On May 22, 2015, the Copyright Board finally issued its long-awaited decision in relation to Access Copyright's proposed Provincial and Territorial Governments Tariffs for the years 2005 to 2014.  The Board's decision establishes the tariff rates payable by these governments for the right to reproduce published works (such as books, newspapers and periodicals).

This decision is a complete victory for the provincial and territorial governments.

For the 2005-2009 and 2010-2014 tariff periods, respectively, Access Copyright originally asked to be paid $15 and $24 per employee, per year, and eventually reduced its requests to $5.56 and $8.45.  The governments, on the other hand, argued that they should only be required to pay between 1¢ and 73¢.  In the end, the Copyright Board agreed with the governments and approved rates of 11.56¢ and 49.71¢.

The Board's thorough decision also addresses several fundamental copyright law issues which will have far-reaching implications.

A Tremendous Loss for Access Copyright

While Access Copyright proposed rates that would have generated close to $25 million over the course of the ten years covered by the tariff, the rates actually certified by the Board will result in a total payment for this entire period of only about $370,000.  This amount is unlikely to cover more than a fraction of Access Copyright's expenses for participating in the Board's hearing, let alone to recover whatever royalties it may have expected from the decision.

This result can only be described as a devastating defeat for Access Copyright and its author and book publisher affiliates.  This is why Access Copyright immediately announced after the release of the decision that it was "deeply concerned" that the Board had only set a "nominal rate" and that it was, accordingly, "assessing all appeal options".  Presumably, by this, Access Copyright is seriously considering a judicial review application to the Federal Court of Appeal in which it would argue that the Board has committed various errors of law in reaching its decision.  If Access Copyright were to do so, it would need to file with the Court by June 22.

This Decision Will Have Far-Reaching Implications

Regardless of the rates that the Board has approved - which would normally only be of interest to the governments that are required to pay them - the importance of this decision relates to the legal and factual issues addressed by the Board in reaching its final result.  At 147 pages in length, this decision is arguably the longest and most highly reasoned decision the Board has ever issued in its entire 26 year history.  In this regard, it can easily be described as a landmark decision that will have ramifications on subsequent Board proceedings involving different collectives and parties well into the future. 

Moreover, because of the extreme care that the Board has obviously taken in reaching its conclusions, and for which the parties have been patiently waiting for over two and a half years, it may well be very difficult for Access Copyright to identify any legal vulnerability that would justify the intervention of the Federal Court of Appeal.  This is particularly the case since the Court normally shows some deference to the decisions of specialized tribunals, such as the Copyright Board, and will only overturn a Board decision if it believes the Board made a clear error of law.  This is obviously an outcome that the Board has made every effort to avoid given the length to which it has gone to explain and justify every element of its reasoning and analysis in reaching the certified 11.56¢ and 49.71¢ tariff rates.

Fair Dealing

One of the most important legal issues dealt with by the Board in its decision relates to the scope of the fair dealing exception contained in section 29 of the Copyright Act.  This is because the extent to which copyright "users" can rely on this exception has been the focus of three decisions issued by Supreme Court of Canada in recent years, CCH Canadian Ltd. v. Law Society of Upper Canada (2004), Alberta v. Access Copyright (2012) and SOCAN v. Bell Canada (2012).  Even though the Supreme Court has repeatedly dealt with the fair dealing issue, how it operates in the context of the copying of published works on an institutional level, such as the case of governments or educational institutions, has been the continuing subject of vigorous debate.

In its May 22 decision, however, the Board held that, in accordance with the Supreme Court's decisions, fair dealing was a user's right and should therefore be given a large and liberal interpretation.  In performing its analysis relating to this issue, the Board carefully looked at each of the six fair dealing factors recognized in the Supreme Court's CCH decision in relation to each copying event that had been identified in a survey that had been conducted of various government copying activities, and assessed whether, in each particular case, the dealing could be considered fair or not.  When all was said and done, this analysis generally favoured the governments' approach to fair dealing. 

