For the past 13 years, Canadian copyright jurisprudence has followed a consistent trajectory. Starting with the Supreme Court of Canada’s CCH decision in 2004, Canadian courts and tribunals have affirmed the need for balance in copyright and the importance of user’s rights. That approach has been particularly evident in fair dealing cases. Much to the dismay of Access Copyright, from the Supreme Court’s 2012 copyright pentalogy cases (including Alberta v. Access Copyright and SOCAN v. Bell) to the Copyright Board’s rulings on copying in K-12 schools and governments to the Federal Court of Appeal (upholding the Copyright Board’s decisions), the courts have upheld the need for balance and a broad, liberal approach to fair dealing.
Yesterday, however, five years to the day of the release of the Supreme Court’s copyright pentalogy, Access Copyright found a willing taker for its legal arguments. Judge Michael Phelan of the Federal Court of Canada delivered a complete victory for the copyright collective, rejecting York University’s fair dealing approach and concluding that an interim tariff is mandatory and enforceable against the university. The immediate implications of the decision are significant: royalty payments to Access Copyright (that will likely be kept in escrow pending any appeals) and the prospect of other universities re-thinking their current copyright policies. The decision will also have an effect on the copyright review scheduled for later this year. With the court’s decision, there will be little reason to revisit the inclusion of the “education” purpose in fair dealing as it had no discernible impact on the court’s legal analysis.
While Access Copyright is understandably celebrating the outcome, this likely represents only the first step in a longer legal process. As with virtually all significant fair dealing cases, this one is surely headed to the Federal Court of Appeal and possibly the Supreme Court of Canada (Access Copyright would have undoubtedly appealed had the decision gone the other way). In this particular case, there are very strong grounds for appeal. This lengthy post focuses solely on the fair dealing analysis, which frequently diverges or simply ignores Supreme Court jurisprudence (there is important analysis needed on the flawed tariff discussion which also diverts from Supreme Court rulings, but this post is already too long).
The trial judge acknowledges the Supreme Court’s emphasis on user’s rights, but quickly downplays it by restricting the fair dealing analysis. The Supreme Court may have called for a large and liberal interpretation to fair dealing, but the trial judge, fresh off a similarly restrictive approach in United Airlines v. Cooperstock, holds a different view.
At the heart of the fair dealing discussion is the validity of York’s fair dealing guidelines. The Supreme Court in CCH stated the following with respect to fair dealing policies and practices:
is it incumbent on the Law Society to adduce evidence that every patron uses the material provided for in a fair dealing manner or can the Law Society rely on its general practice to establish fair dealing? I conclude that the latter suffices. Section 29 of the Copyright Act states that “[f]air dealing for the purpose of research or private study does not infringe copyright.” The language is general. “Dealing” connotes not individual acts, but a practice or system. This comports with the purpose of the fair dealing exception, which is to ensure that users are not unduly restricted in their ability to use and disseminate copyrighted works. Persons or institutions relying on the s. 29 fair dealing exception need only prove that their own dealings with copyrighted works were for the purpose of research or private study and were fair. They may do this either by showing that their own practices and policies were research-based and fair, or by showing that all individual dealings with the materials were in fact research-based and fair.
The trial judge expands this by stating:
The jurisprudence permits the fairness assessment to be done on the basis of individual dealing as well as on the basis of policies and/or practices (CCH at para 63). As was also made clear in CCH, the fairness assessment looks at the text of the policies, the rationale for the policies, and the practical or real dealing by the users of the owners’ works. Both the Guidelines themselves and the practices under the Guidelines must be fair.
In his general comments on the York fair dealing guidelines, he appears to conclude that they were unfair for reasons that have little to do with the six factor test established by the Supreme Court. The trial judge’s reasoning points to multiple locations for copying (something that also occurs in the Alberta case and seems irrelevant), claims that there was enforcement of policies by librarians in CCH but none at York (as if the Treasurer of the Law Society oversaw copying there), single vs. multiple copies (which the Supreme Court had little trouble concluding was acceptable in Alberta), “ad hoc copying vs. systemic copying”, and the impact on publishers (more on that below).
