Canada’s Copyright Board at the Cross Roads

Michael Geist posted an important blog today entitled Appointment of New Copyright Board of Canada Chair Offers Chance for Change. He concludes as follows:

As I noted over a year ago, many believe the Copyright Board of Canada is broken. The government hasn't paid much attention, but a starting point for addressing the concerns may come with the appointment of a new chair and the potential it brings to establish new policy and governance priorities.

 

The Copyright Act provides in s. 66(3) that “The chairman must be a judge, either sitting or retired, of a superior, county or district court.” Current Chairman William Vancise’s term as Chair will end on May 13, 2014 because the statute allows for re-appointment once only.The Chairman's position has traditionally been served on a part-time basis.

For the next Chair, the Government need look no further than the Federal Court or the Federal Court of Appeal. There are a number of sitting or retired judges on these courts who have significant experience with copyright law based upon their practice careers and/or cases they have dealt with in these Courts. Indeed, judicial review of the Copyright Board is done by the Federal Court of Appeal, where the Board has been sometimes very resoundingly been reversed, for example in this recent and very important decision from the Federal Court of Appeal written by retiring Justice John Maxwell Evans, who is also the“dean” of administrative law in Canada and co-author of the leading treatise on the subject.

Many of these sitting or retired judges have also had useful and relevant experience in administrative law and related areas of economic regulation, such as competition or communications law that could be helpful in Copyright Board cases. The sitting judges of these Courts must reside in the National Capital Region and some of the retired ones still do. This factor alone could save the Government a great deal of money.

It is an interesting fact that the Copyright Board – which is constantly seeking more resources – already has almost 10% of the budget of the Supreme Court of Canada. The Copyright Board’s net cost of operations for 2014 will be more than $3.5 million. That of the Supreme Court for 2013 was less than $41 million.

The Copyright Board typically renders only about two or three (more or less) substantive decisions a year that typically require several years to reach the hearing stage. The hearings are rarely longer than a week or two. There is typically a 1.5 to 2 year (or even more) delay after the hearing before a decision is rendered, and the decisions are often then reversed after judicial review. By contrast, the Supreme Court of Canada in 2013 received 529 applications for leave to appeal, heard 75 appeals and rendered judgment in 78 cases. The average time between a hearing and the rendering of a judgment was 6.2 months. More statistics on the SCC can be found here.

The Government now has an opportunity to appoint a Chair who can lead the Board forward in such a way that decisions will be rendered much more quickly, at a much lower cost to the parties and with a greater scope for public interest involvement.

This could also be the beginning of a process that could see the implementation of regulations that would help to ensure that the Board can and will carry out what the Supreme Court of Canada recently stated is “Parliament’s purpose in creating the collective societies in the first place, namely to efficiently manage and administer different copyrights under the Act”. See Entertainment Software Association v. SOCAN, [2012] 2 S.C.R 231, para. 11. Needless to say, regulations do not require legislation and the authority is already in place to implement the kind of regulations that would be needed. 

HPK

Canada’s Unlocatable Copyright Owner Regime – A Canadian “Solution” or a Canadian Problem or a Canadian Opportunity?

A fellow Canadian, Barry Sookman, recently spoke at the 22^nd Annual Fordham conference for a about two or three minutes or so about the virtues of Canada’s unlocatable copyright owner regime and the Copyright Board’s role therein as a solution to the orphan works problem, which he has referred to as the “Canadian Solution”. The panel was about “Orphan Works & Extended Collective Licensing”.  Barry has done a blog, which indirectly refers to me, about this brief presentation. Naturally I would be remiss if I didn’t at least give him the courtesy of a response.

As Barry said, “A member of the audience at Fordham suggested that the unlocatable copyright owner process occupied too much of the Board’s resources to administer and was not a useful process. This was categorically disputed by Mr. Justice William J. Vancise, the Chairman of the Copyright Board who was also at Fordham.” 

