8.64 Australian copyright law should recognise that the reproduction of copyright material is a necessary part of the effective functioning of technology in the digital environment. The fact that copyright material has been copied—for example by a search engine—should not, of itself, provide a full answer to the question of infringement. Copyright exists to protect the expression of ideas and facts, rather than the facts themselves.
8.65 The ALRC proposes that the fair use exception proposed in Chapter 4 should be applied when determining whether uses of copyright material for the purposes of caching, indexing or text mining infringes copyright.
8.66 The ALRC also proposes that ‘non-consumptive’ uses should be one of the illustrative purposes of the fair use exception. This should signal that uses that fall within the broader category of ‘non-consumptive use’ are more likely to be fair than uses that do not fall into this, or any other, category of illustrative purpose. However, this does not mean that all non-consumptive uses will be fair. A wider inquiry into the fairness factors is necessary and crucial.
8.67 There is a spectrum along which uses of copyright material may, to a greater or lesser extent, be said to be ‘trading on’ the underlying and expressive purpose of the copyright material. In the ALRC’s view, the fairness factors, including the nature and use of the copyright material; the portion of the material that is taken; and the impact on the potential market for the work provides a flexible framework for balancing the interests of users and rights holders in a way that specific exceptions cannot.
8.68 In the event that fair use is not enacted, the ALRC proposes an alternative, namely, fair dealing for ‘non-consumptive’ uses. This fair dealing exception would require consideration of whether the use is fair, having regard to the same fairness factors that would be considered under the general fair use exception.
8.69 The Copyright Act should define ‘non-consumptive’ use to mean uses of copyright material ‘that do not trade on the underlying or expressive purpose the material’. The ALRC proposes that ‘non-consumptive use’ be defined, because unlike the existing fair dealing provisions—such as parody and satire or reporting the news—it is not immediately clear what this term means.
8.70 The section below explains the ALRC’s reasoning as to why caching and indexing, and data and text mining, should be considered under fair use.
Caching and indexing
8.71 In the ALRC’s view, the use of copyright material for caching, indexing and other similar functions that are necessary in the digital environment should not infringe copyright. Indeed, the fact that no company has been sued in Australia for caching and indexing might suggest that rights holders consider such activities to be ‘fair use’, or that such uses do not sufficiently prejudice existing markets to warrant litigation.
8.72 There are strong arguments that lack of protection for such activities comparable to other jurisdictions may create an environment of uncertainty which could have an impact on investment decisions about whether to operate in Australia or contribute to increases in the cost of providing services to the Australian public, such as internet streaming of television programs. The development of cloud computing services will also increase the need for temporary copies to be made.
8.73 Further, it appears difficult to draft a specific exception for caching and indexing that would be technology neutral, and that would accommodate the different interests of the parties. Technology reliant on copying will continue to evolve, and the Copyright Act needs to be to adaptive to such technological changes.
8.74 In the ALRC’s view, a general fair use exception may provide more flexibility to consider the impact on the market than blanket exception that permits caching and indexing.
8.75 The caching and communication of content located behind a ‘paywall’ or ‘subscription content’ is unlikely to be fair use. On the other hand, as argued by Pandora, where a licence has been obtained to communicate recordings and temporary copies are made for the purposes of exercising that licence, this should not be subject of further licensing. This appears on its face to be a non-consumptive use more likely to be fair (that is, incidental copying in order to exercise a right).
8.76 The Copyright Act contains a number of disparate provisions that deal with ‘temporary copying’ that are intended to cover different forms of caching or copying that is required as part of the way a technology functions. It is undesirable to have multiple provisions that do not adequately cover the full spectrum of caching activities. If fair use is enacted, these existing exceptions should be repealed.
Data and text mining
8.77 For similar reasons, the ALRC considers that the use of copyright material for data and text mining should also be considered under the fair use exception, in determining whether copyright is infringed.
8.78 There is not enough evidence of market failure to warrant a specific exception to deal with data and text mining, and the benefits of the data analytics industry are capable of being maximised through collaboration between researchers and publishers. In particular, the ALRC considers that voluntary licensing should be pursued for commercial uses of data and text mining.
8.79 In the ALRC’s view, fair use would not undermine emerging market solutions for data analytics. Rather, the availability of licensing solutions would be one factor in determining whether a data or text mining use is fair. The fairness factors are intended to provide a framework within which a number of competing interests can be balanced. In respect of data and text mining, these can include but are not limited to:
the amount of copyright material that was copied;
whether the data or text mining will be used for a non-commercial purpose;
whether the use is to facilitate education and research;
the existence of any agreed industry guidelines; and
whether the copying resulted in an end use that is considered transformative and that does not trade on the underlying expressive purpose of the copyright material that is copied.
Proposal 8–1 The fair use exception should be applied when determining whether uses of copyright material for the purposes of caching, indexing or data and text mining infringes copyright. ‘Non-consumptive use’ should be an illustrative purpose in the fair use exception.
Proposal 8–2 If fair use is enacted, the following exceptions in the Copyright Act should be repealed:
(a) s 43A—temporary reproductions made in the course of communication;
(b) s 111A—temporary copying made in the course of communication;
(c) s 43B—temporary reproductions of works as part of a technical process of use;
(d) s 111B—temporary copying of subject-matter as a part of a technical process of use; and
(e) s 200AAA—proxy web caching by educational institutions.
Proposal 8–3 If fair use is not enacted, the Copyright Act should be amended to provide a new fair dealing exception for ‘non-consumptive’ use. This should also require the fairness factors to be considered. The Copyright Act should define a ‘non-consumptive’ use as a use of copyright material that does not directly trade on the underlying creative and expressive purpose of the material.
 See Ch 4.
 In consultations the ALRC heard that rights holders consider some caching or indexing activities as having an implied or zero licence, rather than accepting that the use is fair.
 Having regard to the portion that is copied and the fact that there is market for subscription access to copyright material.
 Pandora Media Inc, Submission 104.
 Whether a use is transformative can be considered when applying fair use. See Ch 10.