York University v. Canadian Copyright Licensing Agency

York University v. Canadian Copyright Licensing Agency
Court (s) Database
Federal Court of Appeal Decisions
Date
2020-04-22
Neutral citation
2020 FCA 77
File numbers
A-259-17
Notes
A correction was made on September 24, 2020. A correction was made on April 13, 2021.
Reported Decision
Decision Content
Date: 20200422
Docket: A-259-17
Citation: 2020 FCA 77
CORAM:
PELLETIER J.A.
DE MONTIGNY J.A.
WOODS J.A.
BETWEEN:
YORK UNIVERSITY
Appellant
and
THE CANADIAN COPYRIGHT LICENSING AGENCY (“ACCESS COPYRIGHT”)
Respondent
and
UNIVERSITIES CANADA, CANADIAN ASSOCIATION OF UNIVERSITY TEACHERS, CANADIAN FEDERATION OF STUDENTS, COPYRIGHT CONSORTIUM OF THE COUNCIL OF MINISTERS OF EDUCATION, CANADA, ASSOCIATION OF CANADIAN PUBLISHERS, CANADIAN PUBLISHERS’ COUNCIL AND THE WRITERS’ UNION OF CANADA
Interveners
Heard at Ottawa, Ontario, on March 5 and 6, 2019.
Judgment delivered at Ottawa, Ontario, on April 22, 2020.
REASONS FOR JUDGMENT BY:
PELLETIER J.A.
CONCURRED IN BY:
DE MONTIGNY J.A.
WOODS J.A.
Date: 20200422
Docket: A-259-17
Citation: 2020 FCA 77
CORAM:
PELLETIER J.A.
DE MONTIGNY J.A.
WOODS J.A.
BETWEEN:
YORK UNIVERSITY
Appellant
and
THE CANADIAN COPYRIGHT LICENSING AGENCY (“ACCESS COPYRIGHT”)
Respondent
and
UNIVERSITIES CANADA, CANADIAN ASSOCIATION OF UNIVERSITY TEACHERS, CANADIAN FEDERATION OF STUDENTS, COPYRIGHT CONSORTIUM OF THE COUNCIL OF MINISTERS OF EDUCATION, CANADA, ASSOCIATION OF CANADIAN PUBLISHERS, CANADIAN PUBLISHERS’ COUNCIL AND THE WRITERS’ UNION OF CANADA
Interveners
REASONS FOR JUDGMENT
PELLETIER J.A.
Table of Contents
I. Introduction 2
II. Background 3
III. The Decision Under Appeal 6
IV. York’s Statement of Issues 10
V. Statement of Issues 13
VI. Standard of Review 13
VII. Analysis 14
A. Is a final tariff mandatory? 14
(1) The rights conferred by copyright 18
(2) Legislative History: 1936 to 1985 21
(3) Legislative history: 1988 amendments 31
(4) Legislative history: 1997 amendments 42
B. Jurisprudence 70
C. General Considerations 71
D. Conclusion 73
VIII. York’s Counterclaim 74
A. Fair dealing 75
(1) The purpose of the dealing 75
(2) The character of the dealing 87
(3) The amount of the dealing 92
(4) Alternatives to the dealing 99
(5) The effect of the dealing 101
(6) Nature of the work 105
B. Conclusion on the Counterclaim 106
I. Introduction
[1] When licence renewal negotiations between York University (York) and the Canadian Copyright Licensing Agency (Access Copyright) were languishing, the latter applied to the Copyright Board for and was granted an interim tariff covering the copying of protected works in post-secondary educational institutions. York briefly complied with the terms of the interim tariff but then “opted out” and introduced its “Fair Dealing Guidelines for York Faculty and Staff (11/13/12)” (Guidelines). Acting pursuant to the guidance offered in the Guidelines, York faculty and staff copied significant amounts of material for which York paid no licence fees or royalties.
[2] Access Copyright sued York to enforce the interim tariff, seeking various remedies including royalties as provided in the tariff. York counterclaimed, seeking a declaration that all copying which fell within the terms of the Guidelines constituted fair dealing pursuant to section 29, 29.1, or 29.2 of the Copyright Act, R.S.C. 1985 c. C-42 (the Act).
