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I recently posted on how Access Copyright (?AC?) is trying to eliminate all but two of the 101 timely objectors to its proposed tariff hearing that would seek to increase its per student rate by about 1,300% for university and college students. AC is also seeking to charge for linking to and displaying digital content from the internet, which is interesting since no permission is required to do either.

Moreover, it is seeking to collect for repertoire in which it often will have insufficient rights or no rights whatsoever and for repertoire in which it has no digital rights in any event. Many if not most creator and publisher affiliates have refrained from giving AC any digital rights. There may be an even more fundamental and perhaps fatal problem, as is discussed below.

Now, AC is trying to get the Copyright Board to impose an ?Interim Decision" or tariff. See this letter dated October 7, 2010 to the Board from Barry Sookman.

This is one of the most unusual requests that has ever been filed at the Copyright Board. It is particularly problematic since AC does not already have a certified tariff in place and in light of the Board?s own precedents.

Only a handful of institutions, believed to be smaller ones, have signed an ?Interim Agreement? that would extend beyond January 1, 2011. The reason that so few have signed may be that paragraph 2 of the agreement would bind the institution to whatever rate the Board might decide years from now, which will almost certainly be retroactive, given the way the Board works. That is quite the blank cheque. The agreement as worded would seem to override any right to pursue judicial review and a possible Supreme Court of Canada appeal.

AC?s letter to the Board is fraught with irony. It claims it will lose about 50% of its licensing revenues if the Board doesn?t set an ?interim decision?. That $16 million a year would pay the salaries of about 160 professors - which isn?t such a bad thing.

And AC complains that it will have to cut its operating expenses by as much as 50%. Why the would be such be a bad thing is not obvious to all concerned - especially since AC has such a very high administrative expense ratio compared to most other collectives - almost 25% and that?s not counting ?expenses for ?Copyright Board application and development of future projects? (which likely means expenses for outside lawyers and consultants).

Of course, the fact is that AC has itself chosen to jettison its existing rich agreements in place for several years in favour of the extremely controversial and arguably very overreaching $45 per year tariff on linking, displaying, etc.

Nobody forced AC into this corner.

It would be very unusual if not unprecedented for the Board to issue an interim decision or tariff in this situation, especially since there is no tariff in place to extend on an interim basis. The current agreements are arguably already much too expensive because they do not reflect the 2004 CCH v. LSUC decision, which arguably should have resulted in a significant drop in the rates when these licenses were renewed after the decision came out.

Moreover, even if AC?s cash flow is reduced due to its own decisions and strategy, it still will have tens of millions of cash flow left to fund this and other tariff applications.

Setting an interim tariff would make the expiring agreement, which at least was ?negotiated? and voluntary, into a binding one with the force of a legal tariff that will apply to any institution that falls within its wording and engages in any of the activities that it covers. That?s a pretty drastic step to be done an interim basis by means of letter without the holding of hearing.

AC?s offer to include free digital access during the ?gap period? is not of any great consequence, since it AC offering to give away temporarily for free something that it arguably doesn?t have anyway - namely non-existent digital rights in works that aren?t in its repertoire.

In any case, post secondary institutions are now finally beginning to question whether they need AC at all and how much they need to worry about the supposed risk of going without an AC license.

Here are some aspects of AC that educational institutions should know about:

1. It has very limited repertoire compared to the overall repertoire used by post secondary institutions in Canada, which includes countless books and journals from around the world.

2. It has very limited rights in turn in the repertoire that it has.

3. AC?s repertoire problem has never been adequately put to the test in court or at the Copyright Board. For whatever reasons, CMEC did not address in the K-12 Copyright Hearing. The Board glossed over it in the K-12 decision. AC claimed it had 99% of the necessary repertoire, but provided no evidence. The Board was, inexplicably, not troubled by the absence of evidence and CMEC did nothing about this in its judicial review application. Even if the repertoire in the K-12 context is relatively limited, since children generally don?t read books or journals published by Oxford or Harvard, that is clearly not the case in higher education - where access to virtually the whole world?s repertoire is necessary and where much if not most use will be fair dealing.

4. Many authors and publishers have not given AC any ?digital rights?, which is what the new tariff is mostly based upon.

