2017 FC 669, 2017 FC 669

Please note that at paragraph 135 of the English version of the present decision, “to be given to his evidence” has been changed to “to be given his evidence”) following an erratum published in [2018] Volume 2,

Part 3. [2018] 2 F.C.R. 43 T-578-13 2017 FC 669 The Canadian Copyright Licensing Agency (“Access Copyright”) ( Plaintiff/Defendant by Counterclaim ) v. York University ( Defendant/Plaintiff by Counterclaim ) Indexed as: Canadian Copyright Licensing Agency v. York University Federal Court, Phelan J.—Toronto and Ottawa, May 16-19, 24-27, 30 and 31, June 1-3, 6-9 and 22-24, 2016; Ottawa, July 12, 2017.

Copyright — Infringement — A ction by plaintiff/defendant by counterclaim (plaintiff) against defendant/plaintiff by counterclaim (defendant) to enforce Interim Tariff issued by Copyright Board of Canada in respect of copying activities engaged in by defendant’s employees — Defendant counterclaiming seeking declaration that any reproductions made falling within defendant’s Fair Dealing Guidelines (Guidelines) issued; therefore, constituting exception for “[f]air dealing” under Copyright Act (Act), s. 29 — Plaintiff, collective society under Act, administering reproduction rights of copyright in published literary works on behalf of creators, publishers holding copyright in those works — Defendant, university in Ontario, having licensing agreements with plaintiff typically providing for payment of licence fees — Photocopying facility (Keele) located near defendant caught providing copying services without paying fees; judgment thereagainst obtained for unauthorized copying — Defendant contending unaware of unauthorized copying at Keele by staff professors; failing to take any disciplinary measures — Board granting plaintiff’s application for interim decision; setting terms of Interim Tariff but not publishing Tariff in Canada Gazette — Defendant formally informed of terms of Interim Tariff, operating thereunder until deciding to opt-out — Defendant arguing Interim Tariff, payment of copyright fees voluntary matter — Implementing own guidelines — Plaintiff alleging entitled to recover royalties from defendant pursuant to Interim Tariff while defendant claiming Interim Tariff not approved tariff — For action, issue whether Interim Tariff issued by Copyright Board as amended enforceable against defendant; for counterclaim, issue whether defendant’s dealings fair for purposes ofAct, s. 29 — L egislative history, particularly development of modern enforcement provisions, confirming legislative intent to provide collectives with effective enforcement mechanisms against users not subject to agreement, who reproduce, without proper authority or without benefit of exception, copyright protected works covered by collectives — Tariff subordinate legislation — While word “tariff” not defined in Act, word found in other contexts to indicate imposed charge — Use of term “tariff” consistent with provisions of Act directed at ensuring, inter alia, that copyright owners paid for reproduction of their works — Act, s. 68.2(1) indicating mandatory nature of payment for copying — Approved tariff form of subordinate legislation which mandatory, binding on any person to whom pertaining — Opting out not possible — If defendant had not copied any works in plaintiff’s repertoire, if it had obtained proper permission to copy works at issue or if copying exempt by law, then tariff would not be applicable — Absent these conditions, tariff mandatory — Although Board having obligation to publish in Canada Gazette, given circumstances, urgency of situation, Board deciding that publication not practicable — In this case, defendant having actual knowledge of Interim Tariff — If defendant’s position accepted, would be triumph of form over substance — Therefore, defendant’s arguments that Interim Tariff neither mandatory nor properly established dismissed — Offending copying constituting acts so closely connected to professors’ authorized employment activities as to render defendant vicariously liable — Defendant’s approach to copyright infringing actions consistent with wilfully blind approach to ensuring compliance with copyright obligations — Therefore, plaintiff entitled to declaration of entitlement to, payment of royalties, ancillary relief — Respecting “fair dealing” as set forth in Act, ss. 29, 29.1 , 29.2 , two-step process analysis undertaken to examine fair dealing in present case — While dealing (copying) was for allowable purpose of education, second stage of analysis, i.e. whether dealing fair, not met herein — Weighing factors, considering whole of issue of fair dealing in context of facts of present case, defendant’s Fair Dealing Guidelines not fair — Declaration defendant requesting denied with costs to plaintiff — Action allowed.

This was an action by the plaintiff/defendant by counterclaim (plaintiff) against the defendant/plaintiff by counterclaim (defendant) to enforce an Interim Tariff first issued by the Copyright Board of Canada on December 23, 2010 in respect of copying activities engaged in by the defendant’s employees in the period September 1, 2011 to December 31, 2013. The defendant counterclaimed seeking a declaration that any reproductions made fell within the Fair Dealing Guidelines it issued and therefore constituted the exception for “[f]air dealing” under

section 29 of the Copyright Act (Act). The declaration sought covered all reproductions of all copyright-protected works made prior to April 8, 2013, and thereafter regardless of whether such works were part of the plaintiff’s repertoire. The subject matter of this litigation was the new methods of distributing published materials to students. The plaintiff is a collective society under the Act . It administers the reproduction rights of copyright in published literary works in Canada, except for the province of Quebec, on behalf of creators and publishers that hold copyright in those works.

In particular, it licenses the reproduction of published works in its repertoire to users of the works, collects license fees from users, and distributes royalties to creators and publishers. The plaintiff’s role is to license the right to copy a work in its repertoire. It does not provide actual access to any published works or collect royalties which are generally done through licensees which are then remitted to the plaintiff. The defendant is a university established by the Legislative Assembly of the province of Ontario and is the second largest university in Ontario.

The defendant had had licensing agreements with the plaintiff from 1994 to the end of 2010. The licences typically provided for the payment of licence fees. As part of the plaintiff’s obligation to enforce copyrights and collect fees, the plaintiff periodically made “sweeps” of copy shops believed to be copying without paying fees. Keele, a digital printing and photocopying facility located in a mall across from the defendant’s main entrance, had been caught up in one of those sweeps and a judgment against it was obtained for unauthorized copying.

The defendant contended that it was unaware of this unauthorized copying at Keele by a number of its professors. It did not take any disciplinary or corrective action against the professors in question and, in this action, denied responsibility for the actions of these employees, despite acknowledging that their actions were contrary to its policy.

On December 23, 2010, the Board granted the plaintiff’s application for an interim decision and set the terms of the Interim Tariff. The Interim Tariff was never judicially reviewed. It was imposed because of objections to the proposed final tariff governing the photocopying at the defendant and other post-secondary educational institutions. It was not published in the Canada Gazette . The defendant was formally informed of the terms of the Interim Tariff and operated under it from that point until August 31, 2011, after deciding to opt-out of it.

Its position was that the Interim Tariff was a voluntary matter as was the payment of copyright fees. The defendant implemented its own guidelines on December 22, 2010. The plaintiff alleged that it was entitled to recover royalties from the defendant pursuant to the Interim Tariff. The defendant’s position was that the Interim Tariff is not an approved tariff because it did not result from a tariff certification process and because it was not published in the Canada Gazette .

The main issues were whether the Interim Tariff issued by the Copyright Board on December 23, 2010 as amended was enforceable against the defendant and, with respect to the counterclaim, whether the defendant’s dealings were fair for the purposes of

section 29 of the Act. Held , the action should be allowed and the counterclaim dismissed. Regarding the enforceability of the Interim Tariff against the defendant, the legislative history and particularly the development of the modern enforcement provisions confirmed the legislative intent to provide collectives with effective enforcement mechanisms against users who are not subject to an agreement and who reproduce, without authority from owners or without the benefit of an exception (e.g. fair dealing), copyright protected works covered by the collectives, such as those works in the plaintiff’s repertoire. The

Interpretation Act defines a regulation as including a tariff of costs or fees. As such, a tariff is subordinate legislation. While the word “tariff” is not defined in the Act, it is a word found in other contexts to indicate an imposed charge. The use of the term “tariff” is consistent with the provisions of the Act directed at ensuring that copyright owners are paid for the reproduction of their works and is also consistent with the role of collectives, such as the plaintiff, in collecting the amounts which are due or become due.

