Industry Committee on May 22nd, 2018

[Wanda Noel]

I will get that out of Hansard and pass it on to the statisticians to see if I can get the answers.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

So there are three questions. One is which constant dollars it's in. Two, could we have this comparison against the rate of change here versus the rate of change in the consumer price index, specifically for education? Seeing how much of your education budget...is it constantly what you're spending in Canadian books, or is it going down or staying the same?

Do you understand?

[Wanda Noel]

I can get your exact question out of Hansard.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

That's it. The third one is, and maybe I've misunderstood something...but please clarify that too.

[The Chair, Liberal, Dan Ruimy]

Thank you.

For the final two minutes, we have Mr. Masse.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

To follow up with your two copies per student, I'd just like to get an idea of where that came from in terms of the accumulation of that data. Also, have you had specific cases where there was significant copyright infringement? What were the repercussions to the people who were doing that? What's your policy on that?

How did you get the numbers? There are many students, I'm sure, who would do copyright infringement, but have there been major cases, and what happens to those individuals with regard to those cases?

[Zach Churchill]

That number comes from the 600 million pages that the industry has told us are being made free every year in Canadian schools. Again, we don't know if that number is accurate. If you look at 2% of that based on the Copyright Board of Canada and the Federal Court of Appeal saying only 2% of copying is falling outside of fair dealing, that's 12 million copies. We have seven million students, so that's approximately two copies per student per school—

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Yeah, you just applied their own numbers. Really it's their own data.

[Zach Churchill]

That's using the data from the industry.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Is it province by province, the repercussion with regard to copyright infringement?

[Zach Churchill]

The mechanisms in place for performance issues or disciplinary action does differ from jurisdiction to jurisdiction, even specifically sometimes from board to board.

[Rémi Massé, Liberal, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

[The Chair, Liberal, Dan Ruimy]

On that note, I would like to thank Ms. Noel and the Honourable Zach Churchill for being here today with us and answering some pretty hard questions. You can tell we're a very inquisitive group over here. We're trying to get to the core of this. I want to thank you both for coming and speaking with us today.

We're going to suspend for a very quick minute while we change over our panels.

Thank you very much.

[The Chair, Liberal, Dan Ruimy]

Welcome back, everybody.

For the second hour, we have with us from Copibec, Frédérique Couette, executive director. From Access Copyright we have Roanie Levy, president and chief executive officer.

We are going to start with Copibec.

You have seven minutes.

[Frédérique Couette, Executive Director, Copibec]

Hello. Thank you for inviting me here today.

My name is Frédérique Couette. I am the executive director of Copibec, the Société québécoise de gestion collective des droits de reproduction.

Established in 1997, Copibec is the management collective of the community of Quebec authors and publishers. It is a non-profit organization. We collect royalties and pay them to authors, freelance journalists, creators, and publishers after covering our management fees.

About six years ago, we appeared before the committee with regard to Bill C-32. At that time, we warned MPs about the risks and potential abuse associated with introducing the word “education” into the fair dealing exception. The education sector officials offered reassurance. They said they would never end the licences with collective societies. They said it was merely a clarification with no tangible negative consequences for copyright holders.

As of January 2013, however, those same officials started terminating their agreements with Access Copyright. The situation has gone downhill steadily ever since. They claimed the right to establish copying policies that allowed them to reproduce a chapter or 10% of a work, according to the broadest possible interpretation, so they would no longer have to pay royalties to copyright holders through their collective society. The ministries of education outside Quebec have gone so far recently as to sue copyright holders through Access Copyright, while at the same time refusing to pay the minimal royalties established by the Copyright Board of Canada in 2017.

The situation is worrisome in Quebec as well. In June 2014, Université Laval adopted a copying policy based on the one used by educational institutions in the rest of Canada. The other universities in Quebec, the CEGEPs, and the ministry of education are still working with Copibec, but each time an agreement is renegotiated, the royalties are further reduced. The annual royalty per university student has accordingly fallen by close to 50%, from $25.50 in 2012 to $13.50 in 2017, while the CEGEP rate has fallen by 15%.

