Originally posted on Prof. Katz's blog, here.
Two weeks ago, Justice Phelan of the Federal Court handed Access Copyright a huge victory in its lawsuit against York University.
In a nutshell, York has chosen to ignore the most important question in this case, namely whether tariffs approved by the Copyright Board become mandatory on users. The answer to this question carries long-term strategic implications for Access Copyright and for all educational institutions in Canada. Access Copyright understood the importance of this question and argued its case accordingly. York, on the other hand, has chosen to limit its submissions to the narrow question of whether an interim tariff could be mandatory, and refrained from addressing the general question of whether approved tariffs (i.e., final tariffs) were mandatory on users. York has also been eager, it seems, to turn this case into a case about fair dealing, which need not have happened.
This is a long post, so here’s a roadmap: I begin by explaining what was the case about and why the substantive question of fair dealing need not have been decided. I then describe Access Copyright’s theory of the case and the flaws in the Court’s reasoning about mandatory tariffs. The next part discusses York’s defence strategy. It documents York’s astonishing failure to fully and forcefully respond to Access Copyright’s submissions on the most important question in this case, namely whether tariffs are mandatory. In the last part I raise some possible explanations to York’s hard-to-explain strategy and raise some more general questions about what this case might teach about systemic problems in the practice of copyright law in Copyright Board and related proceedings.
What was the Case About?
Most of the coverage of the Court’s decision in the media and the blogosphere focused on the Court’s finding with respect to fair dealing (i.e. that York’s Fair Dealing Guidelines are not “fair” in their terms or application), see e.g., here, here, and here. However, the first important point to note about this decision is that, although it looks like a decision about copyright infringement, this action was not a copyright infringement case. In Canada, only “the owner of any copyright, or any person or persons deriving any right, title or interest by assignment or grant in writing from the owner” may initiate legal proceedings to protect and enforce the copyright they own, and only those persons are entitled to the remedies provided by the Copyright Act. Access Copyright neither owns the copyright in any of the works in its repertoire, nor does it hold any other property interest in those works. Therefore it has no standing to sue for copyright infringement. Even if York had infringed any copyright, it is only answerable to the owner of the copyright, but not to Access Copyright. I hope in a separate post to discuss the implication of this point, and how overlooking it might have led to Court to admit and rely on irrelevant or possibly inadmissible evidence, which, in turn, contributed to some of the most problematic aspects of the Court’s ruling on fair dealing.
Lacking standing to sue to protect and enforce the copyrights of its members, Access Copyright couldn’t and didn’t sue York for copyright infringement. Rather, Access Copyright brought these proceedings to compel York to pay royalties pursuant to an Interim Tariff first issued by the Copyright Board of Canada on December 23, 2010.
Therefore, the central question wasn’t whether York infringed any copyright of any of Access Copyright’s members, but whether York has been legally obliged to pay the royalties specified in the Interim Tariff—in other words, whether the Interim Tariff was legally binding (i.e. “mandatory”) on York. Not only was this the central question, it should have been the only question before the Court. And since Access Copyright could not sue for copyright infringement, there was no need for York to defend itself against such allegations, and no need to file a counterclaim seeking a declaration that all of the reproductions made under its Fair Dealing Guidelines constituted fair dealing (and hence were non-infringing). Arguably, the case could have been decided more quickly, and potentially at a tiny fraction of the cost, if the Court and the parties had focused on the single legal question of whether tariffs are mandatory on users, or at least had attempted to answer this preliminary question first, before dealing with the more factually and legally complicated issue of fair dealing. In fact, during a case management hearing on March 26, 2014 (which I attended as an observer), Prothonotary Aalto suggested bifurcating the case in order to answer this legal question first. Access Copyright seemed willing to do that, but York, for reasons that I never understood, was not.
Importantly, as I shall show below, York never made any attempt to respond to Access Copyright’s submission on this question or moved to resolve the case earlier by way of attack on Access Copyright’s pleading, motion for summary judgment, ruling on a question of law, etc. Any of those could have ended the case much earlier, without the need to deal with the far more complex, time-consuming, expensive and, as it turned out, fatally risky, question of fair dealing.
Access Copyright's Theory of the Case
Access Copyright’s case was predicated on the notion that tariffs that it files with the Copyright Board become binding on users once the Board approves them. It argued that the Interim Tariff was an approved tariff, and therefore was mandatory and binding on York whether or not York has chosen to operate under it. Access Copyright’s theory of the case can be summarized as follows:
- When the Copyright Board approves a proposed tariff, the approved tariff creates a legal obligation to pay the royalties specified therein;
- This legal obligation exists whether the tariff is a final one or an interim one;
- This legal obligation, akin to a tax or other statutory levies, applies to any person to whom the approved tariff applies, so long as this person does any act covered by the tariff, with respect to even a single work from the collective’s repertoire. Just as nobody can opt out of the duty to pay applicable taxes, nobody can opt out of the obligation to pay the specified royalties;
- Persons to whom the tariff applies will not have to pay the specified royalties only if they don’t copy any work from collective’s repertoire; if they copy but the copying is permitted as fair dealing or under another statutory exception; or if they have been licensed separately by the owner of the copyright in the work;
- York employees made at least some copies from Access Copyright’s repertoire that would not be permitted as fair dealing or under another statutory exception and had not been licensed separately by the owner of the copyright in the work;
- Therefore, York must comply with the terms of the Interim Tariff and must pay all the royalties specified therein.