I was indeed that “member of the audience.” I suggested to Barry that he was looking at this through rose-coloured glasses and challenged him on some of the many issues he did not mention. Granted, Barry had very little time to speak, since he was only a “panelist” (and apparently a late addition at that) and not a full-fledged “speaker” on the session. Panelists get only a couple of minutes at Fordham. Even actual “speakers” rarely get more than 8 minutes, unless they are very prominent people such as judges or senior government or WIPO people speaking on very important topics.

Nonetheless, Barry made his very supportive pitch of the Canadian Copyright Board’s implementation of its role in the “unlocatable” issue, which is reflected on his blog. In the few moments I could command the mike, I questioned whether Canada’s approach was a wise use of resources for a Board that is already the largest board of its kind by far anywhere in the world. I pointed out that the Board had unnecessarily insisted for a very long time on charging homeowners for copies of architectural plans needed to renovate their own houses on file with city halls. I also pointed out that the Board was facilitating the collection of license fees on behalf of collectives that had done absolutely nothing to deserve this money. Chairman Vancise - who is a retired judge from Saskatchewan and whose term as the Chair of the Copyright Board expires in a few days on May 13, 2014 – was in the audience and stated very clearly that he disagreed with me.

One would think that it’s fair and legitimate to question whether the 1988 legislative mandate on orphan works makes any sense now and whether the Board is fulfilling it in an efficient and effective manner. Given the fact that even collectives are now unhappy with the enormous costs and long delays inherent in Copyright Board proceedings (i.e. sometimes several years to get to a hearing, then sometimes 18 months or even two years or more to render a decision after a relatively brief oral hearing), the question of efficient use of supposedly scarce Board resources would appear to be a legitimate and even unavoidable one.

With about 16 full time equivalent employees (FTEs), plus up to five full or part time Board members themselves, this Board is already by far the largest organization of its kind anywhere in the world. It will have a net cost of operations for 2014 in excess of $3.5 million.

S. 77 of the Copyright Act enables the obtaining of a license from the Board when a copyright owner cannot be found. The Board has been involved in this since 1989. To date, it has issued 277 licenses and denied requests in 8 cases because a license wasn’t needed or the work in question had not been published.

In fact, I am hardly the only one who has questioned whether Canada’s unlocatable regime and the way it is implemented by the Board make good sense.

On the resource issue, the Department of Canadian Heritage itself stated in its  2002 “Section 92” report from Canadian Heritage:

There are concerns that the in absentia licensing process for unlocatable copyright owners has overburdened the resources of the Copyright Board, and that improvements to the process are needed.

In 2009, the Board published a lengthy study on this regime written by Professor Jeremy de Beer and the Board’s then own (now former) General Counsel, Mario Bouchard. The conclusion of the study, which was paid for by the Board and Canadian Heritage, notes the rejection of a Canadian type system by the US Copyright Office:

After reviewing hundreds of comments, holding several public roundtables and more private meetings, the authors of the US Report concluded that legislation is necessary to provide a meaningful solution to the very real problems posed by orphan works. They rejected a system requiring government involvement because it would entail more resources and efforts than are readily available without providing offsetting benefits.

That the Canadian system was given short shrift, and not seriously considered as a viable policy alternative in the US, might call into question whether it is an appropriate solution in Canada. Moreover, some entities contemplating mass digitization of works are attracted to the level of certainty the Canadian approach can provide, and have commented favourably on it. Still, many questions remain about the interpretation, administration and effectiveness of Canada’s system for licensing the works of unlocatable copyright owners.

(page 40, footnotes omitted, emphasis added)

The 2006 Report of the US Register of Copyrights, referred to by De Beer and Bouchard, recites a number of criticisms of the Canadian system. For example, the Report states:

Generally, the critics of the Canadian system felt that it would impose an undue administrative burden on whatever agency reviewed the applications, would lead to lengthy delays in the approval process, and would provide little benefit. (page 83, footnote omitted)

On the escrow payment system, the Register’s Report states:

Most other commenters strongly disfavored the Canadian approach, and also opposed an escrow system of any kind. (page 114)

