May 27, 2020
In York University v. The Canadian Copyright Licensing Agency (Access Copyright), 2020 FCA 77, the Federal Court of Appeal set aside a Federal Court judgment regarding the enforceability of tariffs by collective societies. The Court of Appeal found that a tariff set by the Canadian Copyright Licencing Agency (“Access Copyright”) and approved by the Copyright Board was not mandatory and could not be enforced against York University (“York”). However, the Court of Appeal upheld the lower court’s decision on the issue of fair dealing, declining to declare that the copies made in compliance with its internal guidelines did not constitute copyright infringement.
Access Copyright is a collective society which administers the reproduction rights in protected works and collects and distributes the royalties to copyright holders.
For over 15 years, York operated under a licence agreement which permitted its faculty and staff to make copies of the works in Access Copyright’s collection. When it became unclear whether a new licence agreement would be reached, Access Copyright applied to the Copyright Board and obtained approval for an interim tariff which incorporated the existing agreement’s royalty rate.
York opted out of the tariff, taking the position that it was not mandatory or enforceable against non-licencees. York implemented its own set of guidelines (the “Guidelines”), which indicated that short excerpts could be copied without constituting copyright infringement. Using the Guidelines, York faculty and staff copied a significant amount of material without paying licence fees or royalties.
In response to York opting out, Access Copyright brought an action to compel York to pay royalties pursuant to the tariff. York counterclaimed against Access Copyright, seeking a declaration that the copying made in compliance with its Guidelines constitutes fair dealing.
At the trial level, the Federal Court decided in favour of Access Copyright and found that the tariffs were mandatory. The Federal Court also dismissed York’s counterclaim, concluding that the copying policy in York’s Guidelines did not qualify as “fair dealing”. York appealed both decisions.
There were two main issues for the Court to consider on appeal:
Whether the interim tariff was mandatory; and
Whether copies made in compliance with York’s Guidelines constituted fair dealing.
The Tariff Was Not Mandatory
The Court of Appeal first addressed the issue of whether a tariff approved by the Copyright Board is enforceable against non-licencees. If a tariff is mandatory, a user who infringes copyright becomes liable for the amount in the tariff, regardless of whether the user has agreed to be bound. In the absence of a tariff or collective society, a user who infringes copyright becomes liable only to the copyright owner for damages.
At common law, copyright owners, or entities like Access Copyright who have acquired certain rights from copyright owners, cannot impose terms on those who have not agreed to become licensees. The issue turned on whether the Copyright Board’s approval of a proposed tariff changes the relationship between copyright owners and users.
The Court of Appeal proceeded by examining the scheme and legislative history of the Copyright Act R.S.C. 1985, c. C-42 (the “Act”), specifically section 68.2, which formed the statutory basis for Access Copyright’s claim:
68.2 (1) Without prejudice to any other remedies available to it, a collective society may, for the period specified in its approved tariff, collect the royalties specified in the tariff and, in default of their payment, recover them in a court of competent jurisdiction.
The Court of Appeal found that the word “tariff” on its own does not necessarily connote a mandatory fee. A review of the legislative history revealed that, at one point in time, “tariff” and a “statement of fees, charges or royalties” were equivalent expressions. Referring to something as a “tariff” does not mean that it is imposed regardless of whether the user agrees to be bound.
The Court of Appeal also rejected the argument that a tariff is binding on all users because it is a regulation. The tariff cannot be considered a regulation since the Act does not give power to the Copyright Board to make or establish tariffs on its own motion. It may only approve tariffs that have been submitted to it by collective societies.
The Court of Appeal then considered the statutory purpose of collective societies and concluded that they are given statutory authority to operate licensing schemes for the benefit of copyright holders. References to licensing schemes throughout the history of the Act led to the conclusion that the collective society/tariff regime has always regulated consensual licensing schemes.
