05 World Media International Pty Ltd
22 October 2012
The Inquiry : Copyright and the digital economy
Question 1.  The ALRC is interested in evidence of how Australia’s copyright law is affecting participation in the digital economy. For example, is there evidence about how copyright law:
a.	affects the ability of creators to earn a living, including through access to new revenue streams and new digital goods and services; 
We write on behalf of World Media International Pty. Ltd. (WMI) which specialises in the management and provision of customised high quality Pay-TV channels including Arabic TV “aljazeera’, Greek TV ‘antenna 1” and Italian TV “mediaset”. 

WMI leads the market for foreign language media and marketing with over (insert number) customers. Our business reaches customers across Australia playing a significant role in promoting and maintaining our country’s multi-cultural linkages. Our importance in reinforced by our partnerships with major media operations including Optus Television, Foxtel, Astro (Malaysia & Brunei) and Intel Sat 8.

WMI employs (insert number) Australians who are involved not only in the distribution of Pay-TV but also work in TV production, content customisation, advertising and marketing communications.

It is our experience that the present digital copyright regime favours commercial infringers.

We seek to draw your attention to the following matters;

1.	Copyright infringement in Australia is substantially worse than is reported by the Commonwealth.

Copyright infringement by commercial operations not only diminishes the return on investment in the creative endeavours by diverting revenue to those who misappropriate the property right but it also diminishes the value of the copyright. History, and our own experience, has shown that the levels of copyright infringement have a direct relationship to the value of copyright, i.e. the greater the levels of infringement the less creators can sell their copyright for. This impacts not only on the ability to create sustainable businesses in the distribution of copyright based products but also acts as a barrier to pre-creation and (copyright) creation industries.

As copyright infringement is an illicit activity the revenue derived from it can only be associated with other illicit activities. It is well known that illicit activities such as copyright infringement on the scale it is actually occurring in Australia rely heavily on the intervention and assistance otherwise legitimate service providers. Whilst there has been considerable research into the existence of this phenomenon there has been no research into the effect of otherwise legitimate service providers supporting illicit activities. 

Intellectual Property Referrals to the Australian Federal Police 1989-2003

Year	Reported	Cleared	(%)	Male	Female	Value ($A)	
1989-90	42	27	64	5	1	N/A	
1990-91	81	43	53	15	1	50,000	
1991-92	1246	900	72	32	2	2,151,805	
1992-93	763	519	68	15	4	17,840	
1993-94	597	247	41	12	2	410,061	
1994-95	1924	303	16	24	5	838,310	
1995-96	486	42	9	5	1	630,500	
1996-97	145	12	8	11	2	N/A	
1997-98	N/A*	60	N/A*	4	-	N/A	
1998-99	N/A*	32	N/A*	5	-	N/A	
1999-00	N/A*	6	N/A*	6	-	1,000,000	
2000-01	N/A*	11	N/A*	4	-	350,000	
2001-02	N/A*	55	N/A*	3	1	N/A	
2002-03	N/A	N/A	N/A	N/A	N/A	N/A	

Taken from AFP Annual Reports

Copyright and Trade Mark Prosecutions by the Commonwealth Director of Public Prosecutions (CDPP) 1989-2010

Year	Copyright	Trade Marks	
	Summary	Indictable	Summary	Indictable	
1989-90	10 	0	N/A	N/A	
1990-91	11 	0	N/A	N/A	
1991-92	20 	0	N/A	N/A	
1992-93	14 	0	22	0	
1993-94	6 	0	13	0	
1994-95	11 	0	20	0	
1995-96	8 	0	11	0	
1996-97	3 	0	11	0	
1997-98	4 	0	3	0	
1998-99	12 	0	12	0	
1999-00	15 	0	6	1	
2000-01	8 	0	15	0	
2001-02	10 	0	14	0	
2002-03	11 	0	10	0	
2003-04	23	0	27	0	
2004-05	37	0	14	2	
2005-06	25	0	5	0	
2006-07	35 	3	25	0	
2007-08	N/A	N/A	N/A	N/A	
2008-09	504 	40	56  	6 	
2009-10	377	82	59	0	
Taken from CDPP Annual Reports

Excerpt from Michael Speck and Gregor Urbas, “Criminal infringement of intellectual property rights in Australia; assessing recent reforms”, (2011) 29 Copyright Reporter 183.

‘Information obtained from copyright and trade marks owner representatives indicate that the bulk of copyright and trade marks prosecutions have been dealt with by State courts rather than on referral to the Commonwealth. For example, statistics supplied by a copyright owners’ industry group for Victoria for the period 2004 – 2011 indicate that out of a total of 209 cases in which charges were laid: 
•	174 cases (i.e. 83%) were handled by Victorian state prosecutors, all on referral from Victorian Police (VicPol); 
•	11 cases (i.e. 5%) were handled by the Commonwealth Director of Public Prosecutions (CDPP), all on referral from the Australian Federal Police (AFP); and 
•	24 cases (i.e. 12%) were classified as being uncertain.’

