ARIEL KATZ

ASSOCIATE PROFESSOR
INNOVATION CHAIR, ELECTRONIC COMMERCE

December 17, 2010 - BY EMAIL -

Mr. Gilles McDougall

Acting Secretary General
The Copyright Board of Canada
56 Sparks Street, Suite 800
Ottawa, Ontario
K1A 0C9
Dear Mr. McDougall,
Re: Additional Response to Access Copyright’s Application for an Interim Decision
Imposing an Interim Tariff
Pursuant to the Copyright Board ruling of Dec. 8, 2010, I hereby make this submission regarding
the Application of Access Copyright (“AC”) for an interim decision imposing an interim tariff.
As per the Board’s suggestion, this submission focuses mainly on the questions 2, 3 and 4
suggested by the Board. This submission extends and relies on my previous submission, and any
suggestion made herein with respect to the content of an interim tariff should not be interpreted
as an endorsement of its approval. My position that the Board cannot and should not issue such a
decision remains firm.

I. Should the Board grant Access Copyright's application for an interim decision?
My previous submission addressed some of the numerous reasons why AC’s application should
be denied. Without repeating what I have written there, I wish to add that among other things,
the additional evidence that AC filed, emphasizing the history of its negotiations with academic
institutions, further emphasizes that AC attempts to achieve through the Board an (in)equitable
remedy that it probably believes will not be granted if it applied to a court of competent
jurisdiction. Together with the evidence that it chose not to file (e.g., with respect to its repertoire
or with respect to the alleged deleterious effect), AC’s reply confirms the reasons for dismissing
its application outright.

II. If the Board decides to issue an interim decision, which form should that decision take?
For the reasons outlined in my previous submission and for some additional reasons outlined
below, I would submit that under the current circumstances, the only interim decision that would
constitute a proper exercise of the Board’s jurisdiction is dismissing AC’s application. Whatever
its title may be, an interim decision having the effect of a tariff is a tariff, and it cannot be
approved until and unless the Board has fully heard all the objections, considered them, and has
sufficient evidence upon which to base its decision. The fact that the terms of such tariff may
later be modified does not alter this basic point.

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 2

Contrary to AC’s assertion, there is no certainty that a tariff will be certified,1 nor could there be
such certainty. The Copyright Act does not mandate collective administration in the present case,
and in any event the Copyright Board is not AC’s rubber stamp.2 Neither AC nor its members or
affiliates have a vested right to administer their copyright collectively. The Act permits them,
under some conditions and subject to regulatory scrutiny,3 to enter into voluntary agreements
with users, or propose tariffs for the Board’s approval. But the very notion of a proposal (as in
“proposed tariff”, in s. 70.12(a)) includes the possibility of its rejection. As a corollary, the very
notion of filing an objection (as in ss. 67.1(5) and 70.15) implies the possibility that objections
will be accepted. Nowhere does the Act limit the scope of the grounds of objection or the issues
they may target.
Moreover, the objections in this case are not limited to royalties, the amount of which may
increase or decrease and be refunded according to the terms of a final tariff. The objections in
this case pertain to the constitutional validity of the Proposed Tariff, its necessity, its anti-
competitive nature, the ability of the Board to impose it, and to the various conditions it seeks to
impose not only on academic institutions, but also on their faculty, staff and students. None of
those issues can be remedied retroactively.
Even if the Board has the power to approve an interim tariff, it should not do so for the following
reasons. There is no basis on which a legally valid tariff can be determined. The absence of
sufficient information about AC’s repertoire prevents the Board from making any determination
that is not arbitrary and unreasonable, and the existing agreements do not provide an adequate
benchmark for such determination. In addition, approving a tariff will trigger s. 38.2, which will
aggravate the anti-competitive nature of the tariff, will seriously prejudice the rights of copyright
owners who are not members of AC, and may result in a violation of Canada’s international
obligation without advancing any good domestic policy. I address these points below.

