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Factsheet: Copyright Board Reform

From: Innovation, Science and Economic Development Canada

Government consultations demonstrated the urgent need to address the procedural and structural challenges faced by the Copyright Board (Board). The chief concern is that decision-making processes take too long, with tariffs routinely taking years to be approved.

The Government is taking comprehensive action to tackle these issues through Budget 2018, with a 30% increase in financial resources for the Board, accompanied by legislative proposals. Together with new appointments at the Board, these measures would set a new course for decision-making.

A well-functioning Board should facilitate the development and growth of markets that rely on copyright in Canada, serve as a specialized, independent, quasi-judicial decision-maker, and safeguard the public interest.

Clearer rules and processes

Consultations indicated that the current decision-making framework, which includes evolving Board practices, previous Board rulings, decisions from reviewing courts, and practice notices, is not clear to all prospective participants. These reforms would provide clear markers to guide participants and the Board so that they can prepare and engage more efficiently in proceedings.

Clear mandate: The proposed amendments would formalize the de facto substantive mandate of the Board, which is to set ‘fair and equitable’ rates for uses of copyright-protected content. The proposed amendments would also introduce a procedural mandate for the Board to act as informally and expeditiously as the circumstances and considerations of fairness allow. This will promote a culture of efficiency at the Board and instill more discipline upon participants for the overall benefit of the entire process.

Clear criteria: The proposed amendments would require the Board to consider two criteria in its decisions: what would be agreed upon between a willing buyer and a willing seller in a competitive market, and the public interest. The Board would retain discretion to consider additional factors when appropriate. Establishing clear criteria would help participants to better present their cases and the Board to more clearly focus its decisions.

Empowered case management: Case management has been demonstrated to be a highly effective tool to advance contested proceedings in a flexible and efficient manner. The proposed amendments would establish a formal framework for case management by the Board. Case managers would have the authority to make orders of the Board to facilitate swift resolution of questions and issues. They would be able to work with the parties directly throughout the process to ensure that their arguments and evidence are relevant and focused.

Streamlined timelines

Delays in tariff setting are in large part structural and have impaired the efficiency of copyright markets in Canada. Users wait years to balance their books, and collectives cannot fully distribute royalties to their members until royalty rates are determined. Online music streaming services have cited long delays in the tariff-setting process and the resulting price uncertainty as a disincentive to entering the Canadian market, thereby reducing opportunities for Canadian creators and consumers. These reforms would provide the means for faster and more prospective proceedings.

Earlier filing, longer duration: The proposed amendments would require tariff proposals to be filed with the Board at least five and a half months earlier (i.e., October 15 instead of the following March 31) and be effective for a minimum of two years longer (i.e., three years instead of one).

Modernized publication: The proposed amendments would empower the Board to publish proposed tariffs by any means it sees fit rather than mandatorily in the Canada Gazette, as at present. This flexibility in publication could reduce the length of proceedings by a few months.

Shorter opposition period: The period for filing tariff objections would be reduced from the current 60-day period to 30 days to reduce statutory delays to the maximum extent feasible.

Decision-making deadlines: A new regulatory power would enable the Governor in Council to establish timelines or deadlines for any procedural step in a matter, such as the time the Board takes to render a decision after a hearing. Stakeholders would have the opportunity to comment on the proposed regulations before they are finalized.

Letting willing buyers and willing sellers agree

Collectives and users of communication and public performance rights for music currently have to go to the Board to establish royalty rates. Currently, the Copyright Act does not expressly allow these parties to negotiate directly. This is a significant obstacle for efficient rights management in the music industry. By allowing more direct agreements and withdrawal of proposed tariffs that are no longer required, these reforms would ensure that the Board is only adjudicating matters when needed, freeing resources for more complex and contested proceedings.

Agreements: The proposed amendments would allow direct negotiation between users and collectives for communication and public performance rights for music, just as the Copyright Act already allows for reproduction rights. These copyright owners would no longer need to seek the Minister’s approval to enforce rights outside of a tariff context.

Individual dispute settlement: All users and collectives empowered under the Copyright Act to enter into agreements, would be able to access the Board’s individual dispute settlement mechanism. For instance, if negotiations come to an impasse, either party would be able to ask the Board to set royalty rates between those parties. While those proceedings are underway, users are authorized to use the copyright-protected content, as long as they offer to pay the rates set by the Board.

Enforcement and remedies: To maintain the current balance with regards to remedies, existing statutory damages would continue to be available to collectives and their members in respect of communication and public performance for certain forms of music where the Board has set a fair rate. Otherwise, monetary remedies for these activities would be determined by courts.

Filing and review of agreements: The existing mechanisms which allow either party to file agreements with the Board and have them available for potential review would be extended to all music rights for which direct negotiation is possible.

Robust protection of the public interest

Consultations indicated that a lack of information and the potentially high cost of participating in Board processes was a barrier to some potential participants. In addition to clarifying and streamlining the procedural framework in which the Board operates, these reforms would clarify and ease the integration of public perspectives into the decision-making process.

Considering the public interest: Within the context of fair, equitable and expeditious decision-making, these reforms would formally establish the public interest as one of the criteria that the Copyright Board must consider in its decisions. This would ensure that the Board takes into account the broader impact of its decisions, including the impact on those who are not directly involved in a particular proceeding such as end consumers and the public at large.

Public participation: The Board plans to propose regulations that would formalize the ways for the public to be involved without having to incur the costs of full participation. Public consultations would allow stakeholders to provide feedback regarding the regulations.

Modernized website: Additional resources earmarked in Budget 2018 will enable the Board to revitalize its website to more clearly convey to Canadians information about their ongoing operations as well as proceedings. It will also allow Canadians and interested parties to subscribe to receive relevant information, such as rulings, when they want it.

Expected outcomes

All in all, the reforms seek to ensure that royalty rates are determined faster and with more certainty while continuing to protect the public interest. They seek to reduce litigation and transactions costs for users and creators alike, and allow royalties currently kept in reserve or on contingency to be put to more productive uses. Users would know the cost of royalties earlier, and collectives could more rapidly pass on those royalties to their members.

All Canadians benefit when Canada has a robust creative economy in which the creative and innovative sector can thrive. Canadians deserve timely access to diverse cultural content and to the kinds of services that are available world-wide. These reforms would eliminate barriers for businesses and services wishing to innovate or enter the Canadian market. They would also better position Canadian creators and cultural entrepreneurs to succeed so they can continue producing high-quality Canadian content.

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