Friday, February 24, 2017

Blacklock’s Litany of Litigation Lengthens

https://www.blacklocks.ca/ 

In the first month of 2017, Blacklock’s has commenced four more actions in the Federal Court against the Federal Government or an agency thereof. These are as follows:
T-117-17 Blacklock’s v. Attorney General of Canada re Health Canada for $90,100.55 + punitive damages of $25,000
T-132-17 Blacklock’s v. Attorney General of Canada re Employment and Social Development Canada (EDSC) for Statutory Damages + punitive damages of $20,000
T-133-17 Blacklock’s v. Attorney General of Canada re Transport Canada for $85,228.50 + punitive damages of $10,000
T-134-17 Blacklock’s v. FINTRAC for $11,470 + punitive damages of $5,000

Concerning the first Health Canada action, iPolitics says in the publicly posted intro to a paywalled article (to which I do not have access):
Blacklock’s Reporter is not backing down from its decision to aggressively sue multiple federal departments and agencies for copyright infringement — even after it lost a case against the Department of Finance late last year.
In a case that recently moved from Ontario Superior Court to the Federal Court of Canada, Blacklock’s Reporter — a subscription-based, online news outlet — is suing Health Canada for more than $115,000 for “the unauthorized use, distribution, and third party dissemination” of its paywalled content, and/or breach of contract.

An earlier action T-2042-16 filed on November 28, 2016 on which I reported here is along with the older actions are under case management and the newer ones will also presumably be under the ever very efficient case management of Prothonotary Mireille Tabib. A case management conference is scheduled for March 6, 2017.  See here.

I will not comment specifically at this time on any of the allegations in these various actions, none of which have been proven in Court. That said, it does appear that each of these actions apparently allege somewhat different facts from the previously decided Federal Court case. However, Blacklock’s suffered a resounding defeat in the first case that was tried in the Federal Court on the basis of an "obviously" and clearly correctly applicable fair dealing defence asserted by the Government.  

[45] Blacklock’s maintains that this case challenges the viability of its business model including its right to protect news copy behind a subscription-based paywall. The suggestion that Blacklock’s business cannot survive in the face of the minor and discrete use that took place here is essentially an admission that the market places little value on Blacklock’s work-product. All subscription-based news agencies suffer from work-product leakage. But to customers who value easy, timely and unfettered access to news that may not be readily available from other sources, the price of a subscription is worth paying. It also goes without saying that whatever business model Blacklock’s employs it is always subject to the fair dealing rights of third parties. To put it another way, Blacklock’s is not entitled to special treatment because its financial interests may be adversely affected by the fair use of its material. Nothing in these reasons should however be taken as an endorsement of arguably blameworthy conduct in the form of unlawful technological breaches of a paywall, misuse of passwords or the widespread exploitation of copyrighted material to obtain a commercial or business advantage.
 (highlight and underline added)

It is important to recall that Blacklock’s has chosen not to appeal that original judgment. Interestingly, however, Blacklock’s instead chose to appeal the $65,000 costs award in which Judge Barnes stated:
[7] …I also reject the Plaintiff's argument that this case raised "strong public interest considerations". Rather, this case was about the Plaintiff's attempt to recover disproportionate damages without any apparent consideration to the legal merits of the claim or to the costs that it imposed on the taxpayers of Canada.
[8] Any reporter with the barest understanding of copyright law could not have reasonably concluded that the Department's limited use of the subject news articles represented a copyright infringement. Indeed, the fair dealing protection afforded by section 29 of the Copyright Act, RSC, 1985, c C-42, is so obviously applicable to the acknowledged facts of this case that the litigation should never have been commenced let alone carried to trial.
 [9] I am also troubled by Plaintiff's attempt to claim an excessive amount of damages beginning with its demand for compensation completely divorced from the Department's limited use of the two articles. In no circumstances would Blacklock's losses have exceeded the cost of individual subscriptions by the six officials who read the articles; yet Blacklock's demanded a license fee equivalent to its bulk subscription rate of over $17,000.00. This practice appears to be consistent with Blacklock's usual approach which is to hunt down, by Access to Information requests, alleged infringers and then demand compensation based on an unwarranted and self-serving assertion of indiscriminate and wide-spread infringement. The record discloses that in several instances government departments acquiesced for business reasons and paid the full amounts demanded. In this instance the Department appropriately took a hard line and succeeded in its defence.
(highlight added and emphasis added)

Costs judgments are normally very difficult to appeal successfully.  The $65,000 award in this instance flows directly from the normal  “mid-point of Column III” approach as explained by Justice Barnes in paragraph 6 of the costs judgment.  The Government was also able to benefit from the “double costs” rule because of “the failure by the Plaintiff to accept an early settlement offer in the amount of $2,000.00” (para. 4). Costs decisions by judges are “quintessentially discretionary” and are rarely set aside on appeal.

Blacklock’s tenacity is nothing if not noteworthy.  It has 13 actions pending against the Federal Government or its agencies, not to mention the appeal of its costs order in its unsuccessful original case against the Department of Finance.  

