CHAPTER 3
PROVISIONS OF THE BILL
Introduction
3.1 The purpose of this Chapter is to discuss the essential provisions
of the Bill. This discussion is based on the provisions of the Bill itself,
its accompanying Explanatory Memorandum, and evidence provided to the
Committee.
Objectives
3.2 The Bill expressly seeks to benefit consumers by promoting competition
in the distribution of CDs in Australia. [1]
A more competitive Australian market is expected to result in conditions
which better reflect the costs of production and the needs of consumers.
This is expected to result in lower prices for CDs in Australia, [2]
so addressing the central conclusion of the PSA inquiry in 1990 that “the
prices Australian consumers pay for records are too high”. [3]
3.3 In order to provide lower prices to consumers, the Bill proposes
to amend the Copyright Act (the Act) to permit the importation of legitimate
copies of sound recordings without the permission of the owners or licensees
of the Australian copyright.
3.4 The Bill also seeks to benefit consumers by providing them with a
greater range of choice. The Explanatory Memorandum notes that the local
subsidiaries of global music companies (which control 70% of the world
industry) typically release only 20% of their titles in Australia. [4]
3.5 In response to industry concerns about piracy, and to ensure a consistent
approach to penalties in this area, the Bill will also amend the Act to:
- significantly increase penalties for the importation, manufacture,
sale or trade in all pirated intellectual property products; and
- provide substantial procedural assistance to copyright holders in
piracy litigation by requiring the defendant to prove that the imported
recordings were legitimate. [5]
The import restriction
3.6 Under the Act as it stands, it is an infringement of copyright in
a sound recording, and in a musical or other work recorded in the recording,
to import a copy for commercial purposes without the permission of the
Australian copyright owners, and to deal commercially within Australia
in such copies. [6] Such infringements are actionable
by the copyright owners or exclusive licensees, and are criminal offences.
3.7 A number of preliminary points should be noted here. First, it is
not an offence to import a sound recording for personal use, and, as noted
in para 1.18, a growing number of consumers are importing directly for
personal use using facilities such as the Internet.
3.8 Secondly, the effect of the existing provision is not to restrict
imports, but to restrict those who are entitled to import. [7]
As noted by the ACCC:
[t]he law does not protect Australia from imports as such. It merely
confers an import monopoly on the multinational record companies to
be the sole importer. They can and do import as many CDs and as much
foreign music as they like. This system allows the record companies
to charge much higher prices in Australia than otherwise without fear
of being undercut by direct import of those CDs from overseas; that
is, by so-called parallel imports. [8]
3.9 Thirdly, the Bill will permit only the importation of `legitimate'
recordings. The Bill inserts into the Act a definition of a non-infringing
copy of a sound recording. Such a copy is defined as one:
- made without infringing any copyright in a literary, dramatic or musical
work under the law of the country in which the copy was made (the copy
country); and
- made by or with the consent of:
- the owner of the copyright or related right in the sound recording
in the copy country when the copy was made; or
- (if the law of the copy country did not provide for copyright
or a related right in sound recordings when the copy was made) the
owner of the copyright or related right in the sound recording in
the country in which the sound recording was made (the original
recording country), or
- (if neither the law of the copy country nor the law of the original
recording country provided for copyright in sound recordings when
the copy was made) the maker of the sound recording. [9]
Removal of the import restriction
3.10 The Bill will insert new sections 44D and 112D in the Act. Proposed
section 44D deals with copyright in a musical work recorded in a sound
recording. Proposed section 112D deals with copyright in the sound recording
itself. In each case, the proposed amendments will provide that copyright
is not infringed by the importation of a non-infringing copy of a sound
recording (as defined).
3.11 In each case the proposed amendments will also exclude from infringement
acts of commercial dealing in Australia with an imported non-infringing
copy.
3.12 Under proposed new section 44D(2) and 112D(2), each section will
apply only if the sound recording was published in Australia or in another
country before the date of importation of the copy into Australia. If
it was published in another country, it must have been so published with
the consent of the owner of the copyright or related right in the sound
recording. If the country does not have a law for copyright or a related
right, then the sound recording must have been published with the consent
of the maker of the sound recording. [10]
New statutory defence
3.13 The Bill proposes to insert a new section 130A in the Act. This
will apply to actions under sections 37 or 102 for infringement of copyright
in a sound recording or underlying musical work by importation for commercial
purposes. Under the proposed section, once the plaintiff has proved the
elements of the action referred to in those sections – including
the importation for commercial purposes and the absence of a licence to
import from the copyright owner – it will then lie on the defendant
to establish that the copy in question was a non-infringing copy that
was able to be legally imported. A similar approach is taken in the case
of an action for commercial distribution under sections 38 and 103. [11]
3.14 The Attorney-General's Department states that the Bill does not
propose the repeal of the importation provisions of the Act, but rather
creates an exception to those provisions. The effect of proposed section
130A is that, if an importation is legally challenged, it will be up to
the importer or the seller of the import effectively to prove that it
comes within the exception – in other words, to establish that the
stock is genuine. If they fail to do this it is likely they will be found
to have infringed the importation provisions. [12]
Penalties
3.15 The Bill also provides for increases in maximum penalties. The new
maximum monetary penalties will be $55,000 for individuals and (by the
operation of subsection 4B(3) of the Crimes Act 1914), $275,000
for corporations for all offences under sections 132, 248P, 248Q and 248QA.
These Bill provides for these penalties in penalty units.
3.16 In evidence to the Committee the Attorney-General's Department stated:
The penalties under the legislation now before the Senate are substantial.
As a further measure, the department was authorised by the government
to advise the committee that, when the bill is brought on for debate,
the government will propose that the penalties be increased by 10 per
cent. The proposed increase is intended to respond to industry concerns
that the deterrence message from the reform of the penalty provisions
was insufficient and, in particular, to give effect to the government's
own intention to send a message of deterrence through an increase. Although
maximum pecuniary penalties in the act were increased in 1997 through
an amendment of section 4AA of the Crimes Act 1914, the government accepts
that a further increase is warranted and will move an amendment accordingly.
[13]
3.17 Under the revised penalty provisions, the maximum penalty will now
be 550 penalty units, which is the equivalent of $60,500 per infringement
for individuals, and $302,500 for corporations.
3.18 In introducing the Bill, the Minister saw it as demonstrating a
commitment to an effective and practical Copyright Act that looks after
the legitimate interests of copyright owners while also delivering benefits
to Australian consumers. [14]
Footnotes
[1] Explanatory Memorandum, p 12.
[2] Submission No 186, p 3 (DOCA).
[3] PSA, (1990) p 150.
[4] Explanatory Memorandum, p 12.
[5] See, generally, Explanatory Memorandum,
p 20; Submission No 180, p 2 (Attorney-General's Department).
[6] Submission No 180, p 1 (Attorney-General's
Department).
[7] Transcript of Evidence, p 48 (Mr M Paterson).
[8] Transcript of Evidence, p 2 (Prof Fels).
[9] Proposed section 10(1) as amended.
[10] Explanatory Memorandum, pp 17-18.
[11] Explanatory Memorandum, p 18.
[12] Transcript of Evidence, p 181 (Mr C Creswell).
[13] Transcript of Evidence, p 181 (Mr C Creswell).
[14] Hansard, House of Representatives,
20 November 1997, p 10812.