Legal Services/Civil Law Branch

500 Phipps McKinnon Building

10020 – 101A Avenue
Edmonton, Alberta T5J 3G2
Telephone: 780-422-9107
Jason.fung@gov.ab.ca

December 10, 2010

SENT BY EMAIL

Mr. Gilles McDougall

Acting Secretary General
Copyright Board of Canada
56 Sparks Street
Suite 800
Ottawa, Ontario K1A oC9

Dear Mr. McDougall:

Re: Objection to an Interim Tariff Decision on the Access Copyright Post-Secondary

Educational Institutions Tariff (2011-2013)(the “Proposed Tariff”)

I am writing to you on behalf of the Government of Alberta (“Alberta”), pursuant to the Notice
of the Board dated November 26, 2010 and the Ruling of the Board dated December 8,
2010.

It is the position of Alberta that the Board should not should not grant Access Copyrightʼs
application for an interim decision for the following reasons.

(a) The interim decision should not be granted because doing so would be
contrary to the procedural requirements of the Copyright Act (Canada).

Subsection 70.13(2) of the Copyright Act states that where no previous tariff has
been approved pursuant to subsection 70.15(1), a collective society shall file
with the Board its proposed tariff, in both official languages, all royalties to be
collected by it for issuing licenses, on or before the March 31 immediately before
its proposed effective date.

The application for a proposed interim tariff was filed with the Board on October
13, 2010. While the Board, under section 66.51, may render interim decisions,
those decisions should be consistent with the overall ambit and scheme of the
Copyright Act. Subsection 70.13(2) does not distinguish between interim or
other types of tariffs.

Similarly, under section 70.14 of the Copyright Act, where a proposed tariff is
filed under section 70.13, subsection 67.1(5) requires the Board to publish the
proposed tariff in the Canada Gazette and give notice to prospective users (or

 their representatives) within sixty days after the publication of the tariff, that they
may file written objections to the tariff with the Board.

If Access Copyright is granted the Proposed Tariff, the Board will have effectively
overridden express procedural requirements for the imposition of tariffs, interim
or otherwise. These requirements are there in order to allow prospective users
reasonable time to consider and respond to proposed tariffs.

(b) The interim decision should not be granted because the parties have not
been given reasonable and sufficient time to address the application.

Although AC filed the application for the interim tariff on October 13th, it only
provided precise figures with respect to the Proposed Tariff on November 30th
and December 1st, 2010. Moreover, additional documents, namely the model
license and a table correlating the model license with provisions of the proposed
interim tariff were only received by the participants to these proceedings on De-
cember 8th, 2010.

The participants should be provided reasonable time to review and consider all
materials filed pursuant to these proceedings. Whether or not the Board consid-
ers them merely supplemental in nature is immaterial; the parties should be pro-
vided adequate time to review them if they are relevant to the proceedings. The
participants were only provided with the most recent submission of AC at 5 p.m.
on December 8th and were expected to respond to them on December 10th.
Thus, the participants will have effectively only been provided one day to review
highly detailed documents relevant to the Proposed Tariff. That the parties have
not been provided sufficient time to review the documents filed by AC is particu-
larly egregious given the fact that Proposed Tariff may last several years.

(c) The interim decision should not be granted because AC has not provided
sufficient information in support of its application for the Proposed Tariff.

Only recently, on December 1st, did AC provide precise figures with respect to
the Proposed Tariff. However, AC did not provide any further information in sup-
port of those figures. AC should be required to provide further information ex-
plaining the process at which those figures were arrived.

AC provided information in the letter dated October 7, 2010 as to the financial

effects that would be felt by AC if an interim tariff was not imposed.1 None of the
information provided by AC in support of its application for a Proposed Tariff
have been supported by affidavit evidence, nor have the participants been af-
forded an opportunity to test the veracity of those representations.

In addition, the financial estimates provided by AC were purely one-sided esti-

mates of how AC might be adversely affected if it was not granted the Proposed
Tariff. AC did not provide any estimations as to (a) how the amounts proposed
relate to the copying being done by post secondary institutions, (b) how those
amounts might decrease over time due to the advent of digital collectives and

1Bloom, G., “AUCC response to Access Copyright Application for Interim Decision” (December 10,
2010), at page 11, para. 2. According to Mr. Bloom, the effects that would be felt by AC are suspect.