Subsection 68.2(1) of the Act indicates the mandatory nature of payment for copying. The compulsory nature of a tariff is also evidenced by the nature of the tariff- setting process. Under

section 70.12 of the Act, either a tariff is filed or the relevant parties enter into an agreement. The agreement option is voluntary and is in contrast to the mandatory nature of a tariff. Also, the language of “opting out” does not appear in sections 70.1–70.191 of the Act unlike provisions dealing with licensing royalties under

section 70.2 thereof. The fact that it does not strongly suggests that tariffs are mandatory, particularly when contrasted with the permissive language of the licensing regime. Thus, an approved tariff is a form of subordinate legislation which is mandatory and binding on any person to whom it pertains. There is no opting out. If the defendant had not copied any works in the plaintiff’s repertoire, if it had obtained proper permission to copy those works, or if the copying was exempt by law—the fair dealing defence and counterclaim—then the tariff would not be applicable.

Absent these conditions, the tariff was mandatory. While the defendant argued that the Interim Tariff was not enforceable, it failed to take judicial review of the Board’s decision. Judicial review was an important process in this case. The scope and enforceability of the Interim Tariff were matters squarely within the Board’s jurisdiction. The resolution of these issues would engage the Board’s expertise and were ones for which the Board was entitled to deference by the Court.

As to the argument that the Tariff was not an approved tariff because it was not published in the Canada Gazette , it was the Board that had the obligation to publish in the Canada Gazette . However, given the circumstances and the urgency to prevent a vacuum, the Board apparently decided that publication was not practicable—a matter which was within its discretion to decide. The purpose of publication in the Canada Gazette is to give notice to affected parties. In this case, the defendant had actual knowledge of the Interim Tariff. Its position, if accepted, would be a triumph of form over substance.

That argument was unsustainable. Therefore, the defendant’s arguments that the Interim Tariff was neither mandatory nor properly established were dismissed. The final argument that there was no breach of the Interim Tariff and, if there was, the defendant was not responsible for them was addressed. The unauthorized copying that took place by some of the defendant’s professors and the Keele copy centre triggered obligations under the Interim Tariff. Those obligations were the obligations of the defendant, which is legally responsible for that copying.

Although the defendant may not have specifically authorized the offending copying, those acts were so closely connected to the professors’ authorized employment activities as to render the defendant vicariously liable. The defendant produced no evidence of any disciplinary actions taken against the professors nor did it take any significant or effective remedial action. The defendant’s approach to these copyright infringing actions was consistent with its wilfully blind approach to ensuring compliance with copyright obligations, whether under the Interim Tariff or under the Fair Dealing Guidelines.

Therefore, the plaintiff was entitled to the declaration of entitlement to and payment of royalties as pleaded and to ancillary relief, including injunctive relief where needed. The defendant’s counterclaim raising in particular the exception of fair dealing was addressed. One of the most important exceptions to infringement is “fair dealing” as set forth in sections 29 , 29.1 and 29.2 of the Act. The two-step process analysis (first, the authorized purpose had to be established and second, the dealing had to be fair) was undertaken to examine fair dealing in this case.

The defendant established that the dealing (copying) was for the allowable purpose of education. The second stage of the analysis — fairness of the dealing — engaged six non-exhaustive factors such as purpose, character and amount of the dealing, alternatives to the dealing, nature of the work, and the effect of the dealing on the work. The defendant sought a determination on whether copying within the Guidelines constituted fair dealing.

Weighing the factors and considering the whole of the issue of fair dealing in the context of the facts of this case, it was concluded that the defendant’s Fair Dealing Guidelines were not fair. The declaration the defendant requested was denied with costs to the plaintiff. STATUTES AND REGULATIONS CITED Copyright Act , R.S.C. 1970, c. C-30, ss. 48 to 50. Copyright Act , R.S.C., 1985, c. C-42, ss. 2 “educational institution”, 2.1(2), 29, 29.1, 29.2, 29.4, 29.5, 29.6(1), 29.7, 29.8, 29.9, 30, 66.5, 66.51, 68(4), 68.2, 70, 70.1, 70.11, 70.12, 70.13, 70.14, 70.15, 70.16, 70.17, 70.18, 70.19, 70.191, 70.2 to 70.4.

Copyright Modernization Act , S.C. 2012, c. 20.

Interpretation Act , R.S.C., 1985, c. I-21, ss. 2 “regulation”, 12.

The York University Act, 1959, S.O. 1959, c. 145. The York University Act, 1965, S.O. 1965, c. 143. CASES CITED APPLIED: ENMAX Power Corp. (Re), [2004] A.E.U.B.D. No. 58 (QL); Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R.27, (1998), 154 D.L.R. (4th) 193; Théberge v. Galerie d’Art du Petit Champlain inc., 2002 SCC 34, [2002] 2 S.C.R. 336. DISTINGUISHED: Canadian Broadcasting Corp. v. SODRAC 2003 Inc., 2015 SCC 57, [2015] 3 S.C.R. 615; CCH Canadian Ltd. v. Law Society of UpperCanada, 2004 SCC 13, [2004] 1 S.C.R. 339; Alberta (Education) v.

Canadian Copyright Licensing Agency (Access Copyright), 2012SCC 37, [2012] 2 S.C.R. 345; Society of Composers, Authors and Music Publishers of Canada v. Bell Canada, 2012 SCC 36, [2012] 2S.C.R. 326. CONSIDERED: Access Copyright Interim Post-Secondary Educational Institution Tariff, 2011-2013; R. v. Consolidated Maybrun Mines Ltd., (SCC), [1998] 1 S.C.R. 706, (1998), 158 D.L.R. (4th) 193; Reproduction of Literary Works, Re, 2015 CarswellNat 1792(WLNext Can.); Reproduction of Literary Works, Re, 2016 CarswellNat 436 (WLNext Can.). REFERRED TO: Algoma Central Corporation v.

Canada, 2009 FC 1287, 358 F.T.R. 236; Performing Rights Organization of Canada Ltd. v. Lion D’Or(1981) Ltée et al. (1988), 17 C.P.R. (3d) 542, 16 F.T.R. 104 (F.C.T.D.). AUTHORS CITED Carrier, Rock. The Hockey Sweater. Montréal: Tundra Books, 1979. Lange Donald J. The Doctrine of Res Judicata in Canada, 4th ed. Markham, Ont.: LexisNexis Canada, 2015. MacMillan, Margaret. Paris 1919: Six Months That Changed the World. New York: Random House, 2002.

ACTION by the plaintiff/defendant by counterclaim against the defendant/plaintiff by counterclaim to enforce an Interim Tariff firstissued by the Copyright Board of Canada on December 23, 2010 in respect of copying activities engaged in by the defendant’semployees in the period September 1, 2011 to December 31, 2013. Action allowed, counterclaim dismissed. APPEARANCES Arthur B. Renaud, Erin Finlay and Jessica Zagar for plaintiff/defendant by counterclaim. John C. Cotter, Janet Chong, Barry Fong, Lillian Wallace and Evan Thomas for defendant/plaintiff by counterclaim.

SOLICITORS OF RECORD The Canadian Copyright Licensing Agency, Toronto, for plaintiff/defendant by counterclaim. Osler, Hoskin & Harcourt LLP, Toronto, for defendant/plaintiff by counterclaim. TABLE OF CONTENTS PARAGRAPHI. Introduction 1–4II. Issues 5–6III.

Summary of Conclusions 7A. Interim Tariff—Main Action 7–13B. Fair Dealing—Counterclaim 14–29IV. The Parties 30A. Access Copyright 30–35B. York University 36–42V. Subject Matter 43–46A. Coursepacks 47–52B. Learning Management Systems 53–62VI.

Summary of Key Lay Witnesses 63A. Plaintiff’s Lay Witnesses 64(1) Roanie Levy 64(2) Matthew Williams 65(3) Michael Andrews 66–68

(4) Glenn Rollans 69

(5) David Swail 70

(6) Writers’ Union 71 B. Defendant’s Lay Witnesses 72

(1) Patricia Lynch 73–79

(2) Professors and Administrators 80–82 VII.

