Supreme Court – Collective Copyright Licenses Are Not Mandatory

The Canadian Copyright Licensing Agency (Access Copyright) is a copyright collective meaning that it manages certain rights on behalf of copyright holders. Importantly Access Copyright does not itself hold any of the copyrights that it manages.

York University (York) is Canada’s third-largest university with over 50,000 students and approximately 1,500 full-time faculty members.^[1] York had a license to use some of the works licensed by Access Copyright from 1994 to 2010. Access Copyright applied to the Copyright Board for an interim tariff during a period when renewal negotiations were languishing. York initially complied with the interim tariff but then advised Access Copyright that it was opting out. York chose to manage copyright infringement using its fair dealing guidelines or seeking permissions directly.

York had based its fair dealing guidelines on a model prepared by the the Association of Universities and Colleges of Canada following the decision of the Supreme Court in CCH Canadian Ltd. v. Law Society of Upper Canada^[2] and revised following the Supreme Court’s decision in Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright)^[3] and the passage of the Copyright Modernization Act.^[4]  In both CCH and Alberta (Education) the Supreme Court had found certain uses of copyrighted written materials by a library and by a school were for research purposes and the conduct was fair dealing. The Copyright Modernization Act added “education” as a specific purpose eligible in the fair dealing analysis.

Access Copyright sued York and was successful at the Federal Court in enforcing the interim tariff. The Federal Court held that the interim tariff was mandatory. The Federal Court took a much criticized approach to assessment of York’s fair dealing guidelines and found the dealing not fair.

A key element of the tariff question is the meaning of Section 68.2(1) of the Copyright Act which states:

68.2 (1) Without prejudice to any other remedies available to it, a collective society may, for the period specified in its approved tariff, collect the royalties specified in the tariff and, in default of their payment, recover them in a court of competent jurisdiction.

York appealed the finding that the interim tariff was mandatory and sought a declaration that any copying under its Guidelines was fair dealing.

After an extensive review of the history of the applicable provisions, the Federal Court of Appeal found that an interim or final tariff would not be enforceable against York because tariffs do not bind non-licensees.^[5] Access Copyright appealed to the Supreme Court.

The Supreme Court used the opportunity to clarify the issues raised by this dispute in a unanimous decision by Justice Abella.^[6] On the issue of whether a tariff issued by the Copyright Board is mandatory, the Supreme Court agreed that Section 68.2(1) of the Copyright Act

only grants a collective society the right to collect defaulted payments from a user who has agreed to be bound by a licence on the approved terms. A collective society is required to provide licences pursuant to the terms of an approved tariff, since s. 70.17 immunizes a person who pays or offers to pay the royalties from an infringement action. But the licence cannot be forced on a user. A user is entitled to obtain its rights through other means and, if the user makes an unauthorized use, the appropriate remedy is an action for infringement.^[7] While Access Copyright’s inability to initiate infringement actions in respect of its repertoire may cause it difficulties, this is the consequence of its freely chosen contractual arrangements with its members. Section 68.2(1) does not provide a collective infringement remedy.^[8]

The result was that the Supreme Court found that Access Copyright could not enforce its tariffs against non-licensees, such as York, and, further, since Access Copyright does not have an assignment of copyright from the copyright owners, Access Copyright could not sue York for any alleged infringement.

As a result of the primary decision on the tariffs the Supreme Court noted that York’s request for a declaration of non-infringement was moot and the assessment of York’s Guidelines and claim to fair dealing as a defence to Access Copyright’s action did not arise.^[9]

The Supreme Court chose to explicitly identify significant jurisprudential errors made by both the trial court and court of appeal in their fair dealing analysis and described the problem with their analysis.^[10]

The main problem with their analysis was that they approached the fairness analysis exclusively from the institutional perspective. This error tainted their analysis of several fairness factors. By anchoring the analysis in the institutional nature of the copying and York’s purported commercial purpose, the nature of fair dealing as a user’s right was overlooked and the fairness assessment was over before it began.

This Court’s modern fair dealing doctrine reflects its more general “move away from an earlier, author-centric view which focused on the exclusive right of authors and copyright owners to control how their works were used in the marketplace”.^[11] The Court is “at the vanguard in interpreting copyright law as a balance between copyright rights and user rights”, and its understanding of fair dealing is no exception.^[12] Fair dealing is “[o]ne of the tools employed to achieve the proper balance between protection and access in the Act”.^[13]

Accordingly, to understand and apply fair dealing doctrine requires first understanding the copyright balance. Copyright law has public interest goals. The relationship between members of the public and copyrighted works is not merely the “consequence of the author-work relationship”.^[14] Put differently, the public benefits of our system of copyright are much more than “a fortunate by-product of private entitlement”^[15]

Instead, increasing public access to and dissemination of artistic and intellectual works, which enrich society and often provide users with the tools and inspiration to generate works of their own, is a primary goal of copyright. “Excessive control by holders of copyrights and other forms of intellectual property may unduly limit the ability of the public domain to incorporate and embellish creative innovation in the long-term interests of society as a whole”.^[16]

As a result, the Supreme Court explicitly recognized that there are three interests that need to be considered in copyright – those of the user, the author and no less important, the public interest.