The correctness of Access Copyright’s theory depended on the meaning of section 68.2(1) of the Copyright Act, which provides as follows:
68.2 (1) Without prejudice to any other remedies available to it, a collective society may, for the period specified in its approved tariff, collect the royalties specified in the tariff and, in default of their payment, recover them in a court of competent jurisdiction.
I have written before about why section 68.2(1) does not support the mandatory tariff theory. My initial take on that was in this blog post, which I wrote five years ago. I then refined and expanded the argument in two academic articles. We presented the same arguments (and included a draft of my articles) before the Supreme Court when McGill’s Centre for Intellectual Property Policy and I intervened in the CBC v. SODRAC case in 2015.
That case involved the interpretation of section 70.4, which, like section 68.2(1), provides that “the collective society may, without prejudice to any other remedies available to it, collect the royalties or, in default of their payment, recover them in a court of competent jurisdiction.” The only difference between section 68.2(1) and 70.4 is that section 68.2(1) applies to tariffs, while section 70.4 concerns licences that apply a particular user, rather than to a class of users. Our argument before the Supreme Court was not limited to cases involving section 70.4. In fact, our leave to intervene application, our Factum, and our oral argument specifically referred to tariffs, and used the example of universities to illustrate the potential consequences of the mandatory tariff theory. Howard Knopf argued our case at the Supreme Court and Prof. David Lametti (now an MP and Parliamentary Secretary to the Minister of ISED) and I appeared with him. All three of us worked on the Factum.
The Supreme Court accepted (unanimously on this point) the position advanced in our intervention: the language in section 70.4 does not support the view that the terms and royalties set by the Board are mandatory on users. Nevertheless, Access Copyright argued, and the Justice Phelan agreed, that CBC v. SODRAC was distinguishable, because it involved the interpretation of section 70.4 regarding licences, while the present case involved the interpretation of section 68.2(1) on tariffs. One might think that if the licence fees that the Board sets in an arbitration-like proceeding in which the user was a voluntary party cannot be imposed on the user then, a fortiori, such licence fees cannot be imposed on under tariffs that could apply to users who were not party to the Board proceedings. But York did not make this argument and the Court did not consider it.
Licences vs. Tariffs: A Distinction without a Difference
Justice Phelan noted that the word ‘tariff’ is not defined in the Copyright Act. He then noted that the word is frequently referred to in connection with fees or charges which must be paid, and observed that section 2 of the Interpretation Act, “refers to tariffs in respect of ‘fees or costs’ within the definition of ‘regulation’”. This, he noted, “connotes at least an element of compulsion or requirement to pay.” On that basis, he held that the word “tariff” in the Copyright Act must refer to payment that are mandatory on users.
Justice Phelan’s analysis was lacking in depth, and his conclusion wanting in many respects.
The meaning of "tariff"
Contrary to the Court’s holding, the word “tariff” itself does not necessarily connote a fee that can be imposed on an unwilling user. In its submission, Access Copyright maintained that “[t]he word ‘tariff' is synonymous with ‘tax’, ‘duty’ or ‘levy’.” It cited the following definition from the 8th edition of Black’s Law Dictionary: “a schedule or system of duties imposed by a government on goods”. It asserted that this was the ordinary meaning of the work, and that “the word ‘tariff’ is something that is imposed on a user whose activities trigger obligations under the terms of the tariff. There is no notion of ‘voluntariness’ associated with the use of that word.” It appears from Access Copyright's written submissions and from the transcript of the oral argument that Access Copyright failed to inform the Court that this was not the only definition of the word “tariff”, and that the Black Law Dictionary also provides the following definitions:
Access Copyright might have been disinclined to mention definition number 3(“A fee that a public utility or telecommunication company may assess for its services; The tariffs that a provider may charge are limited by statute.”) or definition number 4 (“A schedule listing the rates charges for services provided by a public utility, the U.S. Postal Service, or a business (esp. one that must by law file its rates with a public agency.”). Had it mentioned those definitions, the Court might have realized that, in choosing the word “tariff”, Parliament obviously did not refer to import or export duties, but rather to the maximum royalties that Access Copyright, as a regulated entity, could charge.
If York had responded to those apparent omissions (and its written submission and oral argument don't indicate that it did), it could have easily directed the Court’s attention to Access Copyright’s selective quotation. York could have also find support in other dictionaries, many of which contain similar definitions. My 2004 Canadian Oxford Dictionary, for example, defines “tariff” as follows:
1 a a duty on a particular class of imports or exports, b a list of duties or customs to be paid. 2 a table of fixed charges (a hotel tariff).