In Justice Barnes’ judgment, he stated:
[22] To resolve this matter I need only decide whether the conduct Blacklock's impugns is protected under the fair dealing provisions of the Act and, in particular, section 29. Although there are certainly some troubling aspects to Blacklock's business practices it is unnecessary to resolve the Attorney General's allegation that this litigation constitutes a form of copyright abuse by a copyright troll.
(highlight and underline added)

It will be interesting to see whether, and if so how, the Government deals with the “abuse” issue as this “litany of litigation” continues and unfolds and how the Court, in turn, may deal with it. In any event, the "obviously applicable" defence of fair dealing will presumably be in issue in each case and the Government will no doubt rely on Justice Barnes’ very solid decision.

Even if Blacklock’s is somehow able to establish copyright infringement in a particular factual situation, it remains to be seen what quantum of damages it might be awarded.  Without commenting on the Blacklock’s litigation, it is useful to remind readers that Canadian courts, unlike some American courts with juries, are very reluctant to award copyright damages that bear little or no relation to actual damages. Indeed, some significant checks and balances are hard-wired into the damages regime in the Canadian Copyright Act and solidly backed up by case law that prevent it from being used to obtain disproportionate damage awards that bear no relationship to actual damages suffered by the plaintiff or profits, if any, made by the defendant. Where a plaintiff elects to pursue statutory minimum damages rather than to prove actual damages, the case law is clear that the Court will still insist that there must be some correlation or relationship between actual damages and statutory damages. Moreover, since 2012, there has been a provision that limits statutory minimum damages to “a sum of not less than $100 and not more than $5,000 that the court considers just, with respect to all infringements involved in the proceedings for all works or other subject-matter, if the infringements are for non-commercial purposes.” (highlight added)

Speaking generally of damages in copyright cases, it is always timely and increasingly important in light of recent case law to remind readers that “success” in copyright litigation in Canada does not necessarily lead to a pot of gold and can indeed backfire and become a very expensive pyrrhic victory.

Perhaps the most notorious pyrrhic victory in copyright litigation was what I have called “A Cautionary Tale of Costly Copyright Litigation Consequences: How to Win a Little and Lose a Lot”. This was the relatively recent case of Leuthold v. CBC. As I summarized about this case, Leuthold is an American photographer whose 9/11 images were used by the CBC, by way of an “honest mistake”, six times more than permitted by the original one-time license for which she was paid $2,500. She refused a settlement offer of $37,500 and went to trial, where she was awarded $19,200 ($3,200 times six) plus $168.73 as her portion of CBC’s “profits”’.  

Ms. Leuthold actually did technically succeed in proving copyright infringement but recovered less than 1/1,000th of her extravagant damages claim of about $21.5 million. Her claim was predicated upon a far-fetched and longshot liability theory that would have resulted in each of CBC’s 800 or so participating affiliated stations and Broadcasting Distribution Undertakings [BDUs] supposedly giving rise to a separate act of infringement. Because of the way the Federal Courts Rules on costs work, she predictably ended up being liable for a very large costs award even though she technically won her lawsuit.

I make no comment on whether the Leuthold case would be applicable to any of Blacklock’s cases in any particular respect.  Rather, I mention Leuthold’s case because it is the ultimate cautionary tale for every copyright claimant in Canada who may have expectations of substantial damages where actual damages cannot be calculated in a reliable manner or may actually be quite low by any reasonable measure. Thus, even a technical victory in a copyright case can be a costly proposition in Canada – especially if the defendant is savvy about the use of the settlement offer mechanism in the Federal Courts Rules. But even without successful recourse by a defendant to the “double costs” implications of a strategic settlement offer, it can obviously still be a pyrrhic victory if a plaintiff ends up spending far more in legal fees than the court awards in damages, and the normal costs award that may follow is insufficient to make the litigation cost effective. Needless to say, these various factors may discourage contingency fee arrangements in copyright cases, even when the cause of action seems solid but the potential damages may be modest. For better or worse, the calculus of costs is becoming increasingly important for all concerned with copyright litigation, and indeed all litigation.

Unlike the American system with its $150,000 per work statutory damages limit for copyright infringement and sometimes apparently absurd jury awards (e.g. $1.92 million for infringing 24 songs), Canadian courts are very measured and cautious about damages in copyright cases. There are no juries and no pots of gold in Canadian copyright litigation.

Concerning the issue of costs, the Federal Court of Appeal in the Leuthold case provided what I then characterized as “some cautionary language for those who may contemplate high risk litigation” from Justice Denis Pelletier:
[13]  Finally, Ms. Leuthold argues that an order of costs ought not to be such as to bring the administration of justice into disrepute. Once again, this is an argument based on impecuniosity. The sad fact of the matter is that litigation produces winners and losers; that is why it is such a blunt tool in the administration of justice. But justice is not served by allowing persons who have imposed costs on others by pursuing or defending a claim which lacks merit to avoid the consequences of their behaviour. Such a policy would be more likely to bring the administration of justice into disrepute than the result in this case.
(emphasis added)

Blacklock’s’ resounding initial defeat on the fair dealing issue in Justice Barnes’ careful and convincing judgment (not appealed) and the resulting $65,000 costs award (which is being appealed) together with the Government’s clear and able determination to fight back and its success to date may be of interest to all Blacklock’s copyright litigation defendants, including those outside the Government, who may be considering with their counsel their next steps, such as whether or not to settle or to continue to fight back and to utilize strategic settlement offers.

