Mandatory Tariffs In the Canadian Copyright Scheme

Ariel Katz, University of Toronto Faculty of Law, has published Spectre: Canadian Copyright and the Mandatory Tariff. Here is the abstract.

Canadian copyright collectives claim that when the Board certifies collectives’ tariffs (or fixes the royalties in individual cases pursuant to statutory arbitration proceedings), those tariffs become mandatory on users. Users then have no choice whether to deal with the collective or not, and must pay the specified royalties as long as they make a single unauthorized use of a work from the collective’s repertoire. Many users, with very little protest, have also subscribed to this view, despite its extraordinary consequences.

This article argues that this spectre of a mandatory tariff lacks any basis in law. Established case law debunks it, standard principles of statutory interpretation contradict it, and the legislative history discredits it. The statutory scheme is very simple: an approved tariff creates a compulsory licence that interested users can avail themselves of if they wish to obtain a licence, but it cannot force users to become licensees. It is compulsory on copyright owners, not on users. Users who do not wish to obtain licences when they need them may be liable for copyright infringement, and maybe ordered to pay damages or account for their profit, but they cannot be compelled to pay royalties under a licence that they have never taken.

Whether this apparently esoteric copyright question proves to be a spectre or a bluff may determine whether users can in fact exercise their rights under the Copyright Act or must nonetheless still deal with, be monitored by, and pay ever-increasing layers of tariff royalties to, copyright collectives.

Download the paper from SSRN at the link.