The Bills Digest at a glance

What the Bill does

The Bill will amend the Copyright Act 1968 to:

• Expand the threshold for injunctions to be sought against overseas online locations with the ‘primary purpose or the primary effect’ of infringing, or facilitating the infringement of, copyright.
• Insert a rebuttable presumption that an online location is located outside Australia, which will reduce the evidentiary burden on copyright owners applying for injunctions.
• Enable copyright owners to seek injunctions requiring online search engine providers to take such steps as the Federal Court of Australia (Federal Court) considers reasonable so as not to provide search results that refer users to blocked online locations.
• Clarify that the Federal Court may grant injunctions which allow:
  • the copyright owner and carriage service provider, by agreement, to apply the injunction to block other domain names, URLs and IP addresses that start to provide access to the online location after the injunction is made and

  • the copyright owner and online search engine provider, by agreement, to apply the injunction to not provide search results that include domain names, URLs and IP addresses that start to provide access to the online location after the injunction is made and
• Enable the Minister, by legislative instrument, to declare that particular online search engine providers, or classes of online search engine providers, be exempt from the scheme.

Purpose of the Bill

The purpose of the Copyright Amendment (Online Infringement) Bill 2018 (Bill) is to amend the Copyright Act 1968 to expand the online copyright infringement scheme. This scheme allows copyright owners to apply to the Federal Court for injunctions to block access by users in Australia to overseas online locations which facilitate the infringement of copyright.

In particular, the proposed amendments will expand the threshold test for injunctions to be granted and allow injunctions to be applied to the search results of online search engine providers. The Bill will also clarify that the Federal Court can make responsive orders which may be applied to new online locations (without the need for a further injunction).[1]

Background

Copyright is an intellectual property right which allows the creative works of writers, musicians, visual artists, film makers and others to be commercialised.[2] Copyright owners have exclusive rights in relation to protected works, including the right to reproduce the work and the right to communicate the work to the public.[3] In particular, the meaning of communicate in the Copyright Act includes to ‘make available online or electronically transmit’.[4]

In his second reading speech for the Bill, the Minister for Families and Social Services Paul Fletcher noted that while the digital age has created ‘opportunities for consumers to access this content in new and different ways’, it has also created ‘major challenges for Australia's creative industries’:

Online copyright infringement reduces the livelihood of Australian creators and investors, and foreign based websites continue to illegally distribute the content of Australian copyright owners. The operators of these sites are often difficult to find and are located in countries that do not have strong copyright laws.[5]

In response to these challenges, in 2015 the Copyright Amendment (Online Infringement) Act 2015 (2015 Act) inserted section 115A into the Copyright Act.[6] This section allows the owner of a copyright to apply to the Federal Court for an order requiring a carriage service provider (CSP) to block access to an online location that has the ‘primary purpose’ of infringing copyright or facilitating the infringement of copyright.[7]

Content owner organisations have successfully used section 115A to obtain injunctions blocking access to a range of online locations.[8] An alternative approach to address online copyright infringement through an industry code with Australian internet service providers (ISPs) and a ‘three strikes’ scheme directed at piracy by consumers appears to have faltered over concerns about who would be responsible for the costs of the scheme.[9]

In this context, a key question is to what degree can copyright enforcement measures influence levels of online copyright infringement? The Department of Communications and the Arts has commissioned research which has found that ‘there has been a decrease in those who consume infringing content from 42 per cent in 2015 to 38 per cent in 2017, and down to 33 per cent in 2018’.[10] This trend accords with overseas research into online piracy which found a decrease in the percentage of persons who acquired or accessed content illegally in France, Poland, Spain, Sweden and the United Kingdom between 2014 and 2017 (while Germany experienced a slight increase).[11] This study stated:

It might be tempting to argue that an increase in the use of certain enforcement measures against obviously illegal platforms has contributed to the decreasing number of pirates in Europe. However, a lack of evidence concerning the effectiveness of most enforcement measures and the strong link between piracy and the availability and affordability of content suggests otherwise: at a country level, online piracy correlates remarkably strongly with a lack of purchasing power. Higher per capita income coincides with a lower number of pirates per legal users.[12]

