Copyright References in the Budget: Good Intentions Are Welcome but Early Action is Needed

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Last week I discussed the copyright needle buried in the 2022 Canadian budget haystack, a reference to impending legislation to amend the Copyright Act to fulfill Canada’s obligation under the USMCA/CUSMA to extend its term of copyright protection from the life of the author plus 50 years to “life plus 70”. The amendments will be tacked on as part of the 2022 Budget Implementation Bill along with a number of other measures unrelated to the budget. The only remaining question on term extension is whether the government will do the right and sensible thing and simply automatically extend the term of protection going forward (normally there is no retroactive extension for works that have already fallen into the public domain, even if that just happened) or whether they will listen to the lobbying from anti-copyright voices who are proposing that Canada institute a barrier to automatic extension by requiring rights-holders to renew their copyright through a registration process in order to access the additional period of protection. As I explained in last week’s blog, it would be a major mistake for the government to do this, creating an unnecessary bureaucracy, causing confusion and increasing complexity for users who will have to research whether copyright has been extended on a work, and likely being inconsistent with Canada’s international obligations under the Berne Convention.

But in addition to stating that copyright extension amendments will be included in the forthcoming budget bill, the budget document also added the following;

“The government is committed to ensuring that the Copyright Act protects all creators and copyright holders. As such, the government will also work to ensure a sustainable education publishing industry including fair remuneration for creators and copyright holders, as well as a modern and innovative marketplace that can efficiently serve copyright users.”

Why was this in the budget? Does it signal that there will also be legislation to restore some balance to use of unlicensed commercially published educational content by educational users? That would be welcome and long overdue. To achieve this, the overly-broad educational fair dealing exception introduced in 2012 needs to be amended and made more precise.

And what does “a modern and innovative marketplace that can efficiently serve copyright users” look like? Could it be that we will have a return to collective licensing of educational content after the disastrous Supreme Court of Canada decision last year that pulled the foundation out from under Canada’s collective licensing system for educational materials? (The Supreme Court upheld the Federal Court of Appeals decision that “mandatory tariffs” were mandatory only for providers of educational materials, not for users such as colleges and universities.) If this is the case, these are probably not measures that would be slipped into a budget implementation omnibus bill, although I suppose it is always possible. After all, there has already been extensive consultation on the fair dealing question. But if legislation to fix the educational publishing crisis is not being brought forth now as part of budget implementation, why then the reference in the budget?

It is likely to send a signal to publishers and authors that relief is coming (hopefully soon) even though it won’t be as part of the copyright extension process. Publishers, authors and their collective society, Access Copyright, have been looking for an opportunity to propose amendments to the Act to address problems with the definition of educational fair dealing and to fix the mandatory tariff issue. Because the Copyright Act has to be amended before the end of 2022 to deal with term extension, (according to the terms of the CUSMA agreement), this seemed to provide an opportunity to deal with these other pressing copyright issues. The budget reference therefore is a recognition that something needs to be done and a signal that fixing the problems is high on the government’s agenda. A sign of good faith intentions if you will. Given the “confidence and supply” agreement reached with the New Democrats, the Trudeau government now has some headroom and the ability to get legislation passed since it can expect to govern until the statutory date of the next general election in 2025.  

Inclusion of references to “a sustainable educational publishing industry” in the budget should mean that the government is finally ready to move forward to repair the damage caused by opening the fair dealing floodgates in 2012. There has already been extensive consultation, two Parliamentary committees have reviewed the issue and have recognized the problem, and a lengthy court process upholding findings of unfairness by York University, as a proxy for the post-secondary sector, has been completed. Although the educational sector will fight tooth and nail to leave things as they are and continue their free ride at the expense of the creators of educational content, it is time to move from consultation to action. After a decade of litigation and consultation, remedial action is required if Canada is to maintain a viable educational publishing sector so that Canadian students can continue to benefit from the creation of culturally-relevant educational materials. The impact on the publishing sector has been devastating; jobs in the book industry declined by over 30% between 2012 and 2019, the education sector has deprived Canadian creators and publishers of approximately $190 million in unpaid royalties under tariffs certified by the Copyright Board, and a number of publishers have exited the education market.

The fix to fair dealing is relatively straightforward. It needs to be narrowed so that the education fair dealing exception applies only when a work is not commercially available, as per the recommendation of the Standing Committee on Heritage in 2019. This would avoid the current college and university practice of reproducing works, piece by piece, supposedly to enable students to exercise their individual fair dealing rights, with the result often being that the entire work, or most of it, is made available to students in course packs all under guise of fair dealing and with no license or payment to the rights-holder. This will require a change to the legislation.

So too will clarifying the role of the Copyright Board of Canada in setting “tariffs” (licence fees) for use of materials in the repertoire of a collective society such as Access Copyright. This is a complicated issue, made more complicated by the finding of the Federal Court of Appeal (FCA), recently upheld by the Supreme Court. Until these court decisions, the practice and understanding had been that payment for use of any materials subject to a Copyright Board tariff decision became mandatory on all users if they reproduced covered content without obtaining a license.

However, based on its reading of the history of the legislation the FCA, upheld on appeal by the Supreme Court, ruled that the tariff is mandatory only when applied to a user. In other words, a rights-holder cannot withhold a licence to reproduce material if that material is subject to a tariff established by the Copyright Board, assuming the user agrees to pay the tariff. But the reverse (imposing a requirement to pay on a user who reproduces material covered by a tariff without obtaining a licence) is not mandatory. Instead, a rights-holder would have to bring an infringement action against the user. This decision undermined the system of collective licensing for educational works established some 30 years ago to avoid the necessity for individual users and institutions to have to negotiate licences with individual rights-holders, or for individual rights-holders to have to resort to litigation against individual users each time there was an alleged infringement. It was a system that worked for both authors and users, until it began to break down about a decade ago over licence negotiations. When the collective and users could not agree on a licensing agreement, the Copyright Board stepped in to establish fair remuneration based on estimates of the amount of copying engaged in by user institutions. Once a tariff was established, it was considered binding on all users if they accessed any of the repertoire covered by the tariff. And now a key pillar of that system has been removed by the courts.

It is not clear whether the promise in the budget document to bring about a “modern and innovative marketplace” to “efficiently serve copyright users” is a reference to the reinstitution of a viable collective licensing regime, probably in parallel with a review of the mandate and procedures of the Copyright Board. Hopefully that is what it means. A collective licensing regime is by far the most efficient means to serve users.

When the Copyright Act was last reviewed and overhauled in 2012, the intention was that this would be a process conducted every five years. That period has now doubled, although in the interim there have been consultation papers issued on various aspects of copyright (AI, Internet of Things, Data Mining, Orphan works, etc.), and a review by two Parliamentary committees which brought forth numerous recommendations. All this to prepare for Copyright Act updating. Despite the preparatory work, this will take time. Some of these issues, like the ones mentioned in the budget, should be fast-tracked and acted on now.

If the statement in the budget was a down-payment of sorts, a statement of good intentions, that is all well and good. But we all know that a road paved with good intentions, but no action, leads to only one place. And that is a hell of a place to be. The government should act on its commitments laid out in the budget and convert those intentions into legislation as quickly as possible. Other potential changes coming out of the much-needed and long-overdue review of the Copyright Act should also be put in motion so that a full overhaul of the Act can be completed before the next election. 

© Hugh Stephens 2022. All Rights Reserved

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