Contracting out in practice

20.11 The ALRC did not conduct its own research into the nature or prevalence of contracting out in Australia. However, there is reason to assume that terms contracting out of copyright exceptions are common.

20.12 In 2002, the CLRC reported information about the extent to which contracting out was being used.[6] It observed that agreements with online publishing companies may contain clauses that prevent libraries and archives from reproducing and communicating extracts of works, which would otherwise be permitted by the library and archives exceptions.Agreements may also exclude or limit the fair dealing exceptions, and the statutory licensing schemes for educational and other institutions and the services of the Crown.[7] The CLRC confirmed that many of the online licences it had surveyed involved contracting out of copyright exceptions.[8]

20.13 Academic commentators have suggested that the ‘majority of electronic contracts involving material protected by copyright purport to restrict the uses of that material in ways that conflict with applicable exceptions to copyright, such as fair dealing’.[9]

20.14 Recent research funded by the Australian Research Council is said to indicate that the practice of excluding or limiting exceptions by contract is ‘just as (if not more) prevalent now as it was 10 years ago’.[10] The study, by Robin Wright, found that common contract terms may hinder the ability of libraries to deliver interlibrary loans, reproduce and communicate materials for educational purposes, and prevent researchers or students relying on the fair dealing exceptions.[11]

20.15 In a submission, Wright confirmed that an examination of excerpts from publisher agreements demonstrates that licence agreements include terms that ‘purport to exclude or limit a library’s ability to use the existing Australian copyright exceptions with licensed digital material’.[12]

20.16 In this Inquiry, many stakeholders submitted that contracting out has continued—and perhaps become more common—since the CLRC reported.[13] The shift to online distribution of copyright materials was identified as a key driver of this trend.[14]

20.17 The National Library of Australia stated that only 21% of its licence agreements for subscription databases permit supply of copies to Australian users through the Australian interlibrary loan network, and 57% prohibit access by users outside the NLA’s premises. Further, none of the agreements permit the NLA to supply copies in response to requests from individuals and, therefore, prohibit it from supplying copies that would otherwise be permitted by fair dealing exceptions.[15]

20.18 Other stakeholders provided examples of contractual terms encountered by Australian libraries that potentially affect the availability of document supply and interlibrary loans.[16] For example, contracting out has become an issue for parliamentary libraries, as online information service contracts limit or negate copyright exceptions:

This trend compromises the intended function of the exceptions, which is to provide members of Parliament with unimpeded access to quality information. There is a need for the exceptions to be broadened to provide immunity from infringement when using these services and/or copying from electronic and online services.[17]

20.19 Universities Australia stated that the most common forms of contractual limitations on commercially-published journal content were prohibitions on:

  • use of content in course packs (otherwise permitted by pt VB of the Copyright Act);

  • use of material for interlibrary loans (otherwise permitted by ss 49 and 50);

  • electronic transmission of content between authorised users (otherwise permitted by ss 40 and 41);

  • use of content for the purpose of data mining or text mining; and

  • use other than ‘personal use’ of online broadcast material (otherwise permitted by pt VA).[18]

20.20 Stakeholders expressed concerns about the effect of contractual restrictions on fair dealing with copyright materials. The ABC stated that it is ‘often placed in a worse position for having entered into a contract with a rights holder, where that contract restricts fair dealing, compared with its competitors for those rights, who have no such contract and who can fair deal with that content across platforms’.[19]

20.21 Internationally, a review of contracts conducted for the UK Strategic Advisory Board for Intellectual Property Policy in 2010 looked at empirical evidence from the UK and several other countries. Bargaining outcomes, the review found, are tilted towards rights owners, because consumers ‘typically are not in a position to contest the terms of licences offered’.[20]

20.22 The review found that the market for electronic services is growing rapidly. The review also found that users’ access to copyright content is increasingly governed by contract; and that there was ‘robust evidence that licence agreements for software, digital consumer services and educational content routinely conflict with statutory copyright exceptions (for example regarding back-up copies and archiving)’.[21]