Throwing Good Money After Bad: How Canadian Universities Wasted Millions by Not Securing a Copyright Licence

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The wheels of justice grind slowly—and at great expense to all concerned. The result to date has been a colossal waste of public money by many of Canada’s post-secondary institutions (outside Quebec) who have chosen to incur large legal fees while hiring unnecessary staff, all to avoid paying a reasonable tariff to Canadian authors and publishers for reproducing their works in the teaching materials they provide to their students.

Beginning May 21, the Supreme Court of Canada (SCC) will hold initial hearings in the cross appeal by York University and The Canadian Copyright Licensing Agency (Access Copyright) of a recent decision by the Federal Court of Appeal (FCA) in this long-running case. York is contesting the Appeal Court’s decision upholding the 2017 ruling of the Federal Court that York’s fair dealing guidelines failed to prevent—indeed tolerated if not encouraged– infringement of copyright. For its part, Access Copyright is appealing the FCA’s ruling that the “mandatory tariffs” certified by the Copyright Board of Canada for the use of any material in its repertoire by unlicensed users are not, in fact, mandatory, allowing York to opt-out and not pay the certified tariff despite making widespread unlicensed copies of published works.

The background to all of this can be found in a series of earlier blog postings. (Access Copyright vs York University: High Stakes for Canadian Culture; The Access Copyright v York University Federal Court Decision: Restoring Some Balance to Copyright in Canada; York University’s Appeal of the Access Copyright Case: A Further Waste of Public Funds; When is a “Mandatory Copyright Tariff” mandatory only if you Opt-in?.

Background to the Case

This case goes back over a decade and involves an ongoing lawsuit over the refusal by York (standing in as a proxy for Canadian post-secondary institutions outside Quebec), to pay Access Copyright for using (reproducing) copyrighted works held in its repertoire. Instead of obtaining a licence from Access Copyright, as they did for two decades after the copyright collective society was formed in the late 1980s, or alternatively paying the per student tariff established by the Copyright Board of Canada, York and the post-secondary institutions have fought tooth and nail to escape the obligation to pay for the content they are using in (mostly digital) course packs. Over the past decade York, along with much of the rest of the post-secondary sector, has declared it was  “opting out” of the tariffs established by the Copyright Board, boycotted hearings of the Board rather than participate in the rate-setting process aimed at determining a fair and equitable tariff, tried to devise Fair Dealing Guidelines that would get it off the hook for payment, and appealed an unfavourable judicial decision on its Guidelines to the Federal Court of Appeal (FCA) and now to the Supreme Court, supported throughout by Universities Canada (UC).

Quebec universities  deal with a separate copyright collective society, Copibec, and after similar litigation involving Laval University as the proxy, all have now agreed to licences for use of materials in Copibec’s repertoire. Outside Quebec, the struggle continues.

Unneeded Staffing Increases

While York was contesting payment for use of Access Copyright materials, other post-secondary institutions were bulking up their staffing to handle copyright management, a step that would have been largely unnecessary if the universities had simply taken out a license with Access Copyright or paid the established tariff for reproducing materials in the repertoire. The Copyright Board has established a current tariff of $14.31 per student annually. Did all this ducking and weaving actually result in saving the universities any money or lightening the financial burden on students? Ironically, based on information provided by Universities Canada itself, this seems to have not been the case. 

In its Motion for Leave to Intervene in the SCC case, at paragraph 32, Universities Canada makes much of the increased resources universities have dedicated over the past few years to ensuring compliance with copyright licensing. This is intended to rebut assertions that institutions are free-riding without paying. However, hiring staff to “promote and assist compliance” in effect means increasing staffing in order to operationalize self-defined fair dealing guidelines, policies that have been found by the Courts to fall outside the boundaries of fair dealing and which condone infringement. UC states that;   

“Staffing at Canadian universities further confirms the importance of copyright universities. Based on a survey Universities Canada did of its member institutions between the fall of 2016 and summer of 2017, Canadian universities, on average, had hired the equivalent of two additional full-time staff dedicated to copyright since 2012. Larger institutions will have hired even more. For example, in the summer of 2017, the University of Guelph reported that it had ten full-time equivalent staff working on copyright issues across its campus (including at the library, bookstore and distance education office). The University of British Columbia has 16 full time employees working on copyright issues across both campuses, including five new rights and permissions assistants added in 2019. These staff promote and assist compliance with copyright laws by members of the campus community.”

What the Numbers Mean

Let’s unpack these numbers. There are 77 universities outside Quebec that have hired on average the equivalent of two additional full-time staff (FTE) dedicated to copyright since 2012. These staff members presumably spend their time trying to ensure that university users are aware of and follow the institution’s fair dealing policy as well as seeking to acquire copyright licenses when they are required. This adds up to a lot of personnel resources, at least 154 new full-time positions since the universities decided not to licence content from Access Copyright. Most of these costs could have been avoided by the simple expedient of securing a single licence, or paying the tariff, since the university would have been granted a blanket licence to use content within the repertoire. One of the main functions of a copyright collective is to provide an efficient and effective mechanism for users to obtain permission to reproduce and use copyrighted works published by multiple rights-holders, savings and efficiencies that the universities have decided to forgo.