After the general comments, the trial judge proceeds to engage in a more detailed fair dealing analysis, but it is frequently at odds with Supreme Court jurisprudence. A discussion of the six factors follows below:
i. Purpose of the Dealing
If any of the six factors should have been a slam dunk for York, it is the purpose of the dealing. In Alberta, the Supreme Court addressed the question of whose purpose is relevant, stating:
fair dealing is a “user’s right”, and the relevant perspective when considering whether the dealing is for an allowable purpose under the first stage of CCH is that of the user (CCH, at paras. 48 and 64). This does not mean, however, that the copier’s purpose is irrelevant at the fairness stage. If, as in the “course pack” cases, the copier hides behind the shield of the user’s allowable purpose in order to engage in a separate purpose that tends to make the dealing unfair, that separate purpose will also be relevant to the fairness analysis.
In the case before us, however, there is no such separate purpose on the part of the teacher. Teachers have no ulterior motive when providing copies to students. Nor can teachers be characterized as having the completely separate purpose of “instruction”; they are there to facilitate the students’ research and private study. It seems to me to be axiomatic that most students lack the expertise to find or request the materials required for their own research and private study, and rely on the guidance of their teachers. They study what they are told to study, and the teacher’s purpose in providing copies is to enable the students to have the material they need for the purpose of studying. The teacher/copier therefore shares a symbiotic purpose with the student/user who is engaging in research or private study. Instruction and research/private study are, in the school context, tautological.
The Supreme Court rules that there is no separate purpose for student and teacher. Yet the trial judge opens his analysis by stating:
In this case, there are two users – the university which is assembling material, copying, and distributing the material as the publisher, and the student who is the end user of the material.
It is as if the Supreme Court Alberta decision did not exist. The court was clear: coursepacks are developed by teachers for their students and the copying that occurs is for the purpose of education, research, and private study.
Incredibly, the trial judge finds that York’s purpose was to facilitate student enrolment through reduced costs:
It is evident that York created the Guidelines and operated under them primarily to obtain for free that which they had previously paid for. One may legitimately ask how such “works for free” could be fair if fairness encompasses more than one person’s unilateral benefit. The goal of the dealing was multifaceted. Education was a principal goal, specifically education for end user. But the goal of the dealing was also, from York’s perspective, to keep enrolment up by keeping student costs down and to use whatever savings there may be in other parts of the university’s operation.
In this case, as in Alberta, the trial judge should have found that there is no separate purpose. The fair dealing is the students’ users’ right and the purpose clearly permissible. Further, even if focused on York’s purpose, the characterization of it as cost savings to drive enrolment is hard to square with the Supreme Court’s CCH decision, which was comfortable with the fair dealing of commercial copying on behalf the legal profession.
ii. Character of the Dealing
The character of the dealing involves a quantification of the total amount copied. The trial judge concluded that this was less fair, despite admitting that the data provided by both sides in the case was unreliable.
iii. Amount of the Dealing
The amount of the dealing was clearly the crucial factor for the trial judge. However, his analysis simply does not comport with the Supreme Court caselaw. For example, he states the following with respect to the aggregate amount of copying and the impact of the fair dealing guidelines:
“It is relevant to consider the aggregate volume of copying by all post-secondary institutions that would be allowed if the Guidelines or similar policies were adopted. There is a problem with the current data because of unreported copying. However, when all such institutions were licensed, they produced 120 million exposures of published works per year in printed coursepacks alone.”
Yet the SCC says the opposite with respect to the relevance of the aggregate amount of copying. In Alberta:
as discussed in the companion case SOCAN v. Bell, the “amount” factor is not a quantitative assessment based on aggregate use, it is an examination of the proportion between the excerpted copy and the entire work, not the overall quantity of what is disseminated.
In the SOCAN case:
SOCAN argued, however, that the proportion of the preview in relation to the length of the whole musical work was not the proper measure, and that the Board should have considered instead the aggregate number of previews that are streamed by consumers. Since the evidence showed that each user, on average, listened to 10 previews before purchasing a musical work for download, the overall amount of time spent listening to previews was so large that the dealing was unfair. SOCAN saw this factor as determinative in this case.
There is no doubt that the aggregate quantity of music heard through previews is significant, but SOCAN’s argument conflicts with the Court’s statement in CCH that “amount” means the “quantity of the work taken” (para. 56). Since fair dealing is a “user’s” right, the “amount of the dealing” factor should be assessed based on the individual use, not the amount of the dealing in the aggregate. The appropriate measure under this factor is therefore, as the Board noted, the proportion of the excerpt used in relation to the whole work. That, it seems to me, is consistent with the Court’s approach in CCH, where it considered the Great Library’s dealings by looking at its practices as they related to specific works requested by individual patrons, not at the total number of patrons or pages requested. The “amount of the dealing” factor should therefore be assessed by looking at how each dealing occurs on an individual level, not on the aggregate use.