Excerpt from Michael Speck and Gregor Urbas, “Criminal infringement of intellectual property rights in Australia; assessing recent reforms”, (2011) 29 Copyright Reporter 183.

‘Information obtained from NSW Police indicates that a large number of charges under the Copyright Act 1968 (Cth) have been dealt with by that agency (over 5,000 since 1998) and that these are routinely commenced through a Court Attendance Notice (CAN) rather than by infringement notices.’

2.	Limited law enforcement resources.

Victims of copyright infringement are continually faced with the consequences of limited law enforcement resources. This ranges from the outright rejection of copyright crime as is the case of the Western Australia Police through to an inability of police to prosecute infringements in a timely a timely manner. 

This lack of resources results in criminal infringers of copyright continuing their misappropriation for extensive periods and often extending into other illicit activities.

Given that much of the detected copyright infringement regardless of its size or impact occurs at the market level the law enforcement resource issue could be addressed by simply enacting the necessary Regulation to give force to the Copyright Infringement Notice Scheme. At present the Copyright Infringement Notice Scheme is not operational although its existence appears in a number of government publications and the work of various academics.

The Copyright Infringement Notice Scheme, if it were operational, would reduce the resources required by police to investigate and prosecute criminal infringers of copyright.

We note that there is no co-ordinated national law enforcement approach to criminal infringements of copyright and that the various state Fair Trading offices, who otherwise have a responsibility to protect consumers and businesses, have no involvement at all.

b.	affects the introduction of new or innovative business models; 
We urge the Commission to treat any submission that suggests Copyright law affects new or innovative business models with the utmost caution.
Whilst it is often suggested by academics and critics of copyright that copyright law may affect the introduction of new or innovative business models, and those suggestions often benefit from uncritical media, we are yet to see any evidence that innovation or creativity is stifled by the laws specifically enacted in this country to protect them.
We contend that Australian copyright law and the manner in which Australian courts have been able to effectively balance often competing interests of stakeholders give Australia an environment that is overall supportive of innovation and creativity generally in all phases of creative industry.
c.	imposes unnecessary costs or inefficiencies on creators or those wanting to access or make use of copyright material; 
Presumptions as to subsistence and ownership of copyright.
The presumptions as to subsistence and ownership of copyright found in the Copyright Act have not reduced the complexity or cost of proving copyright in infringement cases.
Proof of ownership of copyright is so complex that a creator could not in litigation prove their right. At present it requires the participation of lawyers to satisfactorily prove ownership of copyright.
Proving subsistence and ownership of copyright constitutes the principal expense in infringement proceedings. It remains stuck in the industrial age; resource intensive, juridified and archival.
At the same time it is almost always clear that copyright infringers before the courts have or make no claim of copyright ownership. This is so in the vast majority of cases where the subsistence and ownership is universally recognised.
The Commission must urgently consider formulating a means by which creators can prove subsistence and ownership of copyright without the need for the intervention by lawyers.  

 Guiding principles for reform
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?
We contend that most of the clamoring for change to the Copyright Act comes from those with no real investment in the creative industries, i.e. infringers and academics.
We urge the Commission to adopt a rigorous evidence based approach to all submissions 
Copying for private use        
Question 7.  Should the copying of legally acquired copyright material, including broadcast material, for private and domestic use be more freely permitted?
Question 9.  The time shifting exception in s 111 of the Copyright Act 1968 (Cth) allows users to record copies of free-to-air broadcast material for their own private or domestic use, so they may watch or listen to the material at a more convenient time. Should this exception be amended, and if so, how? For example:
a.	should it matter who makes the recording, if the recording is only for private or domestic use; 
Yes it should matter who makes the recording. If this exception were to be expanded to allow commercial operations to undertake the recording for advantage or benefit it would substantially diminish the rights of copyright owners as they presently exist, diminish the value of copyright law as a property rights regime and dramatically diminish, especially in the digital environment, the value of copyright based products.
We are especially concerned that the Commission is revisiting this particular issue so soon after the judgment in National Rugby League Investments Pty Limited v Singtel Optus Pty Ltd [2012] FCAFC 59 (27 April 2012). We do not believe the judgment has created a public policy issue for the public or stakeholders with the exception of those who wish to profit from the copyright of others.