Ultimately, the Court of Appeal allowed the appeal, concluding that the tariff is not enforceable against York because the Act does not bind non-licensees.
York’s Guidelines Did Not Constitute Fair Dealing
The Court went on to consider York’s counterclaim, in which York sought a declaration that copies made in compliance with its Guidelines came within section 29 of the Act as fair dealing.
A crucial issue in this appeal was whose perspective matters for the purposes of the fair dealing analysis. Following CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13 (“CCH”), the Court of Appeal held that, in the case of an institutional claim of fair dealing based on general practice, it is the institution’s perspective that matters and not that of its users.
An institution acting as a copier-for-others can rely on fair dealing either by (i) showing that all of its users dealt with the copies in a “fair dealing manner”; or (ii) relying on its “general practice”. Since York did not bring evidence of the fair dealing of its users (i.e., its students), it was bound to justify its Guidelines by demonstrating that its practices and safeguards ensured that the Guidelines were implemented in a fair dealing manner. The Court of Appeal agreed that the fact that there were virtually no safeguards implemented by York to ensure compliance with the Guidelines tended to show unfairness and that York should have taken steps to ensure that its Guidelines were properly implemented.
The Court of Appeal proceeded to apply the two-part test for fair dealing set out by the Supreme Court in CCH.
The first step of the test requires a determination of whether the dealings fall within one of the allowable purposes under the Act. There was no contention in this case that the allowable purpose was education.
The analysis shifted to the second branch of the test, which requires a determination of whether the dealing was “fair”, having regard to the six factors established in CCH: (1) purpose of the dealing; (2) character of the dealing; (3) amount of the dealing; (4) alternatives to the dealing; (5) nature of the work; and (6) effect of the dealing.
Purpose of the Dealing
The Federal Court’s findings that the purpose of the dealing was “to obtain for free that which [York] had previously paid for” and “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” were findings of fact and were absent of palpable and overriding error. The Court of Appeal agreed with the lower court that the purpose of York’s Guidelines was a clear indication of unfairness.
Character of the Dealing
“Character of the dealing” referred to the quantification of the total number of pages copied. Since there were no restrictions put on the number of copies in York’s Guidelines, or on downstream copying and redistribution by students, this factor tended to show that York’s dealings were unfair. The Court of Appeal found no reason to interfere with the Federal Court’s conclusion.
Amount of the Dealing
The “amount of the dealing” factor considers the proportion of a protected work which is copied. The Federal Court concluded that copying on such a large scale does not point to fair dealing where there is no meaningful control over the portions copied. York challenged these conclusions on the grounds that the Federal Court focused on York’s perspective, rather than the students’. However, York did not point to any evidence to support its arguments and did not show that the Federal Court erred in any material way in reaching its conclusion.
Alternatives to the Dealing
The Federal Court concluded that the use of copying was reasonably necessary to achieve the ultimate purpose of education. While the factor favoured York, its effect was mitigated since York had not considered paid alternatives. The Court of Appeal did not interfere with this conclusion.
Effect of the Dealing
Access Copyright had the burden of showing the negative impacts of the dealings on the copyright holders. The “massive” amounts of copying in issue, the history of payments to Access Copyright prior to York’s “opting out” and York’s size supported the conclusion that York’s copying practices under the Guidelines likely resulted in negative impacts. None of York’s submissions was sufficient to show that the Federal Court fell into palpable and overriding error when it concluded that the effect of the dealing pointed to unfairness.
Nature of the Work
“Nature of the work” was not a determinative factor in the Federal Court’s decision. The Court of Appeal did not conduct a separate analysis.
Conclusion on fair dealing
After considering the six factors, the Court of Appeal concluded that York did not show 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. York failed to justify the Guidelines and did not take steps to ensure that copying under them constituted fair dealing. Therefore, the Court of Appeal upheld the Federal Court’s decision and dismissed York’s counterclaim.
Authors: Scott Kerr and Megan Brooks