The Copyright Board of Canada delivered a devastating defeat to Access Copyright on Friday, releasing its decision on a tariff for copying by employees of provincial governments. Access Copyright had initially sought $15 per employee for the period from 2005 – 2009 and $24 per employee for the period from 2010 – 2014. It later reduced its demands to $5.56 and $8.45. The board conducted a detailed review of the copying within government and the applicability of the Access Copyright licence. Its final decision gives Access Copyright pennies rather than dollars: 11.56 cents for 2005-2009 and 49.71 cents for 2010-2014.

The financial loss for Access Copyright in the case is obvious as it expected to earn millions from the tariff. With roughly 120,000 full time employees covered by the tariff, Access Copyright’s initial ask would have brought in $9 million in the first five years and another $14.4 million in the second five years for a total of almost $25 million (even its reduced ask envisioned nearly $9 million in revenues). Instead, the Board estimates that the total value of the tariff for the entire period will be $370,000, which is unlikely to cover Access Copyright’s legal and administrative costs (it also does not include revenues from the Province of Ontario, which struck an incredibly bad deal in 2011 by agreeing to pay $7.50 per year per employee).

Yet as bad as the specific outcome is for Access Copyright, the longer term implications are even worse. Revenues from government and corporate copying are useful, but bigger money lies with its education licenses. Those have been hit hard by the decision of universities, colleges, and school boards to abandon the licence in favour of fair dealing and alternative licensing. This decision notably addressed the core issues that lie at the heart of the battle between the education community and Access Copyright, as the Copyright Board strongly rejected Access Copyright’s interpretation of fair dealing and in the process provided the education community with clear support for its fair dealing guidelines.

The Access Copyright defeat on three key issues should have a significant impact on the education battle: repertoire, the breadth of insubstantial copying, and fair dealing.

1. Repertoire

Access Copyright likes to claim its repertoire covers just about everything. As the Board notes, “Access considers in its repertoire almost all published works, without regard as to whether there is any relationship between the rights holder and Access.” How does it do this? It simply says that all published works are part of its repertoire or will be in the future. Where there is no agreement in place, it argues that the Board should “infer that agency relationships will eventually be formed.” In reasoning the Conservatives would love given their attempt to retroactively change the law on Access to Information, Access Copyright claims that once this happens, it will retroactively apply to the date on which it licensed the work.

The Board rejected the Access Copyright argument, noting that this will only occur for a tiny percentage of works:

Access can only send cheques, and thus be able to argue for the existence of an agency relationship, in relation to at most 0.005 per cent of copying from works of non-affiliated rights holders. Even if we were to accept the premise that the sending of a cheque by Access in relation to a copying event, and its subsequent cashing by the owner of copyright in the work copied, forms an agency relationship in relation to that particular copying event, it would remain that this would not happen for at least 99.995 per cent of the actual potentially compensable copying of works of non-affiliated rights holders that will occur during the Tariff period.

The Board therefore rejected those works that Access Copyright claims an “agency relationship”, code for no actual agreement. Moreover, the issue of repertoire was raised again with respect to digital copies, since Access Copyright has digital copying agreements with less than half of the collectives with which it has an agreement.

This aspect of the ruling could have enormous implications for other cases as it provides a roadmap for challenging the Access Copyright repertoire and its claims to represent all published works and to cover digital copying rights.

2. Insubstantial copying

While much of the discussion on copyright exceptions focuses on fair dealing, there is only a need to even consider exceptions when the amount of copying involves a substantial part of the work. By implication, an insubstantial amount does not give rise to a copyright claim. I raised the issue in a blog post last year that noted that Copyright Board was considering whether a few pages or small percentage of a book is insubstantial.

In this case, Access Copyright argued that everything was substantial, claiming that a test based on the number of pages would not address the qualitative aspect of the portion taken. It also argued that since it offers per-page transactional licences, one page cannot be insubstantial. The Board rejected Access Copyright’s arguments clearing the way for up to two pages to be treated as insubstantial. It rejected the licensing claim, noting that “Access cannot alter the scope of protection granted by the Act by its business practices.” It further set a standard for insubstantial copying: 1 to 2 pages of a work, not constituting more than 2.5 percent of the entire work:

In this matter, without the benefit of a qualitative analysis of each of the copied works, and without even knowing which portions of a work were copied, in our opinion the amounts proposed by the Consortium, being 1 to 2 pages of a work, are reasonable approximations in establishing non-substantiality. However, since 1 to 2 pages of a short work can amount to a great portion of that work, we further limit this approximation by requiring that the copying of 1 to 2 pages not constitute more than 2.5 per cent of the entire work, the percentage equivalent to what the Board had previously considered not to be substantial reproductions in its Satellite Radio Services decision.