I will endeavor to update after the case management conference on March 6, 2017 or sooner if events warrant.

HPK

Tuesday, February 14, 2017

Copibec v. Laval Class Action Can Proceed Says Quebec Court of Appeal

On November 17, 2014 I posted this:

Here is the first step in the Quebec copyright infringement class action by Copibec against the University of Laval. This is a request to the Quebec Superior Court to authorize Copibec to proceed by way of a class action. 
Two immediate differences leap out in comparison to the Access Copyright v. York U. litigation:
  1. There is no "interim tariff" in effect for Copibec. York is relying on the "interim tariff" from the Copyright Board, which AUCC and ACCC took no steps to have set aside when this might have been possible and perhaps quite feasible at the time back in January 2011.
  2. This is a proposed class action. The AC v York U litigation is not.
Here's an update. The Quebec Superior Court on February 26, 2016 refused to authorize the proposed class action. Copibec appealed and the Quebec Court of Appeal has just reversed - allowing the class action to proceed.

Here's the decision of the Quebec Court of Appeal dated February 8, 2017. I attach a Google translation for those who need it.

Here's a press release from Copibec.

It will be interesting to see whether Laval seeks leave to appeal this decision to the Supreme Court of Canada, and whether interveners come forward in support of such a leave application and/or later on, if any such leave application is successful.

I leave to others with more expertise than I have to comment on the class action aspects of this ruling, and particularly whether the result might have been different in a common law context.

At first glance, there would appear to be several interesting copyright questions that may arise, such as whether and how Copibec has standing to sue on a class basis for copyright infringement and particularly so re moral rights.

HPK

PS:
Here's a summary prepared by Alan Macek who provides invaluable update and tracking tools. See here.
The Quebec Court of Appeal granted the appeal (see 2016 QCCS 900) regarding Copibec's proposed class action again Laval regarding copyright infringement. Laval had not renewed the license agreement after the Copyright pentalogy and amendments to the Copyright Act in 2014. The Court considered the necessary level of commonality between the proposed class members to certify the class and found the trial court had put too high a burden on the plaintiff. The Court found that it will be up to the University to establish fair dealing and shouldn't detract from the commonalities. The Court also found that collective action appropriate in view of the small amount of each authors' claim and to facilitate access to justice and was also appropriate for moral rights claims. The Court concluded that Copibec was an appropriate representative plaintiff. (Summary based on a translation) (summary prepared by Alan Macek)

Thursday, February 09, 2017

Blacklock’s appeals $65,000 costs award in litigation that “should never have been commenced let alone carried to trial”

https://www.blacklocks.ca/ 
In an unusually trenchant costs award, Justice Barnes of the Federal Court has ruled that Blacklock’s must pay the taxpayers of Canada an “all-inclusive amount of $65,000 plus interest….” This follows decisively upon Blacklock’s clear loss in the first case of what I have called a “litany of litigation” of 11 lawsuits against the Government of Canada and/or its agencies, not to mention several other cases against other parties in the Federal and Ontario courts

I went on to quote from the Court’s ruling:
[7] …I also reject the Plaintiff's argument that this case raised "strong public interest considerations". Rather, this case was about the Plaintiff's attempt to recover disproportionate damages without any apparent consideration to the legal merits of the claim or to the costs that it imposed on the taxpayers of Canada.
[8] Any reporter with the barest understanding of copyright law could not have reasonably concluded that the Department's limited use of the subject news articles represented a copyright infringement. Indeed, the fair dealing protection afforded by section 29 of the Copyright Act, RSC, 1985, c C-42, is so obviously applicable to the acknowledged facts of this case that the litigation should never have been commenced let alone carried to trial.
 [9] I am also troubled by Plaintiff's attempt to claim an excessive amount of damages beginning with its demand for compensation completely divorced from the Department's limited use of the two articles. In no circumstances would Blacklock's losses have exceeded the cost of individual subscriptions by the six officials who read the articles; yet Blacklock's demanded a license fee equivalent to its bulk subscription rate of over $17,000.00. This practice appears to be consistent with Blacklock's usual approach which is to hunt down, by Access to Information requests, alleged infringers and then demand compensation based on an unwarranted and self-serving assertion of indiscriminate and wide-spread infringement. The record discloses that in several instances government departments acquiesced for business reasons and paid the full amounts demanded. In this instance the Department appropriately took a hard line and succeeded in its defence.

(highlight added)

In the latest of many unusual twists and turns in Blacklock’s “litany of litigation”, as I have called it, Blacklock’s has chosen to appeal the December 21, 2016 $65,000 costs ruling, while notably not attempting to appeal the underlying judgment itself.

Here is Blacklock’s Notice of Appeal – the content of which is unusual in certain respects, not least of which is the inclusion of a quote from a blog.  I will refrain from further comment on this document at this time.

