Copyright in the Digital Economy – Part 2: The submission of Arts Law to the ALRC Discussion Paper

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The proposal to introduce a U.S. style ‘fair use’ exception to Australian copyright law produces a stark division between the supporters of an open-ended fair use exception similar to the test used in the Copyright Act of the United States[1] and those of the opinion that the evolution of copyright exceptions in the digital environment should follow that path of narrowly defined fair dealing provisions, which currently provide for exceptions to copyright infringement where copyrighted material is used for the purposes of  criticism and review, research and study, parody and satire, and reporting the news.

The fair use proposal was set out in the Discussion Paper that was published by the Australian Law Reform Commission (ALRC) as part of the ‘Copyright in the Digital Economy’ Inquiry, which is headed by Professor Jill McKeough.[2] The terms of reference direct the ALRC Inquiry to consider the ‘the importance of the digital economy and the opportunities for innovation leading to national economic and cultural development created by the emergence of new digital technologies’. As a consequence the submissions in response to the ALRC Discussion paper focus on how digital technologies have impacted on the copyright system and how any exceptions to copyright would operate in the digital environment.

The article in the June edition of art+LAW commented on the implications for artists, writers and other creators of copyright work of a fair use exception; in particular how an open-ended fair use exception would usurp the decision of the author as to how works will used by others and would have a detrimental impact on the moral rights of the author. The Arts Law submission[3] in response to the ALRC Discussion Paper 79 provided a detailed argument as to how an open-endedfair use exception would appear to conflict with Australian’s Berne Convention commitments in relation to the scope of copyright exceptions permitted by Article 9(2) of the Berne Convention. Article 9(2) states that any exception to copyright should not ‘unreasonably prejudice the legitimate interests of the author.’ Arts Law argued this includes both economic interests and the separate and non-economic interests that are the moral rights of creators as provided for in Article 6^bis of the Berne Convention. In other words, an open-endedfair use exception that allows the reproduction of existing works appears to conflict with the moral rights obligations to provide attribution of authorship and the protection against derogatory treatment of works that exist in Part IX of the Copyright Act 1968.

 

The importance of the moral rights obligations

Arts Law described the significance of the moral rights regime in the Copyright Act 1968 in these terms: an open-ended fair use exception that allows the appropriation of existing work appears to conflict with the existing obligation of third party users to provide attribution of authorship and the author’s right to protection against derogatory treatment of works. The move to an open-ended fair use exception will impact negatively on the moral rights of the author.

Arts Law’s view is that having implemented a moral rights regime consistent with its treaty obligations under the Berne Convention, Australia cannot adopt an open-ended fair use exception and must work within the narrow public-interest based exceptions in meeting the challenges in the digital environment.

The interpretation of the Berne Convention commitments is a matter of controversy, with different opinions described in the ALRC discussion paper and argued in submissions to the ALRC. The Arts Law submission also directed attention to the public interest values that support the existing fair dealing exceptions and also critically evaluated the economic arguments that have been presented to justify an open-ended fair use exception.

In relation to the development of exceptions, Arts Law submitted to the ALRC that Australia mustbalance all public interest values (including non-economic values such as moral rights) and limit the scope of exceptions to circumstances in which the moral rights of authors are off-set by a significant public interest value.

 

The economic justification for fair use

An economic justification for an open-ended exception to copyright is that it facilitates innovation in the digital environment. The economic studies and reports that consider the implementation of the fair use doctrine are not clear-cut as to what are the appropriate conclusions that can be stated as the benefits of a fair use exception. This controversy is best summarised in the quote from the Hargreaves Report (2011) of the United Kingdom, which stated that economic benefits of fair use:

‘may sometimes have been overstated.’