Prof. Ariel Katz has also written in a very scholarly way about problems with the way the Board deals with its mandate in a recent 2012 paper published in the Berkeley Technology Law Journal, available here.  Prof. Ariel Katz’s “remedy tweaking” solution, which basically entails reducing the liability to a very small amount for anyone who has engaged in good faith due diligence, is a far more sensible solution than the current Canadian regime. He analyzes the data and information provided by de Beer and Bouchard and suggests that the Board’s unlocatable regime is “a radical shift from the mechanism contemplated by Parliament (or, perhaps more precisely, such a subversion of that mechanism)” (at p. 1329).  Prof. Ariel Katz has calculated that the average license fee for unlocatable licenses is C$326.  The proceeds are turned over to the collective society deemed appropriate by the Board, and if not claimed by the rightful owner, eventually belong to the collective.  This seems inexplicable, since the collective has typically done nothing to entitle it to receive the proceeds and the owner apparently did not see fit to join the collective.

As I mentioned in my brief comment from the floor at Fordham, for a long time, the Board was spending significant time on requests for licenses for reproduction of architectural plans for home renovations. Until 2007, these amounted to 29% of the s. 77 applications.

Finally, after I pointed out that licenses were not required in view of a well-known 1971 Supreme Court of Canada decision allowing the owner of a building a right to repair it and in view of the SCC’s large and liberal interpretation of fair dealing, the Board finally stopped entertaining such applications in 2007 and unnecessarily taking money from home owners. Chairman Vancise appears to deserve some credit for having solved this particular problem.

Interestingly, one of the few cases in which all five board members have ever all been actively engaged arose in the “unlocatable” context. The most well-known of these concerned the issue what constitutes a “substantial part” of a work. After ten months of deliberation, the Board eventually issued a 25 page 3/2 split decision about the quotation in a film of eight excerpts comprising 325 words out of a 342 page book on WWII published in 1954 by Vantage Press, which is a vanity press.  The Board’s decision in the Breakthrough Films case was a missed opportunity to help documentary film makers, who are frequently given overly cautious and even bad advice on such matters. In fairness to the Board, it must be pointed out that this was not an adversarial proceeding and the Board may not have had the benefit of satisfactory research. Fortunately, the Supreme Court of Canada has since provided some considerable and definitive guidance on the meaning of “substantial part” in the decision in Claude Robinson and Les Productions Nilem inc., 2013 SCC 73, [2013] 3 S.C.R. 1168

The Board could easily provide a useful service to the public by updating its website on providing guidance as when a license is NOT needed in the case of an unlocatable copyright owner. As of now, the Board has apparently not updated its website since 2001 on this issue – and thus ignores several key Supreme Court decisions and legislative changes since then. The Board still continues to suggest that:

You also do not need a licence if the intended use is not protected by copyright. There are a few specific exceptions to the copyright owners' exclusive right to authorize the use of their works "or any substantial part thereof in any material form whatever". For instance, fair dealing for the purposes of research or private study is allowed. So is copying of sound recordings for a person's own private use. However, the courts tend to interpret these exceptions restrictively.

(highlight added)

Quite apart from the inexplicable reference to private copying, the above material was dubious in in 2001, when the Board’s website on this subject was apparently last modified. It has been clearly very wrong ever since the Supreme Court's landmark 2004 ruling in CCH v. LSUC which confirmed that ““Research” must be given a large and liberal interpretation in order to ensure those users’ rights are not unduly constrained.”

The statement is even more blatantly wrong since the SCC’s “pentalogy” decisions in 2012 and the inclusion of “education”, “parody” and “satire” in the fair dealing provisions of the legislation. It should not take more than a few minutes of the time of one of the Board’s four lawyers to update this page by providing, at the very least,  links to the current statutory framework as found in s. 29 of the Copyright Act and the three Supreme Court of Canada decisions on fair dealing plus the Cinar decision rendered since 2004 and indicating how these decisions are relevant.

Indeed, on the resource question, Chairman Vancise confirmed in his response to my comment that “There is one person at the Board dedicated to dealing with this matter.” He also stated that “Every license that is issued, Howard, is seen by the Board and an order is issued.”

