Time Limits in Respect of Matters Before the Copyright Board Regulations: SOR/2020-264
Canada Gazette, Part II, Volume 154, Number 26
SOR/2020-264 December 4, 2020
P.C. 2020-982 December 4, 2020
Her Excellency the Governor General in Council, on the recommendation of the Minister of Industry and the Minister of Canadian Heritage, pursuant to paragraphs 66.91(2)(a) footnote a and (d) footnote b of the Copyright Act footnote c, makes the annexed Time Limits in Respect of Matters Before the Copyright Board Regulations.
Time Limits in Respect of Matters Before the Copyright Board Regulations
Definition of Act
1 In these Regulations, Act means the Copyright Act.
2 The Board must make a decision with respect to the approval of a proposed tariff under subsection 70(1) or 83(8) of the Act
- (a) if the Board holds any written or oral hearings in respect of the proposed tariff, within the period of 12 months after the day that is fixed by the Board or a case manager as the final day on which any party may present their written or oral submissions to the Board; and
- (b) in any other case, before the day on which the effective period of the proposed tariff begins.
Royalty rates or terms and conditions
3 The Board must make a decision with respect to the fixing of royalty rates or their related terms and conditions, or both, under subsection 71(2) of the Act within the period of 12 months after the day that is fixed by the Board or a case manager as the final day on which any party may present their written or oral submissions to the Board.
Final day for submissions
4 If, on or after the day fixed by the Board or a case manager as the final day on which any party may present their written or oral submissions to the Board, the Board or a case manager fixes another day as the final day on which any party may present their written or oral submissions to the Board, that later day is not considered to be the final day for the purpose of determining the 12-month period referred to in paragraph 2(a) or section 3.
Notice to parties
5 The Board or a case manager must, within the period of three months after the day on which the Board publishes a proposed tariff under section 68.2 or subsection 83(5) of the Act, notify the collective society that filed the proposed tariff and any person or entity that filed an objection to the proposed tariff as to whether the Board will hold a written or oral hearing in respect of the proposed tariff.
Extension of time limit
6 (1) The Board or a case manager may, in exceptional circumstances, give a direction or make an order that extends a period referred to in section 2 or 3 and sets out the extended period and the exceptional circumstances that justify the extension.
(2) After a direction is given or an order is made, the Board must publish, in the manner that it sees fit, a notice of the direction or order.
Conformity with these Regulations
7 Subject to sections 8 to 11, every matter that is pending before the Board on the day on which these Regulations come into force must be continued under and in conformity with sections 1 to 6 in so far as it may be done consistently with those provisions.
Notice not provided
8 If, in respect of a matter pending before the Board, on the day on which these Regulations come into force, the Board or a case manager has not notified the collective society that filed a proposed tariff and any person or entity that filed an objection to the proposed tariff as to whether the Board will hold a written or oral hearing in respect of the proposed tariff and the three-month period referred to in section 5 has ended, the Board or a case manager must provide the notice within two months after the day on which these Regulations come into force.
9 If, in respect of a proposed tariff, on the day on which these Regulations come into force, the effective period of the proposed tariff has begun and if, at any time before the end of two months after the day on which these Regulations come into force, the Board or a case manager notifies the collective society that filed the proposed tariff and any person or entity that filed an objection to the proposed tariff that the Board will not hold any written or oral hearings in respect of the proposed tariff, the Board must make a decision with respect to the approval of the proposed tariff, under subsection 70(1) or 83(8) of the Act, within 12 months after the day on which these Regulations come into force.
10 If, in respect of a matter pending before the Board, on the day on which these Regulations come into force, the Board has already held a hearing in respect of the matter and the 12-month period referred to in paragraph 2(a) or section 3 has ended or will end in less than six months, the Board must make a decision referred to in that paragraph or section within six months after the day on which these Regulations come into force.