[3] The Federal Court allowed Access Copyright’s action and dismissed York’s counterclaim, which gave rise to this appeal: see Canadian Copyright Licensing Agency v. York University, 2017 FC 669, [2018] 2 F.C.R. 43 (Reasons).
[4] For the reasons that follow, I would allow York’s appeal on the basis that a tariff approved by the Copyright Board (the Board), as the interim tariff was, is not “mandatory” in the sense that it is enforceable against anyone whose use of the protected works is an infringement of the copyright owner’s exclusive rights. I would dismiss York’s counterclaim on the basis that its Guidelines do not ensure that copying which comes within their terms is fair dealing.
II. Background
[5] The respondent, Access Copyright, is a collective society which administers the reproduction rights in published literary works and collects royalties and distributes them to copyright holders.
[6] The appellant, York, is Canada’s third-largest university. It has over 50,000 students and approximately 1,500 full-time faculty members.
[7] From 1994 to 2010, Access Copyright and York were parties to a licence agreement. This agreement permitted professors at York to make copies of portions of textbooks and other published works in Access Copyright’s repertoire. By 2010, the annual royalty payable pursuant to that licence was $0.10 per page and $3.38 per full-time equivalent (FTE) student.
[8] In March 2010, when Access Copyright was uncertain if the renewal of the licence agreement could be finalized before its expiry, it filed a proposed tariff with the Board for post-secondary educational institutions covering the years 2011-2013. This proposed tariff contemplated a flat annual royalty of $45 per FTE student per year. The proposal was published in the Canada Gazette on June 12, 2010, and 101 persons and institutions filed timely objections.
[9] In light of the rapidly approaching expiry date of the licence agreement, Access Copyright applied to the Board for an interim decision. It asked that the existing licensing regime continue to apply until the Board certified a tariff for the period in question. On December 23, 2010, the Board granted Access Copyright’s application and issued an interim tariff, which incorporated the licence agreement royalty rate of $0.10 per page and $3.38 per FTE.
[10] The interim tariff took effect on January 1, 2011. Initially, York complied with the terms of the interim tariff. However, in July of 2011, York formally notified Access Copyright of its decision to “opt out” of the tariff as of August 31, 2011, in time for the start of the new academic year. Since 2011, several other Canadian universities have also decided to opt out of the Access Copyright tariff.
[11] As of September 1, 2011, York was operating without the benefit of a licence from Access Copyright. Instead, York relied on its Guidelines, which were created to help the university avoid copyright infringement. In essence, the Guidelines direct York’s faculty and staff on how fair dealing under section 29 of the Act applies to certain copying practices. The Guidelines specify that Short Excerpts (as defined in the Guidelines) may be copied for educational and research purposes.
[12] By way of background, it was the Association of Universities and Colleges of Canada (AUCC) (now Universities Canada), that first developed a fair dealing policy in 2004 following the decision of the Supreme Court in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339 [CCH]. York first implemented its own fair dealing guidelines modelled on those developed by the AUCC in December of 2010. In 2012, the AUCC revised its fair dealing policy following the Supreme Court’s decision in Alberta (Education) v. Canadian Copyright Licensing Agency (Access Copyright), 2012 SCC 37, [2012] 2 S.C.R. 345 [Alberta Education], and the passage of the Copyright Modernization Act, S.C. 2012, c. 20, after which York also revised its own Guidelines. Many other Canadian universities use guidelines similar to those used by York.
[13] York’s decision to opt out of the tariff prompted Access Copyright to start an action in the Federal Court to enforce the interim tariff under subsection 68.2(1) of the Act. The foundation of Access Copyright’s claim was that York had infringed copyright in works in its repertoire and were therefore liable for the amounts specified in the interim tariff and that some York professors had, after September 1, 2011, made unauthorized copies of in-repertoire works. In response to the action, York filed a counterclaim seeking a declaration that any reproductions made in compliance with its Guidelines constitute fair dealing under section 29 of the Act.
[14] In this Court, a number of entities were granted intervener status, namely: Universities Canada, the Canadian Association of University Teachers and the Canadian Federation of Students, the Copyright Consortium of the Council of Ministers of Education, Canada, the Association of Canadian Publishers, the Canadian Publishers’ Council and the Writers’ Union of Canada.
