York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32– Intellectual property — Copyright — Tariffs

On appeal from a judgment of the Federal Court of Appeal (2020 FCA 77) setting aside in part a decision of Phelan J. (2017 FC 669).

Access Copyright (“Access”) is a collective society who licences and administers reproduction rights in published literary works on behalf of creators and publishers. From 1994 to 2010, a licence agreement permitted professors at York University (“York”) to make copies of published works in Access’s repertoire and set the applicable royalties. As licence renewal negotiations were underway, the relationship between Access and York deteriorated, resulting in Access filing a proposed tariff with the Copyright Board for post‑secondary educational institutions. Unsure that it would be able to reach an agreement with York before the expiry of its licence, Access applied to the Board for certification of a tariff on an interim basis, generally matching the pre‑existing licence agreement, to operate until the Board approved a final tariff. The Board granted Access’s request for an interim tariff. York initially paid the approved royalties, but eventually informed Access that it would not continue as a licensee.

Access sought enforcement of the interim tariff in the Federal Court, and York counterclaimed for a declaration that any copying conducted within its fair dealing guidelines was protected by fair dealing rights under the Copyright Act. The trial judge found that the interim tariff was enforceable against York and that neither its guidelines nor its actual practices constituted fair dealing. The Federal Court of Appeal allowed York’s appeal on the tariff enforcement action, holding that Board approved tariffs are voluntary for users, but dismissed its appeal on the fair dealing counterclaim. Access appeals to the Court on the tariff issue, and York appeals from the dismissal of its fair dealing counterclaim.

Held (9-0): The appeals should be dismissed.

The tariff is not enforceable against York. Section 68.2(1) of the Copyright Act does not empower Access to enforce royalty payments set out in a Board approved tariff pursuant to s. 70.15 against a user who chooses not to be bound by a licence on the approved terms. Section 68.2(1) does not provide a collective infringement remedy. A collective society is required to provide licences pursuant to the terms of an approved tariff, but the licence cannot be forced on a user. A user is entitled to obtain its rights through other means and, if the user makes an unauthorized use, the appropriate remedy is an action for infringement. While Access’s inability to initiate infringement actions as a non‑exclusive licensee may cause it difficulties, this is the consequence of its freely chosen contractual arrangements with its members.

The text, legislative context, purpose and supporting jurisprudence confirm this interpretation. As a collective society that administers a licensing scheme in respect of reproduction rights applicable to its repertoire of published works, Access operates within the Copyright Act’s general regime for collective administration (ss. 70.1 to 70.6). Once a tariff is approved under s. 70.15(1), the resulting legal consequences are established by ss. 70.15(2) and 70.17. Section 70.15(2) says that s. 68.2(1), which is found in the Copyright Act’s separate regime for the collective administration of performing rights and communication rights, applies “with such modifications as the circumstances require”. Section 68.2 provides that 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. Section 70.17 states that “no proceedings may be brought for the infringement of a right . . . against a person who has paid or offered to pay the royalties specified in an approved tariff”.

The text of s. 68.2(1) is silent on who the collective society may collect royalties from and on what conditions. Where Parliament sees fit to create a mandatory duty to pay, it generally does so with clear and distinct legal authority showing that this was its intent. There is no such language creating a duty to pay approved royalties to a collective society that operates a licensing scheme anywhere in the Copyright Act. Concluding otherwise would read words into the provision that are not found anywhere in the text of the Copyright Act.

With respect to the legislative context, the combined effect of ss. 68.2(1) and 70.17 creates a dichotomy between users who choose to be licensed pursuant to the terms of a Board approved tariff, and those who choose not to acquire a licence. Copyright infringement constitutes an unauthorized exercise of the owner’s exclusive right and a licence constitutes an authorization to make a particular use that would otherwise be infringing. It is therefore elementary that a person cannot simultaneously be an infringer and a licensee. A person who has paid or offered to pay the royalties under s. 70.17 has become a licensee and may accordingly be liable for defaulted payments under s. 68.2(1). But a person who has not paid or offered to pay is not licensed and may only be liable for infringement. Section 68.2(1) thus ensures that a collective society has a remedy for defaulted payments from voluntary licensees and that actions for recovery can be brought in Federal Court.

The object of the statutory scheme governing collective administration is the protection of users, and this purpose has persisted through various amendments to the Copyright Act. The first regime regulating any form of collective society in Canada was created in response to the emergence of early performing rights societies who had acquired control of the vast majority of “popular musical” compositions. Regulating collective societies was deemed necessary by Parliament and was done by vesting the Board with price‑setting powers to protect users from the potentially unfair exertion of the new societies’ market power. Though an approved statement of royalties put a cap on what the societies could charge for a licence, it did not bind an unwilling user to the terms of a licence. Empowering a society to foist a licence on an unwilling user would be discordant with the protective purpose of the regime. Users are therefore entitled to choose whether or not to accept a licence on Board‑approved terms.

It would be inappropriate to entertain York’s request for declaratory relief in these proceedings. In light of the conclusion that the interim tariff is not mandatory and is therefore unenforceable against York, there is no live dispute between the parties. This is not an action for infringement, since Access has no standing to bring such an action. Furthermore, the copyright owners who do have standing are not parties to these proceedings and have not had the opportunity to advance arguments about the impact of York’s activities on their copyrighted works. Assessing fair dealing guidelines in the absence of a genuine dispute between proper parties would anchor the analysis in aggregate findings and general assumptions without a connection to specific instances of works being copied.

However, the reasoning of the Federal Court and Federal Court of Appeal on the fair dealing issue is not endorsed. It is well‑established that the party invoking fair dealing must prove first that the dealing was for an allowable purpose and, second, that it was fair. Six non‑exhaustive factors provide a framework for assessing fairness, which is ultimately a question of fact: the purpose of the dealing; the character of the dealing; the amount of the dealing; alternatives to the dealing; the nature of the work; and the effect of the dealing on the work. At the second step, the Federal Court and Federal Court of Appeal approached the analysis from an institutional perspective only, leaving out the perspective of the students who use the materials. This error tainted the analysis of several fairness factors. The purpose of copying conducted by university teachers for student use is for the student’s education. Funds saved by proper exercise of the fair dealing right go to this core objective, and not to some ulterior commercial purpose. Ultimately, the question in a case involving a university’s fair dealing practices is whether those practices actualize the students’ right to receive course material for educational purposes in a fair manner, consistent with the underlying balance between users’ rights and creators’ rights in the Copyright Act. In the present case, by focusing on the institutional nature of the copying, the nature of fair dealing as a user’s right was overlooked and the fairness assessment was over before it began.

Reasons for judgment: Abella J. (Wagner C.J. and Moldaver, Karakatsanis, Côté, Brown, Rowe, Martin and Kasirer JJ. concurring)

Neutral Citation: 2021 SCC 32

Docket Number: 39222