11 The period within which the Board must make its decision under section 9 or 10 may not be extended under section 6.
Coming into Force
12 These Regulations come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
The Copyright Board (the Board) is an administrative tribunal responsible for deciding royalty rates and related terms and conditions for uses of copyrighted content that is collectively managed, among other duties. Delays in the decision-making processes of the Board are a long- standing and significant issue. As a result of these delays, Board-set royalties are often payable retroactively. This state of affairs poses several related consequences:
- Marketplace uncertainty: Persons making use of copyrighted content subject to a Board proceeding before the Board has rendered its decision risk retroactive payment of royalties that could be greater than what users were expecting or had been paying previously. Businesses seeking to provide innovative services to Canadians that rely upon such uses (e.g. digital streaming services) may therefore delay or decide against doing so because their costs would be unknown at the time their services would have been provided. The development and growth of businesses in Canada would thus be limited. footnote 1
- Constrained rights holder and creator remuneration: Rights holders and creators could similarly be harmed both through an underdeveloped market for copyrighted content in Canada and because delays may prevent them from receiving timely payment for corresponding uses or from being fully compensated because of difficulties with retroactive payment collection and distribution.
- Additional costs to participants: Decision-making delays also result in additional legal costs for participants while the Board remains seized of their matters. As a result, Board proceedings may be inaccessible to some would-be participants.
- Frozen capital: Pending a Board decision, some users may maintain reserves to account for possible increases in royalty rates. This capital, which could otherwise be put to more productive uses, is effectively frozen.
- Limited access to copyrighted content: These potential obstacles could deter the creation and dissemination of copyrighted content, which would harm Canadians generally given the significant and increasing ways in which such content features in daily life.
The present Regulations are a key element of the Government’s comprehensive plan to address the issue of decision-making delays of the Board, while preserving the independence of its decision-making process.
The functions, independence and importance of the Copyright Board
The Board is an independent administrative tribunal created by the Copyright Act (the Act) primarily to facilitate the collective administration of rights established therein by setting royalty rates and related terms and conditions for the use of copyrighted content where such rates or terms and conditions cannot be independently determined. The Board sets such rates and terms and conditions through tariffs of general application as well as in certain individual cases.
The Board is an important Canadian institution, and increasingly so. In 2018, royalties generated by Board decisions amounted to approximately $503 million. Its decisions span a broad range of fields, including music played in public venues, music streaming, copying of educational materials and retransmission of distant radio and television signals. As innovative technologies have emerged and legislative reforms affecting copyright have been enacted, the Board has evolved to perform its functions in an increasingly dynamic landscape. As such, the Board has been at the forefront of cases interpreting new provisions of the Act and applying them to changing uses and technologies relating to such issues as peer-to-peer file sharing, Internet service provider liability, levies upon digital audio recording media, cloud computing and digital interactive services, among many others. In all contexts, the success of this system is based, in part, upon the timeliness of decision-making processes relating to the Board.
Previous research regarding delays at the Copyright Board
Delays in Board decision-making have been noted and studied by the Government, the Board and stakeholders for many years. A backlog of proposed tariffs was reported by the Board throughout the 1990s footnote 2 and, although it abated somewhat in the early 2000s, the issue re-emerged prominently in 2014 when the Standing Committee on Canadian Heritage studied the music industry and recommended further study of the time it takes the Board to approve tariffs. footnote 3
Consequently, a government-commissioned study in 2015 found that, between 1999 and 2013, tariffs were approved an average of 3.5 years after being filed and proposed tariffs filed but not yet approved had been pending for an average of 5.3 years. footnote 4 A 2016 report of the Standing Committee on Banking, Trade and Commerce indicated that decision-making delays were increasing: at that point, it was taking an average of 3.5 to 7 years for tariffs to be approved. Related studies in which decision-making delays at the Board have been analyzed include a 2016 government-commissioned paper footnote 5 and a 2015 discussion paper by a working group convened by the Board to investigate and improve the efficiency and effectiveness of its decision-making processes. footnote 6
According to these studies and other stakeholder consultations, a significant contributor to delays is the amount of time the Board takes to render decisions after final oral hearings or the filing of parties’ final written submissions. The 2015 government-commissioned study found that the median time it took the Board to render a decision between 1999 and 2013 was 1.44 years following a final oral hearing. However, in certain cases, the study found that this waiting period could be up to three years following a final oral hearing.