It is impossible to know exactly how much the added costs of these 154 incremental professional staff amount to, but a fair estimate would be about $80,000 to $85,000 per FTE in 2021, including benefits which on average amount to 13 percent of staff costs. Thus, the cost for this additional copyright management staff cumulatively amounts to $12.5 to $13 million dollars annually, not including office overheads. How does this compare to the cumulative cost of paying the Access Copyright tariff? It is almost the same–$13 to $14 million annually.

Now of course it is true that even if the universities sought and obtained licences from Access Copyright, or paid the tariff set by the Copyright Board, they would still have to do some copyright management. Despite having millions of works in its repertoire, Access Copyright does not represent all authors and publishers. However, it covers a substantial proportion of them, and a licence agreement would undoubtedly have allowed university libraries to reduce or streamline their copyright clearance staff significantly. The 154 FTEs noted by Universities Canada are all incremental staff added since the universities decided to drop the Access Copyright licence. Universities are huge consumers of public funds, getting almost half their funding, (47.2% in 2017-18), from government.  Rather than investing these largely public funds into the creation of more and better Canadian content through payment to authors and publishers, the universities have instead chosen to increase staffing levels. And on top of that, York, its spear-carrier, has had to commit substantial funding to legal resources to defend its position in court, and after losing (twice) has dug the hole deeper by further appeals.

The Tariff in Perspective

As noted above, the Copyright Board determined that starting in 2015, a fair tariff for uncompensated use of works whose rights were held by authors and publishers represented by Access Copyright would be $14.31 per full time student. (It was higher for the period 2011 to 2014). This was despite a potential wider application of fair dealing arising from the addition of “education” as a fair dealing exception in 2012 and the fact that many universities directly license some content from some publishers. How significant is this tariff, a fee which provides reproduction rights and legal access for students and teaching staff across the country to the works of over 11,000 Canadian authors and 600 publishers, as well as millions of international works and publishers represented by Access Copyright, in comparison to the cost of education in Canada?

For the most recent year for which figures are available from the Canadian Association of University Teachers (CAUT), 2017-18, the total cost of university education in Canada was slightly more than $38 billion dollars. If divided by the most recent reported number of full-time equivalent university students in Canada (1,027,644), that amounts to a per capita cost of around $37,000. The tariff set by the Copyright Board amounts to less than .0004% of the average annual cost per student (or less than four cents a day).

Wasting Scarce Public Funds

While the case before the Supreme Court involves appeals by both parties, the litigation could be very disruptive in terms of upsetting and undermining the existing copyright collective licensing system if the Supreme Court upholds the FCA’s decision on “mandatory tariffs”. One cannot help but wonder whether all this legal action was necessary in the first place. Had the universities, including York, reached a licence agreement with Access Copyright, or alternatively complied with the Copyright Board’s tariff ruling, the lengthy litigation and waste of public funds could have been avoided while providing Canadian authors and publishers fair compensation for use of their work. Nor did York have to appeal the initial finding that its Fair Dealing Guidelines were, in the words of the judge of the Federal Court “not fair in either their terms or their application”, a conclusion upheld by the Federal Court of Appeal. None of this obstinacy and litigation saved the universities any money or lightened the financial burden on students.

Ongoing Challenges

Where do we go from here? With the appeals having been launched, the court proceedings probably have to now play out, although the government could step in to clarify the legislative intent with regard to the applicability of mandatory tariffs for use of content within the repertoire of a collective society, as I argued it should in an earlier blog. (Undoing the Damage of the Federal Court of Appeal’s Decision on “Mandatory” Tariffs). For York and the universities outside Quebec, it is not just the $13 million for 2020 that is at issue, or the royalties that York owes. Because of the stonewalling by the universities over the past decade, hundreds of millions of dollars are now at stake, going back to 2011.

COVID-19 has increased the challenges for universities (not to mention authors and publishers). Foreign student enrolment, a revenue “quick fix” that more and more universities have become addicted to, is down sharply and may not recover. Government funding is tightening as provincial and federal budgets are under stress from COVID. Already one major university, Laurentian in northern Ontario, has declared bankruptcy. Every penny counts these days, which is why it is so frustrating and disappointing to see university funds being squandered on legal proceedings and hiring unnecessary staff to manage multiple copyright permissions and find loopholes.  Instead, the universities should be doing the obvious and right thing by licensing the content needed by students and professors from the collective society that represents the vast majority of authors and publishers, both Canadian and international, in Canada. It is time that the universities, York in particular, faced up to their obligations and stopped throwing good money after bad.

© Hugh Stephens 2021. All Rights Reserved.

