12.17 In other jurisdictions, a number of different models exist, or have been proposed to deal with orphan works. The ALRC has been informed by these models in formulating its proposal.
Limitations on remedies after diligent search
12.18 In 2006, the US Copyright Office’s Orphan Works Report recommended limitations on statutory remedies against those who made use of an orphan work after having conducted a good faith, ‘reasonably diligent search’. This is broadly in line with the ALRC’s proposals later in this chapter.
12.19 The Copyright Office did not seek to define what ought to be a ‘reasonably diligent search’. Rather, it acknowledged that the search standard was ‘very general’ and favoured ‘the development of guidelines’ by users and stakeholders. It was argued that a truly ‘ad hoc’ system—where users simply conduct a reasonable search and then commence use, without formality—is most efficient.
12.20 Where a user had conducted a reasonably diligent search, the liability for infringement is limited to ‘reasonable compensation’, rather than statutory damages. In most cases, reasonable compensation would be the amount a user would have paid to the owner had they engaged in negotiations before the infringing use commenced. The term ‘reasonable’ imports the notion that some uses may attract a zero or low royalty payment.
12.21 No relief is available for non-commercial uses of orphan works, provided that the user ceased using the work expeditiously upon receiving an infringement notice. Future uses of the work would be the subject of negotiations between the parties.
12.22 It was recommended that injunctive relief be limited in two ways. First, where a user has made a derivative use of an orphan work that also includes ‘substantial expression’ of the user—such as incorporating it into another work—a court would not restrain its use. Rather, the user is to pay ‘reasonable compensation’ for use of the orphan work, and is required to adequately attribute the work. If a work is used without transforming the content, a full injunction is still available, but a court would take into account and accommodate the interest of the user that might be harmed by an injunction.
12.23 The Office emphasised that an orphan works solution should not act as a replacement or substitute for fair use:
The user of an orphan work should consider whether her use might fall within fair use, or curtailing her use in a way to have it more clearly fall within the exemption, in addition to or in lieu of reliance on any orphan works provision.
12.24 Part of the reasoning for a legislative solution was that many stakeholders to that inquiry expressed a view that the ‘uncertain nature of fair use and the idea/expression dichotomy’ contributes to a user’s hesitation in using orphan works, even in cases that seem to ‘fall squarely within classic fair use situations’.
12.25 Despite a number of Bills before Congress to implement the Copyright Office’s proposals, these were not passed. The drafters of the Bills grappled with particular issues, including: recognising and accounting for the concerns of photographers; the contours of a ‘reasonably diligent search’ and the role of searchable electronic databases.
12.26 In late 2012, the Copyright Office launched a further inquiry into orphan works, seeking to find answers regarding the ‘current state of play for orphan works’ and ‘what has changed in the legal and business environments in the last few years that might be relevant to a resolution of the problem and what additional legislative, regulatory, or voluntary solutions deserve deliberation’.
12.27 Submissions to date have emphasised that a ‘reasonably diligent search’ is the appropriate test to determine whether the user of an orphan work is entitled to protection. Many stakeholders have also called for the establishment of a copyright register, which may help identify owners of orphan works.
European Directive on certain permitted uses of orphan works
12.28 In October 2012, the European Union adopted its Directive on Certain Permitted Uses of Orphan Works. Member states are required to implement the Directive in national legislation by 29 October 2014. In short, the Directive allows publicly accessible cultural institutions to reproduce and communicate orphan works in furtherance of their public interest mission. The Directive only applies in respect of certain types of work held by institutions: text; audiovisual and cinematographic works; and phonograms that are first published or broadcast within an EU member state. Photographs are only covered to the extent that they are incorporated into other works.
12.29 Orphan works can only be used after the institution conducts a ‘reasonably diligent search’. The Directive leaves discretion for member states to determine the sources that are appropriate to include in diligent search criteria for each category of work. It also leaves open the possibility to allow external organisations to conduct a diligent search for a fee. 
12.30 Importantly, the Directive establishes a central EU orphan works register and requires reciprocal recognition of orphan work status across member states. Results of a diligent search are recorded and provided to a competent national authority and made available on a publicly accessible online database to be established and managed by the European Commission’s Office for Harmonization in the Internal Market.
12.31 The Directive directs that rights holder should, at any time, be able to put an end to the orphan work status insofar as their rights are concerned. Fair compensation is then due to the rights holder. Again, the member states retain the discretion to determine the circumstances under which compensation may be organised.
12.32 Since 1998, users in Canada can petition the Copyright Board of Canada for a non-exclusive licence to use an orphan work, after ‘reasonable efforts’ have been made to locate the copyright owner. The orphan work must be one that is published or fixed.