Other causes of delays in Board decision-making have included improperly calibrated timelines previously set out in the Act (e.g. the times by which proposed tariffs are to be filed, the minimum proposed duration of tariffs and the length of time during which objections to proposed tariffs may be filed) and party conduct during proceedings (e.g. protracted discovery processes and multiple procedural motions) as well as outside of proceedings (e.g. requests that the Board delay the initiation of proceedings).
Government and Copyright Board action regarding delays
The Government has taken significant action to address the problem of decision-making delays. In collaboration with the Board, the Government undertook extensive technical consultations in 2017 seeking stakeholder input on potential legislative and regulatory changes to the Board’s decision-making processes. footnote 7 In parallel, Budget 2018 increased the Board’s Parliamentary appropriation by over 30% so it could hire additional staff and implement new systems, including case management, which received strong support in the consultations. The Governor in Council (the GIC) also appointed a new vice-chair and additional Board members in the fall of 2018. Legislative amendments to the Act flowing from the consultations were included in the Budget Implementation Act, 2018, No. 2, which entered into force on April 1, 2019. The legislative changes notably include a direction requiring the Board to deal with all matters before it as informally and expeditiously as the circumstances and considerations of fairness permit; the empowerment of case managers to ensure parties more efficiently work towards the final stages of Board proceedings; and a recalibration of timelines currently set out in the Act, including a requirement for collective societies to file proposed tariffs earlier and for longer effective periods. The objective of these new measures is to facilitate faster proceedings and more tariffs being approved before their effective dates. In parallel, the Board is preparing regulations to provide further clarity on various procedural matters.
The legislative changes also include a new power allowing the GIC to set regulations governing timelines for any step of Board proceedings, including the time the Board takes to render decisions. Such time limits are the subject of the current Regulations.
The objective of these Regulations is to improve the efficiency of the Board’s decision-making processes and the predictability of its decision-making timelines, in accordance with the reasonable expectations of stakeholders and the public while preserving the Board’s independence and ensuring it has the necessary time to render decisions effectively and fairly.
The Regulations specify time limits by which the Board must render final decisions in its proceedings, varying according to the types of such proceedings:
- In a tariff proceeding where no hearing of the matter is held, the Board would be required to make its final decision before the effective period of the proposed tariff is to begin.
- In a tariff proceeding where a hearing of the matter is held as well as in an individual dispute proceeding, in which a hearing of the matter is always held, the Board would be required to make its final decision no later than 12 months after the final day on which parties could present their submissions on the substance of the matter to the Board. These submissions would comprise the hearing for the purposes of this time limit, as opposed to potentially earlier submissions limited to interlocutory or procedural issues.
The format and scope of such hearings are intended to be flexible. For instance, the Board could structure or restructure a hearing to proceed in multiple phases as well as orally or in writing or by a combination of both. Likewise, it is also intended that the Board could restructure a hearing to be more or less intensive than initially planned. In this regard, it is expected that written hearings could comprise any final written submissions from parties or third parties that the Board invites where it determines that previously planned hearings are no longer necessary to the extent the Board originally expected (e.g. upon filing of terms of settlement between parties, partial withdrawal of a proposed tariff or withdrawal of objections to a proposed tariff). For the purposes of the relevant time limit, any such structuring or restructuring would need to occur in advance of the final day on which parties could present their submissions to the Board but otherwise would be at the Board’s discretion based on the facts of the case, subject to potential Board-made regulations limiting that discretion in certain cases.
Whether a hearing would be held in a given tariff proceeding would be at the Board’s discretion based on the facts of each case, subject to potential Board-made regulations limiting that discretion in certain cases. Nevertheless, it is anticipated that circumstances in which the Board would likely not hold hearings — whereby the shorter decision-making time limit specified above would apply — could include cases concerning a proposed renewal tariff that is unopposed and has not substantially changed over its predecessor tariff, in that the proposed renewal tariff
- (a) changes only the dates of its predecessor tariff’s effective period;
- (b) includes, in the Board’s preliminary view, only minor changes to the definitional or administrative provisions of its predecessor tariff;
- (c) changes only the royalty rate(s) of its predecessor tariff in such a way that, in the Board’s preliminary view, approximates an inflationary adjustment; or
- (d) includes some combination of factors (a), (b) or (c).
