Fixing Our Broken Copyright System

Copyright law seeks to regulate creativity. Nowhere is this regulation more apparent, or specific for that matter, than at the level of setting tariffs for copyright uses as set by the Copyright Board and administered by collective societies. As illustrated most recently in the Access Copyright v. York University decision, this system of collective administration is horribly broken. It is time to get creative about how we regulate creativity.

This is how copyright works. Authors (and their intermediaries) are compensated for their creations through a tradeable commodity known as copyright. The ability of some authors to make a living depends on this. The viability of all intermediaries (e.g. publishing houses or record companies) depends on it even more. At the same time, the law has created rights of users to use these works – without compensation to authors and their intermediaries – for certain purposes that also contribute to creativity. These purposes are private study, research, criticism, news reporting, education, parody and satire. These two interests, the rights of authors and the rights of users for specific purposes, are obviously in tension and need to be reconciled.

Collective societies enter the fray as way to manage unwieldy transaction costs that arise between authors and certain large scale users of various copyrighted works. Rather than have radio stations, for example, negotiate multiple rights every time a song is played on a radio, a tariff is set by a neutral party – the Copyright Board – that makes it easier for users to pay and for authors to collect money. So for example if a radio station plays X number of hours of songs from a collective society catalogue (e.g. SOCAN), then the radio station plays Y number of dollars, which ultimately filters back to songwriters minus an administration fee.

Where this apparently sensible system goes off the rails is that it does not regulate the uses that can be made of works without compensation, i.e. the fair dealing uses mentioned above. In other words, the system addresses one interest of copyright and ignores the other with which it is in tension. Large scale users of copyright works – say universities – must devise their own multi-faceted fair dealing practices based on an inherently nebulous fair dealing factor analysis. These practices may then by legally attacked by a collective society as unfair leading to years of litigation and incredible expense.

The obvious solution therefore is to prescribe fair dealing practices and uses within the same tariff that sets tariffs for compensable uses. This is a workable solution insofar as economic uses set under a tariff have corresponding fair dealing uses that could also be prescribed. It would also add to efficient administration of the system to develop context neutral fair dealing rules rather than struggle with imprecise of vague rules on a case by case basis ex post facto. And while many existing tariffs have detailed reporting and auditing requirements to ensure compliance, so too these tariffs could prescribe safeguards and reporting requirements to ensure that fair dealing practices are adhered to by institutions.

As sensible a solution as this might be, the main objection is that it would add further expense and delay to an overburdened Copyright Board whose mandate would be widened. It would be better if incentives could be placed for parties themselves to resolve those disputes. Almost all commentary I have encountered on collective administration – from lawyer war stories to academic literature and the blogosphere – takes a side. It has become an adversarial issue. There will be no “love and courage” or kumbaya moment here.

The needed incentives could draw on a labor relations model. Each party to a collective agreement has a compelling incentive to reach an agreement even though their interests are opposed. When negotiations become intractable and both sides engage in suboptimal tactics, i.e. strikes or lockouts, then they sometimes turn to binding arbitration. In the copyright context, the Copyright Board, playing the role of arbitrator, could pick between the bottom line proposals of each side once it is determined that negotiations have reached an impasse. The threat of losing by making unreasonable demands ensures that proposals are reasonable.

This is but one idea. There are others. Patricia Aufderheide and Peter Jaszi recently wrote a book called Reclaiming Fair Use which, in part, discusses the development of a fair use best practices guide to documentary film making in the US based on input from relevant stakeholders. One advantage of a sectoral best practices guide developed on an inclusive basis is that it can create value for copyright holders (who may otherwise go uncompensated) while also instilling a norm of compliance among users who view such payments as legitimate and consensual.

I would love to hear other ideas as would, I am sure, the Standing Senate Committee on Banking Trade and Commerce that is conducting a review of copyright and the Copyright Board in particular.