Edited from a Seminar Paper by Adam Simpson.
The Communication Right – an amendment to The Copyright Act 1968
The “right to communicate” works to the public came into effect on 4 March 2001 and is a major development in Australian copyright law. This right reinforces the copyright owner’s basic and exclusive right to control the use of their work in the digital environment. It is broad enough to cover free-to-air television, cable, radio and the internet. It has replaced the existing broadcasting and cable rights and extended copyright protection to sound recordings over cable.
Previously the Act did not contemplate the Internet, the new right now provides specifically for ‘online’ distribution. Furthermore, the Government has aimed to keep the right “technology neutral” so that the right will continue to operate and withstand the semantics and processes of scientific innovation that would outdate a definition based on existing technology.
In relation to the internet (and its future incarnations) the new right not only includes the right to “electronically transmit” such as emailing Brittany Spears’ new soundtrack but also to “make available online” which would include simply having your computer on a file sharing system such as Gnutella and allowing others to access that track from your hard drive.
The amendments raise a number of issues for copyright owners. The aim of this article is to identify the risks facing authors when dealing with the right to communicate and also suggest a number of options for mitigating against such risks.
Protection, Control and the Risk of Piracy
Issues such as protection, control and the risk of piracy are not new in the digital age. These concerns act upon the right to communicate because until the introduction of effective security tools for on-line trading, copyright authors need to consider the risks associated with public access when granting or licencing rights.
Further, from the author’s perspective, granting a right to communicate work to the public without restriction may expose their work to additional risks of piracy. To mitigate this risk the grant of the broad “communication right” should be carefully qualified so as to minimise the dangers of copyright abuse. For example, the contract may contain a clause providing that, if work is to be distributed on line it must have an effective and approved security and rights management mechanism to enable controlled exploitation and subsequent reuse.
Valuing the Right to Communicate
Valuing the right of communication poses another problem. Technological advances and changing business models make it difficult to value new uses of copyright, however it is widely acknowledged that the right to distribute works on line is potentially very valuable.
The time has come where remuneration of digital rights must be specifically provided for to encourage the development of the industry and an equitable share in this development for authors. Just because its new or not making money now doesn’t mean the copyright owner should be locked into low royalty schemes. Flexible remuneration mechanisms can be built into contracts such that if on-line delivery is a success for the distributor (say the record company) then it can be a success for the copyright owner.
The impact of the right of communication will have a different impact on agreements entered into before and after the commencement date of the Act (4 March 2001.)
Contracts entered into prior to 4 March 2001
Contracts that refer to the now outdated diffusion and broadcast right will continue to have effect as though the Act had not been amended, ie the specific rights granted will not be widened simply because the Act has been amended. If online rights are required in a contract made before this date the contract should be checked to ensure that it has been drafted in such a way that will cover the new right of communication. For example if the contract does not provide for the required ability to electronically transmit works on line, it will need to be amended and renegotiated; a simple side letter amending the contract may do this.
Because the new communication right has expanded the exclusive rights of copyright, allcontracts entered into before 4 March 2001 will be presumed not to include the more expansive rights. This is favourable from the point of view of authors who are presumed not to have given away their on-line rights unless there is clear evidence in support. It will be a question of interpreting the words in the contract (or other supporting documentation) or examining the conduct of the parties.
However, where a pre 4 March 2001 contract assigns all rights, licenses future rights or provides for any activity which involves the exercise of the communication right (such as uploading the work onto a server) that contract will be interpreted to cover the entirety of the new communication right. However, a specific reference to only one element of the communication right (such as electronically transmitting a work) will not be interpreted to cover the remaining rights (such as making a work available on-line).
Contracts made after 4 March 2001
For these contracts the new right must be considered and provided for in all cases dealing with copyright. If a contract says that the author grants the right to “communicate the work to the public” the grant is likely to be interpreted to the full extent of the Copyright Act – it will cover all forms of electronic distribution. It is important that authors are aware of the broad nature of this right and its value. Authors must ask themselves if they are giving up more than necessary and what steps they are taking to protect their rights and receive fair consideration.
Drafting Tips for Digital Use
1. Identify the “right to communicate”
When you exclusively licence the right to communicate your work to another person you lose all rights to communicate the work for the period of the license. This is why it is important to identify and reserve specific rights that you wish to control that would otherwise come under the definition of right to communicate. By identifying the right to communicate you can control the use of your work by limiting the uses that can be made by licensees or assignees (refer below.)
By way of example for a Visual Artist the right to communicate would include the right to reproduce prints, make online sales, undertake online promotions and use the work in any media ie television, print and the internet. It is likely that the Artist would like to remain in control of all or most of these means of communication.
2. How do you limit the right to communicate material?
You can limit the right to communicate by identifying the right and then reserving various components of the right to yourself. For example you might retain uses in various media or restrict the right to specific territories. You can also limit the right to a certain period, subject uses under the right to review or approval, limit the right to communicate to traditional marketing purposes and retain first and last options over opportunities.
You may even wish to reserve the “right to communicate” thus allowing you to retain your original rights.
For example you may limit the use of your work to certain media, for example print, film, television or online, or you can limit the uses that can be made of your work including making, selling, leasing or hiring copies of the work. Because the right covers communications originating here and received overseas you can, for example, stop your work being distributed both here and overseas by refusing to grant communication rights to Australian internet providers. An example of limiting the right to communicate in book publishing would be to limit publishing to volume form.
There are no standards of payment for the right at present so you will have to come to an agreement with any prospective assignees or licensees. Your contract should specify how much money you will receive for the use of your work. It is important that the price you agree on is sufficient to compensate you for the rights that you are giving up. Payment options include up front payment, payments subject to review and as a percentage of total sales. Beware of the risk of giving up expansive rights to your work for insufficient consideration. It is easy to make the mistake of being paid for exploitation in traditional media but actually give away the more expansive (and valuable), right to communicate.
4. Limit to a short period of time
A way of mitigating against uncertainty as to price is to limit the time period of the licence or assignment. By limiting the term you give yourself the opportunity to renegotiate a new price for subsequent terms when your current contract expires and there is greater certainty as to a fair price for the rights.
A licence arises when you give permission to another person (licensee) to do an act which would constitute an infringement of that copyright if done without that permission. A sub licence arises where the licensee subsequently grants power to other parties up to the extent of the original licence. Copyright owners can limit the rights of sublicensees in their contracts. For example a composer may license a music publisher with the right to communicate but not want the publisher to be able to sublicense a record distributor to publish the works online. You may choose to control sublicencing by making all sublicencees subject to your consent or approval.
When assigning rights the key message for copyright owners is to know and understand exactly what rights they are giving away and making sure that they are paid adequately for those rights and do as much as they can to protect their asset. The Arts Law Centre is currently updating its pro forma contracts to reflect the new right to communicate and to mitigate issues raised in this article.