III. The Decision Under Appeal
[15] The Federal Court began its analysis by addressing the question of the mandatory effect of the tariff. It reviewed the use of the word “tariff” in cases dealing with various tribunals such as the Alberta Energy and Utilities Board, the Canadian Radio-Television and Telecommunications Commission, the National Energy Board, the Nova Scotia Utility and Review Board, and the Ontario Energy Board. It also considered tariffs of fees fixed by various government agencies. All of these examples are instances of amounts which must be paid. The Court concluded that the word tariff connotes a mandatory fee.
[16] The Federal Court then considered the scheme of the Act, beginning with subsection 68.2(1) of the Act, which Access Copyright relies upon as the statutory basis for its claim that it is entitled to collect royalties. At the material time, it read as follows:
68.2 (1) Without prejudice to any other remedies available to it, a collective society may, for the period specified in its approved tariff, collect the royalties specified in the tariff and, in default of their payment, recover them in a court of competent jurisdiction.
68.2 (1) La société de gestion peut, pour la période mentionnée au tarif homologué, percevoir les redevances qui y figurent et, indépendamment de tout autre recours, le cas échéant, en poursuivre le recouvrement en justice.
[17] Subsection 68.2(1) applies in this case because subsection 70.15(2) provides that where a tariff is approved under subsection 70.15(1), as the interim tariff was, then subsection 68.2(1) applies with such modifications as the circumstances require.
[18] In the Federal Court’s view, Parliament recognized the difficulties that individual copyright owners might face in enforcing their rights against infringers and so provided mechanisms for the collective enforcement of those rights. The Court briefly reviewed the mechanisms in place prior to the 1989 amendments to the Act. Under the earlier regime, performing rights organizations filed with the Copyright Appeal Board statements of fees, charges, and royalties for the issuance of licences with respect to works in their repertoire. The Court found that under that regime, the performing rights organization’s enforcement action was limited to users who had entered into a licence agreement.
[19] The Court then reviewed the legislative history of this provision. In 1988, Parliament amended the Act to include the predecessor to subsection 68.2(1), subsection 67.2(2), which provided that a performing rights organization had the right to collect royalties specified in the statement filed with the Board or “in default of their payment, recover them in a court of competent jurisdiction”. In the Court’s view, enforcement was no longer tied to the presence of a licence agreement.
[20] The 1988 amendments also provided for new licensing bodies for the collective administration of exclusive rights recognized in the Act other than performing rights including, among others, reproduction rights. These licensing bodies did not have the ability to file statements of proposed fees, charges or royalties with the Board and had no statutory enforcement remedies equivalent to those of performing rights organizations. The Court found that these limitations were corrected when the Act was amended again in 1997. In the Court’s view, these amendments gave the licensing bodies, now known as collective societies, the right to file tariffs for approval by the Board, as an alternative to entering into licence agreements with users. These amendments also gave these bodies the same right to collect the amounts specified in approved tariffs and, in default of payment, the right to recover the royalties by action in a court of competent jurisdiction, including the Federal Court: Reasons at para. 203.
[21] The Court then turned to statutory interpretation. It noted that the Interpretation Act, R.S.C. 1985 c. I-21 defined “regulation” to include a tariff of costs or fees so that a tariff was “subordinate legislation” which is consistent with compulsion, as opposed to a voluntary licensing scheme. The Court also found that the procedural aspects of the tariff-setting process such as public notice and Board certification were consistent with a mandatory scheme.
[22] The Court then distinguished the Supreme Court’s decision in Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57, [2015] 3 S.C.R. 615 [SODRAC] to which we shall return later in these reasons. The Court reasoned that the statutory provisions in issue in SODRAC – sections 70.2 to 70.4 – do not deal with tariff-setting, which is set out in sections 70.1 to 70.191. The Court noted that the tariff-setting provisions are mandatory while the dispute resolution provisions in sections 70.2 to 70.4 are optional.
[23] In the end, the Court found that legislative history and statutory interpretation led to the conclusion that Board tariffs are mandatory.
