University of Toronto Law School Faculty Blog

The GSU Copyright Case: Some Canadian Perspectives

This post was originally published on Prof. Katz's blog.

In April 2008, three publishers, Cambridge University Press, SAGE Publications, and Oxford University Press, filed a copyright infringement lawsuit against Georgia State University, alleging that GSU infringed their copyrights by allowing professors to upload excerpts from books onto the university’s electronic reserve system (ERes). The complaint alleged “systematic, widespread, and unauthorized copying and distribution of a vast amount of copyrighted works”, and argued that GSU “has facilitated, enabled, encouraged, and induced Georgia State professors to upload and post to these systems - and Georgia State students simultaneously to download, view, print, copy, and distribute - many, if not all, of the assigned readings for a particular course without limitation.” Unless GSU’s “infringing digital distribution practices are enjoined", the complaint asserted, "Plaintiffs, authors, and the publishing community at large will continue to face a certain, substantial, and continuing threat of loss of revenue, which will in turn threaten Plaintiffs' incentive to continue supporting and publishing the cutting-edge scholarship upon which the academic enterprise depends.”

On Friday, the US District Court issued a 350 pages decision, dismissing 94 out of the 99 claims of copyright infringement.

Prof. Ed Morgan - "The difference between lunchtime prayer and a Jesus T-shirt"

This commentary was first published by Prof. Ed Morgan in The Globe and Mail on May 9, 2012.

A public school in Toronto thinks a clergyman can be invited to conduct Islamic prayers at lunchtime on school grounds. As a school trustee explains it, “What we’re doing is what we should be doing as a school board and that is accommodating students’ needs no matter what their religion is.”

A public school in Chester Basin, N.S., thinks a student can be prohibited from wearing a T-shirt with a Christian message on school grounds. As school trustees explain it, “It is expected that students will not wear clothing with messages that may offend others’ beliefs, race, religion, culture or lifestyle.”

Does Canadian law really get such a failing grade?

Prof. Anita Anand: "Telus funds ignore governance"

This commentary was first published in the Financial Post on April 28, 2012.

The collapse of Magna’s dual-class share structure in 2011 via an insider bid for Frank Stronach’s holdings raised eyebrows because of the unprecedented pay out of an 1,800% premium that Mr. Stronach (through a private holding company) received in the transaction. Dual-class structures are once again in the spotlight with the recent proposal by Telus to eliminate its dual class structure. It was clear that Magna concerned securities regulators at least from a disclosure standpoint. By contrast, regulators have been conspicuously silent on the Telus transaction.

Under the terms of the Telus proposal, which goes to a shareholder vote on May 9, each non-voting share would be converted to a common share on a one-for-one basis. The two classes of shareholders will vote separately on the transaction. Two-thirds approval from each class is required in order for the votes to pass. Thus, a concern about shareholder participation that existed in previous dual class transactions, such as Canadian Tire, falls away since shareholders in each class have a vote.

Prof. Ed Morgan - "Foreign affairs: a delicate balancing act"

This article by Prof. Ed Morgan was originally published in The Lawyers Weekly, April 13, 2012.

When it comes to conducting foreign affairs, it is well established that the constitution puts the weight of responsibility on the federal government. But in recent years, the courts have deviated from that rule as often as they have invoked it.

In the Afghan prisoners case, the Federal Court of Canada explained that the government owes no constitutional duty when, after questioning, the military turns detainees over to a foreign government. The judgment presumed that Canadian forces require flexibility, and enjoy the discretion to deviate from domestic rules when they deal with an allied state and prisoners of war.

That ruling came within a year of the Supreme Court's first judgment on Omar Khadr's treatment in Guantanamo, where it held that the government owes a constitutional duty to a detainee held by a foreign state and turned over to CSIS for questioning. The court presumed that intelligence officers can adhere to the same domestic standards as the Charter requires of ordinary police when they deal with an allied state and national security prisoners.

The Best Possible Outcome for Universities, Really?

This post was posted originally on Prof. Katz's blog.

Access Copyright and the Association of Universities and Colleges of Canada (AUCC) announced yesterday that they had negotiated a Model Licence that would allow universities to reproduce copyright protected materials in both print and digital formats. In a joint media release issued by Access Copyright and the AUCC, Paul Davidson, president of the AUCC, was quoted as saying "We believe that this negotiated agreement provides the best possible outcome for universities, their students and faculty." Really, Mr. Davidson, Really?