A. Obfuscated repertoire
A fundamental problem with the proposed interim tariff (as well as the Proposed Tariff) is the
undefined repertoire to which it is meant to apply. Although AC defines the term Repertoire
Work as “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”, this definition is useless, as it gives no indication
whatsoever about the works within its purview. As explained in my and other parties’ previous
submissions, AC could not possibly have been authorized to administer the copyrights in the
millions of works used by academic institutions.4

1
AC’s submission of Dec. 15, 2010 (“AC Reply”), at 13.
2
Re Public Performance of Music, Statement of Royalties to be Collected for the Performance in Canada of
Dramatico-Musical or Musical Works in 1990, 1991, 1992 and 1993, 1993 CarswellNat 2616, at para. 53.
3
Copyright Act, ss. 70.5 & 70.6.
4
In its Reply, AC misunderstood or misrepresented my argument about the proportion of Canadian books in the
libraries of Canadian academic institutions. Contrary to what AC argues in p. 16, I was not suggesting that the fact
that only 3.6% of the recent acquisitions of the University of Toronto Library are books published in Canada means
that the copyright of foreign copyright owners should not be respected. Nor did I argue that the fact that 20% of the
world’s peer-reviewed journals are now freely available on-line means that the other 80% are also freely available.
The point was that even if one could assume that AC represents all Canadian copyright owners in contemporary

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Consistent with its view that it does not need to provide any evidence to support its Application,5
AC’s Dec. 15 Reply misses another opportunity to provide any helpful information necessary to
determine a tariff and continues to obfuscate its repertoire. Rather than responding constructively
to my letter of Dec. 13, 2010 requesting information about its repertoire according to s. 70.11 of
the Act,6 AC chose to assert, without any explanation, that my request was “entirely
unreasonable”.7 Regrettably, AC ignored the statutory basis for my request and characterized it
as an attempt to circumvent the hearing process. Finally, the information about its repertoire that
AC did provide is meaningless.8 Ultimately, the information that AC was willing to provide
boils down to a vacuous and tautological assertion that its repertoire consists of works that are in
its repertoire, or alternatively, to a bold, highly implausible, and likely misleading claim that it
lawfully administers every literary, dramatic or visual Published Work that is not included in the
exclusion list.
In its filed Reply, AC dismisses as “spurious” my argument that absent any evidence regarding
the ambit of its repertoire, it is impossible to determine an adequate price for any interim tariff.
Further, it will be impossible for users to identify the works require compliance with the terms of
the tariff, and distinguish them from works that need to be licensed separately or works that can
be used without the tariff’s limitations.9 AC simply maintains that under the expiring agreements
the institutions clearly knew what was in the repertoire, and knew how much they were paying,10
and adds that “[n]either of these factors has changed in the context of the proposed Interim
Tariff.”11
AC’s Reply misses the point. My argument is not about the knowledge of the academic
institutions. (I will discuss the question what can be inferred from the existing agreements
below). Rather, my argument concerns fundamental principles of due process and legality. The
issues are (1) the evidentiary basis that must be before the Board to allow it to exercise its power

works (and it clearly does not), there is no reason to assume that it represents the entire universe of copyright owners
whose works are used in academic institutions. The point about open access journals was that there exist a
significant number of peer-reviewed journals that AC cannot possibly be entitled to collect royalties for. Also,
contrary to AC’s claims, links to supporting publicly available evidence were provided. AC’s argument that no
suitable evidence was filed is surprising given its position that hyperlinking constitutes reproduction. While I do not
share this view, if it is true that linking constitutes reproduction, then it is interesting that AC now claims that I filed
no supporting evidence with my previous submission. For convenience, the relevant documents are attached hereto
as Appendix A and Appendix B.
5
AC Reply, at 19-20.
6
My letter to AC’s counsel is attached as Appendix C.
7
AC’s Legal Counsel letter to me, dated Dec. 15, 2010, is attached as Appendix D.
8
In its letter, AC’s Legal Counsel explains that its “repertoire currently consists of: (i) grants from Canadian
publishers and creators of Published Works and from the creators and publishers represented by the [29] collective
management organizations listed on [an attached appendix]; and (ii) for publishers and creators of Published Works
that have not signed a grant, as a result of an agency relationship [with the exception of publishers appearing on an
enclosed exclusion list].” This is merely reiteration of various ways in which it may acquire rights and a list of
works or publications that are clearly not in its repertoire.
9
AC Reply, at 18.
10
Ibid.
11
Ibid.

