To opt out or not to opt out?

To opt out or not to opt out? This is the question that UofT and Western are currently facing, as the initial term of their license agreements with Access Copyright is about to end, but will be renewed automatically unless they choose to terminate by the end of the next month.

The question may not be as existential as Prince Hamlet’s, but like the him, the universities will have to decide whether ’tis nobler in the mind to suffer the slings and arrows of outrageous Agreement, or to take arms against a sea of troubles, and by opposing end them? In this post I’ll focus on my university, UofT, and try to shed some light on this important question: important not only for UofT but also for the entire education community in Canada, and beyond: from as close as the US and as far away as Australia and India, where students and educators are currently facing similar issues. The decision is perhaps even more important for Access Copyright, who is currently struggling to assert its relevance.

Essentially, UofT faces four options: (1) it can decide not to decide and simply let the agreement renew itself for another year; (2) it can decide to renew the agreement, believing that as bad as it is, it is still better than a tariff approved by the Copyright Board, which Access Copyright falsly threatens to impose on it; (3) it can pretend that it might opt out and hope to negotiate an improved license; or (4) it can decide to opt out and defending its right to do so, if necessary.

It should not come as surprise that in my opinion opting out and defending its right to do so is the best option for UofT, both in the short term and in the long run. I anticipate, however, that Access Copyright might try very hard to keep UofT on board by offering some better terms, but as I will explain in greater detail below, as tempting as such offer might be, accepting it would be a serious mistake. Nevertheless, UofT’s decision may ultimately depend on a combination of factors, including the actual and anticipated actions of those with whom it interacts, internally (e.g., faculty and students) and externally (e.g., Access Copyright, or other actors in the education community). The goal of this post is to explore those different factors.

Let me emphasize that I am currently not involved in any internal discussions on this point, so my analysis will be based solely on observable facts, and the factors that in my judgment might influence the ultimate decision.

Access Copyright

Let’s consider what Access Copyright might do to influence the decision. It is fair to assume that Access Copyright suspects that just as UofT’s decision to sign the Agreement precipitated a chain of events that was favorable to Access Copyright (the signing of the AUCC Model License, and its adoption by some universities, and the collapse of the AUCC’s opposition to the Proposed License), it fears that if UofT opts out, this would encourage many other universities who opted in to join the growing number of educational institutions bidding Access Copyright adieu.  In other words, the cost of losing UofT is much higher than the loss of the approximately $2.1 million license fees that it pays. Effectively, if UofT opts out, it might be the final nail in Access Copyright’s coffin.

It is also fair to assume that Access Copyright realizes that securing a declaration by UofT that notwithstanding the changes in the legal landscape, and notwithstanding the emerging consensus that Access Copyright’s licenses are unnecessary at best and harmful at worst, continuing its relationships with Access Copyright is still in the best interest of the University would be an invaluable strategic asset, probably worth more than the annual $2.1 million that UofT pays. It might provide Access Copyright a much-hoped credibility, and offer it a lifeline when it attempts to rescue itself.

This means that Access Copyright would bend over backward to keep UofT on board. Therefore, nobody should be surprised if Access Copyright is currently negotiating (or at least trying to negotiate) the terms of a renewed and somewhat improved license. Such a license might include the following modifications: a lower—perhaps much lower—fee, possibly higher limits on copying (e.g., 20% of a work instead of 10%), and removal of some of the most ridiculous terms (such as paying for linking) found in the current license. Access Copyright might hope that UofT’s administration would be lured by such concessions–meaningless as they are–which would allow both parties to present it as a win-win deal.

There are, however, some possible complications. First of all, Access Copyright may discover that the administration is not as gullible as it was last year. It may face an administration that understands that accepting such an offer, no matter how sweet it may seem, is a dangerous trap.

Second, there might be limits on Access Copyright’s own willingness and ability to lower the fee. Access Copyright’s deals with UofT and Western included a most-favoured-customer commitment. If other universities secured the same commitment, then any discount offered to UofT could trigger an immediate reduction in the fees paid by other universities. Moreover, lower voluntary fees would reduce its ability to justify higher fees under its proposed tariffs, making the threat of exorbitant fees imposed retroactively by the Copyright Board even less credible.

