The Australian Government Productivity Commission has released its final report on ‘Intellectual Property Arrangements,’ which recommends a number of reforms to IP law, including changes to the law on patents, copyrights and enforcement.

Regarding copyright and related rights, the Australian Government Productivity Commission warns that the scope of works eligible protection is too broad and the term of protection is too long, forcing copyright users face higher costs. It recommends clarifying the law on geoblocking and allowing parallel trade in books in order to expand access to works. The report recommends “Introducing a system of user rights, including the (well-established) principles–based fair use exception.” 

Below is an excerpt that briefly presents the Commission’s case for introducing fair use in Australia:

A fairer system of user rights

Australia’s current limited exceptions, fair dealing being the most well-known, do little to restore the copyright balance.

Australia’s exceptions are too narrow and prescriptive, do not reflect the way people today consume and use content, and do not readily accommodate new legitimate uses of copyright material. Legislative change is required to expand the categories of use deemed to be fair. Even when this occurs, changes have simply ‘caught up’ with existing community practice — Australia did not legalise the wide-spread practice of home VCR recording until as late as 2006, by which time most VCRs were household relics. Universities Australia summarised the extent of the problem:
After 20 years of reviews that have considered this question, the evidence is in: Australia’s existing inflexible, purpose-based copyright exceptions are no longer fit for purpose. They are holding Australia back, not just in our universities and schools, but also in our digital industries. Innovative and useful technologies, and new ways of using content in socially beneficial ways, automatically infringe copyright in Australia unless their use falls within one of the existing narrow, purpose-based exceptions. (sub. DR453, p. 1)

Australia’s narrow purpose-based exceptions should be replaced with a principles-based, fair use exception, similar to the well-established system operating in the US and other countries. As part of modernising its copyright arrangements, Israel recently adopted fair use to enable better access to copyright material ‘for the advancement of culture and knowledge’. Fair use would similarly allow Australia’s copyright arrangements to adapt to new circumstances, technologies, and uses over time.

Some inquiry participants suggested that the benefits from fair use are largely academic because, although current exceptions do not reflect how people use copyright material in the digital age, rights holders do not pursue infringements for ‘ordinary’ uses. The example of teenagers sampling music and videos to make mash ups was raised more than once.

But the opportunities Australian businesses and consumers forego because of the current inflexible exceptions are much more extensive. Participants argued that Australia’s current exceptions frustrate the efforts of online businesses seeking to provide cloud computing solutions, prevent medical and scientific researchers from taking full advantage of text and data mining, and limit universities from offering flexible Massive Open Online Courses. The education sector has also indicated that fair use would avoid the current perverse situation where Australian schools pay millions of dollars each year to use materials that are freely available online.

Recent analysis undertaken by EY for the Australian Government assessed the benefits and costs of introducing a broad US-style fair use exception, and concluded that adoption of fair use in Australia would be a net benefit to the Australian community. While intrinsically difficult to assess, the analysis (unlike others commissioned by inquiry participants) examined the impact of fair use on Australian consumers and the broader community, users of copyright material such as schools and libraries, and rights holders. Some aspects of fair use offer larger gains, including education and government use, and improved community access to orphan works. Other changes reduce uncertainty for consumers and businesses, improving Australia’s innovation environment.

Rights holders have argued against the adoption of fair use in Australia. They claim that by design, fair use is imprecise and would create significant legal uncertainty for both rights holders and users. Initial uncertainty is not a compelling reason to eschew a fair use exception, especially if it serves to preserve poor policy outcomes. Australia’s current exceptions are themselves subject to legal uncertainty, and evidence suggests that fair use cases, as shown in the US, are more predictable than rights holders argue. Moreover, courts routinely apply principles-based law to new cases, such as in consumer and employment law, updating case law when the circumstances warrant doing so.

And over time, both rights holders and users will become increasingly comfortable with making judgements about when uses of copyright material are likely to be fair. Where the courts are called on to determine whether a new use is fair, legislation would require that they be guided by four fairness factors:

  • the purpose and character of the use
  • the nature of the copyright material
  • the amount and substantiality of the part used
  • the effect of the use upon the potential market for, or value of, the copyright material.

Rights holders also argued fair use would significantly reduce their incentives to create and invest in new works, holding up Canada as an example. Some have proclaimed that fair use will equate with ‘free use’, particularly by the education sector. But these concerns are ill-founded and premised on flawed (and self-interested) assumptions. Changes in Canada’s publishing industry had little to do with copyright exceptions (where fair dealing still prevails) and more to do with other market factors. Notably, the Australian education sector has repeatedly made clear that fair use would coexist with the current education statutory licence scheme.

Indeed, rather than ignore the interests of rights holders, under fair use the effect on the rights holder is one of the factors to be considered. Where a use of copyright material harms a rights holder, the use is less likely to be considered fair. In the US, where fair use is long established, creative industries thrive.

In addition to the fairness factors above, uncertainty would be further limited by including a non-exhaustive list of illustrative fair uses to guide rights holders and users. By drafting the fairness factors to closely follow the wording of Australia’s existing fair dealing exceptions, as well as the wording of fair use overseas, existing Australian and foreign case law (particularly from the US where fair use has operated for some time) would provide an additional source of guidance. The use of foreign case law to reduce uncertainty was a key factor in Israel’s successful implementation and transition to a fair use regime. Among heavy users of copyright material, such as education and government users, as well as those in the creative sector, the Commission notes the abundance of guidelines developed collaboratively to further assist users in how to make judgements.