Copyright and the Digital Economy

siberiaskeinData Management

Nov 20, 2013 (3 years and 6 months ago)



Copyright and the Digital Economy
Discussion Paper

Proposals relevant to internet industries


The ALRC Discussion Paper addresses many issues relevant to internet industries. If
implemented, the proposed reforms would help to foster a more entrepreneurial culture and
provide greater breathing room for innovation in Australia’s digital economy.

he ALRC has accepted the need for a more flexible copyright regime, and has
proposed a
broad and flexible fair use exception

that it says will be better placed to
adapt to a rapidly changing technological environment. It is intended to apply to internet
tivities such as search, indexing and caching.

It proposes replacing most of the existing exceptions (including those relating to
temporary copies, as well as private and domestic uses such as time
shifting) with an
ended fair use exception that sets

out a non
exhaustive list of “illustrative
purposes”. These illustrative purposes would include
consumptive use

caching and indexing by search engines, and some text mining and data mining), as well
private and domestic use

There would al
so be a non
exhaustive list of “fairness factors” based largely on the US
fair use exception.

As in the US, the mere fact that a use falls within one of the illustrative purposes would
not necessarily mean that it was fair. It would still need to satis
fy the fairness factors.
Conversely, uses that did not fall within one of the illustrative purposes might still be fair.

The ALRC also proposes a
fallback option
. If fair use in not enacted, the current fair
dealing exceptions should be expanded to includ
e (amongst other new purposes) fair
dealing for the purpose of non
consumptive use and private and domestic use. Fair use
is, however, the ALRC’s preferred option.

The ALRC has recommended that the law should make it clear that contracts cannot
override t
he operation of some fair uses

but non
consumptive internet uses are

included in this recommendation.

The deadline for responses to the DP is
31 July.
Submissions can be made by email

. There is also likely to be a period of further consultation between
the ALRC and stakeholder groups over the next two months. The ALRC must issue its
final report no later than 30 November 2013.

Detailed summary

Set out below is a high

level outline of the main proposed reforms of relevance to internet

Fair use [Chapter 4]

The proposed a fair use exception differs slightly in form from the US fair use exception, but has
the potential to operate as broadly (and perhaps mo
re broadly) than fair use in the US. The
exception would operate as follows:

There would a an express statement that a fair use of copyright material does not
infringe copyright.

There would be a

list of illustrative uses or purposes that

may qualify as
fair uses:

research or study;

criticism or review;

parody or satire;

reporting news;


private and domestic;


education; and

public administration.

The ALRC has asked if there are any other illustrative purposes that should be

As in the US, there would be a non
exhaustive list of factors to be considered in
determining whether a use is “fair”:

the purpose and character of the use;

the natur
e of the copyright material used;

in a case where part only of the copyright material is used

the amount and
substantiality of the part used, considered in relation to the whole of the copyright
material; and

the effect of the use upon the potential market

for, or value of, the copyright

Caching and indexing and network related functions [Chapter 8]

The ALRC accepted submissions from the internet industry that the current lack of
express protection for caching and indexing as compared with other
jurisdictions risked


ie, uses that do not come within one of these purposes might
still be fair.


deterring investment in Australian internet industries. The ALRC said the fact that no
search engine had been sued in Australia for caching and indexing functions might
mean that rights holders considered this use to be “fair”, but thi
s was no reason not to
introduce fair use.

The ALRC said that including “non
consumptive use” as an illustrative purpose in a new
fair use exception would send a clear signal that uses that fall within the broad category
of non
consumptive use (ie, uses
that do not trade on the underlying and expressive
purposes of the copyright material) are more likely to be fair than uses that do not fall
within this or any other illustrative purpose.

The ALRC rejected calls for a more specifically worded caching and
indexing exception,
saying that as copy reliant technologies continue to evolve, the
Copyright Act

needs to
be adaptive. A broad fair use exception was best placed to achieve this.

