the
application to conduct that ‘results in’ infringement significantly broadens
the offence in item 154, to the extent that it may have adverse flow-on effects
for fair dealing with material, as discussed above. This could have been
avoided by requiring that that the conduct be
an infringement rather than cause an
infringement. Alternatively, if the goal is to catch preparatory acts to
infringement as well as infringement, the drafting could have required that the
person intends that the conduct
result in infringement, rather than merely be reckless as to that result. Both of these approaches would have
complied with AUSFTA, which merely requires criminalisation of infringement,
not conduct resulting in infringement. In this way, item 154 goes beyond what
is required by AUSFTA
-
the Bill does not take the opportunity to
introduce a broader ‘fair use’ exception to copyright infringement, instead
maintaining the current, more limited ‘fair dealing’ approach. As discussed
above, JSCOT recommended that, in order to balance the tighter copyright
restrictions required by AUSFTA, a ‘fair use’ approach consistent with AUSFTA
should be adopted.[709] Currently,
criminal copyright liability is much narrower in Australia that the United
States, mostly applying only for infringements for the purposes of trade.
However, with the extension of criminal liability to non-commercial
infringement, the absence of a ‘fair use’ exemption would mean that more
conduct will be criminal in Australia than in the United States.
Part 9: Encoded broadcasts
Changes to the law
Part 9 proposes
certain changes to the protection of encoded broadcasts (pay TV). The key
changes are:
-
providing civil and criminal liability for exporters of broadcast decoding devices
(BDDs) (item 164 (civil) and 175
(criminal))[710]
-
expanding the number of parties who may bring
actions under these provisions to include channel providers and anyone with an
interest in the copyright in the broadcast or its content, rather than simply
the broadcaster as is currently the case (items
165 and 170)[711]
-
removing the element of commercial purpose to
the civil action against users of BDDs (item
168); currently, an action will lie against a user of a BDD if the device
is used ‘for the purpose of, or in connection with, a trade or business’. This
will make personal and other non-commercial use of a BDD actionable-for
example, using a decoder in one’s own home
-
creating a new action against wilful
distributors and receivers of broadcasts that have been accessed without
authorisation using a BDD (item 169)
-
criminalising the use of BDDs to gain unauthorised access to an encoded broadcast for
a commercial purpose (item 181)
-
criminalising the distribution of broadcasts received without authorisation using a
BDD, where that distribution prejudicially
affects the channel provider or a person who has an interest in the
copyright in the broadcast or its content (item
181)
-
addition of the element of ‘intention of
obtaining a commercial advantage or profit’ to various crimes involving
commercial distribution of BDDs (items
174-179) (see discussion above under Part 8).
What does AUSFTA require?
Article
17.7 of AUSFTA makes certain requirements regarding the protection of encoded
program-carrying satellite signals. Specifically, it requires that criminal and
civil liability attach to those who:
-
manufacture, assemble, modify, import, export,
sell, lease or otherwise distribute a device or system knowing, or having
reason to know, that the device or system is primarily of assistance in
decoding an encrypted program-carrying satellite signal without authorisation
(‘device liability’), and
-
wilfully receive and make use of or further
distribute a program-carrying signal knowing that it has been decoded without
authorisation (‘use liability’).
In terms of civil liability, the proposed changes appear to
give effect to AUSFTA’s requirements. The only change to Australian law
necessary to align the civil device liability requirement is to add exporting
to the grounds for action, which is proposed by item 164. Australian law
currently provides use liability only where the use is for a commercial
purpose. Item 168 removes this limitation and item 169 provides a specific
action against wilful recipients and distributors of unauthorised broadcasts.
AUSFTA also requires that civil action be available to any person injured by
the contravention of any person with an interest in the broadcast: this is
implemented by items 165 and 170.
With respect to criminal liability, it is not clear that the
Bill adequately implements AUSFTA’s
requirements. In terms of device liability, item 175 provides the necessary
changes to add exporting to BDD offences under s. 135AS of the Copyright Act.
However, AUSFTA requires a slightly lower standard of knowledge to establish
the crime. Current law requires actual knowledge or recklessness as to whether
the device will be used to decode encrypted broadcasts without authorisation (s.
135AS(1)), whereas AUSFTA requires that ‘having reason to know’ be sufficient.
Recklessness requires a subjective consideration of the person’s state of mind,
whereas ‘having reason to know’ is an objective element of fact.[712] An amendment with the words ‘the
person knows, or ought reasonably know’ to replace the current ‘the person
knows, or is reckless as to whether’, would have been a more accurate
implementation of AUSFTA. [713]
Further, the proposed implementation of criminal use
liability does not seem to implement AUSFTA accurately. The versions of
criminal use liability contained in item 181 contain elements not found in the
agreement. It proposes that:
-
use be an offence only where it is done with the
intention of obtaining a commercial advantage or profit, and
-
distribution of a broadcast obtained through a
BDD be an offence only where it affects
prejudicially a copyright holder.
Although these elements reflect the traditional reluctance
of Australian law to criminalise low-level personal use, they may not be
consistent with the text of Article 17.7.
Comment
AUSFTA requires only protection of encoded satellite
broadcasting, but the Bill proposes an extension
that will apply to all broadcasting. This goes beyond implementation of AUSFTA.
On the other hand, there is a powerful rationale for treating terrestrial
broadcasting in the same way as satellite broadcasting in the interests of
technology neutrality.
Australian law has tended not to criminalise the use of BDDs
and other technological protection circumvention devices. Instead it has
criminalised the sale, importation and trafficking in the devices themselves
and, sometimes, provided only civil remedies against end-users.