Will Article 19.17 of the USMCA/CUSMA Influence Canadian Court Proceedings? (The Long—or Short?—Arm of Section 230)

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Over the past couple of years I have written, as have others, about the abuses generated from the free-ride that large internet platforms have been given as a result of their exemption from liability for abusive or sometimes illegal content carried on their services and disseminated by them. They have thrived in this permissive environment. In the US, the cornerstone of this immunity is Section 230 of the Communications Decency Act, 1996. This piece of legislation, passed at the dawn of the internet era, has come under increasing scrutiny in the US–most recently because of the antics of Donald Trump.

Trump’s Provocations

Trump’s online comments have long been suspect with regard to accuracy, but it was his comments justifying violent, seditious activity such as the attack on the Capitol Building on January 6, that finally forced the major platforms to act. Facebook/Instagram, Twitter, Youtube, Reddit, Snapchat and others all took action to block his access to their services, either temporarily or on a longer-term basis. The flow of alternate facts and incitement to violence was finally turned off. It has taken far too long–and needed an incident that shook US democracy to its core–for the major social media platforms to finally “man up” and exert some control over the harmful, even dangerous, content propagated by Trump. While on this occasion they acted, on too many others the platforms have hidden behind the immunities provided by Section 230. This legislation is 25 years old this year; it is high time for a serious update.

Why is Section 230 a Concern?

Why am I writing about this in a copyright blog when intellectual property infringement is specifically carved out of Section 230 immunities for internet platforms? There are other laws in the US (viz. Section 512 of the Digital Millennium Copyright Act, known as the DMCA) that provide safe harbours to the platforms when copyright infringement takes place, provided they take certain actions. (Section 512 is also under review because in the view of many it has not operated as intended to protect copyrighted content online).  Section 230 is relevant because of the broader need for internet intermediaries (platforms) to assume responsibility for the content they propagate and profit from, especially when they are well aware of the abusive content they are enabling. That need for greater accountability and responsibility extends into many areas, including respect for copyright and creators.

The lack of responsibility—enabled by Section 230—that has been a feature of the industry for many years is now catching up to it. The immunity should never have been so broad or widespread. Section 230 has been used as the shield to protect websites promoting child sexual exploitation, selling weapons to individuals prohibited from purchasing them in the offline world, and promoting hate-speech; it has even allowed businesses like Airbnb to ignore municipal regulations on home rentals. Through its broad immunity shield, it has indirectly enabled revenge-porn, doxing, cyber-bullying and defamation. No wonder there are calls for review.

Not only is the new US Congress likely to scrutinize the protections that internet platforms have enjoyed—and often abused—for the past 25 years, but the unfettered right of these platforms to host defamatory or inappropriate content is being challenged in other forums as well, such as courts outside the US. On several occasions, national courts have sought and exerted jurisdiction over cases of abusive online behaviour tolerated by the platforms that has affected their nationals.

Twitter Challenged in a Canadian Court

The most recent example is the lawsuit brought against Twitter in the British Columbia (BC) Supreme Court by Frank Guistra, among other things the founder of Lionsgate Entertainment. He has accused Twitter of publishing and then failing to remove false and defamatory tweets related to him. The tweets in question accused him of being involved in “Pizzagate”, the spurious conspiracy-theory about pedophilia that arose during Hilary Clinton’s campaign against Donald Trump in 2016.

Twitter had argued that the BC Court did not have jurisdiction, and wanted the case heard in California, where Guistra has a residence and where Twitter maintains its corporate headquarters. Guistra, who is a Canadian citizen and whose career in the financial, mining and entertainment industries has been primarily pursued in Canada, maintains his home in Vancouver. Twitter wanted the case heard in California for obvious reasons—they could hide behind Section 230, as well as argue the First Amendment to the US Constitution. The First Amendment provides for freedom of speech and freedom of the press, amongst other things, although it applies only to the role of government. “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press…”. It doesn’t stop Twitter from moderating content on its platform.

There are several interesting aspects to this case; that of jurisdiction, the geographic reach of a potential ruling on the case, and probably most important, whether a social media platform like Twitter can be held liable in Canada for defamation arising from content published on its service by third parties, its users. Related to this last point is the question of whether Section 230 has extended its long arm into Canada as a result of Article 19.17 of the USMCA/CUSMA, the updated version of NAFTA that entered into force in July 2020. Noted copyright lawyer and blogger Barry Sookman has an extensive post on the various legal ramifications of this case, which is well worth reading.

Does Canada have Jurisdiction?

I won’t repeat the well-documented legal arguments in Sookman’s blog posting but want to touch briefly on the jurisdiction question and then take a deeper dive on Section 230. The court asserted territorial competence because the harm to the plaintiff, a BC resident, occurred in BC (as well as elsewhere). It then determined it had jurisdiction–despite the existence of US law on the subject–because under US law the plaintiff would have had no cause of action (because of Section 230) for the harms suffered in BC. With the venue issue settled (unless there is a successful appeal), the really interesting point is whether Twitter is liable in Canada for defamation.

Can Twitter Rely on USMCA/CUSMA Article 19.17

Sookman points out that, in a Canadian context, strictly passive intermediaries (bulletin boards, social media platforms, etc.) will not be held liable for publishing defamatory content posted by users unless they know, or should have known, that their services are being used to distribute such content and they take no steps to remove it. Guistra had specifically requested that Twitter remove the defamatory tweets, and block future ones. Allegedly it did not do so fully, despite repeated requests.

