9.16 The ALRC proposes that the fair use exception should be used to determine whether a private and domestic use of copyright material infringes copyright. The fair use provision should include ‘private and domestic use’ as an example of a fair use—an illustrative purpose. The existing exceptions for time shifting and format shifting in the Copyright Act should be repealed.
9.17 If fair use is not enacted, then the ALRC proposes that the Copyright Act be amended to provide for a new fair dealing for private and domestic uses. For private and domestic uses, this would essentially have the same outcome as the fair use exception.
9.18 A number of stakeholders submitted that a general fair use or fair dealing exception should be used to determine whether private copying infringes copyright. For example, the Australian Communications Consumer Action Network submitted that
the current private or domestic use exception needs to be replaced with a fair dealing or fair use provision that is technology-neutral and that allows for the increasingly diverse ways that the public might consume and arrange content for their private enjoyment.
9.19 It was also submitted that a further purpose-based exception could supplement a more general, open-ended provision. Some stakeholders also submitted that private purposes should be included as an example of a fair use, in part to promote certainty. Others suggested there should be a single, technology-neutral exception for private use, but did not mention fair use or fair dealing.
9.20 One of the primary justifications for private and domestic use exceptions relate to public expectations and social norms. In Australia, many private uses of copyright material are commonly thought by members of the public to be fair. This is one factor that suggests that some private uses of copyright material should not infringe copyright.
9.21 Many stakeholders said that Australians do not understand or respect the current copyright laws, and that the law does not reflect community attitudes or practice. The Copyright Act is said to be ‘out of sync with consumer behaviour and contemporary attitudes,’ because
technology and the myriad applications available to consumers provide consumers with new, cheap (often free) ways to use and store material, including copyright material, particularly for personal use.
9.22 Expanding the private and domestic use permitted under copyright law would simply legalize what consumers are already doing, some said. Many submitted that the law should take account of consumer expectations. Commercial Radio Australia, for example, said:
The current copyright framework cannot be considered fit for the digital age when so many users repeatedly breach copyright, simply by shifting a piece of content from one device to another. Users expect to be able to store content on a variety of devices—including computers, mobile phones, tablets—and in a variety of locations, such as on local servers and in the cloud. Copyright law should recognise these changing use patterns and reflect them, to permit private individuals to take advantage of new technologies and storage devices available.
9.23 The ADA and ALCC submitted:
It seems likely that the majority of Australian consumers aren’t aware that many of the ways in which they enjoy and engage with copyright works fall outside of the scope of what is permitted under copyright law. … If consumers widely believe they have the ‘right’ to copy content they’ve acquired legally for personal enjoyment, and it’s generally recognised as acceptable consumer behaviour, copyright laws should reflect this.
9.24 Similarly, Ericsson submitted that copyright laws must meet reasonable consumer expectations:
Consumers increasingly expect to be able to consume creative content on demand anytime, any device and anywhere. Thus the ability to shift lawfully acquired content within the private sphere is an integral and necessary step of modern consumer behaviour.
9.25 Professor Kathy Bowrey submitted that changing technologies, often beyond the consumer’s control, can ‘effectively frustrate or terminate access to legitimate works’. An e-book bought for one device, for example, will often not work on another. Bowrey said it is ‘hard for consumers to understand why they do not have the right to maintain functional access to content they have purchased, because of technical decisions made by third parties’.
9.26 Professor Pamela Samuelson, discussing US law, has said that ‘ordinary people do not think copyright applies to personal uses of copyrighted works and would not find acceptable a copyright law that regulated all uses they might make of copyrighted works’. Other US scholars refer to research that shows that ‘most members of the public … believe that personal use copying is acceptable as long as the copies are not sold’. There is a core belief, Ashley Pavel argues, that strictly private uses of a purchased copy are ‘none of the copyright owner’s business’.
9.27 Laws that are widely ignored also lower the community’s respect for the law more generally, and particularly other copyright laws. The force of the message that peer-to-peer file sharing of copyright material between strangers is illegal may be diluted by the message that copying a purchased DVD to a computer for personal use is also illegal. The Explanatory Memorandum for the Copyright Amendment Bill 2006 stated that failure to recognise such common practices as time and format shifting ‘diminishes respect for copyright and undermines the credibility of the Act’.
