Copyright Board Canada

Commission du droit dauteur du Canada

December 9, 2013 File: Access Copyright Post-Secondary Educational Institutions Tariff (2011-2013) RULING OF THE BOARD Introduction On November 6, 2013, Professor Katz applied to the Board for an order referring a question to the Federal Court of Appeal; an order setting out a schedule to determine the wording of the question to be referred, the factual basis necessary for its resolution and other related procedural matters; a stay of proceedings in the above-referenced tariff pending the determination of the application, and then pending the final determination of the question on reference. Hearings are currently set to start on February 11, 2014. Access Copyright opposes the application. The other remaining participants in these proceedings, CIPPIC, acting for CAUT and CFS, and Sean Maguire, support it. The University of Toronto and Athabasca University also expressed support for the application in letters of comment. Positions of the Parties The arguments of Professor Katz can be outlined as follows. Conflicting views exist as to what those who wish to use a collectives repertoire can do once a tariff has been certified pursuant to subsection 70.15(1) of the Copyright Act (the Act). According to the first, users must comply with the tariff as soon as they perform a protected use targeted in the tariff. According to the second, only users who so decide are bound by the tariff. A reference is needed to decide which view is correct, for the following reasons. First, the question has direct and immediate impact on the scope of Boards jurisdiction, its mandate, and the procedures necessary for fulfilling it; the answer affects the fundamental basis and almost every aspect of the proposed tariff. If the second view is correct, a decision on a reference may render these proceedings moot: certifying a tariff would achieve nothing that cannot be achieved by relying on existing model licences. If the first view is correct, a decision will determine on what basis a tariff can be approved, and on what grounds opposed, especially if a tariff then imposes liability in the millions of dollars as soon as a university makes one or more infringing copies of works in the repertoire of Access Copyright. Second, both AUCC and ACCC, who represent virtually all Canadian universities and colleges, have withdrawn from these proceedings. No educational institution that has declined to sign a licence agreement is asking the Board to approve a tariff on terms that are more favourable than

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what Access Copyright proposes; apparently, they believe they can operate lawfully without a licence from that collective. As a result, this has become a de facto default proceeding. While the remaining objectors can add to what ACCC and AUCC may have proved or argued, they cannot substitute for them; they cannot mount the resources necessary to address all the issues and do not have access to the evidence that the associations have marshalled. Such failure of the adversarial process compromises the credibility of any decision made by the Board, especially if the first view is correct. For example, the tariff Access Copyright now proposes largely mirrors model licences negotiated before Parliament enacted the Copyright Modernization Act and the Supreme Court of Canadas recent decisions on fair dealing. If the second view is correct, a certified tariff similar to the model licences would lack the credibility otherwise resulting from an adequately fought adversarial proceeding. Third, determining the issue by way of reference will clarify an important question of law that goes to the heart of the current proceedings, will enhance the credibility of the Board, will promote judicial economy and will ensure that the Board and the parties to this and other matters do not spend time and scarce resources on unnecessary proceedings. The arguments of Access Copyright are as follows. First, the question as framed is hypothetical and academic; the single copy scenario is a red herring unless evidence shows that it is not hypothetical. Second, the question as framed will not end these proceedings or be decisive of any matter before the Board; irrespective of the decision on a reference, a certified tariff will be required since its terms will apply retroactively to institutions that have operated under the interim tariff currently in place. In the alternative, Access Copyright proposes a different wording which, it argues, directly engages the issues before the Board. In reply, Professor Katz argues that there is agreement among parties about the nub of the issue and the need for a reference, challenges the alternative wording proposed by Access Copyright and proposes adjustments to the wording of his original question in order, among other things, to dispel the (in his view, non-existing) red herring of which Access Copyright had complained. He also offers additional views as to the usefulness of a reference, even if it does not render the tariff proceeding completely moot: thus, if a reference resulted in the answer he supports, it would remove any reason for his continued participation. It is not necessary to deal with the arguments offered in support of the first or second view. The purpose of the reference is not to decide which view is correct, but to determine who should first deal with the issue within the context of these proceedings, assuming that it is even necessary to do so. The Law Pursuant to subsections 18.3(1) and 28(2) of the Federal Courts Act, the Board may at any stage of its proceedings refer any question or issue of law, of jurisdiction or of practice and procedure to the Federal Court of Appeal for hearing and determination. A reference must concern a question that must be decided for the purpose of dealing with the matter before the tribunal making the reference: see National Energy Board (Re) at 204i. [NEB] It must involve an issue whose solution can put an end to the dispute before the tribunal; the answer to be given need not