Assuming no appeal, or an unsuccessful appeal, the case will be heard in Canada. This brings Section 230 back into the picture, specifically the language in USMCA/CUSMA Article 19.17, which reads in part;

“…no Party shall adopt or maintain measures that treat a supplier or user of an interactive computer service as an information content provider in determining liability for harms related to information stored, processed, transmitted, distributed, or made available by the service, except to the extent the supplier or user has, in whole or in part, created, or developed the information.”

This language almost didn’t make it into CUSMA because of last minute objections by Nancy Pelosi and House Democrats at the time the Trump Administration was seeking Congressional approval of the negotiated USMCA deal. Other changes were made to the treaty at the request of the Democrats, changes that Mexico and Canada subsequently agreed to, but Pelosi’s eleventh hour opposition to inclusion of Article 19.17 was too little, too late, and the language, which mirrors parts of Section 230 but with modifications, stayed in. It is the sort of measure that should not be in a trade agreement, and many in the US are opposed to exporting it to other countries.

There is a qualifier (footnote 7) to 19.17 which reads; 

a Party may comply with this Article through its laws, regulations, or application of existing legal doctrines as applied through judicial decisions.”

In other words, Canada was not obliged to pass any new legislation as a result of the USMCA/CUSMA commitment and can comply through the application of existing law.

Will the USMCA/CUSMA language shield Twitter from  Giustra’s suit? It will be interesting to find out. The question of the extent to which Article 19.17 will bear on defamation cases in Canada involving internet platforms is an open one, as I wrote just over two years ago (“Did Canada Get Section 230 Shoved Down its Throat in the USMCA?”). You can read that blog for yourself, but my conclusion was that;

“…while the Parties have agreed under the USMCA to not treat a platform as the creator of content, in other words as a primary publisher, platforms are still liable under the Canadian common law as secondary publishers when they knowingly publish the contents of a primary publisher that is, for example, defamatory.”

“Far from having Section 230 type safe harbours shoved down its throat, Canada protected its ability to regulate platforms and protected the ability of the courts to take action against platform abuse where and when required.”

Does Article 19.17 Cover Secondary Liability?

This interpretation is based on the explicit wording of Article 19.17. While the article prevents the Parties to the USMCA from treating an “an interactive computer service” (like Twitter) as an “information content provider” (publisher) for purposes of liability for content “stored, processed, transmitted, distributed, or made available” on its service (unless it has created the information itself), that protection is related solely to not treating the interactive computer service as a content provider. This expressly does not exclude secondary publishers from potential liability. Rather, they may be liable if they have published content from someone else, have knowledge of what they have published, and have refused to remove it. That is why the common law clarification in the footnote is important. It confirms that liability as a secondary publisher is not being changed.

Article 19.17 and Section 230: Some Significant Differences

The precise language of Article 19.17 is also interesting because, unlike Section 230, it does not limit access to injunctive relief. It does not exclude the issuance of injunctions, or court-ordered equitable relief whereas Section 230 has been interpreted to prevent the issuance of injunctions against internet intermediaries.

Clarifying Section 230’s Reach into Canada

The Giustra case should help clarify the extent to which Section 230 has reached into Canada through the back-door of Article 19.17. The outcome will be important. Meanwhile, Section 230 is unravelling in the US, and there are moves to amend or get rid of it, notwithstanding Article 19.17 which of course applies as much to the US as it does to Canada and Mexico (although Mexico negotiated a three-year delay in implementing it). If the US Congress intends to forge ahead and amend or repeal Section 230 in order to start holding internet platforms accountable for the harms that they disseminate through unmoderated content posted by users, regardless of the USMCA, then one wonders how much credence courts in Canada will or should give to the trade agreement’s “obligation”, particularly since no legislation was needed to implement it. As I noted above, Canada was free to comply with the commitments in Article 19.17 through the application of existing legal doctrines (i.e. common law principles) as applied through judicial decisions.

Does Article 19.17 have any Legal Effect?

Vivek Krishnamurthy and Jessica Fjeld, two legal scholars who published a research paper on issues related to the implementation of Article 19.17 in the US and Canada have pointed out that;

“The Supreme Court of Canada has found that international treaties are of no force and effect beyond what is provided in their implementing legislation. Since there is nothing in Canada’s USMCA implementing legislation that refers directly to Article 19.17, the provision appears to have no direct domestic legal effect. However, the Supreme Court has also held that it will consider Canada’s international obligations and customary international law as interpretive aids when the meaning and effect of a provision is called into question.”

However, it has since been pointed out to me that the above interpretation is not uncontested in legal circles, and is at variance with the conclusion from the 2007 Regina v Hape (SCC) case that there is a presumption that Canada’s laws will confirm to treaties;

...courts will strive to avoid constructions of domestic law pursuant to which the state would be in violation of its international obligations, unless the wording of the statute clearly compels that result… (R v Hape, [2007] 2 SCR 292 BOA Tab 92 at para 53).