[24] The Federal Court then turned to the counterclaim and York’s Guidelines. They provide that York faculty and staff can copy Short Excerpts of a copyright protected work, which includes literary works, musical scores, sound recordings, and audiovisual works (collectively, a “Work”) within the university environment for the purposes of research, private study, criticism, review, news reporting, education, satire or parody. The critical provision of the Guidelines is the definition of Short Excerpt which is reproduced below:
The copy must be a “Short Excerpt”, which means that it is either:
10% or less of a Work, or
no more than:
a) one chapter from a book;
b) a single article from a periodical;
c) an entire artistic work (including a painting, photograph, diagram, drawing, map, chart and plan) from a Work containing other artistic works;
d) an entire newspaper article or page;
e) an entire single poem or musical score from a Work containing other poems or musical scores; or
f) an entire entry from an encyclopedia, annotated bibliography, dictionary or similar reference work,
whichever is greater.
[25] The Court reviewed the extensive evidence on the quantity and quality of copying which took place at York pursuant to the Guidelines. It then addressed the question of their fairness by examining them in the light of the factors used by the Supreme Court to assess the fairness of the custom photocopying service operated by the Law Society of Upper Canada in CCH.
[26] For present purposes it is sufficient to say that the Court found that four of the factors, specifically, the character of the dealing, the amount of the dealing, the nature of the work and the effect of the dealing tended to show the unfairness of the Guidelines, while the other two, the purpose of the dealing and the alternatives to the dealing, tended to show their fairness. I will return to these factors (collectively, the CCH factors or the fairness factors) in my analysis of the fairness of York’s Guidelines. In the end, the Court declined to issue the declaration sought by York and dismissed the counterclaim.
IV. York’s Statement of Issues
[27] In its notice of appeal, York submits that the Federal Court made several errors.
[28] York argues that the Court erred in concluding that copying which fell within its Guidelines was not “fair dealing” within the meaning of section 29 of the Act. York also appeals on the basis that an interim tariff is not an approved tariff and is therefore unenforceable by action. In any event, York submits that even if the interim tariff was an approved tariff, it would only apply to those who chose to become licensees. York relies upon the decision in SODRAC as authority for the proposition that Access Copyright can only sue to recover royalties in default of payment from users who choose to become licensees under an approved tariff. In particular, York points to the following passage from paragraph 108 of SODRAC in support of its position, to which I have appended, and underlined, the sentence which follows immediately after the sentences quoted by York:
However, this power [to fix royalties] does not contain within it the power to force these terms on a user who, having reviewed the terms, decided that engaging in licensed copying is not the way to proceed. Of course, should the user then engage in unauthorized copying regardless, it will remain liable for infringement. But it will not be liable as a licensee unless it affirmatively assumes the benefits and burdens of the licence. [my emphasis]
(SODRAC at para. 108)
[29] York also points to section 70.13 of the Act, which applies to Access Copyright, to show that an approved tariff deals with royalties due from licensees.
70.13 (1) Each collective society referred to in section 70.1 may, on or before the March 31 immediately before the date when its last tariff approved pursuant to subsection 70.15(1) expires, file with the Board a proposed tariff, in both official languages, of royalties to be collected by the collective society for issuing licences. [my emphasis]
70.13 (1) Les sociétés de gestion peuvent déposer auprès de la Commission, au plus tard le 31 mars précédant la cessation d’effet d’un tarif homologué au titre du paragraphe 70.15(1), un projet de tarif, dans les deux langues officielles, des redevances à percevoir pour l’octroi de licences. [mon soulignement]
[30] York concludes by pointing out that there are regimes under the Act that do create mandatory liability to pay on the part of the target group such as, for example, subsection 19(2) which provides that users are “liable to pay” equitable remuneration in certain circumstances or paragraph 82(1)(a) which stipulates that the manufacturers or importers of blank tape are “liable … to pay a levy”. These are examples of Parliament’s use of clear language to impose mandatory obligations when it chooses to do so.
