Certified tariffs not mandatory says SCOC in York v Access Copyright 

Fair dealing

The Supreme Court released another landmark copyright decision in York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32. The decision, affirmed the decision of the Court of Appeal that held that certified tariffs are not mandatory on users who refuse to accept them. In addition, the Court further developed its fair dealing framework adopted in CCH v Law Society (CCH),  Alberta (Education) and SOCAN v Bell Canada (SOCAN). In obiter dicta, the Court suggested that at the second stage of the fair dealing analysis where the allowable purpose is higher education, the purposes of both students and the educational institution should be taken into account rather than just the perspective of the university as the trial judge and the Court of Appeal had held.

Certified Tariffs are not mandatory

The Supreme Court headnote to the decision aptly summarizes the Court’s reasons for finding interim tariffs and certified tariffs not mandatory on users who refuse to accept the terms of such tariffs.

The tariff is not enforceable against York. Section 68.2(1) of the Copyright Act does not empower Access to enforce royalty payments set out in a Board approved tariff pursuant to s. 70.15 against a user who chooses not to be bound by a licence on the approved terms. Section 68.2(1) does not provide a collective infringement remedy. A collective society is required to provide licences pursuant to the terms of an approved tariff, but the licence cannot be forced on a user. A user is entitled to obtain its rights through other means and, if the user makes an unauthorized use, the appropriate remedy is an action for infringement. While Access’s inability to initiate infringement actions as a non‑exclusive licensee may cause it difficulties, this is the consequence of its freely chosen contractual arrangements with its members.

The text, legislative context, purpose and supporting jurisprudence confirm this interpretation…

The text of s. 68.2(1) is silent on who the collective society may collect royalties from and on what conditions. Where Parliament sees fit to create a mandatory duty to pay, it generally does so with clear and distinct legal authority showing that this was its intent. There is no such language creating a duty to pay approved royalties to a collective society that operates a licensing scheme anywhere in the Copyright Act. Concluding otherwise would read words into the provision that are not found anywhere in the text of the Copyright Act.

The Court also considered that the legislative history of collective administration of copyright in Canada continues to be protection of the public from potential monopolistic practices of collectives.

The fair dealing framework

It is well accepted that users seeking to rely on the fair dealing defense to infringement must establish that both the dealing is for an allowable purpose, such as research, private study, or education, and that the dealing is fair.

Prior to the Supreme Court’s landmark decision in CCH, it was well established that in Canada (and throughout the Commonwealth) that the allowable purpose step was to be reviewed exclusively from the copier’s perspective.

In CCH the Court accepted that facilitating the research of others was sufficient to pass the first step. In that case, the Great Library was facilitating research of lawyers.  In Alberta and SOCAN, the Court, without explaining the change in its framework, went further holding that in assessing whether the first step in the fair dealing analysis is met and where the purpose of the dealing is to facilitate fair dealing of other users, courts should examine the purpose of the dealing from the perspective of the ultimate user. In Alberta (Education) it was students who had the fair dealing purpose of private study. In SOCAN, it was users who were conducting research for the purpose of determining if they wanted to purchase a musical work. In York, as a result of the amendments to the Copyright Act which added education as an allowable purpose, it was clear that York’s dealings were for that allowable purpose. This was noted by the Court which stated: “It was common ground in this case that York’s teachers make copies for their students for the allowable purpose of education at the first step of the analysis.”

Under the Court’s fair dealing jurisprudence at the second step the Court examines six non-exclusive factors. The Court summarized these well-known factors as follows:

Six non-exhaustive factors provide a framework for assessing fairness, which is ultimately a question of fact: the purpose of the dealing; the character of the dealing (which concerns the number of copies made or distributed and whether the copies are retained or destroyed after use); the amount of the dealing (which concerns the proportion of the work dealt with and the importance of that part); alternatives to the dealing; the nature of the work; and the effect of the dealing on the work (para. 53; see also SOCAN, at para. 13; Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright)2012 SCC 37 (CanLII), [2012] 2 S.C.R. 345, at para. 12, per Abella J.).

