Blake.

Cassels & Graydon LLP Barristers & Solicitors Patent & Trade-mark Agents 45 O'Connor Street Suite 2000, World Exchange Plaza Ottawa ON K1 P 1A4 Canada Tel: 613-788-2200 Fax: 613-788-2247

December 15, 2010

Randall J. Hofley Portner Dir: Ottawa: 613.788.2211 Toronto: 416.863.2387 randall.hofJey@blakes.com

VIAE-MAIL

Reference: 00071273/000007

Mr. Gilles McDougall Acting Secretary

Copyright Board of Canada 56 Sparks, Suite Bureau 800 Ottawa ON K1A OC9

Attention:

Gilles McDougall

Acting General Secretary

Re: Access Copyright- Post-Secondary Educational Institutions Tariff, 2011-2013:

Access Copyright's Reply in the Application for Interim Decision dated October 7,2010

Dear Mr. McDougall:

I write on behalf of Access Copyright further to the Copyright Board's Ruling of December 8, 2010 ("Ruling") concerning Access Copyright's application for an interim decision (the "Interim Application") dated October 7,2010. In accordance with the Ruling, this letter contains Access Copyright's submissions in reply to the responses received by the Board concerning the Interim Application. As directed by the Board, Access Copyright's reply submissions herein deal only with Question 1 as set out in the Ruling. Access Copyright will file reply submissions pertaining to Questions 2 through 4 as set out in the Ruling on December 22, 2010. In making these submissions, Access Copyright repeats and relies on the submissions contained in its Interim Application.

I. OVERVIEW

Without exception, the respondents urge the Board to reject the request for an interim decision (and/or tariff) applicable to the period from January 1, 2011 to certification of an approved tariff (the "Gap Period"). In urging this outcome on the Board, the respondents' arguments fall under a number of overarching themes.

First, it is argued that the Board lacks jurisdiction to make an interim order in the nature of an interim tariff in the circumstances of this case. However, the respondents can cite no decision where the Board or a court has determined that the Board lacks such jurisdiction. As a fall-back position, the respondents cite three decisions in an inaugural tariff where the Board has declined to make an order for an interim tariff. In none of these cases has there been a 16-year history during which the very institutions who argue against an interim tariff have - under the most recent version of the agreements - been paying the same royalties as sought under the interim tariff. Nor, in any of the cases cited by the respondents, did the Board reject an

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application where the applicant was seeking only the status quo. The respondents' submissions on jurisdiction and lack of precedent should be rejected by the Board.

A second overarching theme is that Access Copyright has not demonstrated it will suffer any deleterious effects if the Board declines to grant interim relief. The respondents suggest that if Access Copyright does not make any distributions or incur additional administrative or legal costs beyond those currently incurred, it will have enough revenue to meet its operating expenses. Underlying this submission is the presumption that the rightsholders of works in Access Copyright's repertoire need not receive any distributed royalties flowing from use by the post-secondary institutions until the Board has certified an approved tariff. Also underlying this submission is the presumption that Access Copyright's (different) rightsholders benefitting from Access Copyright Elementary and Secondary School Tariff, 2005-2009 (the "K-12 Tariff'),1 for example, must forego receipt of royalties and subsidize other rightsholder affiliates of Access Copyright. Access Copyright urges the Board to reject the respondents' position as a transparent attempt to obtain what amounts to a holiday from paying royalties for the use of copyrighted material - a payment holiday that will last for as long as it takes to have the approved tariff certified by the Board.

Linked to the second theme is the suggestion in some respondents' submissions that Access Copyright could have renegotiated existing licences and should have secured a decision on the tariff before existing licences expired. Both the AUCC and ACCC make this point and argue that any deleterious effects that may be apparent are due to Access Copyright's own actions. This suggestion should be rejected by the Board and recognized for what it is: resistance to Access Copyright's transition in this sector from a licence regime to a tariff regime (necessitated by the decision by post-secondary institutions not to negotiate with Access Copyright) and a misunderstanding of the tariff filing requirements of the Copyright Act. In fact, Access Copyright has acted prudently and reasonably in transitioning from one regime to another.

A third overarching theme is that Access Copyright is forcing the respondents to move from a voluntary regime to a mandatory one. In making these arguments, Access Copyright is effectively being criticized for invoking the tariff regime established by Parliament. Moreover, the respondents ignore a fundamental requirement of a licensing regime: two parties willing to reach agreement. In the present case, notwithstanding concerted and persistent efforts by Access Copyright to persuade the post-secondary institutions and their umbrella organizations, the AUCC and the ACCC, to enter into agreements with Access Copyright covering the Gap Period, the vast majority of the institutions that will be subject to the certified tariff have chosen not to. They are, instead, asking that the Board not issue an interim tariff, seemingly in the hope that a collective exertion of monopsony power will erode the resolve of Access Copyright and its affiliates. As detailed in the Interim Application, without an interim decision, Access Copyright stands to lose 98.5% of its revenues flowing from post-secondary licensing (almost half of Access Copyright's annual revenues) from January 1, 2011 to a date unknown years away.

A fourth overarching theme is that the draft interim tariff (the "Interim Tariff') provided to the Board by Access Copyright does not preserve the status quo. However, the draft Interim Tariff is structured to achieve the twin goals identified in the Interim Application: (1) to preserve the status quo for "notice, recordkeeping, payment, auditing and sampling" in the Existing Agreements (as that term is defined in the Interim Application); and (2) to provide for the uses described in the Proposed Tariff. The Interim Tariff achieves these twin goals. Relating to this overarching theme are criticisms by the respondents of the Proposed Tariff. However, the

1 Collective Administration in relation to rights under sections 3,15,18 and 21, K-12 Tariff, para. 183.

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parties are not litigating the terms of the Proposed Tariff in these interim proceedings and the Board is not considering the terms of the Proposed Tariff. The validity and value of the Proposed Tariff, and the terms thereof, are matters that will be dealt with in the certification proceedings.

Finally, a number of respondents have argued that the time allowed to them to respond to the Interim Application was too short, and consequently they have been denied procedural fairness. While the Board has dealt with this issue in its ruling of December 8, 2010, respondents continue to make this argument. As outlined below, the parties have been given adequate time to respond to both the Interim Application and the terms of the draft Interim Tariff; there has been no lack of procedural fairness.

II. OUTLINE OF ARGUMENT

Access Copyright's reply submissions will be presented in accordance with the following general outline:

Preliminary Issue:

• There has been no lack of procedural fairness

Substantive Issues:

• The history of the negotiations

• Previous decisions of the Board

• The Board has jurisdiction to issue an interim tariff

• The factors considered in deciding whether to grant interim relief

• An interim decision is necessary to preserve the status quo

• An interim decision, by denying the "payment holiday" sought by the respondents, would be consistent with the objects of the Copyright Act

• The balance of convenience favours granting the interim relief sought by Access Copyright

III. PRELIMINARY ISSUE - PROCEDURAL FAIRNESS

Access Copyright wishes to address a preliminary matter concerning the fairness of these proceedings. A number of respondents have argued that the time allowed to them to respond to the Interim Application was too short, and consequently they have been denied procedural fairness. As well, some respondents argue that the provision by Access Copyright of the draft Interim Tariff on December 5, 2010 constituted a change of the relief requested by Access Copyright in the Interim Application and procedural fairness required that they be given more time to respond to the Interim Application. Professor Katz requested a "temporary moratorium" of "several weeks" and an oral hearing. The AUCC requested an extension to December 17, 2010 to respond to the Interim Application.

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As noted in the Interim Application, the AUCC, ACCC and each of the institutions listed in Appendices A and A.1 were served with the Interim Application on October 12, 2010. The Board provided a copy of the Interim Application to all objectors and intervenors on November 26, 2010, upon determining standing of participants, and directed participants to respond to the application no later than December 6, 2010.