Section 230 Reform in the US

We will have to wait to see what happens with the Giustra case with regard to the applicability of  a Section 230-like safe harbour in Canada. In the meantime, calls for Section 230 reform continue to get plenty of traction in the US, such as this thoughtful analysis published by Dr. Mary Anne Franks, Professor of Law at the University of Miami, and concerns about under-filtering identified by University of Virginia School of Law professor Danielle K. Citron. What happens in the US may eventually influence what happens in Canada with regard to Article 19.17 because if it becomes a dead letter in the US, one can hardly expect that it will be rigorously applied in Canada (or Mexico).

Stay tuned.

© Hugh Stephens, 2021. All Rights Reserved.

This blog has been updated to include reference to the Regina v Hape case with respect to the impact of international treaties on domestic law in Canada.

Canada’s Copyright Term Extension Consultation: Why all the Tinkering Around the Edges?

On February 11, the Canadian Government, through the lead ministry responsible for the Copyright Act, Innovation, Science and Economic Development Canada (ISED), issued a consultation paper asking the question as to “whether accompanying measures should be adopted to address concerns that have been raised over the potential implications of a longer general copyright term”, and if so, what measures?

USMCA/CUSMA Obligations

The issue is not whether Canada will be extending its copyright term, bringing it into alignment with roughly 80 countries around the world (including most of Canada’s major trading partners), but how, i.e. whether it should adopt “accompanying measures”. Canada made a commitment in the new NAFTA agreement, aka the USMCA or CUSMA in Canada, to extend its general copyright term of protection from life of the author plus 50 years after death (known in the trade as post-mortem auctoris, or pma) to 70 years pma. The Canadian government has 2.5 years from the entry into force of the USMCA/CUSMA (July 1, 2020) to do so, in other words by the end of 2022. It could just go ahead and bring in legislation without any consultation or accompanying measures, but since the question of term extension has been frequently debated in Canada and was studied by two Parliamentary committees reviewing the Copyright Act in 2019, a process of public consultation presenting some options to consider as “accompanying measures” seems inevitable and is probably a politically astute move.

Parliamentary Review of Term Extension

The two committees of Parliament that examined term extension and other copyright issues were the “INDU” Committee (Standing Committee on Industry, Science and Technology), and the Heritage Committee. I discussed the different conclusions these two committees reached on a number of copyright-related issues back in June 2019 at the time the INDU Committee released its report, some two months after the Heritage Committee’s report, (called “Shifting Paradigms”) was made public. Both were chaired by Members of Parliament from the governing Liberal Party, and both included representatives from the two other major parties, yet they reached different conclusions on a number of copyright issues, including term extension.

While the Shifting Paradigms recommendations were more copyright and rights-holder friendly, significantly it is the ISED Minister–served by the INDU Committee–who has the statutory responsibility for copyright legislation, not the Minister responsible for Heritage Canada. (Both Departments cooperate on copyright issues and have officials that work on copyright topics, but when it comes to legislation, the “Minister” in the Act refers exclusively to the Minister of Industry, except for one section of the Act relating to customs measures, where the “Minister” is the Minister of Public Safety. The Copyright Office is part of ISED and the Registrar of Copyrights reports to the ISED Minister through the Commissioner for Patents). Despite this well-known and well-established fact, after the release of its report (which was somewhat at odds with the conclusions of Shifting Paradigms), the INDU Committee felt compelled to issue a shrill and tone-deaf press release declaring that it had “sole responsibility” for reviewing the Act, in effect dismissing the Heritage Committee report. This was seemingly a way of mollifying critics who didn’t like the conclusions reached by the Parliamentarians who drafted Shifting Paradigms. It is worth noting that the government is under no obligation to accept the recommendations of either committee.

With regard to term extension, the Heritage Committee unequivocally endorsed an extended term, recommending simply “That the Government of Canada pursue its commitment to implement the extension of copyright from 50 to 70 years after the author’s death.” The INDU Committee was more lukewarm in its recommendation, endorsing term extension “only if CUSMA is ratified”, and adding another qualification promoted by groups opposed to extending the term of protection.

 “The Committee believes that requiring rights-holders to register their copyright to enjoy its benefits after a period equal to the life of the author plus 50 years would mitigate some of the disadvantages of term extension, promote copyright registration, and thus increase the overall transparency of the copyright system.”

Additional Registration Requirement?