Prof. Audrey Macklin with Lorne Waldman: Ottawa’s bogus refugee bill

This commentary by Prof. Audrey Macklin and Lorne Waldman was first published on the Toronto Star website on Feb. 22, 2012.

Jason Kenney, the minister of Citizenship and Immigration, knows who the real refugees are. Or at least he knows which ones are “bogus”: refugee claimants from Mexico or Sri Lanka or Hungary are bogus. Bogus refugees include those who use smugglers to overcome the barriers to lawfully reaching countries like Canada which, by signing the refugee convention, have promised not to send back persons fleeing persecution.

Kenney’s system-abusing bogus refugees include those fleeing discrimination, oppression and hardship not quite horrific enough to satisfy the standards required by the jurisprudence defining and applying the refugee definition. Kenney does not mention that close to 40 per cent of the claimants were recognized as genuine refugees last year. Like falling crime statistics, that is an inconvenient truth for this government. Kenney manages to convert the fact that the system does not confer refugee protection on all who seek it into evidence of system failure.

Prof. Audrey Macklin: Minister Kenney’s Ban on Face Coverings is Ultra Vires

Not only is Minister Kenney’s ban on face coverings a gratuitous insult to Muslim women, it’s ultra vires.

In the wake of all the publicity about the Minister of Immigration’s decree that no one shall be allowed to go through the citizenship ceremony with her face covered, I thought I'd find out how the ban on face coverings was authorized in law. It appears that the ban is buried in the Operations Manual on citizenship ceremonies.  The Operations Manual provides guidance to citizenship bureaucrats (including Citizenship Judges) about how to interpret and apply the law -- the Citizenship Act and the Citizenship Regulations.  Since they are only guidelines, they do not have the force of law, and are invalid to the extent that they contradict the statute or the regulations.

You can find the citizenship manual here (PDF) (see s. 6.5). The manual contains an elaborate set of instructions about how citizenship officials shall respond if a woman is both uppity and oppressed enough to show up with her face covered.

The more interesting discovery, though, is the citizenship regulations that govern citizenship ceremonies.  These seem to provide an entitlement to religious accommodation, and therefore cut against the legality of the Minister’s instructions. Section 17(1)(b) speaks directly to religiosity, and 17(1)(d) to 'intergroup understanding' as a component of good citizenship. 

Don’t throw in the towel: Systemic Risk in Securities Markets Must be Federally Regulated

Anita Anand and Grant Bishop 

In its recent decision, the Supreme Court nixed the federal proposal for a national securities regulator, finding that its proposed scheme was unconstitutional.  Admittedly, the federal government’s proposal largely (and intentionally) uploaded the current provincial regime to a federal statute. The Court held that, while aspects of the proposed legislation were within the federal wheelhouse, these could not justify a “wholesale takeover” of securities regulation in Canada. 

Nonetheless, the Court’s decision should not be read as foreclosing on a federal role in securities regulation.  The judgment specifically observes that provinces would be incapable of enacting legislation to effectively address systemic risk and comprehensive data collection.  Indeed, the Court expressly stated that “[t]he need to prevent and respond to systemic risk may support federal legislation pertaining to the national problem raised by this phenomenon”.

While the Court has barred one proposal, we note Minister Flaherty’s recent statements that the federal government remains committed to a presence in securities regulation to address a glaring regulatory gap with respect systemic risk.  But we seem to have moved in Canada from the specific notion that “systemic risk” is the interconnected financial breakdown where a triggering event causing default by one market participant in turn impacts others’ ability to fulfill their legal obligations causing a chain of negative economic consequences.  As Governor Carney has suggested, “systemic risk” can be used more broadly to refer to the financial system’s inability to support economic activity.

The recent (and arguably ongoing) financial crisis underscores how financial contagion can spread from securities markets to financial institutions and back again, threatening the integrity of the entire economy.  In Canada, our regulatory framework has not kept pace with the increasing integration of financial institutions and securities markets.  In particular, banks are frequent counterparties in over-the-counter derivatives – products for which provincial securities regulators have yet to enact a coherent regime. 

Many commentators rightly point to the efficacy of Canada’s regulation of financial institutions in safeguarding against financial contagion.  Certain commentators urge that what we have is good enough, arguing that the U.S. had a federal regulator (i.e. the Securities and Exchange Commission) but little good did this do.  Such an inference is dangerously simplistic and conveniently forgetful.

