20.54 In the Discussion Paper, the ALRC proposed that limitations on contracting out should apply to the exceptions for libraries and archives, and the fair use or fair dealing exceptions, only to the extent these exceptions apply to the use of material for research or study, criticism or review, parody or satire, reporting news, or quotation.
20.55 Essentially, if a fair use exception were introduced, the proposed limitations on contracting out would have applied to some, but not all, fair uses. That is, the proposal would have created a ‘hierarchy’ of fair use, for the purposes of limiting contracting out.
20.56 The rationale for taking this approach was that while the libraries and archives exceptions and fair dealing exceptions promote important public interests, any broader limitation on contracting out—for example, extending to all fair uses—would not be practical or beneficial.
20.57 While this approach was welcomed by some stakeholders, others who favoured limitations on contracting out, criticised the proposed hierarchy of limitations in relation to fair use, or otherwise considered that the limitations did not extend far enough.
20.58 The ADA and ALCC strongly supported limitations on contracting out, but raised detailed concerns about distinguishing between categories of fair use for this purpose. These included concerns that the ALRC proposal would:
be unworkable in practice because of the difficulties involved in differentiating between illustrative purposes, because many uses have multiple purposes (for example, study and education) and other uncertainties concerning what uses would be covered;
undermine the operation and rationale of the fair use exception, by introducing an emphasis on purpose rather than fairness—that is, limits on contracting out would depend on whether a use falls within a particular illustrative purpose, and not on whether use is fair;
be contrary to public policy, because protecting illustrative purposes that align with the current fair dealing provisions, at the expense of the other illustrative purposes, jeopardises public interests such as education and public administration; and
undermine any attempt to ‘future-proof’ the Copyright Act, because new uses and markets may not be able to develop if constrained by contract.
20.59 A particular concern expressed by stakeholders was that any division of illustrative purposes risks creating a presumption that some illustrative purposes are more likely to be fair use than others, (which would be contrary to the ALRC’s intention).
20.60 Google expressed concern that purposes considered ‘non-core’ to the public interest may come to be seen as more presumptively fair than those that are not. The Communications Alliance objected to what it characterised as a situation where ‘old media’ uses—such as criticism or review and reporting news—would, in effect, be ‘quarantined while new uses which are just as critical from a public interest perspective will be considered as second tier’.
20.61 CAG Schools had particular concerns about contracting out and educational uses. It submitted that, as a matter of public policy, treating education as a ‘non-core’ fair use would be ‘at odds with the universal acknowledgement of the role of the education sector in advancing the public interest’. Further, it considered ‘any attempt to divorce the public interest in education from the public interest in libraries, and in research and study’ to be highly artificial.
20.62 More generally, CAG Schools submitted that the contracting out proposal would ‘undermine the flexibility and balancing of interests’ sought by the ALRC. It considered that the proposal would enable rights holders, not Parliament, to set the scope of fair use for ‘non-core’ illustrative purposes.
20.64 The ADA and ALCC, for example, proposed that ‘the specific library and archive exceptions and fair use in its entirety [should be] protected from contracting out’. Limitations on contracting out were justified on the basis that the ALRC’s reform proposals ‘describe a cohesive and balanced copyright system, offering protection and incentives to users and creators of content’ and, therefore, it is ‘important that that balance is preserved and not skewed by contractual arrangements’.
20.65 There may also be a competition policy rationale for broader limitations on contracting out. The ACCC advised:
A fair use exception should properly reflect a cost-benefit framework for copyright protection and seek to address inefficient transaction costs and the potential for the extent and use of the rights conferred by copyright to restrict competition and create market power. In such circumstances, the ACCC considers that it necessarily follows that contracting out is more likely to be economically detrimental than beneficial.
20.66 CAG Schools submitted that limitations on contracting out should extend to all copyright exceptions. The effect of a such a statutory limitation should be to ensure that ‘contracts cannot be used to automatically rule out reliance on fair dealing’. However, contractual terms that purport to restrict or prevent certain uses should remain relevant to an analysis of fairness. Dr Rebecca Giblin also considered that a determination of fair use should depend ‘upon consideration of all relevant factors, including any public interest considerations and the precise terms of the licence’.
20.67 Commonwealth and state parliamentary libraries submitted that there should be no contracting out of exceptions applying to their operations.
20.68 Given the importance of the public interests served by copyright exceptions and the ease with which exceptions can be overridden by contract, Dr Giblin stated that broader limitations on contracting out should be considered. She suggested that it should be made explicit that, in addition to the categories of exception covered by the ALRC’s proposal, contracting out will not be enforceable where it is ‘against the public interest’.
20.69 The Law Council expressed concerns about a ‘blanket limitation’ on contracting out and submitted that the question should be ‘whether a term of an agreement that purports to exclude or limit the operation of the relevant copyright exception is fair and reasonable in all of the circumstances’.