This two-stage process, which would insert a barrier into what would otherwise be a smooth transition from a life plus 50 regime to life plus 70, was hailed by copyright critics such as University of Ottawa professor Michael Geist who claimed this would be making the best of a bad provision”. As I commented at the time, inserting such a road-bump in the way of extension would in fact be making complex what should be simple, would increase costs for rights-holders, and would arguably be a violation of Canada’s international obligations under the Berne Convention, (given that under Berne copyright is to be conferred automatically without a registration requirement). The current Government of Canada consultation document seems to agree;

“The approach recommended by INDU raises serious questions in the context of Canada’s international obligations, as well as the costs that would be borne by copyright owners and the duplication of administrative efforts that might result. Numerous international treaties to which Canada is a party (e.g., Berne) prohibit the imposition of any ‘formalities’ that would need to be satisfied for foreign works to benefit from copyright protection in Canada. While limitations on enforcement of copyright linked to registration are not unprecedented, they do not appear to be the norm internationally. In addition, with new pressure on copyright owners to register their works, such an approach would likely result in increased costs in the form of registration fees and associated administrative and legal costs, particularly for owners of copyright in multiple works”

In other words, instituting a registration requirement to access the additional twenty years of copyright protection is a bad idea.

Expect Misinformation About the Costs of Term Extension

That conclusion won’t stop the critics, however, who are already complaining that the one-month consultation period is inadequate. (On the evening of March 11, the day before the consultation period was to close, it was announced that an extension would be granted, with submissions now due by March 31). They will also undoubtedly trot out all the old discredited arguments about how extending the term of protection will cost Canada hundreds of millions of dollars by leading to a massive outflow of royalties from Canada to other countries, ignoring the benefits that Canadian rights-holders will get from qualifying from an additional period of protection in overseas markets that apply the 70 year pma standard reciprocally. The same misinformation was circulated about this time last year prompting me to write a blog post on the topic, (Copyright Term Extension in Canada: Facts versus “Fake News”). However, I fully expect that the same distortion of facts will be recycled again, and I am not the only one to think so.

Possible Accompanying Measures

Clearly the point of the consultation paper is not to re-open the debate on whether term extension should occur or even to focus primarily on a registration requirement. Rather, as the document makes clear, it is to invite comments on options for measures dealing with orphan works and out of commerce works (e.g. out of print books) that could accompany term extension. Neither of these issues is directly related to extension of the copyright term, although there is a connection in that difficulties in accessing copyrighted works that fall into these categories could be increased by virtue of longer terms of legal protection.

More important, tinkering around the edges to increase access to copyright protected works that are often difficult to access is a politically astute move designed to draw some of the sting from critics of term extension, given that the signals emanating from the consultation document indicate the government is unlikely to adopt the INDU committee’s recommendation to impose an additional registration requirement on rights-holders in order to access the extra twenty years of protection. Canada’s term of protection could be simply extended with no accompanying measures, but it seems that the government has decided that increasing access by “LAMs” (Libraries, Archives and Museums) to copyright-protected but difficult to access works will help offset some of the criticisms of a longer term.

Orphan and “Out of Commerce” Works

Orphan works, works where the copyright holder cannot be identified, are an issue regardless of the duration of copyright, particularly when an institution like an archive or library wants to digitize them. There is currently a provision in Canadian copyright law for access to orphan works, through an application to the Copyright Board of Canada. This, however, is a slow and cumbersome process. There is currently no such provision for “out of commerce” works, works that presumably have little current commercial value except for a very limited number of users (like a library) where obtaining additional (digital) copies can be a challenge if a publisher is not interested in licensing further production. The consultation paper puts forward several options for consideration. They include remuneration and exception-based models (five options are presented).  

Minimum Standards to Protect Rights-Holders

Whatever model is adopted, it must be carefully constructed so as not to undermine the rights of copyright holders. It should be limited to LAMs in accordance with their public interest mandate and restricted to non-commercial exploitation. (Special attention will need to be paid to educational institutions to ensure they do not use the special access provisions as a means to do an end-run on rights-holders and avoid payment for materials used in course packs, etc. as they have done with the education fair dealing exception introduced in 2012). It must also ensure that a reasonable and documented search has been conducted for the author of an orphan work and should provide a reasonable window after use during which a rights-holder could come forward to claim compensation.

If special access provisions are going to be put in place for “out of commerce” works (as is currently the case in the EU and US), definitions have to be carefully drawn as to what constitutes “out of commerce”, and care taken in the administration of permissions. Collective societies that hold “out of commerce” works in their repertoire could, for example, be engaged to issue licences. But there could be other wrinkles as well. An interesting example has recently arisen with the decision of the publisher of the Dr. Suess works to cease publishing a number of his works because of concerns they contain racial caricatures. These books will soon technically be “out of commerce” although existing copies will continue to be for sale for many years as used books. Would an “out of commerce” provision allow someone to publish a work that the copyright owner had specifically decided not to republish? That question was discussed in a US context in a recent blog (Copyright Lately by Aaron Moss), which examined the issue from a fair use perspective. Copyright certainly gives the author the right to decide whether or not to publish a work they created (e.g. a private letter, such as Meghan Markle’s letter to her father), but does this include control over republishing? One would think so, but this underlines the need for provisions to widen access to “out of commerce” works to be crafted carefully in order to avoid unforeseen outcomes.