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be decisive, as long as a possible answer is decisive: see Martin Service Station Ltd. The matter must be capable of being decided on the basis of material facts over which there is no real argument between the parties: see Air Canada. Other cases referred to in the Application do not support the propositions for which they are cited. Huang was an appeal, not a reference; the statement that a reference may serve to resolve an unsettled question of law was made obiter and concerned the inconsistent application of a test by citizenship judges, not a mere dispute between parties as to the meaning of that test. The messy state of jurisprudence in Dina concerned contradictory decisions of the Federal Court on precisely the same issue as in Huang. Moreover, since this is a matter of first impression, there can be no jurisprudential mess. In Section 4 of the Patented Medicines (Notice of Compliance) Regulations (Re), the court did not address, obiter or otherwise, the proposition the Application claims it supports. That proposition is found, if at all, not in the decision, but in the application for reference itself. Analysis For the following reasons, the application for a reference is dismissed. This makes it unnecessary to deal with the rest of the application. As a matter of law, the legal issue the Application raises, however framed, is not a proper matter for a reference, for the following reasons. First, the issue cannot be referred because the Board may not need to decide it. Only questions that must be answered for the purpose of dealing with the matter before the tribunal can be the subject of a reference: see NEB. The Board can deal with virtually any question of law, but only if it arises as a necessary incident to the exercise of its core competence. As a result, the Board can refer a question only if, and to the extent to which, the Board must answer it before it certifies a tariff. Yet it is far from certain that the issue raised in the Application will need to be addressed at all in these proceedings. The Application concerns the effect of a tariff certified pursuant to subsection 70.15(1) of the Act. The effect of a tariff is, first and foremost, an enforcement issue: see Application at para. 43.1 The Board does not enforce its decisions: see Private Copying Tariff Enforcement in 2001, 2002, 2003 (19 January 2004) Copyright Board Decision. Courts normally determine the effect of a tariff: see Application at para. 43. The Board has even tailored tariffs so as to avoid deciding enforcement issues: SOCAN Tariff 17 (Transmission of Pay, Specialty and Other Television Services by Distribution Undertakings) purposely does not apportion liability among joint debtors. The issue raised in the Application affects neither the fundamental basis nor every aspect of the proposed tariff. It may be possible to design a fair tariff that addresses all the Objectors legitimate concerns without dealing with the issue. The liability that a single copying event may trigger is a case in point. Different tariffs trigger liability differently, according to market needs:
1

Whether Access Copyright lacks standing to sue for copyright infringement (Application at para. 11) also is an enforcement issue. No one had challenged the standing of Access Copyright to seek a certified tariff for the repertoire it represents.