Phillips Fox,
in its review of the Digital Agenda reforms, explained the rationale for Australia’s
reliance on device liability rather than use liability as follows:
The Government took this approach as it saw the most significant
threat to copyright owners’ rights as lying in preparatory acts for
circumvention, such as manufacture, importation, making available online and
sale of devices, rather than individual acts of circumvention.[714]
Another rationale is that some uses of circumvention devices
might not infringe copyright; for example, where they are covered by a ‘fair
dealing’ exception. Accordingly, prohibition on use of BDDs would prohibit some
otherwise non-infringing activities.
Phillips Fox
recommended that civil use liability should be provided. However it also
proposed a blanket exception for use of a BDD for a ‘permitted purpose’ being a
purpose that involves fair dealing.[715]
The Bill does not propose a blanket exemption for
permitted purposes and to do would probably contravene AUSFTA.
Phillips Fox
did not recommend the adoption of criminal use liability. The issues involved
in the criminalisation of these infringements are similar to those discussed in
relation to Part 8.
Part 10: Reproductions
Changes to the law
Description of changes
Item 186 proposes
a new definition of the term material
form for the purposes of the Copyright Act. Material form is an important
concept in copyright, as copyright only attaches to works that have been
reduced to material form. More importantly, for present purposes, the right to
reproduce a work in material form is one of the key rights subsisting in
copyright (s. 31, Copyright Act).
Currently, material form is defined to include forms of storage
from which reproductions can be made. This definition was introduced in 1984 so
that digital ‘copies’ of works would receive copyright protection even though
they were not ‘material’ in the traditional sense. [716] The limiting criterion is that reproductions
can be made from the digital copy; for example, by printing a hard copy of the
document or making another digital copy.
The proposed definition would remove this criterion so as to
include all forms of storage of the
work, whether or not they allow further reproductions.
Like item 186, item
187 proposes an addendum with a similar effect on the definition of copy for the purposes of film and sound
recordings. This addendum would provide that forms of storage of film and sound
recordings are copies, with the copyright protection that entails, regardless
of whether or not reproductions are available from that form of storage.
Item 188 proposes
a new exception to copyright infringement of works where a reproduction is made
as part of a technical process of use. Item
189 proposes a similar exception for reproduction of subject-matter other
than works (for example, films and sound recordings).
Effect of the changes
These changes must be read together. Items 186 and 187 expand copyright protection to non-reproducible
forms of storage.
The current law on this issue was considered in the Federal
Court case, Kabushiki Kaisha Sony Computer Entertainment & Ors v Eddy Stevens (the Playstation case). [717] Based on the current definition
of material form, that case held that a reproduction to a form of storage which
is ‘ephemeral or volatile’ and not capable, with existing technology, of
further reproduction to a more stable form, is not a copyright violation. The
relevant issue in that case was whether copying of data from a CD-ROM onto the
RAM (working memory) of a games console constituted reproduction in material
form. The same issue could potentially apply to DVD players-which make
temporary copies of the data on the disc before processing the data into a
TV-readable signal-as well a variety of other existing and future technologies. [718]
The definition proposed by items 186 and 187 would make
these temporary copies subject to copyright. However, the effect of items 188
to 189 is to ensure that temporary copies made for the purpose of accessing
CD-ROMs or DVDs and the like (‘incidental reproductions’) would continue to be
non-infringing as long as these copies
are not made from infringing copies.
In effect, items 186 and 187 extend copyright protection,
but items 188 and 189 claw some of it back. Further limitation to items 186 and
187 would be provided by the existing ss. 48A and 111A of the Copyright
Act, which provide an exception for infringement where temporary copies are
made in the process of communication.
In the abstract, it is difficult to hypothesise about what currently
lawful conduct would become unlawful under these proposed amendments. The most
obvious is that temporary reproductions made for the purpose of accessing
pirated material would become a copyright infringement. This could mean that playing
pirated DVDs could be an infringement, even when it is for non-commercial use
in one’s own home, as could browsing or playing infringing material on the Internet
(although some of this material would already be covered by the definition of
‘material form’). The change may also have flow-on effects for other copyright
areas such as anti-circumvention device laws.[719]
Why are these changes necessary?
AUSFTA requires that copyright apply to ‘all reproductions,
in any manner or form, permanent or temporary (including temporary storage in
material form)’ (Article 17.4.1). Given the Playstation
case and similar court decisions, Australian copyright law as it currently
stands does not protect all temporary
reproductions so scenarios could emerge that conflict with AUSFTA. The Bill’s
approach to this issue is to establish a general rule that temporary,
non-reproducible reproductions are covered by copyright, with limited
exceptions.
Comment
The Bill’s approach has merit
as it clarifies the position of temporary reproductions. The current
definition’s reliance on the concept of reproducibility is far more difficult
to grasp than exceptions for communications and incidental reproductions.
However, the fact that the incidental reproductions
exception does not apply where infringing material is involved warrants closer
examination. One effect of this
‘exception to the exception’ might be that end-users of infringing materials
become infringers in their own right. This would be a significant extension of
the reach of copyright law. Copyright law normally acts on those who produce,
reproduce, sell, distribute, exhibit to the public or make other commercial use
of unauthorised copies, not on those who make final, personal use of those
copies. These end-users of pirate material are not normally liable.
Given that ever increasing media are delivered through
digital means, the exception to the exception could create a creeping ‘end-use
infringement’. Not only would this be a significant change to the nature of
copyright, it also compromises technology neutrality. Merely reading an
infringing copy of a book, viewing a counterfeit painting, or listening to an
(analogue) sound recording would remain a non-infringing activity. Yet playing
an infringing DVD or an infringing computer game would be infringements, simply
because the nature of these media technically involves ‘reproduction’.