Public Comment

Public comment is invited with a closing date of March 12, 2021 (since extended to March 31). Various stakeholder groups, from the LAMs to rights-holder organizations, to others with just a viewpoint to express will be making submissions. These will all be made public after the closing date. The stakeholders are obviously best placed to assess their own interests, and it will be illuminating to see whether opinion will coalesce significantly around any one of the options from a user or rights-holder perspective, or whether it will be dispersed across all five. There will also no doubt be repetition of the arguments both for and against term extension, but the die is cast. Copyright term extension will happen in Canada; the only question is how much tinkering there will be around the edges.

© Hugh Stephens, 2021. All Rights Reserved.

This post has been updated to clarify that both ISED and Heritage work on copyright issues, although the Minister responsible for copyright legislation in the Copyright Act is the ISED Minister. The new closing date for the consultation, March 31, has also been referenced.

Facebook in Australia: “READY, FIRE, AIM”

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Over the course of the past week or so, Facebook has managed what some thought impossible; pushing Google off the front pages as the “bad actor” when it comes to behemoth internet platforms thumbing their nose at a sovereign government, indeed at an entire nation, and instead putting itself in the spotlight. This took a degree of clumsiness that only Facebook could manage.

First There Was Google

For months, Google has been in the cross-hairs of the Australian government’s News Media Bargaining Code. The Code, in its original iteration, required that major internet platforms that use news content from Australian media sources (specifically Google and Facebook because of their dominant market share) compensate the content providers through contractual arrangements, failing which a government arbitrator would impose a settlement based on a “final arbitration” model (where each side makes a final offer and the arbitrator selects one of them). It’s not just about payment for news. The Code will also require the platforms to inform news providers in advance of any changes to algorithm settings that may materially affect referral traffic to news, as well as any substantial changes to the display of news and advertising directly associated with news, plus a requirement to share audience data. In other words, a peek behind the algorithmic curtain.

Google dug in, claimed the proposals were unworkable, unfair and would “break the internet”. It threatened to withdraw its online search engine from Australia and to delist Australian news services, while encouraging Australians to bombard their government with complaints about the new Code. In the past, Google has had similar encounters with governments in Europe (Germany, Spain, France) where it resisted reaching agreements to pay publishers for use of news content after publishers had been granted additional rights to the content to enable negotiations. In Germany, Google was able bring the publishers to heel by blocking access to their content on Google News unless they renounced claims to payment. In Spain, Google simply shut down Google News.

Google in France

More recently, in France they faced a determined government that took a stand and used its competition authority to require that Google enter meaningful consultations with publishers over payment for content. Google dragged its feet but finally reached an agreement with one of the major French publishing groups. It may not be out of the woods yet, however, as other publishers not included in the initial agreement have complained to the French competition authority that Google did not bargain in good faith (it has a tendency to approach negotiations on a “take it or leave it basis”), and apparently the Authority has concluded that there is merit to the complaint. The Australian Code will prevent the platforms from abusing their market power through “take it or leave it” offers by holding the arbitration stick in reserve.

Payment for News

Neither Google nor Facebook has refused to pay for access to news content, but they want to do it on their terms. Google has its Google News Initiative that involves some payment for content from selected partners. This was rolled out in some countries after pressure mounted to require quasi-monopoly online platforms that dominate advertising revenues to recognize the contribution of bona fide journalism to public discourse by providing some payment for content. Google tried to use its News Initiative as a lever in Australia by signing contracts with some small media players but making the contracts conditional on the News Media Bargaining Code not seeing the light of day. That didn’t work, and Google has now reached agreements with most of the major media players in Australia. Magically, the “unworkable” Australian proposals suddenly became workable when Microsoft inserted itself into the debate by announcing that it would be more than willing to abide by the Code and in fact, urged the US Government to adopt something similar.  

Facebook too has paid for news. In 2019 it reached a deal with major US publishers to pay for headlines for its news feed, and recently reached a similar deal in the UK to license news stories. For Facebook the motivation was largely to insulate itself from growing criticism that it has become a platform for fake news, alternate facts and conspiracy theories, becoming a closed-loop echo chamber for those who subscribe to such theories. However, Facebook has consistently maintained that it derives no value from news content and should not have to pay to access it. The head of public policy for Facebook Canada, Kevin Chan, claimed that the value of news to Facebook was “zero”.  

Is News of Value to Facebook?

Facebook’s position is that it does news media a service by allowing them to post content on Facebook, which in turn drives readers to the media outlets. Facebook’s VP of Global Affairs, Nick Clegg (a former Deputy Prime Minister of the UK, by the way) wrote that the company had directed 5.1 billion referrals to Australian media in 2020, worth over A$400 million. Yet news does provide “sticky” content that keeps users on Facebook longer—and thus exposed to more advertising which is the source of 98% of Facebook’s revenue. A Canadian researcher, Prof. Jean-Hugues Roy of the University of Quebec at Montreal, who analyzed 1.9 million Facebook posts in 2020 found that almost 20 percent were from media pages. These posts generated 7.3 percent of the total interactions in the sample. Based on that percentage and Facebook’s revenues in Canada he concluded that “Mark Zuckerberg’s company made $210 million thanks to Canadian journalism in 2020.” By way of contrast, Kevin Chan stated that Facebook had contributed $10 million to various news projects in Canada over the past four years. I am tempted to say, “big deal”.