In 2016, the Productivity Commission published a report on Australia’s Intellectual Property Arrangements.[13] This report included consideration of the 2015 Act amendments:

Introduction of the ‘website take down’ scheme was controversial. At the time, concerns were raised with the lack of specificity in the scheme, and in particular, the lack of a definition as to what constituted the ‘primary purpose’ of a website, whether any infringement was ‘flagrant’ or not, and whether or not the website showed ‘disregard for copyright generally’. Concern was also expressed that rights holders might inadvertently (or inappropriately) target other websites providing socially useful functions, or capture virtual private network services. Others argued taking down websites would achieve little, because blocked websites would simply change their address and be quickly discoverable again.[14]

It observed:

Copyright rights holders have been engaged in an almost 20 year-long battle to eliminate online infringement internationally. However, pursuing court-based enforcement against websites, ISPs and individuals has not been successful, and possibly less successful in Australia than elsewhere. What has appeared to limit infringement is timely and competitively-priced access to content. Various survey studies consistently demonstrate that where copyright-protected content is available to consumers, the vast majority prefer paid, legal consumption...

In the Commission’s view, the case for further policy change or Government action on copyright infringement is weak. Rights holders, their publishers and other content providers are best placed to bring content to Australian consumers in a timely and competitively priced way. This approach is the most efficient and effective way to reduce online copyright infringement.[15]

The Senate Legal and Constitutional Affairs Legislation Committee’s inquiry into the legislation for the 2015 Act recommended that the Government conduct an effectiveness review to be completed two years after its enactment.[16] The Government agreed that a review should be conducted.[17] In February 2018, the Department of Communications and the Arts (Department) commenced a review on the operation of the Copyright Amendment (Online Infringement) Act 2015 (Department review).[18] The review received 22 submissions (discussed below). 

Committee consideration

Senate Standing Committee for the Selection of Bills

The Senate Selection of Bills Committee’s Report No. 12 of 2018 contained a recommendation that the provisions of the Bill be referred to the Senate Environment and Communications Legislation Committee.[19] This referral was proposed by Senator Rachel Siewert of the Australian Greens.[20] However, on the motion of the Minister for the Communications and the Arts, Senator Mitch Fifield, this report was amended in the chamber to omit this recommendation.[21]

Senate Standing Committee for the Scrutiny of Bills

At the time of writing, the Senate Standing Committee for the Scrutiny of Bills has not commented on the Bill. It is expected the next Scrutiny Digest will be tabled on 14 November 2018. 

Policy position of non-government parties/independents

Australian Labor Party (Labor)

Labor members supported the passage of the Bill in the House of Representatives. The Shadow Attorney-General, Mark Dreyfus, stated:

Labor will be supporting this bill, the Copyright Amendment (Online Infringement) Bill 2018, because it makes a number of improvements to the existing regime for protecting the rights of artists and others whose livelihoods depend on them being paid for what they create, whether that's music, movies, television programs, books or any other form of intellectual property. Labor supports this bill because it will strengthen the current regime under which a court can make orders blocking access to websites that have the primary purpose, or the primary effect, of infringing copyright.[22]

However, the Shadow Minister for the Digital Economy, Ed Husic, also noted there were broader issues in relation to addressing online copyright infringement. These matters included making material more available to consumers. He stated:

These rights holders think that, by constantly using legal mechanisms through this place and elsewhere, piracy will disappear. The reality is that piracy is a reflection of a market failure. I do not excuse, condone or support piracy, but I do recognise that it is a reflection of market failure, where producers are making an offering that is not in line with consumer expectations and the access is not in line with consumer expectation.