12.33 The Board works closely with the Canadian Copyright Licensing Agency (CCLA) in setting the royalty fee and the terms and conditions of the licence. Royalties collected are held in a fund for five years after the expiration of the licence for collection by the copyright owner. If the royalty is not collected, the Board will allow the CCLA to dispose of the fee to its members as it sees fit. Since it was enacted in 1998, the Board has opened 411 files relating to a total of 12,640 orphan works. Similar systems are in place in Japan, South Korea, and India.
12.34 In the UK, the Hargreaves Review recommended that the government should legislate to enable clearance procedures for use of individual works, based upon a diligent search. In response, the UK government announced that it would introduce legislation to enable the use of orphan works after a diligent search confirmed by an independent authorising body. The proposal is similar to the Canadian model.
12.35 Passage of the Enterprise and Regulatory Reform Act 2013 (UK) will allow an independent body to license, for commercial and non-commercial use, individual orphan works, subject to a diligent search.
12.36 The regulations are to provide that, for a work to qualify as an orphan work, ‘it is a requirement that the owner of copyright in it has not been found after a diligent search made in accordance with the regulations’. The Intellectual Property Office argued that allowing persons to obtain permission to use orphan works after up-front payment and following a diligent search:
should enable the use of orphan works; reduce legal uncertainty for users of orphan works; ensure that rights holders can see what content is being used; and give returning rights holders easy access to any fees that have been paid.
12.37 It is envisaged that the independent body would maintain a registry of orphan works, set fees, levy fees, approve third parties who wish to use the orphan works, ensure that diligent searches are undertaken and approve individual cases. The independent body will not validate individual diligent searches. Rather, it ‘would regularly test the quality of searching and the methods of accredited institutions through a sampling approach—where they take a sample of diligent searches to ensure that the quality of the search is sufficient’. The estimated cost of setting up such a scheme is said to be between £2.5m and £10.5m.
12.38 Opposition to the legislative changes have come from a range of actors, most notably from the photography industry. For example, a briefing paper signed by 70 organisations representing photographers argued that under the scheme proposed, photographers’ livelihoods will be jeopardised because of the ‘de facto standard rate set by those schemes for the use of particular types of works, and it will be more difficult for individuals to negotiate higher rates where the quality and nature of their work justifies it’.
12.39 In Australia, copyright academics Professors David Brennan and Michael Fraser have proposed a ‘non-commercial use exception for natural persons using unpublished subject matter derived from lawfully obtained material’. The proposed exception would apply where the relevant copyright owner is not able to be located after a ‘diligent search’. A similar suggestion has been proposed by the Copyright Council Expert’s Group.
12.40 Brennan and Fraser also propose a broader exception for published material where there are missing owners. The model is akin to a centralised licensing system:
A ‘diligent search’ must be conducted and then a notice must be lodged with a declared collecting society. Once accepted, the work would be placed on an orphan works register. If an owner comes forward within three months, no exception would apply in favour of the user.
If the copyright owner does not present within three months, but supplies a warranty of ownership to the collecting society within three years, the remedies available to the owner are limited in the event that an action is brought against the user.
If the copyright owner does not supply a warranty to the collecting society within the three years, the owner’s sole enforcement rights would be through a compulsory licence administered by the collecting society.
12.41 The proposed exception under this model seeks to balance user accountability, predictability for users and fairness to rights holders. This model received some support from stakeholders.
Extended collective licensing
12.42 Several Nordic countries use extended collective licensing schemes that allow users to pay licence fees to a collecting society comprising a ‘substantial number’ of rights holders of a certain type of works. A feature of extended collective licensing schemes is that the collecting societies are authorised by statute to grant licences on behalf of the copyright owner, even where the owner is not a member of the collective. Some rules allow copyright owners the option to ‘opt-out’ of the system and instead deal directly with licensees.
12.43 Under extended collective licensing schemes, a licence is granted for specific purposes and gives users a degree of certainty that their use will not risk infringement. However, to the extent that some owners have opted out, the system does not provide complete certainty to prospective users.
12.44 In the UK, the Enterprise and Regulatory Reform Act will also provide for voluntary extended collective licensing. It will allow appointed authorised licensing bodies, for certain class of materials, to grant copyright licences in respect of works in which copyright is not owned by the body or a person on whose behalf the body acts. The regulations will provide an ‘opt out’ provision for the copyright owner.
 United States Copyright Office, Report on Orphan Works (2006), 92.
 Ibid, 108−10.
 Ibid, 113.
 In cases of infringement, US courts may award statutory damages ranging from $750 to $30,000 in respect of any one work: Copyright Act 1976 (US) s 504(c)(1).