Facebook Blocks News in Oz

So as we see, Facebook, like Google, is prepared in extremis to throw some dollars toward media providers, but does not like being required to do so. Negotiations with media content providers in Australia had been going nowhere, similar to the situation with Google, until the Australian government rolled out its big gun, the Media Code with its binding arbitration mechanism. Google decided that a strategic retreat was the best option, resumed negotiations with the major news providers, and disappeared off the front pages. They were helped by Facebook’s next move, which firmly planted a bullet in its own foot by threatening, and then following through with, a blockage of all Australian media content. It wasn’t as if Facebook’s engineers executed the move with much care. No. In addition to major news sources, they blocked public health information related to COVID-19 vaccinations, the website of the Australian Council of Trades Unions, information relating to women’s health, food banks, emergency services, cancer clinics, charities…. It couldn’t have been worse. Nick Clegg offered the lame excuse that;

“we had to take action quickly because it was legally necessary to do so before the new law came into force, and so we erred on the side of over-enforcement. In doing so, some content was blocked inadvertently”.

A Classic Backfire

An under-statement. The piling on began immediately. The former chief executive of Facebook Australia, now heading an NGO dealing with digital threats to democracy, described Facebook’s actions as a “shameless demonstration of corporate might”. Other descriptions ranged from “heavy-handed” and “reckless, arrogant and dangerous”, to “corporate bullying” and “unfriending Australia”. The blockage of responsible news sources left open the field for the alternate facts crowd. Facebook has been widely criticized for tolerating abusive content and misinformation on its platform but has argued that it lacks the means to monitor and control such content. Yet, in the blink of an eye it managed to take down just about every legitimate source of essential news in Australia. For a company that has been under constant scrutiny for various abuses, from failing to protect the privacy of users to allowing promotion of conspiracy theories to monopolistic practices, it could not have been a more perfect public relations and reputational disaster. It made (Sir) Nick Clegg’s political achievement of taking the Liberal Democrats in the UK from 57 seats to 8 look like a success.

The Compromise

Facebook back-pedalled, unblocked what should not have been blocked and entered into talks with the Australian government resulting in a compromise, of sorts. Like any good compromise, both sides can claim victory. The government agreed to amend the legislation to provide exemptions from application of the Code if companies subject to it (like Facebook and Google, based on market dominance) have already struck content deals. They also agreed to provide for a one month notice period (to allow for the completion of deals) if the Code is to be applied. Once the Code is triggered, there will be a longer mediation period before arbitration takes place, and platforms will be allowed to differentiate their offers depending on what kind and size of media company they are dealing with. The Code, with these amendments, has now been passed into law. At the same time Facebook announced that it would be restoring news feeds in Australia, that it had secured a content deal with one major Australian media conglomerate, Seven West Media, and was in discussions with others.

Who Won? Not Facebook.

So who won? Overall, certainly not Facebook, although they have likely managed to wriggle out from having the Code applied to them because they will have “voluntarily” reached content deals with media providers. This, of course, was the intent of the legislation all along. If it does not have to be applied, because the market is now working, that is so much the better. And, by the way, the Code is now law and will remain on the books as a back-stop. The outcome is probably even better for smaller players on the Australian media scene given the domination of Australian media by conglomerates such as News Corp. since the platforms are now allowed and encouraged to make differentiated offers. The requirements for disclosure of algorithmic information did not change significantly as the legislation worked its way through the Parliamentary process.

Facebook is claiming that it can still block news coverage, which is true, but this is a hollow victory since it was the blockage of news that caused it such huge reputational damage and ultimately led to the compromise by which Facebook will pay for content in order to avoid becoming subject to the Code. Facebook can still block content—if it wants to shoot itself in the foot yet again. It could also exit the Australian market. The Code does not stop that either, but neither of these things is going to happen.

Wider Implications

Not only was Facebook forced to accept reality in Australia, it will now be even more under the gun elsewhere as other governments, notably Canada and the UK, and possibly even the US, will move to ensure that it reaches fairer revenue sharing deals with media organizations. They will draw important lessons from what happened in Australia, as will the platforms. As Canada’s Heritage Minister Steven Guilbeault said in a radio interview on CBC, if Canada ever needed a reason to deal with the platforms, “Facebook just handed it to us on a silver platter”. The Australian experience has demonstrated that it takes determined and robust government action, backed up by application of competition law to deal with market dominance, to bring the platforms to the table. But it can be done.

Facebook was already headed for a fall before all this happened. It has just propelled itself closer to the cliff edge as governments around the world, and particularly in its home jurisdiction of the United States, will be looking ever more carefully at the company’s business practices and their impact on society, democracy and individual freedoms. Whatever “victory” Facebook salvaged from its antics in Australia, it was pyrrhic in the extreme. That’s what you get when your policy consists of “Ready, Fire, Aim”.

© Hugh Stephens 2021. All Rights Reserved.

This post has been updated with respect to the research conducted by Prof. Roy mentioned in paragraph 7.