01 AUCCs Memorandum of Fact and Law (January 30, 2012)

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FEDERAL COURT OF APPEAL

BETWEEN:

File Nos. A- 339 -11A- 395 -11

ASSOCIATION OF UNIVERSITIES AN D COLLEGES OF CANADAand TH E UNIVERSITY OF MANITOBA

Applicants- and-

TH E CANADIAN COPYRIGHT LICENSING AGENCYOperating as "ACCESS COPYRIGHT"

MEMORANDUM OF FACT AN D LAWOF TH E APPLICANTS

Respondent

Date: January 30, 2012

LEGAL_l:226S1950.1

Osler, Hoskin & Harcourt LLP1900 - 340 Albert StreetOttawa, Ontario K lR 7Y6

Tel: (613) 235-7234Fax: (613) 235-2867

Glen A. BloomPatricia Wilson

Solicitors for the Applicants,Association of Universities andColleges of Canada and TheUniversity of Manitoba

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TABLE OF CONTENTS

I OVERVIEW & STATEMENT OF FACTS .............................................. 1

OVERVIEW .............................................................................................. 1Introduction and Backgronnd of Proceedings ................................ IOpt-Out Interrogatories Decision .................................................. 4Transactional Licences Decision ................................................... 6

STATEMENT OF FACTS ........................................................................ 8The Applicants ............................................................................... 8The Respondent ............................................................................. 9Prior Licensing Arrangements - Between Access Copyright

and AUCC Members ........................................................ 10Alternative Copying Permissions Options Available to

Institutions ........................................................................ 12Access Copyright Interrogatory Proceedings .............................. 15Transactional Licence Decision Proceedings .............................. 19

II STATEMENT OF ISSUES ..................................................................... 21

III ARGUMENT ........................................................................................... 23

STANDARD OF REVIEW ..................................................................... 23

DECISIONS ARE FINAL DETERMINATIONS MERITINGREVIEW ...................................................................................... 23

OPT-OUT INTERROGATORIES DECISION ....................................... 25The Board Does Not Have the Authority under Sections

66.7(1) and 70.15 of the Ac t to Order the Opt-OutInstitutions to Provide Responses to Interrogatories ....... 25

Board Failed to Consider Whether the Opt-OutInterrogatories Order was Necessary or Proper ............... 29

The Board Failed to Consider Whether the Requirementsfor Non-Party Discovery were Met.. ................................ 30

Extensive Nature and Lack of Proportion of theInterrogatories .................................................................. 32

Improper Enforcement Threats and Prospective EvidentiaryRulings ............................................................................. 33

Opt-Out Interrogatories Decision is Unreasonable ...................... 35

Transactional Licences Decision ............................................................. 36Inconsistent with Statutory Context and Purpose of

Copying Licensing Provisions ......................................... 36

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Monitoring and Volume Detennination of the Board wereMisplaced ......................................................................... 39

Th e Board Misapprehended the Purposes ofInterim Ordersunder Section 66.51 of the Ac t ........................................ 40

Inconsistency with Earlier Decisions ........................................... 41Transactional Licences Decision is Unreasonable ....................... 42

Conclusion ............................................................................................... 43

IV ORDERS SOUGHT ................................................................................ 43

V AUTHORITIES REFERRED TO ........................................................... 46

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I OVERVIEW & STATEMENT OF FACTS

OVERVIEW

Introduction an d Bacl,ground of Proceedings

1. This is an application by the Association of Universities and Colleges of

Canada ("AUCC") and The University of Manitoba (" U of M"), the Applicants,

to quash two decisions of the Copyright Board ("Board"), issued August 18,2011

and September 23, 2011 respectively, in the course of proceedings to consider

certification of a statement of royalties proposed by the Respondent ("Access

Copyright") for the copying of published works by post-secondary educational

institutions located outside the Province of Quebec for 2011 to 2013 ("Proposed

Tariff').

Application Record (liAR "), Volume 1, Tabs 1A and 2A, p. 1-A1 to 1-A3, an d p. 2-Al to 2-A15

2. On December 23, 2010, the Board issued an interim tariff, which set the

Access Copyright fees for copying published works onto paper and created an

optional digital copying licence on an interim basis, until the fmal certification of

the Proposed Tari ff ("Interim Tariff') . Prior to the Interim Tariff, AUCC

members had since 1993 entered into blanket licence agreements with Access

Copyright to authorize the copying of published works based upon a model

blanket licence agreement negotiated by AUCC and Access Copyright. The

blanket licence agreements expired on December 31, 2010.

3. The royalties sought in the Proposed Tarif f and issued in the Interim Tariff

talce the form of a blanket licence covering all copying by a post-secondary

educational institution ("Institution"). The Interim Tariff is based on a fee pe r

full-time equivalent student ("FTE"), with per page rates for copies of published

works made for the purpose of course collections sold to students. While the

Interim Tariff reflects the rates and terms of the prior licences between Access

Copyright and institutions, the Proposed Tariff, which will have retroactive effect

as of January 1,2011 and replace the Interim Tariff when certified in final form,

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makes significant changes to the prior licence agreements. The Proposed Tariff

increases the FTE rate from $3.38 to $45.00, eliminates the $0.10 per page rate

for course collection copying, adds an optional blanket digital or electronic

copying licence and removes an indemnity provided to institutions in the prior

licences against infringement claims for copying published works that are not on

an "Exclusions List" maintained by Access Copyright. Institutions with licences

under the Interim Tariff will be liable for the royalties set, and subject to the terms

of, the Proposed Tariff when it is certified by the Board.

4. The decisions of the Board for which judicial review is sought raise issues

about the rights and obligations of universities and colleges that do not have, and

do not want, licences under the Interim Tariff to authorize their copying of

published works ("Opt-Out Institutions"). Opt-Out Institutions obtain copyright

permissions outside the tariff from publishers, licence aggregators, and licensing

consortia like the Canadian Research Knowledge Network ("CRKN"), and

otherwise rely upon statutory exceptions or the fair dealing provisions of the

Copyright Ac t (the "Act").

5. I t is a fundamental underpiuning of the copyright licensing regime enacted

in the Ac t that copyright users are not required to obtain a licence under a tariff

issued by the Board, but can secure copyright permissions either directly from the

publisher or author of the published work, or even by agreement with a collective

society holding the work in its repertoire, apart and separate from a tariff issued

by the Board. The Board itself recognized this when it issued the Interim Tariff:

.. . [An interim decision] will provide certainty until the Boardcertifies a final tariff. I t will not impose a single licensing solution;instead, it will add a tool Institutions can use to comply with their

copyright obligations. Since Access secures rights on a nonexclusive basis, Institutions remain free to seek licences fromothers, even for their uses of the Access repertoire.

[45] An interim tariff does not force Institutions to pay royaltiesabsent any evidence that they require a licence. A tariff applies

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only to those who need the licence; those who do not, need notpay. Under the general regime, which applies in this instance, userswhose consumption patterns justifY different rates remain free tosecure, from Access or from others, transactional or other licencesthat will trump the tariff.

Interim Statement of Royalties (Post-Secondary EducationalInstitutions (2011-2013) Reasons ("Interim Tariff Decision"),March 16,2011; Affidavit of Steve Wills sworn October 6, 2011("Wills Affidavit (A-339-11)"), Exhibit E, paras 30 and 45, AR,Volume 2, Ta b 5E, p 145, 149

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6. As a result of changes to the Proposed Tariff compared with the prior

licensing arrangements between Access Copyright and the universities, along with

the very significant growth in availability of electronic licensing alternatives for

access to and copying of published works, 37 of the 77 universities that areAUCC members outside Quebec decided, effective either January 1,2011, when

the Interim Tariff came into effect, or September 1,2011, at the beginning of the

current academic year, not to obtain a blanket licence under the Interim Tariff but

instead to secure their copying permissions outside the blanket licence under the

Interim Tariff.

7. In the two decisions for which judicial review is sought, the Board:

(a) ordered that full responses to the very extensive written

interrogatories about paper and digital copying activities, finances,

copyright compliance, library reserve, electronic course

management and e-mail systems at institutions to be covered by

the Proposed Tariff that were issued by Access Copyright to

AUCC, in its capacity as an objector to the Proposed Tariff, be

obtained from a representative sample of Opt-Out Institutions

("Opt-Out Interrogatories Decision"); and

(b) dismissed an application by AUCC to amend the Interim Tariff so

as to provide for transactional licences to authorize the copying of

extracts of specific published works in the repertoire of Access

Copyright, at a reasonable rate to be set by the Board, by Opt-Out

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Institutions without a blanket licence under the Interim Tariff or by

institutions seeking to make a digital copy that are licensed under

the blanket licence under the Interim Tariff but not under the

optional digital licence under the Interim Tariff ("Transactional

Licences Decision").

