Bill C-11 and the Big Access Copyright Grab

Two issues, fair dealing and digital locks, have attracted most of the attention in the debates about Bill C-11. Little or no attention has been given to a few provisions in the Bill, especially the proposed subsections 30.02(6), (7) and (8), which are buried within a highly obscure and technical part of the Bill. These provisions constitute one of the greatest and boldest copyright grabs in Canadian copyright history.

So this post is dedicated to this copyright grab and the organization behind it. It is about a corporation whose business model is based on encouraging a large scale unauthorized use of copyrighted materials, without getting the copyright owners’ permission. No, this post is not about Napster R.I.P., or Megaupload. This post is about Access Copyright. Yes, you read it correctly. Access Copyright, the organization that would let anyone believes is the strongest protector of copyright and authors’ rights, is the main beneficiary of the proposed digital copyright grab.

 

The Proposed Copyright Grab

The proposed s. 30.02 (and in particular subsections 6, 7 & 8) constitute the last installment in the copyright grab by Access Copyright. Under the guise of an “exception” supposedly for the benefit of educational institutions, s. 30.02 contemplates a radical transfer of copyrights from their owners to Access Copyright, and entrenches Access Copyright as a collector of what is in effect an “education tax”.

The proposed grab consists of two parts.

First, subsection (6) transfers to the hands of Access Copyright the rights to authorize digital reproduction of the works of its own members even when the members never authorized Access Copyright to grant such licenses on their behalf. Here’s the language:

The owner of the copyright in a work who, in respect of the work, has authorized a collective society to enter into a reprographic reproduction agreement with an educational institution is deemed to have authorized the society to enter into a digital reproduction agreement with the institution — subject to the same restrictions as a reprographic reproduction agreement — unless the owner has refused to give this authorization under subsection (5) or has authorized another collective society to enter into a digital reproduction agreement with respect to the work.

Unlike other situations, there is no reason to adopt an opt-out system in the relationships between Access Copyright and its members. Access Copyright is a voluntary organization and Access Copyright knows exactly who are its members and how to contact them. Access Copyright needs this provision because despite its efforts to convince its members to grant it digital rights, many of them refused and prefer to administer them on their own.

Therefore, the provision ignores the existing agreements between Access Copyright and its members and modifies them to include rights that were never granted. It then places the onus on the members to explicitly opt out. Instead of respecting the choices of its members, Access Copyright tries to expand its digital repertoire by legislative fiat. Not only there is no justification—as a matter of sound copyright policy—to allow that, it is highly questionable whether Parliament’s Constitutional legislative authority over copyright extends to modifying the content of agreements between Access Copyright and its members.

Next, in addition to the transfer of digital rights from its members, subsections (7) & (8) constitute a digital rights grab of non-members by capping the damages that copyright owners who are not members of Access Copyright can recover if their copyrights were infringed. A similar copyright grab already exists under s. 38.2, and to understand how pernicious it is, a description of Access Copyright’s history is in order.

 

The Earlier Grabs

As Access Copyright states on its website,

Access Copyright was established as a not-for-profit organization in 1988 by a group of authors and publishers with a common and simple objective:

To protect the value of their intellectual property by ensuring fair compensation when their works are copied.

The crucial word is “their”, because the group members’ goal of protecting THEIR intellectual property faced a simple, yet fatal, problem. Access Copyright’s prospective licensees, such as universities, use a tremendously large number of different works, and while many of those uses would be permitted under the Copyright Act, some of them would not. University administrators are extremely risk-averse, and seem to be willing to pay a lot of money for not having to worry about copyright.[1] They were eager to obtain a blanket license from Access Copyright if it covered the vast majority of works that are or may be used by the university.

But Access Copyright and its members could offer this kind of license because THEIR intellectual property, that is, the actual repertoire of works that they could legally authorize others to copy, has always been significantly smaller than what universities actually use. Thus, the “repertoire problem” was a serious one for the fledging and cash-hungry Access Copyright. Soon it devised a solution, which constituted the first copyright grab: the Indemnification Scheme. The deal between Access Copyright and the universities was a simple one: “Don’t worry about our repertoire”, it essentially told universities. “Let’s pretend that any work that had not been explicitly excluded is in our repertoire. Purchase a license from us and go ahead, copy any work that you need. Don’t bother worrying whether the copyright owner ever authorized us to give you a license. Assume that we do, and the owner sues you we will indemnify you.” (Of course, Access Copyright didn’t say these exact words, but this has been the essence and the rationale of its licensing scheme).