 United States Copyright Office, Report on Orphan Works (2006), 116. It was suggested that the onus is on the owner to demonstrate that the work had a fair ‘market value’. It was not enough for the owner to assert the amount it would have have been licensed for ex-post.
 Under 17 USC § 504 (c) a court can, instead of awarding actual damages, award statutory damages that can range between $750 to $ 30,000 in respect of any one work.
 The term ‘significant expression’ is intended to exclude situations where the work is simply put into a collection of other works, like an electronic database: United States Copyright Office, Report on Orphan Works (2006), 120.
 Ibid, 119–121.
 United States Copyright Office, Report on Orphan Works (2006), 120.
 Ibid, 56.
 Ibid, 57.
 These included: Orphan Works Act of 2006, H.R 5439, 109th Cong. (2006); Orphan Works Act of 2008, H.R. 5589, 110th Cong (2008); and Shawn-Bentley Orphan Works Act of 2008 S. 2193 (2008).
 For example, the Orphan Works Act of 2006 required users to document their search, and proposed that that the Copyright Office set out authoritative information on search tools and that legislation should list indicative factors to guide the search. See, B Yeh, CRS Report for Congress: “Orphan Works in Copyright Law” (2008).
 Federal Register 6455 Vol 77, No 204 (Monday October 22).
Directive 2012/28 of the European Parliament and of the Council of 25 October 2012 on Certain Permitted Uses of Orphan Works arts 2(1) & 3(1). These public institutions include libraries, educational establishments and museums, archives, film and audio heritage institutions, and public service broadcasting institutions.
 Ibid art 1.
 Ibid art 3(2) .
 Ibid art 3(1) and recital 13.
 Ibid art 5—organisations are to also provide information about the use the organisation is to make of the orphan work, any change to the orphan work status and relevant contact information of the organisations concerned.
 Ibid art 6(5).
Copyright Act 1985 (Can)s77.
 Ibid. The Copyright Act 1985 (Can)requires that orphan works and sound recordings be ‘published’ and performances and communication signals to be ‘fixed’.
Copyright Act 1985 (Can) s 77(2).
 Ibid s 77(3).
 See J de Beer and M Bouchard, Canda’s “Orphan Works” Regime: Unlocatable Copyright Owners and the Copyright Board (2009), 31–32.
 SeeCopyright Act 1970 (Japan) s 67; Copyright Act 1967 (South Korea) s 47; Copyright Act 1957 (India) s 31(A).
 I Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth (2011), 39–40.
 UK Government, Government Policy Statement: Consultation on Modernising Copyright (2012), 8.
 See Enterprise and Regulatory Reform Act 2013 (UK) pt 6. A new s 116A will be inserted into the Copyright, Designs and Patents Act 1988 (UK) that allows the Secretary to approve an independent body to license orphan works.
Copyright, Designs and Patents Act 1988 (UK).
 Intellectual Property Office, Orphan Works Impact Statement: BIS 1063 (2012), 3.
 Ibid, 5.
 Ibid, 6. Equivalent to $3.9m—$16.3m (at 21 May 2013).
 British Journal of Photography, Photography Industry Shows Mass Opposition to Government Copyright Changes (2013) <www.bjp-online.com/> at 25 February 2013.
 Ibid. See also Stop43 and others, Briefing for Members of House of Lords Second Reading Debate Enterprise & Regulatory Reform Bill (2012).
 D Brennan and M Fraser, The Use of Subject Matter with Missing Owners—Australian Copyright Policy Options (2012), 7.
 Ibid. The authors also argue that the exception should apply only to economic rights and not moral rights, or rights found in other legal regimes.
 Copyright Council Expert Group, Directions in Copyright Reform in Australia (2011), 8–9.
 D Brennan and M Fraser, The Use of Subject Matter with Missing Owners—Australian Copyright Policy Options (2012), 9–12.
 Screenrights, Submission 215; APRA/AMCOS, Submission 247. However, APRA/AMCOS did not agree that the model should extend to intermediaries or service providers.
 See J Axhamn and L Guibault, Cross-broder extended collective licensing: a solution to online dissemination of Europe’s cultural heritage? (2011), prepared for EuropeanaConnect, 25–59 for an outline of extended collective licensing in Nordic Countries.
 For example, The Consolidated Act on Copyright 2010 (Denmark) ss 51(i)–(iii) prescribes that remuneration under an ECL extends to unrepresented right holders who are: not members of the collective, foreign rights holders and dead authors.
 For example, The Consolidated Act on Copyright 2010 (Denmark) ss 24A, 30, 30A, 35, 50.