9.28 Many submissions made these points. The ACCC said that failing to recognise common practices, such as format shifting purchased music or time shifting a broadcast, ‘diminishes respect for copyright and undermines the credibility of the Act’. Sally Hawkins spoke of restrictions that ‘are simply ignored for the most part’ and said this ‘casts the law in a bad light in so much as it fails to reflect what are common expectations and standards’. The Law Institute of Victoria said there was a ‘widespread public expectation that making such copies of legally sourced material should be legally permitted’:
if the law significantly diverges from widespread expectation and common community practice, then there is a serious risk that credibility for copyright law will become undermined.
9.29 Robert Xavier stated that ‘imposing unenforceable liability for common acts that cause no conceivable harm will only encourage contempt for copyright law and lead to more infringement’.
9.30 Some are sceptical about the relevance of social norms to copyright policy. Clearly, the fact that some people shoplift does not suggest that shoplifting should be legalised. Some submissions stressed that consumer expectations and behaviour should not justify changes to the law. For example, Foxtel submitted:
While we understand the Government’s desire to ensure that Australian copyright law keeps pace with legitimate consumer practices, simply because digital technology is available which makes copying and storing content easier does not mean that the law should be amended to legitimise infringing conduct.
9.31 Others said that, if the public does not know that common practices are illegal, then this is not an argument for law reform, but for a public awareness campaign.
9.32 The ALRC agrees that social norms should not dictate the law. But the law should at least account for social norms. If a practice is very widespread, and commonly thought to be harmless, then this should, at least, be one consideration when determining whether the practice should be prohibited.
Complexity of existing provisions
9.33 The existing specific exceptions in the Copyright Act are complex. They may not be understood by members of the public who have not made a study of copyright law. A number of submissions criticised the complexity of the current private copying exceptions, and said this should be simplified. Telstra submitted that it ‘believes that the current private and domestic use exceptions should be clarified and simplified, with an emphasis on encouraging the creation and consumption of legally acquired content across technologies and devices’. Robin Wright said that having the private and domestic use exceptions ‘scattered throughout the Act does not assist non-specialist users to understand what they are permitted to do and encourages individual rule-making decisions by poorly informed users about how copyright law works’.
9.34 Case law applying fair use may not be widely understood by members of the public either, but at least the concept of fairness is easy to comprehend.
A single, technology neutral provision
9.35 A number of stakeholders agreed that a single, technology-neutral exception for private and domestic use, though not necessarily fair use, would simplify and clarify the Copyright Act. The ABC submitted that ‘a single, technology-neutral, format-shifting exception with common restrictions that reflects the underlying policy of the exception would be preferable’.
9.36 A technology-neutral approach to copyright policy might suggest that whatever users may do using technology in their own home, they should be able to do using technology stored remotely. Individuals are increasingly using cloud computing services to store copies of copyright material, enabling consumers to access their content from multiple computers and devices more easily. This also raises the question, discussed in Chapter 5, of third parties facilitating private uses.
9.37 Some stakeholders said any such exception should focus on the purpose of the use, rather than on any particular technology or on the type of material being used. This would allow the law to better adapt to new technology.
9.38 Some called for a more technology-neutral application of time-shifting exceptions, saying that they should not be confined to broadcast material. Ericsson submitted, for example, that a time-shifting exception ‘should apply irrespective of content delivery method or underlying technology’ and that it ‘strongly believes that copyright law should adhere to a technology neutral principle, where the basis or an exception should be the purpose rather than the technology itself’.
9.39 The type of copyright material used should also not matter, other submitted. Rather, exceptions for time shifting should be content neutral. It should not be about the nature of the content, or the platform on which it is offered, but rather the nature of the activity. Is a service merely a recording and storage facility, or something more?