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 creative commons licenses, and (c) how much of the amounts to be paid would
be distributed to creators and publisher affiliates. Provision of that information,
even very rough estimates, would provide greater context into whether an in-
terim tariff is necessary or fair, and assist the Board with its decision making. A
proper hearing on the evidence in support of this interim decision would be nec-
essary. As the submission of Athabasca University succinctly states, “...AC has
offered literally no ʻevidenceʼ to sustain its position.” 2

It should be further noted that, given the (a) movement towards towards digital
use of materials, (b) movement towards licensing materials directly from authors
or from digital collectives, (c) movement away from the use of course packs and
(d) the increased role of fair dealing in Canadian law, reliance upon the previous
amounts paid under prior license agreements would be likely to result in inaccu-
rate overestimations of the fair and proper amounts that should be paid to AC.

(d) The interim decision should not be granted until AC has provided further
information as to the extent of its repertoire.

Under section 70.11, a collective society must answer within a reasonable time,
all reasonable requests from the public for information about its repertoire of
works, performerʼs performances, sound records or communications signals.

It would be reasonable to require AC to present further information as its reper-

toire for the purposes of this application for a Proposed Tariff for several rea-
sons. First, it would be impossible for the parties affected by Proposed Tariff to
consider the reasonableness and fairness of the Proposed Tariff without a sense
of the extent to which they continue to use the works being covered by the Pro-
posed Tariff. Second, the parties that would be affected by the Proposed Tariff
may already be entitled to digital reproduction of a large portion of the materials
within the repertoire through other license agreements (i.e. directly with the
authors themselves or through digital collectives). Post secondary institutions
should not be required to pay more than once for the digital reproduction of the
same works.

There is also question, as raised in the submission of Athabasca University, that

ACʼs actual repertoire may be in insufficient to justify the Proposed Tariff. AC
has not submitted any information as to the extent of its repertoire.

(e) The interim decision should not be granted because AC has not met the
necessary criteria

In the case of Bell Canada v. Canada, J. Gonthier set out the test for making in-
terim decisions as follows:

Traditionally, such interim rate orders dealing in an interlocutory manner

with issues which remain to be decided in a final decision are granted for
the purpose of relieving the applicant from the deleterious effects caused by
the length of the proceedings. Such decisions are made in an expeditious

2Infra note 12, at page 3. Athabasca University goes on to note that the Federal Court of Appeal re-
cently ruled that the Board cannot approve a tariff where there is “a lack of or insufficient evidence”.
Socan v. Bell Canada et al, 2010 FCA 139 at para. 28.

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 manner on the basis of evidence which would often be insufficient for the
purposes of the final decision. The fact that an order does not make any
decision on the merits of an issue to be settled in a final decision and the
fact that its purpose is to provide temporary relief against the deleterious
effects of the duration of the proceedings are essential characteristics of an
interim rate order. 3

AC has failed to meet the stated test for the following reasons. First, AC has, in
support of its application, only provided very unsubstantiated claims that it will
suffer lost revenues as a result of awaiting the outcome of the proceedings.
None of the claims were subject to scrutiny or testing for veracity.

Second, while AC notes that in determining the deleterious effects, the Board
considers the balance of convenience of the parties4, this balance weighs heav-
ily in favour of the post secondary institutions affected by the Proposed Tariff. It
is possible that AC would temporarily suffer reduced revenue. However, if re-
duced royalty rates are eventually certified, the post secondary institutions could
be placed in the difficult situation of having to refund royalties to students poten-
tially years after they have left their studies.

In considering the balance of convenience of the parties the Board should also
consider the negative effects that the Proposed Tariff would have upon the com-
petitiveness and ability of post secondary institutions to adapt to changing cir-
cumstances. As noted previously, there appear to be several significant changes
taking place with respect to the use of educational materials by post-secondary
institutions. These include the increasing use of digital materials, deceasing use
of course packs, increasing role of creative commons licenses, and the increas-
ing role of fair dealing, and changes in Canadian copyright law. The submission
of the AUCC 5 sets out an evolution of copyright practices amongst its members
and changes in the way post secondary institutions use educational materials.

The fact that so few of the post secondary institutions that were previously party
to license agreements with AC signed the interim offer is indicative of the para-
digm shift that appears to be occurring in the way educational materials are be-
ing delivered for the benefit of post secondary students.

