4.39 Fair use is a standard, rather than a rule. It requires the consideration of principles or factors in an assessment of fairness, rather than setting out in detail the precise circumstances in which the exception will apply. This makes fair use considerably more flexible and better able to adapt to new technologies and new commercial and consumer practices. It is an important feature and benefit of both fair use and, to a lesser extent, fair dealing exceptions, including the new fair dealing exception recommended in Chapter 6. It is also consistent with the fourth framing principle—‘providing rules that are flexible, clear and adaptive to new technologies’.
4.40 New technologies, services and uses emerge over time—rapidly in the digital environment. Many submissions suggested that a broad, principles-based exception, which employs technology-neutral drafting such as fair use, would be more responsive to rapid technological change and other associated developments than the current specific, closed-list approach to exceptions.
4.41 A technology-neutral open standard such as fair use has the dynamism or agility to respond to ‘future technologies, economies and circumstances—that don’t yet exist, or haven’t yet been foreseen’. That is, fair use may go some way to futureproof the Copyright Act. As the Law Council of Australia saw it, a flexible fair use provision ‘will enable the Act to adapt to changing technologies and uses without the need for legislative intervention’.
4.42 Fair use is also better able to respond to the challenges of convergence. The Convergence Review recommended:
a shift towards principles-based legislation to ensure the policy framework can respond to the future challenges of convergence … [A] principles-based approach would provide increased transparency for industry and users [and] moves away from detailed ‘black-letter law’ regulation, which can quickly become obsolete in a fast-changing converged environment and is open to unforeseen interpretations.
4.43 eBay submitted that a principles-based approach is ‘likely to lessen the need to make ongoing statutory amendments in order to accommodate changing user expectations’. Choice commented similarly:
Fair use is best equipped to address use of works on social media precisely because it is so nuanced. A rigid set of exceptions or limitations would be ill equipped to find the right balance for the various interests at play, and would be likely to age quickly.
4.44 Many stakeholders suggested that specific exceptions will inevitably reflect the circumstances that prevailed at the time of their enactment, while a general exception can respond to a changing environment. Telstra noted:
the current exceptions are generally created in response to existing technologies, economies and circumstances. As a result, they tend to have a narrow ‘patchwork’ application to circumstances existing at the time the exception is introduced.
4.45 Yahoo!7 submitted that ‘the existing exceptions under the Act are no longer sufficient by themselves to protect and support the new services introduced by Internet and technology companies’. For example:
In Australia, the absence of a robust principle of fair use within the existing fair dealing exceptions means that digital platforms offering search tools are not able to provide real time high quality communication, analysis and search services with protection under law.
4.46 Stakeholders were also concerned about the lengthy delay between the emergence of a new use and the legislature’s consideration of the need for a specific exception. At present, ‘each new situation needs to be considered and dealt with in separate amending legislation which usually occurs well after the need is identified’. A copyright exception permitting time shifting was not enacted in Australia until 22 years after time shifting had been found to be fair use in the US. The exception for parody and satire came 12 years later, and for reverse engineering of computer programs, seven years. Electronic Frontiers Australia submitted that the inflexibility of the current purpose-based exceptions, together with the increasingly rapid pace of technological change, ensure that ‘the law now lags years behind the current state of innovation in technology and service delivery’.
4.47 One submission noted that policy makers ‘simply cannot be expected to identify and define ex ante all of the precise circumstances in which an exception should be available’. It was said that no legislature can anticipate or predict the future. Google submitted that ‘innovation and culture are inherently dynamic’ and that ‘you cannot legislate detailed rules to regulate dynamic situations; you can only set forth guiding principles’.
4.48 With a fair use standard, innovation and other new expressive purposes need not wait for Parliament to reconsider the appropriate scope of copyright exceptions. Australian Film/TV Bodies noted that Australia has implemented specific provisions in almost every major policy area resolved by fair use litigation in the US, and suggested that this indicates that the existing provisions are working. However, they did not mention the extensive time lag between the US fair use decisions and the Australian amendments. Fair use will save the legislature from constant law reform to ‘catch up’ with new technologies and uses, although of course the legislature could still act if needed to respond to particular developments.
4.49 Some stakeholders argued that the legislature—and not the judiciary—should determine the scope of the exceptions. They considered that important decisions such as whether a new purpose is fair should be decided by Parliament, because parliamentary processes allow public consideration of community priorities, and create an opportunity for public scrutiny and debate. By contrast, judicial decision making in this context was seen as less democratic, as only the views of the parties are presented to the court, and the ‘economic strength of litigants is unduly significant’. One stakeholder thought that ‘Australian courts will struggle to determine how to give content to an open ended defence’.
