ARCHIVED — Copyright and the Educational Use of Internet Content, Working Group’s Report

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Annex E

Rights Holders' Initial Proposal

COLLECTIVE LICENSING: LIABILITY LIMITS FOR COLLECTIVES AND USERS

Collective licences provide users with easy access to a vast repertoire of works from around the world and rightsholders with efficient management for many uses of their works – replacing, for their mutual benefit, numerous uneconomic, low-value transactions between individual rightsholders and users. Although Canada's Copyright Act provides for the establishment of collective societies, it does not provide adequate mechanisms to minimize the liability of collective societies and users with respect to any copyright infringement occurring because a collective licence may appear to cover a work which is not actually in the domestic or foreign repertoire of the collective society. Such legislative mechanisms are needed to encourage collective licensing, particularly with respect to licensing of works in digital form, and to make more works legally available. More effective and efficient collective licensing, not further exceptions to the exclusive rights of authors, is the key to efficient and equitable access to copyright works.

I. INTRODUCTION

No matter how successful a collective society may be in representing rightsholders and providing users with access to a repertoire covering a very large number of works both domestic and foreign, there will always be works which are not covered by the licensing scheme operated by the collective society. This is often due to the fact that the rightsholder is unaware of the licensing scheme and for this reason has not affiliated with the collective society. These situations present risks to collective societies and to their licensed users that there will be infringing copies made for which the collective society and its licensees may be held liable.⁷ We and our users need legislative measures to address these risks.

Who are we?

Access Copyright, The Canadian Copyright Licensing Agency, is a collective society under section 70.1 of the Copyright Act – the general regime which allows collectives to enter into agreements with users or to file tariffs with the Copyright Board. The Société québécoise de gestion collective des droits de reproduction ("COPIBEC") is a similar organization serving rights holders in Québéc. Our joint success in collective licensing is well illustrated by the fact that, to date, neither Access Copyright nor COPIBEC has chosen to file a tariff with the Copyright Board and the Copyright Board has not been called upon to resolve a dispute when negotiations with a potential licensee have broken down. Together Access Copyright and COPIBEC (the "Collectives") represent more than fifteen thousand creators and more than one thousand publishers with respect to reprographic and digital rights. On behalf of these rightsholders we license educational institutions, libraries, copyshops, federal, provincial and municipal governments and, increasingly, businesses across Canada.

Blanket licensing

The Collectives grant blanket or comprehensive licences to make or authorize the making of reprographic copies of works in their repertoires and offer an indemnity to licensees with respect to works which are copied but happen to be outside the repertoire. They also offer transactional licences for named works. Each licence has a list of exclusions specifying particular works and categories of works that are not covered by the licence. Licensees have been vociferous in their unwillingness to check the contents of the Collectives' repertoires. Access Copyright has only recently become able to provide a full listing of its domestic repertoire, but it is likely that users will remain unwilling to check the entire repertoire on a work-by-work basis to ensure the inclusion of what they wish to copy. The Collectives' repertoires, together with the repertoires of the foreign collectives with which they have reciprocal agreements, contain several million works and it is in any case impossible for the Collectives to provide a complete listing of the works in their international repertoires. This situation exposes both the Collectives and their licensees to the risk of infringing copyright and hence the need for mechanisms that will minimize such risks.

Access Copyright wishes to reduce those risks through amendments to the Copyright Act. Unless we make substantial changes to the manner in which most of our licences are now granted, these risks will become more significant as more licences are granted, particularly licences to commercial businesses and digital licences issued in response to demand from educational users.

Reducing liability for collectives and licensees

To reduce risk and to encourage collective licensing, particularly for digital uses of works, it is beneficial to both the licensees of collective societies and the collective societies themselves for there to be legislative provisions which protect them from infringement actions when they are acting responsibly. Low-risk collective licensing is also, in most instances, beneficial to those rightsholders not represented by the collective societies, sometimes referred to as "outsiders", as they are apt to be located and paid by a collective society.