What we are providing for with these types of bills, which the rights holders all champion, support and claim credit for, is a form of regulatory hallucinogen, where they think that, if they get this type of regulatory reform through, piracy will disappear. No, it won't. When rights holders get serious about the consumer offering and the way in which they're helping consumers access content in a much more affordable way, that will have a bigger impact ...[23]

Australian Greens

Representatives of the Australian Greens do not appear to have commented on the provisions of the Bill. As noted above, Senator Rachel Siewert unsuccessfully proposed that the Bill be referred to the Senate Environment and Communication Legislation Committee. Her proposal stated ‘[c]areful scrutiny is needed over legislation that blocks websites to ensure sufficient safeguards and oversight’.[24]

When the Senate Legal and Constitutional Affairs Legislation Committee conducted an inquiry into the Copyright Amendment (Online Infringement) Bill 2015 (which introduced section 115A into the Copyright Act) former Senator Scott Ludlam made a dissenting report for the Australian Greens which recommended that the legislation not be passed. He stated:  

The Bill will allocate a significant new censorship power to the Court that will be used by copyright owners to block access to online content. However, there is a substantial weight of evidence showing that it will be relatively easy to evade the Bill's provisions, that it does not contain appropriate safeguards, and that it may result in legitimate online sources being blocked.[25]

Position of major interest groups

The positions of some major interest groups concerning amendments to the Copyright Act to address online copyright infringement were outlined in submissions to the Department review.

Several content industry and ISP industry submissions indicated they were broadly satisfied with the arrangements created by the 2015 Act. However, the amendments of the Bill appear to be responsive to matters raised by a number of content industry submissions. For example, the Joint Submission from the Australian Film & TV Bodies recommended extending section 115A to other ‘intermediary service providers’ which can also facilitate access to content. These include content delivery network services, reverse-proxy services, file-hosting providers, domain name registries and registrars and service engine providers.[26] It stated:  

Extending s115A to these other types of service providers would materially assist in achieving the objective of reducing online copyright infringements in Australia. It would result in a technologically neutral provision that does not discriminate between the technologies used by different types of service providers to allow Internet users to access infringing content, putting these service providers on a level playing field and future-proofing s115A.[27]

The Foxtel submission was also supportive of expanding the scope of the section 115A arrangements to ‘service providers’, particularly search engine providers.[28] It noted that search is ‘still the most used source via which people access piracy sites, both in overseas jurisdictions and in Australia’ and that ‘search engines already remove URLs from site indexes to comply with local laws and product community standards’.[29] It considered that ‘capturing search engines under the site blocking powers is a powerful regulatory advancement through [sic] which would place Australia at the forefront of piracy action’.[30]

Foxtel’s recommendations also included lowering the ‘primary purpose’ threshold in section 115A. It stated:

[T]here are a substantial number of piracy sites which are currently accessed by a large number of Australia for which it less clear that the site in question would meet [the primary purpose] threshold requirement; for example, hosting and cyberlocker type sites that may appear on their face to be legitimate sites but in fact are predominantly used to remotely store infringing files that are then accessed by pirate services. Foxtel submits that amending s115A(1)(c) to refer to ‘a substantial purpose or effect’ rather than ‘the primary purpose’ would assist in ensuring such sites are undoubtably [sic] able to be targeted under s115A... [31]     

Only a few stakeholders representing content user rights appear to have made submissions to the Department review. However, these submissions did raise concerns regarding the potential expansion of the scheme. For example, the Australian Digital Alliance noted that it would be concerned with any amendments which sought to extend ‘the application of the scheme beyond ISPs to other intermediaries, including libraries, universities, schools, cloud services and online platforms’.[32]

The Pirate Party of Australia made a substantial submission which was critical of a number of aspects of the scheme introduced by the 2015 Act. For example, it considered ‘[t]here is no evidence after almost 3 years showing any causal effect between injunctions issued under the site-blocking scheme and any significant or meaningful change in levels of online copyright infringement in Australia’.[33] The submission made a number of recommendations including that the ‘[t]he Federal Court’s role providing judicial review of injunctions brought under the scheme should not be diminished or degraded’ and that injunctions should be for a maximum duration of six months ‘unless rights-holders apply for a renewal of the injunction’.[34] Overall, it concluded the 2015 Act should be repealed.[35]