Summary of Key Expert Evidence 83 A. General 83–86 B. Sampling Issues 87–94 C. Plaintiff’s Experts 95

(1) Benoît Gauthier 95–105

(2) Michael Dobner 106–119 D. Defendant’s Experts 120

(1) Dr. Piotr Wilk 121–128

(2) A. Scott Davidson 129–135

(3) Dustin Chodorowicz 136–143 E. Survey Evidence 144–151 VII. Key Events—Main Action 152 A. Keele Copy Centre 153–161 B. Interim Tariff Events 162–172 IX. The Fair Dealing Guidelines Story/Key Events in the Counterclaim 173–179 A. York—Publication/Copy Distribution 180–187 X. Legal Conclusions 188 A. Main Action—Was the Interim Tariff enforceable against York? 188

(1) Preliminary 188–193

(2) Scheme of the Act 194–204

(3) Statutory

Interpretation 205–220

(4) Status of Interim Tariff 221–245

(5) Conclusion—Main Action 246–248 B. Counterclaim 249

(1) General 249–263

(2) The Fairness Factors 264 (

a) The Purpose of the Dealing 264–275 (

b) Character of Dealing 276–289 (

c) Amount of the Dealing 290 (

i) Quantitative 291–295 (ii) Qualitative 296–317 (iii) Conclusion on the Amount of the Dealing 318 (

d) Alternatives to the Dealing 319–331 (

e) Nature of the Work 332–338 (

f) Effect of the Dealing 339–355

(3) Conclusion 356–357 The following are the reasons for judgment rendered in English by Phelan J.: I.

Introduction [ 1 ] This is an action by The Canadian Copyright Licensing Agency (Access Copyright) (Access) against York University (York) to enforce an Interim Tariff first issued by the Copyright Board of Canada (Copyright Board or Board) on December 23, 2010 (as subsequently varied during its term) [ Access Copyright Interim Post-Secondary Educational Institution Tariff, 2011-2013 ]. in respect to copying activities engaged in by its employees in the period September 1, 2011 to December 31, 2013. [ 2 ] York counterclaims seeking a declaration that any reproductions made fell within the Fair Dealing Guidelines [Fair Dealing Guidelines for York Faculty and Staff (Guidelines)] it issued and therefore constitute the exception for “[f]air dealing” under

section 29 of the Copyright Act , R.S.C., 1985, c. C-42 (Act). The declaration sought covers all reproductions of all copyright-protected works made prior to April 8, 2013 and thereafter, regardless of whether such works are part of Access’s repertoire. [ 3 ] For ease of reference, the key provisions of the Guidelines are outlined below while the full text is attached as

Schedule A: II. FAIR DEALING GUIDELINES 1. Teaching Staff* and Other Staff** may copy, in paper or electronic form, Short Excerpts (defined below) from a copyright protected work, which includes literary works, musical scores, sound recordings, and audiovisual works (collectively, a “ Work ”) within the university environment for the purposes of research, private study, criticism, review, news reporting, education, satire or parody in accordance with these Guidelines. [Definitions omitted]

2. The copy must be a “ Short Excerpt ”, which means that it is either: 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 (including a painting, print, photograph, diagram, drawing, map, chart and plan) from a Work containing other artistic works; (

d) an entire newspaper

article or page, (

e) an entire single poem or musical score from a Work containing other poems or musical scores; or (

f) an entire entry from an encyclopedia, annotated bibliography, dictionary or similar reference work, whichever is greater. 3. The Short Excerpt in each case must contain no more of the Work than is required in order to achieve the fair dealing purpose; 4. A single copy of a short excerpt from a copyright-protected work may be provided or communicated to each student enroled in a class or course: (

a) as a class handout; (

b) as a posting to a learning or course management system (e.g. Moodle or Quickr) that is password protected or otherwise restricted to students of the university; or (

c) as part of a course pack. [ 4 ] The amount of material that this case touches upon is vast—it covers virtually all of York’s libraries and course content. The evidence was similarly vast and the case difficult and complex. But for the work of the Case Management Judge, Prothonotary Aalto, this trial would have been unmanageable despite the best efforts of counsel for the parties. II. Issues [ 5 ] In the main action, the issue is “whether the interim tariff issued by the Copyright Board on December 23, 2010 as amended is enforceable against York” .

In the counterclaim, the issue is “was York’s dealings fair for the purposes of s 29 of the Act ” . The net effect would be that if the Interim Tariff was enforceable and royalties were therefore payable, York would be exempt from paying because of “fair dealing” . [ 6 ] The trial management process set out the specific issues as follows: A. Main Action 1. The issues relating to whether the Interim Tariff is enforceable against York are: (

a) Whether Access can sue for amounts allegedly due under the Interim Tariff, namely: (

i) Is the Interim Tariff an “approved tariff” for the purposes of subsection 68.2(1) of the Copyright Act ? (ii) Is the Interim Tariff otherwise enforceable pursuant to subsection 66.7(2) of the Copyright Act and subrule 424(2) of the Federal Courts Rules ? (

b) Whether the Interim Tariff is voluntary, whether York can elect whether or not to operate under it, and whether it has any application to York. (

c) Whether, after August 31, 2011, any “employee” of York, “Student” , “Professor” , “Library Worker” , “volunteer”, or “other persons” (as those terms are used in the Interim Tariff) was a “Licensee” under the Interim Tariff. (It was not necessary to answer this question given the finding on York’s vicarious liability nor was the issue substantially addressed.) 2. Whether the Interim Tariff extends to acts of authorizing the reproduction of copyright-protected works falling within the ambit of the Interim Tariff. 3. Whether the activities of the professors relating to reproductions alleged to have been made by Keele Copy Centre Inc. of the

Schedule B Works are activities for which York is responsible. B. Counterclaim 4. Whether any reproductions made that fall within York’s Fair Dealing Guidelines constitute fair dealing pursuant to sections 29 ,

29.1 or 29.2 of the Copyright Act . 5. Whether the declaratory relief sought in subparagraphs 25(a)(i), (ii), and (iii) of York’s amended statement of defence and counterclaim should be granted. III.

Summary of Conclusions A. Interim Tariff—Main Action [ 7 ] The Interim Tariff is mandatory and enforceable against York. To hold otherwise would be to frustrate the purpose of the tariff scheme of the Act and the broad powers given to the Board to make an interim decision pursuant to

section 66.51 of the Act , and to choose form over substance. The Act is quite specific in terms of the Board’s powers in this regard: Interim decisions 66.51 The Board may, on application, make an interim decision. [ 8 ] The Interim Tariff was imposed because of objections to the proposed final tariff governing the photocopying at York and other post-secondary educational institutions. The Interim Tariff was not published in the Canada Gazette (and this was one of York’s principal defences against enforcement).

However, all of the interested parties were already part of the process by virtue of the tariff application filed by Access (including the then-named Association of Universities and Community Colleges (AUCC), which represented the interests of York) and the parties had actual notice of the Interim Tariff by virtue of their participation in the tariff application process. [ 9 ] In addition, public notice was effected by the Board’s order to Access to post the interim decision on Access’s website and take all reasonable steps to alert the community of post-secondary educational institutions of the Board’s order. [ 10 ] It is noteworthy that the Interim Tariff was never judicially reviewed.

York’s defence against the action for enforcement of the Interim Tariff smacked of a collateral attack on the Board’s decision. [ 11 ] In the final analysis, I find that the Interim Tariff is mandatory, not voluntary. Many factors point to the mandatory nature of the Interim Tariff including the scheme of the Act , the Act’s legislative history, and the ordinary meaning of the term “tariff” . [ 12 ] York’s reliance on the Supreme Court’s decision in Canadian Broadcasting Corp. v.

SODRAC 2003 Inc. , 2015 SCC 57 , [2015] 3 S.C.R. 615 ( SODRAC ), is misplaced because the provision for tariff setting in the present case is distinct from the provisions for licence- term arbitration relevant to the SODRAC decision. [ 13 ] While there are several exceptions to the Act and to the provisions governing tariff setting, including statutory defences such as “fair dealing” and exceptions for obtaining permission for reproduction, these are nevertheless exceptions to an otherwise mandatory scheme. Further, those exceptions are not applicable in these circumstances. B.