There are a number of legal techniques or mechanisms by which this protection can be achieved, thus eliminating or minimizing liability for infringement under the Copyright Act. These include the following:

1. Compulsory licences
2. Mandatory collective management
3. Implied licence
4. Indemnification of licensees
5. Limited damages
6. Restricted statutory damages
7. Restricted liability of equipment provider
8. Extended collective licences
9. Removal of criminal liability

In contrast to the above-listed mechanisms to reduce liability for both collective societies and their user licensees, there have been proposals from users for further amendments to the Copyright Act that would exempt users from infringement of copyright, taking from rightsholders their right to authorize use of their works and revenues that they legitimately expect from their works. Access Copyright strongly opposes such exemptions.

Increase access, not exceptions

Digital technology and the Internet have vastly increased the potential for the dissemination of copyright material. This potentially benefits both rightsholders and users. However this giant leap forward in communications has been accompanied by new demands from users for exceptions – in other words, for cost-free access, not just access. The educational sector has put forward an "educational amendment for the use of the Internet." In their document entitled "The Internet, Copyright, and the Educational Needs of Students and Teachers" on which discussion has been invited by the Council of Ministers of Education, Canada (CMEC), they state:

Although the educators suggest that their proposed amendment should be subject to conditions that would restrict a new exemption to materials "freely available" on the Internet, in fact this exemption from copyright would be extremely broad. It would have an enormous impact both on what materials educators would choose to use in working with their students and on the extent to which rightsholders would try to protect their material from unauthorized access. The proposed amendment would be completely unmanageable. In practice, this amendment would require the user to make two very difficult, if not impossible, determinations – that the work was put on the Internet legally, i.e. with the authorization of the copyright owner, and that the work was meant to be "freely available." It is important to note that from a rightsholder perspective making a work "freely available" does not mean making the work "available for free." In the Internet environment, the Copyright Act must continue to support the fundamental principle that the rightsholder is entitled to be asked by users for permission to use their works.

The proposed exemption would drastically reduce copyright protection for rightsholders by restricting protection to what they are actually able to protect by use of technological measures such as passwords and encryption. Effectively, this would impose a positive obligation on rightsholders to use technological measures to guard their works, lest they be "freely available." For many rightsholders the cost of doing so would be prohibitive. An even greater problem exists in that a great deal of material that may seem to be "freely available" has been made available by persons other than the rightsholder entitled to do so. Access Copyright has evidence of the unauthorized wholesale transfer of whole books from one site to another on the Internet.

The United States Copyright Act was amended in November 2002 by passage of the Technology, Education and Copyright Harmonization Act (TEACH Act). The bill, which reflects a hammered-out consensus between rightsholders and educators, gives educational institutions the right to use, without permission from the copyright owner, portions of copyright works on-line to facilitate distance education, but only if "instructor-mediated" and subject to rigorous requirements including time and content restrictions. Displays of copyright works are restricted to an amount comparable to that typically displayed in a live classroom. The numerous, diverse preconditions and other requirements that fall on institutional policy makers and information technology officials as well as on instructors mean some institutions may lack the administrative resources to comply. The Collectives, particularly if supported by revised legislation, can provide access to materials for distance learning through licensing and without bureaucratic obstacles. Educators in Canada will find it much simpler to secure permission from collective societies for material they wish to use in on-line courses than for their American colleagues to negotiate the snakes and ladders of their new legislation.

Over 70% of the royalties now collected by the Collectives for rightsholders come from the educational sector. Exemptions such as the one put forward by CMEC and other exemptions proposed by other users of copyright, if incorporated into Canadian copyright legislation, would profoundly affect how and what materials are used both on and off the Internet and consequently rightsholders' revenues and potential revenues, as well as raise the cost of licensed uses provided by the Collectives. It is important to understand that this is a result of the fact that when rightsholders make works "freely available" they do not necessarily intend to make them "available for free." Exceptions – or amendments – that turn "freely available" content into "available for free" content have an important cost attached to them. In the end, such costs would be borne by those that can least afford it, Canada's creators.

Making works more accessible, including through use of the Internet, is a goal that rightsholders share with users, but rightsholders want to be able to set the conditions and monitor this access. Both rightsholders and users also share the goal of reducing as much as possible the instances of infringement, although their solutions are diametrically opposed. The Government of Canada has launched a revision process that will deal with this issue. It is imperative for the Collectives and other collective societies to convince Government as well as users that they can license materials responsibly and cost-effectively without exposing their licensees and themselves to unnecessary risks of copyright infringement.