Further consultation with CSPs and online search engine providers

The Department’s Regulation Impact Statement for the Bill (attached to the Explanatory Memorandum) outlines that a further ‘limited consultation’ occurred in September 2018.[36] Copyright owners were supportive of the approach which was termed ‘Option 2: extend to online search engine providers and extend the “primary purpose” test’. However,

CSPs and online search engine providers did not support these proposals, arguing that there may be unintended consequences. Online search engine providers also argued that the legislative requirements are unnecessary as they take voluntary measures in cooperation with copyright owners.[37]

Some adjustments were made to the ‘Option 2’ approach to address these concerns (discussed below). The Regulation Impact Statement acknowledges that two major online search engine providers dominate the market—Google and Bing.[38] It states:

[I]t is clear that both these online search engine providers have the existing capability to modify their search engine results to implement any orders under s 115A, although there may be a cost of maintaining systems to ensure they are up-to-date and effective.[39]

It is not clear whether these online search engine providers (who are likely to be the subject of injunctions) have had the opportunity to provide feedback on the specific amendments of the Bill. It is also unclear whether Google or Bing made submissions to the Department review of the 2015 Act.[40] Previously Google and other major internet companies have opposed overseas legislation which proposed to filter or block access to websites through their services in order to deter online intellectual property infringement.[41]

Financial implications

The Explanatory Memorandum states that the Bill will not have a significant impact on Commonwealth expenditure or revenue.[42] The Department’s Regulation Impact Statement suggests that the approach adopted in the Bill could result in an increase in regulatory costs for online search engine providers in the first year ($0.5 million) but that these costs would fall to zero in following years.[43]   

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[44]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights has not commented on the Bill.

Key issues and provisions

As noted above, section 115A was inserted into the Copyright Act in 2015.[45] Currently, section 115A of the Copyright Act allows a copyright owner to apply to the Federal Court for an injunction where:

• a carriage service provider (CSP) provides access to an online location outside Australia
• the online location infringes, or facilitates an infringement of, the copyright
• the primary purpose of the online location is to infringe, or to facilitate the infringement of, copyright (whether or not in Australia) and
• the injunction is to require the carriage service provider to take reasonable steps to disable access to the online location.

Subsection 115A(5) includes a range of matters which the Federal Court may take into account in determining whether to grant an injunction. These include ‘the flagrancy of the infringement’, ‘whether disabling access to the online location is a proportionate response in the circumstances’ and ‘whether it is in the public interest to disable access to the online location’.

The Bill will repeal and replace a number of the subsections in section 115A and give it a new heading—‘Injunctions relating to online locations outside Australia’. In particular, item 2 will repeal and replace subsections 115A(1) and 115A(2) and substitute four proposed subsections.

Injunctions on carriage service providers

Proposed subsection 115A(1) will allow a copyright owner to apply to the Federal Court to grant an injunction to require a CSP to take reasonable steps to disable access to an online location outside of Australia which:

• infringes, or facilitates an infringement, of the copyright and
• has the primary purpose or the primary effect of infringing, or facilitating an infringement, of copyright (whether or not in Australia).

The inclusion of ‘or the primary effect’ will expand the scope of the online locations which potentially may be subject to an injunction. The Explanatory Memorandum confirms that this will be the effect of the amendment:

Some overseas online locations that have the primary effect of facilitating large-scale copyright infringement may not be captured under the current scheme as it could be difficult to establish that this is the ‘primary purpose’ of the online location. For example, this may include but is not limited to, some online file-hosting services, such as certain cyberlockers, which are widely used as tools for sharing infringing music and movie files...

