After two exciting and lively debates on the principle of technological neutrality (see Sebastian Beck-Watt’s coverage ) and reproduction rights (see Paul Blizzard’s coverage ), IP Osgoode’s Unpack��SODRAC symposium turned to a new panel to ‘unpack’ the paragraphs of [SODRAC] concerning the mandatory (or not) nature of tariffs set by the Copyright Board.

The fresh panel was asked to tackle the issue of whether the majority decision of SODRAC dispelled the notion—coined by Ariel Katz as the “”—that once the Copyright Board approves a tariff, any unauthorized use of a work triggers legal obligations to pay the royalties specified in the tariff and comply with the terms and conditions. The majority judgment’s alleged ‘debunking’ is found in paragraphs [101]-[13]. At paragraph [107] Justice Rothstein (for the majority) wrote: “In the absence of clear authority that this is Parliament’s intent, the burdens of a license should not be imposed on a user who does not consent to be bound by its terms” and, at [112] he concluded “that the statutory licensing scheme does not contemplate that licences fixed by the Board pursuant to [of the Copyright Act (the “Act”)] should have a mandatory binding effect against users [emphasis added].”

This issue was posed to the panel—comprised of Katz ( Intellectual Property Professor), Mario Bouchard (former General Counsel, ), Adriane Porcin ( Copyright Professor), Bobby Glushko (Head of the at University of Toronto), and Howard Knopf (Copyright Lawyer and )—in the form of the following questions: what are the potential implications for collective management organizations (CMOs), copyright users, and the copyright board?; and, more specifically (a major point of contention) does the reasoning of paragraphs [112]-[113] extend to other tariffs approved by the Copyright Board, and if so, does this “debunk” the so-called “mandatory tariff” theory?

Ariel Katz – The spectre is dismissed

Katz promptly asserted that Copyright Board issued tariffs are not mandatory. He focused on the language of of the Act, stating that even though a literal reading of s 68.2(1) appears to grant CMOs a right to collect royalties, it does not grant such a right. The provision reads:

68.2 (1) Without prejudice to any other remedies available to it, a collective society may, for the period specified in its approved tariff, collect the royalties specified in the tariff and, in default of their payment, recover them in a court of competent jurisdiction.

Katz examined the key phrase “default of their payment”, and reasoned that a collective may only collect royalties if the user owes a payment. Logically, Katz argued, if the user does not owe any payment they cannot be in default. As a result, a CMO’s right to collect only extends to a licensee, and not a user who falls outside the definition of the type of users to which the tariff applies.

Katz then argued that the holding was applicable to of the Act, since it is indistinct from s 70.2. He focused on the plain meaning of the word “tariff” and stated that if parliament wanted it to be mandatory, they would have called it a “Levy”.

As a joint intervener in the case with the Centre for Intellectual Property Policy, more of Katz’ argument can be found in his .

Mario Bouchard – Copyright Board-issued tariffs are mandatory

Bouchard followed Katz and began with a criticism of the way the issue was framed for the panel. He was concerned by the classification of s 70.2 licenses as tariffs. Bouchard dispelled this notion by explaining that s 70.2 licenses are not tariffs, they are regulations.

Turning to SODRAC, Bouchard argued in favour of the mandatory tariff theory. He reasoned that the SODRAC decision misapplied, misapprehended, and ignored copyright principles, principles of statutory interpretation, judicial precedents, legislative history, and the way foreign copyright values approach the regulation of collective societies. Concerning copyright principles, Bouchard stated that—well established by the —where permission is required, it is for the user to ask permission from the copyright owners, not the other way around. Asking rhetorically “are we to embrace Google’s approach to copyright: use first, ask forgiveness later”, he conceded that it may be an appealing instrumentalist approach, but Berne still legally controls.

Adriane Porcin – Do users need CMOs in a transactional world?

Porcin followed Bouchard and took a different approach to the issue, seeking not to conclude what the majority decision means. Rather, she examined the context in which the decision was made and inquired into the purpose of the tariff regime, mandatory or not. After detailing the “one size fits all” approach tariffs impose on users, she opined on the purpose of s 70.2 and CMOs in a transactional world where organizations (like CBC) are free to negotiate licensing terms with or without the assistance of the Copyright Board as arbitrator.

