February 18, 2014

By Email phenein@casselsbrock.com tel: 416.860.5222 f a x: 6 4 7 . 2 5 9 . 7 9 7 4 file # 1-2812

Mr. Gilles McDougall, Secretary General Copyright Board of Canada 56 Sparks Street, Suite 800 Ottawa, ON K1A 0C9

Dear Mr. McDougall: Re: Access Copyright Post-Secondary Educations Institution Tariff (2011 - 2013) (the "Proposed Tariff")

We write on behalf of the University of Toronto (the U of T) pursuant to the Notices of the Board dated December 20, 2013 and February 7, 2014. The purpose of this letter is to respond to Access Copyrights December 13, 2013 application to the Board, seeking leave to file a report prepared by Circum Network Inc. (Circum) entitled Analysis of the Volume and Nature of the Copying of Published Works at the University of Toronto, 2005 - 2012 (the Circum Report) and the Supplementary Witness Statement of Kerrie Duncan (the Supplementary Duncan Statement) (collectively, the Additional Materials). A. Overview of the U of Ts opposition to Access Copyrights application

1. The U of T strongly opposes Access Copyrights application on the following grounds: a. Breach of Contract. Access Copyrights attempt to file the Additional Materials is a breach of its explicit contractual obligations to the U of T pursuant to the Agreement in two ways. i. First, the Additional Materials rely on survey data (the Survey Data) provided by the U of T to Access Copyright pursuant to a licence agreement executed on January 30, 2012 (the Licence Agreement) and amended by a letter agreement executed the same day (the Amending Agreement) (collectively, the Agreement). Copies of these documents are attached as Schedules A and B, respectively, to this letter. The U of T entered into the Agreement on the explicit understanding that it would not be required to participate in the Proposed Tariff proceeding and that Access Copyright would not seek to rely on the Survey Data in connection with its tariff proposal. It provided the Survey Data for two very limited purposes: to facilitate Access Copyrights distribution of royalties collected under the Agreement and to assist the parties in renegotiating an extension term to the Agreement. ii. Second, as the U of T has objected to Access Copyrights use of the Survey Data, and as Access Copyright has refused to withdraw its application,

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Access Copyright persists in attempting to do indirectly what the Agreement precludes it from doing directly that is, causing the U of T to provide information as to its copying activities and to otherwise participate in the Proposed Tariff proceeding contrary to the explicit language of the Agreement. b. Fairness. The late submission of the Additional Materials in a public proceeding, well outside the deadlines that were published by the Board, is prejudicial to the U of T and to the integrity of the tariff process itself. Further, given that all but one of the parties opposing the certification of the Proposed Tariff have withdrawn from the proceeding, there is no participant remaining to meaningfully challenge the propriety or accuracy of the Additional Materials. The U of T itself, having entered into the Agreement for, among other things, the express purpose of not having to participate in the Proposed Tariff proceeding, does not intend (and should not be compelled) to do so. c. The Circum Report is inaccurate and unreliable. In the alternative, the U of T submits that, should the Board admit the evidence despite Access Copyrights clear breach of contract and the U of Ts right to procedural fairness, the evidence should nevertheless be given very little weight. The Circum Report itself is based on incorrect and incomplete information provided to Circum by Access Copyright and is neither accurate nor probative. 2. The U of T acknowledges that it is not a party to the Tariff Proceedings, nor does it desire to become one by way of these submissions. However, insofar as the Additional Materials pertain to the U of Ts copying activity during the term of the Proposed Tariff, and comments on data derived from the U of Ts course management system, the U of T wishes to make these submissions to the Board as to whether the additional evidence should be admitted, and, in the alternative, as to the weight to be given to the additional evidence if admitted. As the Board stated in its Notice of January 17, 2014, the withdrawal of the few remaining objectors implies that the Board staff needs to play a more active role in the file. The Boards Directive on Procedure allows any member of the public to comment on proceedings. In that capacity, the U of T welcomes the opportunity to provide these comments to the Board to assist it in its scrutiny of the Additional Materials. 3. In sum, for the reasons set out below, the U of T submits that the Board ought to dismiss Access Copyrights application. Further, inasmuch as the attempted filing of the Additional Materials amounts to compelling the U of T, against its will, to provide information as to its copying activities in the Proposed Tariff proceeding, the U of T again calls upon Access Copyright to fulfill its obligation under the terms of the Agreement to support the position that the U of T should not be required to do so. B. Procedural Background