The online Oxford Living Dictionary provides the following definitions: 
The definitions from the full Oxford English Dictionary are equally instructive:
The OED explains that the word tariff is based on the Arabic word ta’rif(a), derived from the word ‘arrafa, which means ‘notify’. The Arabic word became tarife in Turkish, transformed into tariffa in Italian, became tarif in French, and tariff in English. A “tariff”, in other words, is merely a notice of fees or prices.
Like many words, the word “tariff” has acquired other meanings over time. One such meaning of “tariff” is a mandatory charge, such as tax, duty, toll, levy, etc., but as the OED explains, today, this meaning is limited to Customs "tariffs". Another meaning, which according to the OED is the more common one, is basically an advertised price list.
Justice Phelan chose the first meaning, without explaining why he preferred that meaning over the other. This may not be entirely his fault, because Access Copyright insisted on the first meaning, and York never tried to contradict it.
Tariffs and the Interpretation Act
If York had attempted to counter Access Copyright’s suggested interpretation of the word “tariff”, it could have argued that the Interpretation Act should actually direct the Court to prefer the second meaning. According to section 2 of the Interpretation Act the word “regulation”
includes an order, regulation, rule, rule of court, form, tariff of costs or fees, letters patent, commission, warrant, proclamation, by-law, resolution or other instrument issued, made or established
(a) in the execution of a power conferred by or under the authority of an Act, or
(b) by or under the authority of the Governor in Council;
It can be seen that:
- The Interpretation Act doesn’t define the word “tariff”. It defines the word “regulation” and clarifies that for interpretative purposes, the word “regulation” includes a broad range of statutory instruments and other official orders, including a “tariff of costs or fees”.
- The word “tariff” does not appear on its own, but as part of the phrase “tariffs of costs or fees”. Therefore, in this context, “tariffs of costs or fees” refers to lists of costs or fees, not the costs or fees themselves;
- While the definition clarifies that the word “regulation” includes a “tariff of costs and fees”, it does not say that every such tariff is “regulation”, but only those that are issued, made or established in the execution a statutory power to issue, make or establish them;
- The definition of “regulation” says nothing about whether those fees are binding, on whom, or under what circumstances.
Clearly, tariffs approved by the Copyright Board could be regarded as “regulation”: those tariffs are “tariffs of fees” established by the Board in the execution of its power to approve proposed tariffs. But this conclusion tells us nothing about whether those tariffs are binding, on whom, and under what circumstances. An approved tariffs may be a “regulation”, and the Board may be a regulator, but this on its own, doesn’t tell us who is the regulatee. If tariffs are binding, are they binding on collectives (in the sense that they cannot charge fees higher than those approved) or are they binding on users in the way taxes or levies might be? The Interpretation Act provides no support to the conclusion that tariffs are akin to taxes or levies.
Tariffs and the Copyright Act
While Justice Phelan was correct in noting that the Copyright Act does not define the word “tariff”, he failed to notice that the Act clearly defines the nature of the particular tariffs before him. Access Copyright’s tariffs are filed under section 70.13. This section allows Access Copyright to file with the Copyright Board a “proposed tariff … of royalties to be collected by the collective society for issuing licences.” The definition is quite clear. Such a proposed tariff is not a proposed tax or a proposed levy, but a proposed list of royalties that a copyright collective wishes to collect for issuing licences. These underlined three words aren’t mine. These are the words that Parliament has chosen.
A proposed tariff thus sets out the royalties and related terms and conditions under which Access Copyright is willing to issue licences. And when the Board approves such tariffs, it, as the Supreme Court explained in CBC v SODRAC, merely “set[s] down in writing a set of terms that, in [the Board’s] opinion, represent a fair deal to license the use of the works at issue.”
Once the Board certifies such tariffs, users are entitled to use the works in the collective’s repertoire, so long as they pay or offer to pay the royalties specified in the approved tariff, and, according to section 70.17, “no proceedings may be brought for the infringement of a right referred to in section 3, 15, 18 or 21 against a person who has paid or offered to pay the royalties specified in an approved tariff.”
The significance of the approval of tariff is not that it is mandatory on users, but that it becomes mandatory on the collective, which, once the tariff is approved, cannot legally withhold a licence or refuse to issue one. An approved tariff creates a statutory licence for the benefit of users. Users who wish to obtain a licence under such Board-approved terms may avail themselves of the statutory licence by paying or offering to pay the specified royalties. Correspondingly, the collective is entitled to collect those royalties from those users who offered to pay them, and it is also entitled to recover those royalties from users who offer to pay but then default on the payment. This is the meaning of section 68.2(1).
A user who pays or offers to pay the royalties becomes a licensee, whether or not the collective has issued a licence; but a user who hasn’t paid or hasn’t offered to pay is not a licensee. Should such a user, as the Supreme Court noted in CBC v. SODRAC “then engage in unauthorized copying regardless, it will remain liable for infringement. But it will not be liable as a licensee unless it affirmatively assumes the benefits and burdens of the licence.” This understanding of what the Board does when it sets the terms and conditions of licensing schemes operated by collective, has been affirmed by the courts numerous times, and most recently in CBC v. SODRAC. This interpretation is based on the ordinary legal meaning of the word “licence”, and bolstered by the general rule of law principle that “no pecuniary burden can be imposed upon the subjects of this country, by whatever name it may be called, whether tax, due, rate or toll, except upon clear and distinct legal authority.”