She presented four points on this topic: [1] different copyright collectives have different types of relationships with their members, depending on the nature of the work and industry in which the tariff functions, and so the ability to maneuver around s 70.2 depends on the rights granted to each CMO; [2] because some CMOs’ license valuations have disconnected from the utility of those licenses to the users, intervention of the Copyright Board is essential to ensure that users are not subjected to the CMO’s own price setting; [3] the Copyright Board is in a better position than CMOs to assess the fair market price, but the timing of valuations is an issue in fulfilling their role as market surrogate; and [4] CMOs’ evolving governance structures may alleviate the issue. On the last point, Porcin used Access Copyright as an example of a CMO that evolved by shrinking their number of directors and recruiting them based on their industry knowledge and skills. She explained this may be an encouraging step toward reducing the disconnected valuations between CMOs and users).

Bobby Glushko – The lack of clarity about tariffs is not user-friendly

Glushko—Head of Scholarly Communications and Copyright at University of Toronto—brought a unique user’s viewpoint to the panel. Glushko, whose role is to help his institution identify, evaluate and mitigate risk, focused on the uncertainty of this area of copyright law. He explained that in his case, the uncertainty over whether tariffs are mandatory or not—combined with the uncertain potential outcome of valuations involved in those tariff hearings—made his job particularly difficult.

Glushko further explained how the Principle of Technological Neutrality, in light of the SODRAC decision, only exacerbates the uncertainty in his position. It remained unclear what activities constitute copying, whether they are compensable, and what the value of those copies may be.

Howard Knopf – If you don’t like the bridge toll you can swim across

Knopf closed the panel and described why CMOs might see the SODRAC decision as bad for business: it expressed a clear message that, for users, tariffs are not mandatory. Knopf detailed the historical nature of a tariff, proffering an analogy to the old train tariffs from Toronto to Ottawa to regulate train companies, and suggesting that these were only mandatory it you took that particular train—you could ride a bus, plane, bike or hitchhike if they were cheaper, faster or better means to travel. His argument was that the SODRAC decision gives users leeway to choose “alternate means of transportation” by clearing rights for works they want to use through different mechanisms without running afoul of the Act. Bouchard spoke up in disagreement with this analogy, clarifying that users are free to use alternate repertoire (reinforcing the mandatory tariff theory).

Knopf conceded an earlier argument by Bouchard—that tariffs are in fact regulations—but tempered the concession by adding that parliament is capable of adding explicit provisions to make such tariffs mandatory. In the absence of such language, tariffs as regulations still need not be mandatory.

Conclusion

In light of the disagreement between the panelists on whether the mandatory tariff ‘Spectre’ had been debunked, the panel illuminated the difficulty presented by Glushko: ��If we cannot agree on the very nature of tariffs, it makes it difficult for both users and CMOs alike to predict the implications of �����ٸ鴡��’s decision. And, with CMOs acting as representation for authors (and owners), and users often being authors themselves, it is hard to find where the SODRAC majority decision falls with regard to the Act’s role as balancer of the public interest and obtaining a just reward for the creator. Does it tilt in favour of the public interest, giving more transactional freedom to users and authors, and accordingly encourage dissemination of new works? Or, does it inject more uncertainty and place greater barriers to the just reward of creators? One thing is certain: the issue made for a fascinating and passionate panel.

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IP Osgoode Speaker Series: Advocacy in IP Litigation in the Supreme Court

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“Reflections on the Supreme Court of Canada 2012 Copyright Decisions”

“Advocacy Skills and IP: Observations from the Bench”

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The IPilogue has covered these 5 cases in depth and our analysis of each can be found .

