The fair dealing provision in the Copyright Act permits the use of a copyright-protected work without permission from the copyright owner or the payment of copyright royalties. To qualify for fair dealing, two tests must be passed.
First, the "dealing" must be for a purpose stated in the Copyright Act: research, private study, criticism, review, news reporting, education, satire or parody. Educational use of a copyright-protected work passes the first test.
The second test is that the dealing must be "fair." In landmark decisions in 2004 and 2012, the Supreme Court of Canada provided guidance as to what this test means in educational institutions.
These Fair Dealing guidelines apply fair dealing in non-profit universities and provide reasonable safeguards for the owners of copyright-protected works in accordance with the Copyright Act and the Supreme Court decisions.
When determining what is "fair", the precedent setting user right case in 2004 CCH Canadian Ltd. v. the Law Society of Upper Canada outlined six principles to consider:
1) the purpose of the copying (separate from that of the user? For instance a commercial use might be seen as less fair)
2) the character of the copying (is the plan to make a single copy? multiple copies? will the copy be destroyed when its use is completed?)
3) the amount of the work to be copied and the significance of the copied portion (will copies be made of a significant part of the work?)
4) alternatives to the work to be copied (is a non-copyrighted equivalent available?)
5) the nature of the work (is it published? unpublished? confidential?)
6) the potential effect of the copying on legitimate sales of the work (will it compete with the market of the original work?)
In Canada, we rely on the concept of "fair dealing" as a copyright exemption. In the United States, there is a reliance on "fair use," although some commentators have argued that in recent years, especially since the passage of the Copyright Modernization Act in Canada, the differences between the two concepts have minimized (see this blog post by Michael Geist). However, it is worth noting that the United States Copyright Statute provides more open-ended wording in describing fair use than the Copyright Act does in describing fair dealing.