In accepting Access Copyright’s argument that CBC v. SODRAC (and the earlier case-law) were distinguishable, Justice Phelan’s ruling hinged on the word “tariff” and a supposed distinction between a tariff and a licence. But as noted above, the word itself doesn’t tell whether those tariffs are mandatory, on whom, and under what circumstances, and in the particular statutory setting it merely refers to list of royalties to be collected for issuing licences. The distinction between a tariff and a licence, therefore, in this context, is one without a difference.
Justice Phelan also noted that the word “tariff” was introduced into the legislation in 1997, and accepted Access Copyright’s unsupported assertion that the change indicated Parliament’s clear intent to reverse the earlier case-law.
Those interested in understanding the fallacy of this argument (and why I am confident it would be reversed on appeal) are invited to read Spectre I. For the purpose of this blog post, suffice it to note that, notwithstanding the introduction of the word “tariff”, the fact that approved tariffs are approved licensing schemes has remained unaltered.
There is no ambiguity: Access Copyright is a collective society, which under section 70.1(a) “operates a licensing scheme …”, and when it files a proposed tariff pursuant to section 70.13, it proposes a “tariff … of royalties to be collected by the collective society for issuing licences.” Not only does the alleged fundamental distinction between licences and tariff lack any basis in the legislation, but the statutory language actually belies the distinction drawn by Access Copyright and Justice Phelan. The concept of a “licence” has remained the cornerstone of the statutory scheme. As we wrote in our Factum in CBC v. SODRAC:
There is no indication that Parliament intended to depart from these well-established principles in any of the amendments since these cases [establishing that tariffs weren’t mandatory] were decided, much less to turn the goal of the statutory scheme on its head. The concepts of “licences” and “licensing schemes” remain the cornerstone of the statutory scheme for the collective administration of copyrights. The weight of the authorities that debunk the “mandatory tariff” theory and the principles those authorities rely on indicate that if Parliament had contemplated radical change in the goals of the scheme and in its modus operandi, it would have indicated its intention to do so with “irresistible clearness”.
York’s Defence Strategy
Contrary to what one might expect (and to what both I and Howard Knopf have recommended more than once and very early on in this drama), York never challenged the central premises of Access Copyright’s theory of the case, namely that an approved tariff creates a legal obligation to pay the royalties specified therein. Rather, York’s defense relied of the following main arguments:
- Section 68.2(1), on which Access Copyright relies, applies only to an “approved tariff”. An “approved tariff” is only a tariff resulting from a complete tariff certification process. Therefore, an interim tariff is not an approved tariff and therefore cannot be imposed on York;
- Even if interim tariffs could be mandatory, the particular Interim Tariff could not, because it has not been published in the Canada Gazette, as section 68(4)(a) requires;
- In any event, York did not make any reproduction that would require it to comply with the Interim Tariff, because its reproductions either constitute fair dealing, otherwise permissible under the Act, or are separately licensed.
In addition to defending Access Copyright’s claims, York filed a counterclaim, seeking a declaration that any reproductions made fell within York’s Fair Dealing Guidelines and therefore constitute non-infringing “fair dealing” under section 29 of the Copyright Act.
The question of fair dealing has arisen only because it was common ground that, if York wasn’t liable for any copyright infringement, it couldn’t be obliged to pay any royalties under the Interim Tariff even if it were mandatory. Both parties seemed eager to adjudicate York’s Fair Dealing Guidelines, even though there was no reason (and perhaps even no jurisdiction) to do so, because, as noted, this was not a copyright infringement case. York presumably wanted, for whatever reason, to do so in order to get judicial endorsement of its Guidelines, and Access Copyright, who identified some weaknesses in those Guidelines, saw an opportunity to instill fear and doubt among educators and dissuade them from taking their users’ rights seriously.
However, York’s strategy is difficult to understand here. Leaving aside for the moment that it made no effort to challenge the “mandatory tariff” theory at an early stage and to get the action dismissed, York could have insisted that if the Court were to make any finding concerning infringement, then the owners of the copyright in the works it had allegedly infringed would at least be joined as parties. This would have guaranteed that it were not required to defend itself against general allegations of infringement, but only against concrete ones. Without concrete claims of infringement, why would York's Guidelines even matter? The wisdom of putting York's Guidelines under a judicial microscope when it wasn't absolutely necessary to do so (and thereby risking an adverse ruling that could harm not only York, but also dozens of other universities and colleges who followed the same AUCC guidelines) was never apparent.
York’s Astonishing No-reply to whether Tariffs are Mandatory—The Central and Strategic Question in this Case
Access Copyright understood quite well that the important question is not whether the Interim Tariff is mandatory but whether approved tariffs are mandatory. Unfortunately for Access Copyright, the Copyright Board hasn’t approved its proposed tariff yet, so it didn’t have an approved tariff that it could attempt to enforce. Therefore, it could attempt to impose only the Interim Tariff, which the Board had approved. In the long run, persuading the Court that approved tariffs are mandatory would represent a huge long-term strategic victory.
