111. The Terms of Reference ask the ALRC is to consider whether exceptions should allow ‘transformative, innovative and collaborative’ use of copyright materials to create and deliver new products and services.
What is a ‘transformative’ use?
112. In this Issues Paper, the term ‘transformative’ is used to refer generally to works that transform pre-existing works to create something new and that is not merely a substitute for the pre-existing work. Works that are considered transformative may include those described as ‘sampling’, ‘remixes’ and ‘mashups’.
113. Such uses may be commercial—as in the case of music released commercially that uses samples of existing tracks—or non-commercial, such as where copyright material is used in online user-generated content.
114. A number of law reform and other bodies in Australia and overseas have recommended changes to copyright laws that would provide broader exceptions permitting transformative use of copyright materials. These generally apply only to non-commercial use, however defined.
115. The concept of a transformative use is derived from US law concerning the doctrine of fair use, which permits limited use of copyright material without acquiring permission from the rights holders. A key factor in determining fair use is whether the use is transformative—‘the more transformative the new work, the less will be the significance of other factors [such as a commercial purpose] that may weigh against a finding of fair use’.
116. In the US cases, acts are considered transformative as opposed to merely ‘derivative’ when they do more than merely ‘supersede the objects’ of the original creation and add ‘something new, with a further purpose or different character, altering the first with new expression, meaning, or message’.
117. Authors often ‘draw upon pre-existing works and transform expression from them in creating new works that criticize, comment upon, or offer new insights about those works and the social significance of others’ expressions’—parodies are a classic example of this kind of transformative use.
118. Well-known uses that might be considered transformative include music sampling and mashups. Sampling is the act of taking a part, or sample, of one sound recording and reusing it in a different composition. In music, a mashup is a song created by blending two or more songs, usually by overlaying the vocal track of one song onto the music track of another.
119. Depending on the facts of any particular case, existing exceptions may apply to some transformative uses. Most obviously, the Copyright Act provides that fair dealing for the purposes of criticism or review; and parody or satire, do not constitute an infringement of copyright.
120. However, not all use that might be classed as transformative will be parody, satirical or critical. Nor will sampling and mashups usually fall within the scope of these exceptions. Such uses will constitute infringement provided that a substantial part of the work or other copyright subject-matter is used.
121. Some transformative uses may also infringe an author’s moral rights under pt IX of the Copyright Act. For example, in Perez v Fernandez, the Federal Magistrates Court held that a mashup involving only a few words mixed into a song was prejudicial to the artist’s moral right of integrity.
Options for reform
122. A number of reforms have been suggested overseas, and in Australia, that are directly relevant to transformative uses of copyright material.
123. In Australia, the Copyright Council Expert Group recommended, in 2011, an exception for non-commercial, transformative use of copyright works. The Group highlighted that this exception is particularly relevant in light of the rise of user-generated content.
124. In Canada, the Copyright Modernization Act 2012 (Can) created a new exception for content generated by non-commercial users. This exception has been referred to as the ‘UGC’ (user-generated content) or ‘mash-up exception’ and provides a right to use, for non-commercial purposes, a publicly available work in order to create a new work.
125. Any new broad flexible exception based on a concept of ‘fair’ or ‘reasonable’ use (discussed in the section ‘Fair use’ below) may also be expected to allow individuals to use copyright materials more freely in transformative uses. In addition, some transformative uses might be covered by a new exception for quotation (discussed in the section ‘Fair dealing exceptions’ below).
126. The Copyright Council Expert Group suggested that an exception ‘permitting private, non-commercial, transformative uses would preserve the balance in copyright law between interests of creators and users, and preserve public respect for the relevance and integrity of copyright law’.
127. The Group argued that this exception would legitimise a large number of practices that are already occurring, without harming copyright rights owner interests—in particular, creative uses on the internet characterised as being part of a new ‘remix’ culture. This remix culture can also be seen as a continuation of a longer tradition of postmodern appropriation.
128. The ALRC is interested in comment on whether individuals should be allowed to use copyright materials more freely in transformative uses, and in creating new cultural works. For example, the Copyright Act might be amended to provide that transformative use does not constitute an infringement of copyright.
129. Such an exception could be restricted to ‘non-commercial’ uses, along the lines of the Canadian provision discussed above, or be broader and extend to some commercial uses. For example, the exception could be framed to apply only where the use does not conflict with a normal exploitation of the copyright material and does not unreasonably prejudice the legitimate interests of the owner of the copyright.
