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Why the Supreme Court's Copyright Decisions Eviscerate Access Copyright's Business Model

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Tuesday July 17, 2012
The implications of last week's Supreme Court of Canada copyright decisions seem readily apparent to just about everybody - other than Access Copyright. There have been numerous posts analyzing the decisions (here, here, here, and here), all of which recognize the expansion of fair dealing (my posts on fair dealing as fair use and on technological neutrality). Yet in a release posted hours after losing at Canada's highest court, the copyright collective implausibly claimed that the decision "will have a limited impact on the importance of the Access Copyright licence to the education community" and that it "leaves copyright licensing in the education sector alive and well." To support the claim, Executive Director Maureen Cavan argued that the specific case only covered about seven percent of the copying done in K-12 schools. The Access Copyright claims were echoed in a release from The Writers' Union of Canada.

The reaction was reminiscent of the last time Access Copyright lost big at the Supreme Court. Immediately after the CCH decision was issued in 2004, Access Copyright's release stated that "this ruling does not change the fact that most copying of copyright protected works does not fall under fair dealing. The Supreme Court stated definitively that copyright does exist in original works, and that is why organizations must sign an Access Copyright licence or risk breaking the law."

The strategy of claiming that little has changed may have worked with some institutions after CCH, but it is very unlikely to do so this time. It is true that the specific case involved a small percentage of overall K-12 school copying, but the court's fair dealing analysis applies to all copying, not just the copies at issue. In this specific case, the court ruled the Copyright Board's analysis of the fair dealing six factor test was unreasonable, an unmistakable signal to reverse its ruling. More broadly, the decision eviscerates the current Access Copyright business model that is heavily reliant on educational revenues. The decision does not create a free-for-all - schools will continue to spend hundreds of millions of dollars every year on books, database licences, and transactional licences - but the need for an additional Access Copyright licence for schools at all levels is now unquestionably in doubt.

Just how badly did Access Copyright fare at the Supreme Court?

One measure is to consider the key issues raised by the litigants. The chart below highlights the major issues raised by Access Copyright in its factum to the court and the ultimate decision by the majority. The Supreme Court rejected Access Copyright's arguments on every one: the role of user rights, the perspective of the copier (teacher or student), the meaning of private study, and whether copying is considered from an aggregate perspective or individual copies. Moreover, a unanimous court dismissed claims of economic harm from the copying (with echoes of the recent Georgia State University fair use decision) and in the SOCAN v. Bell Canada decision also offered an exceptionally expansive approach to research under fair dealing.

Issue
Access Copyright Factum
Supreme Court Majority Decision
User Rights
In CCH this Court raised expectations when it held that fair dealing is a "user's right". Those raised expectations have led users like the appellants to ask that the right be clarified and made more predictable. However, this should not come at the expense of
upsetting the balance between users' and creators' rights under the Act. In the final analysis, fair dealing is based on considerations of what is fair. That determination should not be sacrificed in the interest of predictability, by replacing a fact-based enquiry with arbitrary rules regarding the fairness of the purpose and the amount of the dealing.
CCH confirmed that users’ rights are an essential part of furthering the public interest objectives of the Copyright Act. One of the tools employed to achieve the proper balance between protection and access in the Act is the concept of fair dealing, which allows users to engage in some activities that might otherwise amount to copyright infringement. In order to maintain the proper balance between these interests, the fair dealing provision "must not be interpreted restrictively" [SOCAN v. Bell Canada]
Copier Perspective
Notwithstanding CCH, the appellants argue that the Board's fact-based approach to determining fairness was incorrect. With respect to the purpose of the dealing, they state, "[r]ather than trying to determine dominant and subordinate purposes, the dealing should be examined from the perspective of the consumer of the copy". The appellants' assertion is unsupported in law and flies in the face of CCH. 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.
Private Study
Even if we were to consider the student's purpose for using the copied works, it could not be characterized as "private study" in the present case. "Private study" means one's own study, just as "private copying" in Part VIII of the Act means copying by oneself, for oneself. Although it is possible for a student to be engaged in private study in a public place, this is not what occurs when a group of students is directed by a teacher to read from the same page. In such a case the students may be "learning", but they are not engaged in "private study" which is an activity conducted on one's own.
With respect, the word "private" in "private study" should not be understood as requiring users to view copyrighted works in splendid isolation. Studying and learning are essentially personal endeavours, whether they are engaged in with others or in solitude. By focusing on the geography of classroom instruction rather than on the concept of studying, the Board again artificially separated the teachers’ instruction from the students’ studying.
Aggregate Copying vs. Individual Copies
there is no sound reason for assessing the fairness of the amount of a dealing on an individual basis only. Such a perspective misses the reality of what occurs in an institutional setting and cannot lead to a proper factual assessment of what is fair
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.