Opt-Out Interrogatories Decision

8. Opt-Out Institutions have not participated in the proceedings to consider

the Proposed Tariff, because they are not licensed under the Interim Tariff will

not require the blanket licence under the Proposed Tariff. Opt-Out Institutions are

not objectors to the Proposed Tariff under section 67.1(5) o f the Act; they operate

outside the Proposed Tariff to obtain their copying permissions. The effectof

theOpt-Out Interrogatories Decision, however, is to require the Opt-Out Institutions

selected to answer the interrogatories to participate fully in the very heaviest part,

in terms of person hours and required resources, of the Proposed Tariff

proceeding, that of the discovery phase represented by the interrogatories process.

9. The Applicants submit that the Board's Opt-Out Interrogatories Decision

is not reasonable. The Board does not have the authority to require parties that

are not objectors to the Proposed Tariff and who will not be subject to theProposed Tariff to provide discovery. The Board exceeded its general powers

under sections 66.7(1) and 70.15 of the Act by requiring non-parties like the Opt

Out Institutions to provide discovery to Access Copyright. The Board's extension

o f its procedural powers to require non-users of a tariff to answer extensive

interrogatories directed at tariff users is unsupported by a reasoned contextual and

interpretative analysis of these provisions of the Act. The Opt-Out Interrogatories

Decision is therefore unreasonable.

10. If the Board was authorized to order non-users such as the Opt-Out

Institutions to provide discovery, the Applicants submit that the Board made no

examination of whether its order to require Opt-Out Institutions operating outside

the Interim Tariff to provide discovery was necessary or proper under sections

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66.7(1), having regard to the Board's role nuder section 70.15 of the Act, and

made no consideration of whether the requirements for ordering non-party

discovery had been met. A reasoned consideration of these requirements would

have shown that the order was not necessary or proper and that the criteria for

allowing non-parties discovery had not been met. In failing to consider these

requirements the Board therefore lacked jurisdiction to issue the Opt-Out

Interrogatories Decision. The Opt-Out Interrogatories Decision is also

unreasonable for this reason.

11. Further, the Access Copyright Interrogatories are very extensive in scope

and burdensome to answer and involve an enormous imposition of time and

resources on institutions. In July 2010, AUCC provided responses from 55

institutions, including universities that became Opt-Out Institutions on September

1, 2011, to the interrogatories. The applicants submit that the Board's

requirement that more Opt-Out Institutions provide full answers to the

interrogatories in these circumstances is umeasonable given the disproportionate

burden that answering these interrogatories will impose on the selected Opt-Out

Institutions, when those institutions do not use the Interim Tariff and are not

participants in the Proposed Tariff proceeding.

12. In addition, the Board made improper references at paragraphs (6) to (8)

of the Opt-Out Interrogatories Decision to Opt-Out Institutions being potentially

liable under the final tariff and being required to provide the same information as

is requested in the interrogatories nuder the final tariff, that a lack of full

responses from Opt-Out Institutions would tend to raise the royalty rate in the

final tariff, and that the Board would prospectively grant applications by Access

Copyright to bar evidence from or about Opt-Out Institutions that do not provide

full responses to the interrogatories.

13. The Applicants submit that these factors are completely irrelevant to a

reasonable determination of whether Opt-Out Institutions, operating in a

legitimate manner nuder the Ac t outside the Proposed Tariff before the Board,

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should be brought into the proceeding through non-party discovery. The

statements about liability under the tariff improperly conflate enforcement, not a

matter for the Board, with the Board's rate-setting function; the statements about

the tariff rate infer an improper pre-determination of the very question before the

Board, and the prospective granting of future evidentiary applications, without

hearing from the parties, amount to a prospective breach of fairness and an

improper pre-disposition by the Board of matters that may come before it. The

Applicants submit that the errors at paragraphs (6) to (8) of the Opt-Out

Interrogatories Decision exceed the margin of appreciation afforded tribunals in

their exercise o f statutory authority and decision-making and put the decision

outside the range of acceptable and reasonable solutions.

Transactional Licences Decision

14. The purpose for seeking the addition of a transactional licence to the

Interim Tariff was to provide an efficient means for securing occasional copying

permissions from Access Copyright apart from its blanket licence under the

Interim Tariff, in those situations where Opt-Out Institutions, and Institutions

licensed under the Interim Tariff that have not exercised the option for a digital

licence, could not obtain permissions to copy directly from the publisher or

author, or where the publisher or author directs the institution to obtain the

requested licence from Access Copyright.

15. The evidence before the Board was that Access Copyright had made

transactional licences available to institutions for copying that was not covered by

its prior blanket licences with institutions, such as digital copying and copying

beyond the limits of the licence. Access Copyright ceased making transactional

licences available effective January 1, 2011. If an Institution did not also agree to

obtain a blanket licence under the Interim Tariff or if an Institution with a blanket

licence did not exercise the optional digital copying licence under the Interim

Tariff.

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16. The effect of the refusal by Access Copyright to provide transactional

licences is to force Opt-Out Institutions to either forego copying the work or to

obtain a full, blanket licence under the Interim Tariff in order to copy the single

works for which the transactional licences were requested. Similarly, the refusal

to provide transactional licences requires Institutions licensed under the Interim

Tariff but not under the optional digital licence, to either take up the blanket

digital licensing option or forego making the digital copies.

17. In relation to the Transactional Licences Decision, the Applicants argue

that the Board failed to consider the statutory scheme of the Ac t as a whole, which

contemplates a user obtaining an individual licence in respect of a work in the

repertoire of a collective society such as Access Copyright, and does not require a

user to obtain a licence under a tariff which provides a blanket licence for all of

the works in the collective society's repertoire.

18. The Applicants submit that a purposive interpretation o f the copyright

licensing provisions of the Ac t confirms that the purpose of the licensing regime

in the Ac t is to facilitate access to the copyright permissions required to copy

published works, not force distorted licensing results or block access to copyright

licensing. The Board's refusal to provide a transactional licensing option is

contrary to the purpose and object of section 70.2 of the Act, which specifically

empowers the Board to fix royalties where no agreement is reached between a

collective society and a user.

19. The Board's failure to adhere to the Act's purpose of providing, not

blocking, users' access to copying permissions in the Ac t created an unacceptable

result contrary to the intent and objects of the Act. The Transactional Licences

Decision cannot therefore be reasonable.

20. The Board misapprehended the purpose of its authority under section

66.51 to make interim tariff orders, which are to protect parties affected by the

length and uncertainty of the tariff proceeding before it, and misdirected itself by

regarding preservation of the blanket license in the Interim Tariff as the exclusive

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licensing mechanism as necessary to preserve the status quo. The Transactional

Licences Decision instead exacerbated the nncertainty of the Proposed Tariff

proceeding for the Opt-Out Institutions and licensed Institutions that did not

exercise the digital copying option. The Board's reliance on the prior licensing

agreements as the status quo is not justifiable when a very substantial portion of

Access Copyright's prior licensees no longer had licenses and the circumstances

had so fundamentally changed.

21. The Applicants further submit that the Board's refusal to provide a

transactional licensing option in the Interim Tariff is inconsistent with its decision

to issue the Interim Tariff, in which the Board stressed the voluntary nature of the

licence provided nnder the Interim Tariff and its role as one of a number of

mechanisms by which institutions can secure the copying permissions they need.

STATEMENT OF FACTS

Th e Applicants

22. AUCC is an association of 95 public and private not-for-profit universities

and university-degree level colleges in Canada. On behalf of its members located

outside Quebec, AUCC negotiated model licence agreements with Access

Copyright that licensed institutions to reproduce published works onto paper,

which licences expired on December 31, 2010. AUCC has objected to the

Proposed Tariff for which Access Copyright seeks certification by the Board.

Wills Affidavit (A-339-11), paras 2, 6 and Exhibit B, AR,Volume 2, Tab 5, p. 41-42 and 66-68

23. The U of M held a licence for its copying of published works onto paper

from Access Copyright until December 31, 2010, when the licence expired.