Similarly, a blind person who uses a text-to-speech computer to have an
infringing copy of a book read aloud might be infringing copyright, where a
sighted person reading the same book would not.
Phillips Fox
did not recommend the exception to the exception, instead recommending that:
irrespective of whether or not the version from which that
reproduction is made is itself an infringement,- [an] act of reproduction as
part of a technical process, with nothing more, should not expose the user in Australia
to any liability. If all that happens is that person accesses the work, and
does nothing more, then the exception should apply.[720]
This problem could be avoided by the removal of proposed sub-sections 43B(2) and 111B(2).
Would the removal of these sub-sections retain
consistency with AUSFTA? According to the Bill’s
Explanatory Memorandum, the exception
for incidental reproductions is justified by Article 17.4.10, which allows
exceptions to copyright rights according to the ‘Berne
three step test’.[721] Under this test, limitations or exceptions to
the exclusive rights of copyright-holders are allowed in ‘special cases [step 1] that do not
conflict with the normal exploitation of the work [step 2] and do not unreasonably prejudice the legitimate
interests of the right-holder [step 3]’.
The three step test clearly applies to, and therefore
permits, an exception for reproductions made as part of an incidental technical
process. But there seems no reason that the exception would be permitted only when
limited to incidental reproductions of non-infringing copies. The exception for
incidental reproductions is an exception to the exclusive right to authorise
reproduction, which AUSFTA requires and Australian copyright law provides.
AUSFTA does not require that Australia
provide copyright owners an exclusive right to authorise personal use of works,
so there is no need to limit any exception in order to preserve such a right.
Yet this is the effect of the exception to the exception. If the exception is
permitted for incidental reproductions of non-infringing works, it must also be
permitted for incidental reproductions of infringing works.
Part 11: Limitations on remedies available against carriage
service providers
Changes to the law
The current regime
Following
the passage of the Digital Agenda Act in 2000, the present Australian law on
carriage service providers (CSPs) liability for copyright infringements by
third parties using their systems of networks can be summarised as follows:
-
CSPs are not liable merely because a person uses
their facilities to infringe copyright (ss. 39B and 112E, Copyright Act)
-
CSPs may be liable when they have authorised a person to infringe
copyright using their facilities (ss. 36 and 101, Copyright Act)
-
the courts have held that a person ‘authorises’
an infringement when they ‘sanction’, ‘approve’ or ‘countenance’ infringement.
There is no liability for authorisation if a person did not know, and had no
reason to know, that infringements were occurring
-
in determining whether or not the CSP has
authorised the infringement, the following factors are to be taken into account
(‘the authorisation test’) (ss. 36 and 111, Copyright Act):
the extent of the CSP’s power to prevent the
doing of the act concerned
the nature of the relationship between the CSP
and the subscriber
whether the CSP took reasonable steps to prevent
or avoid the doing of the act, including whether they complied with any
relevant industry codes of practice [According to a recent newspaper report,
attempts to develop a CSP industry code of practice on copyright protection are
‘in limbo, due to uncertainty over the impact of the free-trade agreement’.[722]]
-
CSPs are not liable for temporary or incidental
copies of copyrighted work that may be formed on their computers as a result of
the technical process of transferring data from the source computer to the
subscriber’s computer (ss. 43 and 111A, Copyright Act).
Proposed changes
Item 191 proposes
a new regime that will act in addition
to that outlined above. This would have the following key features:
-
CSPs would be immune from any monetary remedy
against them for copyright infringements that occur through the course of
carrying out relevant activities, as
long as they comply with relevant
conditions
-
the relevant activities are:
transmission etc of copyright material (Category
A activity)
caching copyright material through an automatic
process (Category B activity)[723]
storage of copyright material at the direction
of a user (Category C activity), and
referring or linking users to an online location
(Category D activity).
-
even if they have complied with the relevant
conditions, courts may order:
that the CSP disable access to an online
location outside Australia, if an infringement has occurred in the course of a
Category A activity
that the CSP terminate a specified account, if
an infringement has occurred in any relevant activity
that the CSP remove or disable access to
copyright material, if an infringement has occurred in a Category B, C or D
activity, and
any other non-monetary order that would be less
burdensome but comparably effective, if an infringement has occurred in a
Category B, C or D activity
-
the relevant
conditions are set out in the table under proposed s. 116. The key conditions are that the CSP:
adopt and implement a policy for termination of
repeat infringers’ accounts (although there is no requirement for monitoring of
infringing activity across their service)
comply with relevant industry codes of practice
with respect to caching, expeditiously remove or
disable access to cached material upon receipt of a notice that the material
has been removed or blocked at the originating site
with respect to Category C and D activities,
expeditiously remove or block material or a reference residing on its network
upon notice that the material has been found to be infringing by a court, and
with respect to Category C and D activities,
comply with the prescribed procedure in relation to removing or blocking
material or a reference residing on its network.
-
provision for regulations to provide civil
remedies and criminal offences for conduct in relation to conditions, and to
provide immunity from civil remedies as a result of action taken by a CSP to
comply with a condition.
Why are these changes necessary?
Article 17.11.29 requires a very prescriptive scheme in this
area. That scheme is clearly modelled on the United
States’ Digital Millennium Copyright Act of
1998 (DMCA).[724] The Bill,
on the whole, implements this scheme.