4. In response to Access Copyrights December 13 application, the U of T brought a motion before the Ontario Superior Court of Justice on January 24, 2014, seeking an injunction restraining Access Copyright from using or disclosing the Survey Data for any purpose other

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than those purposes specifically identified in the Agreement, including by filing the Additional Materials with the Copyright Board or otherwise publishing or relying on same. 5. In reasons dated February 4, 2014, the Honourable Mr. Justice Maranger dismissed the U of Ts motion. While Maranger J. found that the U of T had not established the basis for an interlocutory injunction, he noted that it nonetheless had a valid argument that the Agreement prevented Access Copyright from using the Additional Materials in the manner that they are attempting before the Board. C. i. Access Copyrights application is in breach of the Agreement The Licence Agreement and the Amending Agreement

6. On January 30, 2012, the parties entered into the Licence Agreement and the Amending Agreement. The Licence Agreement was effective as of January 1, 2011 and had the effect of removing the U of T from the Proposed Tariff regime. Among other things, the Agreement provided the U of T with the ability to continue using works in the Access Copyright repertoire at rates lower than those set out in the Proposed Tariff. This purpose and the parties intentions in entering into the Agreement, were clear on the face of the Agreement. The preamble of the Licence Agreement provided, among other things, that [t]he parties wish to enter into an agreement, instead of relying on the tariff, that facilitates access and distribution of copyrightprotected works and respects academic freedom and privacy. 7. The provision of the Survey Data, described above, was subject to specific limitations. Specifically, section 11 of the Licence Agreement provided as follows. Access Copyright and the Licensee shall establish a joint taskforce ... to develop a mutually agreeable survey methodology and/or reporting structure for the provision of valid and reliable bibliographic and volume data to Access Copyright for distribution purposes and to be used as a measure of volume to assess the appropriateness of the Royalties for any extension term. ... [Emphasis added.] 8. The Licence Agreement also contained an entire agreement clause, specifying that there were no representations, covenants or other terms other than those set forth in the Licence Agreement, and that the Licence Agreement may only be amended only in writing. 9. For its part, the Amending Agreement explicitly confirmed Access Copyrights agreement that the U of T should not have to participate in the Proposed Tariff proceeding, including by providing information about its copying activities. Specifically, the relevant provision of the Amending Agreement provided as follows: Further, Access Copyright agrees to support the position, if taken by U of T in the context of [the Proposed Tariff proceeding], that, in view of the settlement of the tariff as between Access Copyright and U of T, U of T should not be required to respond to interrogatories, participate in surveys,

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provide information as to its copying activities, or otherwise participate in the [Proposed Tariff Proceeding]. [Emphasis added.] 10. The Agreement provided the U of T, and its students who bore the cost of the royalties over the term of the Agreement, with several benefits. Two of those benefits are particularly relevant to the instant application. First, it provided the U of T the ability to avoid participating any further in the expensive, uncertain, and adversarial Proposed Tariff proceeding. By operation of the Agreement, any tariff ultimately certified in favour of Access Copyright for 2011 to 2013 would not apply to the U of T. Second, it provided the U of T with the ability to negotiate with Access Copyright the scope and methodology of an appropriate and limited survey to assess the U of Ts copying activities. This allowed the U of T to avoid having to participate in any more comprehensive study or survey that might be required in the context of the Proposed Tariff proceeding and ensured that the results of the more limited survey contemplated by the Agreement would be used only for the limited purposes described above. The ability to maintain some degree of control over both the survey methodology and the use of the resulting data was, from the U of Ts perspective, a key benefit of entering into the Agreement. 11. Immediately upon entering into the Agreement on January 30, 2012, the U of T ended its participation in the Proposed Tariff proceeding, which at that time was occurring through the Association of Universities and Colleges of Canada (AUCC). From that time forward, and until the instant issue arose, the U of T did not participate and otherwise had no involvement in the Proposed Tariff proceeding, other than submitting a letter to the Board to support an application by Professor Ariel Katz (who, although a professor at the U of T, was participating in the proceeding independently, pursuant to his academic freedom) for a reference to the Federal Court of Canada to determine a discrete question of law. ii. The Survey, the Survey Data, and the commissioning of the Circum Report