Alternatively, consider the decision's effect on fair dealing in the education sector. It is now clear that all copying within Canadian schools (K-12 and post-secondary) qualifies under the first stage purposes test. Given the very broad approach to research (any personal interest) and private study (treated as personal study) as well as the addition of education as a purpose in Bill C-11, all copying within the education system will pass this step (I would argue that virtually all copying now meets the first stage purposes test given the low threshold and broad interpretation of the purposes).

This means that all educational copying is eligible to be examined under the six factor fairness test. In addition to the court's emphasis on users' rights, its analysis strongly favoured an education orientation for the majority of the six factors:
  • purpose of the dealing now clearly favours education as the court concluded (1) that research is extremely broad; (2) that instruction is covered by research and private study; and (3) that teachers share a symbiotic purpose with students.
  • amount of the dealing must be assessed based on the proportion between the excerpted copy and the entire work, not the overall quantity of what is disseminated. The overall quantity of copying has long been a major Access Copyright argument (it is even raised again in response to media coverage of the decision), but the court ruled it is not relevant in considering the amount of the dealing.
  • alternatives to the dealing also favour education since the court concluded that buying books for every excerpt for every student is not a realistic alternative. The court already ruled in CCH that the availability of a licence is not relevant to deciding whether a dealing is fair.
  • effect of the dealing on the work also sided with education as a unanimous court said there was no evidence linking textbook sales declines to teacher copying.

Two other factors were not discussed by the majority in the Access Copyright case. The character of the dealing might favour Access Copyright if there is widespread copying of the particular work, but the nature of the dealing, which examines whether the work is one which should be widely disseminated, is likely to favour education.

The cumulative effect is clear: schools can rely more heavily on fair dealing for the copying that takes place on campus and in the classroom. This includes copies made by teachers for students for instructional purposes, copies that previously formed a core part of Access Copyright's claim of the necessity of a licence. Indeed, it will be very difficult for educational institutions to justify the Access Copyright licence in light of this decision. This is not to say that entire books will be copied without compensation. They clearly won't since that copying would likely fail on most of the factors of the six factor test. However, for shorter excerpts - CCH said as much as a full article or chapter in a book - this copying will benefit from a strong fair dealing argument. Since the Access Copyright - AUCC model licence only covers up to ten percent of a print work, the licence largely duplicates fair dealing and is likely to be viewed by educational institutions as unnecessary.
Comments (25)add comment

Mike said:

...
Couple of things about this that trouble me. First, if this is correct, then Canada will be the only country in the developed world where collective copyright licensing is not allowed because of how the courts interpret the legislation. This is despite very clear provisions in the Copyright Act relating to licensing of educational institutions. And that leads to the second concern, which is that as this outcome clearly runs counter to the government's intentions (as expressed in the legislation and in the departmental backgrounders) I don't think we can discount the possibility of some intervention at the federal level. This is all the more likely given the embarrassingly awful quality of Justice Abella's decision. The class act was Justice Rothstein's minority decision, in which among other things he pointed out that the courts really don't have the option of "stripping" any meaning from words in a statute. I suspect there's another shoe to fall here.
July 17, 2012

Ki said:

...
Seems like someone needs a new business model. Should be interesting to see if they do that or continue to try and use an old one (like all companies/collectives seem to be doing these days).
July 17, 2012

crockett said:

...
So what does this mean for the few major universities (UofT etc.) that prematurely signed the AUCC/AC deal? Will they be passing on these redundant costs to the students, or more likely have to absorb them internally as student councils see they have little value.
July 17, 2012

Ray Saintonge said:

...
It will be interesting to see the extent to which institutions that have signed with Access Copyright will be contractually bound.

