5.43 The fair dealing exceptions, including those proposed in this Discussion Paper, such as ‘fair dealing for private and domestic use’, are less flexible and less well-suited to the digital age than a general fair use exception. Importantly, with the fair dealing exceptions, the permitted uses are confined to the prescribed purposes. If a given use is for some other ancillary purpose, the fair dealing exceptions will not apply, and the question of whether the use is fair will not even be asked.
5.44 However, it would seem preferable at least to consider whether any particular use is fair, rather than automatically excluding uses not for prescribed purposes.
5.45 Some extra flexibility might be found in the new fair dealing exceptions proposed in this Discussion Paper (that is, proposed as alternatives to the ALRC’s preferred exception, fair use). These alternative exceptions would at least expand the number of prescribed purposes or categories of use that may be considered under a fairness exception. However, many of the uses of copyright material discussed in this chapter are unlikely to be fair dealing for these or any of the other prescribed purposes in the fair dealing provisions.
5.46 To say that these uses should at least be considered under the fair use exception is not to say the uses would be fair. But copyright law that is conducive to new and innovative services and technologies should at least allow for the question of fairness to be asked.
5.47 Some have suggested that the Copyright Act should entrench strict technology-neutral exceptions. If an exception now allows users to make copies in their homes, some argue, then it should allow the copies to be made remotely using new technologies, and it should probably allow others to make the copies for them.
5.48 Others might respond that consumers should not be free even to store their copies on remote servers operated by others, and if a third party appears to be profiting from making the copy, then the third party service should pay the rights holder for the use.
5.49 Some copying by third parties is unlikely to harm the rights holders’ market, and may help develop new markets for rights holders to exploit. Prohibiting such unlicensed copying through overly confined exceptions, even if technology neutral, may inhibit the development of the digital economy.
5.50 Some of these third party uses are also ‘transformative and productive’, to draw on the language in US case law discussing the first fairness factor. The first fairness factor to be considered in determining fair use, under the exception proposed by the ALRC and under the US provision, is the purpose and character of the use. In considering this, US courts often ask whether the use is transformative or productive. ‘A transformative or productive use is one where the defendant has created something new, repurposed the original work, or otherwise added value’. A court asks
whether the new work ‘merely supersedes the objects’ of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message … in other words, whether and to what extent the new work is transformative.
5.51 Prescriptively confining Australian copyright exceptions to particular purposes may deny Australia such transformative and productive new technologies and services. The fair use exception asks the right questions of new business models that use copyright material.