Canada: Do Authors Of Artistic Works Still Have Strength In Numbers? Has A Recent Supreme Court Ruling Created A Division That Weakens Their Position?

On June 12, 2014, the Supreme Court published the reasoning for its decision in CAR-FAC / RAAV v. The National Gallery of Canada.

Under the federal Status of the Artist Act (the "SAA"), the Canadian Artists and Producers Professional Relations Tribunal certified CAR-FAC (Canadian Artists Representation / Front des Artistes Canadiens) and RAAV (Regroupement des artistes en arts visuels) as associations for Canadian visual artists.

In 2003, CAR-FAC and RAAV commenced negotiations with the National Gallery of Canada (NGC) respecting the payment and hiring of artists. Many conditions concerned the remuneration of artists for the use of existing works, including the reproduction and public exhibition of those works,  two rights recognized to authors of artistic works under the Copyright Act (the "CA").

However, many authors of artistic works have assigned their rights of reproduction and public exhibition to third parties, specifically to copyright collectives. The question arises whether CAR-FAC and RAAV can claim to negotiate by bypassing such assignees of copyrights. The question also raises the issue of rivalry in the area of copyright between the SAA and the CA, both of which fall under federal jurisdiction. Does one statute prevail over the other? For example, can the Canadian Artists and Producers Professional Relations Tribunal grant professional associations exclusivity to negotiate rates of royalties to be collected for the use of a copyright when the authors have assigned their copyrights to collective societies governed by the Copyright Board which is responsible for certifying such rates?

During negotiations with CAR-FAC and RAAV, the NGC received a legal opinion concluding that CAR-FAC and RAAV did not have the authority to negotiate copyright scale agreements. In 2007, four years after the commencement of negotiations, the NGC reformulated the scale agreement that had been proposed to it, to delete any mention of copyright. CAR-FAC and RAAV complained to the Tribunal, which held that the NGC had failed "to bargain in good faith" because its change in attitude was based solely on a single legal opinion, that its changed position occurred several years after the commencement of negotiations and that the NGC knew that CAR-FAC and RAAV had no option but to reject the new proposal.

In judicial review of that decision, the Federal Court of Appeal, in a majority decision, reversed the Tribunal's decision. But on May 14, 2014, the Supreme Court reinstated that decision from the bench and issued the reasons for its decision on June 12, 2014. Justice Rothstein wrote the unanimous decision of the Court.

Holding that "reasonableness" rather than "correctness" of the decision was the proper standard of review to be applied, Justice Rothstein stated that the first question to consider  "is whether it was reasonable for the Tribunal to conclude that the "provision of artists' services" referred to in the definition of "scale agreement" in the SAA includes the provision of existing artistic works." (para. 15).

Justice Rothstein was persuaded by the analogy suggested by Justice Pelletier, dissenting in the Federal Court of Appeal case, that artists, vis-à-vis  those who use their works, are in a position analogous to that of hotels and car rental agencies that provide a service allowing third parties to use their property. The Court could therefore reasonably find that the "provision of services" in the SAA includes the granting or assigning of copyright licenses.

Justice Rothstein then considered the second issue, namely whether the first conclusion created a conflict with the CA. He first established that it must be presumed that the legislator intended to avoid conflict between the SAA and the CA. Therefore, both statutes "must be read together in a manner that allows them to work in a complementary fashion" (para 21).

In the Court's view, the decision to grant or refuse a copyright licence always belongs to the copyright holder but that does not preclude artists' associations from negotiating a sort of "minimum wage" with users of their works. Moreover, the judgment states that the parties, the SAA and the caselaw of the Tribunal are all to the same effect, namely that "scale agreements do not bind collective societies" (para 24). And Justice Rothstein further stated that "The SAA only governs (...) artists insofar as they choose to retain their copyrights."

This obviously leads to another conclusion which Justice Rothstein clearly stated: artists have the option of assigning their copyrights to a copyright collective, in which case the rates fixed under the CA will apply, or they can choose to deal directly with the users of their work, in which case  they will be bound by the scale agreement negotiated under the SAA.

It will be interesting to see if there will now be some kind of competition between copyright collectives and professional associations of artists or authors and, if that does happen, if it will result in any strengthening or in some other weakening of the position of authors and artists.

Norton Rose Fulbright Canada LLP

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