“Fair Dealing” under Copyright Law

“Fair Dealing” allows persons who qualify under one of the relevant sections of the Copyright Act to copy portions of literary works without a licence from the authors.  The leading case on “fair dealing” is the Supreme Court of Canada decision in CCH Canadian Ltd v Law Society of Upper Canada in which a law library was making copies of legal cases for lawyers doing legal research.   On July 12, 2017 the Federal Court rendered a decision in Access Copyright v York University relating to “fair dealing” by educational institutions.

The Canadian Copyright Act provides for collective societies, being organizations that manage licensing schemes for multiple creators/authors.  Access Copyright is such a collective society.  Access Copyright represents tens of thousands of writers, visual artists and publishers, and licenses the copying of their works to educational institutions, businesses, governments and others.

Between 2005 and 2011, York University had a license to copy literary works with Access Copyright.  During that period, York University copied 122 million print exposures for use in course packs – an average of 17.5 million exposures per year. Each student at York University would receive 387 exposures per year in course packs, 80% of which came from books.

In 2011, York University decided to “opt out” of their license with Access Copyright, instead electing to  copy under its own “fair dealing” Guidelines. Between 2011 and 2013, York University outsourced the majority of its course pack production to three external copy shops which copied between 4.4 million and 7.6 million exposures per year – 90% of which were from books.
The Supreme Court of Canada decision in CCH Canadian Ltd v Law Society of Upper Canada case provided the following guidance to lower courts considering fair dealing:
•                     The analysis is a two-step process: first, the authorized purpose (in this case education) must be established and second, the dealing must be fair;
•                     “Fair” is not defined and is a question of fact depending on the circumstances of each case; and,
•                     The fairness analysis engages six non-exhaustive factors:
a)                  purpose of the dealing,
b)                  the character of the dealing,
c)                  the amount of the dealing (amount of copying),
d)                 alternatives to the dealing,
e)                  the nature of the work, and
f)                   the effect of the dealing on the work.

In the Access Copyright v York University decision, the Federal Court noted that, other than the legal principles annunciated in CCH, that decision is more of a burden than a benefit to York University. One important distinction is that the copying done at the Law Library was for others, not for the Library itself. In York University’s situation, the copying and the Guidelines serve York University’s interests and those of its faculty and students. There is an objectivity in CCH which is absent in York University’s case.
Of even greater significance is that in CCH, the copying at issue was that of a single copy of a reported decision, case summary, statute, regulation, or limited selection of text from a treatise. It was not the mass copying of portions of books, texts, articles, entire artistic work, or portions of collections, nor was it the multiple copying of those materials into course packs or digital formats.   There were a number of other differences which included:
•                     Copying at a single location under the supervision and control of research librarians in the Library contrasted with no effective supervision, control, or other method of “gatekeeping” at York University;
•                     A policy strictly applied and enforced by librarians versus virtually no enforcement of the Guidelines by anyone in authority at York University;
•                     Single copies made versus multiple copies;
•                     A large amount of ad hoc or situational copying for users at the Library contrasted with the mass systemic and systematic copying at York University; and,
•                     An absence of negative impacts on publishers in CCH as contrasted with the negative impacts on creators and publishers caused or at least significantly contributed to by York University.

The Guidelines permitted copying of up to 10% or one chapter of a book. The Federal Court noted that these copying thresholds of York University were arbitrary and expressed the view that a failure to justify the choice of thresholds seriously undermined the overall fairness of the York Guidelines.   The Federal Court noted that under the terms of the Guidelines, in some situations the permitted copying could encompass 100% or such a large part of a work as to appropriate the whole (e.g. for a journal article in a periodical, a short story in an anthology, or a chapter in an edited book). The Federal Court noted that York University had no means of meaningful control or monitoring of compliance with the Guidelines.

The Federal Court accepted evidence from experts that the Guidelines have had a significant negative impact, summarized as follows:
•                     They contributed to a drop in sales and accelerated the drop in unit sales – up to 6.9% per year and 3.4% in revenues between 2012 and 2015. Precise allocation of the amounts attributable to the Guidelines is not possible, but it was a material contribution.
•                     They caused a loss of revenue to creators and publishers as evidenced by the loss of licensing income. The range of loss to Access Copyright alone is between $800,000 and $1.2 million per year.
•                     Actual and expected loss of licensing income resulting from the Guidelines has a negative impact on publishers. Licensing revenues represented about 20% of publishers’ revenues.
•                     Actual and expected loss of licensing income has a negative impact on creators. A survey confirmed the importance of licensing revenue to writers and the materiality of a loss of revenue.
•                     On a balance of probabilities and recognizing the inherent unreliability of predicting the future, there are likely to be adverse long-term impacts of the Guidelines on investment, content, and quality.

The Federal Court concluded that the Guidelines established by York University were not “fair” and, as such, copying under the terms of the Guidelines constituted copyright infringement.  There will now be a determination of the amount of compensation that York University will be required to pay to Access Copyright for the infringement.  Numerous Universities established Guidelines similar to those of York University.  This decision will, without question, impact educations institutions across Canada.