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 4

reasonably and rationally; and (2) the information that must be available to all users who will be
required to comply with the terms of a tariff.
Unlike a contract, the parties to which can agree to bind themselves even when they face great
uncertainty about its scope, a tariff is a regulation,12 which cannot be legally valid and binding
unless its scope is known and determinable. Proper notice, as a matter of fundamental justice, is
an essential feature of any constitutionally valid law or regulation.13 A tariff cannot be valid
unless those the persons required to comply with it can determine the works it applies to.
AC further argues that the scope of its repertoire cannot be an issue because it “proposes only to
be paid for its repertoire that has already been assessed by the Copyright Board in the K-12
Tariff.”14 It adds that “[w]ith 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.”15 This surprising claim, raised for the first time, is peculiar for several reasons.
First, elsewhere in its Reply AC emphasizes that the repertoire to which the K-12 tariff applies
involves different works and different right holders,16 whereas here it seems to be claiming that
payment under the interim tariff is requested only for the same works as those covered by the K-
12 tariff. Second, if the Board and users cannot distinguish the K-12 repertoire from the present
repertoire (and nowhere in its Application does AC makes such distinction), the claim that
payment is not requested for the non K-12 works is meaningless, and in any event ignores the
fact the proposed interim tariff requires not only payment but compliance with various conditions
that apply to all works under its repertoire. Third, the Board in the K-12 tariff seems to have
accepted AC’s claim that more than 99% of the works reproduced by K-12 institutions were
actually part of its repertoire, but acknowledged that AC made this claim without supporting
evidence.17 The Board did not explain why it accepted such unsupported argument despite the
objectors’ challenge,18 and in any event, since the curricula in institutions of higher education are
different from those of K-12 institutions, this holding has no bearing on the present case.19
In sum, a tariff must relate to a specific repertoire and so far AC has missed every opportunity to
define its repertoire in any meaningful way. The Board cannot set a fair tariff without knowing
what it is that the tariff would apply to. Proceeding to a determination of this kind, in the absence
of such evidence, would be arbitrary and unreasonable.20 Moreover, a tariff that purports to be

12
Interpretation Act, R.S.C. 1985, c. I-21, s.2.
13
R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606.
14
AC Reply, at 17.
15
Ibid.
16
AC Reply, at 14.
17
Statement of Royalties to be Collected by Access Copyright for the Reprographic Reproduction, in Canada, of
Works in its Repertoire (Educational Institutions – 2005-2009), at para. 179.
18
Ibid, at para. 181-82.
19
For example, it is possible that K-12 schools use primarily materials written for and tailored to the respective
Provinces’ curricula, and that the copyright owners of these works are indeed members of AC. This clearly is not the
case in higher education.
20
Society of Composers, Authors & Music Publishers of Canada v. Bell Canada, 2010 FCA 139 at para. 27.

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 5

binding but does not allow users to determine the works to which it applies cannot be
constitutionally valid.

B. Current expiring agreements provide an inappropriate benchmark

AC submits that the expiring agreements provide an appropriate benchmark for determining a
tariff. This argument is false. While it is true that voluntary agreements can sometime serve as
useful benchmarks for courts or tribunals in some cases, it is necessary to understand the nature,
context and content of such agreements before they can be relied upon.
The expiring agreements do not provide an appropriate benchmark for determining either the
scope of AC’s repertoire or the fair and reasonable royalty for its use. These agreements never
defined what AC’s repertoire was. They only provided specific exclusions, effectively
representing that AC had been authorized to license everything else. Academic institutions, in
turn, did not bother asking too many questions because AC explicitly undertook to indemnify
them if copyright owners who never authorized AC to license on their behalf sued them. Setting
aside the questionable legality and validity of this indemnity scheme (both as a matter of
insurance law and as a matter of copyright law), this “don’t ask don’t tell” policy served the
contracting parties well. If the Board was in charge of devising an insurance program, the
expiring agreements could, perhaps, provide a useful benchmark. But this is not the Board’s
current task.

