4.1 The ALRC recommends the introduction of a fair use exception into Australian copyright law. This chapter briefly explains what fair use is, and makes the case for enacting fair use in Australia. It sets out some of the important arguments for and against introducing this exception.

4.2 Fair use is a defence to copyright infringement that essentially asks of any particular use: Is this fair? In deciding whether a use is fair, a number of principles, or ‘fairness factors’, must be considered. These include the purpose and character of the use and any harm that might be done to a rights holder’s interests by the use.

4.3 Importantly, fair use differs from most current exceptions to copyright in Australia in that it is a broad standard that incorporates principles, rather than detailed prescriptive rules. Law that incorporates principles or standards is generally more flexible and adaptive than prescriptive rules. Fair use can therefore be applied to new technologies and new uses, without having to wait for consideration by the legislature.

4.4 The factors in the fair use exception ask the right questions of particular uses of copyright material. Does this use unfairly harm a market the rights holder alone should be able to exploit, and so undermine the incentive to create? If so, it is unlikely to be fair. Is this use for an important public purpose, or perhaps for a different purpose than that for which the creator or rights holder intended? If so, the use is unlikely to harm the rights holder and should be permitted, facilitating the public interest in accessing material, encouraging new productive uses, and stimulating competition and innovation.

4.5 Fair use is not a radical exception. It largely codifies the common law, and may be seen as an extension of Australia’s fair dealing exceptions. Guidance on its meaning and application can be found in the case law on fair dealing in Australia, the United Kingdom and other countries with fair dealing exceptions. Arguably more helpful will be case law applying the very similar fair use provision in the United States, and industry guidelines and codes that would be prepared if fair use were enacted.

4.6 Copyright exceptions need to be certain and predictable, in part so that rights holders and users have the confidence to invest in innovation. Although standards may generally be more flexible and less certain than detailed rules, the ALRC considers that a clear and principled standard like fair use is sufficiently certain in scope—and arguably more certain than much of Australia’s highly complex, sometimes nearly indecipherable, Copyright Act.

4.7 Finally, this chapter discusses whether fair use—an exception codified by the US over 30 years ago—is consistent with international law. The ALRC concludes that it is.