12. The parties agreed upon a survey methodology in February 2013 and conducted the survey through the summer of 2013. The U of T provided the Survey Data to Access Copyright solely for the limited use contemplated by the Agreement, namely for distribution purposes and to be used as a measure of volume to assess the appropriateness of the [royalties payable under the Licence Agreement] for any extension term. 13. From July 2013 to December 9, 2013, the parties conducted negotiations to extend the Agreement. By express agreement between the parties, these negotiations were conducted on a confidential and without prejudice basis. 14. Completely unbeknownst to the U of T, Access Copyright commissioned the Circum Report on November 19, 2013, while the negotiations were still underway, and received multiple drafts of the Circum Report between December 4 and 11, 2013. At no time before or after the renewal negotiations were terminated did Access Copyright ever seek permission from the U of T to use the Survey Data as the basis for the Circum Report. In fact, Access Copyright never so much as informed the U of T that the Circum Report was being prepared or that it intended to file the report as evidence before the Board. Had it done so, the U of T would have objected.

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15. Upon becoming aware of Access Copyrights application on December 13, 2013, the U of T advised Access Copyright that it objected to the filing of the Additional Materials and demanded that Access Copyright withdraw the application, failing which the U of T would object directly to the Board. Access Copyright refused, claiming that its actions did not contravene the Agreement. Access Copyright invited the U of T to file information with the Board to respond if it believed it necessary to do so. D. The late submission of the Additional Materials is prejudicial to the U of T and to the integrity of the Tariff process itself

16. The Board is the master of its own procedure and has discretion as to timelines for filing evidence. In exercising that discretion, the Board published a clear deadline for the filing of Access Copyrights case: namely, by no later than September 6, 2013. The U of T submits that published dates for submission of the applicants case in a proceeding such as this are an integral aspect of procedural fairness and that the public (which, pursuant to the Boards Directive on Procedure, has the right to comment), as well as objectors and intervenors, all have the right to rely on the published schedule. Access Copyrights attempt to file additional evidence, at this late stage in the proceedings and when all but one of the opposing participants have withdrawn, is inherently prejudicial in a proceeding of this type, where a tariff is being sought to apply to copying activities pertaining to an entire sector of the economy. 17. The U of T itself is specifically prejudiced by this state of affairs. As it continued its negotiations with Access Copyright into December 2013, it had every reason to believe, relying on the Directive on Procedure, that Access Copyrights case in the Proposed Tariff proceedings had been submitted in accordance with the published deadline. It had no reason to believe that there would be new evidence submitted, and certainly not new evidence based on its own copying activities. Had Access Copyright indicated to the U of T during its negotiations that it would be seeking to file additional evidence with the Board, notwithstanding the deadline, the U of T could have pursued that as one additional factor among many to be addressed in the negotiations themselves. The U of T lost that opportunity due to the approach that Access Copyright took to the use of the Survey Data, and it has been prejudiced thereby. The negotiations are over, and any opportunity to address the issue in negotiations has been irretrievably lost. 18. As noted above, Access Copyright had been in possession of the Survey Data since the summer of 2013. It had the opportunity to seek to file the Survey Data, and any analysis thereof, with its Statement of Case in September 2013, but it chose not to. Instead, in blatant disregard of the deadline set by the Board, Access Copyright did not seek to file the Additional Materials until immediately after the negotiations with the U of T failed in December 2013. In fact, Access Copyright did not even bother to commission the Circum Report until November 2013, more than two months after its Statement of Case had been filed in accordance with the Directive on Procedure. 19. Further, the late filing of the Additional Materials have rendered them beyond scrutiny by those who previously opposed the Proposed Tariff. With very few exceptions, the prior objectors and intervenors, having withdrawn, were not provided with the Additional Materials at a time when they could have brought their own interests and resources to bear to provide comment,

