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Snatching defeat from the jaws of victory: why the government’s Copyright Board plans threaten to spark another lobbying battle

By Michael Geist      

With a framework in place to win broad support on the administration of copyright and a process at the House Industry Committee to grapple with the substantive issues, the government established a viable reform process that seems suddenly set to go badly off-track.

Innovation, Science and Economic Development Minister Navdeep Bains, pictured, and Canadian Heritage Minister Mélanie Joly announced the substantive policy questions would be left to the copyright review, but that the government would move quickly to address the administration of copyright by introducing long-overdue reforms to the Copyright Board of Canada. The Hill Times photographs by Andrew Meade
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OTTAWA—Copyright reform has long been viewed as one of the more contentious policy issues on the Canadian agenda, pitting creators, education groups, innovative companies, and a growing number of individuals against one another in processes that run for years and leave no one fully satisfied. Indeed, the copyright review currently underway before the House Industry, Science and Technology Committee promises to run for months with MPs hearing from a broad range of stakeholders presenting perspectives that will be difficult to reconcile.

Given the somewhat messy politics, last fall the government identified a short term solution that appeared to have wide-ranging support. Innovation, Science and Economic Development Minister Navdeep Bains and Canadian Heritage Minister Mélanie Joly announced the substantive policy questions would be left to the copyright review, but that the government would move quickly to address the administration of copyright by introducing long-overdue reforms to the Copyright Board of Canada.

The strategy was a political slam-dunk since both creator and user groups have expressed frustration with the slow processes at the board, which are said to foster marketplace uncertainty and leave creators waiting years to be paid. A public consultation identified the solutions: more funding for the board, a clear articulation of its mandate, the introduction of case management techniques commonly used in litigation, and strict time limits to stop delay tactics.

Yet despite an easy political and policy win, the issue is now mired in internal disputes that threaten to sideline the broader copyright review process as parties gear up for a battle over board reform. The source of the dispute is not the administrative changes to the board. Rather, some are also pushing for substantive changes that would have significant implications for broader copyright policy that threaten to create massive liability risks for some copyright stakeholders.

The substantive change at issue is described as “tariff harmonization,” which sounds innocuous but would result in a radical change to copyright policy and pre-empt much of the work of the Industry committee.

Canadian copyright law features two different approaches to the use of tariffs determined by the copyright board. Some tariffs, such as those for music collective SOCAN, are mandatory owing to concerns over competitive practices. This means the collective must file tariffs with the board, which determines the appropriate rate. Since the tariffs are mandatory, the law provides for the possibility of a statutory damages multiplier, meaning that users that fail to pay the prevailing tariff may owe several times more than the actual licence fee. This helps foster compliance and represents a quid pro quo for the mandated approach.

Alternatively, for some tariffs, such as those involving Access Copyright, the use of the board is optional. This leaves it to rights holders to determine if they want to privately negotiate their rates or have the board establish a rate for the market. Since the process is optional, there are no statutory damages multipliers in effect.

Despite the obvious differences in approach, the government is considering “harmonizing” the two approaches, by granting statutory damages multipliers for both of the mandatory and voluntary tariff systems. Not only would the approach undo the policy rationale behind multipliers for statutory damages within Canadian copyright, but it would also have a dramatic impact on substantive copyright issues such as fair dealing.

Access Copyright, which supports the measure, argues that the massive escalation in potential damage awards are needed for three reasons: deterrence, promotion of settlement negotiations, and efficient use of court resources. Yet none of the arguments ring true.

Deterrence is used in the context of small establishments that might use music without paying the appropriate licence. But that is far different from the current situation with educational institutions that have not paid the Access Copyright licence because of a good faith analysis of the scope of fair dealing under Canadian copyright law, an issue currently before the Industry committee.

Further, the so-called public policy benefit of promoting settlement negotiations amounts to little more than the hope that increasing liability risk will convince educational institutions – and by extension students and taxpayers—to cave to Access Copyright’s legal claims. The litigation costs sparked by the Access Copyright lawsuit are significant. To accept Access Copyright’s argument, it would be beneficial to encourage collectives to file lawsuits against educational institutions with the added threat that failure to settle could lead to hundreds of millions in liability beyond what even they would argue are the applicable royalties.

As for efficient use of court resources, to maintain that it is a waste of resources to determine actual damages is to dismiss how most litigation unfolds and suggests that the collective’s insistence of good faith negotiation has instead devolved into being primarily interested in a windfall at the expense of students and taxpayers.

With a framework in place to win broad support on the administration of copyright and a process at the House Industry Committee to grapple with the substantive issues, the government established a viable reform process that seems suddenly set to go badly off-track. In doing so, it may turn an easy win into a political quagmire that once again leaves stakeholders largely dissatisfied.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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