CPCC asks for new audit powers to deal with ‘recalcitrant’ CD manufacturers

The Canadian Private Copying Collective (CPCC) and a coalition of retailers have become embroiled in a quiet dispute before the Copyright Board of Canada over rights of access to records, according to documents obtained by Canadian NEW MEDIA. In dueling letters dating through the summer, the CPCC has asked the board to approve strict new regulations governing how it gathers financial and other records from manufacturers and importers of compact discs. The CPCC argues that the changes are necessary to deal with "recalcitrant" manufacturers, but the retailers counter that the proposed regulations are overarching and inappropriate. Further, there is a question about when the CPCC let objectors to the proposed 2005 tariff know of its request. In a letter to the board dated June 18, the CPCC asks for two significant changes to the proposed private copying tariff. The first would give auditors the right to view original source documents about the volume of blank CDs manufactured in and imported into Canada - both from the manufacturers themselves, and from related third parties. Further the CPCC is asking that it be freed from treating the information confidentially, and be able to share it with "other persons, but only as required by CPCC to carry out its audit responsibilities…" The two changes are being sought by the CPCC as they find it increasingly difficult to enforce the private copying tariff. In the June 18 letter, counsel David Collier writes: "As part of CPCC’s enforcement responsibilities it has carried out a number of audits in order to verify the information provided by reporting companies. However, in approximately 75% of the audits, CPCC’s auditors have been refused access to company records that they consider essential to a proper conclusion of the audit." The CPCC notes that in some cases, being able to examine records from companies that sell to the manufacturers and importers would help verify audit results. It writes: "This would have been of particular assistance in a recent case where the company informed the auditor that its entire records for the year had been lost as a result of a mysterious computer theft the day before the audit." The second change, to confidentiality provisions, is necessary, argues the CPCC, because in some instances reporting companies purchase CDs from parties that either don’t report, or under-report their sales. However, even armed with knowledge that a company may have purchased more CDs from another company than the selling party admits, confidentiality provisions prevent the CPCC from using the information. It writes: "In this regard, common sense would dictate that if CPCC can share information received from reporting companies with the Copyright Board, it can also share that information with the courts and with third parties (i.e. levy evaders) when necessary for legitimate purposes." In response, counsel for the retailers Howard Knopf writes on August 31, "Mr. Collier has attempted to modify the CPCC’s proposed tariff by inserting some unacceptable and frankly overarching audit provisions. This attempt is not only untimely, it is completely irregular and contrary to the statutory mechanism as set out in s.83 of the Copyright Act…The board simply has no authority and no jurisdiction to consider this attempt to change the proposed tariff." Compounding the retailers’ ire is that it appears the CPCC’s June 18 request was not copied to the various objectors to the current process to determine a 2005 tariff. Knopf writes: "Not only is the attempt simply absurd in view of the statute, but is frankly offensive in that it should not have been communicated to the board privately without any of the objectors on record as of June 9 or earlier being copied, much less the many other parties that would be directly affected. Even if the various objectors had been copied on June 18, 2004, the proposals are still completely irregular and untimely by several months. Mr. Collier should be advised that the board has no authority or jurisdiction to consider this request and should be told at a minimum and in no uncertain language that the request is highly irregular and his procedure was highly improper." A consultant to the CPCC, Paul Audley, tells CNM that there was no reason to copy the original letter since the change was then being sought to the existing tariff, not the new proposed one. He says that, after consultation with the board, it was decided to seek the change for the tariff now before the board, and the request was made known to objectors in that process. "There is no issue," he says.

CPCC asks for new audit powers to deal with ‘recalcitrant’ CD manufacturers

News | 09/08/2004 4:00 am EDT

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