Court File No. A-93-16 FEDERAL COURT OF APPEAL BETWEEN: The Canadian Copyright Licensing Agency, operating as Access Copyright Applicant -and- British Columbia Ministry of Education et al. Respondents OUTLINE OF ORAL ARGUMENT A. Volume of exposures in repertoire determined without regard to evidence [Memorandum, paragraphs 44-57] 1, Inthe Copyright Board’s 2009 decision (in respect to the 2005-2009 Tariff), the Board made a legal finding that works published by non-affiliated rightsholders who actively ratify Access Copyright’s collective administration of their reprographic rights were included in Access Copyright’s repertoire under the principles of agency (Decision, paragraph [137)), 2. In the tariff proceedings below relating to the 2010-2015 periods, Access Copyright submitted that the doctrine of issue estoppel precluded the re-litigation of the repertoire status of the works copied in the Volume Study. Accordingly, no detailed analysis of the Volume Study data, to discern whether or not an entity had a direct or indirect affili agreement with Access Copyright, was necessary. 3. After the hearing, the Copyright Board posed a series of technical questions, including how the data in the Volume Study relating to repertoire status should be interpreted, In response to those questions, Access Copyright alerted the Board that the data greatly underestimated the volume of copying of works, the copyright in which was owned by a direct or indirect affiliate [Exhibit AC -112, AR, V.5, T.8LL, pp. 1740-1743] 4. Access Copyright also filed further evidence [AC-114A and AC-114B, AR, V.5, T.800- PP, pp.1783-1791, pp.1802-1810] and submissions [AC-114, AR, V.5, T. 8NN, pp. 1772- 1774] that quantified the degree of underestimation,10. The Copyright Board, in its discretion, declined to apply the doctrine of issue estoppel (Decision, paragraph [128]). The Board was thus required to reconsider the repertoire status of the works copied in the Volume Study. ‘The Copyright Board rejected Access Copyright’s submission that the Volume Study data greatly underestimated the volume of copying of works that were published by Access Copyrights affiliates. ‘The Board provided three reasons for its rejection. “First, Access Copyright has provided no evidence of the degree of underestimation. Second, Access Copyright had many years to correct the underestimation but has chosen not to do so. Third, to the extent that the underestimation related to works that were not in Access” repertoire in 2005-2006 when the copies were made but now are, we do not want to make that correction”. (Decision, paragraph [405]). The Board’ first and second justifications for its rejection constitute clear ertor. The Board arrived at its rejection without regard to the evidence of record, referred to in paragraph 4 above, ‘The Board’s third justification was arrived at without affording Access Copyright the opportunity to address the Board’s unfounded speculation that the underestimation identified by Access Copyright resulted from an expansion of Access Copytight’s repertoire in the years subsequent to the 2005-2006 collection of data in the Volume Study. Had Access Copyright been afforded that opportunity; it would have dispelled the Board's speculation by demonstrating that the works copied in the Volume Study were indeed included in its repertoire well before the copying events captured in the Volume Study. ‘The Copyright Board’s findings thus lack justification, transparency and intelligibility within the decision-making process and fall outside the range of possible, acceptable outcomes which are defensible in respect of the evidence of record.B, Board’s consideration of “substantiality” under section 3 of the Copyright Act failed to follow binding precedent and disregarded material evidence [Memorandum, paragraphs 58-65] 12. The Board interpreted section 3 of the Act. That section provides that copyright subsists in a work “or any substantial part thereof”. 13, That interpretive exercise is shared with the courts. The standard of review is thus correctness (CBC v, SODRAC, 2015 SCC $7 @35). 14, In assessing whether or not a substantial part of a work has been copied, it is essential to assess the qualitative aspect of what was copied. Whether a partis substantial must be decided by its quality rather than its quantity (Cinar, 2013 SCC 73 @26). 15. In addition, the Federal Court of Appeal (Edutile, [2000] 4 C.F. @22) expressly disavowed the adoption of bright-line rules to determine substantiality on the ground that, such a rule would unduly minimize the protection given to copyright. 16. The Board correctly cited the ratio in Cinar and correctly found that whether a part of the work copied is substantial must be decided using a qualitative and holistic approach rather than merely considering the quantity copied (Decision, paragraphs [213-214]). 17, Nonetheless, the Board devised a “bright-line” inflexible rule that fixed a solely Quantitative threshold under which the number of pages copied would be deemed “insubstantial”; and over which the pages copied would be deemed “substantial” (Decision, paragraphs [214] - [227)). 