Expand statutory damages to other collectives: copyright groups

Just over a week before Parliament is set to embark on its five-year review of Canada’s Copyright Act, some collective societies responding to a Copyright Board reform consultation are asking the government to allow them to collect up to 10 times the royalties owed in the event of noncompliance. This means collectives — those organizations that administer rights and collect royalties — involved in mediums as diverse as videos, software, books and newspapers that are not paid licensing fees for use of their content would be able enforce the tariff by collecting many more times what they’re owed, with one intended purpose of deterrence. “Because of...the inconsistency of statutory damage rules across the various tariff regimes, and the lengthy and unpredictable tariff setting process...certain traditional markets for Canadian writing are hobbled by delay and uncertainty, resulting in economic damage to Canada’s cultural sector,” the Writers Union of Canada (WUC) wrote in its submission. The consultation was initiated in August by the board, Innovation, Science and Economic Development (ISED) Canada and Canadian Heritage and asked parties to consider whether “certain other elements unique to one or more of the current regimes could be maintained and applied broadly, such as the limitation upon statutory damages in the mandatory regime.” “Any improvements will be rendered moot if Collectives lack enforcement provisions to apply those tariffs,” Access Copyright said in its submission. The Copyright Modernization Act currently has different tariff-setting regimes that govern different collectives and remedies. For example, under the private copying regime, a collective can get a court order to collect up to five times the amount of levies owed, according to Access Copyright. Meanwhile, those under the mandatory regime, such as collectives Society of Composers, Authors and Music Publishers of Canada (SOCAN) and Re:Sound can collect damages of up to 10 times royalties. However, Access Copyright argues those under the general regime, which includes itself, can collect only the original royalties. It’s in effect asking that the mandatory regime be extended to the collectives governed by its own regime. “As there are ‘no-penalties’ attached to non-payment, users gamble on the fact that the Collective will only ever be able to pursue enforcement against a small number of users,” Access Copyright said, adding that this “completely undermines the effectiveness of the tariff regime and the legitimacy of the Board as a rate setting tribunal.” Anne Godbout, legal counsel for Access Copyright, added in a phone interview that the damages allowed under the mandatory regime “is a very easily recognizable damage. When you look at three to 10 times, it’s easy for you to calculate what your damages are going to be.” She added this takes the guesswork out of some of the other damages under the act, which may not necessarily quantify the amount. Access Copyright is joined by parties including the Canadian Copyright Institute (CCI) and support from the WUC in asking the government to harmonize those regimes, as they argue that some users are not paying because the repercussions are not severe enough for them to comply. “Given that many rightsholders today rely on collective administration — just given the multiple uses there are — it really makes sense to have this regime that applies only to one collective, apply to other collectives,” Barry Sookman, an intellectual property lawyer at McCarthy Tétrault LLP, said. The board lists on its website collectives under different categories, including the Directors Rights Collective of Canada (DRCC), the Producers’ Audiovisual Collective of Canada (PACC), and the Canadian Screenwriters Collection Society. “Statutory damages in principle do have some benefit in that they can be a helpful deterrent to harmful behaviour and can be a more efficient means of determining damages,” Gerry Wall, president of telecom consulting company Wall Communications and who submitted his own intervention, said in an email. However, University of Ottawa law professor Michael Geist said in a blog post that Access Copyright’s deterrence argument, among others, doesn’t hold up. He said deterrence is used in the context of small establishments, not educational institutions that don’t pay the licence because of a “good faith analysis of the scope of fair dealing,” the law which governs use of content without permission. “For Access Copyright to argue that non-payment of its licence is a function of low risk of penalties rather than a different view of copyright law badly (and knowingly) mischaracterizes the situation,” Geist said. Access Copyright has been embroiled in a court case with York University over that issue. Howard Knopf, a lawyer with Macera & Jarzyna LLP, previously told The Wire Report that many institutions don’t want to deal with collectives because they put in the effort and money to get rights on their own. "Many universities don't want to deal with Access Copyright at all because they spend often millions of dollars a year on direct licences with major publishers and minor publishers, and they hire people to go over material and determine what's fair dealing and what is not substantial copying and what doesn't need to be paid for, and they use open-source material," Knopf said in 2015. "They go to great lengths to comply with their copyright obligations, and do not want to deal with Access Copyright because, in their view, Access Copyright charges too much for too little, and Access Copyright has a quite limited repertoire," he added. Under the current rules, those collectives under the mandatory regime can’t negotiate a royalty agreement without the board having a final say on rates. On the contrary, those outside of that regime, including Access Copyright, can negotiate rates or payment terms with users without going to the board. For this reason, Wall believes that in securing the right to obtain punitive damages, these collectives can increase their leverage in negotiations with users. While Wall said he thinks the harmonized approach makes sense, it is also where he sees a problem with the equal treatment argument. “This clearly isn’t the case currently since some collective parties must get tariffs approved by the Board while others (Access) can conduct private negotiations to set payment terms without going through the Board,” Wall said, adding this needs to be explored before going forward with the recommendation. The groups calling for this extension argue that it is good public policy. Access Copyright said it would also “encourage settlement and increase judicial efficiency,” as well as strengthen the Board’s role as a tariff-setting tribunal. “Harmonizing the remedies for collective societies under the Act would level the playing field among Canada’s creative industries, and allow more revenue to flow to publishers and other rightsholders, enabling them to reinvest in their businesses,” the Association of Canadian Publishers said in its submission, adding since the fair dealing provision for education in the Act in 2012, royalty distributions to Access Copyright affiliates declined by 80 per cent. Statutory damage provisions were first introduced in 1997, with both SOCAN and Re:Sound being beneficiaries of the mandatory regime. Sookman said as more collectives have sprung up since and because of the recent review, the opportunity to push the issue has resurfaced. But the consultations don’t begin or end there. Parties to the consultation largely agreed that the board needs to be more timely on setting tariffs and making decisions following hearings. “In an increasingly digitized era, change happens rapidly,” the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) said in its submission. “Processes designed for a pre-digital era need to be re-assessed. “Currently, it can take as long as three years after hearings for a decision to be rendered. Industry practices and business realities often change dramatically in that time,” ACTRA added. For example, in a decision released in August, the board ruled that collectives like SOCAN can collect royalties on music made available for download online but did not set a value for the tariff — which SOCAN is appealing. But the kicker is that the case began four years ago. ACTRA and other groups, including the Canadian Association of Broadcasters and Re: Sound, recommended tariff-setting decisions by the board be capped at no more than a year following a hearing. As for how much more urgent the statutory damage recommendations are in the digital space, Wall said it may be worthwhile to “investigate whether infringement could be more widespread or more consequential than in our current environment.” — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Expand statutory damages to other collectives: copyright groups

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