Access Copyright’s submissions reflect this strategic goal. Access Copyright filed its final written submission on June 22, 2016. It dedicated the first 10 pages of its 74-pages written submission to an argument about why approved tariffs are mandatory and to distinguishing the 2015 decision of the Supreme Court in CBC v. SODRAC.
Final oral arguments began on the same day. The transcript of the hearing from that day is 84 pages long. 31 pages of the transcript are dedicated to Access Copyright’s theory as to why tariffs are mandatory and the Supreme Court’s decision in CBC v. SODRAC is distinguishable.
Even though Access Copyright had presented to the Court a lengthy submission on why approved tariffs are mandatory, York, throughout its submission, insisted that there was no need to determine whether a final approved tariff would be mandatory. York maintained that the only essential question in this case was whether the Interim Tariff was mandatory, and therefore explicitly refrained from making any submission on the point of whether a final tariff would mandatory.
York counsel began his oral argument on June 22, 2016. Like Access Copyright’s counsel, the first issue he addressed was whether the Interim Tariff was mandatory, but he did not attempt to counter any of Access Copyright’s arguments with respect to the alleged mandatory nature of approved tariffs. To reiterate: Access Copyright’s arguments weren’t unassailable. One would think that arguments that persuaded the Supreme Court, never mind the Supreme Court’s own reasoning, might prove persuasive to the lower court as well.
And even though the SODRAC case and the York case did not involve the same statutory provision, my articles, our factum, and the Supreme Court’s decision provide enough grounds for arguing that there is no real basis for distinguishing between them. All the arguments were there, available for cutting and pasting.
[caption id="attachment_3779" align="aligncenter" width="605"]
A page from Spectre I, with text highlighted by an imaginary associate at a law firm, ready for cutting and pasting.[/caption]
But York did nothing of that kind. Instead of explaining to the Court why CBC v. SODRAC shows that tariffs can’t be mandatory on users and maintaining that the reasons of SODRAC are controlling, it gratuitously conceded that the reasoning of SODRAC was not directly applicable. York’s counsel only suggested that the decision was “instructive”, and that “the decision [in CBC v. SODRAC] in terms of general principles are equally applicable here”.
York was correct to maintain that the general principles of SODRAC were applicable to the present case, but it provided very little explanation about which general principles were applicable and how. Rather than drawing from the richness of the principles discussed in SODRAC and explaining how they demonstrate that Access Copyright’s tariffs can’t be mandatory, York’s submission was, again, limited to why the Interim Tariff was not mandatory.
York’s reliance on CBC v. SODRAC was limited to para 107 of that decision, where Justice Rothstein wrote: “In the absence of clear and distinct legal authority showing that this was Parliament's intent, the burdens of a licence should not be imposed on a user who does not consent to be bound by its terms." I love this paragraph because I can claim bragging rights for its inclusion in the judgment, but York’s submissions missed its importance. York could have explained why there is no clear indication in the legislation that Parliament intended to make approved tariffs mandatory on users, whether interim or final (all the arguments could be found in my articles and our factum). But instead of doing that, York submitted only that the quote from SODRAC confirmed the view that the interim tariff was not mandatory. It noted that section 68.2(1) mentions only an ‘approved tariff’. This, it argued, showed that Parliament never meant to make an interim tariff mandatory.
This narrow argument comes very close to conceding that a final one would be mandatory, and the ensuing exchange between York’s counsel and Justice Phelan suggests that this is how the judge understood it. The transcript of the final oral arguments confirms that Justice Phelan wanted to ensure that he fully understood York’s submission, so he paraphrased its counsel’s argument and asked:
"[Are you submitting that] In a final decision or in an approved tariff there is specific statutory grant of authority to impose it in, which you say since an interim tariff isn't mentioned there isn't the specific statutory granted?"
York’s counsel replied:
"Precisely."
In other words, not only did York fail to challenge Access Copyright’s assertions about the mandatory nature of a final tariff, its answer to the Court’s question seems to concede that it agreed with Access Copyright’s view as far final tariffs were concerned. The only point of contention was with whether this also extended to the Interim Tariff.
It seems that York’s counsel did not want to explicitly concede that a final tariff would be mandatory—but rather that he simply wanted to avoid the question. After explaining why it believed the Interim Tariff wasn’t mandatory, York’s counsel concluded its submission on the question of the mandatory tariff and said:
"So in my submission an interim tariff is not an approved tariff, and that resolves the issue. And as a result, it's not necessary to dive into this bigger question as to whether tariffs are generally enforceable or whether approved tariff is mandatory or voluntary."
York’s only reference to why a final tariff might not be mandatory came after the previous statement, when its counsel told Justice Phelan:
"If, however, you decide you want to get into that issue [of whether an approved tariff is mandatory] the issue is addressed by Professor Katz in this article."