Fair Dealing—Counterclaim [ 14 ] York’s own Fair Dealing Guidelines (Guidelines) are not fair in either their terms or their application. The Guidelines do not withstand the application of the two-part test laid down by Supreme Court of Canada jurisprudence to determine this issue. The relevant provisions state: Research, private study, etc. 29 Fair dealing for the purpose of research, private study, education, parody or satire does not infringe copyright. Criticism or review 29.1 Fair dealing for the purpose of criticism or review does not infringe copyright if the following are mentioned: (

a) the source; and (

b) if given in the source, the name of the (

i) author, in the case of a work, (ii) performer, in the case of a performer’s performance, (iii) maker, in the case of a sound recording, or (iv) broadcaster, in the case of a communication signal. News reporting 29.2 Fair dealing for the purpose of news reporting does not infringe copyright if the following are mentioned: (

a) the source; and

(

b) if given in the source, the name of the (

i) author, in the case of a work, (ii) performer, in the case of a performer’s performance, (iii) maker, in the case of a sound recording, or (iv) broadcaster, in the case of a communication signal. [ 15 ] York’s dealing with copyrighted material satisfies part one of the test in that it falls within the enumerated activities in

section 29 —specifically, education, research, and private study. There is no real issue that York met the first prong of the fair dealing provision —that the photocopying was done for allowable educational purposes. [ 16 ] This finding only in part addresses the first factor of the second part of the test—the purpose of the dealing.

The remaining factors to be considered under the second part of the test are the character of the dealing, the amount of the dealing, alternatives to the dealing, the nature of the work, and the effect of the dealing. [ 17 ] In respect of the “character of the dealing” factor, the Court finds that the better measure of the dealing is the overall number of exposures (as per Gauthier’s evidence) rather than the number of exposures per full-time equivalent (FTE) student (as per Wilk’s evidence). The FTE evidence suffered from significant reliability concerns. Further, the FTE evidence is less useful because (

a) the data is not sufficiently disaggregated to draw conclusions about smaller sub- groups and (

b) it would obscure the Court’s perspective to focus only on the copying per FTE rather than the entire amount of copying done at York. [ 18 ] The character of the dealing factor is not particularly helpful on its own, but it becomes more meaningful when considered together with the other fairness factors.

However, this wide-ranging, large volume copying tends toward unfairness. [ 19 ] Under the factor of the “amount of the dealing” , the Court had to consider how much of a work was copied and whether the delineated allowable amount or “threshold” under the Guidelines (10 percent of a book or articles in a journal, etc.) is fair. This was a core area of focus in this case. [ 20 ] Quantitatively, the Guidelines set these fixed and arbitrary limits on copying (thresholds) without addressing what makes these limits fair.

The fact that the Guidelines could allow for copying of up to 100 percent of the work of a particular author, so long as the copying was divided up between courses, indicates that the Guidelines are arbitrary and are not soundly based in principle. [ 21 ] An example suffices to illustrate. The classic story, The Hockey Sweater , would benefit from copyright protection if it was copied on its own, but is deprived of protection if it is copied from an anthology. The Guidelines make an arbitrary distinction for protection based on the format of publication.

York has not satisfied the fairness aspect of the quantitative amount of the dealing. There is no explanation why 10 percent or a single

article or any other limitation is fair . [ 22 ] Qualitatively, the parts copied can be the core of an author’s work, even to the extent of 100 percent of the work. No explanation is given for this provision of the Guidelines. This is equally as unfair as the quantitative aspect. [ 23 ] In regards to “alternatives to the dealing” , York has not made out a case that there are no alternatives to its dealing.

The dealing at issue includes copying entire required course readings (coursepacks) without compensation to the author or publisher, simply because such copying can be done digitally with the product residing in a computer database rather than on the stacks in a library. [ 24 ] The justification of cheaper access cannot be a determinative factor, since in that respect it is always better for users to get for free that which they have had to pay for in the past. [ 25 ] The effect of the dealing on the market is complicated in this case.

It is almost axiomatic that allowing universities to copy for free that which they previously paid for would have a direct and adverse effect on writers and publishers. In terms of a more thorough analysis of those impacts, I prefer the expert evidence of Dobner over that of Chodorowicz and Davidson, whose evidence did not survive cross-examination. Dobner’s evidence shows the nature and extent of the adverse impacts. [ 26 ] The question of impacts on the market from a broader perspective is more complicated because of the multitude of factors impacting publication generally.

This whole field is in flux with the transition over the last decade to digitalization, increased peer-to- peer sharing, and the use of databases and programs as a means of distributing materials to students (such as Moodle). It would be impossible to isolate each factor and separately weigh its contribution to market impacts. It is sufficient here for Access to prove, as it has, that the market for the works (and physical copying thereof) has decreased because of the Guidelines, along with other factors.

It is also sufficient for Access to establish, as it did, that copying done under the Guidelines is likely to compete in the market for the original works. [ 27 ] These negative impacts, from both a narrow and broader perspective, further point to the unfairness of York’s dealing. [ 28 ] A further and final factor of the fairness of the Guidelines is that York has made no real effort to review, audit, or enforce its own Guidelines. As became evident, educational efforts on setting their copyright rules are insufficient because there was no effective compliance mechanism.

Even professors operating outside of the Guidelines are not held accountable. The complete abrogation of any meaningful effort to ensure compliance with the Guidelines—as if the Guidelines put copyright compliance on autopilot—underscores the unfairness of York’s Guidelines.

[ 29 ] These points are discussed more fully in the body of these reasons. IV. The Parties A. Access Copyright [ 30 ] Access is a collective society under the Act . It administers the reproduction rights of copyright in published literary works in Canada, except for the province of Quebec, on behalf of creators and publishers that hold copyright in those works. [ 31 ] The Copyright Act , R.S.C. 1970, c. C-30 (the 1970 Act ) and its predecessor legislation provided for the collective administration of performance rights, one of three copyrights covered by the Act.

The other two copyrights, the right to reproduce a work and the right to communicate a work to the public, were excluded from collective administration. [ 32 ]

Section 48 of the 1970 Act provided that the performing rights society (PRS) was required to file lists of the works in respect of which it had authority to issue or grant performing licences.

The respective PRS was required to file, with the then Minister of Consumer and Corporate Affairs, statements of fees, charges, and royalties that it proposed to collect in exchange for the issuance or grant of licences for the performance of works in Canada. [ 33 ] Access licenses the reproduction of published works in its repertoire (effectively its copyrighted holdings) to users of the works, collects license fees from users, and distributes royalties to creators and publishers. [ 34 ] In addition, Access receives authorization to administer reproduction rights through affiliation agreements with Canadian creators and publishers and through bilateral agreements with similar PRSs in other countries and in Quebec. [ 35 ] Access’s role is to license the right to copy a work in its repertoire.

It does not provide actual access to any published works or collect royalties which are generally done through licensees which are then remitted to Access. B.

York University [ 36 ] York is a university established by the Legislative Assembly of the province of Ontario under The York University Act, 1959 [S.O. 1959, c. 145] and continued under The York University Act, 1965 [S.O. 1965, c. 143]. [ 37 ] York is the second largest university in Ontario and the third largest university in Canada, with 11 different faculties covering undergraduate, post-graduate, and professional fields of education located at two campuses in Toronto: Keele Campus and Glendon Campus. [ 38 ] York runs on an academic year basis, from September in one year to August in the next.

There are three semesters: Fall, Winter, and Summer. Courses are usually run for a semester or they may be run on a “full year” basis, which is September to April (two semesters).

York uses a credit system—a semester course is three credits and a full load for an undergraduate student is 30 credits over two semesters in the academic year. [ 39 ] Between 2008 and 2014, the number of undergraduate and graduate students at York ranged from 51 989 in 2008 to a high of 54 590 in 2012 to 52 879 in 2014. [ 40 ] An important metric both in this case and in educational reporting each year to the Ontario Ministry of Training, Colleges and Universities for funding purposes is the number of FTEs for undergraduate and graduate students.

Because of the method of calculation of FTEs, which accounts for the number of York students who do not carry a full course load, the total number of FTEs is typically lower than the total number of students at York in any given year. [ 41 ] Between 2008-2009 and 2014-2015, the total FTEs in each respective academic year ranged from 45 383 to 48 967. [ 42 ] In regard to teaching staff, which consisted of full-time faculty and contract/part-time members, the full-time faculty fluctuated between 1 528 and 1 465 over the 2008-2014 period, and contract/part-time faculty ranged from 1 774 to 1 582 over that same period.