[31] York’s position that approved tariffs are only binding on those who choose to be licensed by a collective society is strongly supported by the interveners Universities Canada, the Canadian Association of University Teachers, and the Canadian Federation of Students (collectively Universities Canada). They invoke the Supreme Court’s decision in Vigneux v. Canadian Performing Right Society Ltd., [1943] S.C.R. 348, 1943 CanLII 38 [Vigneux] in support of the position that approved tariffs are not mandatory. Relying on Vigneux, Universities Canada says that the provisions of the Act dealing with tariffs were introduced, not to protect copyright holders but rather to protect the public from the monopoly power of performing rights organizations:
… it is evident that the legislature realized in 1931 that this business in which the dealers [in performing rights] were engaged is a business affected with a public interest; and it was felt to be unfair and unjust that these dealers should possess the power so to control such performing rights as to enable them to exact from people purchasing gramophone records and sheets of music and radio receiving sets such tolls as it might please them to exact.
(Vigneux at 353)
[32] Both York and these interveners cite an article by Professor Ariel Katz, “Spectre: Canadian Copyright and the Mandatory Tariff – Part I”, (2015) 27 IPJ 151, that I found very useful in addressing the question of the enforceability of tariffs.
V. Statement of Issues
[33] I will begin with the issue of the enforceability of the tariff. The question of fair dealing only arises if the tariff applies to York. It is only if a final tariff is “mandatory” that York must rely on its Guidelines to show that compliance with them is fair dealing, a user’s right.
[34] I propose to deal with Access Copyright’s claim by first reviewing some of the concepts which will recur in the discussion. I will then review the statutory provisions in issue in Vigneux and trace their legislative development through to the Copyright Modernization Act. This review will show that the basic structure set out in the 1936 amendments has been preserved throughout this legislative history which supports the conclusion that the legislative intent has also remained the same. Similarly, the use of the expression “licensing schemes” throughout this history also suggests a continuity of purpose. I will deal with various ancillary arguments as they arise in the course of this legislative history.
[35] As noted earlier, I will deal with York’s Guidelines by examining the Federal Court’s reasoning and the parties’ submissions in light of the teachings of the three relevant Supreme Court decisions.
VI. Standard of Review
[36] Given that this is an appeal of a decision of the Federal Court after a trial, the standard of review is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, namely, correctness for questions of law, and palpable and overriding error for questions of fact and questions of mixed fact and law, except where an extricable question of law arises.
VII. Analysis
A. Is a final tariff mandatory?
[37] Since much of the argument was framed in terms of whether Copyright Board approved tariffs are mandatory, it is perhaps useful to begin by clarifying what it means to say that a tariff is mandatory. When Access Copyright says that the tariff in issue here is mandatory, it means that a user becomes liable for payment of the royalties stipulated in the tariff if it engages in any copying which constitutes infringement, i.e., copying which was not authorized by the copyright holder or which does not come within any of the users’ rights set out in the Act, such as fair dealing. A user’s liability to pay royalties depends upon his or her use of works in Access Copyright’s repertoire and not upon any assumption of liability for payment.
[38] There is an important distinction between liability for royalties and liability for damages for infringement. In the absence of a tariff, a user who infringes copyright becomes liable for damages for infringement in an amount equal to damages the owner of the copyright has suffered as a result of the infringement: see Act, s. 35(1). Those damages are assessed by a court. However, in the case of a mandatory tariff, the owner’s remedy is an action to enforce the tariff. In effect, the royalties set out in the tariff become a form of statutory damages. This distinction becomes blurred when Courts use the tariff as a means of calculating damages. One example of this approach among many is Society of Composers, Authors and Music Publishers Canada v. 348803 Alberta Ltd., 79 C.P.R. (3d) 449, 1997 CanLII 5389 (F.C.), where the following appears (at 452):
Where it is customary to licence the use of a work, music in this instance, damages may be measured on the basis of the usual royalty or licence fee. The licence fees for music are calculated using given figures and rates from the Copyright Board Tariffs and various statistics as to the operation of the licensee.
[39] This approach may have contributed over time to the assumption that collective societies can enforce a tariff against infringers, the very question raised by this appeal.
[40] York attempted to avoid infringement by only copying protected materials to the extent provided in its Guidelines. In a relatively small number of cases, some of its copying fell outside its Guidelines. Access Copyright says that, in either case, York is liable for royalties to the same extent as if it had agreed to pay them.