Effective January 1,2011, the U ofM elected not to obtain a licence from Access

Copyright nnder the Interim Tariff and operates outside the Interim Tariff to

obtain, where required, its licences and copying permissions. Access Copyright

has refused to grant transactional licences to the U of M to authorize its copying

of specific works in the repertoire of Access Copyright for which copying

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permissions cannot be obtained directly from publishers or authors or when

publishers direct licensing requests to Access Copyright. The U of M is an Opt

Out Institution directly affected by the Board's Transactional Licence Decision.

Wills Affidavit (A-339-11), paras 8 an d 15, AR, Volume 2, Ta b5, p. 43, an d 46-47

24. Brandon University is making an application to be added as an applicant

in the within applications. Brandon University held a licence for its copying of

published works onto paper from Access Copyright until December 31, 2010,

when the licence expired, and, effective January 1, 2011, also elected not to

obtain a licence to authorize its copying of published works under the Interim

Tariff. Brandon University instead operates outside the Interim Tariff to obtain

the licences and copying permissions it needs. Brandon University was selected

as part of a representative sample of Opt-Out Institutions that would be required

to answer the Access Copyright Interrogatories pursuant to directions from the

Board following the Opt-Out Interrogatories Decision. Brandon University is

directly affected by the Board's Opt-Out Interrogatories Decision.

Wills Affidavit (A-339-11), paras 8, 15 and 30, AR, Volume 2,Ta b 5, p. 43, 46-47 an d 53,

Affidavit of Christopher Hurst sworn October 7, 2011 (IfHurstAffidavit (A-339-11)If), paras 3, 5 an d 7, AR, Volume 3, Ta b 6,p.385-386

The Respondent

25. Access Copyright is a collective society representing authors and

publishers that agree to affiliate with it with respect to the copying of their

published works. Access Copyright entered into licence agreements with AUCC

member institutions to authorize the copying of published works onto paper from1994 until December 31, 2010.

Wills Affidavit (A-339-11), para 8, AR, Volume 2, Ta b 5, p. 42

26. On March 31, 2010, Access Copyright filed the Proposed Tariff, for which

it seeks certification by the Board pursuant to section 70.13(2) of the Act.

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Prior Licensing Arrangements - Between Access Copyright and AVCCMembers

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27. Since 1994, AUCC members obtained licences from Access Copyright for

the copying of published works onto paper, based upon the model licences

negotiated by AUCC and Access Copyright. Under the most recent licence

between Access Copyright and AUCC member Institutions, AUCC members paid

Access Copyright an annual royalty rate of $3.38 per FTE enrolled in the

Institution, plus $0.10 a page for paper copies of published works sold to students,

generally in the form of course packs. The prior licences permitted the copying

onto paper of all published works except those placed on an Exclusions List

maintained by Access Copyright and provided an indemnity to institutions against

copyright infringement claims for copying any work not on the Exclusions List.

Wills Affidavit (A-339-ll), para 9, Exhibit G, AR, Volume 2,Tab 5, p. 43 an d 190-214

28. When the Proposed Tariff was filed by Access Copyright in March 2010,

negotiations by AUCC and Access Copyright to renew the existing licences

between institutions and Access Copyright were abandoned. The term of existing

licences with institutions expired on August 31, 2010, but was extended until

December 31, 2010 by agreement, at which point the prior licences betweenAccess Copyright and AUCC member institutions terminated.

29. Until December 31, 2010, Access Copyright also provided transactional

licences to AUCC members to licence the reproduction of specific published

works in the Access Copyright repertoire not covered by the prior blanket

licences, for example when the amonnt of copying exceeded the copying limits in

the prior licences, or where the institution sought to make an electronic copy of a

work in the Access Copyright repertoire.

Affidavit of Steve Wills sworn November 22, 2011 (ItWillsAffidavit A-395-ll It), paras 5 and 6, Exhibit C, p. 8,Appendixes A and B, AR, Volume 5, Ta b 8, p. 846-847, 889,and 895-904

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30. Access Copyright applied to the Board for an interim tariff, to have effect

January 1, 2011, pending certification of the Proposed Tariff ("Interim Tariff").

The Interim Tariff was issued by the Board on December 23, 2010. When the

Proposed Tariff is certified by the Board, it will replace the Interim Tariff and

apply retroactively, as of January 1,2011.

Interim Tariff Decision, supra, AR, Volume 2, Tab 5E, WillsAffidavit (A-339-11), para 5, AR, Volume 2, Tab 5, p. 42

31. The Interim Tariff reflects the terms of the prior licences by maintaining

the FTE rate of $3.38 plus $0.10 per page for copies made for sale (e.g. course

packs), but adds an optional digital copyright licence applicable to the Access

Copyright repertoire. The paper copying part of the Interim Tariff applies to all

published works that are not on the Access Copyright Exclusions List and

maintains the indemnity for paper copying that was in the prior licence

agreements.

Interim Tariff Decision, supra, AR, Volume 2, Tab 5E, WillsAffidavit (A-339-11), para 11, AR, Volume 2, Tab 5, p. 44

32. The Proposed Tariff filed by Access Copyright in March 2010, differs,

however, from the prior licence agreements and Interim Tariff in four principal

ways:

(i) The Proposed Tariff would extend Access Copyright licensing

from permitting the making of print or paper copies to the making

of digital copies, including in optical or electronic form;

(ii) The Proposed Tariff limits permitted copying to works in the

Access Copyright repertoire and eliminates the indemnity provided

to institutions against copyright infringement claims;

(iii) The Proposed Tariff sets significantly elevated FTE rates, from

$3.38 CAD per FTE, to $45.00 CAD per FTE and eliminates the

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$0.1 0 per page copying rate under the model licence agreements;

and

(iv) The Proposed Tariff would provide Access Copyright the right to

conduct a bibliographic and volume surveyof

the usesof

theworks in its repertoire and imposes reporting requirements in

relation to print and digital copying at the Institutions, obligations

that were not included in the prior licence agreements except in

respect of the reporting of copies made for sale to students.

Wills Affidavit (A-339-11), para 10, AR, Volume 2, Tab 5, p. 44

33. An institution holding a licence issued under the Interim Tariff faces

potentially very large liability to Access Copyright upon certification of the

Proposed Tariff, based on the difference between the amount the institution paid

under the Interim Tariff and the amount payable under the proposed Tariff, from

January 1, 2011 to the date of certification. This liability could be very large

given the very large increase to $45.00 from $3.38 in the FTE rate in the Proposed

Tariff.

Alternative Copying Permissions Options Available to Institutions

34. The copyright licence rights held by Access Copyright in respect of

published works in its repertoire are non-exclusive. AUCC member institutions

can and do enter into licence agreements directly with publishers or other

licensing consortia to secure rights to copy published works. This has become a

widespread practice in relation to digital copying, which was not covered by the

prior licences with Access Copyright. Institutions have obtained licence

agreements from publishers directly, or negotiated by CRKN, the Council of

Prairie and Pacific University Libraries ("CPPUL"), the Ontario Council of

University Libraries ("OCUL") or the Council of Atlantic University Libraries

("CAUL "), as well as from other collective societies, such as the Copyright

Clearance Center in the United States. The vastly expanded availability of

electronic works, and the licences providing access to and use of electronic works,

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have made electronic works a very significant component of Institution libraries

and course materials.

Wills Affidavit (A-339-ll), para 13, AR, Volume 2, Ta b 5, p. 42

Wills Affidavit (A-395-ll), Exhibit C, p. 3, AR, Volume 5, Tab 8, p.884

Affidavit of ShaUyn MacDonald sworn November 4, 2011("MacDonald Affidavit"), Exhibit 7G, p. 5-7, Appendixes B-F, AR,Volume 4, p. 585-587, and 605-674

35. In addition to electronic licensing alternatives, Institutions can use

statutory exceptions, including the fair dealing exceptions in section 29 of the Ac t

to copy for purposes including research and private study. In addition, until the

Interim Tariff took effect on January 1, 2011, institutions could securetransactional licences from Access Copyright, i f needed, to permit copying

beyond the limits permitted in the prior licences, or digital copying, which was

not covered by the prior licences.

Wills Affidavit (A-339-ll), para 14, AR, Volume 2, Ta b 5, p. 46

36. In view of the significant increase in royalty rates in the Proposed Tariff

over the royalty rates in the prior blanket licence agreements, the increased use of

digital technologies and the availability of licence agreements for the access and

use of a vast repertoire of published works in electronic form, 16 of AVCC's

members elected not to operate under either the Proposed Tariff or the Interim

Tariff effective January 1, 2011. An additional 21 AVCC members opted out of

the Interim Tariff effective September 1, 2011.