The Arts Law submission also commented on studies of theincomes of professional artists in Australiafor the purpose of discussing the role of copyright policy to provide an incentive for the creation of works and other subject matter.Arts Law commented on two studies conducted by David Throsby and Anita Zednik and David Throsby and Virginia Hollister entitled “Do you really expect to get paid?”[4] and “Don’t give up your day job”[5] These studies are part of a 30 year series of studies into the incomes of professional artists in Australia. The survey by Peter DiCola (2013) into income of American musicians and the correlation of income with copyright incentives also provided a valuable insight into the importance of copyright to artists.[6]

The studies of David Throsby et al and Peter DiCola support the proposition that notwithstanding the fact that significant portions of actual artists’ incomes are derived from sources other than their ownership of intellectual property, nevertheless the protection of such rights are 1) a significant asset to those artists; and 2) a significant incentive to their production of art. The argument supported by the findings in those research articles is that introducing changes into the Australian regime of fair dealing to make it similar to the U.S. fair use exceptions would have a negative impact on the production of art and on the welfare of individual and independent artists.

 

The advantages and disadvantages provided by a fair use test

Many submissions to the ALRC in favour of the adoption of a fair use exception identify a benefit as being the flexibility of assessing whether a use is fair through the application of fairness factors. A fair use test considers, among the fairness factors, whether the existing work is transformed through the use and whether the use that is claimed to be a fair use has a detrimental impact on the market for the existing work. The Arts Law submission accepted that the fair use doctrine provides a flexible test, however the flexibility of the fair use doctrine comes at a cost – the lack of clarity, certainty and predictability in the application of the fairness factors.The fairness factors that are to be considered in determining whether there is a fair use are factors in which there can be a difference of opinion. Cariou v Prince[7] and Morris v Young,[8] which were discussed in the June edition of art+LAW,were considered in the Arts Law submission as examples of uncertainty as to whether there is a fair use.As a consequence it is likely that courts will have to determine the difference between an infringing derivative work and a ‘fair use’ on a case-by-case basis.  Arts Law submitted that the majority of artists are not in a financial position to spend money on litigation to establish what is a fair use of an existing work.

The proposal to create an exception that allowed the use of copyright material for ‘private and domestic use’ was opposed in the Arts Law submission. A blanket proposal to allow expansion of the private and domestic use exception in an online environment may reduce the development of authorised online content providers and the capacity for artists and rights-holders to generate revenue from copyright material in online environments.

The internet creates challenges for artists and owners of copyright, although the Arts Law submission described how artists can engage with the digital environment and take advantage of the opportunities to find an audience and generate income. An example of a sophisticated web strategy of a creator was the response of Gotye (Wally De Backer)to the posting of copies, remixes, parodies and cover versions of ‘Somebody That I Used To Know’. It should be noted that of these versions of Gotye’s song, only the parodies would be within a U.S. style fair use exception and otherwise permitted under the parody and satire exception in s. 41A of the Copyright Act 1968.Gotye’s response was to edit some of that material into ‘Somebodies: A YouTube Orchestra’, which allowed Gotye to acknowledge his fans, with the video having several pop-up messages so that fans can learn about Gotye’stour dates.

The Arts Law submission also noted that over a billion viewers have accessed Psy’s ‘Gangnam Style’ music video on YouTube. While there is no cost to users to access and view YouTube content, Artists like Psy can generate income from YouTube’s ‘ID Content’ policy as YouTube shares advertising revenue with rights holders.

These examples of artists engaging with digital technologies support the submission of Arts Law that the digital environment already allows for mechanisms that give artists’ choices as to how to respond to unlicensed use of their work while facilitating fair access and wide dissemination of their work. The YouTube ‘ID Content’ policy allows copyright owners to ‘monetise, block or track’ uses that are not fair uses of copyright material. Through such a policy, copyright owners have choices as to whether to block the use of their copyrighted works through ‘takedown notices’; or track the use (as the copyright owners may decide that the reuse is beneficial in that it draws public attention to the copyrighted work, with the copyright owners deriving value from the work from some other sources); or the copyright owner can engage with internet service providers and internet content hosts to monetise what is otherwise an unlicensed use of the work through accessing advertising revenue related to the user-generated content.