This is the context in which we now look at various mechanisms that could help to achieve this result. All of these mechanisms will require legislation amending the Copyright Act.

II. LEGISLATIVE SUPPORT MEASURES REDUCING LIABILITY

1. Compulsory licences

Often referred to more benignly (mainly by our international colleagues) as statutory or legal licenses. Rightsholders cannot opt out of the scheme provided by legislation. They cannot sue for infringement (within the scope of the exemption provided by the legislation) and to receive remuneration they must participate.

The Canadian Copyright Act currently provides compulsory licences for retransmission of distant telecommunication signals by cable companies and other retransmitters and for off-air taping by educational institutions. Collective societies apply to the Copyright Board to have a tariff of royalties approved. Royalties are then fixed by the Copyright Board (as well as related terms and conditions) and, where appropriate, allocated between collective societies representing rightsholders. An "outsider" or "orphan" copyright owner, that is, a copyright owner who does not authorize a collective society to collect for it, is nevertheless entitled to receive, from the collective society designated by the Board, royalties on the same basis as rightsholders who are represented by a collective society.⁸

Australia provides educational and certain impaired users with exemptions and a scheme for the remuneration of rightsholders for reproduction pursuant to the particular exemption. The body administering the educational institution gives notice to the relevant collective society. If the collective society and the administrative body are unable to agree on suitable remuneration, remuneration is fixed by the Copyright Tribunal.⁹ Australia's Digital Agenda Act 2000 extended this system to making digital copies of print works and reproducing works in digital form.

Compulsory licensing deprives rightsholders of their exclusive right and replaces it with a right to claim remuneration. This is a mechanism that could be applied to any specified right within any sector although only to the extent acceptable under the international copyright conventions.

2. Mandatory collective management

Mandatory collective management is much the same as compulsory licensing in effect except that the term is more often associated with unlicensed activities for which the rightsholders are compensated. Like compulsory licensing, this mechanism provides a high degree of safety for collective societies and users. Rightsholders cannot opt out or sue for infringement (within the scope of the rights a collective society is entitled to administer). To receive remuneration, they must affiliate with a collective society.

An example of mandatory collective management in the current Copyright Act is the treatment of "Private Copying", where a levy on blank audio recording media (tapes, disks etc.) is paid by manufacturers and importers to a collecting body which then distributes the remuneration to collective societies representing eligible authors, performers and makers (with respect to musical works only and sound recordings incorporating musical works).¹⁰ Tariffs are filed with and approved by the Copyright Board. Collective societies distribute revenues to those they represent but "outsiders" or "orphans" may claim payment from a collective society designated by the Board.¹¹

Copyright legislation in Germany provides a number of exemptions in certain sectors that permit free use of works for certain strictly private and internal uses, but then provides remuneration for the rightsholders by way of a legal presumption that a collecting society represents all owners of rights for uses for which they can only collect remuneration through a collecting society. The legislation also establishes the presumption that a collective society represents all owners of rights when enforcing its claim to remuneration. Under such a scheme, applicable to institutions including schools, universities, public libraries and copyshops (but not generally to other private industry or to governments), rightsholders are compensated for permitted reprography through levies on photocopiers and comparable devices including scanners and telefax devices.¹²

Although mandatory collective management has much in common in philosophy with a compulsory licence system, at least insofar as this currently operates in Canada it is probably more appropriate to refer to new prerogatives given to the authors, performers and makers of sound recordings of musical works than to suggest that they have been deprived of an exclusive right. Mandatory collective management may seem more suited to particular sectors, but could in theory be applied in any sector.

3. Implied licence

Another mechanism to back up the acquisition of rights by a collective society is an implied or "apparent licence", based on the presumption that a licence from a collective society covers all that it purports to license. It is therefore the licensee who must establish that a work is not covered by the licence in order to avoid payment.

In 1995 France amended its copyright to establish rules concerning reprography (defined broadly enough to cover print-outs from electronic databases). Although reprography is in principle an exclusive right entirely within the control of the copyright owner, the French legislation implies the conveyance of the reprography right in published works to a collecting society.¹³ This empowers the collective society to grant licences and assures users that they can obtain licences from the collective society, as well as giving the collective society standing to sue infringing users.¹⁴

If more than one collective society is entitled to assert the claim to remuneration, then there would need to be co-operation between the collective societies.¹⁵ It should be noted in this regard that the Collectives have a history of joint licensing and co-operation in enforcement.

