149. This section considers the problem of ‘orphan works’, broadly defined as a situation where ‘the owner of a copyrighted work cannot be identified and located by someone who wishes to make use of the work in a manner that requires permission of the copyright owner’. Use of a work, without the copyright owner’s permission may constitute copyright infringement.
150. Individuals and institutions who wish to use, and make access available to, orphan works assume significant risks. The problem of being unable to identify the author of a work applies equally in the case of older works—in analog forms—and digital works that are created online, and often anonymously. In particular, orphan works present a recognised problem in mass digitisation projects undertaken by public and cultural institutions.
Scope of the orphan works problem
151. Despite widespread acknowledgement that orphan works create significant copyright problems, there is a lack of comprehensive empirical evidence about the economic and social effects of orphan works, or the extent to which the inability to access such works impedes creative efforts. However, studies around the world point to a growing problem, at least in terms of the number of orphan works.
152. The Hargreaves Report suggested that orphan works represent ‘the starkest failure of the copyright system to adapt’ and that the system is ‘locking away millions of works’ in this category. In France, the Association des Cinémathèques Européennes suggests that 21% (225,000) works in the European film archives are presumed to be orphan works. In Australia, the National Film and Sound Archives estimates that about 20% of the national audio-visual collection is abandoned or orphaned.
153. The ALRC invites stakeholder comments about the extent of the orphan works problem in Australia, and how the treatment of orphan works in Australia affects the use, access to and dissemination of copyright works.
Question 23. How does the legal treatment of orphan works affect the use, access to and dissemination of copyright works in Australia?
Existing models and options for reform
154. There are existing models in Canada and the Nordic countries that specifically address orphan works. Growing awareness of the orphan works issue has led to proposals for reform in the UK, the US, the EU, and in Australia.
155. These models and proposals recognise that orphan works—especially those held in archives, libraries and public institutions—have significant cultural, academic and social significance. Access to these works is an important public interest benefit that must be balanced with ensuring that copyright owners are properly compensated for their work. 
156. Since 1998, users in Canada can petition the Copyright Board of Canada for a non-exclusive licence to use an orphan work, after ‘reasonable efforts’ have been made to locate the copyright owner. The orphan work must be one that is published or fixed.
157. The Board works closely with the Canadian Copyright Licensing Agency (CCLA) in setting the royalty fee and the terms and conditions of the licence. Royalties collected are held in a fund for five years after the expiration of the licence for collection by the copyright owner. If the royalty is not collected, the Board will allow the CCLA to dispose of the fee to its members as it sees fit.
Limiting remedies after diligent search
159. In 2006, the US Copyright Office recommended the enactment of legislation that would limit the monetary and injunctive relief available to an owner where a user of an orphan work has conducted a reasonably diligent search. Under the proposal, ‘reasonable compensation’ from the user would be available where the use of the work is commercial. Injunctive relief would be limited where the work is transformative, and the user pays ‘reasonable compensation’ for its use.
160. In the UK, the Hargreaves Report recommended that the government should legislate to enable clearance procedures for use of individual works, based upon a diligent search.
161. In response, the UK government announced that it would introduce legislation to enable the use of orphan works after a diligent search confirmed by an independent authorising body. Under the model proposed, commercial and non-commercial uses would be permitted via a non-exclusive licence. A user would be required to pay, in advance, a market price—to the extent that one can be established—for such use and it is assumed that moral rights have not been waived. Importantly, the proposed scheme would not take the form of an exception; rather it would be based on authorisation by an independent body.
Extended collective licensing
162. Several Nordic countries use extended collective licensing (ECL) schemes that allow users to pay licence fees to a collection society comprising a ‘substantial number’ of rights holders of a certain type of works. A feature of ECL schemes is that the collection societies are authorised by statute to grant licences on behalf of the copyright owner, even where the owner is not a member of the collective. Some rules allow copyright owners the option to ‘opt-out’ of the system and instead deal directly with licensees.
163. Under ECL schemes, a licence is granted for specific purposes and gives users a degree of certainty that their use will not risk infringement. However, to the extent that some owners have opted out, the system does not provide complete certainty to prospective users.
Australian reform proposals
164. Australian copyright academics Professor David Brennan and Professor Michael Fraser have proposed a ‘non-commercial use exception for natural persons using unpublished subject matter derived from lawfully obtained material’. The proposed exception would apply where the relevant copyright owner is not able to be located after a ‘diligent search’. A similar suggestion has been proposed by the Copyright Council Expert’s Group.
165. Brennan and Fraser also propose a broader exception for published material where there are missing owners. The proposed exception involves three stages:
A ‘diligent search’ followed by lodgment of a notice to a declared collection society. Once accepted, the work would be placed on an orphan works register. If an owner comes forward within three months, no exception would apply in favour of the user.