V. Subject Matter [ 43 ] The subject matter of this litigation is the new methods of distributing published materials to students. Generally, gone is the single textbook for a course, gone is pulling books and publications from library stacks, and gone is finding a way to pay for photocopying at library run photocopiers. In part, this case involves the intersection of traditional copying with the digital world. [ 44 ] At York, courses may be comprised of lectures, labs, and/or tutorials. For a large enrolment course, it may be offered in more than one

section and taught by different instructors. [ 45 ] Consistent with the principle of academic freedom, instructors choose the materials to be used in their courses. Typically, these materials include books, journal articles, newspaper articles, portions from collections of works, encyclopaedia, music, video, film, software, data sets, and other published materials. Key forms of published materials are the “printed coursepack” and the “learning management system” .

[ 46 ] While books to be used are generally purchased by students at the university bookstore, much of the other material used for teaching is licensed to York’s various libraries by authors, publishers, PRSs, and other libraries. A. Coursepacks [ 47 ] A coursepack is a bound compilation of materials selected by the instructors and made available to students.

It often contains a course outline or syllabus, course notes, and course materials such as excerpts from books, journal articles, and other miscellaneous materials. [ 48 ] During the period covered by this litigation, coursepacks used by York students were produced internally at York by the University Printing Services or externally at third party print shops which were supposed to be licensed by Access. As evidenced in this case, that was not always the case and some instructors went to a non-licensed print shop, Keele Copy Centre (Keele), for which no sanctions were imposed by the York administration.

This is the foundation for Access’s claim that York breached Access’s Interim Tariff. [ 49 ] However, York instructors generally used internal print shops that were licensed by Access and for which Access is paid royalties on materials in their repertoire.

These authorized print shops invoice York directly for the coursepacks. [ 50 ] After August 31, 2011, when York “opted out” of Access’s Interim Tariff, York also used another Access licensed print shop, Gilmore, to produce coursepacks. [ 51 ] In the usual manner, coursepacks produced at York or by Gilmore are ordered through York’s Copyright Clearance Centre (York’s CCC), which is an organization within the university’s Printing Services unit. [ 52 ] In the past, the instructors gave the York CCC the full bibliographic details of the materials made from the coursepack and the CCC was supposed to take over from there.

In that regard, the CCC determines the licence status of the materials, obtains transactional licences where necessary, and/or contacts copyright owners or copyright licensing organizations to obtain the necessary permissions. If the CCC cannot obtain timely approvals, it is supposed to send the coursepacks to Gilmore for production and payment to Access where appropriate or obtain transactional licences for materials not in Access’s repertoire. B.

Learning Management Systems [ 53 ] Instructors may choose to use a learning management system (LMS) provided by York. [ 54 ] An LMS is a software platform by which an instructor can organize certain course materials and make them available to students electronically. An LMS may also provide various functionalities to facilitate learning, including a calendar system for assignment due dates, discussion forums, portals for the submission of assignments, and means for returning graded assignments and for accessing York Libraries’ electronic resources and catalogue.

York has been using LMSs since approximately 2000. [ 55 ] Each course and course

section has its own site on an LMS. While an LMS site can be made available to each course and course

section offered by York, use of an LMS is optional and not all instructors choose to use an LMS for their courses. [ 56 ] While there are different LMSs, the most common LMS platform used at York is called Moodle. Moodle currently accounts for over 70 percent of all LMS course sites at York.

By the end of Summer 2016, it was anticipated that Moodle would account for approximately 92 percent of all LMS course sites at York. [ 57 ] An LMS provides instructors with the ability to post course materials in various digital formats (such as PDF, Word documents, PowerPoint slides, image files, audio files, video files, etc.) for access by students enrolled in their courses.

An LMS also allows instructors to create links to electronic resources, including resources licensed by York’s libraries and materials on the Internet, to direct students to pertinent materials. [ 58 ] While York says that it has developed a number of safeguards to ensure that materials on an LMS are only accessible by authorized users, York has no monitoring or enforcement mechanisms to address compliance with copyright laws or even its own policies. [ 59 ] As the Director of Information, Privacy and Copyright at York, Patricia Lynch, confirmed, her initial role included compliance monitoring and enforcement and this was changed in that monitoring and enforcement were deleted.

York developed an educational program for faculty and staff to deal with copyright, as well as some other not very effective procedures. It developed a “copyright attestation” requirement to remind instructors, staff, and students of the importance of complying with copyright guidelines when using an LMS. In as early as July 2012, some LMSs required instructors to agree to comply with copyright guidelines before gaining access to their course sites.

And since the Fall of 2013, users (including instructors and students) cannot gain access to Moodle course sites until they agree to comply with York’s copyright guidelines. [ 60 ] It is not completely accurate to say that York ignored copyright. It did set up programs where instructors and students agreed to copy within York’s copyright guidelines and it did initiate procedures on Moodle sites to remind users of copyright obligations.

However, there was no evidence that any of these actions were effective. [ 61 ] York’s Copyright Support Office (CSO) was created in 2013 and provided copyright support services to instructors and staff in all faculties, including services with respect to the review and preparation of course materials for an LMS and the provision of information sessions. [ 62 ] Some of the services provided by the CSO are assistance to instructors and their support staff in identifying the copyright status

of the course materials they wish to upload to their course sites, reviewing course materials for copyright compliance, and securing transactional licences from copyright owners and copyright licensing organizations for posting materials on course sites. But, as noted earlier, compliance monitoring and enforcement were not part of the CSO’s role, nor of anyone else’s role. VI.

Summary of Key Lay Witnesses [ 63 ] It is not the Court’s intention to summarize all of the evidence heard in this case, but rather to highlight some of the key elements heard by the Court. More specific findings are made throughout these reasons. A. Plaintiff’s Lay Witnesses

(1) Roanie Levy [ 64 ] Roanie Levy, Executive Director of Access, testified generally as to the objectives and operations of Access including its organizational structure. She explained the importance of the educational sector to the writers and publishers for whom Access acts. She also outlined the impact of York’s refusal (and the refusal of other universities who were acting similarly) to abide by the Interim Tariff and to pay the substantial amounts said to be owing. Her evidence was unshaken by cross-examination. The history of the relationship between Access and York is discussed later in these reasons.

(2) Matthew Williams [ 65 ] Matthew Williams, Vice-President of Publishing Operations at House of Anansi Press and Groundwood Books, appeared also in his capacity as President of the Association of Canadian Publishers. His corporate evidence related primarily to trade bookstores rather than education; however, he gave evidence on behalf of the Association and particularly on the impact of the York Guidelines in reducing revenues for publishers. In cross-examination he showed how royalties to Anansi had been declining, particularly at York (details of which were given in confidence). His evidence also underscored the changes in the publishing world from traditional books to e-books.

(3) Michael Andrews [ 66 ] Along the same lines but with greater experience, Michael Andrews, Senior Vice-President and Chief Financial Officer of Nelson Education and Interim CEO, gave evidence which was particularly germane and balanced. Nelson Education is Canada’s largest educational publisher for grades K–12 and higher education. Some of the details of the financial aspects of the business are confidential and need not be repeated here. Higher education was a significant part of the company’s business.

In describing post-secondary educational products, he divided them into three groups—indigenous (Canadian origin or Canadianization by adaptation of another country’s work), agency (another country’s work unchanged), and custom (bringing different chapters together to create what a professor requires). [ 67 ] He described how the higher education market had been in decline for at least five years. Illegal sites and peer-to-peer sharing, plus copying done by professors in coursepacks and Moodle, have contributed to this decline.

While coursepacks for professors contributed to the decline in publication, the relationship with professors is complex because professors are also the authors of materials published by publishers such as Nelson. [ 68 ] Importantly, Andrews’ evidence of the decline in Access’s revenues and the adverse impact on this educational publisher is consistent with the expert evidence called by Access (including, to some extent, the survey evidence filed). Also importantly, he admitted that conversion to new digital products would happen with or without fair dealing guidelines—that this is a market reality.

(4) Glenn Rollans [ 69 ] Glenn Rollans, Co-owner of Brush Education (an independent higher education publisher), President of the Book Publishers Association of Alberta, and Vice-President of the Association of Canadian Publishers, gave similar evidence of the decline in Canadian educational publishing and the impact of changing technology. He confirmed, as did others, that York did not involve his organizations in the development of their Guidelines.