In its order of December 3, 2010, the Board extended the time for response to the Interim Application to December 10, 2010, noting that this gave all participants at least two weeks to respond to the Interim Application. In the Ruling of December 8, the Board noted that the provision by Access Copyright of the draft Interim Tariff did not constitute a new proposal and that the Interim Application and the documents filed with it were sufficient for anyone to respond. In the result, the Board did not change the deadline to respond to the Interim Application. However, it extended to December 17, 2010 the date by which the respondents were to file submissions on the form of the interim decision, including any interim tariff, in the event the Board should decide to grant Access Copyright's request.

The Board has adequately and appropriately dealt with the arguments of procedural fairness in its order of December 3 and its Ruling of December 8, 2010. As a result, the arguments put forward by the respondents regarding procedural fairness are moot. However, Access Copyright adds the following.

As the Supreme Court of Canada has noted," the duty of procedural fairness is flexible and variable and depends on an appreciation of the context of the particular statute and the rights affected. The purpose of the participatory rights contained within the duty is to ensure that administrative decisions are made using a fair and open procedure, appropriate to the decision being made and its statutory, institutional and social context, with an opportunity for those affected to put forward their views and evidence fully and have them considered by the decision-maker.

Several factors are relevant to determining the content of the duty of fairness, among them: (1) the nature of the decision being made and process followed in making it; (2) the nature of the statutory scheme and the terms of the statute pursuant to which the body operates; (3) the importance of the decision to the individual or individuals affected; (4) the legitimate expectations of the person challenging the decision; and (5) choices of procedure made by the agency itself.

Applying the factors' identified by the Supreme Court of Canada to the facts of this case, it is evident that there has been no breach of procedural fairness.

In approaching the first factor (the nature of the decision) in Knight v. Indian Head School Division No. 193, the Supreme Court of Canada held that "the closeness of the administrative process to the judicial process should indicate how much of those governing principles should be imported into the realm of administrative decision making. The more the process provided for, the function of the tribunal, the nature of the decision-making body, and the determinations that must be made to reach a decision resemble judicial decision making, the more likely it is that procedural protections closer to the trial model will be required by the duty of fairness." Here, the Copyright Board is an administrative tribunal charged under the statute with

2 Baker v. Canada (Minister of Citizenship and Immigration), [1999]2 S.C.R. 817, paras. 21-28. 3 Knight v. Indian Head School Division No. 19, [1990]1 S.C.R. 653.

4 Ibid., at para. 23.

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determining a fair and reasonable royalty rate for uses of copyright-protected works, and it must also be able to control its own processes so that that objective is achieved efficiently.

With respect to the second factor (the nature of the statutory scheme and the terms of the statute pursuant to which the body operates), the Act gives the Board authority to make interim decisions and, within the statutory scheme, an interim decision may be varied at any time prior to certification of the approved tariff upon application to the Board. This reduces the degree of procedural fairness required.

With respect to the third factor (the importance of the decision to the individual or individuals affected), while the interim decision, if granted will have an impact on the requirement of postsecondary institutions to pay royalties to Access Copyright on behalf of rightsholders, the decision will not affect the lives of those affected in the same manner as cases where full procedural fairness has been held to be required, for example cases where an individual faces incarceration" or a professional disciplinary hearing where the individual faces loss of professional status which prevents him or her from practising his or her chosen profession." Moreover, what is sought in the Interim Application is effectively the status quo - hardly an outcome of material consequence to the respondents and certainly an outcome of greater consequence to the rightsholders who would otherwise receive no royalties for an extended period of time. Moreover, this is an outcome the respondents can avoid by not engaging in conduct covered by the draft Interim Tariff.

With respect to the fourth and fifth factors, section 66(1) of the Copyright Act (the "Act") gives the Board authority to set its own practice and procedures, time and manner in which applications and notices must be made or given and the carrying out of the work of the Board. There can be no legitimate expectation that there will be an oral hearing, or that particular timelines shall be followed. That said, in this case, the Board has provided ample time and an appropriate means to respond to the Interim Application.

The parties have been given an opportunity to make submissions in writing which will be considered by the Board before an interim decision is made. All respondents have had at least two weeks to respond to the Interim Application, and they have been granted an additional week to file submissions on the form of the interim decision. Access Copyright notes that the institutional respondents, who are the only parties directly affected by the application, were served with the Interim Application on or about October 12,2010. Therefore, any argument that they, or any other institution that was served with the Interim Application, have been denied procedural fairness can be rejected on its face. With respect to the intervenors, as noted by the Board in its December 3 and 8 rulings, they have had sufficient time to understand and respond to the Interim Application.

A number of respondents argue in their submissions that they have not had enough time to respond because the terms sought by Access Copyright changed between the date of filing the Interim Application and the present date? The draft Interim Tariff filed by Access Copyright in response to the request by the Board is consistent with Access Copyright's Interim Application,

5 Cardinal v. Director of Kent Institution, [1985]2 S.C.R. 643.

6 Kane v. Board of Governors of the University of British Columbia, [1980]1 S.C.R. 1105, at p. 1113 and Knight v. Indian Head School Division No. 19, supra.

7 For example, that Canadian Association of University Teachers (CAUT) and the Canadian Federation of Students (CFS) claim that clause 5(5) was added "for the first time" in the draft Interim Tariff. This is not accurate. Clause 5(5), which deals with digital copying, is contained in the Proposed Tariff.

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the proposed language is reflective of what was sought in the Interim Application and, as regards uses, the Proposed Tariff. Moreover, in response to a further direction of the Board, Access Copyright has supplied two charts that indicate (i) precisely where each provision of the draft Interim Tariff came from; and (ii) each provision of the AUCC model licence ("Model Licence"), where it appears in the draft Interim Tariff, and if does not appear, why it does not appear. This gives the respondents ample information to respond to the application.

For the above reasons, Access Copyright rejects any suggestion that the principles of procedural fairness have not been met in these proceedings.

IV. SUBSTANTIVE ISSUES

A. The history of the negotiations with the AUCC and ACCC

The AUCC has alleged that Access Copyright made no bona fide attempt to renegotiate the Model Licence." Access Copyright disagrees and believes it is important to provide the Board with all of the facts.

The emails attached as Appendix G to the AUCC's response dated December 10, 2010, chronicle that representatives of Access Copyright met with members of the AUCC in February 2009. At that time, representatives of the AUCC advised Access Copyright that they were not prepared to discuss the renewal of the Model Licence, because, among other reasons, it was waiting for the Board to release its decision on the K-12 Tariff. On July 8, 2009, two weeks after the decision on the K-12 Tariff was released, the AUCC requested to be provided with "further details on what you [Access Copyright] see as the main components of a proposed future licence" by mid-August. (AUCC Appendix G)

Access Copyright provided the AUCC with a "without prejudice" high-level proposal for the terms of a licence in October 2009. As indicated in the covering email dated October 21, 2009 (missing from the AUCC's submission and attached hereto as Appendix A), the proposal highlighted the "key features" Access Copyright was prepared to offer as a "starting point for discussions". Aside from some minor back and forth on whether an indemnity was being proposed, the AUCC did not provide Access Copyright with any comments or questions, or attempt to schedule a meeting with Access Copyright to discuss the proposal. Rather, the AUCC advised on November 24, 2009 that it would be having a Board teleconference in midJanuary and that it would be back to Access Copyright within a week of that meeting to discuss next steps. The AUCC representative also advised, "[t]hat gives us plenty of time before expiry of the current licence term to hold discussions and preserves your options should you wish to file a tariff." Access Copyright had no reason not to rely on the AUCC's contention at that time that the parties would be able to negotiate a new licence arrangement in the nine months that was left before the expiry of the Model Licence.