18. In particular, using solely a “two-page threshold”, the Copyright Board denied copyright protection to the content of books copied in the Volume Study whenever the copying, transaction involved two or fewer pages of the book. All such copied content — approximately 22% of all copying from books - was thus arbitrarily excluded from the category of compensability on the grounds of “insubstantiality”. 19. Despite its recognition of the legal test for substantiality, despite the parties’ own agreement that the determination of insubstantial copying should ideally be based on qualitative as well as quantitative tests (AR, Vol.3, T. 61, p. 989), and despite a substantial body of evidence before the Board that would have allowed for a the required qualitative assessment, the Board's determination of substantiality was made without due regard to that evidence, 20, First, the Board disregarded the evidence captured in the Volume Study that pointed to the qualitative importance of the content that may be expressed in a little as one or two pages of the work (AR, V. 4, T.7T, pp. 1193-1310).21. Second, there was viva voce evidence before the Board that the content of as few as two pages copied from a book can often be the most qualitatively important portion of the book (AR, V.6, T.10, pp.1927-1928; AR, Vol. 5, T.8V, pp.1471, 1475-1480). 2. Third, the Board was also furnished numerous samples of books (Physical exhibits AC- 70-74; AC-85) that were used for instruction in K-12 institutions in 2010-2015, a review of which would have confirmed the qualitative importance of the content that is capable of expression in as few as two pages of these books. 23, An assessment of all such evidence would have revealed the qualitative importance of the content that an author or other creator is able to express in one or two pages of a book; and would have repudiated the Board’s adoption of its “two page or fewer threshold” for the determination of substantiality. The adoption and application of that arbitrary threshold was therefore unreasonable, 24. The evidence captured in the Volume Study also revealed that K-12 teachers also engaged in “compound copying” - the copying of different excerpts from the same book by the same teachers at different times (AR, V.4, T.7T, p.1177). The Board disregarded all evidence of compound copying (Decision, paragraph [202]). 25. A due consideration of the evidence of compound copying would have revealed that, in many instances, the number of pages copied from the same book exceeded the “two page or fewer” threshold applied by the Board and would therefore have qualified as “substantial” even under the Board’s solely quantitative assessment. 25A. Therefore, the Copyright Board’s adoption and application of its arbitrary “two pages or fewer” threshold for its determination of “insubstantiality”; and its disregard of all qualitative aspects of the content that is used and copied in K-12 institutions was contrary to binding precedent and unreasonable. Its determination of substantiality is therefore indefensible in respect of the evidence and the law. C. Board’s consideration of “fair dealing” under section 29 of the Act failed to follow binding precedent and resulted in an incorrect and unreasonable outcome [Memorandum, paragraphs 66-127] a. Board failed to correctly apply the evidential burdens prescribed by law (Memorandum, paragraphs 67- 92] 26. The party who claims that its copying activities constitutes fair dealing carries both the evidential and persuasive burdens to establish that claim (CCH, [2004] 1 $.C.R. 339 @ 48-50). 27. A party who has both the evidential and persuasive burdens on an issue will lose on that issue as a matter of law if that party fails to satisfy the evidential burden. (Sopinka, 4*, para. 3.34),28. Those burdens apply equally in both the copyright infringement context and in the context of fixing tariffs under the Copyright Act (Alberta, 2012 SCC 37 @ 12; SOCAN v. Bell, [2012] 2 S.C.R. 326 @ 13). 29. While the party who claims that its dealings are fair bears the evidential and persuasive burdens, the courts have re-distributed the evidential burden regarding the “effect of the dealing on the work” fair dealing factor on the party with exclusive access to that evidence, that is, the party whose works are copied, 30. Indeed, in both CCH and Alberta, the party contesting the claim of fair dealing was found not to have discharged that burden, resulting in that factor playing no role in the fair dealing assessment. In other words, when the party bearing an evidential burden fails to tender any [CCH] or only insufficient [Alberta] evidence, the burden is not discharged. 31. The incidence of the evidential burden, the evidentiary effect of its discharge and whether evidence is capable of satisfying the evidential burden are questions of law (Sopinka, 4", para. 3.16) 32. In their attempt to satisfy their evidential burdens, the Respondents led evidence that, as and from January 2013, the copying behaviours of their teachers were being undertaken under, and guided by, “Fair Dealing Guidelines” published by a consortium of Ministries of Education in a document entitled Copyright Matters (AR, V.2, T. 5, pp. 320-328). 