As I indicated in blog of December 21, 2016:
Costs awards are usually very hard to appeal successfully – especially one such as this where Justice Barnes has provided ample reasoning and a detailed calculation in Annex “A”.

The appeal process will likely take several months at least to unfold. Meanwhile, Blacklock’s has commenced four additional actions in the Federal Court in 2017. I shall update on these shortly.

HPK

Wednesday, February 01, 2017

The Federal Court of Appeal Rules on Access Copyright’s K-12 Tariff

On March 15, 2016 I initially wrote about the Copyright Board’s decision on the Access Copyright K-12 tariff here.  

On April 14, 2016 I further wrote regarding the Copyright Board’s K-12 tariff decision as follows:
Not surprisingly, Access Copyright (“AC”) is pursuing judicial review (“JR”, or an “appeal” in layperson’s terminology). Except for the surprising outcome that would potentially give it almost $10 million per annum based almost solely on the reproduction of “consumables” (assuming all school boards actually decide to pay – which is very doubtful - see below), AC lost badly on just about every other conceivable aspect – including some very important ones such as fair dealing, insubstantial copying, and its agency by ratification argument, about which the Board has effectively, even if belatedly, done a 180 degree turn around. Here is AC’s comparatively fulsome JR Notice of Application.

Somewhat surprisingly in view of the arguably much too high FTE rate of $2.46, CMEC [the “Consortium”], which represents school boards outside of Quebec, is not seeking JR. For those interested in Federal Court of Appeal procedure, there is no such thing as “cross” judicial review. Each party needs to launch its own JR on or before the 30 day deadline. In this case, only AC did so. CMEC (Council of Ministers of Education, Canada) will no doubt ably defend AC’s JR but has not commenced its own, perhaps for the reasons I speculate about below.

Well, the Federal Court of Appeal has now ruled on AC’s JR proceeding. The issues as defined by the FCA were as follows:
[10] I have regrouped the issues raised by Access under the following headings:
A. Repertoire
(1) Did the Board err in ignoring expert evidence provided by Access to correct and clarify the breadth of its repertoire as described in the volume study?
(2) Did the Board err in restricting the “substantiality” (term used by the parties) of compensable exposure under section 3 of the Act?
B. Fair Dealing
(1) Did the Board err in its application of the burden of proof?
(2) Did the Board breach its duty to act fairly?
(3) Was the Board’s methodology unreasonable and did it err in assessing the relevant factors?
A. Repertoire
(1) Did the Board err in ignoring expert evidence provided by Access to correct and clarify the breadth of its repertoire as described in the volume study?

In a nutshell the bottom line of this 35-page decision is as follows:

-        AC scored a minor legal point but a potentially commercially significant point by convincing the FCA that the Board essentially ignored certain evidence as to its repertoire. The FCA states that:

[19] It is not disputed that if Circum’s calculations had been accepted, this would represent a sizeable increase in the royalties to be paid to Access, which it estimates to represent approximately $500,000.00 per year, or $3 million dollars over the two tariff periods. Before us, the Consortium did not offer any other estimate of the potential impact of these coding errors, saying that it would have to review the validity of Access’ calculations should the matter be reconsidered by the Board as its experts had not yet had the opportunity to comment on Access’ calculations.
….

[22] Although the Consortium argued that this finding was based on the weight given to the evidence by the Board, a matter with which this Court should not lightly intervene, it is difficult to conclude anything other than that the Board, through oversight, overlooked the expert evidence and submissions it accepted as exhibits AC-114 and AC-114A on December 5, 2014.

[23] The Board’s clear wording that Access provided no evidence rebuts the presumption that a decision-maker has considered all the evidence before it.
[24] There is no ambiguity in the reasons expressed at paragraph 405 of the Board’s Reasons reproduced above. The Board failed to consider that expert evidence had been filed to estimate the degree of the underestimation, that Access had chosen to correct the underestimation and that it explained in detail why it had not done so before. Access’ statement that the corrections proposed by its expert did not result from an expansion of Access’ repertoire in the years subsequent to the data collected in the 2005-2006 volume study was not challenged before us. Thus, the Board’s refusal to consider whether the repertoire was underestimated is unreasonable.
(highlight added)

On virtually all other issues as defined by the FCA, CMEC prevailed, although not necessarily for all the reasons that it may have wished.