The AUCC now claims that "the negotiation of [sic] model licence arrangement for Canada's university sector is a time consuming process" and that somehow, Access Copyright's behaviour after October 2009 suggests that Access Copyright had decided on its own to elect the tariff process. This claim is entirely inconsistent with the AUCC's own behaviour and statements during the relevant time.

8 AUCC. p. 12. 9 AUCC. p. 8.

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On January 18, 2'01 '0, the AUCC advised that the AUCC Board of Directors had a preliminary discussion of the AUCC Model Licence "but did not give AUCC a negotiating mandate". (AUCC Appendix G) The AUCC advised that it would be returning to the AUCC Board in April, and that it was unable to meet with Access Copyright before its Board met.

In the end, while claiming that the parties would have ample time to negotiate a new Model Licence, the AUCC in fact told Access Copyright that it was unable to discuss any element of the key features presented to it in October 2'0'09 for a period of six months. The message from the AUCC was clear - "go file a tariff, and then we might talk to you after you do that".

The AUCC's claim that Access Copyright did not approach AUCC to discuss the renegotiation of the AUCC Model Licence at any time after the filing of the Proposed Tariff (see AUCC submission page 8) is entirely disingenuous. In response to Access Copyright's proposal for the interim agreement, the AUCC advised that its Board did not endorse the interim agreement. Access Copyright wrote to the AUCC on June 21-, 2'01'0 for clarification, asking, whether the AUCC would "discuss any arrangements for the post-January 1, 2'011 period". On June 25, 2'01 '0, the AUCC advised Access Copyright that "AUCC does not wish to discuss any arrangements for the post-January 1, 2'011 period." This e-mail chain is attached as Appendix B.

Access Copyright also denies that it failed to negotiate in good faith with the ACCC after the filing of the Proposed Tariff. In late January 2'01 '0, Access Copyright wrote to the ACCC and advised that it wished to discuss the options available to cover the period after September 1, 2'01'0 once it filed its tariff application with the Board. Access Copyright then approached the ACCC in early May 2'01'0 to present it with a proposal to deal with the expiry of the Existing Agreements and the Gap Period. On June 28, 2'01 '0, Access Copyright and representatives of the ACCC participated in a conference call where the proposed extension and interim agreement and other options to address the Gap Period were explored.

On July 5, 2'01 '0, the ACCC advised that representatives would be in contact with Access Copyright at a later date regarding the Gap Period. On July 6, 2'01 '0, Access Copyright asked that the ACCC advise of its position for the Gap Period prior to July 3D. The ACCC did not reply. On August 3, Access Copyright advised that, because it had not heard from the ACCC, it would be approaching the ACCC member institutions directly. In response, the ACCC requested an extension to some later undefined date. Since the proposal had been with the ACCC since at least June, and Access Copyright had not received any comments on it from the ACCC, Access Copyright advised that: (i) it would be pleased to continue discussing a possible resolution of the Gap Period but (ii) it had no choice but to send the interim agreements to the ACCC member institutions directly. Access Copyright also requested that, if the ACCC had any comments on the interim agreement, to provide them so that the parties might avoid an appearance before the Board. To date, Access Copyright has received no comments from the ACCC on the interim agreement or any alternative proposal to deal with the Gap Period.

Given the AUCC's and ACCC's refusals to discuss any arrangement for, and the institutions general refusal to enter into any arrangements for, the Gap Period, Access Copyright had no alternative but to file an application for an interim decision.

B. Previous decisions of the Board

There is a common theme in the cases decided by the Board where an interim tariff or licence is sought: absent compelling evidence of a need for change, the Board seeks to preserve the

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status quo regardless of the applicant. In the present case, Access Copyright is simply seeking to maintain the status quo - maintained throughout a 16-year period - during the Gap Period. It is the respondents who are seeking to change the status quo during the Gap Period by using works in Access Copyright's repertoire without paying royalties to creators and publishers during that period. The burden, both of persuasion and evidentiary, rests with the respondents.

The themes, above, are reflected in CANCOPY v. AUCC and Wilfrid Laurier University where the Board granted interim relief to maintain the status quo. Interestingly, both the AUCC and CAN COPY (Access Copyright, formerly) were seeking an interim decision in this case. In its reasons, the Board stated:

Interim decisions are granted for the purpose of relieving the applicant from the deleterious effects caused by the length of the proceedings. Such decisions are made in an expeditious manner on the basis of evidence which would often be insufficient for the purposes of the final decision.

The Board is of the view that maintaining the status quo will cause the least disruption to the parties and is therefore the most appropriate thing to do under the circumstances."

In Retransmission of Distant Radio and Television Signals, the Board considered an application for interim relief under section 66.51 of the Act, by the collective. In discussing the basis for its decision, the Board stated:

In the present case, the applicants are clearly confronted by "the deleterious effects of the duration of the proceedings". They may well be correct in stating that "any variation ... might have effect only from the date of the order and not from the date of the relevant material change or, alternatively, the application to vary". Absent an interim order, they may receive no compensation for the period before an order to vary is issued, even if their claim is granted. An order to vary cannot be issued swiftly. The legal and factual issues raised are complex: ample evidence will be required before determining whether the claim (if correct in law) should result in an increase in the tariff rate or only in a reallocation amongst the collectives. The extent of the required adjustments also remains to be determined."

For these reasons, the Board extended the current tariff, preserving the status quo, on an interim basis:

The order suggested by the applicants is meant to preserve their right to compensation for the period from the date of the interim order to the date of the order to vary. The Board is of the view that this is better accomplished by making the current tariff interim. This avoids any prejudice to other participants by keeping the status quo until an order to vary is issued. This will also allow for appropriate notices to be given, and for a process to be set out for the examination of the issues. Finally, this will allow parties to fully argue the date at which any changes made in a decision to vary may take effect.12

10 CANCOPYv. AUCC and Wilfrid Laurier University, Copyright Board, Decision dated September 13, 1996, at p. 3. 11 Retransmission of Distant Radio and Television Signals, Decision dated February 28,2004, at p. 242.

12 Ibid.

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In SODRAC v. cac, SODRAC filed an application under s. 66.51 and 70.2 of the Act to have the Board set an interim licence. In granting the decision, the Board stated:

[9] An interim decision is used to avoid any negative consequences caused by the length of proceedings. In most cases, the best way to achieve this is to maintain the status quo while preventing a legal vacuum. Sometimes changes in circumstances tend instead to favour the adoption of new rules. In this instance, it seems appropriate to do a bit of both."

In a similar setting, the Board has stated, "[w]hen an agreement exists between the parties, it is generally preferable to extend that agreement on an interim basis."!"

The AUCC and ACCC have cited three decisions where the Board has dealt with an application for an interim decision in inaugural .proceedinqs." In none of those three decisions was the Board being asked for an interim decision to maintain the status quo; they are manifestly distinguishable from the Interim Application on this basis.

Professor Katz, the CAUT and CFS argue that the Board has denied two applications for an interim decision for an inaugural tariff on the grounds that to do so would set a "policy precedent" on a substantive matter not yet properly heard by the Board." They both rely on the Media Monitoring 1 case." However, it is our understanding that, in that case, the policy precedent of concern to the Board existed because there had been no licence or tariff regime in place and thus the status quo involved no payment of royalties. Clearly, here, there is a 16 year history of payment by educational institutions of the royalties sought in the Interim Application. Access Copyright is only asking the Board to continue the status quo. Neither Media Monitoring 1 nor Media Monitoring 2 has any application in the present case.

In the third decision cited by AUCC and ACCC, AVLAlSOPROQ, the Board considered an application for an interim tariff where a first statement of proposed royalties had been filed, as in this case. While the Board recognized it had jurisdiction to issue an interim tariff," this was a case where the applicant was seeking to change the status quo by having royalties paid where they were not before.