Moreover, the trial judge rather remarkably almost entirely discounts the millions of dollars spent by the university on licensing and permissions in considering the amount of the copying. He states:
York has argued that because it has separate licences and permissions, the amount of copying at issue is reduced. However, York has conceded that its evidence on licensing information is inaccurate and its ability to marry up copies with the relevant licence or permission is impossible to rely upon.
The judge engaged in no such analysis of the Access Copyright repertoire, which is suspect given the recent Copyright Board of Canada decision that questioned the repertoire. Yet even beyond the issue of the Access Copyright repertoire, the reasonableness of the guidelines should surely have considered the massive amount of licensed content and the ready availability of openly licensed content. The judge’s conclusion seem to suggest that even when the copying is expressly permitted without the need for a licence – for example, open access materials – that that permitted copying somehow does not count. Since the Access Copyright licence only applies where other licences, permissions or exceptions do not, that cannot be correct.
The trial judge was also taken by the possibility of copying multiple chapters out of the same book. For example, he states:
referring in argument and questioning to Margaret MacMillan’s superb book Paris 1919: Six Months That Changed the World, numerous chapters could individually be segregated for use in different courses, effectively eviscerating the copyright protection on the book.
The trial judge again mistakes who benefits from the copying under fair dealing. It is the student copying one chapter, not the institution copying multiple chapters on behalf of many students. Further, the trial judge is bothered that:
To the consideration of this form of overcoming copyright must be added the matter of compound copying as demonstrated by Access. Not only are the works copied in whole, but they are also copied multiple times.
Yet the Supreme Court left no doubt: “teachers do not make multiple copies of the class set for their own use, they make them for the use of the students.” Each student is entitled to exercise their fair dealing rights, which are lost under the trial judge’s interpretation of fair dealing.
The trial judge argues that the unfairness is exacerbated by the lack of compliance monitoring:
The unfairness evident in this part of the six-factor exercise is compounded by the absence of any meaningful control over the portions of publications copied or any monitoring of compliance, be it pre- or post-copying, which also serves to render the thresholds largely meaningless.
But in the CCH case the Supreme Court ruled that:
a person does not authorize copyright infringement by authorizing the mere use of equipment (such as photocopiers) that could be used to infringe copyright. In fact, courts should presume that a person who authorizes an activity does so only so far as it is in accordance with the law. Although the Court of Appeal assumed that the photocopiers were being used to infringe copyright, I think it is equally plausible that the patrons using the machines were doing so in a lawful manner.
While the CCH discussion involves the availability of photocopiers, the rationale applies in similar fashion. The Supreme Court has never injected a control or monitoring requirement in order to qualify for fair dealing, something that the trial judge seems to do here.
Finally, the trial judge puzzlingly states that “some consideration is to be given to the importance of the work” as part of the amount of the dealing. He proceeds to conclude that a single chapter is significant to the work. Yet the “nature of the work” fair dealing factor already considers this issue and the overlap into amount is inconsistent with the test established by the Supreme Court.
iv. Alternatives to the Dealing
Given that the Supreme Court of Canada has ruled that neither the availability of a licence nor the prospect of buying books for every student of every copied work is a realistic alternative, this factor should have easily sided toward fairness. Indeed, the trial judge admits that it should favour York:
While as a general principle this factor favours York and its asserted fairness, the level of fairness is diminished because York has not actively engaged in the consideration or use of alternatives which exist or are in development.
Yet the trial judge downplays the factor by pointing to other alternatives such as licensing chapter or purchasing more books. In other words, after stating that the Supreme Court had ruled that licenses and book purchases are not realistic alternatives, the trial judge argues that not pursuing those alternatives (as well as ones that do not even exist) lessens the fairness of the dealing.
v. Nature of the Work
The nature of the work speaks to its value and importance and whether it should be widely disseminated. The trial judge emphasizes the value of the works and dismisses the role that fair dealing guidelines play in increasing their dissemination. For the trial judge, fair dealing guidelines are not about dissemination:
The Guidelines are not established to motivate dissemination. There is no evidence that these professional writers and publishers need the Guidelines to assist in the dissemination of their works. Dissemination may improve because under the Guidelines the works are free, but the same can be said of any goods or services that are provided for free.