The FCA supported the Board’s decision “that it could not rely on the Guidelines for the purpose of setting the royalty rates (Reasons at paras. 233-234). “. These were the guidelines propounded in Wanda Noel’s booklet Copyright Matters!.
[58] The Consortium chose to present its case using two different approaches. First, the Consortium presented evidence in respect of guidelines issued in 2012 (see Copyright Matters! Some Key Questions & Answers for Teachers, 3rd ed., Respondents’ Record [RR], Vol. 1 at Tab 4) (the Guidelines)), and the fact that they had been widely distributed to K-12 school teachers. This was presented as evidence of a general practice of the type referred to at paragraph 63 of CCH. The Consortium argued that any copy made following those Guidelines would necessarily be fair (presumably these would only be relevant for the period covered by the Second Tariff). Ultimately, the Board found that it could not rely on the Guidelines for the purpose of setting the royalty rates (Reasons at paras. 233-234).
[59] Although both parties were clearly disappointed by the fact that the Board did not offer any detailed comments on their evidence relating to those Guidelines, Access did not challenge this finding, which was based on its assessment of the weight of the evidence. This was a wise decision, for indeed, the Board’s conclusion was clearly open to it on the evidentiary record.
[60] Access argued extensively in its memorandum (not at the hearing or in its outline of oral argument) that the Board was wrong to discard the Guidelines as they were the best evidence of the behaviour to be assessed to determine the issue of fairness. This resulted, according to Access, in the rejection of what Access believed was the Consortium’s better case. Yet, in my view, Access does not indicate how the Board’s actions on this point render its analysis unreasonable.
[61] That said, contrary to Access’ submissions, the Guidelines were not the only evidence tendered by the Consortium to meet the second part of the CCH test (i.e. weighing the fairness factors).
[62] It is apparent from a review of the expert report filed by the Consortium (RR, Vol. 2 at Tab 17) that the Consortium did present a second approach based on an evaluation of the CCH factors. I note that the Consortium’s experts even offered alternative calculations, for example, in respect of “the amount of the dealing” factor, although it assumed based on the instructions received, that reproduction of 10% or less of a book would be considered fair, the said experts also calculated the impact of the Board’s finding that only the reproduction of 7%, 5%, 3% or 1% of each work would be fair (RR, Vol. 2, Tab 17 at 438).
[63] Access had, for its part and as mentioned, marshalled evidence in respect of the sixth factor given that in its view, this factor militated towards finding that the dealing was not fair because of the considerable effect that copying had on the market for those works. Its expert had also calculated what would be fair by using and adjusting the Board’s previous calculations in 2009 to account for what it considered fair based on Alberta (Applicant’s Record [AR], Vol. 1, Tab I at 887-889). Access had also taken the position that the Guidelines were flawed and indeed promoted unfairness (Reasons at para. 231). In its view, the Board could only deduct the exposures that Access had conceded met the fairness test.
(highlight added)

For convenience, here are paras 233 and 234 of the Board decision discussing the Guidelines:
[233] However, in this matter, the parties have asked the Board to treat the Volume Study as representative. Thus, on one hand, the Board is being asked to consider the effect of the Guidelines on the copying behaviour of the Objectors, and on the other hand, to evaluate the copying captured by the Study. These two approaches are not readily reconcilable. If the Guidelines have modified the copying behaviour of the Objectors, then the Volume Study is no longer representative. If the Volume Study is representative, then the introduction of the Guidelines has not had a pronounced effect on the copying behaviour of the Objectors.

[234] Much of the evidence presented by the Objectors related to only certain schools or school boards. Evidence showed that while the Guidelines may have been distributed, and may even be known by, teachers and other persons that make copies of published works, there was insufficient evidence of the extent of the compliance with those Guidelines. Indeed, cross-examination of Objectors’ witnesses showed that there was little or any emphasis on monitoring and compliance with the Guidelines.147 As such, we cannot conclude that there is a generally uniform practice among all the elementary schools, secondary schools and school boards that can be evaluated for fairness in the manner contemplated in CCH.

(highlight added)

So, for better or for worse, we still have no explicit commentary on the substance of the Guidelines from either the Copyright Board or the Federal Court of Appeal. These are essentially the same Guidelines that are now, for better or worse, “on trial” in the Federal Court in the York University litigation. I have written extensively about whether letting the York Fair Dealing Guidelines be put on trial could have been avoided. We will likely know soon enough what Justice Phelan thinks about these guidelines when his decision on Phase I of that monumentally complex litigation that might have been greatly simplified is released. The final arguments in the Phase I hearing took place on June 22-24, 2016.

Here are some other observation on the FCA decision, which is complicated, lengthy and important and which no doubt requires much more detailed scrutiny by university counsel and the library community that is increasingly becoming involved in copyright issues.

