In March 2010, Access Copyright filed a tariff proposal with the Copyright Board to cover copying at post-secondary institutions in Canada. The proposed rate was $45 per year per university student and $35 per year per college student. The proposal represented a dramatic increase in the fees paid under the Access Copyright licence, which, when combined with Supreme Court of Canada jurisprudence on fair dealing in the 2004 CCH decision and the growing investment in digital materials, sparked concern among the Canadian education community. In 2012, the Supreme Court of Canada re-emphasized the broad and liberal approach to fair dealing as user’s right and the government would expand the fair dealing purposes to explicitly include education.
The Access Copyright tariff proposal progressed slowly before the Copyright Board, but on Friday, more than nine years after it was first filed, the Board issued its ruling. It established a retroactive tariff for the years from 2011-2014 of $24.80 per university student ($9.54 for college students) and $14.31 per university student ($5.50 for college students) for the years 2015 to 2017. Access Copyright welcomed the decision, arguing that it outlined a reasonable framework for copying in post-secondary institutions.
Over the years, the debate over educational copying in Canada has continued to play out in several venues. There is outstanding litigation before the courts (the Federal Court of Appeal has yet to release its decision in the Access Copyright – York University case, a decision that is likely to go to the Supreme Court no matter what the ruling) and the recently concluded copyright review heard extensive arguments from all stakeholders, before rejecting calls to limit educational fair dealing and recommending that the issue be revisited in three years.
Many Canadian institutions have dropped the Access Copyright licence altogether and – in a decision that has an enormous effect on the latest Copyright Board ruling – withdrew from the proceeding at the Copyright Board, presumably on the grounds that if they did not need the licence, they did not need to participate in an expensive proceeding. In doing so, the Canadian universities left the field to Access Copyright. Indeed, the Board explicitly states that given the absence of objectors, it accepted virtually all Access Copyright evidence and testimony:
Because of the absence of objecting parties, none of the foregoing fact evidence was contested or contradicted. We accept the facts as set out in the testimony of the fact witnesses and the exhibits presented through them. With one caveat, we generally accept the opinion evidence of the expert witnesses.
Yet the reality is that after years of evidence gathering and deliberations, the Board declined to address virtually every issue of consequence. For example, is the tariff mandatory?
We are aware that related issues have been raised in recent judicial proceedings and it is not necessary for us to opine on the issue at this point.
What is the effect of fair dealing?
In the end, we conclude that it is unnecessary for us to determine in these proceedings whether, or to what extent, the Fair Dealing Guidelines or the proposed tariffs encompass uses that are exempted from copyright protection under the fair dealing provisions of s. 29 of the Act.
How to factor alternative site licensing into the tariff?
We therefore conclude that we do not have the evidence in this proceeding necessary to establish a mechanism in the tariffs that would adjust royalties based on other licensing activities of the user. We hope to have more and better evidence the next time on this question.
Should Access Copyright be required to establish a publicly accessible list of the works in its repertoire?
In this context, we acknowledge the challenges educational institutions face in determining whether Access has been authorized to authorize a particular act with respect to a given work. However, the imposition of this, or a similar requirement, would be relatively novel in a tariff approved by the Board. We would prefer that the practicality of such a requirement, along with any benefits and disadvantages thereof, be more fully addressed before establishing such a requirement.
So what did the Board decide and how did it establish the tariffs?
The Board established these new tariffs based simply on agreements that some universities had entered into with Access Copyright. In the case of the 2011-2014 period, it relied on a 2012 Model Licence that was signed by 35 institutions (University of Toronto and Western signed similar agreements, 20 AUCC members refused to sign). That agreement, largely signed before the 2012 Supreme Court of Canada decisions and the fair dealing reforms, is said to represent the market value of the licence. Many institutions quickly regretted the decision to sign, though the Board’s decision effectively seeks to impose the same terms on both signatories and non-signatories. This suggests that retroactive tariffs for this period will only affect a minority of institutions since contrary to the lobbying claims, the majority of institutions were paying the licence until 2014.
For the period from 2015-2017, the Board relies on a $15 “Premium Licence” that Access Copyright offered to universities. Despite being cheaper, adoption of that licence was quite different from the Model Licence. Coming on the heels of Supreme Court jurisprudence and legislative reform, it was widely rejected by universities, with only 11 of 57 institutions signing it. The Board tries to downplay the rejections by excluding those that declined to sign the 2012 Model Licence in arguing that 11 of the 37 willing to sign an agreement did so. However, that is just playing with numbers as the reality is that the offer did not find much of a willing market.
The final numbers reflect some adjustment downward due to findings that Access Copyright cannot claim to represent some “non-affiliates” (ie. rights holders with whom it does not have an agreement or paid any royalties), however, the Board has basically just adopted whatever Access Copyright offered to the market as a proxy during the relevant time periods as its tariff.
Strikingly for those accustomed to the Copyright Board seeking to assess the value of copying, these numbers bear no resemblance to copying or the “value” of the copying. Indeed, Access Copyright admitted that:
As to the question of how Access decided on $15, Access explained that it was simply a rate it believed the institutions would accept in light of their interpretation of fair dealing and the instability of the market as a result of the 2012 changes.
In other words, the tariff is not based on value or compensation for copying (the Board explicitly rejects the “volume-times-value” approach which sought to calculate the volume of copying multiplied by the value of a copy). Rather, by basing it on the 2015 agreement, it is grounded in an assessment of the costs and risks of litigation, the readiness of some institutions to address their copyright obligations by means other than the Access Copyright licence, and the decision by a small minority of institutions to sign an agreement. This is not a tariff based on market value but is instead a simple act of market validation in the absence of actual evidence of value. This has enormous implications for tariffs at the Copyright Board, pointing to a potential future in which collectives look to establish a “market price” with a few well-placed deals with little correlation to actual value. If that approach continues – particularly without intervenors or other public interest advocates – the Copyright Board will emerge as a rubber stamp for industry-crafted deals that shift value to the side and massively increase copyright costs.
In the meantime, what comes next for the education tariff? The educational institutions have made a big bet that the tariff is optional provided they have alternative means of addressing their copyright obligations. That suggests that the issue will remain in the courts with the government remaining on the sidelines at least until the litigation plays itself out.