(5) David Swail [ 70 ] The plaintiff also called David Swail, Executive Director of the Canadian Publishers’ Council and former President and CEO of McGraw-Hill Ryerson. His evidence, garnered from years of experience, was helpful in understanding the causes of the decline in the sale of primary resources. The principal causes were unauthorized copying (peer-to-peer sharing, unauthorized physical copying). He also outlined the increasing role of e-books and the ability to buy individual chapters through e-book platforms. Given the terms of the Guidelines, this is a significant factor as discussed later in the context of alternatives to copying and the Guidelines.

(6) Writers’ Union [ 71 ] Evidence from the Writers’ Union also confirmed the decline in revenues and the absence of contact from York when York developed its Guidelines. B. Defendant’s Lay Witnesses

[ 72 ] The defendant called 14 lay witnesses in addition to its 3 experts. Some were called in respect to the Interim Tariff, others in respect of the Guidelines, and some covered both issues.

(1) Patricia Lynch [ 73 ] Patricia Lynch played a significant role, both in respect of York’s defence to the Interim Tariff claim as well as in the counterclaim regarding the Guidelines. [ 74 ] Lynch was the Director of Information, Privacy and Copyright at York. She was the principal administrator of licence agreements with Access, which involved ensuring that copying was done according to York’s agreement with Access and that relevant fees were paid. [ 75 ] Lynch described the process by which York moved away from dealing with Access.

She explained that by September 1, 2011, York was not operating with Access through either an agreement or a tariff. She indicated that her role became that of an educator on copyright, and she ran non-mandatory educational sessions (for which attendance was not recorded) on the new regime of Fair Dealing Guidelines.

She spearheaded the matter of authorized copy shops and encouraged the use of the Copyright Office in preparing materials, even offering to review copyrighted material used in courses in any format. [ 76 ] Her evidence confirmed that while she was committed to the protection of copyright, there was no organizational support for monitoring or enforcement of copyright obligations including compliance with the Guidelines.

Her job description referred to a role of monitoring and auditing compliance, but she never engaged in those roles and her job evolved away from such mechanisms to one of persuasion and education. [ 77 ] According to Lynch, the York University Faculty Association objected to any form of monitoring or enforcement of compliance with the Guidelines implemented in December 2010. [ 78 ] As established in Lynch’s cross-examination, there was no auditing, sampling, or monitoring of compliance. York did not implement safeguards such as periodic reviews.

Of the 27 percent of exposures described as exceeding the Guidelines by the expert Wilk (discussed later), no transactional permissions were sought. York did not produce a single permission document for any the 1 252 items captured in the sampling. [ 79 ] In sum, Lynch’s evidence established that while her intentions to educate were sincere, there was a complete absence of meaningful review of compliance with the Guidelines.

(2) Professors and Administrators [ 80 ] York called a number of professors to give evidence of their use of teaching materials. The professors confirmed their freedom to choose material, their use of copied material, and their strong preference for using coursepacks and Moodle. None of the professors were subject to any form of process to ensure compliance with the Guidelines. [ 81 ] Vice-Provost Academic Alice Pitt gave evidence about the importance of academic freedom. She stated that any form of monitoring would have staffing and cost implications.

She also feared that any form of compliance monitoring or auditing would raise issues of academic freedom with faculty and staff. [ 82 ] It appeared, from the evidence of professors and academic administrators, that compliance with the Guidelines raised internal academic freedom issues that were not worth the “battle” . VII.

Summary of Key Expert Evidence A. General [ 83 ] A significant problem in this case is that there is no record of the number of copyrighted pages actually copied. That issue not only affects the compensation owed to Access, but also implicates one of the factors the Court is required to assess when considering whether the Fair Dealing Guidelines actually are fair (that is, the amount of the dealing). [ 84 ] Neither party realistically suggests that the impugned copying was de minimis or insignificant, but precise calculation was a problem.

A surrogate for data on the actual “copied” pages was to use sampling data and to extrapolate estimates of copying from this sampling data. A secondary issue of that exercise is the appropriate measure of copying—by student (FTE) or by exposure (assumed to be a photocopy per page). [ 85 ] In addition to this quantification exercise, the Court had to consider, under the operation of the Guidelines, the impact of the Guidelines on persons who had an interest in the works—Access, authors, and publishers. This raised the issue of the use of surveys, to which York objected.

For reasons given at trial, the survey evidence was admitted; however, this case is not an exercise of the quantification of harm, so the impact of the surveys was more confirmatory of what common sense suggests—that if one is deprived of revenue which had been received in the past, one is likely to be adversely affected. It is important to recognize that this litigation is not about government assisted funding to the “arts” or other similar matters of broad social policy.

It is also not about subsidies (overt or opaque) to writers and publishers. [ 86 ] Finally, as a general rule, the Court found the expert evidence of the plaintiff more credible and compelling. It was more

rigorous, coherent, and consistent, and it suffered from fewer flaws than the evidence of the defendant. B. Sampling Issues [ 87 ] Due to the volume of materials which could be covered by this litigation—essentially all the works in York libraries and the non- recorded copying of materials distributed to students—it was necessary to devise a means to calculate the amount of materials which could have been copied and would have been subject to the Interim Tariff and/or encompassed by the Fair Dealing Guidelines. [ 88 ] The parties conducted sampling of two different types of items at York: (

a) items in coursepacks produced internally by York’s Printing Services and (

b) PDFs posted on LMSs by York’s staff. The sampling was done as a “pre-test” (to ensure that the sampling would work) and “main” (the sampling itself) and covered the period September 1, 2011 to December 31, 2013 (the period of the Interim Tariff after York stopped operating under the Interim Tariff). [ 89 ] A total of 565 items were selected for the coursepack sampling and a total of 1 247 PDFs were selected for the LMS sampling.

The details of the samplings, contents, and sources are set out in the evidence and need not be repeated here. [ 90 ] As indicated earlier, both the FTEs and the number of unique users were used in the respective experts’ analyses. [ 91 ] In respect of the published works in the sample items, York adduced a number and variety of documents and records to demonstrate that there were permissions to use many of the works used in the coursepacks and on the LMSs.

As indicated later in these reasons, York’s reliance on permissions was misplaced and of no assistance. [ 92 ] The results of the sampling, the extrapolations therefrom, and the conclusions drawn by the respective experts have been previously discussed and the Court’s acceptance of the plaintiff’s experts underscored. The differences between the experts on some matters were significant.

For example, Gauthier, on behalf of Access, estimated that over 160 000 items were copied for coursepacks at York between January 2005 and August 2011—more than 20 000 per year. [ 93 ] York dismissed this matter by contending that the copying was either subject to permissions or was within the quantitative limits of the Guidelines, despite the Guidelines not being in effect in that period and the matter of permissions/licences being of no real assistance. [ 94 ] Discounting permissions and licences, both parties’ experts concluded that approximately 11 percent of documents in the LMS sample exceeded the Guidelines.

Not only is this a significant amount of unauthorized copying even if the Guidelines are assumed to be a valid response to copyright claims, but if the Guidelines are not valid (as found by this Court), then the amount of unauthorized copying is significantly higher. C. Plaintiff’s Experts

(1) Benoît Gauthier [ 95 ] A principal expert in this litigation was Benoît Gauthier, a business evaluator with experience in surveys. His qualifications were not challenged, subject to the defendant’s objection to his survey evidence. [ 96 ] Gauthier had a four-fold mandate: 1. To advise on sampling methodology to collect relevant data in order to measure the volume of print and digital copying of published works at York from September 1, 2011 to December 31, 2013, and to perform calculations on various data sets to report information about such copying to Access; 2.

To perform calculations on various data sets in order to report information about copying for the production of coursepacks (through the internal printing services and external copy shops) to Access; 3.

To assist in the development of a 2014 online survey questionnaire addressed to member companies of the Association of Canadian Publishers and to provide feedback regarding the wording and design of the questionnaire, to design an online version, to conduct a pre- test of the online questionnaire, to manage the online data collection for September to October 2014, and to provide the data collected to PricewaterhouseCoopers LLP; and, 4.