Concerning “substantiality”, there was a discussion of the Supreme Court’s decision in CINAR and the FCA’s acceptance that the burden of proof was on AC to establish that copying was “substantial” in order to be eligible for payment. All of this is in the context of the very problematic volume study relied on by both sides, which was undertaken a year of so after CCH but which failed to take that decision adequately into account.
[37] I have not been persuaded by Access that the Board ignored any evidence produced by Access. Indeed, the Board considered it and found that it did not provide a reasonable basis to assess the qualitative nature of the thousands of copying excerpts at issue.
[38] That said, the Board had a couple of options. First, if it had applied the approach proposed by Access in respect of the Consortium’s burden of proof under the fair dealing analysis (see paragraph 81 below), the Board could have concluded that Access had not established that the exposures reported in the volume study amounted to reproduction of “a substantial part of the books” in its repertoire (this is the only genre in respect of which the finding of the Board is contested) given the lack of probative evidence produced by Access in this respect. Second, and what the Board chose to do, was to determine that because it did not have the benefit of a qualitative analysis applicable to the majority of cases, it was reasonable in the particular circumstances of the matter before it (fulfilling its statutory mandate to set a tariff where the parties only presented evidence on an aggregate basis) to infer that the copying of one or two pages from a book was not qualitatively substantial. This approach resulted in a smaller volume of copying being classified as non-substantial than if a threshold of 1% of each such work was adopted (Reasons at paras. 226-227).
[39] It is the task of a tribunal or trial court to fulfil its mandate, despite the paucity or quality of the evidence before them. Such decision-makers must determine if they are satisfied that a certain question of fact has been established. This task is at the very core of the expertise of tribunals such as the Board. Inferences, like findings of facts, are owed considerable deference.
[40] In my view, in the particular circumstances of this case, and considering the mandate of the Board under the Act, it was not unreasonable for the Board to infer that the copying of one or two pages of a book did not constitute reproduction of a “substantial part of the work” within the meaning of section 3 of the Act. It should be clear however that, in my view, such an inference would rarely be within the range of acceptable outcomes when there is evidence produced about each work at issue and would normally constitute an overriding and palpable error in the context of civil litigation proceedings where infringement is at issue.
[41] Finally, I note that considering the application of fair dealing and of section 29.4 of the Act to the exposures, most of the so called “non-substantial copying” in respect of books would have been deducted anyway from the compensable exposures (see tables 24 and 25 of Appendix A to the Reasons).
          (Highlight added)

It is clear that the Board made many of its findings based upon “impression” and “inference”, simply because there was inadequate evidence both in terms of data and expert testimony to fully analyse the thousands of copying events recorded back in 2005 in a flawed survey. The highlighted passage above makes is clear that the FCA would frown on such an approach in “civil litigation proceedings where infringement is at issue.”

It is also interesting that the Court suggests at para. 38 that the Board “could have concluded that Access had not established that the exposures reported in the volume study amounted to reproduction of “a substantial part of the books” in its repertoire (this is the only genre in respect of which the finding of the Board is contested) given the lack of probative evidence produced by Access in this respect.”

The Board instead chose “to infer that the copying of one or two pages from a book was not qualitatively substantial.”  This would seem to suggest that AC was indeed very lucky to get anything, based upon the problems with its evidence and its burden of proof on this issue.

On fair dealing, there is lengthy and useful analysis from the Court. However, one paragraph merits comment because it may be seized upon by those eager to repeal “fair dealing” to some extent.
[45] In Alberta, the Supreme Court focused on fair-dealing for the purpose of private study. The Court had to deal with the viewpoint from which fair dealing for this purpose is to be assessed – the teacher or the student, particularly when multiple copies are made for one or more classes. Shortly thereafter, the Act was amended to include “education” as another purpose in respect of which users could rely on section 29 of the Act. In my view, this addition removed the dichotomy between teachers’ or students’ viewpoints under the section 29 analysis, when education is the relevant purpose.
(highlight added)

With respect, I believe that the “dichotomy between teacher’s or students’ viewpoints” was resolved in paras. 42 to 45 the Province of Alberta decision of the Supreme Court of Canada under the law in place before s. 29 was amended. In this respect, the SCC had accepted arguments on this point that I made along with Prof. Ariel Katz and his institute at U. of T.

There are extensive comments that will encourage the educational community about how the Board was right in not relying solely on the “aggregate volume of pages copied or otherwise”. In fact, the Court states at para. 93 that “I find no reviewable error on the part of the Board in this respect. In fact, this finding is reasonable even if one were to consider that the overall number of copies represents approximately 90 pages per student per year.”

The FCA also supported the Board’s finding that the declining book sales could be caused by such factors as “open educational resources movement, digital sharing and the general emergence of new technologies” (para. 98)

This is an important decision that comes at an interesting time. We can only speculate as to if and how it may, or may not, affect the following pending decisions, which have been argued and which are under reserve as I have previously noted:
-        AC Provincial Government tariff, which was heard on June 20, 2016 by the Federal Court of Appeal, in which fair dealing and non-substantial copying were also major issues. For reasons which are not apparent, these cases were heard by different panels on different dates. So, it will be interesting to see whether the Provincial Government case – which was heard several months before the current case – will be consistent with the current decision.
-       decision from the Copyright Board in the AC Post-Secondary tariff case, from which the interim tariff that gave rise to the York University litigation arose. This case, which began in 2010, was finally heard by the Copyright Board in January of 2016. For all practical purposes, it was a default proceeding. The Copyright Board “ordinarily” and, indeed, often takes two years or more to render decisions – a delay that is unusual by any measure. So, a decision in 2017 – while certainly reasonably to be expected – cannot be assured unless the new Chairman is able to change the way the Board has worked for very many years.
-        The AC v. York University litigation, in which York’s fair dealing guidelines are very similar to those that were in issue – but which escaped detailed comment – in the K-12 Board decision and the current FCA decision.
It will be interesting to see whether AC seeks leave to appeal the current decision to the Supreme Court of Canada. It has 60 days to do so, i.e. until Tuesday, March 28, 2017. If the “other” case involving the Provincial Governments tariff does not come down in the meantime, or comes down within that time in manner that is notably inconsistent with the current decision, such a leave application would not be surprising. However, if the FCA’s ruling in the Provincial Government case, whenever it is released, is reasonably consistent with the current ruling, it would seem that a successful application for leave to appeal would be a long shot for AC in either case in all the circumstances.