Wills Affidavit (A-339-ll), paras 15 and 16, AR, Volume 2,Ta b 5, p. 46-48

Cross-examination of Steve Wills, January 17,2012, p.100-104, AR, Volume 6, Ta b 10, p.1346-150

Hurst Affidavit (A-339-ll), para 10, Exhibit B, AR, Volume 3,Ta b 6, p. 387 and 430

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37. Those Opt-Out Institutions that became Opt-Out Institutions as of January

1, 2011 have not participated in the proceedings to certify the Proposed Tariff,

other than having provided evidence in support of the application to add a

transactional licences option to the Interim Tariff, which arose directly from their

requirements to obtain occasional copying permissions from Access Copyright

apart and separate from the blanket licence. The remaining Opt-Out Institutions

have not participated in the proceedings since they became Opt-Out Institutions as

of September 1, 2011.

38. The Board explicitly recognized the voluntary nature of the Interim Tariff

and the range of copyright licensing alternatives mandated under the Ac t in its

decision to issue the Interim Tariff.

- to allow targeted institutions to make digital copies pursuant tothe interim tariff, but only ifthey so elect;

- to confirm that institutions that do not require a licence fromAccess Copyright are not required to deal with it, whether pursuantto the interim tariff or otherwise.

[30] An interim decision will allow Institutions to continue to availthemselves of the existing licensing scheme if they so wish. I t willprovide certainty until the Board certifies a final tariff. I t will notimpose a single licensing solution; instead, it will add a toolInstitutions can use to comply with their copyright obligations.Since Access secures rights on a non-exclusive basis, Institutionsremain free to seek licences from others, even for their uses of theAccess repertoire. As always, Institutions that do not makeprotected uses of that repertoire are not targeted by the decision inany event.

[45] An interim tariff does not force Institutions to pay royaltiesabsent any evidence that they require a licence. A tariff appliesonly to those who need the licence; those who do not, need notpay. Under the general regime, which applies in this instance, userswhose consumption patterns justify different rates remain free to

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secure, from Access or from others, transactional or other licencesthat will trump the tariff. The fact that the interim tariff can bemodified at any time ensures that Access will display good faith insuch negotiations. Any misconduct on its part would necessarily bereported to the Board, which would take it into account in anyfurther consideration of this matter.

Interim Tariff Decision, snpra, AR, Volume 2, Ta b 5E, p. 134-184

Access Copyright Inter rogatory Proceedings

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39. Access Copyright served its interrogatories on AUCC on March 21, 2011

pursuant to the Board's procedural directive and schedule for the proceeding to

certify the Proposed Tariff. The interrogatories required extensive information

and responses from AUCC and, notwithstanding that there were 16 Opt-Out

Institutions as of January 1,2011, required AUCC to obtain extensive responses

and information from all AUCC member institutions located outside Quebec.

Wills Affidavit (A-339-11), paras 18 and 20, Exhibit H, AR,Volnme 2, Tabs 5, 5H and 51, p. 49,215-239 and 240-331

40. The Access Copyright interrogatories are extensive, consisting of over 120

questions covering the activities of Institutions over the time period from 2008 to

2011, most consisting of multiple parts. The interrogatories require voluminousinformation about an Institution's licences, budgets and expenses for acquisitions

and licences, fees charged stndents, detailed questions on paper and electronic

copying practices, including equipment and volumes, library operations and

budgets, course management systems, uploading and downloading on course

management systems, e-reserve systems and functionality, email accounts, use of

email to transmit, store, upload and archive documents and works used in the

Institution's courses of study, amongst other matters.

Wills Affidavit (A-339-11), para 21, Exhibit H, AR, Volnme 2,Tab 5, p. 49-50, and 215-239

41. AUCC filed its objection to the interrogatories with the Board on April 4,

2011, in which AUCC objected to providing answers to the interrogatories from

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its member institutions that operated outside the Interim Tariff to obtain copying

permissions (the "Opt-Out Institutions"), on grounds that the proposed Tariff does

not apply to these members.

Wills Affidavit (A-339-11), Exhibit I , Response tointerrogatory 3, page 202, AR, Volume 2, Ta b 5, p. 2 4 3 ~ 2 4 4

42. On June 13,2011 and July 11, 2011 AUCC served on Access Copyright

extensive documentation containing complete answers to the Access

Interrogatories from 55 AUCC members, incomplete answers from two AUCC

members that had elected to obtain licences under the Interim Tariff as well as

answers to certain interrogatories provided by nine consortia of AUCC members

(such as CRKN) on behalf of the Institutions that have an Interim Licence.

AUCC provided 16,236 separate documents comprising 11.92 gigabits of

information. If printed onto paper, the answers AUCC provided to the Access

Interrogatories would weigh over eight tons.


43. AUCC did not secure or provide Access Copyright with any answers to

the Access Copyright Interrogatories from the 16 Opt-Out Institutions that ceased

their licence arrangements with Access Copyright as of January 1,2011 ("January1,2011 Opt-Out Institutions").


44. On July 20,2011 Access Copyright applied to the Board for, inter alia, an

order requiring AUCC to secure answers to the interrogatories, from a

representative sample of the Opt-Out Institutions.


45. AUCC opposed the Access Copyright motion on August 2, 2011.


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46. The Board allowed the Access Motion in part on August 18,2011. In the

Opt-Out Interrogatories Decision the Board ordered AUCC to provide complete

answers to the Access Interrogatories, from a representative sample of the Opt

Out Institutions, issued directions requiring Access Copyright and AUCC to agree

on a list of Opt-Out Institutions required to answer the Access Interrogatories, a

joint letter to the Opt-Out Institutions and a time table for dealing with the

responses from those institutions by September 15, 2011, and directed AUCC to

send the letters requiring answers to the Access Interrogatories to Opt-Out

Institutions by September 26, 2011.


47. At paragraphs (6) to (8) of the Interrogatories Opt-Out Decision, the Board

also:

(6) [directed that] "Access may file with the Board anapplication prohibiting any objector from adducing evidence aboutan [Opt-Out Institution] that does not provide responses by the dateprovided to do so, or that does not remedy a deficient response bythe date provided to do so. Once such an order has been issued,Access will be allowed to adduce evidence about the [Opt-OutInstitution], but objectors will not be allowed to refute suchevidence except with leave of the Board";

(7) "remind[ed] the objectors that an [Opt-Out Institution's]decision not to avail itself of the interim tariff [in respect of whichthe Opt-Out Institutions have elected not to require a license fortheir copying activities] in no way guarantees that [the Opt-OutInstitution] will bear no liability under the final tariff, that itsliability will not be retroactive or that it will not be compelled,pursuant to the final tariff, to provide information about its copyinghabits during the period between January 1, 2011 and the date onwhich the final tariff is certified .."; and

(8) Stated that "A lack of information concerning copyinghabits at Opt-Out Institutions might tend to increase any FTEroyalty the Board may decide to certify. This would happen if theaverage volume of copying of works from Access Copyright'srepertoire by Opt-Out Institutions was less than by otherinstitutions. This will not prevent the Board from certifying such aroyalty based on an imperfect record."

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Wills Affidavit (A-339-11), para 28, AR, Volume 2, Tab 5, p.52-53

18

48. Two universities, Brandon University and Campion College were chosen

as part of the representative sample from amongst the January 1, 2011 Opt-Out

Institutions. Ten universities were chosen as part of the representative sample

required to answer the interrogatories from amongst the 21 universities that opted

out of the Access Copyright licence under the Interim Tariff effective September

1,2011 ("September 1, 2011 Opt-Out Institutions). The September 1, 2011 Opt

Out Institutions, which held licences from Access Copyright at the time the

interrogatories were answered, provided answers to the Access Interrogatories

that were included in AUCC's response to the interrogatories in July, 2011. At

issue before the Board in the Opt-Out Interrogatories Decision relating to theSeptember 1, 2011 Opt-Out Institutions is whether they must address deficiencies

in the interrogatory responses they provided. AUCC does not object to having a

representative sample of September 1, 2011 Opt-Out Institutions address

deficiencies in the responses to interrogatories they have provided.