The Court’s jurisprudence on the perspective to be applied at the second step of the analysis had not been subject to any well developed analysis. As for the “purpose of the dealing” factor, the decisions in CCH, SOCAN, and Alberta (Education) were fact based and to took into account the perspectives of both the users and the copiers since in each of these cases the copiers were facilitating the research or private study fair dealings of others.

In Alberta (Education) the Court dealt with the perspective to be applied stating the following:

. . . fair dealing is a “user’s right”, and the relevant perspective when considering whether the dealing is for an allowable purpose under the first stage of CCH is that of the user . . . . This does not mean, however, that the copier’s purpose is irrelevant at the fairness stage. If . . . the copier hides behind the shield of the user’s allowable purpose in order to engage in a separate purpose that tends to make the dealing unfair, that separate purpose will also be relevant to the fairness analysis.

In the case before us, however, there is no such separate purpose on the part of the teacher. Teachers have no ulterior motive when providing copies to students. . . . [T]hey are there to facilitate the students’ research and private study. It seems to me to be axiomatic that most students lack the expertise to find or request the materials required for their own research and private study, and rely on the guidance of their teachers. They study what they are told to study, and the teacher’s purpose in providing copies is to enable the students to have the material they need for the purpose of studying. [paras. 22-23]

In SOCAN, the Court, on the facts of the case, found that the “predominant perspective” when assessing the purpose of the dealing was “that of the ultimate users of the previews”, whose research purposes were facilitated by the online music services. According to the Court:

The first factor identified in CCH is the purpose of the dealing, where an objective assessment is made of the “real purpose or motive” behind using the copyrighted work (para. 54).

SOCAN argued that the purpose of the previews in this case was purely commercial. This is an approach that looks at the purpose of the previews from the perspective not of the consumer, but of the service providers.  I agree instead with the Board and the Federal Court of Appeal that the predominant perspective in this case is that of the ultimate users of the previews, and their purpose in using previews was to help them research and identify musical works for online purchase.  While the service providers sell musical downloads, the purpose of providing previews is primarily to facilitate the research purposes of the

In York, the Court built on the statement in Albert (Education) that “the separate purpose [of the educational institution] will also be relevant to the fairness analysis” to hold that the analysis should focus on both the perspective of users and the educational institution. The key error made by the trial judge and the Court of Appeal, according to the Court, was assessing the purpose of the dealing exclusively from the perspective of the educational institution.

In other words, contrary to the Federal Court of Appeal’s view, in the educational context it is not only the institutional perspective that matters…

The main problem with their analysis was that they approached the fairness analysis exclusively from the institutional perspective. This error tainted their analysis of several fairness factors. By anchoring the analysis in the institutional nature of the copying and York’s purported commercial purpose, the nature of fair dealing as a user’s right was overlooked and the fairness assessment was over before it began.

But at the second step, where fairness is assessed, the Federal Court and Federal Court of Appeal 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.

In the educational context, instructors are facilitating the education of each of their individual students who have fair dealing rights (Alberta (Education), at paras. 22-23). However, courts are not required to completely ignore the institutional nature of a university’s copying practices and adopt the fiction that copies are only made for individual isolated users…

In this case, as in Alberta (Education), “the key problem is in the way the [trial judge] approached the ‘purpose of the dealing’ factor” in the fairness analysis (para. 15). In fact, both the Federal Court and the Federal Court of Appeal erred in an almost identical fashion to the Copyright Board in Alberta (Education). There, the issue was whether copies of short excerpts of textbooks and other literary works made by secondary school teachers and provided to students as assigned reading constituted fair dealing for the purpose of “research or private study”. The case arose prior to the enactment of the Copyright Modernization Act, S.C. 2012, c. 20, which added “education” as a permissible purpose. The Board found that the copies were for the permissible purpose of research or private study at the first stage of the analysis, but the predominant purpose at the second stage was “instruction”, which fell outside of research or private study.