Extending a royalty regime that does not take into consideration any of the
above noted changes would hamper the ability of post-secondary institutions to
adapt and remain competitive. The negative effects of imposing such a tariff
would be widespread and systemic.

3[1989] 1. S.C.R. 1722 at p. 1754. This test has been applied with respect to the section 66.51 of the
Copyright Act (Canada) previously in “Interim Statement of Royalties to be Collected by SOCAN and
NRCC in respect of Commercial Radio for the Years 2003 - 2007” (November 24, 2006).
4 Sookman, B. “Application for an Interim Decision on the Access Copyright Post-Secondary Educa-
tional Institutions Tariff (2011-2013)(the “Proposed Tariff”).” (October 7 2010) at page 7. Sookman
cites several sources. Retransmission 2001-03, Decision of December 21, 2001, at p. 4; SODRAC v.
ADISQ, Decision of August 31, 1999, File 70.2-1999-1, at p. 2.
5 Supra note 1, at page 5.

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 It is also important to re-emphasize the fact that the existing tariff amounts do
not adequately address the role of fair dealing as set out in the landmark Su-
preme Court of Canada case of CCH Canadian Limited v. Law Society of Upper
Canada6 , in which Justice McLachlin emphasized the importance of balancing
“the public interest in promoting the encouragement and dissemination of works
of the arts and intellect and obtaining a just reward for the creator”. Fair dealing
does not merely provide a defence, it defines the outer boundaries of copyright
and grants a right to the user. A significant portion of the revenues that AC cur-
rently enjoys likely falls under the fair dealing exception and should be excluded
from the scope of any tariff or license fees. Post-secondary institutions would be
placed in the position of being charged for works they were already entitled to
copy under the CCH case.

The submissions of the AUCC and the ACCC both make further comment on the
previous interim decisions of the Board. Alberta makes no further comment on
those interim decisions other than to agree with the conclusions of both the
AUCC and ACCC that, on the whole, the precedents suggest that the interim
decision should be rejected.7

Lastly, it is submitted that AC had numerous other options prior to this applica-
tion, including filing the proposed tariff earlier, in order to properly have the Pro-
posed Tariff heard by the Board. Caution should be taken when using interim
processes to abbreviate a process that warrants careful consideration.

(f) The interim decision on the Proposed Tariff should not be granted because
it does not promote the status quo.

AC argues in its application that part of the intent of the interim decision would
be to maintain the status quo8 and that the interim decisionʼs effect would be to
extend a pre-existing regime, which would not necessitate new payments or re-
porting on the part of the respondents.9

However, clearly the Proposed Tariff goes significantly farther than the status
quo. For example, the AUCC Model License provided AUCC members with an
indemnity holding the university harmless from claims arising from its exercise of
its rights under that license.10 There is no such indemnity in the Proposed Tariff.
There are also serious changes to the tariff royalty structure which would greatly
benefit AC.11 As the submission of Athabasca University notes, “an interim tariff
would, if enforceable in the way AC clearly intends, would, in effect, be poten-

6 [2004] 1 S.C.R. 339.

7Supra note 1, at page 13; Noel, W. “Application for an Interim Decision on the Access Copyright
Post-Secondary Educational Institutions Tariff (2011-2013)(the “Proposed Tariff”).” (December 10,
2010) at page 8.
8 Supra note 4, at page 4.
9 Ibid, at page 5.
10 Supra note 1, at page 2.
11 Ibid, at page 3.

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 tially a mandatory injunction requiring the payment of at least $11 million a year
by universities to AC for several years to come...”.12

Conclusion

Alberta urges the Board to reject the interim decision for a Proposed Tariff on the aforemen-
tioned grounds. The critical issues pertaining to these proceedings should be addressed
with a full hearing, where the evidence and arguments can be properly considered.

Alberta is concerned with both ensuring that its post secondary institutions remain competi-
tive and preserving an environment that promotes fostering learning and innovation. This
interim order does not adequately recognize the changing ways in which post secondary
institutions use education materials or the important role that fair dealing plays in balancing
the rights of users and creators.

For all of the above reasons, Alberta requests that the interim tariff application be dismissed.

Yours truly,

Jason Fung
Barrister & Solicitor

c.c.: Lisa Fox

12Athabasca University, “Submissions re Access Copyright (“AC”) DRAFT INTERIM TARIFF” (De-
cember 10, 2010), at page 2.

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