[41] York argues that Access Copyright’s position means that, given the form of the tariff in issue, a single infringing act could subject it to a significant liability for royalties for an entire year. Access Copyright replies that York’s argument is an argument in terrorem and that it would respond reasonably to isolated acts of infringement. Access Copyright undoubtedly has the right to waive its claim for royalties in cases where infringement is inconsequential, but this does not derogate from its argument that tariffs are mandatory.
[42] Access Copyright’s argument that tariffs are mandatory is based upon the text of the material portions of the Act, their context and their purpose.
[43] Beginning with the text, Access Copyright argues that the meaning of the word “tariff” is unequivocal and means “a schedule or system of duties imposed by a government on goods”. This leads it to conclude that a copyright tariff is imposed on users, whether or not the user agrees to be bound or not.
[44] Access Copyright also relies upon the change in the wording of the remedies provision in the portion of the Act dealing with collective administration of copyrights, specifically the removal of the reference to “licences” in the remedies provision of the Act. Access Copyright argues that the absence of the words “in respect of the issue or grant by it of licences” in subsection 68.2(1) means that its ability to collect royalties is no longer tied to the issuance of a licence but arises as soon as there is infringement of a work in its repertoire.
[45] As for context, Access Copyright points to paragraph 70.12(b) and section 70.191 which it says are inconsistent with a “voluntary tariff”. Access Copyright argues that since the tariff is only engaged when users have not entered into an agreement with the collective society under those sections, it would be incongruous to require the consent of the user to make the tariff enforceable.
[46] Finally on the issue of purpose, Access Copyright asks why a collective society would engage in the lengthy, time-consuming tariff process if, at the end of it all, users could simply “opt out” of the tariff. Access Copyright points out that the scheme of the Act provides for the protection of copyright owners’ rights while ensuring, by means of the tariff-setting process, that the fees charged for the use of works in a collective society’s repertoire are fair and reasonable.
[47] In my view these textual arguments are best dealt with in the legislative context in which they arose.
[48] I propose to proceed by first discussing the Vigneux decision in which the Supreme Court dealt with the original legislative response to performing rights societies and their monopoly or their market power with respect to performing rights. I will then trace the historical evolution of that legislative response to that mischief from the 1930’s to 1985. I will then review the 1988, 1997 and 2012 amendments to the Act to see if they have changed the legislative scheme so that it supports Access Copyright’s claim that the tariffs are mandatory. This will involve consideration of changes in the wording of the relevant provisions including subsection 68.2(1), as well as consideration of the meaning of terms used in the Act, notably “licences” and “tariff”. I will then deal with some of the inconsistencies and the incoherence which Access Copyright says would result if tariffs are not mandatory.
[49] Because this analysis will require references to the Act as it read at different points in time, I will indicate the version of the Act to which I am referring by placing the year of the version or the amending act in parentheses. Thus, a reference to the version of the Act found in the Revised Statutes of Canada, 1985 will read “the Act (1985)” while a reference to the Act as it read after the 1936 amendments to the Act, enacted in An Act to amend The Copyright Amendment Act, 1931, S.C. 1936, c. 28, will appear as “the Act (1936)”.
(1) The rights conferred by copyright
[50] In the interval between the Copyright Amendment Act, 1921, S.C. 1921, c. 24, and the 1985 revision of the statute book, the Act has defined the rights conferred by copyright in substantially the same form, that is:
…“copyright” means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform, or in the case of a lecture to deliver, the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right
«droit d'auteur» s'entend du droit exclusif de produire ou de reproduire une œuvre, ou une partie importante de celle-ci, sous une forme matérielle quelconque, d'exécuter ou de représenter ou, s'il s'agit d'une conférence, de débiter, en public, et si l'œuvre n'est pas publiée, de publier l'œuvre ou une partie importante de celle-ci; ce droit s'entend, en outre, du droit exclusif:
(a) to produce, reproduce, perform or publish any translation of the work,
a) de produire, reproduire, représenter ou publier une traduction de l'oeuvre;
…
…
and to authorize any such acts.
Est inclus dans la présente définition le droit exclusif d'autoriser ces actes.