C. The relevance of s. 38.2

I share AC’s reluctance to include indemnity provisions such as the ones existing in the expiring
agreements. I disagree, however, with its position that s. 38.2 of the Copyright Act provides an
adequate protection to academic institutions. I further maintain that s. 38.2 provides yet another
reason for dismissing the Application.
The utility of the protection which s. 38.2 accords academic institutions is correlated with the size
of the collecting society’s repertoire. If the overwhelming majority of works used by academic
institutions is within the repertoire, and consequently, the likelihood that the institution will
infringe the copyright of a non-member is very low, then the cap on the amount the non-member
can recover may provide adequate protection to the institution. If, however, the collective
administers a very limited repertoire (as is very likely in the present case), then an institution
relying on the tariff can still face significant liability even within the limits set by s. 38.2. Class
action lawsuits may compound this risk significantly.
Moreover, s. 38.2 applies only to reprographic reproduction. Unfortunately, the Act does not
define the term “reprography.” Arguably then, s. 38.2 does not apply to other forms of
reproduction, or to any other exclusive right (e.g., the right to communicate a work to the public
by telecommunication), and potential non-member plaintiffs are likely to argue exactly that.
Therefore, it is possible that s. 38.2 fails to provide any protection with respect to many uses
proposed under the interim tariff.
But more importantly, rather than supporting the approval of the tariff, s. 38.2 provides yet
another reason against its certification, even on an interim basis. S. 38.2 provides that if some
copyright owners decide to administer their rights collectively and license their works to an
academic institution (under an agreement or a tariff), other copyright owners cannot recover more
than the amount of royalties that would be payable to them had they been members of that
collective.

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This is an extraordinary provision, which imposes severe limitation on the copyright of non-
members. It is potentially inconsistent with what is known in international copyright law as the
“three-step test”. The test is not presently part of Canadian copyright law, but it does provide a
useful framework for discussing the extraordinary nature of s. 38.2. As presently formulated in
Article 13 of the TRIPS Agreement, the test provides that “[m]embers [states] shall confine
limitations or exceptions to exclusive rights to certain special cases which do not conflict with a
normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the
right holder.”21 S. 38.2 is clearly a limitation and exception to the exclusive rights of copyright
owners, and although it applies only in special certain cases, it is hard to see how this provision
does not conflict with a normal exploitation of the work and does not unreasonably prejudice the
legitimate interests of the rights holder.
S. 38.2 is also extraordinary from the academic institutions’ perspective. While it accords them
some protection from liability, it also deprives them the benefit of a competitive market offering
innovative models for licensing. This is so because copyright owners’ willingness to offer
competitive and innovative products to academic institutions depends, in part, on their ability to
enforce their copyrights if those are infringed. Capping the amount that non-members of AC can
recover reduces their incentive to innovate and compete.
However, s. 38.2 does not necessarily violate Canada’s international obligations and is not
necessary anti-competitive. The only situation in which the extraordinary nature of s. 38.2 can be
consistent with Canada’s international obligations and serve Canadian good copyright policy is
when there is no prospect for a competitive market for works and collective administration is the
only way to avoid a market failure. Under such circumstances s. 38.2 serves a useful purpose of
preventing non-members from behaving opportunistically. At the same time, under such
circumstances s. 38.2 does not deprive users of the benefits of a competitive market (which by
assumption does not exist) and it does not conflict with a normal exploitation of the work and
does not unreasonably prejudice the legitimate interests of the rights holder, because again, by
assumption, the copyright owner cannot exploit her work in the normal way through the market.
One of the triggers of s. 38.2 is an approval of a tariff. 22 Therefore, the Board should be
extremely careful not to approve a tariff in circumstances when the application of s. 38.2 makes
for very bad policy domestically and violates Canada’s obligations internationally.
The evidence before the Board at this stage cannot support any conclusion that collective
administration is necessary. Quite the contrary, almost all objectors and intervenors argue that
market-based administration exists and is preferable. Therefore, the Board should refrain from
approving an interim tariff that will unjustifiably trigger the extraordinary measure of s. 38.2.