In its submissions, ACCC states that one of the reasons the Board declined to issue an interim tariff in the AVLAlSOPROQ case is because AVLA had "significant licensing income", which could be used to fund the tariff proceedings before the Board." There are two important distinctions in the present case. In AVLAlSOPROQ, the licensing income came from licensing agreements between AVLA and radio stations, television stations and others. The Board was content that the same rightsholders benefitting under the commercial licences that could subsidize the proceedings would benefit under the tariff. In other words, there was no

13 SODRAC v. cac, decision dated March 31, 1999, at para. 9. See also SODRAC v. AD/SQ, Copyright Board, Decision dated August 31, 1999.

14 SODRAC v. Astral, decision dated December 14, 2009, pp. 3-4, citing decision in SODRAC v. CBC, decision dated March 31, 2009

15 Ruling on CBRA's Application for an Interim Tariff, May 3,2001 ("Media Monitoring 1"); Ruling of the Board regarding CBRA Media Monitoring Tariffs, June 11,2003 ("Media Monitoring 2"); and Statement of Royalties to be Collected by AVLAlSOPROQ for the Reproduction of Sound Recordings, in Canada, by Commercial Radio Stations for the Years 2008 to 2011, February 29, 2008 ("AVLAlSOPROQ").

16 Katz, p. 9, Fewer, p. 4, 5-6.

17 Media Monitoring 1, supra.

16 AVLAlSOPROQ.

19 ACCC, p. 10.

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subsidization in AVLAlSOPROQ by one set of rightsholders for the tariff prosecution that would benefit another set of rightsholders. Here, any other licensing revenues that may exist belong to a different set of rightsholders that will not directly benefit from these tariff proceedings. The second important distinction is that in AVLAlSOPROQ there was no licensing regime in place prior to the filing of the tariff. AVLAlSOPROQ did not risk losing 50% of its revenues if an interim tariff was not certified.

C. The Board has jurisdiction to issue an interim tariff

The respondents' arguments on the Board's lack of jurisdiction take a number of guises. The AUCC argues that the Interim Application amounts to a request to fix royalties and it should have been brought under s. 70.2 of the Act.20 It also argues that an application under s. 70.2 would be and should be barred because Access Copyright has not made bona fide efforts to renegotiate the AUCC Model Licence. Further, AUCC argues that the Board has no jurisdiction under s. 66.51 to extend the licensing regime through a tariff.

Other respondents (Professor Katz, Ambrose University College and Alberta, for example") argue that the provisions of section 70.13 of the Act should have been, and were not, complied with. This would have required Access Copyright to file a draft interim tariff by March 31, 2010, the Board to have gazetted the interim tariff, and the timeline honoured to permit 60 days for objections to be filed.

(i) Section 66.51 gives the Board the required authority

In codifying a tariffs regime under the Act, Parliament recognized that there would be a need for the Board to make a number of kinds of decisions applicable to collectives in a variety of situations. Consequently, Parliament chose to grant broad interim decision-making authority to the Board, an authority that would cover the range of situations presented, including the request, as here, for an interim tariff where an inaugural tariff has been filed. This grant, section 66.51, is express and imposes no constraints on the scope of the Board's discretion to make an interim decision. There is no prohibition against certifying an interim tariff in circumstances where there has been no certified approved tariff; and conversely, there is nothing in the Act indicating that the Board may only issue an interim tariff where a certified tariff has already been approved. Section 66.51 gives the Board jurisdiction to make the interim decision sought in the Interim Application.

Professor Katz argues that administrative tribunals cannot issue an order without express powers in the tribunal's enabling legislation.22 He cites Bell Canada v. Canada (CRTC) in support of this proposition. However, in Bell Canada, Justice Gonthier, writing for a unanimous court, states: U[t]he powers of any administrative tribunal must of course be stated in its enabling statute but they may also exist by necessary implication from the wording of the act, its structure and its purpose. Although courts must refrain from unduly broadening the powers of such regulatory authorities through judicial law-making, they must also avoid sterilizing these powers through overly technical interpretations of enabling statutes.r" Thus, even if the power is not express as alleged by Professor Katz (and rejected by Access Copyright), the power can be found by necessary implication from the context and wording of the statute.

20 AUCC, p. 12.

21 Katz, p. 2; Ambrose University College, p. 1; Alberta, p. 1. 22 Katz, p. 3.

23 Bell Canada v. Canada (Canadian Radio-Television and Telecommunications Commission), [1989]1 S.C.R. 1722 at 1756.

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Contrary to the assertions of Professor Katz, neither section 70.17 nor section 70.18 indicates any intention on the part of Parliament to limit the broad powers conferred on the Board to issue interim decisions, or approve interim tariffs, in the context of the Interim Application. Section 70.17 makes basic provision for the relationship between an approved tariff and private enforcement. Section 70.18 simply confirms that a previous tariff may carry on to authorize uses and justify collection of royalties, pending certification of a new tariff. Neither speaks, expressly or impliedly, to the Board's powers in the time period between an application for certification of an inaugural tariff and the Board's certification of a tariff.24

In Bell Canada, the respondent (opposing the interim order made) argued that the power to revisit the period during which interim rates were in force could not exist within the statutory scheme established by the Railway Act and the National Transportation Act because these statutes do not grant such a power explicitly, unlike s. 64 of the National Energy Board Act, RS.C., 1985, c. N-7. Gonthier J. found that, within the statutory scheme established by the Railway Act and the National Transportation Act, the power to make interim orders necessarily implied the

power to revisit the period during which interim rates were in force.25 .

Applying Gonthier J.'s dicta to the present case, even if the Board were to conclude that s. 66.51 is not explicit in its grant, the Board should conclude - based on the structure of the Act and its underlying purpose - that s. 66.51 accords the Board the jurisdiction to, in this context, issue an interim decision that would protect rightsholders during periods akin to the Gap Period in this case.

In the proceedings instituted by Access Copyright's filing of the Proposed Tariff, the Board became seized of the duty to certify a tariff applicable to post-secondary institutions that use works in Access Copyright's repertoire, including the power to vary any such tariff.26 As the Board noted in CANCOPYv. AUCC and Wilfrid Laurier University," all interim decisions may be reviewed in the final decision." If the Act empowers the Board to certify a final tariff, then review and vary it on more evidence," clearly the Act is intended to authorize the Board to issue an interim tariff, which is subject to variation and review before a final tariff is certified.

Finally, it should be noted that if the collective could not obtain interim relief pending certification of a final tariff in appropriate circumstances, the Act cannot be said to effect a balance between users and rightsholders. Indeed, if such an interpretation of the Act were accepted by the Board, users would be motivated to deny or obfuscate their use of copyrighted works during the period before a final tariff was certified, and delay any such certification.

(ii) Section 70.13 is not applicable

Professor Katz suggests that, in these interim proceedings, Access Copyright should have filed its interim tariff as a Proposed Tariff.3D There is no logic or basis on any reading of the statute to argue that a collective can file more than one proposed tariff in respect of the same uses, users and repertoire. In this sense, section 70.13 is spent. The Board is seized with the Proposed

24 Professor Katz's reliance on Re Public Performance is misguided as a tariff takes effect as of the date specified regardless of the date on which its is certified. The decision, therefore, has no bearing on the Interim Application. 25 Ibid.

26 Section 66.52 of the Act gives the Board the power to vary a tariff certified inter alia under s. 70.15. 27 Supra, at p. 1754.

28 SODRAC v. MusiquePlus, November 22,1999. 29 Section 66.52 of the Act.

30 Katz, p. 2.

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Tariff and this is simply an interim decision in respect of the Proposed Tariff. Also, if an applicant in Access Copyright's position were forced to comply with the timelines imposed by section 70.13 and 70.14 (requiring the gazetting of the proposed tariff, and a 60-day period for objections to be filed), it would be impossible for the Board to hear applications for an interim decision in a timely manner. The purpose of section 66.51 - and the Board's ability to hear an application for interim decision - would be undermined.