Wills Affidavit (A-339-11), para 30, AR, Volume 2, Tab 5, p.53-54

49. The selected January 1, 2011 Opt-Out Institutions are small universitiesand colleges. They will be required to divert significant resources and staff to

provide full responses to the Access Copyright interrogatories. For example, the

preparation and generating of the information necessary to provide answers to the

Access Interrogatories will reqnire a very significant investment of staff resources

and time, a diversion from other pressing needs at Brandon University

("Brandon"), all when Brandon is no longer operating under the permissions

provided in an Access Copyright license and is not a participant in the Proposed

Tariff proceeding.

Hurst Affidavit (A-339-11), para 22, AR, Volume 3, Tab 6, p.390

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50. Brandon is a small institution with limited information technology,

administrative library and operational staff. The Interrogatories would require

diversion of existing staff resources from Financial Services, Student Services, the

Registrar's Office, the Library, Information Technology Services, Ancillary

Services, the office of the Vice-President Academic & Research, the office of the

Vice-President Administration and Finance, and the offices of Academic Deans.

Because of the tight financial commitments Brandon currently faces, many of

these departments are understaffed. Answering the Interrogatories would have a

noticeable impact on ongoing university projects and even impinge basic

university operations such as library, network systems and finance and

administration operations.

Hurst Affidavit (A-339-11), para 24, AR, Volume 3, Tab 6, p.390-391

51. The Opt-Out Interrogatories Decision was stayed by order of this Court

dated September 28, 2011.

AR, Volume 1, Tab lB, p. I-Bl to I-B2

Transactional Licence Decision Proceedings

52. Although Opt-Out Institutions obtain most of their copying permissionsthrough the alternative licensing arrangements described above, in certain

circumstances, Opt-Out Institutions are unable to locate the author or publisher of

a published work to obtain permission to copy an extract from the published

works where the copying of the work would not fall under an exception in the Act.

In other instances, based on Access Copyright's recommendation, publisher

affiliates of Access Copyright have directed Opt-Out Institutions to contact

Access Copyright to obtain a licence to copy their published works. Similarly,

Institutions with licences under the Interim Tariff, but that have not elected to take

up the optional digital licence under the tariff, occasionally require permission to

make digital copies of specific works in the Access Copyright repertoire that

cannot be licensed elsewhere for the same reasons.

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Wills Affidavit (A-395-11), Exhibit e , AR, Volume 5, Tab 8e ,p. 881 to 950

20

53. Since the issuance of the Interim Tariff, Access Copyright has refused to

grant AUCC members transactional licences for uses covered by the Interim

Tariff blanket licence and optional digital licence. The only alternatives available

to those institutions are either to opt into the Interim Tariff or its optional digital

licence and copy the published work, or to refrain from copying and using the

published work.

54. The evidence before the Board was that Access Copyright began refusing

licences of digital copying, having granted these licences while the prior blanket

licences were in force, as of January 1, 2011 if the Institution requesting the

licence was an Opt-Out Institution or an Institution that had not elected to obtain

the optional blanket digital licence under the Interim Tariff. The evidence before

the Board also established that publishers affiliated with Access Copyright began

to refer requests for transactional licences that had previously been handled

directly by them to Access Copyright after the Interim Tariff was in effect.

Wills Affidavit (A-395-11), Exhibit e , and Appendixes A-K, p.889-950,957-979, Exhibit E , and Appendixes A-E, AR, Volume

5, Ta b 8 e and 8E, p. 881-950 and p. 954-979

55. Operating under the Interim Tariff would be prohibitively expensive for

Opt-Out Institutions which require permission to copy only a few published

works in any year. Access Copyright has taken the position that by copying even

one extract from a published work in its repertoire during an academic year, an

Institution would be liable for the full Interim Tariff blanket licence royalties for

that entire academic year. In addition, for that academic year the Institution

would also have the potential liability, upon certification of the Proposed Tariff,to pay Access Copyright the difference between the royalty rates in the Interim

Tariff and the royalty rates in the Proposed Tariff as certified.

56. The refusal of Access Copyright to provide transactional licences to

institutions on the occasions when they were requested left the institutions

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without an effective means to secure permissions to copy the works in question.

To address this, AUCC applied to the Board on June 8, 2011 to amend the Interim

Tariffby adding a transactional licence option to permit copying, onto paper or in

electronic form, of published works in the Access Copyright repertoire at a

reasonable per page royalty rate. The amendment requested by AUCC wouldenable an Opt-Out Institution to make a copy and use a work, or extract of a work,

in the Access Copyright repertoire without triggering the blanket tariff royalty

rate for the academic year in which the copy was made, in those situations where

an Opt-Out Institution was not able to obtain a permission to copy the work from

the publisher or other licensing organizations and an exception under the Ac t was

not available.

Wills Affidavit (A-395-11), Exhibit C, AR, Volume 5, Ta b 8e ,p.881-950

57. The Board denied the application for a transactional licence option on

September 23, 2011. In the Transactional Licences Decision the Board

determined that the Interim Tariff reflects the status quo of the blanket licence or

"take i t or leave it" approach of the prior licences between Access Copyright and

institutions and should not be disturbed, that Access Copyright should not be

required to depart from the blanket licence conferred under the Interim Tariff, thattransactional licences raised monitoring issues and that the degree of usage by

institutions indicated institutions could do without transactional licences.

AR, Volume 1, Ta b 2A, p. 2-A1 to 2-A15

II STATEMENT OF ISSUES

58. The issues raised by this application are:

(i) Whether the Opt-Out Interrogatories Decision and TransactionalLicences Decision of the Board were reasonable decisions having

regard to the circumstances and relevant law;

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(ii) Whether the Board exceeded its authority under the Act by

requiring Opt-Out Institutions to answer the Access Copyright

interrogatories;

(iii) I f the Board was authorized to require Opt-Out Institutions toanswer the Access Copyright Interrogatories, whether the Board's

decision was umeasonable:

(a) As a result of the Board's failure to consider whether the

order was necessary or proper under sections 66.7(1) and

70.15 of the Act;

(b) As a result of the Board's failure to consider the

requirements for third party discovery;

(c) Given the inappropriate and heavy imposition of burden,

time and expense in answering the interrogatories would

require when the Opt-Out Institutions are not licensed

under the Interim Proposed Tariff;

(iv) Whether the Board's statements at paragraphs (6) to (8) of the Opt

Out Interrogatories Decision were improper.

59. In relation to the Transactional Licence Decision, the issues are:

(i) Whether the decision is inconsistent with and fails to take account

of the statutory context and purpose of the copyright licensing

provisions of the Act;

(ii) Whether the Board misapprehended the purposes for providinginterim relief or orders in section 66.51 of the Act; and

(iii) Whether the decision is inconsistent with earlier decisions of the

Board that the Interim Tariff is voluntary and will not impair

alternative licensing mechanisms.

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II I ARGUMENT

STANDARD OF REVIEW

60. The Applicants submit that the standard of review of the Opt-Out

Interrogatories Decision and Transactional Licensing Decision is reasonableness,

and that both decisions fail to reach the reasonableness standard.

Dunsmuir v. New Brunswick, [2008] 1 SCR 190, 2008 SCC 9("Dunsmuir"), Applicants' Book of Authorities ("ABA"), Tab1

Alberta (Information and Privacy Commissioner) v. AlbertaTeachers' Associations, 2011 SCC 61, ABA, Tab 2

61. The Board exceeded its powers under sections 66.7 and 70.15 of the Ac t in

extending discovery obligations to non-parties, and populated its reasons with

improper statements amounting to breaches of fairness in the Opt-Out

Interrogatories Decision. In the Transactional Licences Decision, the Board failed

to have regard to the statutory context in which the transactional licences request

was made and misinterpreted the purpose of its interim order authority by blindly

applying a misplaced perception of the status quo. In both decisions, the Board

imposed unreasonable, disproportionate obligations on Institutions given the

extremely burdensome nature of the interrogatories for Institutions not licensedunder the tariff, and the cavalier disregard for the lack of access to published

works that the refusal of transactional licence option would entail.

62. The Applicants submit that the errors in the Decisions put them beyond

the range of acceptable outcomes that are defensible and do not meet the standard

of reasonableness required of the Board's decisions.