QED. Even if it is only one person or FTE equivalent who works on these files, I would respectfully suggest that this is one person too many. One person year (FTE) per year since 1989 translates at a probably conservative cost estimate of $75,000 per year, including benefits, to about $1,875,000 to date for a process that was clearly absolutely unnecessary in at least 19% of the files and probably a great deal more (perhaps involving insubstantial copying or fair dealing?) – even under the existing legislation. To the extent that more senior staff, including legal staff, and Board members themselves, may have gotten involved, the real cost may have been substantially more. The Board itself recently states  that “a target of 45 days was set between the file completion date and the issuance of the licence”. This suggests that a lot of time may be spent on these files. 

The Board may have well spent more than $2 million of public money to direct about $75,000 or so to collectives through about 277 licenses in circumstances where the collectives have generally nothing to deserve this little windfall.  It should be pointed out that collectives, as required by s. 67 of the Copyright Act:

must answer within a reasonable time all reasonable requests from the public for information about its repertoire of works, performer’s performances or sound recordings, that are in current use.

If a relatively little country like Canada in terms of population needs to devote so much bureaucratic resources to issuing unlocatable licenses and has already the largest copyright board bureaucracy anywhere, this is not necessarily a model to commend to other bigger countries. Barry calls this “the Canadian solution”. Perhaps a more informative title would have been “the Canadian problem”. The US Register of Copyrights clearly sees our system as more of a problem than a solution.

The Board could also usefully provide a “soft law” check list of how to go about searching for an unlocatable copyright owner. Bouchard and de Beer themselves make such as suggestion, at page 19 of their report, noting that “It is conceivable that creating and promoting best practices could reduce the amount of time and resources the Board currently spends walking applicants through possible search procedures, liaising with collective societies or performing aspects of searches itself.”

Moreover, if such a checklist were followed in good faith, Canadian courts might well see such a protocol as a reasonable standard and “best practice” and might be reluctant to award anything more than the lower end of statutory minimum damages – which could be as low as $100 in non-commercial situations with double costs to the defendant on the basis of the Federal Court settlement offer rules – in the highly unlikely event that an unlocatable copyright owner should ever actually spring forth and successfully sue. Obviously, a copyright owner who is unlocatable with diligent effort and whose work is long since out of print and has become commercially unavailable would likely have a difficult if not impossible task in proving any actual damages.

So – in the true Fordham spirit of “learn, debate, and have fun” – we certainly had a brief and intense debate here between Barry, me and Board Chairman William Vancise. The debate should be continued in Canada – where the Government may wish to consider implementing regulations that might deal with this and many other issues that increasingly call out for resolution concerning the Copyright Board.

The unlocatable owner issue is just one of these issues, and many of the others are even more serious and concern both collectives and users, not to mention the efficient use of public resources. In fairness to the Board, many of the problems that have arisen have been caused by the parties before the Board or choices some have taken that may have greatly prolonged some proceedings that might have been greatly shortened, or been dealt with more effectively, efficiently and decisively by means of timely and vigorous judicial review or other court proceedings. For whatever reason, the Board has not always been willing or able to deal with these situations. Regulations could help. Needless to say, regulations do not require legislation and the authority to implement useful and appropriate regulations is clearly already in place.

Perhaps a fully informed discussion of this “unlocatable” issue could be an opportunity  to serve as a catalyst for the implementation of regulations that would enhance the efficiency and effectiveness of the Copyright Board of Canada.

HPK

The Changing Skyline of Lincoln Center

© 2014 Howard Knopf

The skyline of Lincoln Center is changing. Good for real estate development, and no doubt for Fordham's endowment fund. But maybe not so much for architecture.

This was taken by me during the 22nd #FordhamIP conference last week in New York. The Fordham law school campus is next to Lincoln Center. 

HPK

The Perennial Issue of Parallel Imports and Border Enforcement: Canada's Version of ACTA - Bill C-8

On April 24, 2014 I was a speaker and presented a talk entitled "The Perennial Issue of Parallel Imports and Border Enforcement: Canada's Version of ACTA - Bill C-8" at the 22nd annual Fordham IP conference.

