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Copyright – Copying for Educational Purposes Must Still Be Fair

In a decision released on July 12, 2017, the Federal Court held that an Interim Tariff issued by the Copyright Board for secondary education institutions was mandatory and that York University's so-called "Fair Use Guidelines" were not "fair". As a result, the voluminous copies made by York did not qualify for the "fair dealing" exemption for educational purposes in the Copyright Act and Access Copyright was entitled to the payment of royalties under the tariff.

Background

The Canadian Copyright Licensing Agency (“Access Copyright”) is a collective society which administers copyright in published literary works in Canada under a regime established by the Copyright Act. Access Copyright is responsible for collecting royalties from users of copyrighted works and then distributing the proceeds to the authors and creators of the works. 

The royalties payable by identified categories of users are established by the Copyright Board and published periodically as a "tariff". With respect to the tariff established for secondary educational institutions, many objections were raised during the consultation process to set a new tariff prior to 2010 and no agreement was reached, potentially leaving a gap in the regime at the expiry of the previous tariff. An Interim Tariff was therefore issued by the Copyright Board in December 2010.

York University took the position that the payment of royalties under the Interim Tariff was voluntary and purported to “opt out” of the Interim Tariff in 2011. Instead, it sought to rely largely on a new exemption added to the Copyright Act in 2012 permitting "fair dealing" in works for the purpose of "education" and refused to pay any royalties to Access Copyright.

Fair Dealing

Although the Copyright Act does not define what constitutes “fair dealing”, the issue was recently considered by the Supreme Court of Canada in 2004 in in CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 SCR 339 which established a two-part legal test. The first step of the test is to establish that the copying is for an authorized purpose set out in section 29 of the Copyight Act. The second step is to consider whether the copying was “fair”. In this regard, six non-exhaustive factors are to be considered:

1.            the purpose of the dealing;

2.            the character of the dealing;

3.            the amount of the dealing (amount of copying);

4.            alternatives to the dealing;

5.            the nature of the work; and

6.            the effect of the dealing on the work. 

York's "Fair Dealing Guidelines"

To establish what and how much material it believed could be copied from published works for use by its professors and students under the "education" exemption, York adopted "Fair Dealing Guidelines". The Guidelines were modeled on guidelines developed by the Association of Universities and Colleges of Canada (“AUCC”). These guidelines permitted the copying of a “short excerpt” from a copyrighted work in either paper or electronic form. A “short excerpt” was defined as 10% or less of a work, or no more than (a) one chapter from a book; (b) a single article from a periodical; (c) an entire artistic work from a compilation containing other artistic works; (d) an entire single poem or musical score from a compilation containing other poems or musical scores; or (e) an entire entry from an encyclopedia, dictionary or similar reference work; whichever is greater. However, the evidence established that York took no active steps to ensure compliance with its Guidelines.

Access Canada then brought an action against York University in the Federal Court of Canada to enforce the Interim Tariff. York counterclaimed for a declaration that any copies it made fell within the fair dealing exemption for the purpose of "education".

Court's Analysis

The Court’s analysis of fair dealing followed the structure of the two-part legal test set by the Supreme Court of Canada . With respect to the first step, the court concluded that the copies were made for the purposes of education and that education is an authorized purpose under section 29 of the Copyright Act. The next step of the test was to consider whether the copying was “fair”. In this regard, the Court considered York’s actions and its Guidelines in light of the factors identified by the Supreme Court in CCH v. LSUC and discussed above.

The Court’s analysis was highly fact specific and drew attention to the broad range and large volume of copying which was done. It found the threshold of 10% of a work or one component (chapter, article, poem etc.) to be arbitrary and unfair. It noted that such a limit would allow the copying of an entire story if it was found in a compilation while prohibiting the copying of the same story if published as a standalone work. The Court also found that the Guidelines would not prevent the copying of almost an entire work if it was divided up in the context of different courses and publishing formats. Finally, the Court found that the Guidelines lacked any consideration of what copying would be qualitatively fair, meaning that the core content of a work could be copied so long as the quantitative size of an excerpt was kept below the threshold. 

The analysis included a consideration of the alternatives to copying, the effect of copying on writers and publishers, and also on the broader publishing industry in Canada. The court found that York’s practice of assembling course packs of required reading containing excerpts from many sources enabled it to distribute materials widely without compensating the authors or publishers. It found that the university was freely copying materials that they paid for under the previous Tariff and they doing so on a massive scale, producing approximately 2.9 million paper copies of published works in course packs between September 2011 and December 2013. The court also found that its digital distribution of materials through databases and sharing services was convenient and cost effective for the university, but has a negative effect on the publishing industry and content creators. Again the volume of copying in this regard was massive, being estimated at 16.3 million digital copies for the same time period. In its judgment the Court placed considerable emphasis on the conduct of the university, its lack of infrastructure to administer its Guidelines, its failure to test and ensure compliance with them, and its failure to discipline staff who contravened them. 

The Decision and its Impact

In its decision released on July 12, 2017, the Court held that the Interim Tariff was mandatory and that Access Copyright was entitled to the payment of royalties under the tariff. The Court reviewed York’s conduct and its Guidelines and determined that the both the guidelines themselves and the manner in which York administered them were not “fair”. Consequently, its activity did not qualify for the education exemption even though copying was done for the purpose of education. As a result, York had infringed copyright by copying materials for inclusion in its student course packs and by posting materials for dissemination to students electronically without paying the royalties due under the Interim Tariff. 

This decision is expected to have a significant impact on colleges and universities throughout Canada since York’s Fair Dealing Guidelines were substantially similar to those adopted by the AUCC. If other Canadian educational institutions adopted the AUCC guidelines, their copying and fair dealing practices may leave them exposed to similar legal action. Of course, the decision is very fact specific and largely follows from the court's finding that the Guidelines themselves were arbitrary and that York took no active steps to ensure compliance with the Guidelines.

Given the subjective nature of many of the factors to be considered when administering the "fair dealing" test, it will likely be a risky challenge for any institution to develop practical guidelines that comply with the law. Although tariffs are often criticized for being arbitrary as well, they are sanctioned by law and provide some measure of ensuring that authors are compensated for the use of their works. 

York is entitled to appeal the Federal Court decision and many interested parties will be watching further developments over the next few months.