21
Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement
Establishing the World Trade Organization, Annex 1C, THE LEGAL TEXTS: THE RESULTS OF THE
URUGUAY ROUND OF MULTILATERAL TRADE NEGOTIATIONS 320 (1999), 1869 U.N.T.S. 299, 33 I.L.M.
1197 (1994), Article 13.
22
S. 38.2 can be triggered even without an approved tariff, when there is an agreement between the collective society
and an academic institution. In such cases, however, the agreement can still be scrutinized by the Commissioner of
Competition and the Board, according to s. 70.5, to determine whether it is in the public interest.

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 7

III. If the Board decides to issue an interim decision, what should the substantive content of
the decision be? Access proposes maintaining what it refers to as the status quo, with
additional, potential uses being allowed at no additional cost. Does the proposal achieve
what it purports to achieve? Is that what the interim decision should indeed achieve? If not,
what else?
The proposed interim tariff does not maintain the status quo. In fact, it substantially deviates
from the status quo along at least the following five main dimensions: regime change from
voluntary to mandatory; price; digital copying; conditions; and indemnity.
I will address each of these changes to the status quo in turn.

A. Regime Change
I have discussed this issue at greater length in my previous submission, and I will only repeat the
essence of it here. There is nothing further from the status quo than an interim tariff. Granting an
interim tariff is not a continuation of the status quo; it is a regime change, and a radical one as
that. Until December 31, 2010, the relationships between Access Copyright and some of the
prospective users will be based on contractual and voluntary agreements. This is the regime that
AC chose, and the one that its licensees agreed to. The parties have considered their legal rights
and bound themselves to contracts defining payment, reproduction rights, reporting requirements
and indemnification. Moreover, these contracts contain express provisions defining their
duration, contemplating their renewal and the dealing with conditions for their termination. As
with many other contractual relations, these contracts are reaching their end. All of this has been
known, contemplated and expected. The nature of voluntary relations is that they depend on
volition. The status quo, even in the face of a monopoly, has been one of free will. Preserving
the status quo means only one thing: allowing academic institutions to decide whether they want
to be licensed by AC, and allowing those who wish to be licensed by Access Copyright to
negotiate those licenses freely.
A tariff, by virtue of its mandatory nature, even if on an interim basis, is an entirely different
regime. Even if theoretically an academic institution may be permitted to claim that it is not
bound by the tariff because it does not use any repertoire work (or does not use any works
beyond lawful unauthorized uses and uses for which it already has a license) the burden of
proving the inapplicability of the tariff, which may fall on the institution itself, would involve
proving a negative and therefore render such an option meaningless. A tariff, therefore, even an
interim one, introduces a radical regime change. Nothing is more antithetical to the status quo
than that.
Unlike the expiring agreements that were limited in their duration and contained provisions
dealing with early termination,23 an interim tariff cannot be terminated by the parties. Moreover,
given the expected length of the current proceedings, it is very likely that an interim tariff will
last longer than any of the previous agreements. All of this constitutes a radical shift from the
status quo. The only interim decision that is consistent with the status quo is one that permits the
parties to decide whether they wish to be bound by mutually agreed contracts, and permits them
to apply for an arbitration under s. 70.2 if they so wish.