The Arts Law submission supported targeted reforms to the Copyright Act 1968 to confirm the legitimacy of digital technologies such as the non-consumptive uses of works in the operation of internet-related functions of search engines, which need to index material that is located on the internet. Arts Law, along with other organisations and individuals, supported changes to the Copyright Act 1968 so as to provide for procedures to allow the use of ‘orphan’ works after a reasonably diligent search for the rights holder had been carried out.

The ALRC Discussion Paper proposed the repeal of statutory licensing schemes for the use of copyright material by governments, educational institutions, and institutions assisting persons with a print disability; leaving these institutions to negotiate voluntary licences with rights holders. The ARLC Discussion Paper put forward an efficiency justification for abolishing the statutory licensing schemes, which would be replaced by the providers of education negotiating directly with rights holders. The efficiency being the lowering of transaction costs of accessing material for educational use flowing from the negotiation of education use licences where the intended use is not otherwise a fair use of the work. Arts Law submitted that there are no studies that provide evidence of higher transaction costs created by the existing statutory licensing schemes or any studies that provide an analysis of improvements of efficiency that would flow from educational institutions negotiating with rights holders to licence material for educational use.

The ALRC Discussion Paper also proposed an open-ended fair use exception or a fair dealing exception for educational use. Arts Law submitted that existing ‘research and study’ fair dealing provided access to copyright material and Arts Law argued in support of the existing the statutory licensing schemesbeing as balancing the public interest in supporting the creation of copyright material with the public interest in facilitating access to copyright material for use by educational institutions.

The provisions that currently apply to reproduction by libraries and archives are also proposed to be replaced by a fair use exception and a new exception that allows those institutions to make copies of copyright material, whether published or unpublished, for the purpose of preservation of that material. Arts Law supports changes to the Copyright Act 1968 that facilitate the operation of libraries and archives in the digital environment, however Arts Law argued that the application of an open-ended fair use exception was not the solution to the specific needs of libraries and archives in relation to the digitisation of their collections.

As a footnote to this commentary on the ALRC ‘Copyright in the Digital Economy’ Inquiry, notwithstanding the ALRC final report is not due until December 2013, the Green Party introduced the Copyright Legislation Amendment (Fair Go for Fair Use) Bill 2013into the Senate in June 2013. Arts Law made a submission on the Bill to the Senate Standing Committees on Environment and Communications.[9] Arts Law did not support the implementation of a fair use exception, as provided in the Bill, nor did Arts Law support the provisions in the Bill that expanded the level of copying works by the education sector by permitting “multiple copying for classroom use” by any public or other non-profit institution of higher education. Arts Law also opposes the adoption of the proposed changes to the definitions of ‘access control technological protection measures’, which impact on geographic market segmentation or regional zoning of DVDs and online delivery of content through the use of ‘geocodes’. Arts Law submitted that the pricing differences that may exist between Australia and the United States would be better addressed in the way described in the ‘At What Cost Report’ that was published on 29 July 2013 by the House of Representatives Standing Committee on Infrastructure and Communications. Arts Law also opposes the adoption of the proposed exception to the circumvention prohibition related to ‘access for visually impaired people’. While there is a strong public interest in meeting the needs of visually impaired people, Arts Law submitted that facilitating access to copyright material should be addressed in the implementation of Australia’s commitment to the ‘Treaty to Facilitate Access to Published Works by Visually Impaired Persons and Persons with Print Disabilities’(VIP Treaty) that was concluded at the diplomatic conference held at Marrakesh, Morocco from June 17 to 28, 2013.

The Arts Law submission to the ALRC Issues Paper argued for the importance of authors and other creators of copyright material and that proposals for new exceptions to copyright, that diminish the economic and moral rights of author and creators, should be based on clearly identified policy grounds.The final report of the ALRC which is intended to be published in December 2013, will present the conclusions of the commissioner, Professor Jill McKeough on what will remain a contentious area of copyright policy. The legislative agenda of the new federal parliament is likely to include legislation that implements the government’s response to the ‘Copyright in the Digital Economy’ final report, the ‘At What Cost Report’ and the VIP Treaty.

 

Dr Morris Averill is a IP and media lawyer in Sydney.