Here's a summary of my talk:

Bill C-8 is now pending before Canada’s Parliament. According to the Legislative Summary:

Canada has not explicitly indicated its intention to ratify ACTA by introducing Bill C-8... However, when questioned on this issue by the Committee, the Honourable James Moore, Minister of Industry, and his deputy minister stated that although the bill is intended to respond to domestic pressures, it brings Canada in line with ACTA.

According to the IIPA, “Bill C-8 should be improved and then enacted as quickly as possible”. There is, however, concern that Bill C-8 goes far beyond what is required in terms of anti-counterfeiting, even as required by ACTA. This would be controversial enough, especially since ACTA shows no sign of imminently or even ever coming into force. Moreover, there is reason to believe that Bill C-8 could – whether inadvertently or otherwise – enable the use of copyright and even trade-mark law to block parallel imports, which are legitimate by definition and which have been legitimized by the Supreme Court of Canada.

Here are some questions I would have liked to see discussed more but the Moderator had other ideas:

1. How likely is it that ACTA will ever come into force?
2. How can the USA possibly expect to credibly oppose parallel imports in the TPP after its Supreme Court confirmed in Kirtsaeng last year that copyright law won’t work to block parallel imports and US TM law is generally ineffective?
3. Does the 301 process really have any consequences anywhere?

It’s always interesting that so many who profess to believe in free trade and believe that IP issues belong in free trade agreements are really hostile to parallel imports and use every possible means to erect “private tariffs” in these agreements.

The antipathy to parallel imports makes me even more concerned that Bill C-8 may have language in it that has been tainted by lobbyists and which may betray the Government’s stated intentions NOT to impede parallel imports. Having made the winning arguments in Canada’s leading Supreme Court case on parallel imports, I know how tricky every word and the placement and history of every word in the statute can be in this context.

Anyway, my slides contain a number of examples of the inconsistent and ambiguous wording that has crept into this bill that could impact the issue of parallel imports.

I’m also in good company here with Prof. Jeremy de Beer who told the Committee:

I admit that it was not easy for me, or a number of other IP experts

whom I consulted, to understand the intricacies of this bill's

provisions affecting parallel imports. The provisions are technical

and complex, and they interact with the provisions of the existing

legislation with effects that may not be immediately apparent.

The Committee hearings on Bill C-8 that took place last November were very unsatisfactory. The Committee would not hear from me, but did hear separate presentations from a father and son team of anti-counterfeiting lawyers from the same firm. This hearing was another example of the quote attributed to Bismarck “If you like laws and sausages, you should never watch either one being made”.

This is really too bad because I think that the Government and its officials have some good intentions here. Nobody supports counterfeiting. However, somewhere along the line, they are getting some not so good advice and the results could cause a lot of collateral damage to the free flow of legitimate goods - including medicines intended for sale in developing countries where lives may be at risk in the event of delayed delivery.

Lots more in my slides, which are available here.

HPK

The Access Copyright Post-Secondary Tariff Hearing – The Copyright Board is Between a Rock and a Hard Place

Wikimedia Commons: Odysseus's boat passing between the six-headed monster Scylia and the whirlpool Charybdis

On January 17, 2014, the Board ruled  that it “postpones sine die the hearing in this matter. After having received and analysed all answers from Access, and replies from Mr. Maguire, the Board will either decide when to reschedule the hearing or proceed on paper.”

Since December, I have, for various reasons, not posted everything about this uniquely problematic hearing. However, AC’s submissions dated March 28, 2014 in respect of the “answers” sought by the Board call out for public attention and are available here.

At the risk of oversimplification, a quick glance at these “answers” indicates that AC has provided 40 pages of detailed submissions that essentially urge the Board, inter alia, to:  

• effectively ignore the February 13, 2014 decision of the CJEU, Europe’s highest court, in Swensson that “the owner of a website may, without the authorisation of the copyright holders, redirect internet users, via hyperlinks, to protected works available on a freely accessible basis on another site”. This is so even if the internet users who click on the link have the impression that the work is appearing on the site that contains the link
• effectively ignore the majority ruling of Justice Abella in the SCC’s 2011 decision in Crookes v. Newton
• effectively ignore the implications it doesn’t like of the SCC’s fair dealing rulings in CCH, SOCAN v. Bell and Province of Alberta
• effectively ignore the impact of the addition of the word “education” to the fair dealing provision of s. 29
• convince the Board that “the “fair dealing” Policies advocated by the AUCC and ACCC do not set out a legally or factually defensible policy of fairness.”
• convince the Board that the fair dealing principles advocated by the Association of Canadian Publishers are valid. I have pointed out how these principles are clearly wrong and/or seriously misleading.