The legality of solution has always been questionable for several reasons: As a matter of copyright law, authorizing another person to reproduce a work without the copyright owner’s consent is an infringement of copyright. As a matter of contract law, a contract that encourages a party to infringe the right of a third party may not be valid. And as a matter of insurance law, selling an indemnity may not be allowed, and in any event might require a license from the relevant regulators, a license, which, as far as I know, Access Copyright never obtained. Howard Knopf raised these points in an article in the Intellectual Property Journal more than a decade ago and they have never been refuted.

Access Copyright was aware of the questionable legality of this scheme, and universities probably also suspected that the indemnity might not be valid, and in 1997 the Copyright Act was amended to solve their problem. The newly enacted Section 38.2, the second installment in the copyright grab, provides that:

38.2 (1) An owner of copyright in a work who has not authorized a collective society to authorize its reprographic reproduction may recover, in proceedings against an educational institution, library, archive or museum that has reproduced the work, a maximum amount equal to the amount of royalties that would have been payable to the society in respect of the reprographic reproduction, if it were authorized, either

(a) under any agreement entered into with the collective society; or

(b) under a tariff certified by the Board pursuant to section 70.15.

In plain English, the section means that if a university that has entered into an agreement with Access Copyright (or operates under a Tariff) and infringes the copyright of a copyright owner who is not a member of Access Copyright, that copyright owner cannot recover in damages more than what she would get from the university if she had been a member of Access Copyright. If Access Copyright charged 10 cents per page, that is the maximum that a non-member could recover in damages.

In other words, s. 38.2 permits a self-proclaimed group of authors and publishers to get effective control over the entire copyrights in the category of works simply by setting up a collective and entering into an agreement with an educational institution.  S. 38.2 effectively gives Access Copyright the ability to authorize the use, set the terms, and charge fees, not only of the works of those who authorized it to act on their behalf, but also of those who did not authorize it to act on their behalf.

Not only section 38.2 (and the indemnity scheme) effectively appropriates the copyrights of those who never authorized Access Copyright to act on their behalf, it is extremely anti-competitive and anti-innovative, because it reduces universities’ incentive to seek licenses from copyright owners that aren’t members of Access Copyright, and it reduces those copyright owners’ incentives to offer such licenses.

But s. 38.2 applies only to “reprographic reproduction”, not to digital reproductions. As a result, the business model based on the indemnity scheme and s. 38.2 was no longer satisfactory for universities as the use of digital copies became increasingly popular. Access Copyright, whose digital repertoire is even smaller than its reprographic repertoire, was reluctant to offer indemnity for digital copies because it was concerned that authorizing digital reproductions would expose it to a much greater legal risk. And meanwhile, while Access Copyright was balking, some universities slowly began to realize that by dealing directly with publishers or other market-based intermediaries they could obtain licenses that cover more than Access Copyright could legally give them and more than it ever would.

 

Back to the Present Grab

Seeing the threat to its business model, Access Copyright’s solution has been to go to Parliament and sneak in another statutory copyright grab into Bill C-11, and ask the Copyright Board to impose a Tariff on the universities. The last move made universities a little angry, but despite what presently seems like adversarial relationships, the AUCC, ACCC, and CMEC (the main organization representing educational institutions) seem to be quite content with the copyright grab that has been the foundation of their relationships over the last two decades. Once again, rather than astute, competent and independent negotiators looking out for the public interest through the lenses of education, teaching, research, and innovation, educators’ advocates and even some educational institutions (who tend to heed to the advice of the same copyright lawyers who regularly advise copyright collectives and major content owners) appear to be more like partners and enablers of Access Copyright, and cannot envision operating without the short-term fixes that its scheme provides.

So here we are. One of the greatest copyright grabs will likely become law because it benefits Access Copyright and provides an illusion of benefiting educators. One cannot help but wonder whether the kerfuffle and hyperbole over fair dealing is nothing but a red herring orchestrated to sneak in this copyright grab, which effectively transfers the copyright of the majority of Canadian and foreign authors—mine included—into the hands of Access Copyright.