This new threshold test will ensure that the intent of the online location operator, or of the location’s users, are not conclusive factors in granting an injunction. This new threshold is sufficiently high to exclude online locations that are primarily operated for a legitimate purpose but may contain a small proportion of infringing content.[46]

The Department’s Regulation Impact Statement highlighted the role of ‘cyberlockers’ in current online copyright infringement and indicated there was ‘a high likelihood that they are used by Australians for infringing purposes’: 

Cyberlockers are third-party file-sharing services, sometimes also known as “file hosting” services. Access is provided through password-protected hard drive space online. Users of these sites can share the cyberlocker password information with others, who can privately download the contents that the original user maintains on the site. Cyberlockers are able to house large movie and music files, and unlike BitTorrent file-sharing which is traceable, cyberlockers are very hard to monitor, as they employ one-to-one connectivity which is difficult to detect through surveillance tools. Because of this, cyberlockers are often used to trade infringing movie and music files.[47]

The potential issues with expanding the threshold to online locations with ‘primary effect’ of infringing, or facilitating, copyright infringement are considered in the Department’s Regulation Impact Statement:

During the consultation on the Exposure Draft Bill, concerns were raised that some sites (e.g. Pinterest), might have the ‘primary effect’ of facilitating the infringement of copyright, if a particular copyright owner (e.g. a photographer or studio) decided to make an application under s115A. Similar concerns were raised that the same risk could apply to non-infringing cyberlockers sites used, for example, by legitimate small businesses that need to share large-size files such as wedding videographers or distance education providers.

However, copyright owners would be more likely to seek cooperation from the operators of popular websites to address online infringement issues (e.g. removing pay-per-view content appearing on Facebook Live) rather than seeking a court injunction. If an application was made, the operator of a popular website would be more likely to appear in the Court and oppose the making of an order, and provide detailed arguments as to why it should not be made.[48]

This amendment is a significant change to section 115A. When section 115A was introduced it was made clear that the ‘primary purpose’ requirement was ‘an intentionally high threshold for the copyright owner to meet as a safeguard against any potential abuse’.[49] The expansion of the threshold to include online locations with ‘the primary purpose or the primary effect of infringing, or facilitating an infringement, of copyright’ may impact the effectiveness of this safeguard against potential abuse.

Injunctions on online search engine providers

Proposed subsection 115A(2) provides that a request for an injunction may also include a request to require an online search engine provider to take such steps as the Court considers reasonable so as not to provide a search result that refers users to the online location. This is a key change as the injunction power in the 2015 Act was not intended to target ‘[s]earch engines or websites based primarily on user-generated content’.[50] The Explanatory Memorandum to the Bill clarifies:

[I]njunctions directed at online search engine providers can be made only where an injunction is granted in relation to a carriage service provider, and only apply to search results that would link to an online location to which the injunction directed at the carriage service provider applies...

Consistent with the general operation of the Act, this provision is limited in its operation to Australia. The aim of the scheme in section 115A is to reduce the visibility and availability of infringing material to users located in Australia.[51]

Flexible injunctions

Proposed subsections 115A(2A) and (2B) will provide considerable flexibility to the Federal Court regarding the terms and conditions of the injunctions that may be granted and how they can be applied. The Court can grant injunctions in the terms, and subject to the conditions, it considers ‘appropriate’. This flexibility is emphasised by the note under proposed subsection 115A(2A) which clarifies that the terms and conditions for an injunction which are applied to a CSP may be different from those that are applied to an online search engine provider.

In particular, an injunction can require a CSP or online search engine provider to take reasonable steps to block or not provide search results including:

• domain names, URLs and IP addresses that provide access to an online location and
• domain names, URLs and IP addresses that the copyright owner and CSP or search engine provider agree in writing ‘have started to provide access to the online location after the injunction is made’.[52]

This amendment is intended address situations where the operators or owners of online locations circumvent blocking orders by changing domain names, IP addresses or URLs.[53] However, while this change may reduce the burden on copyright owners when infringing material is moved to another online location, it also means the effect of the injunction could be applied to new parties or new circumstances without further judicial oversight. 