4.50 The ALRC agrees that standards do place a greater emphasis on judicial decision making. However, in this area of the law, the better role for Parliament is to set out the principles on which decisions should be made. The application of principles to specific fact situations is the role of the courts. Chapter 5 of this Report discusses how courts will perform this function in a way that contributes to certainty and predictability.
4.51 Some stakeholders queried the argument that fair use provides flexibility to respond to changing conditions. The Viscopy Board stated that copyright law in the US is ‘regularly under review by the legislature in spite of their longstanding fair use provision’. Others said there was no need for greater flexibility, and that more flexibility comes at too high a cost. Some submitted that the existing fair dealing defences were sufficiently flexible to respond to technological change.
4.52 Fair dealing exceptions are generally more flexible than specific prescribed exceptions—like fair use, they need not be confined to particular technologies and they require a consideration of fairness, in light of a set of principles. But fair dealing exceptions, including the new fair dealing exception recommended in this Report as an alternative to fair use, are confined to uses of copyright material for prescribed purposes.
4.53 For many stakeholders, closed-ended fair dealing exceptions are too confined and inflexible. For example, the CSIRO submitted that it was not always clear whether some activities were for ‘research or study’, one of the prescribed fair dealing purposes, and that this can mean
uses that facilitate dissemination and communication of scientific and technical information may be avoided despite there being no or marginal impact on the legitimate interests of a copyright owner. If a more general purpose exception applied this concern may be alleviated, the focus then being on the key issue of the impact of the use on the legitimate interests of the copyright owner.
Rules and standards
4.54 The flexibility of fair use largely comes from the fact that it is a standard, rather than a rule. This distinction between rules and standards is commonly drawn in legal theory. Rules are more specific and prescribed. Standards are more flexible and allow decisions to be made at the time of application, and with respect to a concrete set of facts. Further, ‘standards are often based on concepts that are readily accessible to non-experts’.
4.55 Rules and standards are, however, points on a spectrum. Rules are ‘not infinitely precise, and standards not infinitely vague’. The legal philosopher H L A Hart wrote that rules have ‘a core of certainty and a penumbra of doubt’. The distinction is nevertheless useful.
4.56 Another way of talking about standards is to refer to ‘principles-based’ legislation. In 2002, a study by Australian academic Professor John Braithwaite concluded that, as between principles and rules:
1. When the type of action to be regulated is simple, stable and does not involve huge economic interests, rules tend to regulate with greater certainty than principles.
2. When the type of action to be regulated is complex, changing and involves large economic interests:
(a) Principles tend to regulate with greater certainty than rules;
(b) Binding principles backing non-binding rules tend to regulate with greater certainty than principles alone;
(c) Binding principles backing non-binding rules are more certain still if they are embedded in institutions of regulatory conversation that foster shared responsibilities.
4.57 Standards are becoming more common in Australian law, including, for example, in consumer protection and privacy legislation. As Universities Australia submitted, there is ‘nothing new or novel about courts construing open-ended standards such as fairness’.
4.58 The well-known prohibition on ‘misleading or deceptive conduct’, previously in s 52 of the Trade Practices Act 1974 (Cth) and now contained in s 18 of the Australian Consumer Law, is an example of this kind of legislative drafting—that is, providing a broad standard that can be applied flexibly to a multitude of possible situations.
4.59 Similarly, the unfair contracts provisions of the Australian Consumer Law provide a simple formulation of when a term of a consumer contract is ‘unfair’. Under that law, a term is unfair when:
(a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
(b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
(c) it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
4.60 Such standards are sometimes accompanied by factors a court may, or must, take into account in applying the standard, or examples of when the standard may have been breached, or complied with.
4.61 Again, the Australian Consumer Law provides illustrations of these approaches. The unconscionable conduct provisions contain an extensive, but non-exhaustive, list of factors to which a court may have regard in determining unconscionable conduct. The unfair contracts provisions contain examples of unfair terms.
4.62 In another field, the Privacy Act 1988 (Cth) is an example of principles-based legislation. The National Privacy Principles and Information Privacy Principles provide the basis for regulating the handling of personal information by private sector organisations and public sector agencies. The principles provide broad standards, such as obligations: not to collect personal information unless the information is ‘necessary’; not to use personal information other than for the ‘primary purpose’ of collection; and to take ‘reasonable steps’ to protect personal information from misuse.