It was therefore an error for the Court of Appeal, in addressing the purpose of the dealing, to hold that it is only the “institution’s perspective that matters” and that York’s financial purpose was a “clear indication of unfairness” (paras. 238 and 241)…The purpose of copying conducted by university teachers for student use is for the student’s education. But in every case, all relevant facts must be taken into account in order to determine the fairness of the dealing.

The Court’s analysis on the perspective to be applied at the fairness step was implicitly premised on both York and students being entitled to the benefit of the educational exception in respect of the university’s copying activities. In CCH, SOCAN, and Alberta (Education), however, the decisions of the Court were clear that the users had fair dealing rights that were facilitated by the alleged infringers. In the York decision the Court did not expressly canvass whether the new allowable purpose for education was intended exclusively for the educational institution or applied also to the purposes of students. Had the Court canvassed this question it may not have been critical or as critical of the framework adopted by the trial judge or the Court of Appeal.

The Court also commented on how the character of the dealing factor (which concerns the number of copies made or distributed and whether the copies are retained or destroyed after use) should be assessed where there is aggregate copying made to support fair dealing that is facilitated by a higher educational institution. The Court reaffirmed its prior holdings that

[W]hen an institution is defending its copying practices, its aggregate copying is necessarily relevant, for example, to the character of the dealing and the effect of the dealing on the work (see, e.g., CCH, at paras. 55 and 72; SOCAN, at para. 42; Alberta (Education), at paras. 30 and 33).

The Court, however, also noted that the aggregate copying must also be examined from the perspective of users stating:

And the trial judge’s criticism of York’s Guidelines on the basis that different portions of a single work could be distributed to different students, such that an author’s entire work could end up being distributed in the aggregate, is also contradicted by SOCAN, which held that “[s]ince fair dealing is a ‘user’s’ right, the ‘amount of the dealing’ factor should be assessed based on the individual use, not the amount of the dealing in the aggregate” (para. 41; see also Alberta (Education), at para. 29)….

And while it is true that “aggregate dissemination” is “considered under the ‘character of the dealing’ factor” (SOCAN, at para. 42; see also CCH, at para. 55; Alberta (Education), at para. 29), as this Court cautioned in SOCAN, “large-scale organized dealings” are not “inherently unfair” (para. 43). In SOCAN, where copies could easily be distributed across the internet in large numbers, this Court warned that focussing on the “aggregate” amount of dealing could “lead to disproportionate findings of unfairness when compared with non-digital works” (para. 43). By extension, the character of the dealing factor must be carefully applied in the university context, where dealings conducted by larger universities on behalf of their students could lead to findings of unfairness when compared to smaller universities. This would be discordant with the nature of fair dealing as a user’s right.

The Court did not comment substantively on the application of any of the other fair dealing factors and went out of its way to note it was not deciding the fair dealing issue between the parties.

In commenting on those errors, it is important to emphasize that our reasons do not decide the issue of fair dealing, which can only be determined in a factual context. Rather, the objective is to correct some aspects of the reasoning from the courts under review which, respectfully, depart from this Court’s jurisprudence. While correcting the errors committed by the Federal Court and Court of Appeal favours the position argued before this Court by York, these reasons address only some of the factors that make up the fair dealing analysis, an analysis that requires consideration of facts and factors not addressed here.

At the end of the day, the question in a case involving a university’s fair dealing practices is whether those practices actualize the students’ right to receive course material for educational purposes in a fair manner, consistent with the underlying balance between users’ rights and creators’ rights in the Act. Since we are not deciding the merits of the fair dealing appeal brought by York, there is no reason to answer the question in this case.

Concluding remarks

 The Court’s fair dealing decision is another example of the impacts to users and rights holders brought about by the significant changes to the interpretation of the Copyright Act that started with the Court’s decision in Théberge. This decision of the Supreme will also have broad impacts on the collective administration of copyright in Canada.  As the ink is not yet dry on the York case, it is too early to know whether the Government will accept the Court’s decision, and in particular, its finding that certified tariffs are not mandatory.

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