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Letter to McDougall - AUCC Reply to Access Copyright Response to AUCC Application to Amend Interim Tariff Re Transactional Licences 21095351_2 (2)

Letter to McDougall - AUCC Reply to Access Copyright Response to AUCC Application to Amend Interim Tariff Re Transactional Licences 21095351_2 (2)

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Published by: Howard Knopf on Aug 02, 2011
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LEGAL_1:21095351.2
July 19, 2011
Glen A. Bloom
Direct Dial: 613.787.1073gbloom@osler.com
Our Matter No: 1059568
BY EMAIL
Mr. Gilles McDougallSecretary GeneralCopyright Board of CanadaSuite 800 - 56 Sparks StreetOttawa, OntarioK1A 0C9Dear Mr. McDougall:
Access Copyright Post-Secondary Educational Institutions Tariff, 2011-2013
We are writing to you on behalf of the Association of Universities and Colleges of Canada (“AUCC”) pursuant to the Notice of the Board dated June 16, 2011. This letter constitutes AUCC’s reply to the response of Access Copyright (“Access”) by letter datedJuly 8, 2011 (the “Response”) to AUCC’s application to amend the Interim Tariff filedJune 8, 2011 (the “Application to Amend”).
Introduction
In the Application to Amend (page 1), AUCC explained the reason it made theapplication to amend the Interim Tariff. Access had recently refused to granttransactional licenses to post-secondary educational institutions in a blatant effort to forcethe institutions to operate under the Interim Tariff. The Response confirms Access’srefusal to grant transactional licenses and confirms that the refusal is based on Access’sdecision to file the Proposed Tariff and “to establish the conditions under which usersmake copies of published works” (Response, page 11).Remarkably, Access did not respond to AUCC’s reliance on the Board’s assurance thatthe Interim Tariff would not be mandatory. To reiterate, in its reasons for granting theInterim Tariff, the Board stated at paragraph 45:An interim tariff does not force Institutions to pay royaltiesabsent any evidence that they require a licence. A tariff applies only to those who need the licence; those who donot, need not pay. Under the general regime, which appliesin this instance, users whose consumption patterns justifydifferent rates remain free to secure, from Access or fromothers, transactional or other licences that will trump thetariff. The fact that the interim tariff can be modified at any
 
LEGAL_1:21095351.2
Page 2time ensures that Access will display good faith in suchnegotiations. Any misconduct on its part would necessarily be reported to the Board, which would take it into accountin any further consideration of this matter. [footnotesomitted, emphasis added]AUCC submits that Access did not respond to AUCC’s reliance on the Board’s statementabove because of its fundamental misunderstanding of the general tariff regime (sections70.1 to 70.5 of the
Copyright Act 
(the “
 Act 
”)). Although rightsholders may refuse tolicense copyright in their works, a collective society such as Access cannot refuse togrant a license for the works in its repertoire. The
 Act 
protects against the abuse of monopolistic power by a collective society by providing, through section 70.2 of the
 Act,
a means for a user to obtain a license to the works in the collective society’s repertoire.Recent events show that Access’s attempt to force AUCC member institutions to operateunder the Interim Tariff is clearly intended to eliminate competition in the granting of  permissions to reproduce copies of published works. Access does not only compete withits affiliate rightsholders in the granting of permissions. NRC Research Press has recentlyannounced that it has entered into partnership with Copyright Clearance Centre of Denver, Massachusetts, United States (“CCC”). CCC operates Rightslink®, a fast andeasy way to obtain permission to make copies of published works. By forcing AUCCmembers to operate under the Interim Tariff, Access would eliminate competition in theuniversity sector from CCC.In this reply AUCC will initially discuss Access’s fundamental misunderstanding of thegeneral tariff regime, illustrate by example the extremely punitive fees that Access isattempting to hold over AUCC members in order to force them into operating under theInterim Tariff, and then reply to the jurisdictional and substantive issues presented in theAccess Response.
The General Tariff Regime
In the Response, Access states:(a)“Rightsholders (and, by extension, Access Copyright) should be free todecide if, and how, to licence their works” (page 3);(b)“Rightsholders - and by extension - Access Copyright, should be free todecide. The general tariff regime is based on a collective society’s right toestablish the conditions under which users may make copies of publishedworks” (page 11);
 
LEGAL_1:21095351.2
Page 3(c)“The amendments [AUCC’s proposed amendments to the Interim Tariff]suggest that only Access Copyright has the obligation to license the use of works in a particular way” (page 14); and(d)“Access Copyright’s decision, itself, not to license on a transactional basisin the face of the Proposed Tariff providing for a blanket licence is aunilateral decision” (page 16).The general tariff regime was established by the amendments to the Act enacted in 1988.These amendments removed a previous concern that the licensing of copyright by acollective society of rights of copyright owners (other than the public performance rightsof composers and music publishers) would be contrary to the
Competition Act.
The 1988amendments provided that where a “licensing body”, since 1997 known as a “collectivesociety”, concluded an agreement authorizing a person to use the exclusive rights of copyright, the licensing body or that person could file the agreement with the CopyrightBoard of Canada (the “Board”). Section 32 of the
Competition Act 
1
did not apply inrespect of such an agreement filed with the Board. The amendments further provided thatthe Director of Investigation and Research (the “Director”), now the Commissioner of Competition, could have access to an agreement filed with the Board, and if the Director considered the agreement contrary to the public interest, the Director could request theBoard to examine the agreement
2
.Elimination of the concern over section 32, now section 45, of the
Competition Act 
enabled Access and other licensing bodies to be established and to collectively license theexclusive rights of copyright of more than one copyright owner. As a protection againstthe undue exploitation of monopoly power by a licensing body, the 1988 amendmentsalso provided that, where a licensing body was unable to agree on the royalties andrelated terms and conditions for the use of a work within the licensing body’s repertoire,either the licensing body or the user could apply to the Board. The Board was embodiedto fix the royalties and related terms and conditions with respect to such use
3
.Theseamendments ensured that a licensing body would be obliged to negotiate licenses for theuse of works in its repertoire. If it failed to do so, the prospective user could invoke theBoard’s jurisdiction to fix the royalties and related terms and conditions for the use of works within the licensing body’s repertoire. In effect, where rightsholders decided tohave their copyright administered collectively through a licensing body, their rights weresubject to a compulsory license fixed by the Board if the licensing body and the user wereunable to agree on the terms of use.
1
Now section 45 of the
Competition Act.
 
2
The 1988 amendments may be found at S.C. 1988, c. 15, s. 14.
3
These further provisions may also be found at S.C. 1988, c. 15, s. 14.

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