However, a key part of that scheme that has not been spelt
out in the Bill is the ‘take down notice’
procedure. Article 17.11.29 (v) requires that a relevant condition for Category
C and D activities be:
expeditiously removing or disabling access to the material
residing on its system or network on obtaining actual knowledge of the
infringement or become aware of facts or circumstances from which the
infringement was apparent, such as through effective notifications of claimed
infringement in accordance with clause (ix).
Clause (ix), in turn, provides that Australia
establish an appropriate procedure for notifications (‘take down notices’) and
counter-notifications. Monetary remedies are to be available against people who
cause injury to others by providing false information in notifications or
counter-notifications. Clause (x) further provides that CSPs must restore
material online once they receive a counter-notification unless the complainant
seeks judicial relief within a reasonable time.
Trade Minister Mark
Vaile has exchanged a side-letter on this
issue with his US
counterpart.[725] This outlines in
detail the specific procedures that are required to meet the above
requirements.
The Bill does not contain
provisions detailing ‘take down notice’ procedures, except where notice is
given that a court has found material to be infringing. This is far short of AUSFTA’s
requirements. Instead, the Bill provides that
the take down notice procedures will be prescribed in regulations. Compliance
with AUSFTA will presumably be achieved through these regulations.
Comment
Depending on how it is prescribed in the regulations, the ‘take
down notice’ process could be open to abuse. For example, people could issue
notices to disrupt a competitor’s business or to censor material on the
Internet with which they disagree. AUSFTA provides some protection against this
with the counter-notice provision and the requirement that penalties apply
against knowingly false or misleading ‘take down notices’. But in practice,
this relies on the alleged offender having the resources and inclination to
pursue these remedies. Also, there will be an inevitable delay between the CSP
taking down the material and the restoration of the material once the CSP
accepts a counter-notification. In certain political (for example, elections)
or business (for example, annual general meetings, e-commerce) contexts, a
short delay could be critical. If the complainant ‘seeks judicial relief within
a reasonable time’, the material could be brought down for a much longer
period. These are among the several problems of a system that effectively
assumes infringement until the alleged infringer shows otherwise.
In
response to criticism of these provisions of AUSFTA, the then Communications
Minister Darryl Williams,
said “The FTA’s provisions will also allow Australia
sufficient flexibility to introduce a notice and take down system that
incorporates procedural fairness.” [726]
The Internet Industry Association found these comments ‘significant and
reassuring’.[727]
In failing to provide the ‘take down notice’ procedure in
the Bill, or even draft regulations, the
Government has not demonstrated how it will incorporate procedural fairness and
other protections against abuse. Indeed, it is difficult to imagine how such
protections could be enacted in a manner that complies with AUSFTA. The
agreement requires that material be taken down when the CSP obtains ‘actual
knowledge of infringement’ or becomes ‘aware of facts or circumstances from
which infringement was apparent’. The last of these is a low standard of
knowledge. In effect, a mere claim of copyright infringement requires removal
of the material. The agreement does not seem to leave any room for Australia
to introduce a process, such as a court or tribunal hearing or independent
arbitration, to settle the question of infringement before the material is
taken down. Even though the counter-notification process may allow material to
be placed back on line, AUFSTA requires that the material stay off line if the
complainant seeks judicial relief. In effect, this means material that is
merely alleged to infringe copyright could stay off line for some time.
In their review of the Digital Agenda, Phillips
Fox recommended the development of a similar
‘take down notice’ procedure.[728]
However, its model has several key differences:
-
material would be taken down only if the alleged
infringer had not supplied a counter-notice within a certain time, rather than
taken down immediately on receipt of the ‘take down notice’ as required by
AUSFTA
-
on receipt of a take down notice, the CSP’s core
responsibility would be to provide the notice to the alleged infringer, or
notify the complainant that it is unable to determine the identity and contact
details of the alleged infringer
-
if a counter-notice is received, the CSP would
only be required to forward that notice to the complainant
-
there would be no requirement for the CSP to
take material down while awaiting judicial determination of the dispute, and
-
take-down notices would need to be accompanied
by a statutory declaration affirming the accuracy of the information in the
notice. This would prevent the use of computer-generated automatic notices, a
problem that has reportedly arisen under the DMCA provisions in the United
States. Automated notices costs almost nothing to generate but create
substantial compliance costs for the CSP. Sarah Deutsch, from Verizon, a major
American CSP, told a recent symposium:
The copyright owners are doing no due diligence whatsoever. The
robots automatically scour the Internet and they automatically generate these
notices and tell the service provider to take them down. The problem is that
these materials are not on our system of network, they are on the users’ hard
drive.
So just to give you an example last year one small ISP in the US
received over 20,000 notices of all these automated peer to peer notices that
[were] asking us not only to take the material down but effectively to
terminate the subscriber and since the ISP has no idea what is on the users’
hard drive in this case we just pipe, it’s a very egregious remedy. Another US
ISP received from January to today over 30,000 notices, only two of them
actually related to materials that were on its system of network. So these were
all non-compliant notices and in the past 12 months the same ISP received over
90,000 notices.
Each of these automated notices requires human intervention to
track and see if it is on your network and when the ISP tries to reply for
example to one of these robot notices from Paramount pictures they getting
email bounce back that says the destination domain name specified in this
address doesn’t exists or is incapable of accepting mail.[729]
This scheme which Phillips
Fox proposes is much more generous to the
alleged infringer and the CSP, but would not be possible under AUSFTA.
Technological protection measures
An important area of copyright change that AUSTFA requires that
is not included in the Bill concerns protection
of technological protection measures (TPMs), otherwise known as
anti-circumvention device law. AUSFTA allows Australia
a period of two years from the entry into force of the agreement to enact these
laws, which is why they have not appeared in the present Bill.
