University scores a ‘pyrrhic victory’ in long-running copyright case

By LegalMatters Staff • A recent Federal Court of Appeal decision on copyright tariffs and fair dealing amounts to a double-edged victory for York University, says Toronto intellectual property lawyer John Simpson.

The ruling in the ongoing battle between York University and Access Copyright involves an important yet “technical area that most people are not familiar with,” says Simpson, principal of IP and new media law boutique Shift Law Professional Corporation.

“This decision delves deeply into the collective licensing regime under the Copyright Act,” he tells LegalMattersCanada.ca. “This is a far-reaching and significant ruling that I suspect will be appealed to the Supreme Court of Canada. Both sides can claim a victory although the bigger victor is York University.

Two issues raised

Simpson says York raised two issues: arguing successfully that it shouldn’t have to participate in a collective licensing regime requiring the payment of tariffs to Access Copyright but failing to convince the court that its policies for copying from source material protected it from liability for copyright infringement under the doctrine of fair dealing.

“This is going to be great for York because it is not going to have to pay these tariffs anymore,” Simpson says. “But, because of the decision on fair dealing, it is a pyrrhic victory since it now has significant potential exposure to copyright infringement suits.”

He explains that Canada has a copyright enforcement regime that allows publishers of academic texts to employ collective societies such as Access Copyright to act as their agents.

“These publishers use a collective instead of having to enforce their rights individually against every person who might make a copy, which could be very difficult,” Simpson says. “It frees them from having to take action themselves and means they don’t need their own licence with every university or potential copier. It makes a lot of sense.”

Longstanding question

He says there has been a longstanding question about whether universities are bound to be part of “this licensing regime and pay these tariffs.”

“The regime can be looked at as a convenience for book publishers because they can collect royalties through this system and it’s a potential convenience for universities because they can take part rather than exposing themselves to copyright infringement actions,” Simpson says. “For the universities, it’s like having an insurance policy.”

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However, he says York questioned the need for the regime.

“As a university can you say the fees are too high and then risk defending a lawsuit if something you are doing is considered an infringement?” Simpson asks. “It’s been an open question for quite some time.” 

In an earlier decision, the Federal Court examined the regime, noting that it is part of the Copyright Act and ruled universities must participate.

‘Voluntary regime’

However, last month the Federal Court of Appeal decided “this is a voluntary regime and universities have the right to opt-out,” he says.

York’s victory effectively changes the legal landscape, says Simpson.

“This is significant for the publishing industry. It has existential implications for collective licensing bodies such as Access Copyright,” he says. “If everyone starts opting out, then where are they?”

Simpson notes that the ruling does not mean authors’ and publishers’ copyrights are not enforceable or that there shouldn’t be any compensation when works are used.

While York came out on top on tariffs, it failed on the issue of fair dealing.

However, arguing the matter made perfect sense, Simpson says.

“York didn’t want to pay the licensing fee but it wanted to protect itself from publisher lawsuits,” he says. “What the university was seeking was a declaration from the court that its book copying policy sheltered it under the doctrine of fair dealing.”

Strict rules

York argued that it posts strict rules throughout the university to prevent students from engaging in copyright infringement.

“The guidelines state you can only copy so much, you can only copy for your purposes, you can’t sell the material. You can do all the things under the law of fair dealing,” he says.

Simpson says there are two parts to the doctrine of fair dealing. 

“One is that the copying falls under a recognized purpose, which in this case would be education,” he says. “Number two, it has to be fair. There are cases where copying is for study but too much material is being copied and it’s not fair to the owner of the copyright.”

The Court of Appeal ultimately agreed with the lower court decision and ruled York did not meet the test for fair dealing, Simpson says. 

‘Highly controversial issue’

“It’s a highly controversial issue that is now a question that the Federal Court of Appeal and the Supreme Court of Canada are having to wrestle with,” he says. “Much of it is a philosophical issue about what’s fair but it’s the courts’ job to provide guidance about how to apply it. It’s the courts’ job to provide guidance that is going to make things predictable.”

Should it end up being argued at the Supreme Court, Simpson says “the central issue” will likely revolve around whose perspective matters when it comes to fair dealing.

“In this situation, there’s the student who makes the copy and then there’s the university who provides the source material and says it has to be copied,” he says. “Is it the ultimate user, the student, or is it an accessory to the ultimate user, in this case, the university? There are many tough issues but that is the key for me.”