Contracting out in practice

17.10 In its 2002 report, Copyright and Contract,[4] the Copyright Law Review Committee (CLRC) gathered information about the extent to which contracting out was being used, with a particular emphasis on e-commerce.[5] Information was gathered through submissions in response to the CLRC inquiry, and from a survey of online licence agreements.

17.11 Submissions to the CLRC from copyright owner interests generally argued that there was no conflict between the operation of agreements and the copyright exceptions.[6] In contrast, copyright user interests claimed that agreements that exclude or limit the copyright exceptions were not uncommon, particularly in online trade in copyright materials.[7]

17.12 For example, agreements with online publishing companies may contain clauses that prevent libraries and archives from reproducing and communicating extracts of works as would otherwise be permitted by the library and archives exceptions.Agreements may exclude or limit the fair dealing exceptions, the statutory licence scheme for educational and other institutions, and the exception for the use of copyright materials for the services of the Crown.[8]

17.13 The CLRC confirmed that many of the online licences it had surveyed contained such terms. It noted that uses that were prohibited by the licences included ‘reproducing, making derivative works from, or commercially exploiting the material and communicating, distributing or publishing the material’.[9] Exceptions that were explicitly excluded included the computer programs exceptions and (in one case) exceptions allowing copying for satire or parody under the fair dealing doctrine. Further, many of the agreements examined prohibit the use of even insubstantial portions of material.[10]

17.14 A review of user 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. It found that the ‘market for electronic services is growing rapidly, and 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)’.[11]

17.15 Bargaining outcomes, the review found, are tilted towards rights owners, because ‘fragmented end-users (such as consumers) typically are not in a position to contest the terms of licences offered’.

Even where users should be in position to negotiate, for example in the education, archive and library sectors, there is evidence that statutory limitations and exceptions under copyright law are becoming irrelevant. The reasons are not well understood but competition issues may play a part (with large bundles of rights controlled by few companies).[12]

17.16 In Australia, it has been contended 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’.[13] Many stakeholders submitted that contracting out has continued—and perhaps become more common—since the CLRC reported.[14] The shift to online distribution of copyright materials was identified as a key driver of this trend.[15]

17.17 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’.[16] 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.[17]

17.18 In a submission to this Inquiry, 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’.[18]

17.19 Consistently, 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 Library’s premises. Further, none of the agreements permit the Library 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.[19]

17.20 Other stakeholders also provided examples of contractual terms encountered by Australian libraries that potentially affect the availability of document supply and interlibrary loans.[20]

17.21 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).[21]

17.22 Stakeholders expressed specific concerns about the effect of contractual restrictions on fair dealing with copyright materials. The Australian Broadcasting Corporation (ABC), for example, 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’.[22]

[4] Copyright Law Review Committee, Copyright and Contract (2002).

[5] Ibid, ch 4.

[6] Ibid, 116.

[7] Ibid, 118.

[8] Ibid, ch 4.

[9] Ibid, 129.

[10] Ibid.

[11] M Kretschmer, E Derclaye, F Favale and R Watt, A Review of the Relationship between Copyright and Contract Law for the UK Strategic Advisory Board for Intellectual Property Policy (2010), 4. Similarly, consumer protection legislation is often ignored or hard to enforce—for example, because ‘many online licence agreements are not easily understood, and contain excessive exclusions of liability’.

[12] Ibid, 4.

[13] D Clapperton and S Corones, ‘Unfair Terms in Clickwrap and Other Electronic Contracts’ (2007) 35 Australian Business Law Review 152, 175.

[14] See, eg, ADA and ALCC, Submission 213; Parliamentary Library, Submission 107.

[15] Copyright Advisory Group—Schools, Submission 231; Society of University Lawyers, Submission 158; R Xavier, Submission 146.

[16] ADA and ALCC, Submission 213, citing R Wright, ‘Libraries and Licensing: the eFuture will Need Legal as well as Technical Skills’ (Paper presented at VALA 2012, Melbourne, 9 February 2012).

[17] ADA and ALCC, Submission 213.

[18] R Wright, Submission 167.

[19] National Library of Australia, Submission 218.

[20] ADA and ALCC, Submission 213.

[21] Universities Australia, Submission 246.

[22] Australian Broadcasting Corporation, Submission 210.