So how can Access Copyright try convincing UofT not to opt-out without completely bending over backwards? The timing of the lawsuit against York University and of the filing of a new Proposed Tariff provides the answer. The point of these filings is to send UofT a message, however inaccurate and misleading, that opting out is not really an option. Access Copyright’s theory is that if a single unauthorized copy from Access Copyright repertoire were made, UofT would be bound by the new tariff, no matter what. Essentially, the message is: “Opting out is an illusion, because you cannot be certain that you won’t make a single unauthorized copy from our undefined and unverified repertoire. Therefore, if you think that the deal that you’d signed is a bad deal and you contemplate opting out think twice. The moment you opt out you’d be forced to pay a higher rate and comply with more onerous conditions. So do yourself a favour and stick with us.”

This threat has worked in the past (it was one of the reasons why UofT had not opted out before), so Access Copyright may hope that rattling this saber may be sufficient to keep UofT on board. But Access Copyright would be remiss to be certain that it would necessarily work again. In fact, its aggression and  extravagant legal theories may actually drive home the point that renewing the license, even under improved terms, means living under the constant threat of Access Copyright. UofT may realize that if it ever wants to get over its decades-long addiction to Access Copyright, now is the right time to do that. Therefore, contrary to Access Copyright’s hopes, the very direct threat implied in the lawsuit against York might actually force UofT to realize that it can no longer duck this question, trigger a “just watch me” response, and embolden UofT’s resolve to opt out and defend its right to do so. And judging by how the Supreme Court has so far responded to Access Copyright’s excessive claims, UofT should feel quite comfortable in doing that.

That’s what UofT should do. Whether it will actually do that is a different matter, so let’s consider UofT’s position in greater detail.

UofT

When UofT, Western, and Access Copyright singed the current agreements, they issued a joint media release that might give the impression that UofT believes that its relationship with Access Copyright are more or less the best possible thing that happened to the University since the discovery of insulin. If you read that release, you might assume that UofT is not going to announce anything soon, simply let the agreement renew itself, and rejoice. The reality, however, is that behind the public façade, the Administration’s position has been much more ambivalent.

For example, during the meeting of the Governing Council on Feb. 16, 2012, representatives of the students’ associations, the faculty association, and other attendees criticized the agreement heavily. The President, the Provost, and the Chief Librarian defended the decision to sign the agreement but the tone and substance of their explanations were quite different from the jubilation of the University’s public pronouncements. Rather than exalting the benefits of the relationships with Access Copyright, they emphasized the fears of opting out. They also expressed their hope that the Supreme Court would hand down favourable decisions in the cases that were then pending before it, and that Parliament would indeed pass Bill C-11, and emphasized that “if the legal landscape changed, the University could decline to renew the agreement when it expired at the end of 2013.”

Moreover, a letter to the University of Toronto Faculty Association (UTFA) dated July 3, 2012 (shortly after the passage of Bill C-11 and shortly before the Supreme Court handed down its decisions in the Copyright Pentalogy), seems even more unequivocal about UofT’s intentions. In this letter, the Provost acknowledged that “changes to copyright law are on the immediate horizon”, she noted the passage of Bill C-11, and emphasized that anticipating those changes was “one reason we entered into a very short agreement with Access Copyright”. She detailed some steps that UofT would be taking in the short term to increase the University’s readiness for life without Access Copyright, and agreed with UTFA that “the University needs to maximize its use of fair dealing, particularly once Bill C-11 passes and the educational use provisions are added.” Finally, she vowed that “if the legal, regulatory and compliance landscape changes over the next year and a half and if it is to our advantage we will not renew the current license when it expires in December 2013” (note the difference between February’s “the University could decline to renew” and July’s “we will not renew”).