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per event (SOCAN 8: Receptions, Conventions, etc.), daily (SOCAN 3.C: Adult Entertainment Clubs), monthly (SOCAN Commercial Radio, SOCAN 17, Television Retransmission), yearly (Radio Retransmission), even per transaction requiring a licence (Online Music Downloads). A tariff can be framed to account for the needs of those who resort to the relevant repertoire only incidentally: see Educational Rights Tariff, 2012-2016. A tariff that allowed post-secondary institutions to licence what they need from the repertoire of Access Copyright only when and as they need it may very well render the discussion initiated in the Application purely academic. If the Board need not decide the issue raised in the Application, it cannot decide it. If the Board cannot decide the issue, it cannot refer it. Such will be the case if tariff design or other measures make it unnecessary for the Board to address the issue. Put another way, the issue can be referred only once the Board concludes that it must address the issue before certifying a fair tariff. The CRTC reference mentioned in the Application illustrates the above. The reference was made after extensive hearings. The CRTC had more or less decided to introduce a value for signal regime. Its power to implement the regime was challenged. It could not proceed to implement the regime without first deciding that it had the power to do so. Only then did the CRTC refer the matter to the Federal Court of Appeal: see Reference re Broadcasting Regulatory Policy at paras. 1, 8. Second, the question has no direct and immediate impact on the scope of Boards jurisdiction: the Applicant concedes (at para. 11) that the Board has jurisdiction to approve a tariff. No decision made on a reference will dispense the Board from proceeding with the examination of the proposed tariff. Whether users may or must comply with a tariff certified pursuant to subsection 70.15(1) of the Act changes nothing to the fact that Access Copyright is prima facie entitled to a tariff.2 It only changes what Access and users can do with the tariff, once certified. It would also appear that a tariff will be required in any event for those institutions that have operated under the interim tariff. Even if the answer to a reference leads all objectors to cease participating in these proceedings, the Board will still need to deal with the proposed tariff. Third, a reference is not meant to address hypothetical questions. Yet the issue the Applicant raises remains hypothetical until the Board certifies a tariff. In practice, the question of whether, once a tariff is certified pursuant to subsection 70.15(1) of the Act, users are free to obtain or not a licence pursuant to the tariff does not arise unless and until the tariff is certified: users cannot decide how to exercise the option until they know the terms of the tariff. Fourth, a reference cannot be made without an evidentiary base. To date, no evidence supports such important claims as: whether the educational institutions use of the repertoire of Access Copyright has fallen or ceased; whether institutions have developed enhanced risk-management copying controls and practices; whether institutions have set up fair dealing policies that meet the requirements of CCH; whether institutions increasingly rely on licences and database subscriptions to meet copying needs; whether institutions have found alternative and more efficient ways to comply with copyright law. These claims are controversial; yet these questions must be answered to establish the required context, including whether the scenarios raised in the

Under exceptional circumstances, the Board may decline to certify a tariff by reason that the record leaves it unable to set a fair tariff: see Society of Composers, Authors and Music Publishers of Canada v. Bell Canada (2010). Such a conclusion can only be reached once the record has been perfected.

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Application are purely hypothetical. This would require findings on the part of the Board, made after a fact finding process. Fifth, a reference cannot proceed, even if all parties and the Board would like a question answered by the court, unless the above conditions are met. In any event, it is clear from the Response (at pp. 3-4) that Access Copyright does not agree that the matter is best left for the court to decide: [T]here appears to be uncertainty [...] based on misinformation and misconstruction of the Act. Accordingly, it may be useful to obtain confirmation on the issue, whether by ruling of the Board itself on the merits or by reference to the Federal Court of Appeal. In the event the Board determines the voluntary vs. mandatory question raises an issue that should be referred to the Federal Court of Appeal, Access Copyright submits that the appropriate question to be referred is as follows [...] Even if the matter was one which at law could be the subject of a reference, the Board would not make such an application as a matter of discretion, for the following reasons. First, the Board has dealt with constitutional and legal issues of equal or greater complexity. Sometimes, the courts have found that the Board erred in its interpretation of the law; never since 1993 have they ruled that it ought not to have dealt with a legal issue. To the extent it is at all relevant in these proceedings, section 70.15 of the Act raises issues that go to the core of activities the Board is statutorily empowered to regulate. Presumably, the courts will be interested in the Boards thoughts on the issue, irrespective of the extent to which they may defer to the Board in these matters.3 Second, a reference will not economize resources. To decide the issue raised in the Application, the Federal Court of Appeal would need an evidentiary base. Since the relevant facts are both unproven and controversial, a decision of the Board on these facts is necessary. Third, deciding how to address any legitimate concern raised in the Application will require answering a number of questions. Is a tariff that may require a user to pay thousands of dollars for a single copy (or a few) a fair tariff? Does the evolution in the copying practices of educations institutions dictate changes to the existing tariff formula to reflect new realities? Such issues are at the very core of the Boards competence. A tariff structure that properly accounts for such factors may moot the legal issue raised in the application.
3