(iii) Section 70.2 is not applicable

AUCC argues that Access Copyright should have brought its application pursuant to section 70.2 of the Act, but is barred from doing so because it has not tried to renegotiate the EXisting Agreements in good faith." AUCC's argument is wholly without merit, notably because it rests on a presumption that the Board cannot issue an interim decision in a proceeding, such as this one, where a collective is transitioning from a licence regime to a tariff regime. However, for the. reasons outlined above, section 66.51 expressly and/or impliedly vests the Board with that authority. Clearly, section 70.2 is not applicable in the context of a proposed tariff; it is to be used for fixing royalties in individual cases, not for independent applications to fix royalties in close to 300 cases."

Professor Katz also argues that the Board may only grant Access Copyright the relief sought in its Interim Application pursuant to section 70.2 of the Act because, he states, "the Board's authority to impose interim tariffs is derived from the will of the parties who choose to let the Board arbitrate their dispute"." As is clear from a reading of the statute, this is not an accurate portrayal of how section 70.2 can be triggered. One party can apply under section 70.2. Thus, the will of "the parties" is not required for the Board to fix a royalty in an interim licence just as it is not required for the Board to issue an interim tariff under section 66.51 of the Act.

D. The factors considered in deciding whether to grant interim relief

In Bell Canada v. Canada (CRTC), the Supreme Court of Canada considered the nature and purpose of interim orders. Justice Gonthier, writing for a unanimous court, stated:

A consideration of the nature of interim orders and the circumstances under which they are granted further explains and justifies their being, unlike final decisions, subject to retrospective review and remedial orders. The appellant may make a wide variety of interim orders dealing with hearings, notices and, in general, all matters concerning the administration of proceedings before the appellant. Such orders are obviously interim in nature. However, this is less obvious when an interim order deals with a matter which is to be dealt with in the final decision, as was the case with the interim rate increase ordered in Decision 84-28. if interim rate increases are awarded on the basis of the same criteria as those applied in the final decision, the interim decision would serve as a preliminary decision on the merits as far as the rate increase is concerned. This, however, is not the purpose of interim rate orders.

31 AUCC, p. 12.

32 Access Copyright has almost 300 licences with post-secondary institutions. Even if section 70.2 applied to Access Copyright in these circumstances, AUCC has not cited any law in support of its assertion that a pre-condition to bringing an application under s. 70.2 is a good faith attempt to renegotiate an agreement. In any event Access Copyright has negotiated in good faith and has set out the history of its attempts to negotiate agreements in the Section A of this reply.

33 Katz, p. 7.

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Traditionally, such interim rate orders dealing in an interlocutory manner with issues which remain to be decided in a final decision are granted for the purpose of relieving the applicant from the deleterious effects caused by the length of the proceedings. Such decisions are made in an expeditious manner on the basis of evidence which would often be insufficient for the purposes of the final decision. The fact that an order does not make any decision on the merits of an issue to be settled in a final decision and the fact that its purpose is to provide temporary relief against the deleterious effects of the duration of the proceedings are essential characteristics of an interim rate order. 34 [underlining added]

The Board has held that "it is not necessary for a party to demonstrate prima facie that the main application is likely to succeed; indeed an interim order can be issued in the absence of any evidence or argument, so long as the main application is not plainly without merlts.?" The Board has identified a number of factors that are relevant to the determination of whether an interim decision should be issued: (1) the need to avoid the deleterious effects due to the length of the proceedings, (2) the desirability of maintaining the status quo, and (3) the need to minimize disruption." At times, the Board has also spoken of the need to address a legal void, "such as situations where a person uses a collective society's repertoire without its authorization." This is but one factor the Board may consider in deciding whether to grant interim relief. 38

For the reasons outlined below, Access Copyright believes the interim decision (and/or tariff) sought is warranted. It is necessary to avoid deleterious effects of certification proceedings all parties are agreed will span a number of years and only results in the maintenance of the status quo. Moreover, the interim decision sought will ensure the object of the Act is met, by providing for royalty payments to rightsholders during the Gap Period.

(i) The main application has merit

The AUCC, ACCC and the CAUT/CFS do not argue that the main application is not without merit. 39 Professor Katz does. He states "[t]here can be no presumption that Access Copyright has made a prima facie case that a final tariff would be approved"." Of course, Professor Katz has misstated the Board's discretion. Section 70.14 of the Act provides that "[t]he Board shall certify the tariffs as approved, with such alterations to the royalties and to the terms and conditions related thereto as the Board considers necessary, having regard to the objections to the tariffs." [underlining added] Professor Katz has also misstated the governing caselaw. There is no requirement that Access Copyright demonstrate a prima facie case; it need only show the main application is not plainly without merits. The 16-year history of post-secondary institutions paying royalties for use of works in Access Copyright's repertoire meets this, and the proposed prima facie case, standard. Also, there is a certainty that a tariff will be certified.

34 Bell Canada v. Canada (Canadian Radio-Television and Telecommunications Commission), [1989] 1 S.C.R. 1722 at 1754.

35 Ibid.

36 Canopy v. AUCC and Wilfrid Laurier University, Decision dated September 13. 1996 at p. 3. 37 SODRAC v. MusiquePlus, Copyright Board, and Decision dated November 22, 1999 at p. 2. 36 Ibid.

39 CAUT/CFS, p. 5. 40 Katz, p. 12.

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(ii) An interim tariff will avoid deleterious effects on Access Copyright

Access Copyright has detailed in its Interim Application (pages 5-7) the deleterious effects of a failure to grant the interim relief sought. Those submissions need not be repeated here except to the extent necessary to respond to the respondents' submissions. As the Board stated in SODRAC v. AD/SQ, "The purpose of an interim decision is first and foremost to avoid any negative consequences caused by the length of the proceedings"." No respondent has denied Access Copyright's assertion, made in the Interim Application, that it could be a number of years before the Board certifies an approved tariff. It is patently obvious that if Access Copyright does not receive on behalf of its rightsholders the royalty payments from post-secondary institutions that it has been receiving pursuant to agreements in place for the last 16 years, there will be an immediate detrimental effect. There will be an immediate detrimental effect on the rightsholders who (according the respondents) are apparently not entitled to continue to receive royalties for use of the works in Access Copyright's repertoire during the Gap Period. There will also be an immediate detrimental effectonAccess Copyright which, as detailed in the Interim Application, will be forced to cut operating expenses, which would significantly hamper its ability to carry out its mandate that has been recognized by the provisions of the Act. Indeed, Access Copyright and rightsholders of works in its repertoire will suffer irreparable harm because, as stated in the Interim Application, absent an interim tariff, Access Copyright will not be able to fund the tariff certification proceeding or, at the very least, will not be able to fund it to the extent necessary to pursue its interests fully.42

There is a common theme to the respondents' submissions on this issue. For example, the AUCC and ACCC suggest that Access Copyright should use the "windfall" of retroactive payments in excess of $40 million it received upon certification of the K-12 Tariff." "Surely this windfall amount", AUCC suggests, will go a long way to cover Access Copyright's non-essential operating expenses during the Gap Period"." In short, the AUCC and ACCC suggest that Access Copyright will not suffer any deleterious effects because, even without licensing revenues from post-secondary institutions, "its other licensing revenue fully covers its operating expenses". These "other licensing revenues" must be referring to those related to the K-12 Tariff.

The payment of royalties in respect of the K-12 Tariff are held in trust by Access Copyright for the benefit of the rightsholders for use, from 2005-2009, of works that are related to the K-12 sector." Access Copyright cannot distribute those royalties until all appeals have been exhausted and then they will be distributed to the K-12 rightsholders, who have been waiting for those royalties since 2004. Beyond a reasonable withholding to fund the operations of the collective, royalties must be distributed to the rightsholders of the works used within a reasonable time. It is entirely unreasonable to suggest that a 50% withholding be implemented against royalties owing to one group of rightsholders (for example K-12 rightsholders) to fund tariff proceedings that primarily benefit another group of rightsholders (for example postsecondary rightsholders). To do so, as the AUCC and ACCC suggest be done, would be tantamount to taking from Peter to pay Paul.