4.63 Principles-based regulation was considered the best approach to regulating privacy for several reasons, including that principles have greater flexibility in comparison to rules. That is, being high-level, technology-neutral and generally non-prescriptive, principles are capable of application to all agencies and organisations subject to the Privacy Act, and to the myriad of ways personal information is handled in Australia. Further, principles allow for a greater degree of futureproofing and enable the regulatory system to respond to new issues as they arise without having to create new rules. In the ALRC’s view, these rationales can also be seen as applying to the concept of fair use in copyright law.
4.64 The introduction of fair use is consistent with these current approaches to best practice principles-based regulation.
See, eg, Internet Industry Association, Submission 744; NSW Government and Art Gallery of NSW, Submission 740; Optus, Submission 725; ACCC, Submission 658; Telstra Corporation Limited, Submission 602; Google, Submission 600; BSA, Submission 598; Intellectual Property Committee, Law Council of Australia, Submission 284; Yahoo!7, Submission 276.
Telstra Corporation Limited, Submission 222. See also R Burrell, M Handler, E Hudson, and K Weatherall, Submission 278; Law Institute of Victoria, Submission 198.
Copyright Advisory Group—Schools, Submission 231; Google, Submission 217; ABC, Submission 210.
Intellectual Property Committee, Law Council of Australia, Submission 284; Law Council of Australia, Submission 263. See also Choice, Submission 745; R Burrell, M Handler, E Hudson, and K Weatherall, Submission 716.
Australian Government Convergence Review, Convergence Review Final Report (2012), Executive Summary, xii.
eBay, Submission 751.
Choice, Submission 745.
Telstra Corporation Limited, Submission 222.
Yahoo!7, Submission 276.
For example, Intellectual Property Committee, Law Council of Australia, Submission 284; Yahoo!7, Submission 276; Law Council of Australia, Submission 263; R Giblin, Submission 251; Universities Australia, Submission 246; Google, Submission 217.
Intellectual Property Committee, Law Council of Australia, Submission 284; Law Council of Australia, Submission 263.
Time shifting: Sony Corp of America v Universal City Studios, Inc (1984) 464 US 417 and Copyright Act 1968 (Cth) s 110AA; parody: Campbell v Acuff-Rose Music Inc (1994) 510 US 569 and Copyright Act 1968 (Cth) ss 41A, 103AA; reverse engineering: Sega Enterprises v Accolade Inc (1992) 977 F.2d 1510 and Copyright Act 1968 (Cth) s 47D. See further R Giblin, Submission 251.
EFA, Submission 258.
R Burrell, M Handler, E Hudson, and K Weatherall, Submission 278.
Google, Submission 217. See also Yahoo!7, Submission 276.
Australian Film/TV Bodies, Submission 739.
See, eg, Free TV Australia, Submission 865; ABC, Submission 775; ARIA, Submission 731; Copyright Agency, Submission 727; Cricket Australia, Submission 700; Australian Institute of Architects, Submission 678; Australian Copyright Council, Submission 654; Screenrights, Submission 646; APRA/AMCOS, Submission 247; Australian Publishers Association, Submission 225; NSW Young Lawyers, Submission 195.
ABC, Submission 775; Australian Institute of Architects, Submission 678.
ABC, Submission 775; Arts Law Centre of Australia, Submission 706; Screenrights, Submission 646.
Australian Institute of Architects, Submission 678.
Australian Film/TV Bodies, Submission 739. See also ARIA, Submission 731.
Foxtel, Submission 748; Australian Education Union, Submission 722; Queensland Law Society, Submission 644; Springer Science and Business Media, Submission 639; Viscopy Board, Submission 638.
For example, Viscopy Board, Submission 638.
APRA/AMCOS, Submission 664.
CSIRO, Submission 242.
F Schauer, ‘The Convergence of Rules and Standards’ (2003) (3) New Zealand Law Review 303.
E Hudson, ‘Implementing Fair Use in Copyright Law’ (2013) 25 Intellectual Property Journal 201, 220.
F Schauer, ‘The Convergence of Rules and Standards’ (2003) (3) New Zealand Law Review 303, 309.
H Hart, The Concept of Law (3rd ed, 2012) 123.
See also E Hudson, ‘Implementing Fair Use in Copyright Law’ (2013) 25 Intellectual Property Journal 201 who uses a standards and rules analysis to revisit some of the claims about the merits of different styles of drafting of copyright exceptions.
J Braithwaite, ‘Rules and Principles: A Theory of Legal Certainty’ (2002) 27 Australian Journal of Legal Philosophy 47, 75.