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dispute admissibility, or undertake any of the other actions that parties might take when faced with an attempt to submit new evidence at a very late stage of an ongoing proceeding. 20. Access Copyrights actions were deliberate. While simultaneously purporting to negotiate an extension of the Agreement, Access Copyright was working with Circum to prepare the Circum Report for filing with the Board. The U of T submits that the timing of the application only days after negotiations ended unsuccessfully is not coincidental and was in fact designed to prevent the U of T from objecting before the Additional Materials were already within the Boards possession. As noted above, Access Copyright never advised the U of T of its intention to use the Survey Data as evidence in this proceeding or for any purpose outside the express purposes set out in the Agreement, nor did it seek the U of Ts permission to do so. The U of T has made it clear to Access Copyright that, if it had known that Access Copyright intended to seek to file in a public proceeding material based on the Survey Data analyzed in the Additional Materials, it would never have agreed to provide it in the first place. It would have taken a different approach to the survey methodology and it would have sought additional assurances regarding the use of the Survey Data. 21. The U of T is further prejudiced by Access Copyrights refusal to comply with its contractual obligations. Contrary to the Agreement, and despite Access Copyrights knowledge of the U of Ts strongly-held and clearly-communicated views, Access Copyright has refused to support the position taken by U of T that it should not be required to provide evidence as to its copying activities or otherwise participate in the Proposed Tariff proceeding. Further, as is evident on the face of the Supplementary Duncan Statement, Access Copyright has failed to make clear that the Circum Report is heavily disputed by the U of T. 22. As a result of Access Copyrights refusal to respect the U of Ts requests or its own contractual obligations, the U of T was left with no option but to commence an action in the Ontario Superior Court of Justice and to seek interim and interlocutory injunctive relief to prevent Access Copyright from misusing the dataset developed by the U of T and from filing the Additional Materials with the Board. As the injunction was not granted, the U of T has now been forced to participate in the proceeding by making these submissions. Through this entire process, Access Copyright has continued to maintain its entitlement to use the Survey Data for a purpose not specified in the Agreement and has ignored the U of Ts demands that it refrain from same. Instead, its conduct has effectively compelled the U of T to make its own submissions directly to the Board. 23. The Board, like any administrative tribunal, has the inherent jurisdiction to prevent Access Copyrights transparent attempt to flout the Boards process. It is particularly important that it do so here, in circumstances where the withdrawal of all but one objecting party has left only the Board to test the disputed evidence. The proposed late filing, in breach of the Agreement, is simply inconsistent with procedural fairness, which is an ongoing requirement of any public hearing process. 24. In addition, sections 70.12(b) and 70.191 of the Copyright Act permits most collective societies (including Access Copyright) to enter into licences directly with users in lieu of relying on tariffs certified by the Board. It is therefore respectfully submitted that the Board should not, in exercising its own discretion regarding the admission of evidence, allow such evidence to be

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submitted in circumstances where its use would be contrary to the terms of a privatelynegotiated licence. To do so would sanction behaviour that undermines the efficacy of licences that might be entered into with a collective society such as Access Copyright. D. In the alternative, the Circum Report is inaccurate, misleading, and not probative. If admitted, it should be given very little, if any, weight.

