Saturday, February 15, 2014

Copyright and the Digital Economy: the ALRC's Final Report

In a number of posts on this issue last year I enthusiastically welcomed the ALRC's inquiry into the fair dealing exceptions and statutory licences in the Australian Copyright Act to assess their adequacy and continuing relevance in the digital environment.

I commented on the Discussion Paper released in June 2013 (here), and prior to that had some sport with the rather woeful industry submissions (here).

Now we have the Final Report and a Summary Report released this week. If you are seriously interested in this critical copyright issue then you should put aside a few days and read the 474 page report in its entirety. (The 23 page summary is far too cursory). The reports are here.

Firstly, congratulations to the Commission and particularly to Professor Jill McKeough who chaired this enquiry. They have produced a work of monumental significance in my view. It is extremely comprehensive, and carefully and respectfully dissects all arguments across the whole spectrum of opinion. What we have in the end is a very refreshing, sensible and balanced perspective on hotly contested areas of law and practice that should - in an ideal world - be welcomed by all parties.

The report advocates that our current limited and prescriptive Fair Dealing provisions be replaced by a more general and flexible Fair Use provision similar to that operating in the US and a number of other countries. This will make the Copyright Act 'considerably more clear, coherent and principled' (p24).

Unlike in the Interim Report the ALRC is not now advocating for the complete repeal of the Statutory Licenses for education and government, as was strenuously argued by educational and government bodies. It has recognised the equally strong arguments of rights owners that they be retained. However 'they need to be streamlined and made less rigid and prescriptive. The terms of the license should be agreed on by the parties, not prescribed in legislation. The Copyright Act should be clarified to ensure the statutory licenses are truly voluntary for users, as they were intended to be. It should also be made clear that educational institutions, institutions assisting people with disability and governments can rely on fair use and the other unremunerated exceptions that everyone else can rely on, to the extent that the exceptions apply' (p26).

I criticised the commission's Discussion Paper last June for sitting on the fence at every turn when recommending its fair use agenda. It refused to give any sort of hint as to how the grenade it was lobbing would affect the owner and user communities. In the Final Report however it adopts an entirely different approach. It offers an opinion, with no guarantees of course, when discussing whether specific uses may be judged to be fair. For instance the chapter on education contains these sentences: 'The fact that a particular use is for education should favour a finding of fair use' (p311); but then there's this: 'Educational uses are not even presumptively fair; other factors must be considered, including any potential harm to the rights holder's market. A non-transformative use that merely repackages and substitutes for a copyright work will not be fair use, under the exceptions recommended in this Report' (p312).

The one big ogre constantly painted by the copyright owner community when facing the prospect of such a comprehensive change to our current copyright regime is the one of 'uncertainty'. Jose Borghino, policy director for the International Publishers Association, condemned the ALRC's recommendation and noted that even in the US fair use 'does not offer certainty for investors in content or anyone else'. The Australian Publishers Association says much the same thing. (Publishers Weekly, Feb 14, 2014).

The ALRC has a lot to say about this, because you can tell it upsets them. Let me quote their response in full:

'Many have expressed concern that fair use may harm rights holders because it is uncertain. The ALRC recognises the importance of having copyright exceptions that are certain in scope. This is important for rights holders, as confidence in exploiting their rights underlies incentives to creation. It is also important for users, who should also be confident that they can make new and productive use of copyright material without a licence where this is appropriate.

Concern about uncertainty comes from an important and positive feature of fair use— its flexibility. Fair use differs from most current exceptions to copyright in that it is a broad standard that incorporates principles, rather than a detailed prescriptive rule. Law that incorporates principles or standards is generally more flexible than prescriptive rules, and can adapt to new technologies and services. A fair use exception would not need to be amended to account for the fact that consumers now use tablets and store purchased copies of copyright material in personal digital lockers in the cloud.

Although standards are generally less certain in scope than detailed rules, a clear principled standard is more certain than an unclear complex rule. The Report recommends replacing many complex prescriptive exceptions with one clear and more certain standard—fair use.

The standard recommended by the ALRC is not novel or untested. Fair use builds on Australia’s fair dealing exceptions, it has been applied in US courts for decades, and it is built on common law copyright principles that date back to the eighteenth century. If fair use is uncertain, this does not seem to have greatly inhibited the creation of films, music, books and other material in the world’s largest exporter of cultural goods, the United States'. (Summary Report, p13)

It would be nice if all industry leaders would just take the time to actually read this important and measured report, engage their brains and bring their knowledge and appreciation of these critical issues up to speed.

The future is going to depend on dialogue and cooperation and voluntary licenses negotiated in good faith. Legacy conflicts belong to yesterday.