Data mining and text mining [Chapter 8]

The ALRC said there was not enoug
h specific evidence of market failure to warrant a
specific exception for data mining and text mining. Some data mining and text mining
would come within fair use, but the availability of licensing solutions would be one factor
in determining whether a dat
a or text mining use was fair.

based service [Chapter 5]

The ALRC said that a regime that automatically treats third party copying, storage and
shifting services as infringing was stifling of innovation.

There is currently uncertainty as to

when (if ever) a cloud
based service is entitled to
stand in the shoes of its customer to provide back
up copying, storage, time shifting
services etc in reliance on an exception that would have been available to the customer
had the customer done the cop
ying. The courts have engaged in a fairly artificial inquiry:
who (ie customer or service provider)
the copy? This was a result of narrow,
based exceptions that required a court to consider whether the person doing
the copying was the same per
son who was entitled to rely on the exception.

A shift from narrow purpose
based exceptions to open
ended fair use would mean that
question that needed to be asked was whether or not the copying was
. The
mere fact that the copy had been made
by a third
party service, rather than its customer,
would not rule out reliance on fair use. The ALRC noted that some third party copying is
unlikely to harm rights holders’ markets, and may in fact help develop new markets for
rights holders to exploit. A

regime that automatically finds such uses infringing may
inhibit the development of the digital economy.

The ALRC stressed that it was not suggesting that cloud based uses would always be
fair. The fact that a service provider has obtained a commercial b
enefit would be
relevant to whether the use was fair, with a commercial purpose weighing against a
finding of fair use. Importantly, however, the ALRC says that if the law is to be conducive
to new and innovative services and technologies, it should at lea
st allow for the question
of fairness to be asked.


The bottom line is that cloud
based services would no longer be automatically prevented
from offering services in Australia, but could operate if the services it provided were
considered to be fair.

tantly, however, the ALRC says that if the law is to be conducive to new and
innovative services and technologies, it should at least allow for the question of fairness
to be asked.

Transformative use, UGC etc [Chapter 10]

The ALRC said there was no jus
tification for a stand alone transformative use exception.
Instead, “social uses” such as the creation of UGC, mashups, sampling etc, would be
tested under the general fair use exception. The more transformative the use, the more
likely it would be fair.

Fair use would also apply to platforms hosting UGC, with any commercial benefit
obtained tipping the scales against a finding of fair use.

The ALRC referred to the
Perfect 10 v Amazon

case (Google’s use of thumbnail images)
as an “instructive example” of
when a transformative use may be fair, even though it did
not amount to a “non
consumptive” use. It referred to the court’s finding in that case that
“Google’s search engine, particularly in light of its public benefit, outweighs Google’s
superseding and c
ommercial uses of the thumbnails in this case”.

The ALRC said that “as under US fair use doctrine, some broader concept of
transformative use can be expected to emerge from the application of the fairness
factors under the ALRC’s proposed fair use excepti
on”. It has sought
on whether Australian courts should follow the recent trend in US case
law to put ‘transformativeness’ at the heart of fair use.

Certainty and fair use [Chapter 4]

The ALRC addressed concerns by some stakeholders t
hat a shift to fair use would result
in a high degree of uncertainty and associated transactional costs.

While acknowledging that the proposed reforms would require “some adaptation”, the
ALRC said that fair use would provide a more coherent and predictab
le environment
than its critics suggest. It said that Australian courts would have the benefit of fair use
case law from other fair use jurisdictions, and that experience in the US had suggested
that guidelines, industry protocols etc can also provide a gr
eat deal of certainty.

Copyright and contract [Chapter 17]

The ALRC says that there is real uncertainty as to whether it would be permissible for a
rights holder to rely on contract to override any of the copyright exceptions.

The ALRC has recognised

the importance of ensuring that the operation of copyright
exceptions cannot be excluded by provisions in contracts. However the ALRC has only
recommended that protection be provided for

core purposes (the library and
archive exceptions, as well as
fair use to the extent that this applies to use of material for

research or study, criticism or review, parody or satire, reporting news, or quotation).
This protection from contractual override would

apply to non
consumptive internet
uses (caching,
indexing, search etc) or to common consumer uses such as backups,
time shifting or format shifting.