That the hoped changes in the legal landscape have materialized became evident eight days later, when the Supreme Court ruled in favour of educators in Alberta (Education) v. Access Copyright, and affirmed its commitment to the concept of users’ rights in the other cases decided simultaneously. In fact, it is fair to say that the legal landscape has changed even beyond what even the most optimists had hoped for. If you believe that Administration’s pronouncements were genuine—and I have no reason to believe that they weren’t—you may assume that a notice of non-renewal is currently being drafted.

This is a plausible scenario, but not an inevitable one. While the Provost’s statement sounds like a strong commitment to opting out, it may also reveal a more tentative position, which probably reflects the Administration’s ambivalence. The Provost’s statement “we will not renew the current license” depends not only on the expected favourable legal changes (which have now been materialized), but it also mentions the following three conditions: (1) favourable changes in the regulatory landscape; (2) changes in the compliance landscape; and (3) an overall assessment that opting out would be “to our advantage”. It’s easy to understand what are the legal changes that the Provost referred to, but the other factors may require some interpretation. Let’s see what they might mean.

The regulatory landscape

The reference here is probably to the Copyright Board and the proceedings before it. Issues relating to the Board and those proceedings were some of the primary motivations for signing the agreement. First issue was legal costs. By the end of 2011 the case had barely begun, yet I was told that the AUCC had already paid its lawyers close to $2 million, and as a major university, UofT contributed a significant share of that cost, and could expect to pay a lot more. In addition, UofT, like many other universities, had already spent astronomical amounts of money, time, and effort, on answering Access Copyright’s interrogatories, which were, in effect in-terrorem-ogatories. UofT had many very good reasons not to be satisfied with the way the AUCC had handled the case (if only because after the fact the Board itself indicated that it might have been satisfied with answering questions by only a representative sample of institutions), and very good reasons to be concerned about a combination of skyrocketing costs and very poor results.

Second, UofT had been advised that the Board would likely force it to participate in an extremely costly and intrusive survey at the behest of Access Copyright, and that eventually, once the Board would approved the Proposed Tariff, a retroactive mandatory payment of millions of dollars would be imposed on the University. Since it would not be able to retroactively charge students, this cost would have to be paid out of the University’s operating budget.

From this perspective, signing the agreement with Access Copyright and running as far as possible from the Copyright Board seemed like the best option: it allowed UofT to gain control over its costs, it freed it the whims of the Copyright Board and the AUCC, and immunized it from the effect of the future tariff, which it assumed would be mandatory. And not least importantly, since UofT decided that the full cost of the agreement would be borne by its students it wouldn’t even have to pay a dime for that (more on this below). As I have written before, this conclusion was based on seriously flawed assumptions, but on the basis of those assumptions, the decision made sense.

Let’s consider developments on this front and how they may affect UofT’s decision:

• First, signing the agreement precipitated the collapse of the AUCC’s objection to the Proposed Tariff. Shortly thereafter, the AUCC and Access Copyright signed the Model License, the AUCC recommended to its members to sign it. And then, in an astonishing move, the AUCC counsel informed the Copyright Board that the AUCC withdrew its objection to the Proposed Tariff. This was a jaw-dropping move because the AUCC’s withdrawal of its objection was not part of a settlement whereby Access Copyright simultaneously withdrew the Proposed Tariff. This meant that the AUCC effectively gave Access Copyright carte blanche to pursue its case at the Copyright Board without any objection from the universities. Since UofT signed an agreement it should not care about the terms of that tariff, once approved by the Board. However, whatever the Board approves this time around might be the basis for any subsequent tariffs, meaning that the specter of an outrageous mandatory tariff—unless refuted—would continue to haunt UofT. That is, as long as there is a risk that a tariff approved by the Board would be mandatory, it would always seem rational to sign a deal with Access Copyright at a slightly lower rate.
• Second, the threat of an imposed costly and intrusive survey had turned out to be a straw-man. On Sept. 7, 2012, the Board ruled that it would not order the conduct of a survey, for reasons that could be easily anticipated. In retrospect, UofT’s decision voluntarily to conduct a survey with Access Copyright and share the resulting data in order to avoid an even worse survey, seems utterly foolish.
• Third, on April 8, 2013 Access Copyright “thrashed thrice”, ratcheting up the threat of a mandatory tariff. The false premise behind this threat can be refuted quickly, but the courts will not resolve it before June 30. Therefore, Access Copyright still rattles the saber of a mandatory tariff, and if UofT still feels intimidated it might cave in.