The article Mr. Cotter referred to is “Spectre: Canadian Copyright and the Mandatory Tariff— Part I”. Mr. Cotter described the gist of the argument I laid out in that article, but his description was quick, general, and noncommittal. At no point did he say that York agreed with what I wrote in the article, or indicate to the Court that my article and the case law I cited refutes Access Copyright’s arguments about why tariffs are mandatory. Nor did he ask that the article become part of the trial record. He effectively referred to my article as “suggested reading” that the Court might wish to read, but didn’t really have to. He insisted that there was no need to go through my article in greater detail, because
"If the question of whether an interim tariff is an approved tariff is decided as per York's submissions which is, no, it's not, then it's clearly not enforceable then that's the end of the discussion."
Apparently, it did not occur to York’s counsel that if the Court disagreed with York’s submission and held, as it ultimately did, that the Interim Tariff was an approved tariff, then the failure to rebut Access Copyright’s submission on the mandatory nature of the approved tariff effectively handed it a victory on a silver platter. York’s narrow focus on the Interim Tariff might have won it this case, but by effectively conceding or, at best, not seriously disputing that a final tariff would be mandatory, it guaranteed that it and potentially all other education institutions would be beholden to Access Copyright in any future case based upon a final approved tariff.
But York’s missed opportunities to address the question did not end here. Oral arguments continued the next day. Mr. Renaud, Access Copyright’s counsel, must have been worried that the Court might actually read my article. He had very good reasons to worry, because my article anticipated and refuted all of Access Copyright’s arguments on why tariffs are mandatory. He must have also appreciated that the article was written before the Supreme Court handed down its decision in CBC v. SODRAC, and served as the basis for our intervention in that case. My article and our Factum refute not only Access Copyright very partial description of relevant earlier case law on the question of mandatory tariffs, but they also indicate that there is no basis for its revisionist and unsupported account of the legislative history. Mr. Renaud might have also been concerned that if the Court read this article, it might also read its sequel, Spectre II, which exposes additional serious problems with the notions that tariffs are mandatory.
Perhaps unsurprisingly, then, Mr. Renaud set out to attack my credibility and urged the Court to ignore my article. Moreover, he baselessly asserted that nowhere in my article did I explain what a tariff is, and that I ignored the significance of some of the legislative changes from 1997. These assertions are simply false.
My article discusses at various points what tariffs, such as those filed by Access Copyright, are, and it points out that they are “licensing schemes”. For example, on p 197 I wrote:
[W]hen a section 70.1 CMO [such as Access Copyright] — a CMO that “operates a licensing scheme” — elects, pursuant to section 70.12, to file a proposed tariff with the Board “for the purpose of setting out by licence the royalties and terms and conditions relating to classes of uses,” the tariff that the Board would certify as approved, begins and remains a “licensing scheme.” The only difference between the proposed tariff and the approved tariff is that one is a proposed licensing scheme, and the other is a licensing scheme that the Board has certified as approved. Similarly, when the Board fixes royalties and their related terms and conditions pursuant to section 70.2, it fixes them “with respect of a licence.”
My article further made the point that there was no difference in this respect between tariffs that the Board certifies as approved per sections 68(3) or 70.15, or royalties that it fixes for a particular licence pursuant to section 70.2 (such as those at issue in the CBC v. SODRAC case). In all of those cases, I explained, the Board certifies either licensing schemes or a particular licence that authorize uses that fall within the scope of the collective’s (or its members’) section 3, 15, 18, or 21 copyrights.
I further explained why, contrary to what Access Copyright asserted in its written submission, the royalties specified in an approved tariff under section 70.15 are not mandatory, and are not akin to taxes, levies, or other types of statutory imposts.
Moreover, beginning on p. 190, I discussed whether the earlier case-law that confirmed that tariffs were not mandatory on users was still applicable in light of changes in the statutory language that took place in 1988 and 1997. I concluded that it was. On pp 191-192 I included a table that shows the changes in the statutory language of the relevant provisions as they existed prior to 1988, since 1998, and since 1997. I then said the following:
Proponents of the “mandatory tariff” theory might point out that the pre-1988 language referred to the collection of royalties in respect of the issue or grant of licences by a CMO, and observe that the reference to “issue or grant of licences” has all but disappeared since 1988. Consequently, they might argue, the 1988 amendments were intended to transform the statutory regime and make an approved tariff enforceable not only against licensees under the tariff (as the earlier case-law emphasized) but also against any user who declines to request a licence.
This could have been a plausible argument, and if section 68.2(1) were the only relevant provision, a persuasive one. However, when section 68.2(1) is read in conjunction with all the relevant provisions, it becomes clear that Parliament did not alter any fundamental feature of the statutory scheme. The analysis below shows that Parliament neither changed the nature of tariffs, nor intended to do so. With respect to collective administration of copyrights, tariffs have always been, and remain, approved licensing schemes. The tariffs that CMOs propose, and the Board approves, have always been tariffs that set out the royalties which the CMO proposes to collect in respect of the grant of licences. Plus ça change, plus c’est la même chose.