23
See e.g., Clause 13 of the AUCC 2003 Model License.

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B. Price
Even if nominally the royalties under the proposed interim tariff were identical to those under the
expiring agreements, they would still represent a significant increase in the real price for three
main reasons.
First, the real value that academic institutions derived from the expiring agreements was the
indemnity offered by AC. The indemnity allowed the institutions to use any work not on the
exclusion list, while shifting the risk of copying works outside AC’s repertoire to AC. Since the
proposed interim tariff does not provide an indemnity (and as discussed above, s. 38.2 does not
provide the same protection), the real price demanded by the proposed interim tariff is
substantially higher.
Second, as discussed in my and other parties’ earlier submissions, the current prices were
negotiated when institutions relied heavily on photocopying, when the scope of fair dealing was
less clear than it is today, and when direct licenses with publishers and other market
intermediaries were less common than they are today. A tariff that retains the same nominal price
effectively sets a substantially higher one.
Third, the mandatory and long-term nature of a tariff (even an interim one) creates a substantially
higher price. Under the contractual regime, institutions could always decide to renegotiate the
price upon the expiry of the agreement (or even before), according to their changing needs and
the alternatives available to them. The mandatory and long-term nature of a tariff effectively
locks the institutions into a long-term irrevocable commitment. Locking-in would be a great deal
for institutions if the market price was expected to rise, but the growth of more competitive
market alternatives suggests that this is unlikely, and in any event, AC does not even offer
locking-in to the current price: it explicitly demands an enormous price increase under the
Proposed (final) Tariff.
The combined effect of these three factors is that the royalties under the proposed interim tariff
are substantially higher than those currently paid. This does not preserve the status quo.

C. Digital Copying
AC’s proposal to include in an interim tariff the new digital copying “for no additional payment”
is, by definition, a deviation from the status quo. The problem with this proposal, however, is not
in its literal deviation from the status quo, but with the effects of such deviation. AC wants to
persuade academic institutions as well as the Board that it offers free lunch, but in truth no lunch
is offered and it is certainly not free.
There is no lunch here (let alone free) because, as pointed out in my earlier submission, AC’s
digital repertoire is much narrower than its limited reprographic repertoire, so whatever it can
lawfully license is of little value anyway. Moreover, as per Clause 4(4) of the proposed interim
tariff, copies shall only be made from Repertoire Works that are lawfully obtained by the
Authorized Person making the Copies. This further suggests that the lunch is of little value
because many existing agreements with publishers and other licensed intermediaries already
permit institutions to make digital copies (usually under terms that are substantially more
permissive than those proposed by AC).
Furthermore, the lunch can turn out to be a toxic one because Clause 13 of the interim tariff
requires the institutions to take steps to ensure compliance with the conditions in clauses 4 and 5
and to ensure that no copying in contravention of those conditions takes place. Even if as a
matter of law those provisions do not trump more permissive ones in separately negotiated
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licenses it can be expected that the tariff will effectively create a chill among university
administrators and users.
Even if lunch is offered, it is by no means free. AC clearly intends to send an invoice with a
hefty price if the Board approves the Proposed Tariff, and the anti-competitive nature of AC’s
proposal might ensure that this hefty price will be carried into the future.
By offering digital licenses “for free” today, as part of the bundle AC seeks to impose on
academic institutions, AC seeks to leverage a monopoly over photocopying rights into a
monopoly over digital rights. If academic institutions can make digital copies of Repertoire
Works for free for the next several years, they have no incentive in the short run to negotiate and
pay for those rights when they negotiate subscription deals with publishers. Their long run
incentives are not much better because AC clearly indicates its intention to include those rights—
for a hefty price—in the future, as part of a mandatory tariff, from which the institutions cannot
practically opt out. It will make little sense for academic institutions to negotiate digital rights
when they have to pay for them anyway. This will hamper the development of a competitive
licensing market.
The bundling of digital licenses “for free” creates an even more pernicious effect when s. 38.2 is
considered. If s. 38.2 applies to digital reproductions, then including digital uses in the interim
tariff will severely prejudice copyright owners who are not interested in having their digital rights
administered by AC (that is, the overwhelming majority of copyright owners). Approving the
proposed interim tariff will essentially strip such copyright owners of their copyright, because the
maximum amount they will be able to recover if their rights are infringed is zero.
AC cannot rely on the statutory regime to justify such a patently anti-competitive outcome that is
also so prejudicial to the interests of copyright owners who do not wish to share AC’s loot. The
raison d’être of the regulatory framework for the oversight of collective is to ensure that their
existence and operation is in the public interest and to prevent the abuse of their monopolistic
position.24 Parliament never intended and could never have intended to allow collectives to rely
on this regime to entrench their monopoly and leverage it to markets that can develop in a
competitive way, while prejudicing users and other copyright owners. Allowing such outcome
would be an abuse of this statutory framework.
If the Board decides to approve an interim tariff, it should exclude digital copying from its ambit.