This mechanism could be applied to any specified right within any sector and, unless rightsholders were able to opt out and handle their own rights otherwise, could be viewed as a compulsory licence.

4. Indemnity for licensed users

Legislators in some other countries have provided that where a licence from a collective society does not specify all of the works that it covers, the licensor must indemnify its licensees with respect to any copyright infringement arising for this reason, or the licence must include a provision to this effect. It is presumed that a licensor is acting within the scope of its licence where it is not apparent whether or not a work is covered by the licence. Although nothing in Canadian copyright legislation requires them to do so, the Collectives in fact offer indemnities to their licensees voluntarily as a practical matter to deal with possible losses due to infringement in these circumstances. Indemnification cannot of course relieve users of any criminal liability.

In the United Kingdom the Copyright Licensing Agency Limited (CLA) gives its licensees an indemnity in addition to the indemnity implied into the licensing scheme by U.K. legislation requiring a collective society to indemnify its licensees who infringe by making or authorizing the making of reprographic copies within the apparent scope of their licence.¹⁶ The CLA offered an indemnity to its licensees before this was enacted and given the force of law. If a provision of this nature were incorporated into Canadian legislation, as was done in the U.K., it would reassure both licensees and collective societies concerning the legitimacy of this combination of licensing and indemnification and make it easier to sell licences.¹⁷

5. Limited damages

A restricted version of this technique to limit potential damages currently exists in the Copyright Act, only applicable to reprographic copying by licensed non-profit educational institutions, libraries, archives and museums.¹⁸ This provision limits the civil liability of these non-profit institutions but not criminal liability nor the liability of the licensing collectives societies themselves. A user sued for infringement is liable for damages no greater than what the collective society would have received if the infringed work had been in its repertoire. The aggrieved rightsholder is left free to obtain an injunction against further copying as well as damages from the collective society that authorized the copying, but can in any case ask to have its works excluded from the licensing schemes administered by the Collectives. The Collectives provide our licensees regularly with an "exclusions list" – listing categories of works, territories not covered and named works that are specifically excluded from their licences – and are therefore not vulnerable to claims on account of these listed works.

This limited damages provision was introduced into the Copyright Act in 1997 mainly as a result of lobbying by user institutions. The Collectives have always proceeded on the assumption that the damages attributable to reprographic copying would be modest. The existing provision is applicable to reprographic reproduction only and may not even cover digital copies which are made as an interim stage in providing paper copies. This mechanism could be broadened, for example, to cover digital copying, to protect users in additional sectors, and to protect collective societies, not just users licensed by collective societies.

An alternative to this limitation on damages would be to allow a copyright owner who has not put himself on the exclusions list to claim from the collective society the amount that would have been payable to him by the collective society if he had authorized it to act on his behalf. Such a provision would be likely to have similar effect, since the main effect of the limited damages provision is no doubt to discourage litigation.

6. Restricted statutory damages

Statutory damages were introduced into the Copyright Act in 1997. There are exemptions from the application of statutory damages for educational institutions, libraries, archives and museums that are sued in certain circumstances.¹⁹ Statutory damages may not be awarded if the institution has a licence for reprographic copying for the category of copying involved. In enacting this and the limited damages provision (discussed under heading Limited damages above), legislators were recognizing a degree of risk in existing licensing practices for reprographic reproduction and encouraging educational institutions, archives and museums to participate. It seems curious, however, that these two protection mechanisms only cover the licensed institutions and not the collective society that licenses them. While its licensee is vulnerable only to limited damages and immune to statutory damages, the minimum award applicable to a collective society is $500 for each work infringed and even the possible reduction to $200 minimum per infringement is unlikely applicable. We note too that the provision specifically applicable to collective societies, which places a minimum and maximum on the level of statutory damages, is not applicable to collective societies like the Collectives.²⁰

This mechanism exempting some licensed users from statutory damages should be extended to reflect any expansion of the limited damages provision.

