Faculty of Law, 78 Queens Park, Toronto, ON, Canada M5S 2C5Tel: 416-978-8892 Fax: 416-978-2648 ariel.katz@utoronto.ca www.law.utoronto.ca/faculty/katz

RIEL

ATZ

SSOCIATE

ROFESSOR

NNOVATION

HAIR

LECTRONIC

OMMERCE

June 27, 2011

- BY EMAIL -

Mr. Gilles McDougallSecretary GeneralThe Copyright Board of Canada56 Sparks Street, Suite 800Ottawa, OntarioK1A 0C9Dear Mr. McDougall,

Re: Response to the AUCC’s Application regarding Transactional Licenses

Pursuant to the Board’s notice from June 16, 2011, I wish to respond to the AUCC’s applicationfrom June 8, 2011. The AUCC’s application, including the supporting documents as well asthose submitted by the ACCC, suggest that many of the concerns that I raised in my objections tothe Interim Tariff have indeed materialized despite the Board’s efforts to mitigate them.Naturally, I take these issues very seriously.Nevertheless, I am not persuaded that amending the Interim Tariff to require Access Copyrightto grant transactional licenses on a per copy basis—as the AUCC requests—is the optimalremedy for these issues. In fact, I am concerned that ordering Access Copyright to granttransactional licenses might actually—under some circumstances—aggravate the problem.While I am confident that this was not the AUCC’s intention, I believe that the remedy that itproposes could inadvertently backfire and serve the interests of Access Copyright to thedetriment of Canadian academic institutions.In this submission, I wish to address three main issues: (a) what a non-mandatory tariff entails;(b) the abusive and anti-competitive nature of Access Copyright’s (and some of its members’)alleged conduct; and (c) the appropriate remedy.

Faculty of Law, 78 Queens Park, Toronto, ON, Canada M5S 2C5Tel: 416-978-8892 Fax: 416-978-2648 ariel.katz@utoronto.ca www.law.utoronto.ca/faculty/katz

I reserve the right to make further and more specific submissions, including proposing a morespecific remedy in reply to Access Copyright’s submission and in accordance with the Board’snotice.

What does a Non-Mandatory Tariff Entail

The concern that if approved, the Interim Tariff would be mandatory has been fundamentalto most objectors’ opposition to its approval, including mine. I wish to reiterate my positionthat the Copyright Board does not have the power to approve a mandatory interim tariff andshould not approve a mandatory interim tariff even if it had the power to do so. As I wrote inmy objection to the Interim Tariff, an approved tariff is law. Not only

de jure

but also

de facto,

because upon its approval, the collecting society is entitled, according to s. 68.2(1)and s. 70.15(2) of the

Act

, to collect the royalties specified in the tariff and, in default of theirpayment, to recover them in a court of competent jurisdiction. When a tariff is approved, itbecomes mandatory upon any person to which the tariff pertains. It is binding even onparties that took no part in the proceeding for its approval.2.

The Board responded to this concern by noting thatthe interim tariff we adopt in this matter is not mandatory. An Institution can avoid itsapplication by purchasing the work, negotiating a licence to copy the work with Accessor its affiliates, not using any work in the repertoire of Access or engaging only inconduct exempt from liability.

Moreover, the Board clearly indicated, in paragraph 45, that its ruling on this issue may notnecessarily be final, and that should the need arise, the issue would be further considered.

A tariff is a “regulation” under the

Interpretation Act

, R.S.C. 1985, c. I-21, s.2.

I am setting aside for the moment the likelihood that a tariff that specifically targets educational institutions is alaw in relation to education, and therefore falls under the exclusive jurisdiction of the provinces, according to s. 93of the Constitution Act, 1867 (U.K.), 30 & 31 Victoria, c. 3, s. 93, as well as the possibility that a mandatory tariff isin effect a tax, whose constitutional validity depends on compliance with sections 53 and 54 of the same act. I willreturn to this issue in due course.

Board’s Reasons, March 16, 2011, paragraph 50.

Faculty of Law, 78 Queens Park, Toronto, ON, Canada M5S 2C5Tel: 416-978-8892 Fax: 416-978-2648 ariel.katz@utoronto.ca www.law.utoronto.ca/faculty/katz

The current Application indicates that such further consideration is apt, and I wouldrespectfully submit that further considerations should be given not only to the terms of theInterim Tariff but also some aspects of the Board’s reasons.4.

In my opinion, to be non-mandatory the Interim Tariff must not interfere with Institutions’ability to secure licenses on competitive terms if they wish so. Since there is no guaranteethat this is the case, measures necessary to secure this option should be put in place.5.

With respect, only the first part of the Board’s above-mentioned reasoning satisfiesconditions under which the Interim Tariff could be considered to be non-mandatory.Moreover, to be truly non-mandatory these conditions must imply that an Institution has agenuine option fully to obtain licenses covering all its needs on competitive terms. I wouldsubmit that the options of not using any work in the repertoire of Access or engaging only inconduct exempt from liability do not render the Interim Tariff non-mandatory, becauseaccording to s. 68.2(1) of the

, an Institution making

even a singleunauthorized and non-exempt copy of a Repertoire Work

becomes liable for paying the

entire

fee specified in the Tariff and complying with all its terms (in addition to any other remediesavailable to Access Copyright or the copyright owner). The fact that an Institution can avoidbeing subject to the tariff by refraining from using

any

Repertoire Work or engaging

only

inexempt conduct does not change the mandatory nature of a tariff, in the same way that theoptions of not working or not earning any taxable income do not change the mandatorynature of one’s obligation to pay income tax on her taxable earnings, or in the same way thatthe options of walking, cycling or using public transit do not change the mandatory nature of obtaining a driver’s license for driving.6.

Liability to the collective society for paying the entire fee for the entire repertoire and theability of the collective society to collect this payment in summary proceedings (and not bybringing an action for copyright infringement) distinguishes the case from ordinary liabilityfor copyright infringement, whereby the unauthorized user is liable only to the copyrightowner, the remedy is subject to wide discretion of the court, and in any event will becommensurate with the actual use, the actual damage done, profit earned, etc.7.

These points need not be pursued further because the Board clearly intended that the InterimTariff would not be mandatory, in the sense of securing the Institutions’ ability to obtain