@Mike: Yes the government could make changes that nullify some effects of these decisions, but how willing is it to pick up this hot potato. A decade ago changes to the Copyright Act would have barely raised a yawn. The online community has since become sensitized to such issues, and is willing to become engaged in them. This should at least cause the Harper Government reason to pause before going ahead with legislation.
July 17, 2012

Joel said:

Jim
Just wondering if you comment was a statement or a rebuttal. It sounds like a statement repeating what pat said, only pat was saying that it's a deplorable practice.

I agree, copyright must exist for proper artist compensation, however it can not exist at the detriment of the population. I.E. Education.

In other words, if the country is gone bankrupt by low or poor education levels due to the cost associated to educating it's people, then you can be assured the first thing these people will cut back on is their art and leisure expenses.
July 17, 2012

Fred said:

...
I can't find anything in the decision about post-secondary, and much of what Abella says about school instruction arguably doesn't apply to universities. And a high proportion of K-12 copying wasn't addressed by the court. So the likely outcome is at least one more court case and probably two.
July 17, 2012

Crockett said:

...
Fred, I think you best read it again. It applies to the *category* of education which certainly includes universities.
July 17, 2012

Doug said:

Will copyright lobby want donations back?
Will the copyright lobby want all those political donations back? After all this eviscerates much of the worst of the industry. The very people who paid the most to government have lost the most here. Will the entertainment industry try to buy the Supreme Court too? Even though they cry about a lot of spilled milk, they have a lot more milk to spill!
July 18, 2012

George Pajari said:

At what point do textbook authors stop writing?
Joel writes "copyright must exist for proper artist compensation, however it can not exist at the detriment of the population. I.E. Education."

Do textbook authors also deserve compensation, or does their right to eat get sacrificed to the greater good of Education [sic]?

I appreciate that the copying of entire textbook is not permitted, but in many subject areas there are dozens of possible texts -- for example, I could easily teach a first-year calculus course with chapter 1 copied from book A, chapter 2 from book B, never copying more than a chapter from any text and yet putting together an entire textbook.

Unlikely to happen (and such a blatant example would probably offend any court asked to rule) but you get my point. As the right to copy textbooks is radically expanded, the already paltry returns on writing said books is likely to be further eroded. And speaking from experience, writing a book is not my first choice of ways to pass time enjoyably.
July 18, 2012

Fred said:

@Crockett
It doesn't. It zeroes in on primary and secondary students, the nature of K-12 classrooms and the "symbiotic" relationship between teacher and student. There is a fairly clear implication that K-12 is special because the kids can't figure out for themselves what they need to know. I don't read this as automatically saying that the outcome would be the same for post-secondary and especially not for coursepacks where there is a clearer link between these and buying textbooks. My guess is this will be litigated, and also that the feds will look very closely at a court decision that also eviscerates their copyright policy. You might also want to look at Professor Gervais' blog post where he points out that collectives like AC have certain roles in the Copyright Act that they can't realistixcally undertake if they are out of business.
July 18, 2012

Crockett said:

...
Fred, you are likely correct that there are a few more court cases ahead. Law is marriage of details and interpretation, yet the takeaway from the SCC rulings and the education category in C-11 seems to me to be retooling the (and I hate to use the word again) balance of copyright back from the maximal stance it has enjoyed. The clawback of double dipping for instance on a downloaded song is a good example. The stiff interpretation of the statute wording might allow it, but it made no sense to consumers to pay an extra fee for an item that is much cheaper to produce than an equivalent costly physical inventory item. If the creators want more value for their work then they should turn away from low return contracts and employ new technological empowering opportunities.

George, students will still have need of textbooks but they will also have access to new information technologies. Those data sources may be free or paid so there will still be some earning a living in that regard. The ones here suffereing the larger impact I think are not the writers so much as the publishers. It is always unfortunate for some when an industry is impacted negatively by technology, yet it would be ridiculous to say technological progress has, on the whole, been bad. Will there be a downside to this in terms of variety in the short term? I expect so, but as Wikipedia has shown us there is a part of the human spirit to impart and share knowledge, its not all about business models, profits or careers.

