is a major decision of the Supreme Court of Canada in the matters of the effectiveness of copyright collectives and of fair dealing in Canadian copyright law.
Background Ever since the 2004 judgment of the SCC in CCH Canadian Ltd v Law Society of Upper Canada, many institutional users have sought to simplify the process of determining what constitutes fair dealing through the adoption of guidelines quantifying what amounts of a work may be acceptable.
When the copyright collective Access Copyright sought to enforce an Interim Tariff in December 2010 that had been approved by the Copyright Board of Canada, York University asserted that any copying it did fell outside the tariff's scope under the Fair Dealing Guidelines it had issued to define its position. In relevant part, the Guidelines stated:
Access Copyright sued York University with respect to royalties due under the Interim Tariff, while York counterclaimed for a declaration stating that its Guidelines were lawful under s. 29 of the Copyright Act.
The courts below Federal Court of Canada In a decision released in July 2017, the Federal Court of Canada concluded that Access Copyright was entitled to the royalties as stated in the Interim Tariff, and that the York University fair dealing guidelines were not fair.
Interim Tariff The Court held that a tariff (whether interim or final) is a form of subordinate legislation that is mandatory and binding on all persons, and that there is no ability to opt out of it. "If York did not copy any works in Access’s repertoire, if it obtained proper permission to copy those works, or if the copying was exempt by law – the fair dealing defence and counterclaim – then the tariff would not be applicable. Absent these conditions, the tariff is mandatory."FC, par. 220
Fair dealing In that decision, emphasis was given to the fact that the CCH six-factor test was the second part of a two-stage analysis in which a user must first identify whether a use was allowed before then assessing whether dealing is fair, and stressed that users must not conflate the two stages.FC, par. 255-257 As to the first step:
+ Determination of allowable purpose under the Copyright ActAvailable under s. 29 Relevant purpose in the present caseresearch private study education parody satire"It is a low threshold to meet and there is no real issue that York has established that the dealing (copying) was for the allowable purpose of education."FC, par. 256
Turning to the second step of the analysis:
+ The CCH six-factor test (as applied to York in the Federal Court decision)Factor Criteria Analysis of York's actions The factors as determined in this caseFair UnfairPurpose of the dealing The focus is on considering the fairness of the goal for which the permitted activity (e.g. research, education) took place.FC, par. 270 The absence of safeguards with respect to compliance tends towards unfairness.FC, par. 266"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."FC, par. 273Not a strong factorCharacter of the dealing Courts must examine how the work was dealt with, the number of copies made, and the extent of disseminationFC, par. 276 The "character" and "amount" inquiries must not be conflated. Specifically, the "character factor" involves a quantification of the total number of pages copied (i.e. a quantitative assessment based on aggregate use), whereas the "amount factor" is an examination of the proportion between the excerpted copy and the entire work.FC, par. 277"...recognizing some of the limitations in the data, it is appropriate to view the copies in total despite York’s argument that this approach disadvantages large institutions. It is York’s practices that are at issue and it is its data that is raising the issue."FC, par. 286Amount of the dealing This requires an assessment of both the quantitative amount of the dealing and the qualitative importance of the part copied.FC, par. 290 Where guidelines are devised to advise as to the quantity of a work that can be fairly copied, the court must consider the specified thresholds, the rationale for these thresholds, and the amount of any one type of work which can be copied.FC, par. 293 It is incumbent on the user institution to explain the basis for the delineated amounts and types (the thresholds) and to explain why they are, in and of themselves or in combination with other features, fair.FC, par. 305"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."FC, par. 314Alternatives to the dealing The availability of a licence is not a relevant alternative in deciding whether a dealing is fair.FC, par. 320 The level of fairness depends upon whether the user has actively engaged in the consideration or use of alternatives which exist or are in development.FC, par. 329"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.... There are alternatives – these include using custom book services, purchasing individual chapters or articles from the publisher, or purchasing more of the necessary books and articles. There is just no reasonable free alternative to copying."FC, par. 329-330Nature of the work The user must inquire as to whether the work is of such a nature that its reproduction would lead to a wider public dissemination of the work.FC, par. 332"Aside from the dependency or reliance on income from writing and publishing, the notion of the benefits of dissemination must be carefully considered. 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."FC, par. 337Effect of the dealing on the work Concerned with the negative impacts of the dealing on the creators and publishers.FC, par. 339 If the reproduced work is likely to compete with the market of the original work, this may suggest that the dealing is not fair.FC, par. 341"... since the introduction of the Guidelines, there has been an acceleration of the decline in the sale of works produced for the post-secondary educational market and a transfer of wealth from content producers to content users. He stated that 'the magnitude of the overall impact [of dealing in a work] is indicative of the significance of the impact on individual works'."FC, par. 347
Federal Court of Appeal The University's appeal to the Federal Court of Appeal was allowed in part in April 2020.
