H.W.O. Doyle, LL.B., LL.M.

City Solicitor

Legal Services

55 John Street

Stn.1260, 26th Flr., Metro Hall

Toronto ON M5V 3C6

Tel: (416) 392-8047

Fax: (416) 397-5624

March 11, 1999

To:Corporate Services Committee

From:H.W.O. Doyle

City Solicitor

Subject:Copying Material Subject to Copyright

Purpose:

The purpose of this report is to provide background information respecting a deputation anticipated to be made to the Committee, at its meeting of March 25, 1999, by a representative of the Canadian Copyright Licensing Agency ("Cancopy") regarding the development of a municipal government photocopying licence agreement between Cancopy and the City of Toronto.

Funding Sources, Financial Implications and Impact Statement:

The licence agreement proposed by Cancopy to be entered into with the City, includes a provision for the payment of an annual royalty of $1.50 for every full-time equivalent employee of the City and those agencies, boards and commissions that might be part of the licence arrangement. (For the remainder of this report, all references to the City will include such agencies, boards or commissions). This royalty would be paid for the right to undertake the copying permitted by the licence.

In addition, Cancopy's suggested draft licence agreement provides for a one-time administration fee payable to Cancopy in the amount of 15% of the royalty amount payable to Cancopy, referred to above, for the initial two year term of the licence.

Given these potential costs, if the City were to pursue the licence agreement with Cancopy, a determination would have to be made as to the appropriate budgetary source for those costs, both for the initial term of the licence and for any renewals thereof.

As well, one of the major issues to be addressed in negotiation of any licence agreement would be the scope of its application. A determination would have to be made as to which agencies, boards and commissions, if any, should come within any licence agreement between the City and Cancopy. This determination could also have a significant effect on the total cost of the licence arrangement.

Recommendations:

It is recommended that this report be received for information.

Council Reference/Background/History:

By letter dated December 3, 1998, Councillor Joe Mihevc requested the Committee to provide a representative of Cancopy with the opportunity to make a deputation to the Committee respecting the City's use of materials subject to copyright. The Chairman of the Committee requested that, in consultation with the City Clerk, I submit a report on the materials submitted by Cancopy, for consideration at the time of Cancopy's deputation. As well, members of my staff contacted a representative of Cancopy to determine the anticipated scope and content of the intended deputation to the Committee.

Comments and/or Discussion and/or Justification:

1.The Legislative Framework Established by the Copyright Act

Section 3 of the federal Copyright Act (the "Act") establishes a copyright in relation to various types of works, including literary works. The section provides that the owner of a copyright has the sole right to produce or reproduce the work or any substantial part thereof, in any form.

Section 27 of the Act provides that it is an infringement of an owner's copyright for any person, without the consent of the owner, to do anything that the owner has the right to do by virtue of the Act. Therefore, in situations where the City and its employees photocopy, or otherwise reproduce, any literary work without the permission of the owner of that work, the City and its employees may be infringing the owner's copyright.

The Act does establish various exceptions to this principle of infringement. For example, the Act provides that it is not an infringement to engage in fair dealing with certain types of materials that are copyrighted for the purposes of research or private study, for the purposes of criticism or review and for the purposes of news reporting, provided that certain conditions are met. It should be noted, however, that there are special provisions applicable to archives and libraries that are beyond the scope of this report.

In the event an infringement occurs, section 34 of the Act provides that the owner of the copyright may seek all available legal remedies, including obtaining an injunction to restrain the copying and seeking damages that result from the illegal copying. Although it may be possible that a portion of the daily copying that occurs on behalf of the City infringes the owner's copyright, it is very difficult for an individual copyright owner to assess and determine that such copying has occurred and that the copyright has been infringed. As a result, although the Act confers certain protections and rights on copyright owners, they can be difficult to enforce, given the wide dissemination of materials in which copyrights subsists.

In light of those difficulties, the Act recognizes the existence of the concept of "collective societies", such as Cancopy. Essentially, collective societies are associations or corporations that carry on the business of administering copyright on behalf of a large group of copyright owners and, in particular, the collection of remuneration on behalf of those owners and the payment and distribution of the royalties or levies to the owners.