D. Conditions
The definitions of what is a Copy in Clause 1 of the proposed interim tariff, combined with
Clauses 4 and 5 of the proposed interim tariff create severe limitations on the ability to use
works, many of which represent collusive misuse of their copyrights rather than legitimate
exercise of AC members’ legitimate economic interests. Many of these limitations restrict users
from engaging in uses that the Act clearly permit and the even existing licenses do not prohibit.
Determining the proper scope and wording of these provisions requires further elaboration by all
parties, both with regard to the legal question of which activities require permission, as well as

24
Vigneux v. Canadian Performing Right Society [1943] S.C.R. 348, at paras. 4-8, point affirmed in Vigneux v.
Canadian Performing Right Society [1945] A.C. 108, at para 11.

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 10

the reasonableness of the proposed condition. I would respectfully submit that the Board is not
presently capable of approving these conditions.

E. Indemnity
As already mentioned, the indemnity offered by AC has been a fundamental component of the
expiring agreements, and s. 38.2 does not offer a close enough substitute. Nevertheless, the
Board should not include such a provision in a tariff. If an indemnity such as the one in the
existing agreements is an acceptable practice, it should be open for academic institutions to self-
insure, and it should be open for other companies to authorize for a fee the copying of works
without the consent of the copyright owner, and assume the legal risk. If it is not an acceptable
practice, then the Board should not endorse it. I acknowledge that some parties maintain an
interest in having an indemnity provision included in an interim tariff,25 and AC does not object
to the inclusion of such an indemnity. Although this solution may be desirable for AC and its
members, and provide a short-term and short-sighted fix for the need to obtain licenses from
copyright owners who are not members of AC, it is anti-competitive, extremely unfair to non-
member copyright owners, and hinders the development of a competitive and innovative
licensing models. Approving it is not in the public interest.

IV. Once the content or substance of the decision has been determined, does the proposed
text reflect that substance or content and if not, how should it be modified?
It flows from my position that the only interim decision that the Board should make is to dismiss
AC’s application. The proposed text does not reflect the substance and content of such decision.
Therefore, the text that I would propose is: “Access Copyright’s application to an interim
decision is denied.”
It is also my position that in light of the numerous novel and controversial issues arising from
AC’s Application, the time frame given to respond to it has been insufficient, a has not allowed
me to conduct detailed textual analysis of the proposed interim tariff. I have addressed some
issues arising from it above. I have also noticed that Clause 12(5) contains an error when it states
that “the amount of payment … pursuant to this interim tariff is based upon agreement”, but this
is all that I can comment on at this stage and I expressly reserve the right to further object to
issuance of an interim tariff as well as to its conditions, in accordance with this and my earlier
submission and the rights reserved therein.

Yours respectfully,

Ariel Katz

25
AUCC Submission, at 2, 3, and 7; ACCC Submission, at 3.

Faculty of Law, 78 Queens Park, Toronto, ON, Canada M5S 2C5

Tel: 416-978-8892 Fax: 416-978-2648 ariel.katz@utoronto.ca www.law.utoronto.ca/faculty/katz