The amendments are not prescriptive concerning how the agreements in writing between the copyright owners and CSPs or online search engine providers will be reached after an injunction is made. The Explanatory Memorandum states that this process ‘will ultimately be a matter for the parties, within the terms and conditions of the injunction determined by the Court’:

[I]t is expected that, after the injunction is granted, the copyright owner would be able to identify new domain names, URLs and IP addresses that start to provide access to the online location subject to the injunction after the injunction is granted. The copyright owner and carriage service provider/online search engine provider would then agree, in writing, that the new domain names, URLs and IP addresses are providing access to the online location, and to block them or not provide search results for them, in accordance with the injunction. It is not intended that the injunction would permit a copyright owner to unilaterally determine new domain names, URLs and IP addresses, without written agreement between themselves and carriage service provider or online search engine provider.[54]

This is an area where it appears adjustments were made to address concerns raised by CSPs and online search engine providers. The Regulation Impact Statement states that ‘wording was expressly included in a subsection to make it clear that CSPs and online search engine providers cannot be coerced or forced into agreeing with copyright owners about the blocking of these new pathways’.[55]

Matters to take into account in granting injunctions

Items 6 and 7 amend subsection 115A(5) which outlines the matters the Federal Court may take into account when determining whether to grant an injunction.[56]

Item 6 inserts proposed paragraph 115A(5)(ea) which will include consideration of ‘whether not providing search results that refer users to the online location is a proportionate response in the circumstances’. The Explanatory Memorandum gives the example of the Court considering the ‘percentage of infringing content at the online location compared to the legitimate content, or the frequency by which the infringing material is accessed by users in Australia’.[57] This will only apply to injunctions sought against online search engine providers.

Item 7 inserts proposed paragraph 115A(5)(ga) which will add a broad public interest consideration to the matters that may be taken into account by the Federal Court in determining whether to extend an injunction to the results of an online search engine provider.

Presumption that online locations are outside Australia

Item 8 inserts proposed subsection 115A(5A) which will insert an evidentiary presumption that, for the purposes of the proceedings, the online location is outside of Australia. This is consistent with the broader purpose of the Bill in reducing burdens on copyright owners in applying for injunctions. The Explanatory Memorandum notes it is ‘particularly difficult’ for copyright owners to prove that an infringing online location is outside of Australia.[58]

Ministerial declaration

Item 9 inserts proposed subsections 115A(8A) and (8B). These amendments will allow the Minister, by legislative instrument, to declare that a particular online search engine provider, or an online search engine provider that is a member of particular class, must not be specified in an application for an injunction (or an application to vary an injunction). The Explanatory Memorandum states:

The declaratory power in subsection 115A(8B) will provide a safety net, in addition to the built-in safeguards in subsection 115A(5) of the Act (including, for example, the proportionality principle and public interest considerations), to ensure that applications for injunctions do not unfairly target smaller operators that do not have the same reach or entities that provide only internal (intranet) or limited search functions.

As any declarations made under subsection 115A(8B) are legislative instruments, they will be subject to parliamentary scrutiny and disallowance.[59]

Other provisions

Items 3, 4 and 5 do not appear controversial. Item 3 allows an online search engine provider to become a party to an injunction action under proposed section 115A if an injunction is sought to apply to them. Item 4 requires a copyright owner applying for an injunction to notify the online search engine provider. Item 5 makes a consequential amendment.

Item 10 amends subsection 115A(9) to provide that CSPs and online search engine providers cannot be held liable for any costs in relation to proceedings commenced by a copyright owner under section 115A if they do not participate in the proceedings. Previously, this subsection only covered CSPs.

Concluding comments

The amendments of the Bill are responsive to concerns which were raised by content industry submissions to the Department review of the 2015 Act. However, as noted above, the Productivity Commission’s report on Australia’s intellectual property arrangements has described the case for further policy change or Government action on copyright infringement as ‘weak’.[60] It found that ‘[t]imely and competitively-priced access to copyright-protected works is the most efficient and effective way to reduce online copyright infringement’.[61]

The existing injunctions regime in the Copyright Act does not attempt to directly regulate the activity of overseas online locations which may contain copyright infringing material. Instead, it regulates access to these online locations in Australia through Australian CSPs. The proposed expansion of the injunctions mechanism to impact the search results of online search engine providers (whose operations are primarily located overseas) appears to be a significant change to this regulatory stance.