Copyright Tariffs Are Not Mandatory, Says Supreme Court of Canada

Authors: Kristél Kriel, Adam Lakusta

A recent Supreme Court of Canada (SCC) ruling clarifies copyright enforcement and fair dealing guidelines.

On July 30, 2021, York University won a major copyright dispute at the SCC. York University v Canadian Copyright Licensing Agency (Access Copyright) is the highly anticipated climax and final word in a dispute which began in 2013. View the case brief. 

Some important takeaways from this decision are:

  1. tariffs/royalties agreed by the Copyright Board of Canada (the “Board”) are not mandatory on non-licensees;
  2. unless copyright collectives are assignees or have exclusive licenses from content creators, they cannot sue for copyright infringement; and
  3. educational institutions reproducing copyrighted materials for the purpose of student education may be exempt from copyright infringement under fair dealing if fair dealing guidelines are structured and followed appropriately.

Background on York University’s Use of Access Copyright

York University is the third largest university in Canada and The Canadian Copyright Licensing Agency (Access Copyright) is a copyright collective that licenses and manages the works of authors, creators and publishers. From 1994 to 2010, a license agreement between Access Copyright and York permitted York’s faculty and staff to make copies of works within Access Copyright’s repertoire. Access Copyright filed a proposed tariff with the Board to impose on York from 2011-2013 for the continued use of their content. Since York’s license was due to expire, the Board agreed to the proposed tariff on an interim basis.

York continued to use works within Access Copyright’s repertoire despite not agreeing to a new license, and Access Copyright looked to the courts to enforce its interim tariff. The questions for the Court were:

  • whether Access Copyright’s approved interim tariff could be enforced against York, and
  • a counterclaim by York asking the Court to declare that copies made under York’s fair dealing guidelines constitute “fair dealing”.

The Federal Court ruled in favour of Access Copyright on both questions and held that York was required to pay the interim tariff and that York’s fair use guidelines were not fair. York appealed the decision, and the Federal Court of Appeal determined that York did not have to pay the interim tariff, but agreed with the Trial Judge that York’s fair use guidelines were not fair.

Both parties appealed the Federal Court of Appeal decision to the SCC.

At the Supreme Court of Canada

Writing for a unanimous Court, Justice Abella dismissed both appeals. The Court found that the interim tariff approved by the Board was not mandatory and since York had not agreed to renew the license, it was not required to pay for it. After an extensive historical analysis, the Court concluded that the collective administration provisions in the Copyright Act and the Board were created with the primary purpose of protecting the users of copyrighted materials. The Court held that the Board-approved tariffs/royalties proposed by collectives cannot be mandatory on non-licensees.

Fair Dealing

While dismissing York’s appeal, the SCC clarified and reaffirmed its approach to fair dealing.

The Court reiterated the six non-exhaustive factors to be considered under the doctrine of fair dealing:

  1. the purpose of the dealing;
  2. the character of the dealing (which concerns the number of copies made or distributed and whether the copies are retained or destroyed after use);
  3. the amount of the dealing (which concerns the proportion of the work dealt with and the importance of that part);
  4. alternatives to the dealing;
  5. the nature of the work; and
  6. the effect of the dealing on the work.

Although the Court declined to rule on the fair dealing issue, the Court  emphasized the importance of taking the students’ perspective into account. That is, in assessing an educational institution’s fair dealing practices, the key question should be whether those practices actualize the students’ right to receive course material for educational purposes in a fair manner, consistent with the underlying balance between users’ rights and creators’ rights in the Copyright Act.

Practical Implications

Copyright users will welcome this decision while copyright collectives may find that it complicates copyright enforcement. Since board-approved tariffs are not mandatory for non-licensees, copyright collectives might need to rethink their strategy. Going forward, copyright collectives may require creators to assign or provide exclusive licenses to their works or, it may lead to creators dealing with users and pursuing infringement directly.

The SCC’s decision also offered guidance on how courts could analyze fair dealing in the context of educational institutions. The SCC affirmed that the six factors listed above would be considered in a claim of fair dealing, as well as that the perspective of the students would be a predominant consideration. Although “all relevant facts must be taken into account in order to determine the fairness of the dealing,” the decision confirms that fair dealing guidelines and practices must be structured and followed appropriately.

While the SCC ultimately declined to declare that York’s fair dealing policy was fair, it did provide some hints as to how to frame fair dealing policies. Educational institutions developing fair dealing policies should draft such policies around the students and student educational purposes and ensure that such policies are appropriately implemented..

The MLT Aikins science and technology team provides copyright services relating to copyright infringement opinions, portfolio management and copyright registrations, and development, licensing and assignment agreements. Please contact a member of our team for more information.

Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.