I won’t repeat here all that I wrote in my articles, but anyone who’s interested is welcome to read them and will find therein all of the arguments that could have been brought forward to contradict Access Copyright’s arguments (and then some).
Perhaps, in our adversarial system, it’s easy to understand why, without ammunition to shoot down the message, Mr. Renaud elected to discredit the messenger. It’s less clear why York’s counsel chose not to set the record straight. Responding to every point made by opposing counsel during oral argument can be challenging. But there was ample time to do so before York filed its own final written submission more than a month later, on July 29, 2016. By that time, Access Copyright’s entire submission was laid open before it, and it was crystal clear that the question squarely before the Court was not limited to whether the Interim Tariff was an ‘approved tariff’, but whether approved tariffs in general are mandatory. It was therefore also clear that, while York could technically win a short-term victory if the Court accepted its view that the Interim Tariff is not an “approved tariff” and can’t be mandatory, Access Copyright could win only if the Court accepted its view that an “approved tariff” is mandatory (and that the Interim Tariff was an approved tariff). By the time York set out to write its final submissions, it should have been obvious that, if York failed to contradict Access Copyright’s submissions on the mandatory nature of approved tariffs, the Court might accept them.
Yet, York’s final written submissions on the issue remained dedicated exclusively to its argument about why only the Interim Tariff was not mandatory. York remained adamant that there was no need to decide whether a final tariff would be mandatory, and made no specific submission on this point. It’s reliance on CBC v. SODRAC remained hesitant and limited as it was in its oral argument, and even its noncommittal mention of my articles had completely evaporated from York's final written submissions. Is it a wonder that Justice Phelan’s accepted Access Copyright’s essentially unopposed view?
But why?
If you’ve read this far, you must have wondered: but why? Why did York choose to rely only on the narrow issue of the Interim Tariff and failed to make any submission on whether final tariffs would be mandatory?
I wish I had the answer, but I could not come up with any good one. I hope York has a good answer, and I hope that if it has one, it will provide it, because the outcome of this case, unless reversed, will seriously affect not only York, but the entire education system in Canada.
Not knowing what the answer is, I can only offer a few hypothetical ones and ask a few questions. The most charitable explanation for York’s failure to address the question of mandatory tariffs might be that for quite some time, the notion that tariffs are mandatory for users has been accepted as conventional wisdom among copyright collectives, the small group of copyright lawyers whose practice revolves around Copyright Board proceedings, and the clients they advise. When I began paying attention to this question I simply assumed that this view was correct, and it was only after I began thinking about this question more closely, read the case-law and studied the legislative history that I realized how flawed the mandatory tariff theory was.
Access Copyright filed its Statement of Claim against York on April 8, 2013 and York filed its Statement of Defence and Counterclaim the following September. At that time, my blog post from 2012 was the only publicly available argument against the received wisdom, and I can imagine why York might have thought it better to focus on other arguments. It still wouldn’t explain why York chose not to raise the argument in the alternative, but I can understand the reluctance to do so at least at that time.
But that was only the state of affairs in September 2013. Two months later, I requested the Copyright Board to refer the question of whether tariffs are mandatory to determination by the Federal Court of Appeal. I don’t know if anyone from York’s legal team read my application, but if they did (and I’d be surprised if they didn’t), then it would have appreciated that the notion that tariffs are mandatory was not a forgone conclusion. Even if its lawyers were not persuaded by my argument, they could have appreciated why it was at least arguable that tariffs weren’t mandatory. Maybe they felt the argument was too thin to rely on and not even worth trying. Maybe.
But by the end of 2014 drafts of my article were already available online. Both I and Howard Knopf have blogged about this issue countless times since at least 2012. In January 2015, we filed our leave to intervene in the SODRAC case; we filed our Factum in early March; the case was argued on March 16, 2015. Part I of my article was published in April 2015, and on November 26, 2015 the Supreme Court delivered its judgment in CBC v. SODRAC. Indeed, Osgoode Hall Law School at York University hosted a one day symposium on February 25, 2016 on the CBC v. SODRAC decision (the symposium was organized by Prof. Carys Craig and myself), in which Justice Rothstein was the keynote speaker. One panel was dedicated to the question of mandatory tariffs. We invited York’s legal team to attend the symposium and to the best of my knowledge, at least one lawyer from the law firm acting for York on this case had indeed attended. In any event, the symposium videos are available online.
Moreover, before final oral arguments began, I had reached out to York’s counsel and senior in-house lawyer. I explained my theories and provided copies of my articles and our Factum prior to the final hearing. I would have assumed that even at that late point, York’s legal team would have recognized the possibility that an argument found convincing by nine Supreme Court justices might also appeal to a single Federal Court judge, who might even consider it binding upon him if so urged. Even if York couldn’t be certain that this would be the outcome, giving the argument a shot, at least as an alternative argument, would have seemed elementary. Apparently, York saw things differently, but I, for one, cannot fathom why.