It is obvious that I am a proponent for an open internet, yet I don't completely buy into the 'free' tag that often goes along with it. I do believe that progress and innovation inherently is both creative & destructive and those in the latter category are going to understandably oppose it. The choice comes to either embrace change or be consumed by it.
July 18, 2012

Danux said:

Textbooks and Market Supply
@George Pajari - If technology has changed a market significantly enough that it is no longer profitable to engage in that market as a private company, then that market niche fades away. But, I would say that instructional text is a necessary component of the economy, therefore a crown-based solution seems like an appropriate "Canadian" response to the problem.

In the past, we have used crown corporations to initiate necessary market niches, and handed them over to the private sector when the niche became self-sustaining; it seems reasonable that a necessary market which has become unsustainable, due to technological advances, be continually supplied using a similar, established method.

This circumstance, to me, is indicative of the fundamental role that information is taking in society; I personally include a system of unfettered information exchange as a new, additional keystone of national sovereignty, and a supply of instructional text, I think, falls within that framework. As information flow increases, it becomes less profitable, and less likely to be supplied by private interests. In this context, Canadians have to determine what kind of information is necessary to us, and what kinds are mere luxuries which can be left to find their own way in a demand-based market.

I think it's important to touch on the method of compensation, for works issued under this premise. Authors of such work, in my opinion, should be compensated as most other workers are : a straight wage, either as an employee of the state, or as a contract worker. A crown-issued text, funded by taxpayers, used freely in learning institutions, should have no strings attached to it. This text could be produced by the state, or a contracted 1-time purchase of a finished product by a publishing house which has no claim to compensation once the work is produced & purchased (basically, a tender for a stand-alone work purchased from the lowest bidder by the government).

OTOH, I see no reason why the various universities can't come together and produce their own electronic instructional texts, to be shared between themselves - it is their *business*, after all. If each university began producing & maintaining works based on their own specialty, and distributed them freely between themselves, there would be no copyright issues to cope with. Once the initial text was produced, they would only endure the expense of maintaining the text from that point on. But perhaps I don't understand the scope of what I propose.
July 18, 2012

Fred said:

@Danux
So...the glorious outcome of the SCC smashing Access Copyright is state-sponsored textbooks? I think it's what they deserve.
July 18, 2012

Danux said:

Crown Funding
@Fred - Well, it's just one possible direction. The education "industry" seems capable of supplying its own tools, from where I sit. Frankly, if the only choices available were state-sponsored instructional material, or pervasive surveillance to enforce copyright law of corporate material, I favour the former. Perhaps a better solution would surface after a few years of necessary government meddling.
July 18, 2012

Ray Saintonge said:

@ Danux
More than anything the developed models violate the law of supply and demand. Technology allows the information to be produced at low cost. Notably, the costs of printing on paper and distribution are no longer there. So prices should drop accordingly. I think the public is willing to accept paying the authors a fair return for their work; it isn't willing to pay for an unnecessary superstructure set up by the publishers, or for collecting societies which only give a small share of their revenues to the authors themselves.

I don't think that government textbooks are the answer either. Co-operatively produced texts can be produced cheaply on a wiki (not necessarily Wikipedia). Having many teachers' eyes looking at these texts will probably result in more authoritative work than what any single company can produce. School administrators need to encourage teacher participation in these texts, and that can be done more cheaply than buying large stacks of textbooks.
July 18, 2012

john walker said:

...
For most academic authors the royalties offered on published books are quite small, a friend who has been published by a leading UK publisher got nothing on the first print run and a few percent on the subsequent print run. Things like itunes and google style algorithms for calculating frequency of use and value of use are becoming more common and more accurate. It should soon be possible for institutions to calculate the usage of individual texts and make small payments for usage direct to the appropriate individual author. The days of collectives sampling and averaging photocopier usage are , I think, numbered.
July 18, 2012

Cram175 said:

Standard of Review
A little off topic here, but it now seems the Copyright Board is to be given less deference by the Federal Court as a result of this pentagon of decisions. In the Rogers case (8 to 1), I note Abella highlights Rothstein's flip flop on reasonableness versus correctness, which he fails to deal with, on the TM Opposition Board and Registrar of TMs, such that it seems the TM bodies will now get more deference than the Copyright Board. I wonder whether one or the other is more easily stacked with industry-friendly decision makers.