33. While the parties agreed to consider the volume of copying and the types of works copied as captured in the Volume Study (conducted in 2005-2006) to be a reasonable proxy for the volume of copying and the types (i.e. genres) of works copied in the period 2010- 2015, this agreement did not relieve the Respondents from discharging their evidential and legal burdens to establish that the copying behaviours engaged in by them in the 2010-2015 period constituted fair dealing (RR, V.1, T.BI, pp.189,191). 34, Indeed, the express admission made by the Respondents in their opening statement and the factual evidence led by them throughout the hearing was that the copying behaviours in K-12 institutions had materially changed (AR, V.6, T.10, p.1997). The Respondents attempted to discharge their burdens by leading factual evidence that, at least during 2014, K-12 teachers now copied published works in the manners permitted under the “Fair Dealing Guidelines” and that such copying constituted fair dealing, 35. In accordance with its evidential burden relating to the sixth fair dealing factor ~ the effect of the dealing on the work -- Access Copyright marshalled its evidence to respond to the position taken by the Respondents that the copying activities undertaken in accordance with the “Fair Dealing Guidelines” constituted fair dealing as of January 1, 2013. 36. However, because the Respondents were unable to satisfy the Board that the Fair Dealing Guidelines were complied with, the Board disregarded ail the evidence and arguments tendered by the parties in respect to the Guidelines (Decision, paragraphs [234] - (235)).‘The Board ultimately found that “the parties did not adequately address fair dealing” (Decision, paragraph [350)). 37. Despite that finding, and as was the case in the Governments Tariff decision’, the Board did not apply the burden framework. Had this necessary framework been applied, the Board’s finding that “the parties did not adequately address fair dealing” ought to have resulted in a final determination that the Respondents had not discharged their evidential burdens to establish that their copying behaviours were fair. The Board’s failure to find that the Respondents had not discharged their evidential burdens was an error of law, 38. Instead of finding that the Respondents had failed to discharge their evidential burdens, the Board effectively excused this failure by disregarding all the evidence and argument directed by the parties to the Guidelines and unreasonably restricted its assessment and determination of the fair dealing issue to the data present in the Volume Study (Decision, paragraph [235]) and only those circumstances present in the market in the period 2005- 2006. 39. Despite the Respondents’ failure to adequately address the issue of fair dealing, the Board, without input from the parties, unilaterally conceived and applied a methodology to the data in the Volume Study to determine the issue of fair dealing, Beyond having the effect of excusing the Respondents’ failure to mect their evidential burdens on fait dealing, the methodology itself reveals another example of the Board's failure to apply the burden framework eorrectly. 40. In particular, in fashioning its methodology to determine the issue of fair dealing, the Board created three categories - “fair”, “neutral” and “unfair”- under which the Board assigned a percentage of exposures from the Volume Study (Decision, Appendix “B”, Tables 1 & 2, AR, V.1, 7.3, p. 203). 41. The Board’s creation of a “neutral” category for each fair dealing factor, and assigning a percentage of exposures from the Volume Study into that category, was a finding that the Board could not decide, on the evidence that it considered, that an assessment of those factors tended toward faimess. As the Board was unable to conclude that the exposures assigned to the “neutral” category were “fair”, the correct and required application of the burden framework would have categorized all exposures categorized as “neutral” as “unfair” b. Methodology applied by the Board both procedurally unfair and fundamentally flawed [Memorandum, paragraphs 115-124] 42, Access Copyright was afforded no opportunity to address the methodology unilaterally adopted by the Board (Decision, paragraph [351]). Given the adversarial nature of the Board's proceedings, Access Copyright’s legitimate expectation that the usual post- * access Copyright’s application for judicial review of that decision (A-293-15] was heard on June 20, 2016 and remains under reserve.43. 45. 46. 