41 SODRAC v. AD/SQ, Copyright Board, Decision dated August 31, 1999.

42 For example, the ability to retain qualified experts, carry out the interrogatory process adequately and conduct appropriate surveys could all be affected. This will cause it irreparable harm that cannot be compensated by a future certification of the tariff and will continue to Access Copyright's detriment for years into the future.

43 AUCC, p. 11; ACCC, p. 7.

44 AUCC, p. 11.

45 Access Copyright Annual Report, 2009:, p. 10, Financial Statement and Note 4 thereto: httD:/Iwww.accesscopyright.ca/docs/AnnuaIReports/Annual Report 2009 Final.pdf

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For its part, the ACCC argues that Access Copyright had other options. Access Copyright could have re-negotiated the existing licences; it tried and was unsuccessful." Access Copyright could have filed the Proposed Tariff several years ago to take effect January 1,2011, securing a decision on the tariff before the existing licence agreements expired; of course, the Act is not designed in such a manner." Clearly, these options were not available to Access Copyright. At its core, ACCC and the other respondents are saying that Access Copyright should be penalized because it has chosen to rely on the provisions of the Act that permit it to move from a licence regime to a tariff regime. This argument is without merit. No adverse inference should be drawn against Access Copyright for having relied on its legal rights. Moreover, in criticizing the necessitated move away from a licensing regime to a tariff regime, the respondents ignore a fundamental requirement of a licensing regime: it requires two parties to reach agreement. In the present case, notwithstanding concerted and persistent efforts by Access Copyright to persuade the AUCC and ACCC, and the post-secondary institutions which do not come under the umbrella of those two associations, to enter into agreements with Access Copyright covering the Gap Period, only a small number of institutions have done so.

Access Copyright asserts that none of the submissions made by any of the respondents has effectively countered Access Copyright's position that there will be grave negative effects if an interim decision in the form of an interim tariff, maintaining the status quo, is not made.

(iii) An interim tariff will maintain the status quo

The Interim Application describes the 16-year unbroken licensing history under which AUCC member institutions, ACCC institutions and Proprietary Colleges have paid royalties and reported usage of works in Access Copyright's repertoire pursuant to the Existing Agreements as defined in the Interim Application. The Existing Agreements will come to an end, for most tnstltutions," on December 31, 2010.

The draft Interim Tariff provided by Access Copyright at the Board's request is structured to achieve the twin goals identified in the Interim Application: (1) to preserve the status quo for "notice, recordkeeping, payment, auditing and sampling" in the Existing Agreements (as that term is defined in the Interim Application); (2) to provide for the uses described in the Proposed Tariff. The draft Interim Tariff achieves these twin goals, on essentially the same or better terms as the licences which are about to expire. This will preserve the status quo. If Access Copyright's Interim Application is rejected, there will be enormous disruption of Access Copyright's undertaking to distribute royalties to creators and publishers, royalties they have been receiving throughout the 16-year history of Access Copyright. This result would be inequitable.

46 ACCC, p. 13.

47 Under s. 70.13(2), in order to have the tariff effective January 1, 2011, Access Copyright could not file its Proposed Tariff on or before April 1 , 2009. Unless the Board had dealt with the application in 20 months (the period between the earliest possible date of filing April 1, 2009 and January 1, 2011), which it has never done on an inaugural tariff, we would be in the same position we are today - seeking interim relief to implement the status quo.

48 Access Copyright is not claiming relief against those institutions that have agreed to an Interim Offer, as defined in the Interim Application, to continue payments and reporting during the Gap Period.

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(iv) Other issues raised by the respondents do not undermine the Interim Application

(a) The "repertoire" issues

The AUCC and ACCC argue that the scope of the licence granted under the Proposed Tariff and the rights to copy are less than what are offered in the Model Licence."

The Interim Tariff proposes to license "Repertoire Works", being a Published Work for which Access Copyright collectively administers the rights as authorized by the copyright owner or by another collective management organization, by assignment, licence, agency or otherwise". "Published Work" means a literary, dramatic or artistic work protected by copyright in Canada, of which copies have been made available to the public with the consent or acquiescence of the copyright owner, but excludes a Musical Work".

As noted in the Board's decision on the K-12 Tariff, Access Oopyriqht is entitled to collect (and by extension, license) royalties for works in its repertoire only.50 To suggest that Access Copyright licenses works under the Model Licence that are not in its repertoire is patently wrong. Yet, this is seemingly what the AUCC and the ACCC argue. For example, the ACCC states on page 2 of its submission that the Proposed Tariff is "inclusions based, that is, the repertoire is limited to published works for which Access Copyright administers rights by assignment, licence, agency or otherwise. The existing college licences now in effect are exclusions based. Licensees have access to a repertoire consisting of material that is not on the Exclusions List". On this basis, ACCC suggests that there is a substantial difference between the Proposed Tariff and Interim Tariff and the Model Licence, and that the status quo is not being sought by the Interim Application. This argument is a complete red herring. As is plain on the face of the Model Licence, Access Copyright only licenses what is in its repertoire. Under the Proposed Tariff, Access Copyright has granted rights over works in its repertoire.

In his submissions, Professor Katz asserts that academic institutions have shown themselves willing to operate without Access Copyriqht." He says, without filing any evidence in support, that in the 2008-09 academic years, books published in Canada represented only 3.6% of the titles acquired by University of Toronto libraries. Professor Katz seems to be suggesting that, contrary to Canada's obligations under the North American Free Trade Agreement, chapter 15 and the WTO TRIPS Agreement, works of publishers and creators would not be afforded National Treatment. He also states, again without any evidence to support, that "20% of the world's peer-reviewed journals are now freely available on-tine"." Professor Katz's point seems to be that there will be no demand for works in Access Copyright's repertoire, and therefore no interim tariff is needed.

The responses to this argument are three-fold. First, Professor Katz's reference to books "published in Canada" has no bearing on this application. Access Copyright represents the interests of copyright owners in 29 countries and jurisdictions around the world. Second, postsecondary institutions extended their licence agreements in September 2010 until December 31, 2010. They would never have done so if there was not a need for works in Access Copyright's repertoire. That need cannot and will not evaporate overnight. Finally, even if this were so, institutions that do not use the works in Access Copyright's repertoire would not be

49 AUCC, p. 13; ACCC, p. 2.

50 Copyright Board reasons, K-12 Tariff, June 26,2009, para. 130. 51 Katz, p. 14.

52 Katz, ibid. If one accepts Professor Katz's figure, it means that 80% are not freely available on-line.

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obliged to pay the royalties in the Interim Tariff. However, if they intend to use the works in Access Copyright's repertoire, they will clearly be able to do so under the Interim Tariff.

·It is noteworthy that, for 16 years (and as recently as September, 2010), the members of the AUCC and ACCC and other post-secondary institutions have not questioned the scope of the Access Copyright repertoire for photocopying. This is what they have been paying for under the Existing Agreements, nothing more, and this is what Access Copyright proposes they pay for under an interim tariff.

Moreover, Access Copyright proposes only to be paid for its repertoire that has already been assessed by the Copyright Board in the K-12 Tariff. With respect to the Access Copyright repertoire that the Copyright Board has not yet had the opportunity to assess, no payment is being requested under this interim application. For all of these reasons, the extent of Access Copyright's repertoire is not an issue that need be examined or decided for the relief sought in the interim application.