Hanging over all of this, of course, is the question of whether Copyright Board tariffs are “mandatory”. One would have thought that the Supreme Court of Canada clearly indicated in CBC v. SODRAC that they are not, a subject that I have written about extensively here and elsewhere. (I successful argued the issue in the Supreme Court of Canada on behalf of Ariel Katz and David Lametti’s Centre at McGill). However, just like the CCH decision in 2004, it seems that it is taking a very long time for the good news to sink in and be understood by those who stand to benefit.

It’s therefore nothing if not ironic that AC is once again trying to reinvent the wheel. It recently sent out this message to its affiliates, which I am one:
We could use your help. Our innovation team is aiming to re-invent Access Copyright’s offerings for universities and colleges and needs help finding students and professors willing to sit for 1-hour research interviews on the topic of content use and technology.  

I may have more to say about this invitation later. However, in the meantime certain things would seem obvious if AC wishes to survive. How about, for example, for starters:
-        Offering easy and inexpensive transactional licenses online for repertoire for which it actually has a chain of title?
-        Not purporting to license repertoire for which it claims title only on the basis of “implied agency” or any other dubious or discredited theory?
-        Not purporting to license the public domain, or to “sell the Brooklyn Bridge”, as I have suggested?
-        Offering a clearly non-mandatory but enticing blanket license at really low cost for a really large repertoire with really generous terms of use that would make it efficient and inviting for schools, colleges and universities to consider?
-        Not suing its customers?
Or is this too much to expect?
-         
-        HPK

Friday, January 13, 2017

Copyright Reform in Canada – the 2017 Section 92 Review

(Wikimedia)
We can look forward to a lot of lawyering and lobbying devoted to copyright in Canada in 2017.
In the meantime, on the litigation front, we are awaiting important judgments in several cases, including the following that have been heard with the decision pending:
  • We can probably expect a decision sooner rather than later from the Federal Court in Phase I of the Access Copyright v. York U litigation. Indeed, the decision could come any time now, since final arguments were made June 22 - 24, 2016 and the Federal Court usually renders judgments within six months or less. The decision will likely deal with whether the "interim tariff" that is the basis of the litigation was "mandatory" and York's fair dealing guidelines. These were the key "Phase I" issues.
  • We can expect a decision in RE:SOUND v. CANADIAN ASSOCIATION OF BROADCASTERS ET AL, on judicial review from the Copyright Board, which was heard by the Federal Court of Appeal (“FCA”) on February 24, 2016. The long delay is unusual for a Court that usually renders decisions in a few weeks and normally less than six months.
  • We can expect a decision from the Federal Court of Appeal in the judicial review of the AC K-12 decision from the Copyright Board, which was heard on November 22, 2016. Likewise, there will very likely be a decision from the Federal Court of Appeal in the judicial review of the AC Provincial Government tariff, which was heard on June 20, 2016, in which fair dealing was a major issue. Although these cases were heard by different panels on different dates, there are some common issues and the decisions may very well come down together and will presumably be consistent.
  • At some point, there will be a decision from the Copyright Board in the AC Post-Secondary tariff case, from which the interim tariff that gave rise to the York University litigation arose. This case, which began in 2010, was finally heard by the Copyright Board in January of 2016. For all practical purposes, it was a default proceeding. The Copyright Board “ordinarily” and, indeed, often takes two years or more to render decisions – a delay that is unusual by any measure. So, a decision in 2017 – while certainly reasonably to be expected – cannot be assured unless the new Chairman is able to change the way the Board has worked for very many years.
  • Other decisions under advisement at the Copyright Board involve retransmission and online music services, including the long outstanding ruling on whether there is now a new “making available right” and, if so, how tariffs will be affected.
On the lobbying front, we will have the Section 92 Review. It is worth noting that there is now a different review mechanism in place, compared with the five-year review established in 1997 – which eventually resulted in new legislation 15 years later.
CURRENT 2012 LEGISLATION RE “REVIEW”
Review of Act
92 Five years after the day on which this section comes into force and at the end of each subsequent period of five years, a committee of the Senate, of the House of Commons or of both Houses of Parliament is to be designated or established for the purpose of reviewing this Act.
  • 1997, c. 24, s. 50;
  •  2012, c. 20, s. 58.
The effective “coming into force” day for the purpose of this review is November 7, 2012 – which means that the review process need not officially begin until November 7, 2017.
 PREVIOUS 1997 LEGISLATION RE “REVIEW”