Dunsmuir, para 47, ABA, Tab 1

DECISIONS ARE FINAL DETERMINATIONS MERITING REVIEW

63. The Opt-Out Interrogatories Decision is different than a case about

whether parties to a proceeding must answer interrogatory questions due to their

content. In the Opt-Out Interrogatories Decision, the Board extended the

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requirement to answer interrogatories beyond the institutions affected by and

using the Proposed Tariff, which institutions answered the interrogatories and

about which there is no issue before the Court, to those not licensed by Access

Copyright. This case raises issues that are jurisdictional in nature about the

Board's authority to reach beyond the parties to a tariff to impose discovery

requirements that merit the consideration of this Court and is a final determination

of the obligations of Opt-Out Institutions to provide answers to the

comprehensive interrogatories issued by Access Copyright in the Proposed Tariff

proceedings before the Board. If judicial review of the Opt-Out Interrogatories

Decision is not available at this stage of the Board's Proposed Tariff proceeding,

the damage, by virtue of the very broad and expansive nature of the

interrogatories, and the time and burden involved in responding to them, will havebeen done to the Opt-Out Institutions selected to answer them.

The Canadian Copyright Licensing Agency operating as AccessCopyright v. The Province of Alberta as represented by theMinister o f Education et al., 2006 FCA 108, paras. 3 and 5,ABA, Tab 3

64. The application to review the Opt-Out Interrogatories Decision has not

impaired the decision-making process of the Board. The Interrogatories Opt-Out

Decision was stayed by this Court on the basis of irreparable harm to the affected

Opt-Out Institutions should they be required to answer the interrogatories. The

proceedings to consider the Proposed Tariff are continuing, and are at the stage

where the parties are negotiating a survey of copying at Institutions. The parties

have, on consent, requested and been granted an early hearing date by this Court.

Order dated September 28, 2011 staying August 18, 2011Decision of Copyright Board, AR, Tab lB, p. l-Bl to l-B2

Order dated January 23, 2012, AR, Tab 3, p. 23-27

65. The Transactional Licence Decision is a final disposition of the rights of

Institutions without a blanket licence issued under the Interim Tariff to obtain a

transactional licence. The term of the Proposed Tariff is from 2011-2013. It is

unlikely the Board will conclude its consideration of the Proposed Tariff and issue

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a final tariff over this period. The Board's Transactional Licences decision finally

determines whether Institutions without blanket licences from Access Copyright

can obtain transactional licences for the period of the Proposed Tariff, and the

remedies of a non-licensed Institution before the Board are exhausted on this

issue. The Transactional Licences Decision also raises the very issue of whether

the Board misinterpreted and applied the wrong test under its interim order

authority. The opportunity to review the Transactional Licences Decision will be

lost i f udicial review of the decision is not available now and must await the final

tariff certification of the Board. Judicial review of the Board's Transactional

Licences Decision does not interfere with the progress of the proceeding to

consider the Proposed Tariff.

Canada v. Schnurer Estate (C.A.) [1997] 2 F.C. 545, para 13,ABA, Tab 4

Canada (Minister o f Public Safety an d Emergency Preparedness)v. Kahlon, [2006] 3 FC R 493, paras 12, 14 an d 16, ABA, Tab 5

Ocean Services Limited v. Marcel Guenette, 2010 FC 185, paras.12 an d 13, ABA, Tab 6

Canada (Attorney General) v. Vincent Estate, 2004 FC 1016,257FT R 107, ABA, Tab 7

OPT-OUT INTERROGATORIES DECISION

The Board Does Not Have the Authority under Sections 66.7(1) an d 70.15 ofthe Actto Order the Opt-Out Institutions to Provide Responses toInterrogatories

66. The Applicants submit that the authority of the Board to manage the

interrogatories phase of its proceedings derives from, and is limited, by the

Board's authority in section 70.15 of the Ac t to certify the Proposed Tariff. The

general powers of the Board in section 66.7(1) of the Ac t may only be exercised

within the limits of the Board's authority in section 70.15 to consider and certify a

tariff.

67. The Board's authority to consider and certify the Proposed Tariff is in

section 70.15 of the Act, which directs the Board to set rates and the terms and

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conditions of tariffs proposed for certification as the Board considers necessary,

"having regard to the objections to the tariff'. The Act further specifies, at section

67.1(5) that, following publication of a proposed tariff in the Canada Gazette,

"prospective users or their representatives" may file written objections to the tari ff

with the Board.

S.70.14 Where a proposed tariff is filed undersection 70.13, subsections 67.1(3) and (5) and subsection68(1) apply, with such modifications as the circumstancesrequire.

S. 70.15 The Board shall certifY the tariffs asapproved, with such alterations to the royalties and to theterms and conditions related thereto as the Board considersnecessary, having regard to any objections to the tariffs.

S.67.1(5) As soon as practicable after the receipt of aproposed tariff filed pursuant to subsection (1), the Boardshall publish it in the Canada Gazette and shall give noticethat, within sixty days after the publication of the tariff,prospective users or their representatives may file writtenobjections to the tarif f with the Board.

68. The January 1, 2011 Opt-Out Institutions cannot be regarded as

prospective users of the Proposed Tariff under section 67.1(5) of the Act. These

institutions have clearly indicated, by their actions, that they are conducting their

copying activities outside the Proposed Tariff. In addition, the Interim Tarif f will

remain in place over most, and likely all, the 2011-2013 term of the Proposed

Tariff. By not taking up a licence under the Interim Tariff, the January 1, 2011

Opt-Out Institutions clearly are not prospective users of the Proposed Tariff.

Society of Composers, Authors and Music Publishers o f Canadav. Canada (Copyright Board), 47, CPR (3d) 297, ABA, Tab 8

69. On an application to reconsider its Opt-Out Interrogatories Decision by the

Association of Community Colleges of Canada ("ACCC"), another objector in the

Proposed Tariff proceeding, the Board has reasoned that the term "prospective

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user" cannot be interpreted by reference to the intent of an institution not to take

up a licence under the final tariff, once the Proposed Tariff is certified. The only

evidence before the Board, however, regarding the January 1, 2011 Opt-Out

Institutions was that these institutions were and are not licensed, for all intents and

purposes, under the Proposed Tariff. There was no objective basis upon which

the Board could conclude that the January 1, 2011 Opt-Out Institutions were

prospective users of the tariff when they were, and remain, unlicensed under an

Interim Tariff that will run the term of the Proposed Tariff.

Board Decision dated September 13, 2011, (Reconsideration ofAugust 18, 2011 Decision), ABA, Tab 9

70. The Board 's Model Directive on Procedure recognizes the limits to which

the interrogatories issued in a tariff proceeding are subject. Paragraph B. l of the

Model Directive states that interrogatories can be addressed to "participants" by

parties or the Board:

1. Interrogatories

Interrogatories are NOT filed with the Board. They areserved on the participant to whom they are addressed, bythe date set for that purpose, and presented in the form setout in Appendix II. Interrogatories can be addressed to anyparticipant who is allowed to file evidence or to crossexamine a witness.

The Board may, at any time, direct interrogatories to aparticipant.( emphasis added)

Copyright Board of Canada, Model Directive in Procedure,dated March 16,2011, ABA, Tab 10

71. The January 1, 2011 Opt-Out Institutions are not "participants" in the

proceeding to consider the royalty rates and terms and conditions of the Proposed

Tariff. These institutions operate outside the Proposed Tariff to secure their

copying permissions.

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72. Further, the Board cannot sweep in to the interrogatories process Opt-Out

Institutions operating outside the Proposed Tariff on the basis of their

membership in AUCC.

73. AUCC's members have divergent interests in relation to the proceedingsto certify the Proposed Tariff, because some of its members have licences from

Access Copyright under the Interim Tariff, and to that extent have also elected to

be subject to the final tariff when it is certified, while other members (the Opt-Out

Institutions) have elected not to obtain a licence under the Interim, or the

Proposed Tarif f when it is certified.

74. AUCC members that have elected to obtain a licence from Access

Copyright under the Interim Tariff are, by nature, the users and prospective usersof the Proposed Tariff, are the AUCC members that are concerned with the

content of the Proposed Tariff, and are the members on whose behalf AUCC

appears as an Objector to the Proposed Tariff. By definition, though, AUCC

members that have elected not to obtain a licence under the Interim Tariff, and to

that extent, the final version of the Proposed Tariff, are not concerned with the

content and terms of the Proposed Tariff, because they operate outside the tariff.