For the purposes of the Regulations, where a hearing is held, the Board would fix the final day on which parties could present their submissions thereto. Although the Board would remain free to ask questions or make requests of parties or third parties at any time during a proceeding, such a question or request sent on or after that day would not have the effect of retroactively creating a new “final day” and thereby delaying the Board’s decision-making time limit but rather would fall within the Board’s 12-month deliberation period. Similarly, a subsequent hearing phase scheduled on or after a previously fixed “final day” would not have the effect of retroactively delaying the Board’s decision-making time limit. Instead, as noted above, for the purposes of the Regulations, multiple phases of hearings would need to be set proactively.
In order to inform parties which decision-making time limit they should expect in tariff proceedings, the Board would be required to inform every party to such a proceeding no later than three months after the Board publishes the proposed tariff at issue whether a hearing would be held. The Board need not schedule a hearing at that time. Rather, the scheduling or rescheduling of a hearing would be at the Board’s discretion based on the facts of each case, including upon the request of a party or by the Board’s own initiative regardless of a party’s request, subject to potential Board-made regulations limiting that discretion in certain cases.
The Regulations would also allow the Board to take time to render its decisions beyond the time limits mentioned above in exceptional circumstances and following public notification. In its order or direction extending a decision-making time limit in this way, the Board would be required to set out the reasons for the delay and the timeline by which the decision would be made. The Board would be required to provide this public notification before the otherwise applicable time limit. The precise thresholds for such exceptional circumstances and public notification would be determined on a case-by-case basis. However, such exceptional circumstances would generally be limited to situations outside the Board’s control (e.g. the release of a court decision on issues being considered in a matter before the Board).
The Regulations also include targeted transitional time limits intended to advance or bring to timely conclusion matters pending before the Board for which the otherwise applicable time limits described above would have already passed or be unfeasible.
In the 2017 technical consultations mentioned above, the majority of participating stakeholders expressed strong support for applying decision-making deadlines to the Board. Specific suggestions included a deadline following final oral hearings (e.g. 3, 6 or 12 months) by which the Board must render its final decisions; an overall deadline following the initiation of proceedings (e.g. 24 months) by which the Board must render its final decisions; and a requirement that tariffs simply be approved before their proposed effective dates in all cases.
A minority of participating stakeholders opposed the concept of decision-making deadlines for the Board. The primary concerns of such stakeholders were that the volume and complexity of the Board’s work does not fit neatly into a one-size-fits-all approach and that deadlines that are too short or inflexible could raise issues of procedural fairness and thus increase the frequency of courts’ judicial review of Board decisions. The Board shares these concerns.
As detailed above, these concerns have been taken into account by prescribing decision-making time limits to the steps after parties’ final substantive submissions, tailoring the time limits to the different types of Board proceedings and including a mechanism to deal transparently with exceptional circumstances where additional decision-making time is required.
A proposed version of these Regulations was prepublished in the Canada Gazette, Part I, on April 27, 2019. During the 30-day consultation period that followed, the departments received 12 written submissions from stakeholders across a variety of copyright-related fields, including organizations representing rights holders, users and legal practitioners. These stakeholders were generally supportive of the proposal and suggested certain amendments on select issues. The Regulations reflect this feedback in four primary ways. First, the commencement of the Board’s decision-making time limit in matters where hearings are held has been clarified to make the timing of Board decision-making more predictable. Second, the “exceptional circumstances” mechanism through which the Board could extend its decision-making time limits has been amended. Third, the timing and communication of decisions relating to Board hearings have been clarified. Fourth, the application of certain provisions upon coming into force has been amended. The Regulations also include several minor technical amendments that do not bear on the Regulations’ underlying policies. Furthermore, in response to comments made on the proposed Regulations, the expected nature of Board hearings described in this document has been clarified.