The Supreme Court ruled in CCH that wider public dissemination is one of the goals of copyright law. Yet the trial judge seemingly rejects the role that fair dealing can play in dissemination of works, counter to the copyright balance articulated by Canada’s highest court.
vi. Effect of the Dealing on the Work
The effect of the dealing on the work examines the economic impact of the copying. The Supreme Court has been careful to require actual evidence in order to reach a finding on the factor. In CCH it found that no evidence had been tendered:
Another consideration is that no evidence was tendered to show that the market for the publishers’ works had decreased as a result of these copies having been made. Although the burden of proving fair dealing lies with the Law Society, it lacked access to evidence about the effect of the dealing on the publishers’ markets.
In Alberta, the Supreme Court’s discussion on the same issue:
Access Copyright pointed out that textbook sales had shrunk over 30 percent in 20 years. However, as noted by the Coalition, there was no evidence that this decline was linked to photocopying done by teachers. Moreover, it noted that there were several other factors that were likely to have contributed to the decline in sales, such as the adoption of semester teaching, a decrease in registrations, the longer lifespan of textbooks, increased use of the Internet and other electronic tools, and more resource-based learning...
In CCH, the Court concluded that since no evidence had been tendered by the publishers of legal works to show that the market for the works had decreased as a result of the copies made by the Great Library, the detrimental impact had not been demonstrated. Similarly, other than the bald fact of a decline in sales over 20 years, there is no evidence from Access Copyright demonstrating any link between photocopying short excerpts and the decline in textbook sales.
The limited evidence in this case is apparent from the trial judge’s discussion of the expert evidence. Access Copyright’s own expert (drawing from the PWC report that contains a limitation warning that “we provide no opinion, attestation or other form of assurance with respect to the results of this Assessment” and which admits that “substantial qualitative data regarding the majority of the economic impacts is not yet available”) identified the following factors at work:
The educational publishing industry has historically been large and profitable, but revenues and margins are facing increasing pressure from alternative sources of content.
– The options available for students to obtain materials have increased. Students may buy used, rent or borrow textbooks, purchase electronic versions, or download materials legally and illegally. Students have reduced their total spending on course materials.
– The transition to a digital marketplace presents challenges and opportunities. New participants are interrupting a mature industry which previously enjoyed high barriers to entry.
– Guidance on fair dealing in key court decisions in 2012 led to the development of a series of fair dealing guidelines.
Yet despite the limited evidence and the Supreme Court jurisprudence, the trial judge states:
I agree with Access that in considering the “effect of the dealing” as part of the Court’s overall assessment of fairness, the Court should consider all actual and likely impacts on all original content contributors
Considering “likely” impacts is precisely what the Supreme Court has declined to do. The trial judge ventures beyond actual evidence of harm to “likely” impacts, which is not consistent with prior jurisprudence.
In fact, it would appear that there is only one metric that matters for the trial judge:
under the prior circumstances, the creators and publishers were paid. The loss of revenue to Access is an appropriate surrogate for the nature and quantity of copying and for the negative impacts.
In other words, all the evidence of a changing industry, open access, hundreds of millions on licensing, and transactional licenses do not matter. What matters to the trial judge is that Access Copyright, one of many intermediaries for authors, is generating less revenue. That conclusion is a striking rejection of the Supreme Court’s careful approach to economic evidence in fair dealing cases.
What Comes Next?
As noted above, the case is likely to be appealed as the trial judge’s analysis of fair dealing is inconsistent with Supreme Court of Canada jurisprudence. The Supreme Court’s emphasis on copyright balance, user’s rights, and a large and liberal interpretation to fair dealing, are largely missing from the ruling. In its place, the trial judge injects claims of boosting enrolment as York’s purpose of copying, cites aggregate copying for the amount of the dealing, and relies on “likely” impact for the effect of the copying on the work. None of these positions reflect Canadian copyright law as articulated in the leading decisions.
In addition to an appeal, the case should also have a significant impact on the copyright review scheduled for later this year. The inclusion of “education” as a fair dealing purpose played little role in this decision and with the case likely before the courts, the government has no reason to intervene with premature and unnecessary legislative reforms.