41. hearing procedures would be followed by the Board, and the seriousness of the outeome of the implementation of that methodology - the vast majority of the copying was found to be fair ~ the Board was procedurally required to afford Access Copyright a full opportunity to address both the design and the implementation of the methodology (Baker, [1999] 2 S.CR. 817 @ 21-28) CCH [para, 52-53] instructs us that fair dealing is a “matter of impression” to be approached by assessing all the evidence led in respect to the interdependent fair dealing factors as a whole. The Board’s methodology — that considered each factor independently of the other - leads to absurd results. For example, as the amount of copying increases toward the entirety of a book, one would logically expect that the purchase of the book becomes a reasonable alternative to the copying, rendering the copying unfair as a matter of impression. In other words, an increase in the amount copied ought to have a material impact on the assessment of the “alternatives to the dealing” factor. However, under the Board's methodology, as these factors are considered independently of one another, the copying of the entirety of a book would have no impact on the Board’s assessment of the “alternatives to the dealing” factor and that copying event would not be classified as unfair, ¢. Board failed to correctly assess the “amount of the dealing” factor [Memorandum, paragraphs 94-99] |. In addition to the errors identified above, the Board failed, in considering the “amount of the dealing” factor, to consider the importance of the excerpts copied (Decision, paragraphs [281] ~ [282)), contrary to the instruction in CCH [para. 56]. The Board found that it “did not have evidence about the qualitative aspects of the dealing” (Decision, paragraph [282]). That evidentiary vacuum was the result of the Respondents” failure to meet their evidential burden in respect to this factor. However, the Board again excused this failure by adopting a solely quantitative and arbitrary “approximation” to inform its assessment of this factor, (Decision, paragraph [288}). In applying this approximation, the Board again unreasonably disregarded all evidence of “compound copying” (Decision, paragraphs [283]- [286]). Therefore, even if one accepts the soundness of the Board's methodology, its assignment of 75% of exposures as “fair” under the “amount of the dealing” factor was unjustified and indefensible in respect to the evidence and the law. d. Board failed to reasonably assess the “alternatives to the dealing” factor [Memorandum, paragraphs 100- 103] There was substantial evidence before the Board that, in the relevant tariff period between 2010 and 2015, teachers had a multitude of reasonable alternatives to copying pages ftom published works (AR, V.5, T.8W, pp.1470-1471; AT, V. 6, 7.10, pp.2123, 2126).48. The Board unreasonably disregarded all such evidence on the unintelligible basis that, as the alternatives were not available in 2005-2006 when the Volume Study was carried out, their admitted availability in the 2010-2015 tariff periods were irrelevant (Decision, paragraphs [304] - [306]). 49. In making that finding, the Board ignored the parties’ agreement that the Volume Study was being relied upon solely as a reasonable approximation of the volume of works copied, segregated by genres, in 2010-2015. As the fairness of the copying was being assessed for that latter period, applying the legal framework and legislation in place during that latter period, it was unreasonable to completely disregard the evidence of the ‘many alternatives to copying published works that were available to K-12 teachers. 50. By reason of the Board’s disregard of that evidence, and even if one accepts the soundness of the Board’s methodology, its assignment of 100% of exposures as “fair™ under the “alternatives to the dealing” factor was indefensible in respect to the evidence of record. ©. Board failed to correctly assess the “character of the dealing” factor [Memorandum, paragraphs 104-107] 51. In addition to the errors identified above, the Board failed (Decision, paragraph [269]), in considering the “character of the dealing” factor, to consider the aggregate amount of copying of works in the Access Copyright’s repertoire revealed in the evidence [no fewer than 300 million exposures per year, or approximately 90 exposures per student per year] (AR, V. 5, T. 8Y, p.1552), contrary to the instruction in Alberta [para. 29] and SOCAN (para. 42). 52. The Board’s disregard of the evidence of the aggregate amount of the copying was unjustified and indefensible in respect of the evidence and the law. f. Board failed to correetly assess the “effeet of the dealing” factor [Memorandum, paragraphs 108 -114] 53. CCH [para. 72] instructs us that the proper analysis of the “effect of the dealing” factor is not restricted to the particular works copied but includes, as a relevant consideration, whether the markets for those works have been, or ate likely to be, negatively affected by the copying of published works. 54, The Board restricted its analysis of this factor to the effects of the dealing on the particular works copied in the Volume Study (Decision, paragraphs [316] - [318]). 55. The Board’s narrow search for a conclusive causal link between the copying of particular works and a decrease in the sales of such works was contrary to the Supreme Court’s instruction in CCH and resulted in the Board disregarding material evidence, tendered by both parties, that established that the K-12 institutions’ copying behaviours under theGuidelines have had and are likely to have, significant negative market impacts (AR, V. 5, T. 8QQ, pp. 1812-1814; AR, V. 6, T.10, pp. 2065, 1723). 56. Therefore, even if one accepts the soundness of the Board’s methodology, its assignment of only 20% of exposures as “unfair” under the “effect of the dealing” factor was unjustified and indefensible in respect to the evidence and the law.