The lecture began with introductory statements by the Founder and��Director of IP Osgoode, . IP Osgoode's followed with a short outline of Justice Rothstein’s legal career and past accomplishments. We learned that before becoming a judge, Justice Rothstein spent a number of years in private practice dealing primarily with administrative and transportation law issues.�� He��later became a member of the Canadian Human Rights Tribunal��and held��a host of other offices throughout his career. (More information on Justice Rothstein’s career can be found .) Upon his appointment to the Federal Court in 1992, Justice Rothstein developed an interest in intellectual property law, writing a number of influential decisions. He was eventually elevated to the Supreme Court of Canada (SCC) in 2006. Professor Vaver made special note that the date of Justice Rothstein’s official swearing-in ceremony – April 10^th, 2006 – was auspicious for sharing the anniversary of the commencement of the and potentially meant important things to come for the field of copyright law as a result.

Justice Rothstein, taking to the podium,��made his sizable audience laugh at his forgetfulness to bring his “red Santa Claus robes” for the lecture and mentioned that his introduction would have been very different had his wife Sheila given it. This set the tone for the rest of the lecture – Justice Rothstein proceeded to give a very frank and honest discussion on the Copyright Pentalogy cases, eager to generate discussion on the cases and to answer questions the audience had on his experiences when deciding these cases.

Justice Rothstein began with a short discussion of 3 of the cases: ; ; and . To an extent, these could be considered the “less-controversial” decisions by the Supreme Court of Canada in the Pentalogy (as evidenced by the unanimous decisions in Re:Sound and SOCAN v Bell and the majority of 8 in Rogers v SOCAN). However, Justice Rothstein had some important points he wanted to share with respect to the latter two cases.

In SOCAN v Bell, the court had to determine if an online preview of a song could be considered “research” for the purpose of avoiding a claim of copyright infringement under a fair dealing exception. The SCC agreed with the decision of the Copyright Board – such a use was reasonable and was protected under fair dealing. Justice Rothstein referred to what he thought were 4 interesting aspects of this case:

1)���������� “Research” as described in the case is a very low hurdle to overcome and provides an expansive approach to the first part of the fair dealing test laid out in .

2)���������� In determining whether the specific dealing at issue was fair or not under��the second part of the fair dealing test,����the reviewing courts should��give deference to first instance courts that make a determination on this issue.

3)���������� Fair dealing is to be assessed from the point of view of the purchaser/user.

4) �� �� ��"Research" need not be associated with traditional intellectual pursuits.

In Rogers v SOCAN, the court determined the meaning of “to communicate the work to��the public” in s. 3(1)(f) of the Copyright Act in the context of streaming musical works. Justice Rothstein wrote the decision for the majority: streaming of a copyright work to a number of individuals is a public communication.�� The determination of this issue could be different depending on whose point of view (the sender or the receiver); in the end the desire for the court to remain technologically neutral led to it's decision.

The discussion of the last two cases in the Copyright Pentalogy ( and ) provided interesting insight into the thoughts and opinions of the Supreme Court Justice (it should be noted that Justice��Rothstein wrote dissenting opinions in each of the cases).

To begin his discussion of ESAC v SOCAN, Justice Rothstein told a story about a case he worked on in 1990 about railway companies and grain rates, representing four provinces in the case. Ian Binnie, who would also later become a Justice of the SCC presented a very compelling statutory interpretation argument to the court. After a sleepless night preparing a response, Justice Rothstein was able to convince the court that the railway company was attempting to get double compensation for its product (“double-dipping”). The purpose of the story was to illustrate that judges��do not like��double-dipping and will go to great��lengths to prevent any such unjust enrichment. The relevance of the anecdote became readily apparent as ESAC v SOCAN concerned copyright holders of musical works wanting to receive royalties for their music used in video games which had been downloaded over the internet. SOCAN attempted to construe the download as a communication (the artists only negotiate a right to reproduce the musical works), thereby entitling artists to a separate communication tariff.�� For Justice Rothstein, applying his caselaw experience as a practitioner, now on the other side, it wasn’t very difficult to see how some of the judges viewed SOCAN's approach as an attempt to “double-dip".

Justice Rothstein repeated the well-known concept that the purpose of the court is to give effect to legislation that has been created by governmental bodies and to interpret those laws in accordance with their purpose. However, Justice Rothstein disagreed with the approach that the majority took in this case – in determining that the list in s. 3(1) of the ��are not individual and distinct rights (as he and the minority believed) but rather enumerated examples of the sole rights to reproduce, perform and publish works that is outlined in the preamble to s. 3(1). He also disagreed with the majority’s decision to push technological neutrality (a desirable objective but not one enshrined in the Copyright Act) ahead of some of the statutory requirements that he felt were overlooked.�� Justice Rothstein then pointed out that SCC judges are not prescient or clairvoyant – the court does not usually know what will happen as a result of their decisions until they take place.