Citing from scholars, the Supreme Court describes the proper role of fair dealing and other users rights (exceptions) as follows:

The core of fair dealing is fairness — fairness to the copyright owner in setting limits on the use of their work without permission and fairness to users to ensure that fair dealing rights can be exercised without unnecessarily restrictive limitations.^[17]

Or, in other words, the Supreme Court also endorsed the following description from Professor Craig:

Fundamentally, copyright policy assumes that the restriction of the public’s use of works through the creation of private rights can further the public’s interest in the widespread creation and distribution of works. The limits to these private rights, defined by fair dealing and other exceptions — and circumscribed by the boundaries of the public domain — are therefore essential to ensure that the copyright system does not defeat its own ends.^[18]

The Supreme Court identified that a key error was that the trial court and court of appeal both left out the user’s perspective contrary to the clear guidance of the prior Supreme Court decisions. In each case CCH, Bell and Alberta (Education) the Supreme Court found no goal of the facilitator apart from the user’s goal.^[19]

Regarding the two step analysis of the fair dealing user’s right, the Supreme Court in York noted:^[20]

It was common ground in this case that York’s teachers make copies for their students for the allowable purpose of education at the first step of the analysis.

But at the second step, where fairness is assessed, the Federal Court and Federal Court of Appeal approached the analysis from an institutional perspective only, leaving out the perspective of the students who use the materials. Both perspectives should be taken into account.

Importantly one may recall that that Alberta (Education) was a 5/4 decision written by Justice Abella. The Supreme Court in York unanimously affirmed the majority’s holding in Alberta (Education) and rejected the analysis of the dissent which had focused only on the institution’s role. The dissent in Alberta (Education) found that the predominate purpose was that of the teacher which was instruction^[21], whereas the majority found the teacher found no separate purpose from the student.^[22] It is noteworthy that even the dissent in Alberta Education did not do a fair dealing analysis with multiple different purposes but only one predominate purpose.

In CCH, Bell and Alberta (Education) the Supreme Court considered the role of the facilitator from the end user’s perspective but did examine if the facilitation was fair. In CCH the Supreme Court considered if the Access Policy was fair noting the safeguards in place.

On this point the Supreme Court noted

In the educational context, instructors are facilitating the education of each of their individual students who have fair dealing rights.^[23] However, courts are not required to completely ignore the institutional nature of a university’s copying practices and adopt the fiction that copies are only made for individual isolated users. When an institution is defending its copying practices, its aggregate copying is necessarily relevant, forexample, to the character of the dealing and the effect of the dealing on the work.^[24]

Other errors that the Supreme Court noted were:

It was an error for the Court of Appeal to identify that it is only the institutional perspective that matters in the purpose of the dealing assessment. When teaching staff at a university make copies for their students’ education, they are not “hid[ing] behind the shield of the user’s allowable purpose in order to engage in a separate purpose that tends to make the dealing unfair”.^[25]

It was an error for the Court of Appeal to identify that York’s financial purpose was a “clear indication of unfairness”. Funds “saved” by proper exercise of the fair dealing right go to the University’s core objective of education, not to some ulterior commercial purpose.^[26] The purpose of copying conducted by university teachers for student use is for the student’s education.^[27]

It was an error for the trial court to criticize York’s Guidelines on the basis that different portions of a single work could be distributed to different students, such that an author’s entire work could end up being distributed in the aggregate, as this point was contradicted by Bell, which held that “[s]ince fair dealing is a ‘user’s’ right, the ‘amount of the dealing’ factor should be assessed based on the individual use, not the amount of the dealing in the aggregate”.^[28]

The Supreme Court identified additional errors in the manner in which the character of the dealing assessment is conducted, stating that “while it is true that “aggregate dissemination” is “considered under the ‘character of the dealing’ factor”^[29] “large-scale organized dealings” are not “inherently unfair””.^[30] The Supreme Court noted that in Bell, where copies could easily be distributed across the internet in large numbers, the Court had warned that focussing on the “aggregate” amount of dealing could “lead to disproportionate findings of unfairness when compared with non-digital works”.^[31] By extension, the Supreme Court noted that “the character of the dealing factor must be carefully applied in the university context, where dealings conducted by larger universities on behalf of their students could lead to findings of unfairness when compared to smaller universities. This would be discordant with the nature of fair dealing as a user’s right”.^[32]

That said, the fair dealing analysis in York was irrelevant as Access Copyright was unable to sue York for infringement of copyright. It is anticipated that as various Universities study this decision they will address the guidance of the Court should they rely on similar guidelines or alternative approaches to obtain desired permissions to manage the fairness of copying in those educational institutions.