9.40 The Internet Industry Association submitted that, if advertiser-supported television content were made available on the internet, without payment of a subscription, then time-shifting exceptions should apply. The ABC made a similar point, but said the exception should be confined to ‘ephemeral content’:
The ABC believes the time-shifting exception should apply to ephemeral content made available using the internet, for example, ephemeral content made available by IPTV services. If the ABC were to communicate a scheduled stream of content in an ephemeral manner on a point to point basis, regardless of whether it is simulcast with a point to multipoint service, the exception should apply to such internet protocol television if no catch-up service is provided.
9.41 Other submissions questioned whether the private copying exceptions could usefully be simplified and consolidated. The Association of Learned and Professional Society Publishers said:
It is difficult to see how a single one-size-fits-all exception could provide appropriate protection to the myriad different digital works that are available. It would be clearer, simple and more user-friendly to define specific allowed uses to different categories of work. Scope for confusion would then be removed.
9.42 All works are not created equal, others submitted. The market for digital music operates quite differently from that of digital sheet music, which operates differently from that of e-books and software. One exception for private copying cannot work for all of these markets. Free TV submitted:
Markets for film, music, photographs, books and newspapers are uniquely different and the test of financial harm will differ for each market. Specific exceptions are required to ensure no substantial harm is caused to any particular market and provide greater certainty for consumers and copyright owners.
9.43 Similar reasoning was used in a departmental review of the format shifting exceptions for films and photographs in 2008, which recommended that no changes be made at the time. The review considered whether the two exceptions should be made to align with the broader exception for format shifting of music. The Department stated that it recognised the advantages of consistency and simplicity, but also that:
The test of financial harm must be applied to particular markets. Markets for digital music, photographs and films are very different. This will produce differences in exceptions unless they are drafted in a common form which causes no substantial harm to any copyright market.
9.44 The computer games industry submitted that it ‘understands the demand for format flexibility and continues to adapt their business models to address this demand’, but noted that the introduction of ‘a broader format shifting exception would conflict with the proprietary nature of the major game formats and challenge the effectiveness of technological protection measures’.
Insofar as format shifting applies to printed music, the economic realities of creating physical editions in a rapidly declining (and already small) market, while at the same time investing significant funds in digital print music services do not warrant any extension in reproductions for private or domestic use.
9.45 In the ALRC’s view, fair use and fair dealing exceptions with fairness factors considered, are likely to be able to better account for the differences in markets and technologies between types of copyright material and different types of uses. This is one important reason the ALRC prefers these fairness exceptions to a new specific exception that does not allow for a proper consideration of the likely effect of a use on a rights holder’s interests.
9.46 The fair use and fair dealing for private and domestic use exceptions proposed in this Discussion Paper are both technology neutral, but when applied, uses with some technologies may be found to be fair, while others are not. The ALRC sees this as a strength of fair use.
9.47 Exceptions should not be confined to copies made or stored on devices owned by the consumer. This is not to say that third parties, such as companies that provide cloud computing services, should necessarily be free to use copyright material for their customers. However, it seems clear to the ALRC that to confine exceptions explicitly to uses of copyright material made on computers and other devices owned by the user, is to insist on a technology distinction that, in view of cloud computing, is already outdated.
Business models and market harm
9.48 Some private and domestic uses of copyright material are unlikely to have any significant effect on the market for the material, particularly if the material is only used privately and the original or copies are not sold or given away. Few people will buy the same item twice, some might say, because the law prohibits them from making a copy. Members of the public may also be unlikely to seek licences for other purely domestic non-commercial uses.
9.49 This is one reason why private and domestic uses may be a good example of a fair use. However, this does not mean that private and domestic uses will always be fair. Sometimes, a private use of copyright material may well harm a market that rights holders should be able to exploit. The effect of private copying on the market for copyright material may often be greater when third parties facilitate the private copying.
9.50 Copyright owners may license users to make multiple copies of copyright material, or otherwise access copyright material from multiple computers, phones, tablets and other devices. For example, subscription music services, relatively new to Australia, may allow users to stream music to multiple devices and download music files to their smart phones. Comparable cloud services allow users to watch films and television programs from multiple devices. Films sold on DVD and Blu-ray discs are sometimes sold with a digital file that may be stored and played for example, on, computers and tablets. Books bought on the Kindle store, to take another example, may be read by consumers using a Kindle or a Kindle app on a smart phone, computer or other device.