The exercise that the Board went through with respect to the fair dealing exception will have important implications on similar fair dealing claims made by K-12 schools and post-secondary educational institutions in Canada.  In both these cases, the schools and educational institutions have developed so-called Fair Dealing Guidelines that establish the limits of permitted copying in relation to which they argue they should be entitled in accordance with the Supreme Court's decisions, especially its 2012 decision in Alberta v. Access Copyright

These arguments were made before the Board in another tariff proceeding brought by Access Copyright with respect to proposed tariff rates payable by K-12 schools during the 2010-2015 tariff period, which was heard by the Board in September, 2014.  In addition, Access Copyright has initiated litigation before the Federal Court against York University alleging copyright infringement for copying done further to the university's fair dealing policies.  In this overall context, the Board's analysis of the six fair dealing factors in relation to the individual copying events that were identified in the government survey will be of great relevance in future Board and court proceedings.

Insubstantial Copying: What is Worth Copying Isn't Necessarily Worth Protecting

The Board also dealt with the important issue of "insubstantial copying".  Section 3 of the Copyright Act only accords copyright protection to any use of a "substantial part" of a protected work.  This means that any use of a portion of a work that can be described as insubstantial does not infringe copyright.  If only an insubstantial portion is used, the use does not infringe copyright and there is no need to look at whether any other users' rights, such as fair dealing, apply.

At the Board's hearing in 2012, Access Copyright argued that any copying of materials forming part of its repertoire constituted the copying of a substantial portion according to a qualitative analysis.  Further to this approach, the copying of any protected works, regardless of the number of pages copied, was substantial because the user had chosen those pages as being more important than the pages that had not been selected.  This argument can be boiled down to "what is worth copying is worth protecting."  The problem with the logic of this argument is, of course, that it represents a true Catch-22 situation in which all copying events, no matter how trivial, are substantial for the sole reason that they are made.

In its decision, the Board consequently rejected Access Copyright's arguments relating to insubstantial copying.  Instead, the Board decided that, in this case, it would consider any copying of 2.5% or less of a work to be insubstantial.

The Board appreciated the danger of creating a strict "bright line" test for copying in relation to such a subjective factor as to what is, and is not, a substantial part of a protected work.  However, the Board did not have sufficient qualitative evidence to apply to any of the copying events identified in the government survey so, in this particular case, it applied a purely quantitative approach.  The Board recognized that substantiality should preferably be assessed on an individual, qualitative basis but, in a tariff proceeding such as this, the Board held that it was appropriate for it to use generalized rules to look at the absolute number of pages copied.  This determination will very likely have an important influence on future Board proceedings in which individual uses cannot be measured in a qualitative manner.  It could also have an effect in copyright infringement proceedings in which a large number of individual uses are at issue.

Repertoire Issues

In its decision, the Board also had to address Access Copyright's claim that its repertoire consists of all eligible published works and related digital copies.  Access Copyright has consistently made this argument even though it does not have a direct contractual relationship with many of the rightsholders it purports to represent.  The Board, however, rejected this claim, as well as Access Copyright's position that an agency relationship could be inferred by the mere fact that unaffiliated rightsholders usually cash the royalty cheques it sends them when it finds that their works have been copied.

The Board was especially critical of Access Copyright's claim in relation to its supposed ability to license digital copying.  The Board found that Access Copyright did not have formal agreements in place that would have allowed it to do so.  In other words, Access Copyright's repertoire was much more limited than it claimed. 

Conclusion

This decision constitutes a complete rejection of many of the legal arguments that have been advanced by Access Copyright in its dealings with its licensees over the years, whether they be governments or educational institutions.  Moreover, this proceeding has allowed the Copyright Board to address many of the disputed issues that have separated the various copyright collectives and the respective users of their repertoires.  From this perspective alone, it is an extremely important contribution to the relationship that should hopefully come to exist between copyright creators and users in Canada.  The time and effort that was invested in this proceeding may ultimately provide a positive outcome for the future if this increased clarity means that collectives and users are now more likely to negotiate tariff agreements on the basis of clearly understood legal principles.

The authors, J. Aidan O'Neill and Ariel Thomas, were co-counsel, along with Wanda Noel and Jordan Snel, who together acted on behalf of the Consortium of provincial and territorial governments in this proceeding.