7. Restricted liability of licensed user (equipment provider)

The Copyright Act has a general provision that excuses an "innocent infringer" from liability for damages and generally restricts the copyright owner's remedies to an injunction.²¹ This provision is unlikely to have any application to either collective societies or their licensees where licensor and licensee are fully aware that there may be gaps of varying size in the collective society's repertoire. However, section 30.3 of the Copyright Act does provide some protection for educational institutions, libraries, archives and museums that are licensed by collective societies (or subject to a tariff set by the Copyright Board) by removing their liability for infringement because of reprographic copying by persons such as students and staff on copying machines provided by the institution, if a copyright warning is posted. The Collectives recognize that such institutions are unwilling or unable to monitor compliance and, where appropriate, provide in their licences that a breach by an individual does not in itself constitute a breach of licence that could allow the collective society to take steps to terminate the institution's licence.

Attaching reduced liability for infringement to having a licence from a collective society is a technique that could be applied to other sectors and to digital reproduction as well as reprographic reproduction.

8. Extended collective licences

The five Nordic countries have legislation providing that once a collective society represents a large number of the rightsholders in a particular sector its authority to license is extended to permit it to license the works of all of the rightsholders in that sector, including non-member nationals and foreign rightsholders. The legislation further requires that members and non-members be treated alike when the collective society distributes funds.

A June 1991 publication written by Jukka Liedes, adviser to the Finnish Government, and Hannu Wager, Government Secretary, Ministry of Education, Finland, lists the elements of an extended licence as follows:

1. The organization and the user conclude an agreement on the basis of free negotiations.
2. The organization has to be nationally representative in its field.
3. The agreement is by law made binding on non-represented right owners.
4. The user may legally use all materials, without needing to meet individual claims by outsiders and criminal sanctions.
5. Non-represented right owners have a right to individual remuneration.
6. Non-represented right holders have in most cases a right to prohibit the use of their works.²²

This mechanism would provide ideal support for licensing by the Collectives. The Gervais Report makes the following recommendation:²³

Gervais suggests that this mechanism is particularly appropriate for collective societies established pursuant to Section 70.1 of the Copyright Act.

The Government has noted in its Section 92 Review that extended collective licensing is one of the possible legislative solutions:

9. Removal of criminal liability

Criminal prosecution is incompatible with mechanisms to reduce or eliminate the liability of collective societies and users. Participants functioning within the parameters of a responsible licensing scheme – both licensees and the licensing collective society – should be immune to criminal prosecution.

The choices for legislators?

It is Access Copyright's position that the Copyright Act should make available to collective societies a variety of mechanisms on which they may rely depending on the particulars of a particular licence or licensing scheme. The preference for any collective society will of course depend on a number of factors, including what it is licensing, its manner of operation and the views of the rightsholders it represents.

Compulsory licences, mandatory collective management and implied licences without rightsholders having the ability to opt out provide a very high degree of safety for both collective societies and users. Nevertheless Access Copyright opposes the implementation of licensing schemes or mechanisms that are or approximate compulsory licences since they deprive rightsholders of their exclusive right.

A 1995 position paper of the International Federation of Reproduction Rights Organizations (IFRRO), to which the Collectives belong, stated:

Rightsholders affiliate with the Collectives on a voluntary basis. Unaffiliated rightsholders may request that they be specifically excluded from all licences offered by Access Copyright or COPIBEC or from the licences that they offer jointly. Affiliated rightsholders are also free to request that they be excluded from particular licences. As well as offering transactional licences on a work-by-work basis for their domestic and foreign affiliates, the Collectives negotiate blanket or comprehensive licences with users. According to the last Annual Report of the Copyright Board, 125 such licences were filed with it in the year 2001-2002 by Access Copyright and COPIBEC.

Blanket licences incorporating an indemnity have so far been a partial but reasonable solution to the unwillingness of licensees to check the entire contents of a collective society's repertoire and the impracticality of insisting that they should do so. These licences cover all the works in a collective society's repertoire, specifically exclude particular works and categories not covered by the licence, and provide an indemnity with respect to the copying of other works outside the repertoire. As the Collectives work to make exclusions list more complete, we will decrease our own risks somewhat, but an ever-lengthening list of domestic and foreign works will increasingly inconvenience our licensees, who will in any case become more and more disinclined to consult it. The likelihood of some copyright infringement by licensees will never disappear. Sometimes the collective society will be obligated to indemnify the licensee, but where the infringed work is on an exclusions list it will have no such obligation.