The effect of this ruling is that where two pages are copied from a work of 80 pages or more, or one page is copied from a work of 40 pages or more, the copying is insubstantial and not compensable. In fact, for those copies, there is no need to even consider fair dealing as there is no copyright claim for such small amounts of copying.

3. Fair Dealing

The fair dealing analysis is the most important part of the decision since it represents the first time that Access Copyright’s restrictive fair dealing theories have been assessed by the Board. The outcome is a huge loss for the copyright collective as the Board rejected argument after argument. Some of the most important ones include:

Access Copyright Argues…

Copyright Board Rejects…

All six fair dealing factors must be raised in order to claim that the dealing is fair. No. “It is possible to evaluate the fairness of a dealing without evidence on every factor.” The fair dealing user is the government, not the individual employee making the copy. No, the user is the individual employee. Research is the only fair dealing purpose that benefits from a large and liberal interpretation. No, all fair dealing purposes receive a large and liberal interpretation. The first step purpose test in fair dealing should include a “predominant purpose” analysis such that the predominant purpose must be one of the enumerated purposes in the Act. No, it is enough that one of the purposes be for a permitted purpose. Since one of the purposes of the use was often for government administration (by government employees), this made the dealing unfair. No, citing the CCH decision for the view that the research can be conducted for the benefit of someone other than the user. The government was “hiding” behind the employee’s permitted purposes. No. The aggregate number of copies should be calculated when considering the character of the dealing (the same argument it makes in education). No, the “dealings of one user should not tend to make the independent dealings of another user less fair.” The fact that copies were often not destroyed made the dealings unfair. No, not destroying a copy after it is used does not favour a finding of unfairness. Copying more than two pages from a book or one page from an article would tend to make the dealing unfair. No. Approximately 10 percent of a book in the context of research or private study tends toward fairness. Where an entire article was copied for the purpose of research or private study, while the amount of the dealing factor tends towards unfairness, it does not do so strongly. The availability of any other alternative tends toward unfairness. Disagree in many ways: “Where a copy of a work has already been purchased, it may not be realistic to expect that a copy be purchased for every person who seeks to make a copy thereof.” “The option of acquiring a one-time licence was not counted as a valid alternative.” With the regard to nature of the work, dealing with published works tends to make the dealing unfair. No. “Generally, the natures of the works in this matter do not tend to make the dealing more or less fair. On the one hand, they are published works, and are not of a nature where further dissemination without the dealing is unlikely. On the other hand, they are not private writings where such dissemination could be undesirable.” Every dealing with a copyrighted work will be one where there was an opportunity for the copyright owner of the work to sell a one-time right to license that use. “no direct evidence that would permit us to ascertain with any certainty the effect of the dealing captured by the Volume Study on the works that were reproduced, and given that relying on aspects that have already been considered under other factors could have the effect of erasing proportionality from the fairness analysis, we find that this factor neither tends to make the dealings in the Volume Study more fair nor less fair.”

There is a lot here, but the key point is that Access Copyright tested the same fair dealing theories that it uses when contesting the education communities’ fair dealing approach. It lost on every claim. Indeed, the Board’s approach is consistent with the fair dealing guidelines that have been adopted by universities, colleges, and K-12 schools.

None of this should come as a surprise. Access Copyright frequently engages in fear mongering when it claims there is great uncertainty with respect to fair dealing. As the Board’s decision demonstrates, there is no such uncertainty. The ruling is grounded in decisions from the Supreme Court of Canada and would be predictable to virtually anyone who has reviewed the existing copyright caselaw.

The Access Copyright reaction to the decision states that is “deeply concerned” and “assessing all appeal options.” It also bitterly claims that the decision “disregards the importance of licensing income to creators and publishers in the digital economy.” Yet anyone that takes the time to read the 184 page decision will know this to be false.

The Copyright Board painstakingly reviewed copy after copy to ensure that they were all fairly compensated. As had been readily apparent for years, the problem facing Access Copyright is not that copies are not valued, but rather that its licence is not valuable. The Board’s analysis makes it clear that the licence only applies in a tiny number of circumstances given a reasonable reading of fair dealing, insubstantial copying, alternative licensing, and a repertoire that has limits. It is a big loss for Access Copyright that foreshadows an even bigger loss when the education issues are resolved.