Marginal note: Review of Act
  • 92 (1) Within five years after the coming into force of this section, the Minister shall cause to be laid before both Houses of Parliament a report on the provisions and operation of this Act, including any recommendations for amendments to this Act.
  • Marginal note: Reference to parliamentary committee
(2) The report stands referred to the committee of the House of Commons, or of both Houses of Parliament, that is designated or established for that purpose, which shall
o    (a) as soon as possible thereafter, review the report and undertake a comprehensive review of the provisions and operation of this Act; and
o    (b) report to the House of Commons, or to both Houses of Parliament, within one year after the laying of the report of the Minister or any further time that the House of Commons, or both Houses of Parliament, may authorize.
  • 1997, c. 24, s. 50.
(highlight added)

The main difference now is that the review process will, at least officially, be driven by Parliament rather than the Minister and officials. To what extent Ministers Bains and Joly wish to get involved at various stages here remains unknown. Will the model of the “Fresh Start” bankruptcy law process be followed? In that case, the legislation was such that “The Bankruptcy and Insolvency Act and the Companies' Creditors Arrangement Act require that the Minister of Industry report to Parliament on the provisions and operation of both Acts in 2014”. That seems more like the old 1997 mechanism and less like the current mechanism. If recent events are any harbinger, the Senate Banking, Trade and Commerce Committee may be ready, willing and able to lead the way, or at least play a major role. Hopefully, a process that provides a useful and sustainable synergy between expert bureaucrats, Ministers, elected MPs, and a hopefully less partisan and more engaged Senate where long term expertise can develop will emerge from all of this.

That said, it quite possible that Ministers Bains and Joly may play a role in making suggestions to the House and Senate regarding the direction that the review might take. Since there is little doubt that the Ministers and their officials will be heavily lobbied by the usual suspects, it would be logical for the Ministers to open up the process by inviting submissions and, perhaps, holding public fora either online or in person or both, as has been done in the past. Nothing has been announced to date about how this process will unfold. We may not know more for some time – perhaps not even before the summer.

There are some wild cards that could come unexpectedly. The obvious one is that of NAFTA, where copyright could be forced onto the table. No doubt, the American content industry, through its Canadian surrogates, will push for the life + 70 windfall that they managed to get in the now moribund if not dead TPP.

The following is where we can expect the main lobbying in the next weeks and months to be focused:
The copyright content owner and collective “maximalists”, who will likely be led by the music, publishing and copyright collective sectors, will be seeking such things as:

  •          The roll back of the Supreme Court of Canada (“SCC”) rulings on fair dealing, namely CCH v LSUC, SOCAN v. Bell and Province of Alberta v. Access Copyright
  •          To repeal the explicit inclusion of “education” in s. 29 in the 2012 legislation, not that it has made any great difference given that the key SCC fair dealing rulings were all based on the previous law
  •          To impose some version of an “iPod tax” on memory and devices or even the “cloud”, or perhaps a “linking” or “snippet” or other form of “tax” on search engines and news aggregators, or some kind of general ISP “tax”
  •          To eliminate or at least raise the $5,000 cap on statutory damages for non-commercial infringement
  •          Term extension to life + 70 years – especially if NAFTA is re-opened as Trump keeps threatening
  •          Amendments to create new rights and to attempt to force the Copyright Board to eliminate what they call the “value gap”, which will become their mantra.
  •          Amendments to force incorrect interpretations of the Berne “three step test” and US jurisprudence on the “effect on the market” into Canadian domestic law

The “user” community, on the other hand, may seek such things as:
  •          Explicit “fair dealing” provisions to legitimize the circumvention of  technical protection measures (“TPMs”) in appropriate circumstances and, as Michael Geist says, “to fix the imbalance on fair dealing in the analog and digital worlds that has undermined Canadian innovation and the commitment to balance found in copyright law”
  •          Elimination of criminal offences in relation to circumvention in the absence of commercial scale activity
  •          Regulations to prohibit the use of the “notice and notice” mechanism to troll for settlement demands
  •          Provisions to prohibit the use of “reverse class actions” for copyright infringement
  •          Elimination of crown copyright in laws, statutory instruments and in any material incorporated by reference into the law.
  •          Explicit confirmation that copyright users’ fair dealing rights cannot be waived by means of contracts or otherwise.

Copyright law has, historically, not been a particularly “partisan” issue in the political sense. However, the Democrats in the USA and the Liberals in Canada have overall been more sympathetic to copyright content owners than Republicans and Conservatives respectively. The current Liberal government would do well to remember, however, that the once promising career of Sarmite Bulte, former Liberal Member of Parliament and once potential Minister of Canadian Heritage, came to quick end in 2006 in no small part as the result of revelations about her controversial relationship generally and a notorious “fundraiser” in particular involving prominent copyright industry leaders, including the still very active Graham Henderson.

Virtually all stakeholders that are affected by Copyright Board decisions are eager to see reform at the Copyright Board. I have long suggested that much, if not most, of what is needed could be done quickly by means of regulations. However, legislation may be required for more profound and long-term change.  There is general agreement that the current delays of typically four years or more to get to a hearing and a further delay of two years or more to render a decision that is inevitably retroactive by six years or more are inexplicable, unacceptable and unsustainable.  The Senate BANC Committee has taken the initiative on this front and its report of November 30, 2016 may signal in some ways how the Section 92 process will unfold.

HPK