As an Objector to the Proposed Tariff, AUCC does not object to the royalties and

terms and conditions of the Proposed Tariff on behalf of the Opt-Out Institutions

which are not prospective users of the Proposed Tariff, but does object on behalf

of its members that are licensed under the Interim Tariff, and will be licensed

under the Proposed Tariff. I

AUCC filed its objection to the Proposed Tariff on July 15, 2010, six months before the

Interim Tariff was issued and before the expiryof

the prior copying licences. At that time,AUCC indicated that it objected to the Proposed Tariff on behalf of its members outsideQuebec. Immediately upon the prior licences expiring, however, the Januaty I, 20 II Opt-OutInstitutions elected not to take up licences with Access Copyright under the Interim Tariff.Interrogatories are the first stage of the proceeding to consider the Proposed Tariff. AccessCopyright served its interrogatories on AUCC on March 21, 2011. AUCC objected to theinterrogatories on April 4, 2011 and in that objection, stated, in response to the interrogatoryasking AUCC to identify all parties that it represents in the Tariff, that it represents "itsmembers located in Canada outside Quebec who are operating pursuant to the licenceconveyed by the Interim Tariff", and that it objected to securing answers to the interrogatories

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75. The Board cannot exercise the powers as a superior court of record

afforded it under section 66.7(1) of the Ac t independently of or beyond its

statutory authority. The Board itself has recognized that it cannot, for example,

use its powers to enforce the terms and conditions of a tariff, because the Ac t does

not allocate enforcement authority to the Board. Similarly here, as the Board has

no authority under section 70.15 to require non-objectors like the Opt-Out

Institutions to participate or provide discovery in the tariff proceeding, the

Board's powers under subjection 66.7(1) of the Act do not extend its authority to

do so.

Private Copying Tariff, Enforcement, Re (2004), 32 CP R (4th)271 (Copyright Board, ABA, Tab 11

Public Performance o f Musical Works 2003-2007, November 30,2006, para 14, ABA, Tab 12

Board Failed to Consider Whether the Opt-Out Interrogatories Order wasNecessary or Proper

76. If the Board is authorized to require non-parties to answer interrogatories,

it is submitted that the Board failed to consider whether the order was necessary

or proper, the criteria for non-party discovery, and whether the order is

proportionate given the expanse and breadth ofthe interrogatories.

77. The Board's powers under section 66.7(1) to compel the production and

inspection of documents are not akin to ordering an Institution or person to

provide expansive discovery. First, discovery is provided to a party to a

proceeding, not to the Board. Second, discovery requires parties to provide

information, and although interrogatories also ask for document production, their

primary purpose is to gather information in the manner of a discovery. I t is

submitted that the Board's authority to order that answers to interrogatories beobtained from Opt-Out Institutions cannot be not based on the words "the

production and inspection of documents" in section 66.7(1) of the Ac t as a free

from the January 1,2011 Opt-Out Institutions. Affidavit of Steve Wills, Paragraphs 6, 17;Exhibits B, I.

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standing source of authority, independent of the Board's authority under section

70.15. Rather, the Board must exercise caution when faced with a request to

impose a broad-ranging and burdensome discovery obligation on non-participants

to a section 70.15 proceeding. In addition, the Board must consider whether the

order is necessary or proper for the exercise of its jurisdiction under section 70.15.

Society o f Composers, Authors and Music Publishers o f Canadav. Canada (Copyright Board), supra, ABA, Ta b 8

78. The Board exercised no restraint or caution when faced with the request

by Access Copyright to impose discovery obligations beyond the Institutions

using the Interim Proposed Tariff and made no examination of whether the Order

was necessary or proper under section 70.15. It made a bald statement, without

any elaboration, that the information from Opt-Out Institutions is "relevant". The

Board made no consideration of whether the voluminous information from 55

other institutions made more information from the January 1, 2011 Opt-Out

Institutions "necessary", gave no indication how or why the information from

Opt-Out Institutions would or could be relevant, did not consider whether the

operational burden imposed by the Access Interrogatories was necessary for non

parties to undertake and had no regard as to whether or how the information

would be probative or useful. As such, the Board's decision cannot be areasonable or proper exercise of its jurisdiction under sections 70.15 and 66.7(1)

of the Act.

The Board Failed to Consider Whether the Requirements for Non-PartyDiscovery were Me t

79. If the Board was authorized to require that Opt-Out Institutions provide

responses to the Access Interrogatories, the Board had no regard to the

requirements superior courts of record must require be met before ordering, ineffect, third party discovery. A party requesting third party discovery must show

that the material is relevant, the party sought to be examined is engaged in activity

that is the subject of the claim, that the party seeking discovery cannot get the

information needed in other formal or informal ways, that the request is

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proportional in nature given the ability of the third party to produce the requested

documents and information, there is no unjustified interference and prejudice to

the third party caused by the discovery request, that the request will not interfere

with progress of the action, and that the time and expense involved in fulfilling

the request is not onerous. None of these criteria are addressed in the Board's

decision.

BM G Canada v. Roe, 4 FCR 81, 2005 FC A 193, ABA, Tab 13

GEA Group AG v. Flex-N-Gate Corporation, 2009 ONCA 619,paras 50-53, citing with approval Alberta, ABA, Tab 14

80. The January 1,2011 Opt-Out Institutions, by definition, are not engaged in

the matters at issue before the Board, which relate to the approval of a tariff and

royalty rates of the Proposed Tariff. The information about their copying activity

cannot, by definition, be relevant. By contrast, the scope and extensive nature of

the interrogatories will cause significant and material disruption to the operations

of the January 1,2011 Opt-Out Institutions selected to answer the interrogatories,

as well as significant and material expense, for which no compensation is

provided.

Wills Affidavit (A-339-11), paras 21, 23, Exhibit H, and I, AR ,Volume 2, Tabs 5, 5H, and 51, p. 49-51,215-239, and 240-331

Hurst Affidavit, paras 22-25, AR, Volume 3, Tab 6, p. 390-391

81. The prejudice to January 1,2011 Opt-Out Institutions from answering the

Access Interrogatories far outweighs the probative value and usefulness of the

information, given the extensive information already provided by AVCC from 55

Institutions. Finally, the scope and breadth of the Access Interrogatories, directed

at a January 1, 2011 Opt-Out Institution not licensed under the Interim Tariff

lacks any proportionality and is excessive in relation to the marginal benefit to be

gained from requiring answers from the January 1, 2011 Opt-Out Institutions in

question.

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82. Third party discovery is an intrusive and extraordinary remedy that must

be granted by courts and tribunals alike with caution. In addition to meeting the

criteria above, an applicant for third party discovery must show why the order is

necessary and demonstrate that it is proportional in nature and will not impose an

unreasonable burden on the non-party. I t is submitted that the requirements for

non-party discovery caunot be said to have been met in this case.

(Treasury Branches) v. Leahy (2001, 270 ARI, affd 303 AR 63(CA)

Tetesky v. General Motors Corp, 2010 ONSC 1675, para 47,ABA, Tab 15

83. The Board made no inquiry to address these requirements and there is no

. basis on the facts or circumstances here to infer such reasoning into the Board's

Opt-Out Interrogatories Decision. As such the Board's decision does not meet the

regarding requirements for justification and intelligibility and carmot be

reasonable.

Alberta Information and Privacy Commissioner v. AlbertaTeachers Association, supra, ABA, Tab 2

Dunsmuir, supra, para 47, ABA, Tab 1

Extensive Nature an d Lack of Proportion of the Interrogatories

84. The Access Copyright interrogatories are enormous. They are grossly

disproportionate to the value of information regarding an Opt-Out Institution

operating outside the Interim Tariff under the Board's consideration. The Board

made no consideration of whether the interrogatories were proportionate in

relation to an Opt-Out Institution, but simply assigned to Opt-Out Institutions the

same obligation to provide interrogatory responses as to Institutions licensed

under the Inter im Tariff.

Rule 29.2.03, Sedona Canada Principles, Principle 2, OntarioRules of Civil Procedure, ABA, Ta b 16

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85. I t is not justifiable, and is therefore unreasonable, for the Board to have

ordered that responses to all interrogatories be secured without any consideration

of the fundamentally different position of the Opt-Out Institutions. Further, it was

unreasonable of the Board to impose the very significant demands that providing

answers to these expansive interrogatories would entail given the marginal

connection of the January 1, 2011 Opt-Out Institutions to the Proposed Tariff

proceeding and the wealth of information on the same questions having already

been provided by 55 other institutions, 21 of which became Opt-Out Institutions

as of September 1, 2011.

