26. Copyright law has been much criticised for being confused and complex. It has been suggested that much complexity results from reform decisions being reached in an ad hoc manner, in relation to specific exceptions, rather than being underpinned by any widely accepted principles.
27. The ALRC is developing some guiding principles to inform its approach to the Inquiry and, in particular, to help evaluate whether exceptions and statutory licences in the Copyright Act are adequate and appropriate in the digital environment or whether new exceptions are desirable.
28. The Terms of Reference provide some guidance in this regard, along with existing laws, international instruments and principles identified in other reviews and reports. Based on these sources, the ALRC puts forward the following principles as a starting point, accompanied by brief explanations. The ALRC welcomes comments on these draft principles and also suggestions for other principles to guide the Inquiry.
Principle 1: Promoting the digital economy
Reform should promote the development of the digital economy by providing incentives for innovation in technologies and access to content.
29. The Terms of Reference refer to the ‘importance of the digital economy and the opportunities for innovation leading to national economic and cultural development created by the emergence of new digital technologies’. The ALRC takes this to refer to innovation within Australia and engagement globally in digital opportunities.
30. Copyright law is an important part of the legal infrastructure that supports the development of the digital economy. Sufficient incentives to encourage investment must be in place for desirable innovation to occur. However, ‘without open access to appropriate categories of information, Australia may not enjoy the potential innovation in the digital economy’.
Principle 2: Encouraging innovation and competition
Reform should encourage innovation and competition and not disadvantage Australian content creators, service providers or users in Australian or international markets.
31. This is consistent with the Convergence Review principle that the communications and media market should be innovative and competitive, while balancing outcomes in the interest of the Australian public. While too little intellectual property protection will discourage people from innovating, too much may discourage innovation because ‘the pathways to discovery are blocked’.
32. An optimal system of copyright law will support enterprises as they establish new ways of doing business and seek out new commercial opportunities. Australia competes with other countries in a global digital economy. If copyright law creates ‘a less conducive environment for a digital economy than the law of Australia’s competitors, this will put Australia at a disadvantage in attracting and retaining innovative digital companies’.
Principle 3: Recognising rights holders and international obligations
Reform should recognise the interests of rights holders and be consistent with Australia’s international obligations.
33. Reform of Australian copyright law needs to take account of Australia’s international obligations. The Universal Declaration of Human Rights, to which Australia is a signatory, provides for the protection of ‘the moral and material interests’ of authors in any scientific, literary or artistic production.
34. Australia is bound by treaty obligations requiring the protection of copyright, notably under the Berne Convention. There is also a direct link between intellectual property law and international trade obligations—the explicit basis for the TRIPS Agreement. Alongside multilateral harmonisation of copyright law is an emerging environment of bilateral trade agreements and negotiations. This Inquiry may provide an opportunity for suggesting policy parameters within which future international negotiations take place.
Principle 4: Promoting fair access to and wide dissemination of content
Reform should promote fair access to and wide dissemination of information and content.
35. The Terms of Reference refer to ‘the objective of copyright law in providing an incentive to create and disseminate original copyright materials’ and to the ‘general interest of Australians to access, use and interact with content in the advancement of education, research and culture’. There are important economic and social benefits in promoting access to and wide dissemination of information. New business models should be allowed to develop without copyright hindering these benefits. Copyright should assist where possible in the development of opportunities for Australian creators, and in sorting out ‘what should be paid for, and what should not be paid for’.
Principle 5: Responding to technological change
Reform should ensure that copyright law responds to new technologies, platforms and services.
36. Copyright is an area of law fundamentally affected by technological developments, which allow copyright material to be used in new ways. Copyright law needs to respond to new technologies, platforms and services. The Terms of Reference refer in particular to the emergence of ‘new digital technologies’.
37. Copyright law needs to be able to respond to changes in technology, consumer demand and markets. Copyright also needs to have a degree of predictability so as to ensure sufficient certainty as to the existence of rights and the permissible use of copyright materials, leading to minimal transaction costs for owners of users and avoiding uncertainty and litigation. Uncertainty is created by definitions that become redundant or differentiate between subject matter or rights holders based on technology rather than underlying principle.
Principle 6: Acknowledging new ways of using copyright material
Reform should take place in the context of the ‘real world’ range of consumer and user behaviour in the digital environment.
38. Digital technology has, arguably, been accompanied by changed consumer attitudes to copyright—specifically, less willingness to recognise that copyright is a form of property, owned by a creator (or more usually, the assignee of a creator). Even where copyright is recognised, infringement may be seen as justified. There is a spectrum of ‘real world’ use which ranges from incidental de minimus use of material to transformative, creative use of material. Clarifying which activities infringe copyright now, and whether certain activity should continue to be categorised as infringement, is part of this Inquiry.