As for the AC business model, aren't we all moving towards that utopian paperless society a little faster now? Haven't Collectives clearly demonstrated in the last 25 years that "balance" is code for benefitting someone other than authors and creators? How could revisiting cases like Sony Betamax possibly benefit the public interest?

Lastly, while this sounds American, despite the two Abella (5-4) majorities, is the court moving to the right gradually thanks to Harper's appointments? Rothstein seems willing to roll back CCH and he's supposed to be the uncontested IP guru on the bench. Just a thought.
July 19, 2012

Fred said:

Cram175
Maybe it's because Rothstein, as the IP guru, actually understands copyright law, as opposed to Abella, who clearly doesn't, and wrote a judgement that would get a failing grade in any law course given the sloppy reasoning, ignoring the clear words of the statute, the many contradictions and very poor writing style.
July 19, 2012

Cram175 said:

Fred
That's pretty harsh on the majority decision. 4 other SCC judges put their name to it, so they don't agree with your assessment. In contrast, Rothstein's decisions were pretty formalistic, focused on old narrow myopic definitions (e.g. instruction is not study?) instead of the public interest context which CCH (Binnie not Abella) enunciated and which is the law of the land now. The Act isn't just about Crown granted monopolies and failing economic business models, it's also about fostering a cost efficient, progressive and educated society.
July 19, 2012

Paul Jones said:

...
A few points:

One - How eager will Access Copyright be to pursue further litigation on anything remotely related to fair dealing (or copyright)? After two consecutive smackdowns from the Supreme Court, not anytime soon if ever.

Two - Will Parliament step in with legislation to "fix" things for Access after the latest smackdown from the SCC? No, it just passed C-11 which dramatically favoured the educational sector, including expanded fair dealing.

Three - Will text books stop being produced? Nope again. They are written by academic authors who, with the open access movemement being one example, are inventing ways to publish works outside the traditional private sector, for-profit models.

Four - Degen? Degen? Degen?
July 19, 2012

Crockett said:

Paul ...
1) AC exists for two main purposes; to collect (and distribute) tariffs on behalf of it's members, and to represent it's members before court and committees. It looks likely that their ability to do either will be drastically reduced unless they can find another revenue stream, but I can't see them just throwing in the towel as they truly seem to believe they are on the right side of issue.

2) I think this is going to throw some confusion into the CPC ranks and pit some internal battles between the libertarian and corporate teat sucking camps.

3) The internet is an expander of information and access, not the contractor that some seem to think. Yes, it will have a significant impact on some legacy methods of knowledge creation and distribution but, once through a time of transition, will be a net (pun intended) contributor.

4) John doesn't come here anymore after someone called him a bully and asked if he would behave that way if they met him in a back alley. Yikes!
July 19, 2012

Jim said:

...
There will be more litigation. C-11 was not intended to undermine licensing - see the departmental backgrounders released last year. Instruction is not the same as study. And a public interest interpretation still has to be consistent with what the legislation actually says. So I doubt this is the end of the story.
July 19, 2012

Crockett said:

...
If the collection societies did not try for double dipping, as in the case of song downloads, then there would be a different atmosphere to make your case. Overreach is more than a technical term, its a defining one. If you don't want to get burned, don't try to light the candle at both ends.
July 19, 2012

Gerry said:

Does this apply to academic journal articles?
I've been trying to determine whether or not the court decisions apply to academic journal articles as well or is it solely focused on textbooks. For example, depending on which website I look at for a review, the decision is being reported that, as an instructor, I can now take a journal article that used to be on an excluded list for my institution, i.e,. we did not have purchased access to the journal, but that I obtain from another institute and put it on reserve within our library for my students to read. Prior to the decision, I could do this but would have to pay the publisher to receive permission to do so. There are people interpreting the court decision as saying that you would no longer need to pay the publisher in this example; that is, photocopying one article, regardless of where you obtained it from to put on reserve, is allowed under fair use. Is this a correct interpretation of the court's decision?
August 09, 2012

Kushner143 said:

Business lawyer San diego
Yeap surely copyright must exist for proper artist compensation, however it can not exist at the detriment of the population, and Thank you for sharing excellent information. Your website is so cool. I am impressed by the details provided on this website. >>> Business lawyer orange county
December 05, 2012

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