If technological neutrality becomes an overriding issue in copyright cases, Justice Rothstein is not sure if copyright laws will be read more narrowly now or what effect the Copyright Modernization Act will have on future cases that come to the federal courts.�� He��noted that some cases have already come forward as a result and that there will likely be many more.

Justice Rothstein finished his presentation with a discussion of the Access Copyright case – where photocopies made by teachers and distributed to their students as part of class instruction were determined to be fair dealing under s. 29 of the Copyright Act. These types of copies were considered “Category 4” photocopies – the other 3 categories were already considered fair dealing and were either copies made for the teacher’s use or at the request of a student. While the majority determined that these copies could be considered fair dealing (the end user was the student and considerations towards their research should weigh in their favour), the minority believed that since the teacher would be doing the copying, the teacher’s purpose should weigh in their favour.

After the decision by the SCC on the subject, the redetermination by the Copyright Board was, in the words of Justice Rothstein, “terse” (as most 1-sentence decisions tend to be). The SCC’s decision did not allow for much flexibility and went against one of the usual practices of appellate courts – to give deference to the Copyright Board in findings of fact (fairness in claims of fair dealings is one such finding of fact).�� Justice Rothstein noted that while the courts “don’t always practise what they preach”, one of the differences between the relationship between the Copyright Board and the courts as opposed to other tribunals is that the federal and provincial courts��have concurrent jurisdiction with the Copyright Board in interpreting rights. He finished his discussion of the case by stating that he agreed with a deferential review by appellate courts on factual questions but not on legal questions decided by any tribunal.

After a round of applause concluded his presentation, Justice Rothstein took a seat between Professors D’Agostino and Vaver and answered some of the questions that audience members had with respect to the Copyright Pentalogy and his thoughts on copyright issues. One such question was posed by IP Osgoode's concerning the role of the balancing principle as discussed in and its effect on statutory interpretation. Rothstein replied that this balancing is at the very heart of many of the decisions the court makes, not only in copyright cases but other intellectual property cases such as the . He also stated that while some may believe that the “balancing” done by the court is an after-the-fact justification of the court’s decisions, the concept of balance is always in the mind of the adjudicators.

Another thought-provoking question by an audience member was whether there is room for common law equity considerations in copyright law��(being a creature of statute). Justice Rothstein responded that even though the court is bound to the statute in a number of ways, equitable considerations can come into play.�� While he was unsure of the application of the equity��doctrine to Canadian copyright law, he mentioned��one possibility could be new factors being added to the six factor CCH fair dealing test.

After a resounding applause from the audience at the closing of the discussion and a short wait as the Supreme Court Justice answered the personal questions of some inquisitive Osgoode students, I was able to thank Justice Rothstein for speaking at our school and providing us his insights on these important copyright issues. It was an enlightening afternoon and I hope that he returns to speak to us again in the future. Perhaps we can get his wife Sheila to introduce him��next time? (You had to be there for his opening remarks, please do watch the webcast when it becomes available).

Adam Del Gobbo is a JD Candidate at Osgoode Hall Law School.

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Last Friday, IP Osgoode hosted a guest lecture by Justice Marshall Rothstein of the Supreme Court of Canada as part of IP Osgoode’s speaker series.�� He discussed subject matter patentability, business method patents and possible approaches that a Canadian court might take in deciding a case such as In Re Bilski.

Interim Dean Jinyan Li welcomed Justice Rothstein and highlighted his profound legal career. Justice Rothstein began his lecture by calling it a tribute to Professor David Vaver. After narrating a couple of witty anecdotes, Justice Rothstein noted that the case, which is to be heard by the US Supreme Court on November 9, would be a landmark decision and therefore made the topic of his guest lecture very timely. He briefly explained the facts of In Re Bilski, and outlined what is acceptable as patentable subject matter. He said, it is undoubtedly, a business method that involves some form of mathematical formula or algorithm.�� While the algorithm itself may be an abstract idea, if it has a practical application, the result may be patentable.