The alternative – to prohibit strictly the copying of anything not actually listed in the collective society's repertoire – is even more impractical, as it would be impossible for users to consult a domestic and international repertoire comprising several million titles before every single copying transaction and would likely result in less compliance with the licence, more copyright infringement and less dissemination of rightsholders' works. Repertoires and exclusions will inevitably grow, and neither restricting copying to a listed repertoire nor allowing copying subject to strict compliance with an exclusions list will continue to serve adequately the rightsholders or the public interest. Both types of blanket licence expose collective societies and licensees to some risk of infringing copyright.

In the world of print publications and reprography, the potential damages from infringement would generally seem to be an acceptable risk of doing business. As the Collectives move into licensing schemes involving digital copies, the risks incurred are much greater. These risks militate against blanket licensing, even where it is clearly not practical to license users on a transactional or work-by-work basis, for example in the educational sector where teachers and other educators seek to be able to make and communicate digital copies of works without being at risk for copyright infringement. Educators consequently are lobbying the Government to provide them with further exemptions from copyright infringement. Access Copyright wishes to be able to offer licences at equitable prices for users but subject to conditions that would protect and benefit the rightsholders we represent.

The Collectives will not accomplish this effectively, especially in a digital environment, without additional legislative mechanisms that will reduce risks – for collectives and for licensees – to an acceptable level.

What does Access Copyright want?

We are interested in six of the mechanisms that have been reviewed in this paper. Some of these are alternatives and some would work together or could be applicable to different types of copying.

1. Extended Collective Licensing. The Collectives are particularly interested in the possibility of the extended collective licence which is used in the Nordic countries. This solution, as it would be practised by the Collectives, would be used in conjunction with the Collectives' current practice of an exclusions list, so as not to encroach on the rights of any rightsholder who might choose not to participate in collective licensing altogether or in a particular licence. The Collectives have found the discussion of this mechanism in the Gervais Report to be of great interest, noting particularly two benefits identified by Gervais in his summary:
   
   

   Accelerate the rights acquisition process in newer areas of rights management, such as electronic (digital) uses of protected material while respecting rightsholders who do not wish to participate in the system; and

   Be of great benefit to users, because they get the assurance that the repertory of works they are paying for is indeed complete.²⁶

   We look forward to the further research on this that we understand has been commissioned by the Government and believe that an extended licensing scheme will best serve rightsholders, the Collectives and our licensees.

2. Limited damages. Extending the applicability of the current provision limiting damages for licensed institutions beyond non-profit education institutions, archives and museums to other types of users including businesses would facilitate licensing by the Collectives, as would its extension to digital copying. Collective societies as well as users should benefit from a limitation on damages.
3. Restricted statutory damages. The exemption from statutory damages should be extended beyond those non-profit educational institutions, archives and museums now entitled to benefit from the limited damages provision to all users who may become entitled to benefit from a limitation on damages and also to the collective societies that license them.
4. Restricted liability of licensed user (equipment and service providers). Access Copyright acknowledges the principle underlying the mechanism which already removes the liability of certain institutions with respect to infringing copying on the photocopiers they provide to users such as students and staff, but only if those institutions are licensed by collective societies or subject to a tariff set by the Copyright Board for copying of works of a similar nature. While this mechanism could easily be extended into other non-profit sectors including governments, and cautiously into commercial sectors subject to additional conditions, more significantly we propose that the Government explore the possible extension of this concept to Internet Service Providers (ISPs).
   