(b) The indemnity clause issue

Having noted that the issue of "exclusions" in the Model Licence and "inclusions" in the Proposed Tariff does not reflect any shift from the status quo established by the Model Licence, we note that some respondents argue that because the draft interim tariff does not include an indemnity clause, it does not preserve the status quo.

This argument should be rejected for a number of reasons. First, not including the indemnity clause is consistent with the relief sought in the Interim Application which requested status quo on "all terms and conditions relating to notice, recordkeeping, payment, auditing and sampling" for the uses described in the Proposed Tariff. Second, there is no precedent for including an indemnity clause in a tariff and, in fact, the Board found that an indemnity clause should not be included in the tariff in the K-12 proceedings. 53 Third, section 38.2 (introduced in 1997) significantly reduces the need for the indemnity provision which was first introduced in the Access Copyright licences before the change in the legislation. For all of the above reasons, Access Copyright maintains that there is no need to include an indemnity in an interim tariff to preserve the status quo. However, if the Board concludes that an indemnity should be included in the interim tariff to preserve the status quo, Access Copyright would not object to the inclusion of an indemnity on the same terms as were granted in the Model Licence, that is, for the paper reproductions within the limits of the draft Interim Tariff only.

(c) Other issues with the draft Interim Tariff

Some respondents have taken issue with the draft Interim Tariff because, they say, some reprography uses described in the Proposed Tariff are not currently subject to copyright under the current copyright law (e.g., St. Mary's University College54). Others say that Access Copyright's offer to "give away" digital rights that are not in its repertoire is inconsequential. These arguments are irrelevant in the present application. Access Copyright is not claiming for works that are covered by an exception under the Act - any exempted or otherwise licensed use will be taken into consideration by the Board when it hears the merits of the main application. Furthermore, as Access Copyright has made clear in the Interim Application, the interim relief sought does not deal with digital rights; no royalties will flow in relation to digital

53 Collective Administration in relation to rights under sections 3,15,18 and 21, K-12 Tariff, para. 183. 54 St. Mary's University College, p. 1.

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rights and institutions will be able to use digital rights without any need to report to Access Copyright.

Professor Katz asserts that "absent any evidence from Access Copyright regarding the ambit of its repertoire, it is impossible to determine an adequate price for any interim tariff, and it will be impossible for users to determine which are the works which they can use but need to comply with the terms of the tariff, and which are the works they need to license separately or bear the risk of liability.,,55 This is a spurious argument. The repertoire and the payments proposed for purposes of an interim tariff are precisely the same as have been in place under the Existing Agreements. The institutions clearly knew what was in the repertoire (and used it based on this knowledge), and knew how much they were paying. Neither of these factors has changed in the context of the proposed Interim Tariff.

The Government of Alberta argues that the fact that so few post-secondary institutions signed Access Copyright's interim offer is indicative of the paradigm shift that appears to be occurring in the way educational materials are being delivered." However, in Access Copyright's submission, there are more plausible explanations. For example, the low signing figure could be indicative of a collective assertion of monopsony (Le., buying) power with a view to weakening Access Copyright' and its constituents' resolve to pursue the royalties sought in the Proposed Tariff, as well as their financial means to do so. Alberta, and other respondents, conveniently ignore the fact that institutions need not pay under the interim or any tariff if they do not use the works in Access Copyright's repertoire.

It is also asserted by some respondents that apart from coursepacks and articles used as classroom handouts, most reprography that occurs in the classroom is fair dealing and that the rates proposed by Access Copyright for the interim are based on prices that were not lowered following the decision in CCH Canadian Ltd. v. Law Society of Upper Canada, [2004] 1 S.C.R. 339. This argument is without foundation and will, in any event, be considered fully by the Board in the main application. The Interim Tariff is based on licence agreements that have been in place in the years between the decision in CCH and the present time. Those licences were renewed in the post-CCH period and can be taken to accurately reflect the negotiated royalties dictated by the market, taking into account the legal implications of the CCH decision. Indeed, those licences were renewed in 2006, 2009 and as recently as September 2010. The royalty rates in the Existing Agreements, which will expire on December 31,2010, are the same ones contained in the draft Interim Tariff.

(d) The urgency issue

Finally, Access Copyright would like to address a misapprehension on the part of the AUCC. In its submissions, the AUCC disputes the urgency of Access Copyright's Interim Application." The AUCC maintains that there is no urgency because the first payment for 2011 would be payable at the end of May 2011 (60 days after March 31, 2011). This is incorrect. As Access Copyright notes in the draft Interim Tariff, and the charts accompanying it, for any institution on an annual licence, a payment was due on November 30 for the annual FTE royalties and on December 31 for the coursepack fees. They are already late. The Proprietary College FTE fees will be due January 31 and coursepack fees on February 28, 2011. The need for an interim decision is pressing and substantial.

55 Katz, p. 17. 56 Alberta, p. 4. 57 AUCC, p. 20.

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(e) There is no requirement to demonstrate a legal void

The AUCC and ACCC, relying on the fact that they have recommended to their members that they make a section 70.17 offer to ensure that they will be immune from suit for copyright infringement, argue that there is no legal void." The AUCC and ACCC argue further that if one of their members does not make such an offer and uses works in Access Copyright's repertoire after the Existing Agreements expire, the individual rightsholders of works in Access Copyright's repertoire can sue for copyright infringement. This, they assert, fills any "legal void", the implication being that because there is no "legal void" there is no need for the Board to issue an interim decision.

The caselaw does not state any requirement for a legal void. In SODRAQ v. MusiquePlus, the Board noted that the purpose of an interim decision is first and foremost to avoid any negative consequences caused by the length of the proceedings. It stated, "[i]t can be issued, among other reasons, to prevent legal voids, such as the situation where a person uses a collective society's repertoire without its authorization"." Therefore, the existence of a legal void is simply one factor among others that may be considered by the Board. The respondents have taken the "legal void" test out of context, put their own spin on it and redefined it as a requirement to show there will be no legal regime in place during the interim period. This is an incorrect interpretation and application of the Board's decisions.

In any event, the arguments of the A(jCC and ACCC are disingenuous. They would have the Board believe that there will be a drastic change in use not only by their member institutions, but by each and every one of their employees for whom they are vicariously liable. This change will somehow occur between the expiry of the Existing Agreements at midnight on December 31, 2010 and the commencement of the Gap Period on January 1, 2011. The Board can reasonably expect use to continue as before.

AUCC and ACCC are essentially saying that such use does not represent a "legal void" as it can be addressed through a plethora of copyright infringement litigation by rightsholders during the certification proceedings, i.e. the Board should let matters go into a free-fall during the Gap Period, because individual rightsholders can litigate. This, of course, ignores entirely the fact that Parliament enacted a regime for the collective administration of copyright that recognizes that any such enforcement action is not only highly inefficient but is unlikely to be pursued by individual rightsholders.

Access Copyright asks the Board to issue an interim decision that provides certainty and maintains the balance between rightsholders and users.

(f) The evidence issue

Some respondents argue that Access Copyright's Interim Application is insufficient because no affidavits have been filed and there has been no cross-examination. While there will be a need for such evidence on the main application for an approved tariff, there is no such need here. The Board has held in previous decisions that in order to obtain interim relief, "it is not necessary for a party to demonstrate prima facie that the main application is likely to succeed; indeed an interim order can be issued in the absence of any evidence or argument, so long as

58 AUCC, p. 9; ACCC, p. 6.

59 SODRAC v. MusiquePlus Inc., Decision dated November 22, 1999.

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the main application is not plainly without merits."? There is no dispute about the main facts put forward by Access Copyright to support its application for interim relief; notably that the institutions have a 16-year history of entering into licences with Access Copyright on terms substantially similar to those in the Model Licence. Moreover, no respondent disputes that the revenue stream from post-secondary institutions will stop as soon as the payments under the Existing Agreements, which expire on December 31,2010, cease. The respondents in their own submissions also concede that post-secondary institutions will continue to use works in Access Copyright's repertoire, although there is an issue about whether that use will decrease.