But I could surmise. York’s failure to make important submissions on the question of mandatory tariffs might be an example of a broader phenomenon concerning the practice of copyright law in the context of Copyright Board proceedings and related proceedings before the courts. I have been involved in some of those proceedings and have watched a few others for quite some time. I have noticed more than once how important arguments that could and ought to have been made have either not been raised at all, or only have been made halfheartedly. Therefore, I would like to raise some questions about this phenomenon. I am making no comment on any particular lawyer or firm. I am merely, as an academic, asking some of the questions that others are also are very likely asking.
A small group of regular lawyers dominates the practice of copyright law in the context of Copyright Board proceedings and related court proceedings. Copyright Board proceedings, by their nature, tend to be routine: collective file proposed tariffs, and objectors file objections. Eventually, the Board normally approves the tariffs, and its decisions often attract applications for judicial review before the Federal Court of Appeal. Some of those appeals proceed to the Supreme Court. This process may take years to complete, and in many cases, even before the proceedings concerning one tariff come to an end, it would be time to file new proposed tariffs and start all over again even. As a result, many of the players, as well as their lawyers, are repeat players in a repeat game. Situations such as this might give rise to a strong confirmation bias. Having always assumed that tariffs were mandatory and having strategized their cases accordingly, is it possible that the lawyers involved might have ignored or minimized the importance of all arguments indicating otherwise?
Is it possible that the confirmation bias becomes even stronger because it is also self-serving? I have previously written how the view that tariffs are mandatory has served lawyers who specialize in Copyright Board proceedings nicely. It encourages copyright collective to file tariffs on the belief that they could later impose them on users, and it compels users to object to such tariff in order to minimize the impact of tariffs that might be imposed on them. Regardless of which side they act for, lawyers who specialize in these lengthy and lucrative technical proceedings benefit from them. Naturally, they might be less open to arguments that might reduce their clients’ need for their services.
Finally, sometimes the same law firm might represent copyright collectives in some proceedings and act for users in others. Even if its clients come from different activity sectors and never directly confront one another, the arguments and strategies for either type of client might not always be compatible. In general, lawyers, perceived merely as professional advocates for their clients, are perfectly capable of arguing one point in one case involving one client and arguing the opposite point in another case for another client. But the reality can be more complicated. There are certain areas of law, where certain key legal propositions are routinely made by players from one side of recurring legal disputes, while opposing fundamental points will often be made by typical players on the other side. In such areas, law firms tend to choose the type of clients they might act for. For example, in labour law, specialized law firms tend to choose whether they act for management or for unions or employees. In pharmaceutical patent litigation, law firms who routinely represent brand name drug companies would rarely act for generic manufacturers, and vice versa.
It is a matter of public record that York’s outside counsel has also acted on many important files for Re:Sound, the collective that administers the remuneration right under section 19. Re:Sound is Canada’s second largest music copyright collective in terms of revenues, with income of more than $52 million in 2015. While Re:Sound operates under a different regime than Access Copyright, section 68.2(1), on which Access Copyright relied in this case, applies to both. It is not hard to imagine that Re:Sound would not have been thrilled if the Court rejected Access Copyright’s interpretation of section 68.2(1) and held that the holding in CBC v. SODRAC applies to tariffs as well as licenses.
I cannot tell whether any of this may have been a factor in York’s legal strategy and the extent to which it might have influenced the submissions that were and were not made in this case, but questions along these lines are bound to be asked in many conversations. Is it now time for the copyright bar and its clientele to recognize that the field of Copyright Board practice and related court proceedings has grown to resemble labour law, or pharmaceutical patents law, where law firms must choose whether they act for collectives or for users, but not for both, even on different files?
Conclusion
The most important question in Access Copyright v. York University was whether “approved tariffs” can be imposed on users. Access Copyright’s road to victory required it to convince the Court that approved tariffs are indeed mandatory and that the Interim Tariff was an approved tariff. York could have scored a short-term victory by persuading the court that the Interim Tariff couldn’t possibly be an “approved tariff” regardless of whether an approved tariff would be mandatory, but it would have scored a long-term victory if it persuaded the Court that even a final approved tariffs wouldn't be mandatory. After the Supreme Court's judgment in CBC v. SODRAC, the conclusion that Access Copyright's tariffs aren't mandatory should have been low-hanging fruit.
But York chose to bet on the first option. Not only did it fail to convince the Court that the Interim Tariff wasn’t an approved tariff, but by failing to counter any of Access Copyright’s arguments on why approved tariffs are mandatory, it effectively conceded that they are. In losing this battle, then, it looks poised to lose the war.
Nobody can tell how Justice Phelan would have decided this issue if York had made submissions on it. Maybe he would still find Access Copyright’s arguments more compelling. But without even trying to vigorously counter Access Copyright’s submissions on this point, Justice Phelan was predictably bound to agree with Access Copyright.
Access Copyright’s submissions were, however, wrong as a matter of law, and one can only hope that York appeals the decision, not only for its own sake but also for the sake of universities and other educational institutions, faculty, staff and students across Canada. I am confident that if York and whoever may intervene in the appeal provide the Federal Court of Appeal the opportunity of considering all the relevant arguments, the Federal Court of Appeal will correct the trial division’s misguided ruling.