   A similar mechanism could accord concessions of a comparable nature to ISPs. Some version of a notice and take-down provision, intended to provide a "safe harbour" for those ISPs who are merely conduits for the communication of copyright material without normally being aware of its contents, could protect ISPs, but it is our view that this should only benefit those ISPs that are licensed by collective societies for those other parts of their operations where the ISPs themselves use copyright material. A system which largely absolves ISPs from liability for infringement will reduce the incentive of an ISP to negotiate a licence with a collective society for the ISP's own digital uses of copyright works in the repertoire of that collective society. The Government should consequently give very careful consideration to conditions under which a notice and take-down scheme might free an ISP from liability and damages, especially because providers of infringing content are frequently unreachable, or reachable only at prohibitive cost, by rightsholders and their collective societies.
5. Indemnity for licensed users. The indemnification of licensees will continue to play an important role in licensing by the Collectives. There would be increased credibility for blanket licensing if the Copyright Act were to acknowledge this as a legitimate mechanism.
6. Removal of criminal liability. Responsible participants in a licensing scheme should be immune to criminal liability.

We believe that all of these mechanisms would be of benefit to both rightsholders and their collective societies and to users. None of these mechanisms are complete answers for the risks faced by collective societies and their licensees, although the extended collective licence comes closest and we urge its serious consideration. Mostly these mechanisms can co-exist in a single sector; for example, limited damages, the indemnity requirement and immunity to both statutory damages and criminal sanctions, unless an extended collective licence is in place. Restricted liability for licensed ISPs combined with an extended collective licence or limited damages are other options that may provide the safe Internet use sought by educators.

III. ACCOUNTABILITY OF COLLECTIVE SOCIETIES

The quid pro quo for the establishment of collective societies and enacting measures to facilitate their effectiveness is responsibility and transparency in the governance, administration and operation of collective societies. In different ways the Collectives are responsible to their member industry associations, rightsholders, users and Government, and they operate with as much openness as is compatible with carrying on a licensing service that must respect the confidentiality of both rightsholders and users.

First and foremost, the Collectives are responsible to their members and indirectly, through their members, to affiliated rightsholders. Affiliation is open to all rightsholders resident in Canada and, if citizens, outside Canada, provided they are not already affiliated with another collective society. They are non-profit organizations, subject to annual audits and by-laws providing for democratic participation and control by member organizations, themselves controlled by their own members who are rightsholders affiliated with the Collectives. The Collectives hold annual membership meetings and produce annual reports that are available to rightsholders and licensees as well as to their members. As collective societies subject to the regime set out in section 70.1 of the Copyright Act, the Collectives must answer within a reasonable time all reasonable requests from the public for information about their repertoires.²⁷

There exists a framework of Government supervision over the Collectives and similar collective societies subject to section 70.1. These collective societies are entitled to negotiate agreements with users, but if negotiations break down either collective society or user can take the dispute to the Copyright Board for arbitration.²⁸ Alternatively these collective societies may file a proposed tariff with the Copyright Board for its approval.²⁹ Unlike their sister organizations in some other countries, particularly in Europe, a collective society in Canada is not designated or approved as an organization, possibly the sole organization, to carry on particular activities.

The Collectives operate under an exception to unfair competition legislation. Although the Competition Act excepts the collective bargaining of trade unions from being considered in restraint of trade, it does not apply automatically to collective societies. However, the Copyright Act provides that if a licence is filed with the Copyright Board within 15 days after it is concluded, this filing exempts the collective society from section 45 of the Competition Act prohibiting conspiracies to fix prices, although the Director of Investigation and Research under the Competition Act may request the Copyright Board to examine any such agreement between a collective society and a user.³⁰

IV. SUMMARY / CONCLUSIONS

The Collectives are already well launched on new initiatives that will see them engaging in a wider variety of licensing, including digital licensing. To be as effective as possible and to provide the best service to users, the Collectives need legislative back-up through mechanisms such as those that have been presented in this paper. With legislative support such as many other countries provide to their collective societies, the Collectives will be able to provide the Canadian public with speedy and equitable access to an affordable and ever-growing worldwide repertoire while providing reasonable remuneration to rightsholders. The Collectives have demonstrated their ability to function responsibly and transparently.

Legislative back-up mechanisms and good collective management of copyright works, however, will not be sufficient. Rightsholders cannot tolerate further erosion of their rights to control their creations and productions. New exemptions from infringement of copyright would complicate and undermine the ability of the Collectives to license existing and emerging markets, particularly in the digital environment. Section 13 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), reflecting section 9 of the Berne Agreement, reads as follows:

Survival of the creators and producers of creative works is dependent on their being able to license effectively and to explore new licensing opportunities uneroded by new exemptions that will create an imbalance in the law. To a large extent the licensing of works, especially in a digital environment, must happen more and more through collective licensing by well-managed collective societies that can effectively represent rightsholders and serve their user clientèle. To offer the best we can, we need to secure co-operation from users as well as rightsholders and call on Government to give us the tools we need.