Under AUSFTA, TPMs are ‘any technology, device or component
that, in the normal course of its operation, controls access to a protected
work, performance, phonogram, or other subject matter’ (Article 17.4.7).
Classic examples of TPMs include region coding for DVDs, anti-copying music CDs
that will not play in a PC, encrypted software requiring entry of a
registration code before being installable, passwords and encryption used to
prevent unauthorised access to online databases, and so on.
Article 17.4.7 of AUSFTA requires Australia
to provide civil and criminal liability for the following conduct related to
TPMs:
-
circumvention of any TPM (this would include
circumvention by an end-user), and
-
‘trafficking’ in devices that are designed or
promoted as enabling or facilitating TPMs to be circumvented or have only
limited commercial purpose other than circumvention of TPMs [Note that this is
a summary; see Article 17.4.7 (a) (ii) for the complete description of the
conduct].
Importantly, these are to apply as ‘a separate civil or
criminal offence and independent of any infringement that might occur under the
Party’s law on copyright’ (Article 17.4.7 (d)). This means that circumvention
of TPMs, or devices (including software) that allow TPMs to be circumvented are
crimes even if no copyright infringement results
from the circumvention.
AUSFTA allows Australia
to provide certain exemptions or defences to these actions and offences, which
are listed in Article 17.4.7 (e).
Current Australian law
Under current law, making and trafficking in devices whose
purpose is the circumvention of TPMs is prohibited, but not circumvention
itself (s. 116A, Copyright Act, for civil liability and s. 132 (5A) and (5B)
for criminal liability).
However, under current Australian law the definition of TPMs
is restricted to devices, products or components designed, in the ordinary
course of operation, to prevent or
inhibit copyright infringement (s. 10, Copyright Act). AUSFTA contains a
much broader definition that includes any devices that control access to copyright material. This is a significant
distinction, as it means that the laws required by AUSFTA would protect TPMs
that may do more (or less) than prevent copyright infringement, such as
protection from parallel importation or competition for accessories, which are
discussed below.
Comment
Two concerns might be raised about TPM protection through
copyright law:
-
it effectively bans otherwise legitimate,
non-infringing uses of copyrighted material, and
-
it may give monopoly rights to copyright holders
beyond those rights normally subsisting in copyright.
Banning legitimate, non-infringing uses
The rationale for the protection of TPMs is that it gives
state backing to measures that copyright owners take to protect their own
rights. In a sense, it attempts to stop pirating by criminalising the equipment
the pirates use.
However, the problem is that TPM circumvention may be done
for legitimate, non-infringing purposes, not simply piracy. Examples include:
-
accessing media purchased legitimately overseas,
such as playing on an Australian-bought machine
DVDs bought overseas
-
other uses that would be considered ‘fair
dealing’, such as clips from films for the purposes of criticism or review or
to report news, and
-
other uses that would be non-infringing in
copyright law, such as educational copying, making back-ups or making
interoperable products.
A ban on TPM circumvention, while possibly helping to cut off
piracy at the source, may also prevent these legitimate uses and severely
circumscribe consumers’ rights to do as they wish with the property they have
legally bought.
In respect of current Australian law on TPMs, the Phillips
Fox review recently recommended that the Copyright Act be amended so that:
-
the definition of ‘permitted purpose’ for use
and sale of TPM circumvention devices be expanded so that fair dealing and
access to legitimately acquired non-pirated product are added, and
-
under these circumstances, making end use an
infringement unless for a permitted purpose.[730]
AUSFTA does not allow a blanket exemption for non-infringing
uses, so it would not permit the Phillips
Fox recommendations to be enacted.
However, AUSFTA does allow Australia
to provide an exemption for:
non-infringing uses of a work, performance or phonogram in a
particular class of works, performances or phonograms, when an actual or likely
adverse impact on those non-infringing uses is credibly demonstrated in a
legislative or administrative review or proceeding; provided that any such
review or proceeding is conducted at least once every four years from the date
of conclusion of such review or proceeding’ (Article 17.4.7 (e) (viii)).
In other words, Australia may make certain classes of
copyrighted work (for example, films on DVD, music, video games) exempt from
the normal TPM circumvention prohibitions on use where the circumvention is for
a non-infringing use and such use is adversely affected by TPM protection.
However, the decision to exempt these classes, which may be
made by parliament or delegated to a minister, public servant or government
agency, must be reviewed every four years. This is similar to the process used
under the DMCA in the United States
in which the Librarian of Congress may determine that certain users or uses of
TPM circumvention devices are legitimate.[731]
Notably, AUSFTA does not require the adoption of certain criteria for
determining whether or not a use should or should not be allowed, as does the DMCA.
This leaves parliament with some freedom to choose which criteria should be
relevant, beyond the adverse effects that non-infringing users suffer.
On one hand, this exemption allows that certain fair dealing
and other non-infringing uses may be allowed. On the other hand, AUSFTA
requires that a non-infringing use be illegal until ‘an actual or likely adverse
impact on those non-infringing uses is credibly demonstrated’. In the absence
of well-resourced or organised lobbies representing consumer interests, it is
foreseeable that these processes could be dominated by those representing
copyright owners. A blanket exemption for non-infringing uses would avoid this
problem, but this is not allowed under AUSFTA.
A more significant practical problem is that exemptions
provided under this process would only apply to ‘use’ liability, not liability
for trafficking in circumvention devices (as a result of Article 17.4.7 (f)).