Unfortunately, we have to recognize that our fears have for the most part been realized. The licence revenues of copyright holders are vanishing under pressure from the education sector, lawsuits are multiplying and dragging on, while intellectual property is being steadily devalued with each licence negotiation. Although Copibec has maintained its 15% management fees, the royalties paid to authors, creators, and publishers have fallen by 23% for each page copied by universities.

The universities told you about the millions of dollars allocated in their acquisition budgets to access the content of major foreign publishers of scientific journals. Yet about 80% of the reproduction declarations that we receive, regardless of the level of education, pertain to the reproduction of books and not international journals. It is not the large international publishing groups that have suffered from declining royalties, but our small and medium-sized publishers, our own publishers, for whom royalties account for 18% of net profits on average. For certain book publishers, royalties can account for as much as 30% of net profits. These revenues also make a significant contribution to the long-term survival of specialized Canadian and Quebec journals and can be the deciding factor in a publication's survival or demise. For our authors who are already in a difficult position, any drop in revenue in the copyright chain affects their financial ability to create.

Quebec's experience is nonetheless an example of collective management that allows for the negotiation of agreements between users and copyright holders. I am not saying that everything is great, because that is not the case. In fact, if nothing is done to correct the disastrous effects of the changes made in 2012, the situation in Quebec will only worsen and we will see a steady drop in royalties, if not their complete disappearance.

Quebec university students currently pay $13.50 per year for the Copibec licence. That amounts to less than half a per cent of a student's annual tuition fees in Quebec. Further, there is nothing in the agreements signed with the universities—they are signed with the universities and not the students—that requires them to pass those costs on to the students. For Concordia and the University of Montreal, for instance, this represents 0.08% and 0.07% of their annual operating budget for 2017-18 respectively.

Tuition fees are not higher in Quebec than in the rest of Canada. Paying royalties for the reproduction of excerpts of works has never jeopardized the Canadian education system or led to excessive student debt.

The fair dealing exception for education has been presented to you as the best way to access works. We are extremely puzzled by those statements, which are not backed up by any relevant evidence. At the same time, we know that collective management has always included this aspect of access to works, including digital works, owing to the agreements signed with foreign management organizations that belong to the International Federation of Reproduction Rights Organisations, or IFRRO.

Collective management is an undeniable benefit of a balanced act, as it balances access to works and ease of management on the one hand, with the compensation of rights holders through the payment of reasonable royalties on the other. It not only promotes direct access to knowledge, but also preserves creativity and cultural diversity for the future. It is for good reason that UNESCO considers collective management “an essential element in the construction of a modern national system of protection of copyright which would effectively promote a dynamic cultural development.”

Fundamental rights protect the compensation of authors and publishers. The Universal Declaration of Human Rights provides that all work should be paid and protects intellectual property. Copyright and all its elements is also intrinsically linked to authors' freedom of expression as it allows them to earn independent income that supports independence of thought.

Mr. Chair, vice-chairs, and members of the committee, thank you for your attention today. I would point out that our demands reflect a modern and forward-looking approach for a society that invests in its culture in the digital age. Collective management is not a model of the past, but rather a contemporary model that guarantees access and cultural diversity. The decisions you will make at the end of the current review will profoundly affect the future of the book publishing sector and cultural development in Canada.

I will conclude my presentation by quoting from the Creative Canada Policy Framework, published in 2017, regarding the review of the Copyright Act:

[...] Our copyright framework remains a vital part of our creative economy, and will continue to do so in the future. A well-functioning copyright regime should empower creators to leverage the value of their creative work, while users continue to enjoy access to a wide range of diverse cultural content.

Collective management is consistent with these and the other objectives of Canada's cultural policy.

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Ms. Levy, you have seven minutes.

[Roanie Levy, President and Chief Executive Officer, Access Copyright]

Thank you for the invitation to appear before this committee.

My name is Roanie Levy, and I am president and CEO of Access Copyright. Access Copyright is a not-for-profit copyright collective created in 1988 by Canadian creators and publishers of textbooks, trade books, newspapers, magazines, and journals to manage the reuse of their works.