(see Act (1985), s. 3(1))
The list of rights associated with copyright is considerably longer than the portions which I have reproduced above but, since this appeal deals with reproduction rights, I have referred only to those rights.
[51] This is to say that there are two kinds of rights flowing from copyright under the Act: the exclusive right to deal with the work in certain ways, in this case, to reproduce it, and the right to authorize others to exercise those rights. Since copyright is a form of property, copyright owners can assign their copyright to others who can then exercise all the rights of ownership: see Euro-Excellence Inc. v. Kraft Canada Inc., 2007 SCC 37, [2007] 3 S.C.R. 20, at paras. 27-28, 116-117.
[52] The Act describes a copyright owner’s authorization of a third party to exercise one of their exclusive rights as a licensee. For example, subsection 13(4) of the Act (1985) reads as follows:
13 (4) The owner of the copyright in any work may assign the right, either wholly or partially, and either generally or subject to territorial limitations, and either for the whole term of the copyright or for any other part thereof, and may grant any interest in the right by licence, but no assignment or grant is valid unless it is in writing signed by the owner of the right in respect of which the assignment or grant is made, or by his duly authorized agent.
13 (4) Le titulaire du droit d'auteur sur une œuvre peut céder ce droit, en totalité ou en partie, d'une façon générale, ou avec des restrictions territoriales, pour la durée complète ou partielle de la protection; il peut également concéder, par une licence, un intérêt quelconque dans ce droit; mais la cession ou la concession n'est valable que si elle est rédigée par écrit et signée par le titulaire du droit qui en fait l'objet, ou par son agent dûment autorisé.
[53] Monetizing one’s copyright often takes the form of licensing others to exercise one or more aspects of that right. If one sets aside issues of collective societies and tariffs for a moment, it ought not to be contentious to say that a licensing transaction between a copyright owner and a licensee is a consensual arrangement. An individual cannot acquire a licence without the consent of the copyright owner and a copyright owner cannot impose financial or other terms, on a person who has not agreed to become a licensee. This is not to say that a copyright owner has no recourse against a person who infringes their copyright but the remedy is an action for damages for infringement: see Act (2012), ss. 34-38.1.
[54] If an individual copyright owner cannot impose terms on a person who has not agreed to become a licensee, it follows that, at common law, a group of copyright owners or persons who have acquired certain rights from copyright owners are legally in no better position to impose terms on those who have not agreed to become licensees. As we shall see, this is the effect of the Supreme Court’s decisions in Vigneux and SODRAC.
[55] In practical terms, even though copyright owners acting collectively have no greater legal rights than an individual copyright owner, they can exercise market power if they control a sufficient portion of the market for the rights which they control. Market power can also be acquired by a single copyright holder who has acquired, by assignment or otherwise, a large enough repertoire that it has, in effect, cornered the market. This is what happened with performing rights in the early part of the 20th century, giving rise to the legislative response of interest in this appeal.
[56] The question in this appeal is whether the interposition of the Copyright Board between the user and the rights owner changes the relationship between them. This turns on the effect of the Board’s approval of a collective society’s proposed royalties. This is a question with a long history, which is best understood through the laborious process of a step by step historical review.
(2) Legislative History: 1936 to 1985
[57] The state of affairs existing in the late 1920’s and early 1930’s was described by the Supreme Court in Vigneux. In his reasons, Chief Justice Duff described the environment which led to a series of amendments to the Act as it stood in 1921 (at 352-53):
Seven years after the Act of 1921 came into force the legislature realized that in respect of performing rights a radical change in the statute was necessary. Societies, associations and companies had become active in the business of acquiring such rights, and the respondents in this case admittedly have more or less successfully endeavoured to get control of the public performing rights in the vast majority of popular musical and dramatico-musical compositions which are commonly performed in public. The legislature evidently became aware of the necessity of regulating the exercise of the power acquired by such societies (I shall refer to them as dealers in performing rights) to control the public performance of such musical and dramatico-musical works.