9.51 The provision of these licensed services may suggest there is a market for providing consumers with multiple copies of copyright material, or access to such material from multiple devices, for private and domestic use and that rights holders are increasingly exploiting this market. Some argue that if the market for private copying had ever failed, it has now been corrected. Rights holders can licence private copying; this can give them a competitive advantage over those who do not; therefore the Act should not make any private copying free.
9.52 Such arguments were made by rights holders and others in submissions to this Inquiry. The Australian Copyright Council submitted that ‘business models are reducing the need to engage in private copying’ and that there was no need to extend the private copying exceptions. The Arts Law Centre submitted that ‘enhanced format shifting can be a competitive advantage to differentiate that rights holder’s products from other suppliers’. The Software Alliance submitted that ‘a wide variety of rights to copy legally acquired computer programs for private and domestic use is currently provided for in the applicable license agreements for the programs’.
The copying permitted is determined by a range of competitive market factors, and consideration of business model implemented by the rights holder for delivery of and any payment for use of the program.
Against this background, it is clear that s 109A has become a provision of limited utility as many acts of copying are now covered under licensing provisions.
9.54 Discussing time shifting, the Australian Film and TV Bodies submitted that the commercial development of the legitimate online business models, including ‘licensed cloud based services, online video or demand, and catch-up online television … are already enabling consumers to watch copyright material at a time that suits them’.
A blanket proposal to allow time-shifting in online environments would diminish the development of authorised online content providers and the capacity for rightsholders to extract value in online environments.
9.55 In deciding whether a particular private use is fair, under the fair use exception proposed in Chapter 4, consideration might be given to whether the content was provided with advertising, or upon payment of a fee. Also relevant will be whether the consumer purchased a permanent copy, or whether they were only entitled to have access to the content for a limited period of time. These questions, among others of course, might be considered under the fourth fairness factor, which concerns the effect of the use on the market for the material.
9.56 Some submissions stated that consumers should have the ability to time shift only ‘free’ advertiser-supported content. The ABC submitted that the time shifting exception:
presumes that members of the public have legal access to the broadcast content in order to tape it off-air—they either access it freely, or they have paid their subscription for the pay television broadcast. With the advent of cloud services and the potential for other new technologies to emerge, the issue should be approached in terms of legal access and the market for rights.
9.57 The Australian Copyright Council stressed that the source of the content is relevant, that is, the ‘relevant business model and the market is central to determining whether or not making a copy for private purposes would meet the three-step test’.
9.58 The ALRC does not favour confining exceptions for private and domestic uses in the Copyright Act. Rather, these matters are best considered when determining whether a particular use is fair. Blanket legislative prohibitions—and endorsements—of specific uses are likely to date quickly.
9.59 In the ALRC’s view, the proposed fair use exception is better suited to account for the effect of a given use on the market for copyright material than specific, closed exceptions. Fair use is a flexible exception that, unlike the existing Australian time and format shifting exceptions, requires consideration of the ‘effect of the use upon the potential market for, or value of, the copyright material’. Where the market offers properly licensed copies, then it may be less likely that a person should be free to make their own private and domestic copies. Where a television station offers an online catch-up service, for example, then a competing service that makes copies of broadcasts for consumers is less likely to be fair.
9.60 Some object to exceptions for private copying on the grounds that they may facilitate piracy. It may be fine for the owner of a DVD to make a copy of the film for his or her own use but if this is permitted, it is argued, then the person may be more likely to share the copy with others, including through peer-to-peer networks. Foxtel, while open to the idea of a new single exception for private copying, expressed concern about digital-to-digital copying of films, and the possible facilitation of online piracy.
9.61 However, it seems unlikely that laws prohibiting digital-to-digital copying are having any great effect on preventing piracy. If a person is prepared to infringe copyright laws by sharing a film on a peer-to-peer network, that person will presumably have little regard to laws that prohibit digital-to-digital copying of films.