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^[1] The Supreme Court noted of York: “Its statutory objectives are “the advancement of learning and the dissemination of knowledge” and “the intellectual, spiritual, social, moral and physical development of its members and the betterment of society” (s. 4 of the York University Act, 1965).” See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 3.

^[2] 2004 SCC 13, [2004] 1 S.C.R. 339 [CCH]

^[3] 2012 SCC 37, [2012] 2 S.C.R. 345 [Alberta (Education)]

^[4] S.C. 2012, c. 20.

^[5] See York University v. The Canadian Copyright Licensing Agency (Access Copyright), 2020 FCA 77 at para. 204.

^[6] Important Justice Abella wrote the 5/4 majority decision in See Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37, [2012] 2 S.C.R. 345.

^[7] On this point the Supreme Court cited Ariel Katz, “Spectre: Canadian Copyright and the Mandatory Tariff — Part I” (2015), 27 I.P.J. 151, and Ariel Katz, “Spectre: Canadian Copyright and the Mandatory Tariff — Part II” (2015), 28 I.P.J. 39.

^[8] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 30.

^[9] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 82.

^[10] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at paras 89 – 92. Embedded citations are included in footnotes to enhance readability.

^[11] See Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, [2012] 2 S.C.R. 326 at para. 9, per Abella J.

^[12] Citing Myra J. Tawfik, “The Supreme Court of Canada and the ‘Fair Dealing Trilogy’: Elaborating a Doctrine of User Rights under Canadian Copyright Law” (2013), 51 Alta. L. Rev. 191, at p. 195.

^[13] See Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, [2012] 2 S.C.R. 326 at para. 11.

^[14] Citing Carys J. Craig, “Locke, Labour and Limiting the Author’s Right: A Warning against a Lockean Approach to Copyright Law” (2002), 28 Queen’s L.J. 1, at p. 6

^[15] Referencing pp. 14-15, cited in Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, [2012] 2 S.C.R. 326 at para. 9.

^[16] See Théberge v. Galerie d’Art du Petit Champlain inc., [2002] 2 S.C.R. 336, at para. 32, per Binnie J.

^[17] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 95 citing from “Fairness Found: How Canada Quietly Shifted from Fair Dealing to Fair Use”, in Michael Geist, ed., The Copyright Pentalogy: How the Supreme Court of Canada Shook the Foundations of Canadian Copyright Law (2013), 157, at p. 181.

^[18] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 95 citing from Carys Craig, “Locking Out Lawful Users: Fair Dealing and Anti-Circumvention in Bill C-32”, in Geist, From “Radical Extremism” to “Balanced Copyright”, 177, at p. 179.

^[19] See CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339 where the Supreme Court did not create a focus on either the library or the librarians role in facilitating the user’s research; See Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36, [2012] 2 S.C.R. 326 where the Supreme Court did not focus on the role of Bell Canada in facilitating the user’s previews of the musical works; See Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37, [2012] 2 S.C.R. 345 where the Supreme Court did not create any focus on either the schools, school boards or teachers in their role in facilitating the student’s exercise of their user’s rights. In CCH and Alberta Education the Supreme Court found no goal of the facilitator apart from the user’s goal.

^[20] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at paras 97 – 98.

^[21] See Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37 at paras. 42-45.

^[22] See Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37 at para. 23 stating “Instruction and research/private study are, in the school context, tautological”.

^[23] See Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37, [2012] 2 S.C.R. 345 at paras. 22-23.

^[24] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 99 citing examples, CCH, at paras. 55 and 72; SOCAN, at para. 42; Alberta (Education), at paras. 30 and 33.

^[25] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 102.

^[26] On this point the Supreme Court noted Lisa Macklem and Samuel Trosow, “Fair Dealing, Online Teaching and Technological Neutrality: Lessons From the COVID-19 Crisis” (2020), 32 I.P.J. 215, at p. 238.

^[27] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 103.

^[28] See Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36, [2012] 2 S.C.R. 326 para. 41; see also Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37, [2012] 2 S.C.R. 345 at para. 29; York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 104.

^[29] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 105 citing SOCAN, at para. 42; see also CCH, at para. 55; Alberta (Education), at para. 29

^[30] See Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36, [2012] 2 S.C.R. 326 para 43.

^[31] See Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36, [2012] 2 S.C.R. 326 para 43 at para. 43.

^[32] See York University v. Canadian Copyright Licensing Agency (Access Copyright), 2021 SCC 32 at para 105.