130. Some of the issues that arise include:
The meaning of transformative use. The Copyright Council Expert Group stated that it implies something more than ‘just pasting two things together without any further modification’—for example, using a song as background to a home video posted to a video-sharing website is not ‘transformative’. Questions may arise about whether there should be some threshold of originality or innovation.
The meaning of non-commercial use. Defining non-commercial use in ‘a digital environment that monetises social relations, friendships and social interactions’ may be problematic—especially where a creator of content opts to receive payments from advertising associated with websites.
The implications of any exception for non-commercial transformative use in terms of the protection of authors’ moral rights. For example, allowing new transformative uses of copyright materials may lead to more frequent assertion of moral rights.
Question 14. How are copyright materials being used in transformative and collaborative ways—for example, in ‘sampling’, ‘remixes’ and ‘mashups’. For what purposes—for example, commercial purposes, in creating cultural works or as individual self-expression?
Question 15. Should the use of copyright materials in transformative uses be more freely permitted? Should the Copyright Act 1968 (Cth) be amended to provide that transformative use does not constitute an infringement of copyright? If so, how should such an exception be framed?
Question 16. How should transformative use be defined for the purposes of any exception? For example, should any use of a publicly available work in the creation of a new work be considered transformative?
Question 17. Should a transformative use exception apply only to: (a) non-commercial use; or (b) use that does not conflict with a normal exploitation of the copyright material and does not unreasonably prejudice the legitimate interests of the owner of the copyright?
Question 18. The Copyright Act 1968 (Cth) provides authors with three ‘moral rights’: a right of attribution; a right against false attribution; and a right of integrity. What amendments to provisions of the Act dealing with moral rights may be desirable to respond to new exceptions allowing transformative or collaborative uses of copyright material?
Campbell v Acuff-Rose Music Inc (1994) 510 US 569, 579.
 K Weatherall, Internet Intermediaries and Copyright: An Australian Agenda for Reform (2011), Policy Paper prepared for the Australian Digital Alliance, 33 citing US cases.
 P Samuelson, ‘Unbundling Fair Uses’ (2009) 77 Fordham Law Review 2537, 2549.
The Macquarie Dictionary Online.
Copyright Act 1968 (Cth) ss 41, 103A.
 Ibid ss 41A, 103AA.
 See, eg, EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd (2011) 191 FCR 444.
 The three moral rights in Australian law are: the right to be attributed as the author; the right against false attribution; and the right of integrity, that is, the right not to have one’s work treated in a derogatory way: Copyright Act 1968 (Cth) pt IX. See further Australian Copyright Council, Moral Rights: Information Sheet G043v13 (2012) <www.copyright.org.au/find-an-answer/browse-by-a-z> at 15 August 2012.
Perez v Fernandez  FMCA 2 (10 Feb 2012).
Copyright Act 1985 (Can) s 29.21. The Ireland Copyright Review Committee has invited submissions on whether a similar exception for non-commercial user-generated content should be enacted in Ireland: Copyright Review Committee (Ireland), Copyright and Innovation: A Consultation Paper (2012).
 D Lithwick, M Thibodeau and Parliament of Canada, Legislative Summary of Bill C-11: An Act to amend the Copyright Act <www.parl.gc.ca/About/Parliament/LegislativeSummaries> at 16 July 2012.
 The Ireland Copyright Review Committee has invited submissions on whether a similar exception for non-commercial user-generated content should be enacted in Ireland: Copyright Review Committee (Ireland), Copyright and Innovation: A Consultation Paper (2012).
 Copyright Council Expert Group, Directions in Copyright Reform in Australia (2011), 2.
 Ibid, 4.
 Professor Lawrence Lessig has suggested that non-commercial creative use (which he calls ‘amateur remix’) should be entirely exempted from the scope of US copyright law: L Lessig, Remix: Making Art and Commerce Thrive in the Hybrid Economy (2008), 245–255.
 See, eg, E Shimanoff, ‘The Odd Couple: Postmodern Culture and Copyright Law’ (2002) 11 Media Law and Policy 12.
 Adopting elements of the three-step test: 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 9(2). That is, the use of the work must: amount to a ‘special case’; not conflict with the normal exploitation of the work; and not unreasonably prejudice the legitimate interests of the owner of copyright.
 Copyright Council Expert Group, Directions in Copyright Reform in Australia (2011), 2.
 Ibid, 2.
 Under Copyright Act 1968 (Cth) pt IX.