9.62 On this point, Bowrey submitted that ‘targeting those that facilitate piracy is preferable to restricting arguably legitimate uses of conversion technologies’.
9.63 There is no suggestion that piracy, such as unauthorised peer-to-peer file sharing of music and films, would be fair use or a ‘fair dealing for private and domestic use’.
An illustrative purpose
9.64 The ALRC proposes that ‘private and domestic’ be one of the illustrative purposes listed in the fair use provision. This will signal that a particular use that falls within the broader category of ‘private and domestic use’ is more likely to be fair than a use which does not fall into this or any other illustrative purpose category.
9.65 However, in deciding whether the particular use is fair, the fairness factors must be considered. As discussed in Chapter 4, the fact that a particular use falls into, or partly falls into, one of the categories of illustrative purpose, does not necessarily mean the particular use is fair. In fact, it does not even create a presumption that the use is fair. A consideration of the fairness factors is crucial.
9.66 The fair use exception has been adopted in a number of countries, most notably the US, and is consistent with Australia’s international legal obligations, including the Berne three-step test.
9.67 The Committee of Government Experts that prepared the program for the 1967 Berne Conference, included the following paragraph, which was debated, amended and became art 9(2)—the three-step test:
It shall be a matter for legislation in the countries of the Union to permit the reproduction in such works
(a) for private use;
(b) for judicial or administrative purposes;
(c) in certain particular cases where the reproduction is not contrary to the legitimate interests of the author and does not conflict with a normal exploitation of the work.
9.68 Ricketson and Ginsburg point out that this proposal elicited a wide range of amendments. Some sought to restrict the scope of the exception; others to expand it. France, for example, proposed the substitution of the words ‘for individual or family use’ for the words ‘for private use’, to avoid the possibility of commercial enterprises claiming that their copying was for private purposes. These differences, Ricketson and Ginsburg state, ‘perhaps made delegates more ready to consider a proposal advanced by the UK which sought to embrace all possible exceptions within a single generalized exception consisting simply of paragraph (c) of the programme amendment’.
9.69 The provision drafted by the Committee of Government Experts seems to countenance private use exceptions that are not confined by the limitations in paragraph (c)—for example, ‘not contrary to the legitimate interests of the author’. The final provision that was later accepted and became art 9(2), and the fair use exception proposed by the ALRC, are both narrower than the provision drafted by the Committee of Government Experts. The ALRC only proposes private uses be excepted where the use is fair, having regard to the fairness factors. However, it is interesting to note that private use has long been considered a likely subject of exceptions to copyright, and sometimes in terms considerably broader than proposed by the ALRC.
Fair dealing and third parties
9.70 If fair use is not enacted, the ALRC proposes that an alternative exception be enacted—fair dealing for private and domestic purposes. 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. Applying the two exceptions to a private and domestic use should therefore produce the same result.
9.71 The difference between the two options—a general fair use exception and a range of fair dealing exceptions confined to specified purposes—should only affect uses that are not covered by one of the fair dealing provisions.
9.72 As discussed in Chapter 5, the fair dealing exceptions leave less room for unlicensed third parties to use copyright material in circumstances where they facilitate private and domestic uses. This is because the fair dealing exceptions are confined to uses for the specified purposes, and third parties will often have a purpose ancillary to the specified purpose (for example, a profit motive). While many of these third party uses may not be fair, a general fair use exception is preferable to the confined fair dealing exceptions, because with fair use, the question of fairness can at least be considered. Uses for ancillary purposes are not automatically excluded.
9.73 Copyright law that wishes to allow for the development of new technologies and services should not presumptively exclude uses of copyright material for particular purposes, without asking whether the use would be fair. For this reason, the ALRC prefers the general fair use exception. However, a flexible exception that requires consideration of key principles, even if confined to a specified purpose, is still preferable to the current specific exceptions.
Contracting out and TPMs
9.74 Copyright owners may sometimes provide their material only to customers who agree not to copy, or use in other prescribed ways, their material. This raises the question of ‘contracting out’ of copyright exceptions.