Modern treaty obligations and Indigenous engagement and consultation
As required by the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, the Regulations’ possible treaty implications were assessed. No such implications were identified, including with respect to the issue of jurisdiction.
In developing the Regulations, a range of substantive options were considered. Taking no action was one such option but decided against given the urgent need to make the Board’s decision-making processes more efficient and timelines more predictable as well as stakeholder consensus that deadlines would be helpful to those ends. Different time limits were also considered, including an overall time limit for Board proceedings as well as time limits that were shorter or longer than the ones prescribed. The model and time limits prescribed were ultimately selected because they are expected to achieve timeliness in line with the reasonable expectations of stakeholders and the public while also ensuring that the Board has the necessary time to render decisions effectively and fairly.
Other instruments for implementing decision-making time limits were considered as well. The possibility of the Board enacting time limits by way of its own regulations or a practice notice published on its website was one such alternative but the Government believes that the seriousness of the issue of delays in Board decision-making warranted time limits being established independently. Significantly, Parliament purposefully provided a new provision in the Act to allow for this approach.
Benefits and costs
Implementation of the prescribed time limits will result in faster decision-making by the Board in many cases. Moreover, it is anticipated that the majority of proposed tariffs will be subject to the shorter decision-making time limit, thereby eliminating retroactivity in the large majority of cases. In all cases, parties will also have greater insight into the times by which they could expect Board decisions regarding matters affecting their interests.
No incremental source of funding will be required to implement the Regulations. The cost of the resources required to meet the time limits prescribed will be fully covered by the Board’s existing level of funding. As noted above, the Board’s annual budget going forward includes a 30% increase over its 2017–2018 level of funding, as adopted in Budget 2018 as part of Canada’s Intellectual Property Strategy. Such funding was provided to fund the implementation of reforms, including the establishment of case management and new decision-making time limits. In particular, the Board is expected to use these increased funds to create several new staff positions that will increase its administrative, legal and economic capabilities to make decisions faster.
Small business lens
In accordance with the Policy on Limiting Regulatory Burden on Business, the Regulations are not anticipated to have any associated costs for small businesses. Rather, they are expected to benefit small businesses by providing greater market certainty, among other benefits explained above.
In accordance with the Red Tape Reduction Act, the Red Tape Reduction Regulations and the Policy on Limiting Regulatory Burden on Business, the one-for-one rule does not apply to these Regulations because they will not impose or change any administrative costs on businesses. Rather, the regulatory change will apply to a government entity that does not have a competitive or for-profit motive (i.e. the Board).
Regulatory cooperation and alignment
The Regulations are unrelated to a work plan or commitment under a formal regulatory cooperation forum to which Canada is subject. Nevertheless, decision-making time limit models of similar tribunals in other countries were considered, including that of the United States Copyright Royalty Board. However, given the differences in countries’ legislative and regulatory frameworks for such tribunals and the desire expressed by a majority of stakeholders to maintain reasonable flexibility in the pace of Board proceedings, the present model was developed, unique to the Canadian experience with time limits tailored to specific procedural steps and scenarios.
Strategic environmental assessment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
No gender-based analysis plus (GBA+) impacts have been identified for these Regulations.
Implementation, compliance and enforcement, and service standards
The prescribed time limits and transitional time limits will enter into force on the day on which the Regulations are registered and will be implemented in respect of proceedings commenced by or subsequent to that time, as appropriate, ensuring the Board will have sufficient time to realign its resources and practices in all such cases.
Compliance and enforcement
The Board’s compliance with the prescribed decision-making time limits will be assessed by the departments’ ongoing monitoring of the Board’s operations and stakeholder engagement and the Board’s annual report on its activities to Parliament. The Board is expected to publish relevant data about its decision-making timeliness in this annual report.
Copyright and Trademark Policy Directorate
Department of Innovation, Science and Economic Development
235 Queen Street
Marketplace and Legislative Policy
Department of Canadian Heritage
25 Eddy Street