The fact that a decision may be reviewed on a standard of correctness is irrelevant to whether a reference should proceed. To find otherwise would be to insist that the Federal Court of Appeal deal with every important legal issue the Board has to address: yet see CTV Television Network v. Canada (Copyright Board) (C.A.), [1993] 2 F.C. 115 at 123 b-e; AUCC v. Access Copyright. To the extent necessary, the Board intends to deal with other legal issues that may arise in these proceedings, including whether the Board can grant a collective powers that exceed the scope of the copyrights that it was authorized to administer (Application at para. 41) and the constitutional issues alluded to in footnote 37 of the Application.

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The CRTC reference mentioned in the Application is readily distinguished. There, the very power to set up the contemplated regime was at issue. Here, there is no question that under section 70.15 the Board has jurisdiction to approve a tariff: see Application at para. 11. There, the CRTC had decided on the appropriate course of action. Here, the Board has not expressed a view as to what a fair tariff may be. Absent any such view, it would be premature to speculate on the acceptability of any eventual tariff structure. Two matters of a more practical nature need to be addressed. First, AUCC and ACCC, who represent virtually all universities and colleges, have chosen to withdraw from these proceedings, and none of the institutions they represent is asking the Board to approve a tariff. While troubling, their absence must be viewed in context. Such absence may complicate the proceedings; it does not make them impossible, unmanageable or per se unfair. The task of defending the public interest is not left entirely to the remaining participants. Proceedings before the Board are not purely adversarial. The Board can and does raise its own objections and seek its own evidence. The absence of the associations and their member institutions puts an additional burden on all participants, including Access Copyright, as well as on the Board. Once the Objectors have filed their evidence, the Board will determine whether it has all the information it needs to certify a fair tariff and if necessary, to take appropriate measures to ensure that such is the case. The vigour and competence displayed to date by the remaining Objectors would tend to show that they are quite capable to assist the Board in this respect. In complicating the Boards task of securing an appropriate record, the absence of the associations does not favour early judicial intervention, far from it. It makes it all the more important that the Board fulfil the function entrusted to it in the Act, in order that both the Board and reviewing courts have available to them as complete a record as possible under the circumstances to deal fairly with the proposed tariff as well as with any legal issue that must be addressed in order to reach a fair decision. The associations and the institutions they represent have made a strategic decision that deprives the Board of their input. This complicates the Boards task of reaching a fair decision. If so, it is them, not Access Copyright, who should bear the consequences of that decision (see Council of Canadians with Disabilities v. Via 2007 SCC 15), so long as the Board properly accounts for the public interest and adapts its proceedings with a view to the bona fides and strategic choices of the parties. (see Via at para. 245) The decision of potential users to remain on the sidelines cannot result in the Board becoming unable to fulfil its mandate. The second matter concerns the Boards ability to decide objectively the issue raised in the Application, if such a decision is required. According to the Application, some of the Boards past pronouncements may cast doubt on its ability to fairly decide it: see paras. 22, 44. The Board disagrees. No finding of law the Board makes is binding on anyone, including the Board, until and unless endorsed by a reviewing court. A point of view offered in an interim or interlocutory decision or order, without the benefit of full argument, is of even less consequence: see Canadian Copyright Licensing Agency v. Alberta 2006 FCA 108. As for any argument made by counsel to the Board in the context of an earlier application for judicial review in these very proceedings, suffice it to say that the Federal Court of Appeal expressly refused to pronounce on

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any issue raised in the application because the Board should be permitted to complete its work before the Court is called upon to consider administrative law remedies: see AUCC v. Access Copyright as quoted in footnote 22 to the Application.

Gilles McDougall Secretary General