Is there a need for reform?

17.61 There are differing views on the extent to which the general law and legislation outside the Copyright Act are adequate to constrain contracting out, at least where agreements are governed by Australian law.

17.62 Some stakeholders suggested that existing competition and consumer protection laws are adequate to address any problems for copyright users attributable to contracting out.[82] The APA, for example, submitted that, ‘to the extent that an imbalance in negotiating power leads to undesirable outcomes, then competition and consumer laws are the appropriate means of redressing any contractual imbalance—not blanket prohibitions on such contracts under the Act’.[83]

17.63 There remain concerns, however, that copyright users are not generally in a good position to negotiate the terms on which copyright materials are licensed. Even large institutions may argue that negotiation is ‘so resource-intensive as to be effectively impossible as a general rule’; and there may be no choice of supplier.[84]

17.64 Different considerations may apply to mass-market licences as opposed to negotiated contracts.[85] The Parliamentary Library noted that, ‘in the current environment of online mass-market agreements, such negotiations are often not practically possible’.[86]

17.65 Stakeholders also referred to legal uncertainty about contracting out and its effects. The Parliamentary Library noted that uncertainty about whether contracts may ‘limit or exclude the operation of the parliamentary library exceptions in the Act’ meant that the best option is to negotiate contract terms that specifically permit the Library to exercise its full rights under the Copyright Act.[87]

17.66 Civil Liberties Australia observed that, while doubts remain about the enforceability of contracting out, this legal uncertainty does not prevent ‘deployment and uptake in practice’ of such terms or their ability to regulate industry behaviour.[88]

17.67 The UK Hargreaves Review provided one illustration of this effect in observing that it becomes very difficult to give clear guidance to users where an institution has different contracts with a number of providers, which override different exceptions. The report stated that often ‘the result will be that, for legal certainty, the institution will restrict access to the most restrictive set of terms, significantly reducing the provisions for use established by law’.[89]

17.68 In addition to suggesting that contracting out should be unenforceable,[90] or generally unenforceable,[91] stakeholders who favoured limitations on contracting out proposed a range of approaches to reform.

17.69 Some expressly supported the CLRC’s recommendations[92] or reform that, in effect, follows the CLRC approach. For example, the Arts Law Centre submitted that the Copyright Act should be amended to prevent contracting out of copyright exceptions that have ‘a strong public policy basis: research or study; criticism or review; parody or satire; and reporting news’.[93]

17.70 Wright suggested that contracting out of the educational instruction exception, the statutory educational licences, the libraries and archives exceptions and ‘any fair dealing or fair use exceptions or any future exceptions intended to provide similar public benefits’, should be prohibited.[94]

17.71 The Australian Digital Alliance and Australian Libraries Copyright Committee (ADA/ALCC) highlighted the importance of protecting exceptions allowing personal or social online use, transformative use, use of orphan works, and uses which ‘do not trade on the underlying creative and expressive purpose of the work’.[95]

17.72 The ADA and ALCC noted that the CLRC review did not recommend that any educational exceptions be mandated. They submitted that, given the use of digital materials in schools has expanded since the CLRC report, which makes educational copying exceptions crucial for educational services, ‘any existing or proposed educational copying exceptions should also be protected from override by contract’.[96]

17.73 In addition, some stakeholders submitted specifically that, if the ALRC were to recommend a new general fair use exception, contracting out from that exception should also be prohibited.[97] Stakeholders, including those who did not favour legislative limitations on contracting out, also made suggestions on the desirable scope of such limitations.

17.74 The Australian Copyright Council referred to the need to distinguish between contractual terms designed to protect the integrity of the work or the owner’s commercial interests from other types of restrictions—such as a restriction purporting to exclude fair dealing for judicial proceedings.[98] This distinction, it suggested, could provide ‘a helpful paradigm for looking at freedom to contract and copyright policy in the digital economy’. That is, prohibitions on contracting out should only be considered where ‘the exception in question serves a broad, public policy purpose’.[99]

17.75 The APA submitted that the ALRC should only recommend limitations on contracting out if there is empirical evidence that ‘a fundamental societal interest is in practice being eroded or removed through contract’ and that this has become an ‘entrenched problem’.[100] ARIA cautioned that, should evidence establish abuse of contract terms, any prohibition on contracting out should be ‘drafted very narrowly to address that issue only to avoid any chilling effect on the development of new business models’.[101]

17.76 Civil Liberties Australia suggested that a prohibition could apply initially to consumers, sole traders and small businesses engaged in trade or commerce.[102] Similarly, Copyright Agency/Viscopy suggested that any prohibition should only apply to private uses by individuals.[103]

17.77 The ACCC stated that the exemption for copyright licensing from prohibitions on restrictive trade practices in s 51(3) of the Competition and Consumer Act should be repealed. In its view, such a repeal would ‘not lead to an erosion of the rights created through IP laws’.[104]

[82] John Wiley & Sons, Submission 239; Australian Publishers Association, Submission 225; AAP, Submission 206; IASTMP, Submission 200.

[83] Australian Publishers Association, Submission 225.

[84] UK Government, Modernising Copyright: A Modern, Robust and Flexible Framework (2012), 17.

[85] Australian Copyright Council, Submission 219.

[86] Parliamentary Library, Submission 107.

[87] Ibid.

[88] Civil Liberties Australia, Submission 139.

[89] I Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth (2011), 51.

[90] Copyright Advisory Group—Schools, Submission 231; Pirate Party Australia, Submission 223; Australian Broadcasting Corporation, Submission 210; R Xavier, Submission 146.

[91] K Bowrey, Submission 94.

[92] Universities Australia, Submission 246; Pirate Party Australia, Submission 223; ADA and ALCC, Submission 213; Civil Liberties Australia, Submission 139.

[93] Arts Law Centre of Australia, Submission 171.

[94] R Wright, Submission 167.

[95] ADA and ALCC, Submission 213.

[96] Ibid.

[97] EFA, Submission 258; ADA and ALCC, Submission 213.

[98] Referring to J Carter, E Peden, K Stammer ‘Contractual Restrictions and Rights Under Copyright Legislation’ (2007) 23 Journal of Contract Law 32, 34.

[99] Australian Copyright Council, Submission 219.

[100] Australian Publishers Association, Submission 225.

[101] ARIA, Submission 241. Also CSIRO, Submission 242.

[102] Civil Liberties Australia, Submission 139.

[103] Copyright Agency/Viscopy, Submission 249.

[104] ACCC, Submission 165.