To design and conduct a 2013 survey of Access’s creator affiliates concerning the copying of their published works in the educational sector and to provide a report that was filed in proceedings before the Board. [ 97 ] In

summary, Gauthier’s evidence was that: (

a) From January 2005 to August 2011, York’s internal coursepack printing services made approximately 122 million print exposures of published works that were included in coursepacks for which York remitted royalty payments to Access. Approximately 80 percent of those print exposures came from books. (

b) From January 2011 to December 2015, copy shops made, on behalf of York, approximately 29 million print exposures of published works included in coursepacks. Over 90 percent of that copying was from books. (

c) From September 2011 to December 2013, York Printing Services made approximately 2.9 million print exposures of published works included in coursepacks that are, according to Access, relevant to York’s Fair Dealing Guidelines counterclaim. Relevance to the counterclaim in this instance means that Access has identified the work as requiring permission, authorization, or payment to copy.

(

d) The volume of coursepacks produced internally by York decreased significantly after August 2011. (

e) From September 2011 to December 2013, over 16 million digital exposures of published works (that are, according to Access, relevant to York’s Fair Dealing Guidelines) were posted and copied on York’s LMSs. (

f) From 2012 to 2013, the volume of digital exposures of published works purportedly relevant to York’s Fair Dealing Guidelines counterclaim doubled from approximately 4.5 million to 9 million. (

g) A comparison of the volume of print copying versus digital copying from 2011-2013 suggests that copying behaviour at York is shifting from print coursepacks to posting and copying works on an LMS. [ 98 ] While Gauthier did not adjust his estimate of print and digital exposures to account for York’s claim that some of the items captured in the sampling were copied or posted with permission, this does not significantly undermine the conclusions which can be drawn.

The report may overstate some of the copying, but since York had the data it was incumbent on them to establish quantum and materiality. [ 99 ] The data on coursepacks was voluminous. As an example, between January 1, 2005 and August 31, 2011, there were 122 million exposures. The vast majority of this material and of similar material for copy shop exposures and internal coursepacks produced by York fell within the quantitative limits set by York’s Guidelines. [ 100 ] In respect of LMSs, Access and York agreed to design and implement a study of the copying of published work by staff on LMSs.

The result was that 16.3 million digital exposures relevant to fair dealing were posted on York’s LMSs between September 2011 and December 2013. Generally, 70 percent of the volume of copying on LMS systems fell within the quantitative limits of York’s Guidelines. [ 101 ] An issue arose as to the best representative base from which to assess the copies—enrolment versus unique user access (essentially the number of people with an access number). Gauthier was instructed to use enrolment. [ 102 ] The evidence establishes that neither base is necessarily superior and that each had its flaws.

I have concluded that the base used by Gauthier was reasonable and therefore his conclusions stand. [ 103 ] Gauthier’s role in the Publisher’s Survey was to assist in the development of the survey, to ensure the questionnaire was valid and reliable, and to ensure that it had integrity. He did not, however, analyse the data. The survey was sent to 150 publishers of the 600 Access affiliates. The survey was not directed specifically at copying at York or income produced and used at York. [ 104 ] Gauthier’s role with respect to the Creator’s Survey was somewhat the same as to design, reliability, and validity.

The survey had a 42 percent response rate, which is a high response for surveys. [ 105 ] Gauthier established the reliability, integrity, and validity of both surveys, which is a threshold issue on the admissibility of survey evidence. However, the Creator’s Survey in particular produced little significant evidence relevant to this case.

(2) Michael Dobner [ 106 ] Gauthier’s evidence was also in support of the expert opinion report of Michael Dobner of PricewaterhouseCoopers LLP (PwC). Dobner had post-graduate education in economics and expertise in business valuations. He was qualified, without objection, to give expert evidence in respect of the economic losses to a business from a specific event or events. As indicated earlier, I found his evidence to be thorough, thoughtful, and compelling. His evidence provided considerable assistance to the Court. His opinions on various matters were consistent with the other evidence heard at this trial.

They are particularly relevant to the analysis of the “fair dealing” exception and the determination of whether York’s Guidelines are fair in light of the effects of the dealing. [ 107 ] PwC was retained to prepare a report of its assessment of the apparent and expected impacts: 1. The adoption of the Fair Dealing Guidelines by York on the market for copyright-protected works produced, used, and copied in the post-secondary education market; and, 2. The adoption of identical or substantially similar guidelines on that market by: a. Universities Canada; b. Colleges and Institutes Canada; c.

The Council of Ministers of Education, Canada (CMEC); and, d. Canadian post-secondary educational institutions. PwC was also asked to estimate the loss of royalty revenue by publishers and creators arising from the adoption of the Guidelines by York and other post-secondary institutions. [ 108 ] In

summary, Dobner’s findings and opinions were: (

a) The post-secondary educational publishing industry in Canada, which has been facing numerous challenges in recent years, cannot withstand the adoption of the Guidelines without significant adverse impacts on the works it produces. (

b) Based on the data available, the estimated result of full adoption of the Guidelines by post-secondary institutions in Canada (outside

of Quebec) would be an annual loss of licensing royalties in the range of $10 041 000 to $14 675 000. York’s share of that amount would be $800 000 to $1 285 000. (

c) Since the introduction of the Guidelines, there has been an acceleration in the decline in sales of works produced by content producers for the post-secondary market. (

d) Since the introduction of the Guidelines, there has been a transfer of wealth from content producers to content users, somewhat offset in the short-term by an increase of prices for published works. (

e) The adoption of the Guidelines by York and other post-secondary institutions has led to a lack of transparency regarding copying activities, meaning that content producers are unable to effectively detect infringement or to assert their intellectual property rights in a meaningful way. Evidence suggests that this has led to an atmosphere in which copying in excess of the Guidelines occurs and is tolerated by the institutions. (

f) The educational publishing industry is currently in a period of transition from traditional textbook publishing to digital content and services, but this requires significant investment. The financial impact of the Guidelines limits the publishing industry’s ability and incentives to invest in this economy. Small to medium-sized enterprises (SMEs) are substantially more vulnerable. (

g) The likely long-term impacts of the adoption of the Guidelines is that: - Some SME publishers producing educational content are expected to exit the business; - Creators are expected to reduce the number of works they create, the time they spend creating, and the focus on post-secondary educational content; - Content producers are expected to produce less content and invest less in the Canadian market.

In particular, they will reduce product offerings for subjects without sufficient scale, demand, and requirements for current content; - Continued decline in sales will force publishers to increase prices to offset loss of economies of scale; and, - Users of post-secondary educational content will be faced with deterioration in the quality, diversity, and ingenuity of works in certain subjects, as well as higher prices. (

h) The adoption of the Guidelines will have significant negative implications for the industry’s economic footprint in Canada, which totaled an estimated $550 million and $490 million in 2011 and 2015, respectively.

Negative impacts will likely emerge in the long run, including: - loss of high-paying jobs, - reduced investment that will limit productivity growth, - a shift in some areas from content production in Canada to imported content, and - a consolidation in the post-secondary educational market (i.e. large, mostly foreign-based publishers). [ 109 ] Dobner had some important observations about the role of collectives which are consistent with the purpose of collectives as recognized in the legislation.

An aspect of copyright, a right recognized by the Supreme Court of Canada as a shared right, is the encouragement and incentive to produce new, original, and creative works. Part of that incentive is the compensation to be paid to creators. Copyright collectives reduce the transaction cost associated with administering copyright while ensuring that owners (creators) are remunerated for use of their works. [ 110 ] Dobner also recognized the problem posed by the significant number of works affected by the Guidelines and the difficulty of establishing the effect of the dealing on a particular work.

He also acknowledged the difficulty in detecting the full impact of the adoption of the Guidelines on the market for the works as a whole because some of the negative impacts resulted from other factors, many of which are technological changes such as digitalization. [ 111 ] Having recognized that there are limitations to the information and the ability to analyse the impacts of the Guidelines, I find that the impacts are those which Dobner described. The impacts are more qualitative and directional than quantitative. [ 112 ] However, there are some quantitative aspects which support the qualitative conclusions.