[…]
… it is evident that the legislature realized in 1931 that this business in which the dealers were engaged is a business affected with a public interest; and it was felt to be unfair and unjust that these dealers should possess the power so to control such performing rights as to enable them to exact from people purchasing gramophone records and sheets of music and radio receiving sets such tolls as it might please them to exact. It is of the first importance, in my opinion, to take notice of this recognition by the legislature of the fact that these dealers in performing rights, which rights are the creature of statute, are engaged in a trade which is affected with a public interest and may, therefore, conformably to a universally accepted canon, be properly subjected to public regulation.
[58] It can thus be seen that the mischief which Parliament sought to correct was the quasi-monopoly which performing rights societies had achieved by acquiring performing rights from the original owners of the copyright. The scheme which Parliament enacted in the Copyright Amendment Act, 1931, S.C. 1931, c. 8 and An Act to amend The Copyright Amendment Act, 1931 S.C. 1935 c. 8, was consolidated in the Act (1936). The discrete elements of the scheme are summarized below. The references are to the Act (1936).
Mandatory filing of a statement of the works in a society’s repertoire (s. 10(1));
Mandatory filing of a statement of proposed fees, charges or royalties to be charged for issuing licences (s. 10(2));
No action for infringement without the consent of the Minister where the filing requirements have not been complied with (s. 10(3));
Notice of the proposed statement to, and a right to be heard by, the society and the public (s. 10A);
Approval of the statement of fees, charges or royalties, with or without alteration (s. 10B(7));
Amounts in the approved statement are the fees, charges or royalties which the society may lawfully sue for or collect for the grant or issuance of licences for the performance of works in their repertoire (s. 10B(8));
No action for infringement against any person who has tendered or paid the amounts set out in the approved statement (s. 10B(9)).
[59] Because this constellation of features survived successive revisions and amendments, it is useful to briefly review their effects and the expected consequences of their application.
[60] The obligation imposed on performing rights societies to disclose their repertoire could be expected to serve a public notice function so that users might know if they had to deal with a given performing rights society in order to obtain licence to perform a given work. This presumptive purpose would be enforced by the provision which prohibited a performing rights society from suing for infringement of a work which was not included in its statement of its repertoire.
[61] A performing rights society’s obligation to file a statement of its proposed fees, charges or royalties and the publication of those proposed amounts allowed the public and more particularly, those who produced performances of copyrighted works, to know what the society was proposing to charge in the coming year. The right to be heard before the proposed fees were approved gave users some input into the approval process.
[62] Because of their recurrence in subsequent versions of the Act, certain provisions deserve to be reproduced now. First among these is subsection 10(1) of the Act (1936), which identifies those who are subject to these provisions (which I have been referring to as performing rights societies):
10. (1) Each society, association or company which carries on in Canada the business of acquiring copyrights in dramatico-musical or musical works or performing rights therein, and which deals with or in the issue or grant of licences for the performance in Canada of dramatico-musical or musical works in which copyright subsists, shall, from time to time, file with the Minister at the Copyright Office lists of all dramatico-musical and musical works, in current use in respect of which such society, association or company has authority to issue or grant performing licences or to collect fees, charges or royalties for or in respect of the performance of its works in Canada.
[63] This shows Parliament’s intention to regulate the practices of those that (a) engaged in the business of acquiring copyrights in dramatico-musical works or the performing rights in those works and (b) who dealt in the grant or issuance of licences for the performance of those works. It is important to note the emphasis on the “granting or issuance of licences”. This criterion recurs in all subsequent versions of the Act. This supports the dicta in Vigneux to the effect that the amendments were directed to the existing way of doing business with a view to regulating it by countering the effects of market power which performing rights societies had acquired: see Vigneux at 352.
[64] A second provision of the Act (1936) whose modification in subsequent versions of the Act is frequently the subject of comment is subsection 10B(8) which deals with the effect of the Copyright Office’s approval of the performing rights society’s proposed fees, charges or royalties:
10B(8) The statements of fees, charges or royalties so certified as approved by the Copyright Appeal Board shall be the fees, charges or royalties which the society, association or company concerned may respectively lawfully sue for or collect in respect of the issue or grant by it of licences for the performance of all or any of its works in Canada during the ensuing calendar year in respect of which the statements were filed as aforesaid.
[65] This provision was carried forward, almost verbatim, to the 1985 revision of the statute