Justice Rothstein then discussed the definition of “invention” in Canada, highlighting two types of exclusions. First, he outlined statutory exclusions, such as for abstract theorems, scientific principles and the obvious. Second, the common law exclusions, such as for inventions that are non-economic or unrelated to trade, industry or commerce, inventions relating to medical and surgical methods, and natural phenomena.

Justice Rothstein also referred to the case, and stated his opinion that he agreed with Justice Binnie’s dissent and the following six interpretive principles: 1) Context of the act is expansive, 2) Check is in definition and statutory exclusions, 3) Patent office has no discretion to deny patent if it meets criteria, 4) Patent cannot be denied because of social, economic or cultural impacts, 5) Patentability and regulation should not be conflated, and 6) the Patent Act does not distinguish between lower and higher life forms.

Noting that business methods have historically not been patentable in Canada, Justice Rothstein discussed Schlumberger Canada Ltd. v. Commissioner of Patents, a case in which the Federal Court of Appeal dismissed a patent application for a computer system for the analysis of soil characteristics data for the purpose of oil and gas exploration on the basis that mathematical formula are excluded. He mentioned, in a more recent case, that filed an appeal to the Federal Court in respect of the decision of the Commissioner of Patents refusing to grant a patent. The Canada Patent Appeal Board, , stating that: “even if these concepts or rules are novel, ingenious and useful, they are still not patentable because they are business methods”.

Justice Rothstein then arrived at the US case and commented that under that case, a claimed invention was eligible for protection by a patent in the US if it involved some practical application, specifically if it produces “a useful, concrete and tangible result”. With the 2008 In Re Bilski decision however, the useful-concrete-tangible test was jettisoned for the “machine or transformation” test. Since State Street, thousands of patent applications were filed for business methods and Bilski was an attempt to rein in business method patents.

While Justice Rothstein conveyed that his words should be considered with caution,��he found the majority’s decision in Bilski and the machine or transformation test to be challenging.����

Justice Rothstein stated that he favoured Judge Rader’s dissenting opinion and compared it with the six principles set out by Justice Binnie in the Harvard Mouse case. Justice Rothstein also questioned the justification of the court mandated machine or transformation test, stating that the test is not contemporary. Further, he noted that Judge Mayer’s reasons appeared to be grounded in more policy based reasoning and less anchored in statute, and stated that stand alone policy reasons are for the Canadian Parliament (and the US Congress) to address.

Additionally, Justice Rothstein stated that it is necessary to look at entire process claims in the context of their practical application. A patent claim involving hedging unpredictable volume risks in selling or buying consumable commodities might be a practical application. However, if Bilski’s patent is held valid, there could be problems. For example, other industries may wish to pursue hedging volume risks and if Bilski refuses to licence, then what should be done?

Justice Rothstein also pointed out Lord Hoffman’s view (of the House of Lords), which takes a different approach to these issues and focuses on two over-riding principles for patentability. They are: 1) Practical application of the patented invention and; 2) that one cannot patent a manner of human behaviour. Business methods are unpatentable under the human behaviour principle, according to Lord Hoffman’s argument.

In the Q&A session that followed his talk, Justice Rothstein responded to an array of questions.�� With respect to patents being denied because of social, economic or cultural impacts, Justice Rothstein emphasized that the statutory and existing common law limits to patentability are the pertinent factors that should be applied in the judgment analysis. One audience member asked about his opinion on the policy based reasoning for the length of the term of the patent granted, and he answered that on a policy basis, it is possible to conceive that in theory, the length of patent protection may be different for different patents and patentees.�� He emphasized that investment is a very important criteria to consider, as a huge amount of money may be spent on the research and development of a patented product. So in some cases 20 years might not be enough. In other cases where the investment was minimal it might be too much. But it is simply not practical to consider different lengths for different patents or patentees. Policy makers have decided on 20 years and that is a practical and apparently generally acceptable term.

Powerpoint slides for Justice Rothstein's��guest lecture may be found on IP Osgoode’s .

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