Marian Dingman Hebb M.Sc.(Econ.), LL.B
December 9, 2002

This paper represents the position of Access Copyright and should not be construed as representing the position of individual affiliates or any other collective society. The document was prepared by Marian Hebb, counsel to Access Copyright in consultation with Roanie Levy, B.C.L., LL. M. and Suzanne Conway, B.A. (Hons.), LL.B. of Access Copyright and Helene Messier, B.C.L. of COPIBEC.

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5 Supporting Culture and Innovation, Report on the Provisions and Operation of the Copyright Act, C8, ("Minister's Section 92 Report") page 6. This report, released by the Government of Canada in October 2002, was in response to section 92 of the Copyright Act which requires the Minister of Industry to make a report to Parliament "on the provisions and operation of the Copyright Act, including any recommendations for amendments" within five years of section 92 coming into force (September 1, 1997).

6 Minister's Section 92 Report, page 24.

7 It should be noted that, although Access Copyright and COPIBEC (or its predecessor UNEQ) have been in operation for well over a decade, there have been no infringement claims made against them by rightsholders.

8 Copyright Act, sections 29.6 (news and commentary), 29.7 (reproduction of broadcast) and 31 (retransmission), 76 (retransmission of broadcast signals and off-air taping for educational institutions).

9 Australia Copyright Act 1968, Part VB.

10 Copyright Act, Part VIII.

11 Copyright Act, subsection 83(11).

12 Adolf Dietz, "Germany" in Paul Edward Geller and Melville B. Nimmer, International Copyright Law and Practice, 8[2][a][i -ii] and 8[2][a][d]. Dietz regards "…provisions granting rights of equitable remuneration…as imposing compulsory or legal licences" or "non-voluntary licences insofar as the law permits relevant uses against the payment of ‘equitable remuneration'."

13 In 1995 Centre Français du Copyright, which has reciprocal agreements with both Access Copyright and COPIBEC, was certified as the reprographic collective society to manage reprographic rights. The French law requires that the by-laws of collective societies provide for "equitable modes" of distribution to rightsholders.

14 André Lucas and Robert Plaisant, "France", 8[2][a][ii] in Geller & Nimmer, International Copyright. Daniel Gervais, in a Report prepared for the Department of Canadian Heritage, August 2001, entitled Collective Management of Copyright and Neighbouring Rights in Canada, An International Perspective (footnote 86, page 35) comments: "These two legal mechanisms [implied licence/indemnity] are different in theory but their impact is fairly similar in the practical effects…If rightsholders are given the option to stay out of the system and if the indemnity/implied license is then construed as not covering such excluded rightsholders, their effect is essentially the same." However, from the description in this text by Lucas and Plaisant, it seems that the implied licence may amount to more than indemnification by the collective society, at least with respect to reprography licences in France for internal copying by schools, businesses and other such organizations.

15 German legislation quoted in the Gervais Report (see footnote 11 above) at page 37 requires the claim to be asserted jointly by all the collective societies in order for the presumption to apply.

16 Copyright, Designs and Patent Act 1988, section 136.

17 Each of the Collectives has a reciprocal agreement with CLA to authorize reprographic copying of the other's repertoire.

18 Copyright Act, section 38.2.

19 Copyright Act, section 38.1(6)(b).

20 Copyright Act, section 38.1(4).

21 Copyright Act, section 39.

22 Extended Collective Licence, The Nordic Solution to Complex Copyright Questions, June 1991.

23 Gervais Report, page 43.

24 Minister's Section 92 Report, page 25.

25IFRRO Special General Meeting, London, May 10, 1996.

26 Gervais Report, page 43

27 Copyright Act, section 70.11.

28 Copyright Act, section 70.2.

29 Copyright Act, section 70.12 and 70.13.

30 Copyright Act, section 70.5. The "regulated industry" defence also applies to activities of the collective society on matters within the Board's jurisdiction.

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