Nature of tariff Access Copyright's tariff was held not to be of a mandatory nature, as "tariffs do not bind non-licensees".FCA, par. 204 This arose from an analysis of the legislative history concerning copyright tariffs in Canada:
From the Act's introduction in 1921 until 1931, there was no regulation of the activities of performance rights organisations that had been formed. "[I]t was felt to be unfair and unjust that these dealers should possess the power so to control such performing rights as to enable them to exact from people purchasing gramophone records and sheets of music and radio receiving sets such tolls as it might please them to exact." Amendments in 1931 required these organizations to give notice as to what works they were authorized to collect royalties on, as well as to obtain approval of applicable rates from a newly organized Copyright Appeal Board. 1988 amendments extended the concept of collective rights to all forms of copyright, thus enabling other licensing bodies to be created. 1997 amendments enabled the formation of the present-day framework of copyright collectives.
Canadian jurisprudence has subsequently defined the nature and scope of tariffs:
If a licensee has paid the amount due under a tariff with respect to the use of a work, he cannot be sued by a performing rights organization.FCA, par. 67-68 If anyone who is not a licensee infringes copyright, the rights holder is able to apply for an injunction. A user is free to choose whether or not it will take a licence on the terms set out in the organization's approved statement. Organizations can not collect both licence fees and damages for the same use of a work. Later amendments have not imposed mandatory requirements on users to follow approved tariffs. "[T]he Board does not make or establish tariffs at all: it approves proposed tariffs submitted to it by collective societies."FCA, par. 146
Fair dealing York's counterclaim with respect to the Federal Court's fair dealing analysis was dismissed "on the basis that its Guidelines do not ensure that copying which comes within their terms is fair dealing",FCA, par. 4 noting that "York has not shown that the Federal Court erred in law in its understanding of the relevant factors or that it fell into palpable and overriding error in applying them to the facts."FCA, par. 312
Aftermath The decision was described as "jurisprudential analysis of a high order", and several consequences therefrom were noted as possible:
Although Access Copyright cannot rely on statutory authority to represent its members’ rights, it may be able to become their negotiating agent. It could restructure its activities to acquire a stake in its members’ rights, in the same manner as SOCAN has done, in order to sue directly for damages on its own behalf, and statutory damages are of sizeable amounts in comparison to what tariffs may have charged.
It was also pointed out that institutions will not be able to plead a defence of fair dealing based solely on published guidelines, without providing evidence that there are other practices and safeguards to demonstrate the policy was followed, and that copying was actually done for an allowable purpose.
In October 2020, the Supreme Court of Canada granted both parties leave to appeal.
At the Supreme Court of Canada Access Copyright's appeal was dismissed with costs. York's appeal was dismissed without costs.SCC. par. 107-108
Nature of tariff There was agreement with the Federal Court of Appeal that the tariff is not enforceable against York University.SCC. par. 19 It was also pointed out that the way Access Copyright's operations were structured did not enable it to pursue infringement proceedings on behalf of its members. "Nothing compels Access Copyright and its members to operate this way."SCC. par. 74
Fair dealing
Drawing upon its reasoning in Daniels v Canada (Indian Affairs and Northern Development), the Court recalled, "The party seeking [declatory] relief must establish that the court has jurisdiction to hear the issue, that the question is real and not theoretical, and that the party raising the issue has a genuine interest in its resolution." Because the tariff in question was unenforceable, there was thus no live dispute. As this was not an action for infringement, the defence of fair dealing did not need to arise.SCC. par. 83 However, the Court found the reasoning of the lower courts flawed in this matter, as it "approached the analysis from an institutional perspective only, leaving out the perspective of the students who use the materials. Both perspectives should be taken into account."SCC. par. 98
Aftermath