The copying that creators used to get paid for is now being done for free under so-called fair dealing guidelines. These copying policies reflect the education sector's interpretation of fair dealing, and were developed without the input or support of creators and publishers. These copying policies, which mimic the copying limits that had previously been paid for under the Access Copyright licence, effectively replaced the collective licence with an uncompensated exception under the guise of fair dealing for education.

The outcome is that 600 million pages of copyright-protected content is being copied for free each year by the education sector. This is content that is not licensed through academic libraries or made available under open access licences. Royalties collected by Access Copyright from the education sector have declined by 89% since 2012. Historically, these royalties represented 20% of creators' writing income and 16% of publishers' profits. The estimated loss of licensing royalties to creators and publishers due to the education sector's interpretation of fair dealing is $30 million a year. To this loss we must also add the loss in primary sales due to the substitution effect of free content copied under the education sector's copying policies.

I have structured my remarks today around four questions, which I hope will be helpful to the committee. One, when the act was amended, was it Parliament's intent to eliminate the collective licence and replace it with an uncompensated exception? Two, are the copying policies supported by the teachings of the Supreme Court of Canada? Three, are the copying policies damaging to the writing and publishing sector in Canada? And four, what should be the true purpose of fair dealing for education?

To learn what was intended and understood by the addition of education to fair dealing, it is useful to refer to the representations made by the education sector during the legislative hearings on the bill. Representatives from the education sector repeatedly and emphatically assured the legislative committee that the changes would not result in the education sector stopping to pay for the copying of works. Fair dealing for education, according to their testimonies, was not going to replace the collective licence.

For example, Paul Davidson, president of Universities Canada, said the following:

In particular, it has been suggested that the education community does not want to pay for educational materials and that Bill C-32, especially the addition of education as a new fair dealing purpose, will undermine the publishing industry in Canada and decimate the revenues of copyright collectives such as Access Copyright....These claims are false and are not supported by the facts.

Similar assurances were made again and again by representatives of the elementary and secondary sector. “We are not asking for anything for free” was repeated numerous times.

The Honourable Ramona Jennex, as was mentioned earlier, came before the legislative committee and said:

Nothing in Bill C-32 alters the current relationship among education, publishers, content providers, copyright collectives, and the Copyright Board.

Although replacing the collective licence with an uncompensated exception was not intended with the introduction of education to fair dealing, we now know that this is exactly how the education sector acted following the coming into force of the Copyright Modernization Act. Educational institutions across the country, except in Quebec, adopted copying policies that encourage the mass systemic and systematic copying of protected works without payment to the creators. Once these policies were adopted, most educational institutions walked away from their long-standing licence agreements with Access Copyright.

So if the copying policies were not intended by the changes to the act, are they in keeping with the decisions of the Supreme Court that you heard about earlier today?

Following the adoption of the copying policies, the creators' and publishers' only recourse to clarify fair dealing was to bring the matter to the courts. That is why Access Copyright sued York University. In a decision issued in June 2017, the Federal Court unequivocally concluded that the copying policies and practices adopted by York University, which are virtually identical to the policies adopted across the country by educational institutions, including the K-12 sector, are:

...not fair in either their terms or their applications. The Guidelines do not withstand the application of a two-part test laid down by the Supreme Court of Canada jurisprudence to determine this issue.

The copying policies are not in line with the Supreme Court of Canada's teachings.

Do they harm writing and publishing in Canada? The York case involved a four-week hearing, during which time the Federal Court judge heard extensive evidence, including the evidence of duelling economic experts. They were presented by both sides. The court looked at York's copying policies and their impact on creators and publishers. After careful examination, the judge found that the policies are arbitrary and unfair, and ultimately result in an unfair “wealth transfer” from creators to educational institutions. Importantly, the court concluded that “any suggestion that the Guidelines have not and will not have negative impacts on copyright owners and publishers is not tenable.”

It is important to note that this decision is the only court decision or Copyright Board decision that examines the fairness of the copying policies. There are no other decisions by any court that examine whether 10% or a chapter is fair—only this one.

What, then, should be the true purpose of fair dealing? Here again I think it is instructive to go back to the representations made by the education sector during the legislative committee.