Therefore, although an exception may be allowed for non-infringing uses of
TPMs, it may be illegal to sell the devices allowing such use, potentially
nullifying the effect of the exemption. When asked about this at the Senate
Select Committee, DFAT did not refute this reading of AUSFTA. Instead, it
pointed out that not all circumvention devices or services would be banned from
trafficking, only those within the ambit of Article 17.4.7 (a)(ii).[732] How this will apply in practice
remains an open question. It is at least a possibility, if not a probability,
that the provisions of AUSFTA are too restrictive to develop a regime that
allows the lawful sale of TPMs that allow circumvention for non-infringing,
exempted uses.
Extension of monopoly rights
Copyright is a system that grants certain monopoly (or
exclusive) rights to authors and producers of creative material: to reproduce
the material, publish the material, perform the material in public, communicate
the material to the public, make adaptations of the material and to enter into
commercial rental agreements in respect of the material.
However, copyright holders who are in the position to use
TPMs can potentially create their own additional de facto monopoly rights by restricting access on their own terms.
This could lead to significant anti-competitive results, with increased costs
and/or decreased choice for consumers. State sanctions against circumvention of
TPMs substantially increase this risk. This is especially the case where the
definition of TPM, for the purposes of the protection of the law, includes any
measure which controls access to
material, as AUSFTA requires, rather than merely preventing or inhibiting
infringement, which is the current Australian position.
Two types of monopoly right extensions are likely:
-
copyright holder imposed bans on parallel
importing
Parallel importing is the legitimate purchase of protected
material in one country in order to export it to another country, normally
where that material is cheaper in the first country than in the second. A ban
on parallel importing allows a copyright holder to segment the world into
various markets and charge different prices depending on demand and supply in
each market, rather than on a single world market. In Australia,
the policy trend in recent decades has been to relax legislative restrictions
on parallel importing, with major changes in 1991, 1998 and 2003. The result is
that today, subject to some limitations, parallel importing of books, sound
recordings, computer programmes and electronic literary or musical items is
allowed.
TPMs, by controlling access to electronic works on the
copyright holder’s terms, can be used by copyright holders to circumvent this
policy trend. Important examples are regional coding of DVDs and computer games
so that these media can only be accessed on machines bought and sold within a
relevant region. A ban on devices that circumvent TPMs significantly
strengthens the copyright holder’s ability to prevent parallel importing, by
making it illegal to circumvent the region-coding, and thus play a DVD or
computer game purchased in another country on an Australian-bought machine.
It does seem incongruous that a ‘free trade’ agreement,
purportedly intended to liberalise trade, should assist copyright holders to
establish their own trade barriers, a point that David
Richardson made in a recent Parliamentary
Library Research Paper.[733]
-
use of
TPMs to create ‘serial monopolies’
Some commentators have suggested that the TPMs can also be
used to create ‘serial monopolies’, controlling the markets for accessories
associated with a primary product. This is done by using encryption technology
to ensure that media, accessories or peripherals to a primary product must be
purchased from the maker of the primary product (or another manufacturer under
license). This already occurs frequently in the computer and computer games
industries. Information technology lawyer and commentator Brendan
Scott explains the potential reach of the
problem:
We are already in a position where it
is possible to embed microprocessors onto most manufactured items.
Manufacturers in the US
have already embedded such processors into garage doors and printers allowing
them to control after markets for these products. For example, a printer
interrogates the consumable cartridges to determine their origin and if they
are from a competitor refuse to operate or, worse, will operate to a lower
standard without alerting the consumer. The anti-circumvention provisions will
prevent competitors from making functional accessories. You don't need to be
too bright to realize that this will become an increasingly common practice for
manufactured items-if you can do it for garage doors, why not tractors?
Over time we will see the emergence
of the kinds of serial monopolies (and the attendant price gouging) for product
areas that we have seen in the software world. In an attempt to protect the US
music industry from market competition what will emerge is a reduction in
competition across broad swathes of the economy-whether it’s the farmer who
wants a combine harvester to work with their tractor, or the IT [information
technology] manager who wants their PDA [personal digital assistant] to
interface with their GPS [global positioning system] devices.
Economics tells us we will get
increased prices and lower quality in these circumstances.[734]
Do the exemptions that AUSFTA allow provide enough scope for
Australia to
prevent these extensions of monopoly rights?
The ‘serial monopoly’ problem might be avoided by use of the
first exemption which allows for non-infringing reverse engineering of a
computer program, in ‘good faith’, ‘for
the sole purpose of achieving interoperability of an independently created
computer program with other programs’ (Article 17.4.7 (e)(i)). This is clearly
intended to ensure that software manufacturers cannot use TPMs to prevent
competitors from selling applications compatible with their software. Whether
it can apply to Scott’s printer cartridge
example depends on how broad ‘computer program’ is read-given that all TPMs are
effectively computer programs, there is a strong argument for a broad reading.
The problem remains that a competitor may have the onus of
proving that their purpose was to achieve interoperability. Given the
presumption that even non-infringing uses of TPM circumvention devices are
illegal unless they fit within a prescribed exception, the AUSFTA model of TPM
protection could provide a powerful disincentive to innovate. Where, for
example, a programmer ‘cracks’ a TPM for the purpose of making an interoperable
program, they run the risk of not being able to show that their activities were
conducted in ‘good faith’. In many cases, potential competitors might decide
that innovation is not worth the risk. This is another problem that would be
avoided by a blanket exemption for non-infringing uses.
Schedule 8-Amendments to the Patents Act 1990
Changes to the law
Grounds to oppose the grant of patents
Items 1 and 2
amend s. 59 of the Patents Act which provides the grounds on which standard
patent grants may be opposed. By deleting specific grounds, it effectively
provides that patent grants can be opposed on the general ground that it is not
a ‘patentable invention’ (as defined by s. 18).