For example: (

a) Access’s post-secondary distributions of licensing revenue to content producers declined from $14.2 million in 2008 to $9.8 million in 2010. Between 2010 and 2014, revenues fluctuated before declining to $6.6 million in 2015. (

b) The most recent decline is primarily the result of a reduction in the number of institutions that held licensing agreements with Access and the level of coursepack reporting from external copy shops. Distributions are expected to decline to $1.3 million in 2016. (

c) Since the introduction of the Guidelines, permissions licensing requests and associated revenues have declined substantially and are considered insignificant. (

d) The economic footprint of the post-secondary educational publishing market is significant in the Canadian economy in terms of output, jobs, GDP [Gross Domestic Product], and tax revenue, but this footprint has shrunk in recent years. The industry’s estimated GDP footprint declined by 11 percent from 2011 to 2015. Publishing industry jobs are relatively high value (with an average salary more than 45 percent higher than the Canadian average across all industries):

- The total economic footprint of the post-secondary educational publishing industry was $1.06 billion in 2011, with a GDP of $550 million. This can be contrasted with its 2015 output of $950 million and $490 million GDP. - The post-secondary educational publishing industry has a significant economic footprint comprising over 5 000 jobs on a full-time equivalent basis across numerous industries in 2015. This is an 11 percent decline from 2011. [ 113 ] Furthermore, sales revenue declined by 13 percent from 2010–2015 in the post-secondary market.

The declining sales have weakened the industry’s ability to change its business model to develop innovative digital content and services. [ 114 ] The decline in the market size is driven by: (

a) the transition to digital publishing, (

b) the growth of the used book market, (

c) rental programs for post-secondary textbooks, (

d) technological advancements that make copying easier, (

e) the prevalence of copyright infringement, evidenced in an increase in peer-to-peer file sharing and downloading, and (

f) the adoption of the Guidelines, which have exacerbated the infringement issue. [ 115 ] Dobner’s Report contained fairly detailed descriptions of the impacts of the Guidelines, both at York and, if adopted, across Canada. A critical aspect is that copies are substitutes for the original and excerpts can be suitable substitutes for the original works.

As such, the demand for the original works will decline with the corresponding negative effects on owners. [ 116 ] Dobner points out that copying in excess of the Guidelines is a significant problem—for example, as Gauthier reported, 29 percent of the copying of books at York on the LMSs from September 2011 to December 2013 exceeded or would have exceeded the Guidelines. [ 117 ] The problem, succinctly put, is that the Guidelines, assuming they are fair, become unfair or, alternatively, the unfairness of the Guidelines is exacerbated because of the amount of non-Guideline compliant copying. [ 118 ] This expert evidence confirmed the concerns expressed by Access and by its witnesses, both with respect to the problem of non- remunerated copying but equally importantly with respect to the long-term effect into the future. [ 119 ] As the evidence of the York witnesses confirmed, post-secondary education budgets are being tightened but the demand for services (materials) is expanding.

The absence of tariff payments, the Guidelines, and their non-compliance results in the wealth transfer referred to by Dobner from copyright owners to educational institutions. D. Defendant’s Experts [ 120 ] To counter the plaintiff’s experts, the defendant called three experts: Dr. Piotr Wilk, A. Scott Davidson, and Dustin Chodorowicz. They were not able, either collectively or individually, to overcome the merits of the plaintiff’s experts. These experts were much more focused on criticizing the plaintiff’s experts than on providing the Court with alternative conclusions.

(1) Dr. Piotr Wilk [ 121 ] Wilk held post-graduate degrees and teaching experience in methods of data collection and in data analysis. He was qualified to give expert evidence in sampling methods, analysis, and explanation. His mandate was to analyse the data collected in the two studies (the Coursepack Study and the LMS Study), to advise York’s counsel on various elements of the sampling design of the two studies, and to review and perform an independent analysis of the Gauthier Report. [ 122 ] In

summary, Wilk’s evidence was that: (

a) From September 1, 2011 to December 31, 2013, an estimated 6 147 123 print exposures of published and unpublished works were included in all coursepacks produced by York’s printing services. 82 340 348 digital exposures were produced on LMSs during that period. (b) 63.7 percent of printed volume (3 914 111 exposures) and 27.2 percent of digital volume (22 381 560 exposures) were of published works. (c) 77.2 percent of printed volume and 59.4 percent of digital volume were relevant to the Fair Dealing Guidelines counterclaim. The remaining volume of copying was classified as public domain, open access, Creative Commons, or government documents. (

d) For a portion of the volume of copying relevant for the Fair Dealing Guidelines counterclaim, York had permissions and/or library licences. For printed volume, 1.4 percent relevant to the counterclaim was not covered by one of those permissions or licences. For digital volume, 67.3 percent were not covered by those permissions or licences. (

e) For printed volume, all 40 864 exposures (1.4 percent) not affected by permissions or licences fell within the Fair Dealing Guidelines. Thus, between September 1, 2011 and December 31, 2013, there were no copies of published works that were included in

coursepacks produced by York that exceeded the Guidelines threshold. (

f) For digital volume, 72.6 percent of the volume not affected by permissions or licences fell within the Guidelines. Between September 1, 2011 and December 31, 2013, there were 2 448 859 exposures posed on LMSs that exceeded the Guidelines. In terms of documents, this translates to 1 591 documents containing excerpts from books posted on LMSs between September 1, 2011 and December 31, 2013 that exceeded the Guidelines. This translates into approximately 0.01 documents posted on an LMS per FTE student. (

g) The trend analysis suggests that there was a decline in the overall volume of printed copying by York (34.3 percent) and an even steeper decline in the volume of copying relevant to the Fair Dealing Guidelines counterclaim (58.7 percent) between 2001 and 2013. The reverse trend was observed with respect to LMS postings.

Between 2011 and 2013, the overall volume of digital copying increased by 34.4 percent and the volume of digital copying relevant to the Guidelines counterclaim increased by 71.1 percent. (h) 14.0 percent of the printed volume of copying relevant to the counterclaim was published in Canada (18.9 percent for the digital volume). There does not appear to be a concentration of printed and digital copying within a small group of publishers. [ 123 ] Wilk was involved in the Coursepack Study, which was a study to estimate the exposures of printed volumes included in coursepacks by York during the relevant period.

There were significant differences between Gauthier and Wilk in terms of calculated exposures and in the “sealing up” of the sampling. Wilk took a different approach to Gauthier, particularly with respect to the copying done according to “permissions” held by York. [ 124 ] Wilk was also involved in the LMS Study designed to estimate the volume of digital exposures of published works posted on York’s LMSs during the relevant period.

The critical difference between Wilk’s estimation of copying and Gauthier’s estimation is attributable to the use of unique user data by Wilk as opposed to the use of enrolment data by Gauthier. This resulted in a difference of 13 million copies of materials for Wilk versus 16 million for Gauthier. There were greater differences between the two experts in respect of the coursepack analysis. [ 125 ] Wilk’s evidence was seriously undermined during cross-examination. He made a number of assumptions without support—for example, he did not look at any underlying documentation to verify licensing status information.

This failure to “dig deeper” affected the accuracy of his permissions analysis and his digital exposures analysis in the LMS sample. [ 126 ] His study of the List of Publishers (Table 2.10 of his Report) was also based on unverified assumptions. Likewise, several of his other Tables were suspect (see, for example, Table 3.7). [ 127 ] As exposed in cross-examination, Wilk’s failure to validate data undermined significant parts of his evidence and his opinions.

In addition, as pointed out by Gauthier in his expert report and underscored in his oral testimony, Wilk’s reliance on unique user access was of questionable reliability. [ 128 ] Overall, Wilk underestimated the results of the copying analysis. Where his evidence conflicts with that of Gauthier, I favour that of Gauthier.

(2) A. Scott Davidson [ 129 ] The defendant also relied on the expert evidence of A. Scott Davidson, Managing Director of Duff & Phelps. Davidson had experience in valuations but no real experience in the publishing business. He was qualified as an expert without objection. [ 130 ] Davidson’s principal role was to review and critique the PwC Report and to provide some observations, conclusions, and analysis.

His Report was essentially a criticism of PwC, outlining what he saw was wrong with the PwC analysis but without providing the Court with a helpful analysis of what the Court should conclude from the evidence. This approach is less helpful to the Court than the approach taken by PwC and Gauthier. [ 131 ] In

summary, his opinion was that: (

a) There is no basis, or there is an inadequate basis, for the Dobner Report’s conclusions regarding the apparent and expected impacts of implementing the Guidelines at York and more broadly at Canadian post-secondary institutions. (

b) From a business and financial perspective, the supporting analysis presented by PwC is generally insufficient to establish either or both of the conclusions that: - The alleged events have occurred or are likely to occur; and/or, - Implementation of the Guidelines did or will have a mate

[…]