In sum, there have been no dramatic changes on the regulatory landscape. The specter of an imposed survey turned out to be a straw-man, but the threat of a mandatory tariff, while false, has not been officially eliminated. Therefore, it might be relied on by the Administration as a reason for not opting out, or might trigger a “just watch me” response, and push UofT toward opting out and defending its right to do so.

The compliance landscape

From the Administration’s perspective, the main advantage (or indeed the only advantage) of the agreement over opting out is the indemnity that Access Copyright offers for copying works that are not in its repertoire (on the shaky assumption that this indemnity is actually valid). Opting out means giving up this indemnity scheme, and replacing it with not-yet-tested mode of risk management. While the legal changes (such as the explicit expansion of fair dealing and the limitation on statutory damages) have reduced the risk of non-compliance, UofT also moved to improve its preparedness for ensuring compliance with the requirements of copyright law, should it decide to opt out. Over the last year, UofT has taken two important steps in this direction:

• It has decided to create and fund a new office of a Scholarly Communication Librarian, and will likely be filling this position shortly;
• It has adopted its own new state of the art sophisticated and well-balanced fair dealing guidelines, with the stated aim of “using them as part of [UofT’s] approach to copyright compliance”, and a commitment to further develop sets of best practices and guidance.

Therefore, the combination of the legal changes and UofT’s internal measures means considerable improvement of the compliance landscape. The Administration could easily rely on these developments if it wanted to opt out. In particular, the fact that the Guidelines take the view that what Access Copyright permits is likely to be considered fair dealing anyway, may suggest that UofT recognizes the futility of the license. However, if, for whatever reason, the Administration decides to renew the agreement, it would always be able to say that while UofT would really like to opt out, unfortunately it is not ready yet. Maybe next year. Or the following.

Is opting out “to our advantage”?

The fourth factor in the Provost’s letter is an overall assessment of whether not renewing the agreement is “to our advantage.” Obviously, this reserves to the Administration considerable discretionary power.

Probably, the most important—yet non-articulated—consideration under this heading is the ability to pass the cost of the agreement onto the students. After all, it is one thing to sign a $2 million agreement of questionable value when the millions of dollars that you have to pay have to come out of your own budget. But it is much easier to decide that signing this agreement is to your advantage if the cost can be simply rolled over to someone else. When other people pay (i.e. students), the University’s cost-benefit analysis is very simple: it reaps the benefits, however minute they are, while students bear the cost.

I have always suspected that the assumption that the cost of the agreement can simply be passed on to students was one of the most important considerations in UofT’s reluctance to opt out. Yet it is far from obvious that the University has the legal power to do that unilaterally, and there are some solid reasons to think that it cannot. So far, UofT’s students protested politely, but did not take any further action. Things might change, however.

The signing of the agreement last year took many by surprise, and students had very little time to oppose effectively. This time around they might be better prepared. There are signs that some students’ organizations at UofT and other parts of the Province have sought legal advise on the legality of passing the cost of the agreement to them in the form of ancillary fees. If they’d be willing to challenge the legality of the fees, this might change the University’s cost-benefit analysis in a significant way. It would mean that the University cannot simply avoid the risk of being liable to Access Copyright by agreeing to pay and foot the bill to the students. It might also have to consider the possibility that it would have to bear the cost of continuing its relationships with Access Copyright, and perhaps even become liable for refunding what it had already collected from the students. This ought to lead UofT to think much more carefully about the value of its relationships with Access Copyright and consider the short and long-term costs of those relationships much more seriously.

