The changed environment

4.28 Some stakeholders submitted that nothing had changed since 1996–98, 2000 and 2005–06 when the CLRC, the Ergas Committee and the AGD were considering, respectively, the issue of a fair use-style exception. However, the ALRC considers that developments in recent years provide further evidence in support of Australia introducing fair use.

4.29 The most important change is the development of the digital economy. There has been a noticeable degree of change with respect to digital technology, including increasing convergence of media and platforms. There has also been a significant move from rule-directed legislation to principles-based legislation in Australia. These changes are discussed further below.

4.30 The opportunities made possible by the digital economy provide further evidence in favour of fair use. In 2013, a report by PricewaterhouseCoopers (PwC) identified the possibilities for technology start-ups contributing 4% of the nation’s gross domestic product ($109 billion) and up to 540,000 jobs by 2033, with the right fostering and ‘eco system’ in which ‘culture skills and entrepreneurship’ would be essential.[27] PwC stated that Australia has a ‘considerably higher “fear of failure” rate than nations such as the US and Canada’ and that an optimum environment for innovation includes appropriate copyright law.[28]

4.31 Another change since earlier reviews is that successive governments have given an increased focus to the use of competition to encourage microeconomic reform and to enable the Australian economy to blossom in a more open world economy.[29] For example, creative industries protected by copyright law have experienced many changes designed to enhance competition, including: freeing up the market for books, sound recordings, computer programs and other copyright material; removing parallel importing restrictions based only on labels of goods; the ‘Digital Agenda’ amendments; the introduction of moral rights and allowing decompilation of computer programs for the purposes of interoperability. Stakeholders in this Inquiry have demonstrated their capacity to respond to change: to develop and adapt in the digital economy.[30]

4.32 The ALRC considers there is now more of an appetite for a broad, flexible exception to copyright. Since earlier reviews, there are new understandings of the interpretation of the three-step test. As one submission remarked, many leading copyright experts support ‘an open-textured understanding of the three-step test’ and ‘the compatibility of open-ended drafting with the three-step test’.[31]

4.33 Finally, the ALRC considers that the potential benefits of introducing fair use now outweigh the transaction costs.

[27] PricewaterhouseCoopers, The Startup Economy: How to Support Start-Ups and Accelerate Australian Innovation (2013). See, also, C Griffith, ‘Entrepreneurs “need a leg up”’, The Australian, 23 April 2013, 29.

[28] PricewaterhouseCoopers, The Startup Economy: How to Support Start-Ups and Accelerate Australian Innovation (2013), 13. The report did not suggest any particular changes to copyright law.

[29] This process began in October 1992: Independent Committee of Inquiry into Competition Policy in Australia, National Competition Policy (1993) (known as the ‘Hilmer Report’). The Ergas Committee undertook the specialist review of intellectual property under these principles: Intellectual Property and Competition Review Committee, Review of Intellectual Property Legislation under the Competition Principles Agreement (2000).

[30] See, eg, News Limited has announced that it will introduce a metered digital subscription model for its mastheads: D Davidson, ‘Demand for paid digital content “at tipping point”’, The Weekend Australian, 11–12 May 2013, 23.

[31] R Burrell and others, Submission 278, citing Lionel Bently, William Cornish, Graeme Dinwoodie, Josef Drexl, Christophe Geiger, Jonathan Griffiths, Reto Hilty, Bernt Hugenholtz, Annette Kur, Martin Senftleben and Uma Suthersanen.