9.75 Technological protection measures (TPMs) may also be used to enforce these provisions. These contracts and TPMs can work to lock consumers into content ‘ecosystems’. The more a person buys from one company, the more convenient it is to buy other content from that company, and the more difficult or inconvenient it becomes to buy content from another company. This becomes more pronounced, as content providers increasingly offer to store content for their customers in the cloud.
9.76 Exceptions in relation to TPMs are outside the ALRC’s Terms of Reference, and contracting out of copyright exceptions is discussed in Chapter 17. In this chapter, it is sufficient to note that exceptions for private and domestic use will be of less value to consumers, if they cannot circumvent TPMs and they must contract out of the exceptions before being given access to copyright material.
Proposal 9–1 The fair use exception should be applied when determining whether a private and domestic use infringes copyright. ‘Private and domestic use’ should be an illustrative purpose in the fair use exception.
Proposal 9–2 If fair use is not enacted, the Copyright Act should provide for a new fair dealing exception for private and domestic purposes. This should also require the fairness factors to be considered.
Proposal 9–3 The exceptions for format shifting and time shifting in ss 43C, 47J, 109A, 110AA and 111 of the Copyright Act should be repealed.
 For example, Telstra Corporation Limited, Submission 222; EFA, Submission 258; iiNet Limited, Submission 186; Law Institute of Victoria (LIV), Submission 198.
 ACCAN, Submission 194.
 ADA and ALCC, Submission 213.
 Eg, Law Institute of Victoria (LIV), Submission 198; Telstra Corporation Limited, Submission 222.
 NSW Young Lawyers, Submission 195.
 Commercial Radio Australia, Submission 132.
 ADA and ALCC, Submission 213.
 Ericsson, Submission 151.
 K Bowrey, Submission 94.
 P Samuelson, ‘Unbundling Fair Uses’ (2009) 77 Fordham Law Review 2537, 2591.
 A Pavel, ‘Reforming the Reproduction Right: The Case for Personal Use Copies’ (2009) 24 Berkeley Technology Law Journal 1615, 1617.
 Ibid, 1617. See also A Perzanowski and J Schultz, ‘Copyright Exhaustion and the Personal Use Dilemma’ (2012) 96(6) Minnesota Law Review 2067, 2077.
 Explanatory Memorandum, Copyright Amendment Bill 2006 (Cth), 6.
 ACCC, Submission 165.
 S Hawkins, Submission 15.
 Law Institute of Victoria (LIV), Submission 198.
 R Xavier, Submission 146.
 Foxtel, Submission 245.
 COMPPS, Submission 266.
 Telstra Corporation Limited, Submission 222.
 R Wright, Submission 167.
 Australian Broadcasting Corporation, Submission 210.
 For example, K Bowrey, Submission 94.
 Ericsson, Submission 151. See also ACCAN, Submission 194; ACCC, Submission 165.
 See, eg , Australian Broadcasting Corporation, Submission 210.
 Internet Industry Association, Submission 253.
 Australian Broadcasting Corporation, Submission 210.
 ALPSP, Submission 199.
 Free TV Australia, Submission 270.
 Australian Government Attorney-General’s Department, Copyright Exceptions for Private Copying of Photographs and Films, Review of sections 47J and 110AA of the Copyright Act 1968 (2008), [3.16], [3.17].
 iGEA, Submission 192.
 Hal Leonard Australia Pty Ltd, Submission 202.
 See Ch 5.
 Such as Spotify and MOG.
 Australian Copyright Council, Submission 219.
 Arts Law Centre of Australia, Submission 171.
 BSA, Submission 248.
 Copyright Agency/Viscopy, Submission 249.
 ARIA, Submission 241.
 Australian Film/TV Bodies, Submission 205.
 Australian Broadcasting Corporation, Submission 210.
 Australian Copyright Council, Submission 219.
 Foxtel, Submission 245. See also News Limited, Submission 224.
 K Bowrey, Submission 94.
 See Ch 4.
 Quoted in S Ricketson and J Ginsburg, International Copyright and Neighbouring Rights: The Berne Convention and Beyond (2nd ed, 2006) Vol I, 762.
 Ibid, 762.