25. As noted above, the U of T is not a party to the Proposed Tariff proceeding and does not seek to become an intervenor at this late stage. The following submissions regarding the substantive inaccuracies and deficiencies in the Circum Report are made solely in the alternative, in the event that the Board seeks to admit the evidence despite the concerns expressed above. 26. The Circum Report fails to account properly for the use of documents that are subject existing licences with organizations other than Access Copyright. As such, it calculates inaccurately the number of publications for which Access Copyright might be entitled to claim compensation. Further, the Circum Report, relying on incorrect representations made by Access Copyright itself, claims incorrectly that Access Copyright does not have access to, or direct knowledge of, any pre-existing licences that the U of T may have in place with rightsholders. 27. The Additional Materials utilize the Survey Data, namely a sample of 863 documents taken from the U of Ts course management system that were collated into a dataset and made anonymous (i.e., identifying marks on the documents such as the names of any faculty members were removed). At least 302 of the 863 documents were covered by existing licences with parties other than Access Copyright. The U of T notified Access Copyright of this feature of the sample months before the Circum Report and Supplementary Duncan Statement were finalized. As such, this feature of the dataset could have and should have been highlighted in the Circum Report. Instead, the Circum Report claims misleadingly that Access Copyright has no knowledge of these licences. 28. The fact of the existing licences, which are summarized in a spreadsheet provided to Access Copyright in the summer of 2013 and attached as Schedule C to this letter, dramatically reduces the cogency of the additional evidence in at least two ways. First, it indicates that the universe of potentially compensable copying is at least over one-third smaller than what Access Copyright has asserted. Second, it reduces the sample size for assessment of potentially compensable copying to a level that is so low that it may be statistically invalid. 29. With respect to statistical validity, the U of T does not intend to adduce a detailed statistical critique of the proposed evidence, nor, as a non-party, should it be required to do so. However, the U of T believes that the complement of non-licensed works in the sample is so small as to be of minimal if any relevance in a tariff proceeding that applies to an entire sector comprising a large number of universities and colleges. 30. In addition, the Survey Data includes a substantial outlier: an entire volume of 2,737 pages was copied for a class of 103 students. Had Access Copyright let the U of T know, during the negotiations for which the Survey Data was compiled, that it intended to file evidence containing this outlier with the Board in a public proceeding, the U of T would have made further

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inquiries and informed Access Copyright of the outcome. On subsequent investigation by the U of T, the volume in question is the Ontario Annual Practice, which was initially placed on the course management system on an experimental basis (at the request and with the permission of the publisher, Canada Law Book) for use by students in a particular course at the Faculty of Law. This information would have been available to Access Copyright if it had done any due diligence whatsoever. The Circum Report, without any substantiation and presumably without knowledge of the surrounding circumstances, states that the authors professional opinion is that this outlier, and one other large event, should be maintained in the data set. 31. The cavalier approach taken by Access Copyright to the analysis of the data on which the additional evidence is based should, in the U of Ts respectful submission, cause the Board very serious concern. Access Copyright has taken data provided for two purposes and used it for a third purpose not enumerated in the Agreement; it has failed to give due weight to the fact that over a third of the records in the dataset were already licensed; it has failed to conduct due diligence with respect to outliers and perhaps with respect to other aspects of the dataset; it developed the Additional Materials without informing U of T; and it sought to file them, with no notice to U of T, within days of terminating renewal negotiations (one of two specified purposes for provision of the data) and months after the Boards publicly-stated deadline for filing its case. All of these factors, taken together, mean that not only does the additional evidence have a dubious provenance, but it should be accorded minimal, if any weight. 32. Furthermore, as explained above, the Survey Data was provided under specific contractual terms and for limited uses. While Access Copyright has taken the position that it is free to use the Survey Data as it falls outside the confidentiality provisions in the Agreement (a position that the U of T disagrees with), the Survey Data nonetheless was never intended, nor was it designed, for submission in public proceedings, with the potential scrutiny by experts. The purpose of the Survey Data was solely to help the parties get a general sense of what an appropriate range for a royalty rate in the private licence regime might be and to provide information and context for those private and confidential negotiations to take place. 33. By Access Copyrights own admission in the injunction proceeding, the purpose of the survey was to ballpark the level of compensable copying activities by the U of T, not to use the resulting data as part of the basis for setting a tariff of general application. Unlike Access Copyright, the U of T did not retain its own statistician to assist with the development and analysis of the Survey Data since it was content to use the Survey Data in an informal, private and flexible setting as one of many factors in the ebb and flow of negotiations. The survey was not intended or designed, nor was the resulting Survey Data vetted or suitable, for broader use, much less to serve as a basis for conclusions to be drawn by the Board or any other body regarding appropriate royalty rates. 34. The foregoing submissions, made in the alternative, do not purport to be a complete analysis of the Survey Data, which, if the U of T had been a party, might also have required interpretation of the U of Ts own fair dealing guidelines. Rather, their purpose is simply to alert the Board to matters that, in the U of Ts respectful view, should affect both the admissibility of the Additional Materials and the weight to be given to them if admitted.