These changes expand
the grounds on which patents can be opposed. Currently, a patent can be opposed
on the basis that the invention:
-
is not a manner of manufacture (s. 18(1)(a),
Patents Act)
-
is not novel or does not involve an inventive
step (s18(1)(b)), or
-
is a human being or a biological process for
human generation (s. 18(2)).
Items 1 and 2 will expand these grounds to include that the
invention:
-
is not useful (s. 18(c)), or
-
has been secretly used by the patentee prior to
the priority date of the claim (s. 18(d)).
Conditions on patents
Items 4 and 5
delete ss. 104(3) and 138(3)(c) of the Patents Act to remove references to
conditions on patents. Currently, s. 104(3) allows amendments to patents to be
made ‘subject to conditions’, subject to the regulations. Section 138(3)(c)
provides that failure to comply with a condition on the patent is a ground for
revocation.
Why are these changes necessary?
AUSFTA does not provide for patents to be made on a
conditional basis, so removal of condition-setting powers is required.
AUSFTA requires that the grounds for revocation match the
grounds on which a patent can be refused (Article 17.9.5). Australia’s
grounds for revocation are broader than the grounds to oppose a patent, so the
latter must be expanded.
What is not in the Bill?
Some of the concerns expressed about the patent provisions
of AUSFTA might be assuaged by what has not
appeared in the Bill.
In particular, there is no change to the conditions of
patentability (s. 18). Concern had been expressed, by the open source software
movement in particular, that AUSFTA may require a more permissive approach to
the patentability of software. This concern was expressed in the Senate Select
Committee’s Interim Report, which noted:
Regarding software patents, the AUSFTA extends patents to ‘all
fields of technology’. This is arguably very damaging to the software industry,
as well as consumers, as it limits development opportunities and decreases
competition.[735]
The drafters of the Bill seem
to have felt that the current law already reflects the ‘all fields of
technology’ element. This is an appropriate view, as that element is
substantively congruent to Australia’s
‘manner of manufacture’ test, as expressed, for example, in CCOM v Jeijing.[736] Certainly, Australia
has not received any complaint that its law on patentability does not comply
with the TRIPs requirements, which uses very similar terms to AUSTFA including
the phrase ‘all fields of technology’.[737]
Similarly, no change is made to the definition of ‘use’. A
group of Australian National
University academics had suggested
that Article 17.9.11 would require Australia
to adopt the US
standard of utility, a ‘specific, substantial and credible utility’.[738] Clearly the drafters of the Bill
believe that current Australian law on the definition of ‘use’ is sufficiently
similar not to require any change.
Comment
These are minor changes to the Patent Act. The changes to the
grounds for opposition to patents actually expand the grounds for opposition.
Unlike most of the other changes in the intellectual property chapter, this
change reduces the rights of patent applicants in favour of competitors or
consumers.
Concluding comments
Intellectual property changes as a requirement of
AUSFTA
Parliament’s consideration of the US Free Trade
Implementation Bill 2004 inevitably will involve consideration of the merits
and demerits of AUSFTA as a whole package. As intellectual property laws,
particularly copyright, are a large part of the package, it is appropriate that
the changes AUSFTA requires be considered carefully. To this end, this Brief
has attempted to outline and provide some assessment of the copyright policies
that must be adopted if AUSFTA is to be ratified, including those areas not
fully covered in the Bill (CSP liability and TPMs).
Implementation of AUSFTA
Parliament must also consider whether the Bill
proposes changes that are the best means
to fulfil Australia’s
AUSFTA obligations. Although the copyright requirements of AUSFTA are highly
prescriptive, they do offer some room for interpretation. As a result,
implementation is not a merely technical issue-it requires substantive policy
choices as well.
With respect to encoded broadcasts, it seems that the Bill
does not meet AUSFTA’s requirements. Should Parliament support the ratification
of AUSFTA, it may want to consider either amending the Bill
appropriately or seeking advice from the Government on the United
States’ attitude to the implementation as
proposed. The Australian Subscription
Television and Radio Association has indicated that it is not satisfied
with the model proposed.[739]
In several other areas, the Bill
might either go further than required or fail to take advantage of allowed
exceptions or limitations. These include:
-
narrowing exemptions for sound recordings of performances
made solely for the private and domestic use of the recorder (see above, page 7)
-
failure to provide a new rule for the duration
of copyright in unpublished works (see above, page 14)
-
failure to provide a system for allowing use of
orphaned material (see above, page 14)
-
failure to take advantage of a limitation to the
civil liability of certain public institutions in ERMI-related actions (see above,
page 16)
-
provision of an offence for conduct that results in significant copyright
infringement, where AUSFTA requires only an offence for conduct that is a significant copyright infringement
(see above, page 19)
-
provision of the ‘exception to the exception’
for technical, incidental reproductions, which could make use of infringing
material an infringement where it otherwise would not be (see above, page 24).
In addition to these, there could be several other areas
where the ‘three step test’ might allow other specific exceptions that have not
been explored here or in the Bill.
Wherever the Bill goes
further than AUSFTA requires, substantive policy decisions are involved. These
decisions may be justified on their own merits, but they need to be understood
as policies rather than merely technical amendments consequential to
ratification of AUSFTA.
Copyright balance
In addition to the specific areas where the Bill
does not take advantage of limitations or exceptions available under AUSFTA, the
Bill does not take advantage of general methods
that would be allowed to ensure ‘copyright balance’.