If the copyright owner does not present within three months, but supplies a warranty of ownership to the collection society within three years thereafter, the remedies available to the owner are limited in the event that an action is brought against the user.
If the copyright owner does not supply a warranty to the collection society within the three years, the owner’s sole enforcement rights would be through a compulsory licence administered by the collection society.
166. The proposed exception seeks to balance user accountability, predictive certainty for users and fairness to rights holders.
167. The ALRC invites comment on whether the Copyright Act should be amended to create a new exception or to facilitate a collective licensing scheme for the use of orphan works.
Question 24. Should the Copyright Act 1968 (Cth) be amended to create a new exception or collective licensing scheme for use of orphan works? How should such an exception or collective licensing scheme be framed?
 See, United States Copyright Office, Report on Orphan Works (2006), 1. For example, the copyright owner may be deceased, the publisher who owns the copyright may now be defunct, or there is no data that identifies the author of the work.
 Copyright subsistence in a work does not depend on the author registering the work, and a user will require the permission of the owner to use the work unless a particular exception or statutory licence applies. See Berne Convention for the Protection of Literary and Artistic Works (Paris Act), 24 July 1971,  ATS 5 (entered into force on 15 December 1972), art 5(2). In the Australian context, see Copyright Act 1968 (Cth) ss 36(1), 101(1).
 See the section, ‘Libraries, Archives and Digitisation’.
 I Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth (2011), 38. See also, N Kom, In From the Cold: An Assessment of the Scope of “OrphanWorks” and its Impact on the Delivery of Services to the Public (2009), JISC, 4 suggesting that up to 25 million items across the UK public sector are locked up due to problems associated with orphan works.
 Association des Cinémathèques Européennes, Results of the Survey on Orphan Works 2009/10 (2010), 1.
 National Film and Sound Archive, Statement on Orphan Works (2010), 1.
 In the case of the EU, the existing proposals target digitisation of orphan works and making them available online. See, European Commission, Proposal for a Directive of the European Parliament and of the Council on Certain Permitted Uses of Orphan Works (2011).
 M Dawes, ‘Setting the Orphans Free’ (2010) 18(4) Australian Law Librarian 289, 293.
Copyright Act 1985 (Can)s77.
 Ibid. The Copyright Act 1985 (Can)requires that orphan works and sound recordings be ‘published’ and performances and communication signals to be ‘fixed’.
Copyright Act 1985 (Can) s 77(2).
 Ibid s 77(3).
 See J de Beer and M Bouchard, Canada’s ‘Orphan Works’ Regime: Unlocatable Copyright Owners and the Copyright Board (2009), 31–32.
 SeeCopyright Act 1970 (Japan) s 67; Copyright Act 1967 (South Korea) s 47; Copyright Act 1957 (India) s 190. The Copyright, Patent and Designs Act 1988 (UK) permits licensing only in respect of orphan performances.
 United States Copyright Office, Report on Orphan Works (2006), 92.
 Ibid, 92–122 for a detailed explanation of the recommendations.
 Ibid. However, these proposals have not resulted in any legislative amendments concerning orphan works. However, the proposals have been the subject of Bills considered by congress from 2006 to 2008: Orphan Works Act of 2006, H.R 5439, 109th Cong. (2006); Orphan Works Act of 2008, H.R. 5589, 110th Cong (2008); and Shawn-Bentley Orphan Works Act of 2008 S. 2193 (2008).
 I Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth (2011), 39–40.
 UK Government, Government Policy Statement: Consultation on Modernising Copyright (2012), 8.
 See J Axhamn and L Guibault, Cross-border extended collective licensing: a solution to online dissemination of Europe’s cultural heritage? (2011), prepared for EuropeanaConnect, 25–59 for an outline of extended collective licensing in Nordic Countries.
 For example, in the Danish context, The Consolidated Act on Copyright 2010 (Denmark) ss 51(i)–(iii) prescribes that remuneration under an ECL extends to unrepresented right holders who are: not members of the collective; foreign rights holders and dead authors.
 For example, The Consolidated Act on Copyright 2010 (Denmark) ss 24A, 30, 30A, 35, 50.
 D Brennan and M Fraser, The Use of Subject Matter with Missing Owners – Australian Copyright Policy Options (2012), 7.
 Ibid. The authors also argue that the exception should apply only to economic rights and not moral rights, or rights found in other legal regimes.
 Copyright Council Expert Group, Directions in Copyright Reform in Australia (2011), 8–9.
 D Brennan and M Fraser, The Use of Subject Matter with Missing Owners – Australian Copyright Policy Options (2012), 9–12.