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E.

Conclusion

35. Access Copyrights request to introduce patently unreliable evidence at this late stage of the proceeding, in breach of its own contractual obligations with a non-party to this proceeding is unfair, inequitable and amounts to an abuse of the Boards process. 36. If the Additional Materials are filed and the Board accepts Access Copyrights submissions, the Survey Data could contribute to the enactment of a royalty scheme that could affect universities and colleges throughout Canada for not only 2011 through 2013 but also for many years thereafter. Further, also as explained above, the Circum Report does not accurately represent the U of Ts copying practices. Even though Access Copyright was aware of these deficiencies at the relevant time, it has still sought to file the Circum Report without qualification. 37. The U of T has taken care in these submissions to state its position fairly based on the evidence. It recognizes that Access Copyright takes a different interpretation of the language of the Licence Agreement and Amending Agreement and is not asking the Board to rule on whether Access Copyright has breached its contractual obligations to the U of T. However, as Maranger J. found in the injunction proceeding, the U of Ts interpretation is neither unreasonable or untenable. When that interpretation is combined with what can only be wilful disregard of a highly relevant qualifier to the data (the 302 existing licences), the failure to exercise any kind of due diligence with respect to a major outlier, and the highly questionable manner in which Access Copyright chose to proceed in terms of timing and disclosure, it is the U of Ts respectful submission that, for all the reasons set out above, the Additional Materials ought not to be admitted, or, if admitted, ought to be given extremely little, if any, weight. 38. The U of T will be prejudiced in unquantifiable and unforeseeable ways if Access Copyright is permitted to file the Additional Materials. There will be no remedy capable of compensating the U of T for Access Copyrights numerous breaches of the Agreement and the impact of the filing of these Additional Materials. As explained above, the Survey Data was not vetted for broader use or to serve as a basis for the Board or any other body to draw generalities from regarding appropriate royalty rates. This problem is compounded by Access Copyrights choice to ignore material issues that the U of T identified in relation to the Survey Data. These considerations greatly outweigh both the probative value of the Additional Materials and the prejudice, if any, to Access Copyright if they are not admitted. 39. Access Copyright had the opportunity to present its case and put its best foot forward in the Statement of Case in September. Having chosen not to attempt to rely on the Additional Materials at that time, there would be no unfairness or inequity in requiring Access Copyright to proceed on the case it made and thereby require Access Copyright to uphold its negotiated, contractual obligations.

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40. For all of the foregoing reasons, the U of T submits that the Board ought not countenance Access Copyrights clear abuse of the Boards process. Yours respectfully, Cassels Brock & Blackwell LLP

Peter J. Henein PJH/cb

Enclosures cc: C. Chisick, Cassels Brock LLP N. Brooks & R. Hofley, Blakes S. Maguire

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