The central policy issue in copyright is traditionally
understood to involve achieving a balance between competing goals and interests,
or ‘copyright balance’. At one end of the scales sit the moral and economic
rights of creators and other copyright owners and the public interest in
creating incentives to create. At the other end sit the rights of creators to
build on previous creative work, the right of media outlets, schools and
libraries (among others) to use material, the right of consumers to cheap
prices for copyright material and the public interest in promoting competition
and allowing the free flow of information. This is a simplification of the
rights and interests involved in copyright, but it serves to illustrate the
balance involved.
In current Australian law, a balance of these rights is met
by providing a generally protective regime for copyright, limited in two ways:
-
the provision of certain exceptions from
copyright obligations for specified ‘non-infringing uses’ and ‘fair dealing’
uses of copyright material, and
-
a focus on enforcement and remedies against
commercial infringement, which has direct and serious impact on the interests
of copyright holders, rather than targeting end-users and consumers of
copyright material.
In contrast, the United
States tends to have somewhat more
protective general rules and a broader enforcement and remedial focus that includes
non-commercial conduct. Against this stronger protective regime are two
important counter-balances limiting copyright: the ‘fair use’ doctrine and
competition law.[740]
The fair use doctrine is much broader than the specific and
narrow ‘fair dealing’ and ‘non-infringement’ concepts in Australian law. Rather
than statutorily enumerating the uses that are allowed, as in Australia,
the US approach
allows courts to consider case-by-case whether uses should be allowed
considering the following criteria:
(1) the purpose and
character of the use, including whether such use is of a commercial nature or
is for nonprofit educational purposes;
(2) the nature of the
copyrighted work;
(3) the amount and
substantiality of the portion used in relation to the copyrighted work as a
whole; and
(4) the effect of the
use upon the potential market for or value of the copyrighted work. [741]
This is a broader and more flexible system for providing
exceptions to copyright. The result is that some conduct that is an
infringement in Australia
may be a fair use in the United States.
Competition, or anti-trust, law has been another important limit
on copyright where it is used to anti-competitive effect. Although competition
remedies under the Trade Practices Act
1974 can be used in Australia
to similar effect, the practice has not developed here as extensively as it has
in the United States
and Europe.
Schedule 9 of the Bill could
be said to be adopting US standards on protection and enforcement of copyright
without the broad limitations in the United
States to guard against the excessive or
stifling effects of copyright. In this sense, it could upset the copyright
balance in Australia.
The evidence suggest that in some areas this Bill would make Australia more
protective of copyright than the United States, indeed probably more protective
than any other English-speaking country. With this in mind, JSCOT recommended
the adoption of a ‘fair use’ doctrine in Australian law.[742] The Government
has not taken up this proposal in the preparation of this Bill.
Given the high
standards of protection that the Bill
proposes, it could also be argued that there would be merit in reconsidering the
interaction between competition law and copyright. In order for competition law
to be an effective counter-balance to strong copyright protection, changes to
the Trade Practices Act and/or the Copyright Act might be warranted. It might
also be appropriate to increase the resources of the Australian Competition and
Consumer Commission to regulate this interaction. The Bill does not address these issues.
Consultation
Intellectual
property and copyright are, by their nature, very complex areas of law. As a
result, Australia has relied on special standing and ad hoc mechanisms to review and reform
copyright, including the Copyright Law Review Committee, the Intellectual
Property and Competition Review Committee and the Digital Agenda Review by the
law firm Philips Fox, to cite some important contemporary examples.
Schedule 9
represents one of the most, if not the
most, comprehensive proposals for reform of copyright law in recent decades.
Comparable changes were made last by the Digital Agenda Act in 2000, following
a lengthy process of consultation with stakeholders and experts lasting three
years. Those changes were followed by more consultation on the effect of those
changes (the Phillips
Fox review, which reported in January 2004). It
is notable that in the Digital Agenda Act, the Government made certain policy
decisions that the US Free Trade Agreement Implementation Bill reverses. It is
also notable that Phillips
Fox made many recommendations contrary to those that
this Bill proposes.
This history of
careful and wide consideration on copyright reform has led to the development
of a uniquely Australian system adapted to Australia’s specific needs. Given this history, it
would be unfortunate if the significant changes that this Bill proposes, in many cases rejecting previous
copyright policy, should be adopted without an open process of consultation and
consideration. It is true that the Joint Standing Committee on Treaties and the
Senate Select Committee have taken submissions on AUSFTA. However, the
submissions on copyright issues were, for the most part, made before the
current Bill was introduced. Except for private
consultation undertaken by government departments, there is no evidence that
any significant stakeholder or expert consultation has been undertaken in the
drafting of Schedule 9.
The apparent limited
consultation may explain the Bill’s
failure to propose US-style copyright exceptions and limitations to balance
US-style protection and enforcement standards. It might also explain those
areas where the Bill appears to implement AUSFTA inadequately,
fails to take advantage of exceptions allowed by AUSFTA or goes further than
AUSFTA requires in protecting copyright.
More importantly, a
longer process of consultation and consideration may more effectively predict
and deal with the unexpected consequences of this Bill, which are likely to be numerous as the new
legal concepts interact with existing concepts. There remain many uncertainties
about how these changes will work in practice.
Given the minimal
public consultation so far, the scope of the Bill and the complexity of the subject area, an
inquiry specifically into Schedule 9 would be warranted. If Parliament chooses to
support ratification of AUSFTA, advice from stakeholders and experts-and reasonable
time for analysis-will be crucial to crafting a copyright law that both meets
Australia’s obligations under that agreement and, as much as possible, meets
Australia’s own copyright needs.