Alberta argues that the interim decision should not be granted because Access Copyright has not provided sufficient information in support of its application for the Proposed Tariff.61 Counsel for Alberta says that Access Copyright should be required to provide further information explaining the process giving rise to those figures notwithstanding the fact that the draft Interim Tariff uses the royalty rates under the Existing Agreements. This argument is without merit; the royalty in the Proposed Tariff will be dealt with in the main application.

As noted earlier in these submissions, the interim decisions of the Board indicate that there is an evidentiary burden on the party seeking a change in the status quO.62 In this case, it is the respondents who are seeking a change to the status quo, not Access Copyright. In Access Copyright's submission, the respondents have not submitted any evidence, be it in the form of affidavits or otherwise, which supports any change to the status quo.

In Access Copyright's submission, the record in this matter provides a sound basis for granting an interim decision to maintain the status quo.

(g) The "anti-competitive" issue

University of Athabasca argues that the Interim Application raises "serious anti-competitive concerns and would prevent the development and operation of an effective clearance market, in which universities can deal directly with rights owners?". Professor Katz goes so far as to argue that "loss of revenue by a monopolist is not a recognizable harm in a market system" and "the Board should be concerned with preserving a free market in creative works where parties are free to negotiate voluntary agreements instead of imposing a mandatory tariff"." On the next page of his submissions he argues that post-secondary institutions have alternatives to using Access Copyright's repertoire. 65 (Apparently Access Copyright is a monopoly on page 13 of Professor Katz's submissions, but ceases to be a monopoly on page 14.)

The Board should give these arguments the short shrift they deserve: there is nothing anticompetitive about Access Copyright's application for a Proposed Tariff or its application for an interim decision. Access Copyright is merely relying on the collective tariff regime established by Parliament in the Act.

60 Collective Administration of Performing Rights and of Communication Rights, Decision dated November 24, 2006 ~~ereinafter "Collective Administration"].

Alberta, p. 2.

62 CANCOPYv. AUCC and Wilfrid Laurier University, Copyright Board, Decision dated September 13,1996; SODRAC v CBC, Copyright Board, decision dated March 31, 2009; Retransmission of Distant Radio and Television Signals, Copyright Board, decision dated February 28, 1994.

63 Athabasca, p. 4.

64 Katz, p. 13.

65 Katz, p. 14.

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E. An interim tariff, by avoiding a payment holiday, would be consistent with the objects of the Act

In their responses, many of the respondents characterize the benefits that will flow from the imposition of an interim tariff as flowing solely to Access Copyright. Almost without exception, the respondents have failed to acknowledge in their submissions that the actual beneficiaries of an interim tariff will be the creators and publishers of the books, magazines, newspapers, journals and other publications that are in Access Copyright's repertoire; and that the users get the benefit of access to copyright-protected works in a clearly authorized environment.

It is true that if an interim tariff is not issued, the creators and publishers of the works in Access Copyright's repertoire would receive their royalty payments from the use of their works by postsecondary institutions for the Gap Period once the Board has certified the approved tariff and all appeals have been exhausted. However, it is undeniable that if an interim tariff is denied, the post-secondary institutions will use the works in Access Copyright's repertoire during the Gap Period without any concurrent payment to the creators and publishers.

If the Board acceded to the respondents' request, and denied the application for an interim tariff, the result while obvious bears stating: post-secondary institutions would be able to use the works in Access Copyright's repertoire for an extended time (until an approved tariff is ultimately certified by the Board) without any royalties flowing to the creators and publishers of the works. They would in this manner obtain a payment holiday throughout what all agree will be a protracted period of time until an approved tariff is certified.

In Access Copyright's submission, this would be contrary to the object and purpose of the Act and also manifestly inconsistent with tribunals and courts' stated preference for preserving the status quo and avoiding disruption during ongoing legal proceedings.

F. The balance of convenience favours an interim decision (and/or interim tariff)

The balance of convenience also favours the issuance of an interim decision imposing the status quo.

Public information available on the websites of a subset of Canadian of universities and colleges as listed in Appendix C demonstrates that the operating budgets of those institutions range from a low of $25 million (for the College of the Rockies, enrolment 2100) to $1,438 million (for the University of Toronto, enrolment 63,000). Applying the $3.38 FTE to University of Toronto's FTEs would result in a payment of approximately $213,000 against a budget of more than a billion dollars or 0.0148 per cent of its budget. For College of the Rockies, this figure is approximately $7,100, against an operating budget of $25 million, or 0.0284 per cent. These examples place in context the amounts which would be collected by Access Copyright that are not controlled by the institution. All other amounts paid under the proposed Interim Tariff relate to coursepacks; those amounts are within the control and discretion of the institutions. Access Copyright notes that coursepack copying currently represents approximately 75% of revenues from post-secondary institutions or $12 million. Therefore, under the proposed Interim Tariff, 75% of users' potential royalties would be under their control. Only the remaining $4 million is not and when this $4 million is divided across some 300 institutions, it is evident that the impact on the educational institutions of paying the draft Interim Tariff would not be great. Conversely, individual creators and authors who are not paid during the Gap Period may be greatly affected. Granting the Interim Application is not, as is asserted by some respondents, equivalent to an interim costs award. It is a royalty payment for reprographic copying during the Gap Period.

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A number of respondents argue that if the certified tariff is lower than the draft Interim Tariff, Access Copyright will have to refund to the paying institutions. They argue that to the extent the royalty payments have been passed on to the students by AUCC member universities, the repayment by Access Copyright will put the universities in difficult position in determining how the repayment should be distributed. They rely on this to argue the balance of convenience is against making an interim decision in the nature of an interim tariff. However, this cuts both ways. If there is no interim tariff, the universities would accrue the debt in respect of royalties and will have to pay up when approved tariff is certified. The fact is that educational institutions are not likely to chase former students to either recover for student underpayment or to refund where a student has overpaid. 66 In Access Copyright's view, there can be no doubt that the certified tariff will be higher than the draft Interim Tariff. The certified tariff will cover digital uses, which are not covered under the Existing Agreements and which are not charged for under the draft Interim Tariff. Given these additional uses, it is inconceivable that the certified Proposed Tariff will be lower than the royalty rate amount under the Existing Agreements and the draft Interim Tariff. Even the universities agree. Indicative of the universitles' belief that the final certified tariff will be higher than' the stats quo, in June 2010, the Board of Governors of the University of Western Ontario increased the fee paid by students for Access Copyright's repertoire from $2.90 to $16.45 for the 2010-2011 fall/winter term." That decision was based on an estimated $30 per FTE fee.

Finally, any post-secondary institution can ensure it is not subject to the draft Interim Tariff in one of two ways: it can decide not to use any works in Access Copyright's repertoire or it can enter into a negotiated licence agreement with Access Copyright.

******

I would be pleased to answer any questions the Board may have in respect of the above submissions.

Yours very truly,

7Jartcr ~C~

fo.r Randall Hofley

NKB/jvd

66 In analogous situations, universities and colleges do not chase down former students to repay them when actual costs are less than budgeted costs. For example, where tuition and other types of student fees (such as student association fees) are set according to a budget of operating expenses, staff salaries, etc., the universities do not chase down students and refund if the budgeted amount was higher than actual. This is clear from the document appended to Mr. Fewer's letter on behalf of by CAUT and CFS of November 23, 2010. According to the University of Western Ontario Board of Governors Report of Finance Committee, Western is planning to charge its students a fee in 2011 in the absence of an interim tariff. Western says, "If the new tariff is lower than expected, any surplus funds would serve to reduce the ancillary fees in future years", i.e. there is no intention to chase down former students and refund this to them if the certified tariff is less than estimated.

67 See Appendix to CAUT and CFS submissions dated November 23, 2010.