Much more could and should be said to answer these 40 pages of submissions, but it won’t be said by the “now absent” objectors as AC calls them.

It is, of course, astonishing that the “now-absent” objectors are indeed absent for reasons that have not been publicly explained. They have spent almost three million dollars that we know about to mid-2012 only to abandon their members midway through this historic hearing and, even worse still, to withdraw their objections with no apparent concession on the part of AC. Indeed, the model licenses that they had earlier agreed upon have been widely disavowed by their members.

It is to be noted that CMEC has not even raised the issue of “mandatory tariff” in its statement of case in the imminent K-12 hearing at the Board. Moreover, as I said back in October, 2013, “York appears to have effectively conceded that the inevitable final tariff, when certified by the Copyright Board, will be “mandatory””.

This leaves the Board between a rock and a hard place, with nobody present to serve as an adversary in a hearing that was supposed to have sophisticated adversaries in a process that is designed to be adversarial. Should it refuse to certify any tariff on the basis of lack of sufficient evidence, for example as to AC’s actual repertoire? Can it proceed to devise a scheme, perhaps based upon optional transactional licensing or some other truly non-mandatory scheme that is entirely different than one suggested by any of the parties, in this case the only remaining party? Are the Board’s efforts to get more answers from AC and its apparent willingness to allow in more evidence long after the due date for AC’s statement of case and to allow last minute supplementary evidence and revision of AC’s statement of case intended to serve the public interest? Or will these developments serve, or at least be seen to serve, as a lifeline to AC in a case where it might have been argued that, in certain fundamental respects, AC has not even made a case?

Related and other potentially very significant issues were dealt with very squarely in the immensely important recent decision by the now retired Justice John Evans, the “dean” of Canadian administrative law, in the Re:Sound decision from the Federal Court of Appeal. See Re: Sound v. Fitness Industry Council of Canada, 2014 FCA 48. And then there is the evolving question in Canadian law about how “inquisitorial” the Board can really get with AC in questioning AC’s witnesses if there is an oral hearing.

The public interest is significantly imperilled in this situation. It is not the Board’s fault that the two main associations have walked away and left their members exposed, unrepresented, and  at great risk. That said, the Board has a role and responsibility to adequately consider the public interest. If the Board does something that AC thinks is reviewable, AC will no doubt seek judicial review and still has considerable resources to do so. Indeed, it is dedicating more and more of its vanishing revenue to lobbying and litigation.  Who would oppose it? Apparently not AUCC or ACCC. However, if the Board does something that is legally wrong or unreasonable in the view of the many various elements of the public that will inevitably be directly affected, what legal and practical recourse will they have now that this has become a virtually default proceeding? This is an unprecedented and seriously troubling situation.  

The main question that Board needs to answer very soon is whether, if it concludes that AC is entitled to any tariff, there should be an oral hearing or whether the hearing should "proceed on paper".

An oral hearing would provide at least some measure of transparency. It would provide the Board with an opportunity to publicly question AC’s witnesses to the extent that the Board believes it can and should do so, and to the extent of the Board’s resources, given that the Board does not seem to be contemplating the involvement of an amicus curiae. It would give the public the opportunity to attend and some basis to provide informed written comments, pursuant to the Board’s usual Directive on Procedure, especially if the Board were to promptly post a transcript of the hearing and set a deadline that would allow for meaningfully sufficient time for such comments.  

The Board has difficult decisions ahead to be made in this matter. Another factor may be that the term of its current Chairman expires imminently on May 13, 2014 at the end of his second term.

One wishes the Board well with what will no doubt be a difficult decision about how it will conclude this hearing and render its decision(s) in these exceptionally difficult circumstances.

HPK