Here is a first example. Steve Wills, at the time manager of government relations and legal affairs for the Association of Universities and Colleges of Canada, stated it clearly:

First of all, in regard to the educational community, nothing in Bill C-32, for starters, is going to change the revenue going to the collectives such as Access Copyright and Copibec. It's not about saving money. What it is about—the change to fair dealing in particular—is allowing certain educational opportunities that right now sometimes don't occur.

The Honourable Ramona Jennex also helps us understand what the true purpose of fair dealing should be:

We're not asking for anything for free. The education system, the sector, pays for licences and copyright, and will continue to do so. What we’re asking for with these amendments is to have things clarified.

The true purpose of the 2012 amendments, as represented by the education sector to the legislative committee, was to clarify that fair dealing can be relied on by educational institutions when the copying of a work is not covered by licences or easily available through the rights holders, not to do away with collective licensing.

We urge the committee to recommend that this be clearly stated in the act. As the litigation endures, uncertainty around what can be copied challenges educators every day. Creators are deprived of a significant chunk of their income and educational publishers are making tough decisions. Publishers are leaving the educational market, resulting in lost jobs and significantly reduced investments in the creation of Canadian content. This in turn means fewer opportunities and reduced income for creators.

At the end of the day, we all lose when Canadian creators and publishers do not have the economic incentives and ability to continue to create content that reflects who we are, our experiences and values as Canadians.

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We are going to move, mindful of the time, to Mr. Baylis. You have six minutes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Thank you, Chair.

Thank you for your presentation, Ms. Couette.

Thank you, Ms. Levy, for being here.

We are hearing two sides. On one hand, the universities come in, their representatives saying we're paying more and more. On the other hand, we're hearing from authors, publishers, and yourselves as your association saying we're getting less and less.

Can you help clarify that? Do you agree with that? Are they paying more? Are you getting less? If so, what's happening?

[Roanie Levy]

We don't dispute that the university sectors may in fact be paying more and more for content. What's important to keep in mind is that the content that they are licensing and paying through their library licences is different from the content that they are copying under their copying policies. We're talking about two different buckets of content. There is some overlap, but very little overlap.

The content that they are licensing is, through their own testimonies before you, mainly journal articles. As an example, CRKN testified that out of $125 million, $122 million is spent with foreign publishers. That content is created often by academics, people who rely on a salary in order to be compensated for their contributions.

The content that is copied historically under the Access Copyright licence, today under their fair dealing guidelines, is mostly books, not journals. This is content that is created by professional authors who rely on royalties for compensation. It is not content that is licensed, by and large, through the library licences.

It's two different buckets of content. The Canadian content that is adapted and customized, that tells our story, is in that “B” bucket, the content that is being copied today for free.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Whatever way it's applied or not, the idea of fair dealing is to give a bit of oil to the system to let people make a couple of copies of a book, or so on. Are you looking to clamp...? Do you want to make money, monetize every single copy, or are you against...?

Can you give us your view of what fair dealing should be? You're not happy with what it is. Should it exist, number one; and two, if it does exist, how should it exist?

[Roanie Levy]

Yes, fair dealing should exist. We're not arguing that fair dealing be removed. What's important to keep in mind is that the fair dealing needs to allow a market to take place. The way it's being applied today doesn't allow the educational market to survive.

I think we could be inspired by the way fair dealing is used in other jurisdictions, such as in the U.K. and Australia. The outcome in those jurisdictions is that the copying done by the educational institutions is not allowed under fair dealing. If there's a licence, it has to be paid for. The copying that is done by the students, the self-generated reproduction of works, that is fair dealing. That's what we see in Australia and in the U.K. Both have fair dealing provisions. The mechanisms to achieve that are different in the two jurisdictions, but that is the bottom-line outcome.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

They allow the students to say fair dealing is for the students, but the institution has to pay.

[Roanie Levy]

That's right. The systematic mass copying that happens by the institutions, for example, through the copying of chapters, and the 10% that gets loaded onto online learning management systems, that gets reproduced in course packs that substitute for the purchasing of books should not be fair dealing. This is what the judge's conclusions were in the York decision.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Ms. Couette, Ms. Levy just said that the approach in Australia or the United Kingdom offers potential solutions.

Would Copibec support that approach? What do you think of these solutions?