39. One concern is that, at present:
worthy individuals and citizens, many of them children (some maybe even judges), are knowingly, ignorantly or indifferently finding themselves in breach of international and national copyright law. And they intend to keep on doing exactly as before.
40. Laws that are irrelevant and do not fit with community practice are undesirable. This is not to suggest necessarily that the solution is ‘free use’ for consumer practices (although it might be) but means of licensing or exempting what is currently widespread infringement should be considered.
Principle 7: Reducing the complexity of copyright law
Reform should promote clarity and certainty for creators, rights holders and users.
41. The consequence of reform should not be adding further complications to an already complex statute. The many amendments to the current legislation have resulted in complex numbering and ‘a feeling that the Act is unable to be understood by copyright creators and users’.
42. There are two aspects to ‘simplification’; one is making that which is complex clearer without substantive change; the other is changing the law to make it simpler and more coherent. This Inquiry is aimed mainly at the second aspect and not at overall simplification. The fear is always that attempting either aspect—let alone both—will result in greater incoherence. However, an incapacity to contemplate reform because it causes uncertainty is undesirable and willingness to develop an understanding of desirable reform by stakeholders should be assumed.
Principle 8: Promoting an adaptive, efficient and flexible framework
Reform should promote the development of a policy and regulatory framework that is adaptive and efficient and takes into account other regulatory regimes that impinge on copyright law.
43. Within and outside the Terms of Reference for this Inquiry, contemporaneous developments are taking place which impinge on copyright law and practice. Whether or not the Inquiry will deal with these developments in a substantive manner, the broader environment needs to be taken into account. For example, a review of primary infringement by individuals in the context of ‘new ways of using copyright material’ needs to take into account the effect of any recommendations on the responsibilities for content (if any) of platform providers under safe harbour schemes which are beyond the scope of this Inquiry.
44. On the other hand the Inquiry is directed to consider the Convergence Review and the policy settings recommended there will form part of the ALRC’s deliberations.
45. The costs and benefits to the community should be taken into account in formulating options for reform. The Australian Government Best Practice Regulation Handbook frames a guiding principle for government regulation being to ‘deliver effective and efficient regulation—regulation that is effective in addressing an identified problem and efficient in terms of maximising the benefits to the community, taking account of the costs’.
Question 2. What guiding principles would best inform the ALRC’s approach to the Inquiry and, in particular, help it to evaluate whether exceptions and statutory licences in the Copyright Act 1968 (Cth) are adequate and appropriate in the digital environment or new exceptions are desirable?
 See eg, S Ricketson, ‘Simplifying Copyright Law: Proposals from Down Under’ (1999) 21(11) European Intellectual Property Review 537;C Bond, ‘There’s Nothing Worse than a Muddle in All the World: Copyright Complexity and Law Reform in Australia’ (2011) 34(3) UNSW Law Journal 1145, 1148.
 See eg;, K Weatherall, ‘Of Copyright Bureaucracies and Incoherence: Stepping Back from Australia’s Recent Copyright Reforms’ (2007) 31 Melbourne University Law Review 967; C Bond, ‘There’s Nothing Worse than a Muddle in All the World: Copyright Complexity and Law Reform in Australia’ (2011) 34(3) UNSW Law Journal 1145.
 Department of Broadband, Communications and the Digital Economy, Australia’s Digital Economy: Future Directions (2009), 12.
 Australian Government Convergence Review, Convergence Review Interim Report (2011).
 Department of Innovation, Industry, Science and Research, Powering Ideas: An Innovation Agenda for the 21st Century (2009), 56.
 K Weatherall, Internet Intermediaries and Copyright: An Australian Agenda for Reform (2011), Policy Paper prepared for the Australian Digital Alliance, 2.
Universal Declaration of Human Rights, 10 December 1948, GAR 217 A (III) (entered into force on 10 December 1948), Article 27(2).
Berne Convention for the Protection of Literary and Artistic Works (Paris Act), 24 July 1971,  ATS 5 (entered into force on 15 December 1972).
 For example, the Australia–United States Free Trade Agreement.
 P Banki, ‘The Burden of Proof, ALRC Review—The Law Less Trammelled?’ (Paper presented at Australian Copyright Council Seminar, Sydney, 17 July 2012).
 M Kirby foreword to B Fitzgerald and B Atkinson (eds), Copyright Future, Copyright Freedom (2011), 4.
 A Stewart, P Griffith and J Bannister, Intellectual Property in Australia (4th ed, 2010), 146.
 S Ricketson, ‘Simplifying Copyright Law: Proposals from Down Under’ (1999) 21(11) European Intellectual Property Review 537.
 Australian Government, Best Practice Regulation Handbook (2010); Australian Law Reform Commission Act (1996) (Cth) s 24(2)(b).