Many other factors might influence the final decision. I suspect that the Administration has not been particularly pleased with how the signing of the agreement was perceived by the wider higher education community and the level of scrutiny that it attracted. It can be expected that if UofT decides to renew, despite the legal changes of 2012, and despite the fact that many leading universities, notably UBC, have decided to opt out would be perceived much more negatively than before.

One of the poignant points of criticism against the universities who signed agreements with Access Copyright was that they had provided the funds that Access Copyright uses to lobby against the rights of educators and students, and to threaten them with litigation. Last year, this argument was somewhat abstract. But this year, after Access Copyright’s direct assault against York University, this argument becomes much more concrete. The Administration ought to be concerned that renewing the agreement might be seen as an act of betrayal of the academic community: rather than supporting York University in defending a common cause, renewing the agreement would provide its opponent much-desired credibility and cash.

UTFA has taken a very strong position against the agreement, and while the Provost’s reply, suggesting that UofT would opt out, may have satisfied it for a while, it may not satisfy it again. It is hard to predict whether the possibility of adding another point of contention between UTFA and the Administration is something that the Administration would seriously seek to avoid, or whether it would be regarded as just another minor point of contention among more serious ones.

Lastly, the fact that the terms of President Naylor and Provost Misak are about to end might have some influence on the decision. If they are concerned about their legacy, they might wish to avoid a decision that pleases Access Copyright but upsets the much broader academic community, or they might do nothing and leave this hot potato for their successors.

What’s next then?

There were very few reasons to sign the agreement with Access Copyright last year, and in light of the Supreme Court’s decisions and the passage of Bill C-11, there are even fewer reasons to renew it. It will be extremely hard for UofT to justify spending millions of dollars for the privilege of doing what in most likelihood the law allows for free, whether the source of the money is its own budget or its students’ pockets.

But what if Access Copyright offers an improved license, e.g., a license that permits copying that would likely not be considered fair dealing, and for a very low price? Suppose that Access Copyright offers a dream license, e.g., one that allows UofT to make unlimited copying of all the works in its repertoire for a fee of, say, $2 per student? Might UofT be tempted to sign on and protect itself against the threat of a much higher mandatory tariff? As we’ve seen, the Administration reserved to itself some leeway to rationalize such a move, and if believes that it can continue passing the cost to the students it might be lured into signing such a deal. But should it?

The answer is still no. Such a sweet offer might be tempting in the short run, but disastrous in the long run. Entering into relationships of dependency with a monopolist is never a good idea.  No matter how charming and attractive it may seem today, there is no reason to assume that it would remain that way. Entering into dependency relationships with a monopolist with a history of abuse is even a worse idea, no matter how hard it promises that it has changed.

Access Copyright itself recognizes that it is currently standing on very shaky foundations. UofT should recognize that too, not for the purpose of obtaining a few meaningless concessions, but in order to reshape the entire landscape. Access to works is fundamental to the mission of a research university such as UofT. It can only gain by ensuring that it is achieved in a competitive environment and can only lose if it depends on a monopolist. Now is the time to ensure that if it has any role to play in the educational ecosystem it is based on the value of its service, not on coercion. Instead of buying temporary peace and a hollow promise of good behavior, UofT should use its resources on creating an environment in which Access Copyright doesn’t have to promise to behave well but forced to behave nicely because it has no other choice. Instead of using its (or its students’) money to throw a lifeline to Access Copyright, UofT should use it to challenge Access Copyright’s view that it can impose mandatory tariffs on universities, and on developing capacity to exercise its rights under the law, and obtain licenses, when those are needed, in a competitive market. UofT has already taken important steps in this direction and it should continue these efforts without looking back.

Access Copyright might have sued York University in the hope that this move would instil fear in UofT’s mind. But it actually provided a very good opportunity to test and refute its claim that a tariff can be mandatory. Instead of using its resources to offer a lifeline to Access Copyright and help it in its attach on fair dealing, UofT should use them to fight the cause of education. In the end, the question of whether to opt out or not to opt out is as simple as that.