While this sneaky proposed copyright grab can, and should, be criticized on the basis that it reflects bad copyright policy, there are some grounds to believes that this kind of grab also exceeds Parliament’s legislative power under the Constitution Act, 1867, for the following main reasons:

  • First, while s. 91(23) of the Constitution Act grants Parliament legislative authority over copyright, it is questionable whether this authority extends to replacing copyrights, as rights granted to authors, with a regime that effectively transfers these rights into the hands of a monopoly;
  • Second, as mentioned above, it is questionable whether legislative authority over copyright extends to regulating and re-writing the agreements between copyright owners and collectives. Arguably, the content of these agreements is a matter of “property and civil rights”, which is under Provincial jurisdiction;
  • Third, the proposed section 30.02 (together with the proposed sections 30.01, 30.03, and 30.04 and a few other existing provisions, such as s. 38.2) create a very detailed regime regulating the use of works by educational institutions. These provisions do not simply exempt educational institutions from some provisions of the copyright act but they actually micro-manage the use of works by educational and impose various obligations on them. Therefore, it is questionable whether this is a valid exercise of federal power over copyright or whether it constitutes an impermissible intrusion on the Provinces’ exclusive power to make Laws in relation to Education, under section 93 of the Constitution Act.

In addition, readers who followed the attempts to roll back the Supreme Court’s decision in CCH and prevent any broadening of the language of the statutory fair dealing provision, must have noticed the specious argument fair dealing is inconsistent with the Three-Step-Test of the Berne Convention and other international treaties. Neither of those self-proclaimed advocates of authors’ rights seems to have any issue with the forced collectivization of authors’ rights, a move that is much more likely to be inconsistent with the Three-Step-Test than any expansion of fair dealing currently contemplated. It turns out that respect for the copyrights of others and genuine concerns about compliance with international obligations are very brittle concepts when ignoring them can turn a profit.

 

Will Parliament Stop the Grab?

As Bill C-11 enters the last stretch before it becomes law, one can hope that Members of Parliament who are going to vote for it will recite the following two important paragraphs from its preamble, which reminds us that:

[…] the Copyright Act is an important marketplace framework law and cultural policy instrument that, through clear, predictable and fair rules, supports creativity and innovation and affects many sectors of the knowledge economy;

[and that] the exclusive rights in the Copyright Act provide rights holders with recognition, remuneration and the ability to assert their rights, and some limitations on those rights exist to further enhance users’ access to copyright works or other subject-matter;

Hopefully, they will decide to honour the rights of the majority of authors who, like me, chose not to become members of Access Copyright. Hopefully, they will recognize that allowing self-proclaimed collectives to override the copyrights of others, monopolize markets and collect a de facto “Education Tax” is inefficient, immoral, and likely unconstitutional.

Legislation that allows that is not copyright. Such legislation is copyright’s antithesis.

 


 

[1] They are even more willing to do that if they can pass the cost onto students.

 

 

Posted in Antitrust / Competition Law, Blog, Copyright, Copyright Collectives, Featured
2 comments on “Bill C-11 and the Big Access Copyright Grab
  1. Ron B says:

    Well written excellent explanation of how this section of the law effectively strips copyright owners of control over their work.

    I’m sure most owners are not aware of this. If they were I’m sure they would be raising quite a rukus. Need to get this out somehow….

  2. André Cotte says:

    Mon Dieu que tout cela est compliqué. Je crois qu’une exception au droit d’auteur en faveur de l’éducation serait bien plus simple à gérer.

    Une société pourrait redistribuer après sondage des sommes fournis par l’État (une taxe spéciale pourrait fournir l’argent) aux auteurs dont les oeuvres auraient été copiées.

5 Pings/Trackbacks for "Bill C-11 and the Big Access Copyright Grab"
  1. [...] I urge you to strike these pernicious subections from the bill. See Professor Ariel Katz’s analysis, “Bill C-11 and the big Access Coyright grab,” at http://arielkatz.ca/archives/1347* [...]

  2. [...] Geist points us to “A critique of how the collecting agency behind the ‘bone stupid’ copyright deals signed by U of [...]

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  4. [...] Geist points us to “A critique of how the collecting agency behind the ‘bone stupid’ copyright deals signed by U of [...]

  5. [...] to itself the copyrights of others and entrench its monopoly (I wrote about those in an earlier post). But as beneficiaries of this monopoly, these publishers are understandably silent about those [...]

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