5. AC has never won a significant copyright infringement test case. It was involved in the R. v. Laurier Office Mart and CCH v. LSUC cases, both of which worked out very badly for it. Its only litigation successes seem to have been against little off campus copy shops involving no issues and no jurisprudence of any significance for post secondary institutions. Some of these little copy shops may even have had valid defences, but wouldn?t have had the resources to fight back - as the Law Society or Business Depot (see below) clearly did.

6. Above all, it is very arguable that AC itself lacks the basis to sue anybody. This is why. The most important hurdle AC may face in any adequately defended litigation against a university or college is that it is highly questionable whether AC itself even has any right or standing to sue anyone for copyright infringement based upon the limited rights it has in its limited repertoire. Its recent lawsuit against Business Deport that was launched with much fanfare three years ago was quietly dismissed earlier this year on consent without costs. An examination of the publicly filed pleadings in that case (especially the statement of defence and amended statement of defence filed by Bob MacFarlane of Bereskin and Parr) indicates that Business Deport challenged AC?s very standing to sue on its own because it allegedly lacks sufficient rights as required by the Copyright Act for technical reasons that only a copyright lawyer could love. If that is right - and in my view it is - then there can be no litigation without the actual copyright owner - sometimes the publisher and sometimes the author - becoming a plaintiff. Three publishers were eventually added in this litigation in December of 2009. The amended statement of defence was filed in January of 2010. The case settled shortly thereafter.

Thus, even though AC by itself may have standing at the Copyright Board because of the extraordinary rights provided to collectives by Canadian legislation, it seems very arguable that does not have sufficient standing on its own to sue anyone in the Courts for infringement.

Publishers may well be very reluctant to sue universities and colleges. It certainly didn?t work out well for them when they sued the Law Society. As the music industry has learned, suing one?s customers is not a good business model.

AC has given up on the one aspect of its business model that was attractive to post secondary institutions - namely its indemnity scheme. I have argued in a published paper from 1999 that this basic aspect of its scheme made AC into an insurance company, which is interesting because AC is not licensed to be an insurance company, as required by law. At least this got around its lack of repertoire problem and was a comfort to the ?licensees?, provided that the universities and colleges did not ask too many questions. Perhaps AC has finally taken my 1999 article to heart.

There are potentially other even more interesting arguments and strategies - but I?m not going to go into them at this time on an open blog.

If, mindful of all the above, AC were to sue a higher education institution in a circumstance that arguably involves fair dealing, there is a very good chance that the institution would win if vigorously defended. And such a lawsuit could be defended, including appeals, for a fraction of the amount that will be required to defend the universities at the Copyright Board, which will likely be millions for legal fees , survey and experts? costs - all before the investable judicial review that will follow.

If a smaller institution were to be sued in such a test case, it would make sense for others to chip in for its defence fund - and the contributions would be far smaller than what will be needed at the Copyright Board.

If colleges and universities can wean themselves away from paper course packs, which is usually their most vulnerable area, there would arguably be no reason to have an AC license. With a carefully considered e-reserve policy and the use of links to non-infringing material, who needs course packs?

So - back to Barry?s letter.

Setting an interim tariff in this situation is not something that can or should or will be done lightly by the Board, if at all. AC itself has made its previous agreements expire. These agreements are of very questionable value anymore because they are entirely predicated on photocopying, which is increasingly irrelevant in universities and colleges. And as indicated above, these agreements are overpriced because they totally fail to reflect CCH v. LSUC.

AC?s panic about its cash flow is of not a good reason for Canada?s educational system to prop up an obsolete and highly flawed business model - which has no counterpart in that other country where our best teachers and students are often now going - namely the USA.

Any objector that does not want the Copyright Board to approve this interim tariff and turn what was a voluntary agreement that is now obsolete into a mandatory one should write to the Board and so indicate. The Board will likely hold an interim hearing on this issue, as well as AC?s attempt to get rid of the 99 objectors it doesn?t want to deal with. This could come up quite soon, since AC has set the stage for its lights to dim on January 1, 2011.

The AUCC, although it filed a noticeably less vigorous objection to the proposed $45 per student tariff than other objectors, has now advised its members that they "should not feel any pressure to sign Access Copyright?s proposed interim agreement". AUCC has also told its members that it will "be vigorously opposing" AC's request for an interim decision.

So - this will be interesting. AC may have finally overplayed its hand, which may turn out to be much weaker than many had thought.

HK

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