Canada’s own Asset-Backed Commercial Paper (ABCP) crisis highlights the gaps in our present regulatory structure.   The solution hinged an arrangement fashioned under the thoughtful guidance of Purdy Crawford using a federal insolvency statute.  Contagion from ABCP was forestalled but, had the $32 billion market collapsed, the default would have propagated throughout our financial system.

This weakness  in our regulatory armour was underscored by former Superintendent of Financial Institutions, Nick Le Pan: “If anyone should have been on top of this, it was securities regulators. They expressed ‘surprise’ ex post at aspects of the issue, such as the extent of ABCP sales to individuals. …  In Canada, we don’t have one national securities regulator that could be a partner for federal authorities in financial stability monitoring and crisis management.”

The Office of the Superintendent of Financial Institutions (OSFI) is ill-placed to regulate such systemic risk emanating from securities markets (so-called “macro-prudential regulation”).  Lumping prudential supervision of securities markets into OSFI’s mandate would confuse its specialization and pose a worrisome conflict of interest: would concern about keeping banks healthy lead to over-cautious and ham-fisted interventions in securities markets?  Good regulation requires well-coordinated but specialized regulators that each have a clear mandate.

With its  more ambitious scheme deemed unconstitutional, the federal government should now move to enact a federal regime in areas that are clearly within federal jurisdiction. Taking the lead from the Supreme Court, the federal government should create a Financial Markets Regulatory Agency (FMRA) and mandate such a national regulator specifically with the oversight of systemic risks in securities markets, investing it with powers to intervene where particular products or activities threaten financial stability. 

So what specifically would the FMRA do?  Notably, the Supreme Court’s judgment sketches a statutory scheme which would form the backbone of such a body.  This would involve the regulation of over-the-counter derivatives, credit rating agencies, record-keeping, short-selling and urgent regulation relating to “substantial risk of material harm to investors or to the integrity or stability of capital markets.”  As the Supreme Court recognized, comprehensive data collection on potential risks in securities markets is similarly a function that only the federal government can accomplish.  

Provincial securities regulation, even under the opt-in umbrella of the Canadian Securities Administrators, cannot achieve a comprehensive and standardized regime for these systemically critical areas of law.  There is provincial jurisdiction to protect investors and ensure companies can access capital markets, but with their admitted focus  on local markets, provinces lack uniform incentives not to mention constitutional ability to safeguard Canada’s financial system as a whole.  The Supreme Court was clear on this point.

The Canadian Securities Transition Office has already done a good deal of groundwork towards establishing such a national-level securities regulator. In addition, the Bank of Canada has been primarily responsible for the systemic risk oversight of clearing and settlement systems, is involved in international fora (such as the BIS and the FSB) and is playing a leading role in the reform of derivatives markets. Revised federal legislation constituting the FMRA could leverage that foundation while conforming to the constitutional constraints articulated by the Supreme Court.

There is clear direction from the Supreme Court and a pressing rationale for the federal government to enact a national regime to address systemic risk in securities markets.  The peace and order of Canada’s economy demand no less.

Anita Anand, Associate Professor, Faculty of Law, University of Toronto and Grant Bishop, JD Candidate, Faculty of Law, University of Toronto. An edited version of this editorial appeared in the Financial Post on February 10, 2012.

Governance Issues: The UofT-Access Copyright Agreement

First posted on Prof. Katz's blog.

In addition to serious copyright, privacy, and academic freedom problems arising from the Agreement signed last week between UofT and Access Copyright, the way it has been handled so far raises some questions about whether it is consistent with UofT’s governance procedures.

No serious consultation or discussion has taken place before the Agreement was signed, although, interestingly, s. 22 of the Agreement does contemplate it being conditional upon “applicable Governance approval”. It seems only natural that an agreement with wide, deep, and long-term implication such as this one would be subject to governance approval, yet it is less clear that UofT's Administration is going to seek the appropriate approval. The Administration has not done it yet, and in fact, there are worrying signs that the Agreement will not get the scrutiny that it deserves. I hope I'm misinterpreting these signs.

Prof. Angela Fernandez: Aggression v. Atrocity in the History of International Law

Columbia University history professor Samuel Moyn (visiting at Yale Law School in the spring term of 2012) has recently posted his paper From Antiwar Politics to Antitorture Politics on SSRN, a paper I heard him present at a November session of the Critical Analysis of Law workshop at my law school, the Faculty of Law, University of Toronto.  I have written about it on JOTWELL because it is an excellent paper, which law professors might not otherwise hear about, offering an extremely thoughtful intervention on the recent history of international law.

Read the full post on JOTWELL.