Improper Enforcement Threats and Prospective Evidentiary Rulings

86. In the Opt-Out Interrogatories Decision, the Board also:

(6) directed that "Access may file with the Board anapplication prohibiting any objector from adducing evidence aboutan [Opt-Out Institution] that does not provide responses by the dateprovided to do so, or that does not remedy a deficient response bythe date provided to do so. Once such an order has been issued,Access will be allowed to adduce evidence about the [Opt-OutInstitution], but objectors will not be allowed to refute suchevidence except with leave of the Board";

(8) "remind[ed] the objectors that an [Opt-Out Institution's]decision not to avail itself of the interim tariff [in respect of whichthe Opt-Out Institutions have elected not to require a license fortheir copying activities 1 in no way guarantees that [the Opt-OutInstitution] will bear no liability under the final tariff, that itsliability will not be retroactive or that it will not be compelled,pursuant to the final tariff, to provide information about its copyinghabits during the period between January 1, 2011 and the date onwhich the final tariff is certified .. "; and

(8) stated that "A lack of information concerning copying

habits at Opt-Out Institutions might tendto

increase anyFTE

royalty the Board may decide to certify. This would happen if theaverage volume of copying of works from Access Copyright'srepertoire by Opt-Out Institutions was less than by otherinstitutions. This will not prevent the Board from certifying such aroyalty based on an imperfect record."

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87. The Board's statements are improper and well beyond what can be

justified as an incident of the Board's authority to order responses to

interrogatories.

88. The statements in paragraph (6) above constitute a putative but obviousbreach of fairness insofar as the Board has decided, in advance, to preclude

AVCC from bringing any evidence about an Opt-Out Institution that does not

provide responses to the interrogatories, without any assessment of the relevance

of that evidence, or even whether it is evidence that was requested in the

interrogatories. The Board cannot provide fair procedure by making prospective

decisions to reject the admission of evidence before making a reasoned

assessment of its relevance or weight.

89. In addition, pre-emptively barring AVCC from bring evidence in response

to evidence brought against an Opt-Out Institution by Access Copyright, without

limit, except if the Board grants leave will unreasonably constrain AUCC from

putting forward its case in the event that evidence from Opt-Out Institutions

becomes relevant at the hearing. The Board's pre-emptive ruling has no expressed

limit, and raises the presumption that leave will only be granted in exceptional

cases. A pre-emptive bar of this kind offends the fundamental audi alteram

partem principal that parties to a proceeding must be given an opportunity to be

heard.

Dunsmuir, supra, paras 85-90, ABA, Ta b 1

Cardinal v. Director o f Kent Institution, [1985] 2 SCR 643, paras14 and 15, ABA, Ta b 17

90. The references in paragraph (8) of the Opt-Out Interrogatories Decision to

matters such as liability under the certified tariff, are completely irrelevant to thematter of responses to interrogatories, and improperly conflate liability under, and

enforcement of, the certified tariff, over which the Board has no jurisdiction, with

the powers of the Board to order discovery in a tariff proceeding. It was entirely

improper for the Board to threaten Opt-Out Institutions not licensed under the

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Interim Tariff with repercussions regarding liability under the certified tariff or by

suggesting the Board could embed adverse terms in the certified tariff.

Private Copying Tariff, Enforcement Re, supra, ABA, Ta b 11

91. The Board's statement in paragraph (7) of the Opt-Out Interrogatories

Decision that a lack of full response from Opt-Out Institutions would tend to raise

the royalty rate in the final tariff improperly pre-judges a live issue before the

Board. I t is improper for the Board to signal its direction on the merits of the

Proposed Tariff and the royalty rates it will set in an interlocutory decision

regarding answers to interrogatories, before the Board has received any evidence

whatsoever on the merits, or lack thereof, of the royalty rates in the Proposed

Tariff or heard any argument on this issue.

Opt-Out Interrogatories Decision is Unreasonable

92. I t is submitted that the Opt-Out Interrogatories Decision is an

unreasonable exercise of the Board's authority to require responses to

interrogatories in a tariff proceeding. The Board's extension of its authority to

order responses to interrogatories be provided by non-parties is based on a

misinterpretation of its authority to consider the tariff in section 70.15 and its

general powers under section 67.1 (5) of the Ac t and robs its decision of a

reasonable interpretative foundation under the Act.

93. The use of the Board's authority under sections 70.15 and 66.7(1) to

authorise the order to provide interrogatory responses from non-parties is also

inconsistent with the prior decisions of the Board, which have recognized that the

general process in section 66.7(1) powers cannot be exercised independently of

the Board's statutory authority. The extension of the interrogatories obligation to

the Opt-Out Institutions as non-parties is inconsistent with the Board's procedural

directive, which requires interrogatories to participants in a tariff certification

proceeding. This also signals that the decision and its outcome are unreasonable.

Alberta Information and Privacy Commission v. AlbertaTeachers' Association, supra, para 56, ABA, Tab 2

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94. The Board's failure to engage in any consideration of whether the order

was necessary or improper or whether it meets the requirement for non-party

discovery takes the decision beyond the range of acceptable outcomes defensible

in law, and deprives the Opt-Out Interrogatories Decision of any legal

justification. In addition, the disproportionate nature of the obligation imposed by

the Board, in the form of the expansive and burdensome nature of the

interrogatories, set against the great volume of information from Institutions,

including a number of Institutions that became Opt-Out Institutions, and the lack

of attachment to the proceedings of the Opt-Out Institutions creates a highly

disproportionate result that is of itself umeasonable.


95. Finally, improper nature of the Board's statements at paragraphs (6) to (8)

of the Board's reasons, which result in substantive defects in the Board's execution

of its obligation to provide procedural fairness, render the statements

umeasonable.


TRANSACTIONAL LICENCES DECISION

Inconsistent with Statutory Context and Purpose of Copying LicensingProvisions

96. The Applicants submit that the Transactional Licences Decision is

inconsistent with the statutory context and purpose of the copyright licensing

provisions of the Act. A purposive interpretation of these provisions must take

into account the purposes of the Act as a whole. In Theberge v. Galerie d'Art du

Petit Champlain Inc. ("Theberge"), the Supreme Court of Canada described the

balance struck in the Ac t between the public interest in dissemination of worksand obtaining ajust reward for the creator, as follows:

Excessive contrdl by holders of copyrights and other forms ofintellectual property may unduly limit the ability of the publicdomain to incorporate and embellish creative iunovation in thelong-term interests of society as a whole, or create practical

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99. I t is submitted that the purpose ofthe copyright licensing regime in the Ac t

described above is to facilitate and provide access to copying permissions for

users of works, so as to secure proper reward for their creators. The purpose of

these provisions is not to block access, force particular or distorted licensing

arrangements on users or to require one form of licensing over another.

100. The. practical effect of the Transactional Licenses Decision is to deny

access to copyright permissions to Opt-Out Institutions and licensed Institutions

without the optional digital copying licence. Obtaining a blanket licence under the

Interim Tariff and exercising the digital licensing option would create a severe

distortion in the licensing result and is not a realistic alternative given the high

entry costs of a blanket licence, which is meant to cover all copying, when Opt

Out Institutions or Institutions without the optional digital licence only seek

licences to copy a limited number of specific works.

101. The Board ignored the purposes and object of the licensing regime in the

Ac t by refusing to provide a transactional licence option in the Interim Tariff. The

evidence before the Board was that transactional licences were requested in the

absence of licensing alternatives available from authors, publishers or other

sources, or where publishers directed Institutions to obtain copying permissions

from Access Copyright. It is directly contrary to the purposes of facilitating

access to copying permissions in the Ac t for the Board to deny the provision of a

transactional licence option when no other licensing option was available and the

result would necessarily be that the Institution must forego copying the work.

Instead, the Board determined that it must preserve the blanket licence

requirement of the Interim Tariff, notwithstanding the practical blocking of

licensing access that this would present. It is submitted that the Board's

Transactional Licences Decision resulted in exactly the kind of practical

impediment to dissemination that the Supreme Couct indicated in Theberge

should be avoided.

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102. Further, the Board's refusal to provide a transactional licences option is

inconsistent with the purpose of section 70.2 of the Act. Section 70.2 mandates the

Board to facilitate licence agreements where agreements set between collective

societies and "any person" has not been reached.

103. The purpose of section 70.2 is to ensure that "any person" may have

access to the copying permission needed to copy a work in the repertoire of a

collective society, in the terms and conditions and rates sect by the Board. Section

70.2 contemplates that access to copying permissions from a collective society, is

avai

01 AUCCs Memorandum of Fact and Law (January 30, 2012)

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Transcript of 01 AUCCs Memorandum of Fact and Law (January 30, 2012)