2.The Draft Licence Agreement

As a collective society under the Act, Cancopy is now approaching the City for the purposes of negotiating a municipal government photocopying licence to allow Cancopy to collect royalties from the City for the purpose of distribution to its members. Cancopy has submitted a proposed draft agreement as part of the background material for its deputation. It should be noted that this is only a first draft of the agreement which would form the basis for discussions and negotiations if the City wished to pursue the licence arrangement with Cancopy.

A review of the proposed draft municipal government photocopying licence submitted by Cancopy to the Committee reveals the following key points:

(i)Terms of Authorized Copying

The draft licence agreement would authorize copying in City offices for the non-profit purposes of professional, research, archival, communication and administration activities of the City. "Copying" for the purposes of this licence means only a visually perceivable facsimile reproduction of all or part of a work made by a reprographic process. Copies may be made by employees and other persons associated with the City. All copies must be made onto paper, except as required for facsimile transmission. The licence only provides limited temporary protection for digital copies of protected works.

As well, there are volume limits on the amount of permitted copying. Essentially, copying is limited to up to 10% of the work or the entirety of certain specified parts of a work, such as an entire newspaper article, whichever is greater. The licence authorizes the making of such numbers of copies as are required to conduct business within the mandate of the City. The licence prohibits copying as a substitute for works which would ordinarily be purchased, making copies of portions of works where the portion copied is commercially available as a separate publication and binding copies into anthologies containing copies of works from more than one publication.

(ii)Cost of Licence

The City would be required to pay to Cancopy annual royalties of $1.50 multiplied by the number of full-time equivalent employees of the City. As well, Cancopy would be entitled to receive a one-time administrative fee of 15% of the above-mentioned payment for the initial term of the licence, which is the initial two years from the effective date of the licence. The City would be required annually to provide Cancopy with the number of its full-time equivalent employees at the beginning of each year in the term of the licence. This figure would be used to determine the annual royalty payment.

(iii)Record Keeping Obligations

At the request of Cancopy, the City would be required, for a period of thirty consecutive days, to keep records of all copies of works that are made that fall within the scope of the licence. This information would be used by Cancopy to determine whether the level of royalties payable for this type of licence should be revised in the future and to assist Cancopy in distributing royalties paid by the licensee.

(iv)Indemnity to the City

In the event that someone makes a claim, including a legal claim, that their copyright in a work has been infringed by the City, Cancopy would indemnify and save harmless the City from any costs or expenses of such claim, including damages. Cancopy would also be obliged to defend and settle any such claim, subject to the right of the City to assume and take control of action if it were dissatisfied with Cancopy's handling of the matter. Cancopy would provide this indemnity and defence regardless of whether the claim is in respect of a work that is included within those owned by copyright owners affiliated with Cancopy. Therefore, Cancopy offers protection to the City even in cases where it is not specifically authorized to act as agent on behalf of a copyright owner.

(v)Dissemination of Information

The licence imposes obligations on the City to disseminate information regarding the scope of copying authorized by the licence to all persons entitled to make copies under the licence. Cancopy will assist the City in preparing material for distribution that complies with those information requirements. As well, any material prepared by the City for dissemination must be submitted to Cancopy for review and comment.

Conclusions:

In light of the deputation made to the Committee by the representative of Cancopy and the contents of this report, the Committee and Council may wish to pursue the establishment of a municipal government photocopying licence with Cancopy. If the City is engaging in photocopying practices in violation of any copyright owner's legal rights, entering into the agreement would reduce such violations and result in copyright owners being properly compensated for the reproduction of their materials. As well, given the indemnity provision contained in the agreement, discussed above, the

City would be protected financially by Cancopy in the event any claim, as defined in the licence agreement, was brought against the City for copyright violation. If the Committee and Council wish to enter into an agreement, various details and aspects of the licence would have to be negotiated with Cancopy.

The City Clerk concurs with the contents of this report.

Contact Name:

Karl Druckman

Legal Division

(392-4520)

H.W.O. Doyle

City Solicitor

Legal Division