b.	should the exception apply to content made available using the internet or internet protocol television? 
No the exception should not apply to content made available using the internet or IPTV. At least not yet.
The digital environment presently renders effective enforcement of rights in television broadcast material impossible.
Infringement and commercialisation of infringements occurs at such a velocity that under the present regime the harm is done and evidence is dissipated before effective action can commence. 
Despite the best efforts of Government and various industry stakeholders there is presently no agreed upon mechanism for the effective take down of infringing content from the internet.
We are especially concerned that Section 313 (1) which states, 
“(1)  A carrier or carriage service provider must, in connection with: 
                     (a)  the operation by the carrier or provider of telecommunications networks or facilities; or 
                     (b)  the supply by the carrier or provider of carriage services; 

do the carrier's best or the provider's best to prevent telecommunications networks and facilities from being used in, or in relation to, the commission of offences against the laws of the Commonwealth or of the States and Territories.”
is universally honored in its breach. 
The provision appears to clearly require proactive efforts by carriage service providers to rid their networks of illicit activity. It clearly requires more than simply assisting law enforcement agencies after the event.
The fact that large scale criminal infringement of cinematographic film and television broadcasts occurs via the internet and networks of the carriage service providers is so well known that it perhaps is entitled to judicial notice.
We urge the Commission to examine not only the desirability of the proposals being referred to in the Terms of Reference but examine the actual environment in which these proposals might operate.
Online use for social, private or domestic purposes
Question 11.   How are copyright materials being used for social, private or domestic purposes—for example, in social networking contexts?
Social media applications or networks represent ineliminable intermediaries whose members or subscribers are for them a market and/or a commodity. Put plainly they benefit financially from the activities of members and subscribers. Where that benefit derives from the exploitation of copyright then there must remain liability, both direct and secondary, for infringement.

Question 12.   Should some online uses of copyright materials for social, private or domestic purposes be more freely permitted? Should the Copyright Act 1968 (Cth) be amended to provide that such use of copyright materials does not constitute an infringement of copyright? If so, how should such an exception be framed?
There is nothing private about the distributed computing applications and social networking applications. The activity of members, users or subscribers generates revenue for the operators of those applications.
At present there is an effective balance struck between truly private behavior and behavior on the vast social networking and distributed computing applications. This should not be displaced.
Retransmission of free-to-air broadcasts          
Question 36   Should the statutory licensing scheme for the retransmission of free-to-air broadcasts apply in relation to retransmission over the internet, and if so, subject to what conditions—for example, in relation to geoblocking?
No. It is simply unenforceable and more seriously would provide additional encouragement to commercial infringers in the present environment.
Whilst it is often thought that there is only one Pay-TV operation in Australia there is in fact a number of additional commercial operations serving various foreign language markets including Arabic, Greek, Italian, European, Korean, Mandarin, Cantonese, African and Balkan. These Australian businesses reach in the order 200,000 Australian customers who in short are not served by the major operators.

The Australian foreign language Pay-TV operations supplement the market in which consumers typically seek a combination of multi-cultural products and local language products. 

As smaller media operators the businesses of foreign language Pay-TV operators such as WMI are especially vulnerable to market aberrations such as piracy and can easily render them unsustainable.

The past several years has seen the emergence of international pirate media operations that have extended their operations to Australia that have content catalogues consisting entirely of pirated content.

The International or ‘Shadow’ Pirate Operations

The content or channel offerings of these pirate operations is typically between 50 and 1100 channels including massive amounts of television, English language cinematographic film, adult cinematographic film and foreign language cinematographic film. These pirated catalogues are large scale aggregations of content from all of the legitimate media operations. 

In essence the pirate operations rely on their ability to aggregate competing media operations’ content rather than any ability to deliver content at a different time to the legitimate operators as their selling point of difference to consumers.

Presently there are 14 international pirate media operations operating their services in Australia. These operations offer their services on a fee per service, subscription and video on demand (VOD). 

The Australian representatives of these international pirate operations do not in any way represent the true scale of the operations, their revenue, their technical infrastructure and their human resources.

The modus operandi of these pirate operations involves;

1.	Establishment of a global network of individuals who are responsible for the initial misappropriation of content, the marketing and sale of access to the pirate catalogues, servicing customers and the repatriation of funds from the various territories to the principals. 

2.	Establishment of the global technical infrastructure for the collection, management, distribution and retransmission of pirated content. Often the storage servers are merely obtained on a contract basis from legitimate operators however these international operations need to own the technical infrastructure of a small television company to maintain their overall operations.

3.	These operations rely on IPTV technologies to distribute or retransmit pirated content into their market territories. At the customer level this involves a ‘set top box’ (STB) which is pre-programmed to connect to the pirate operation via the internet and deliver content on the pre-determined conditional access.

4.	Representatives around the world accessing the content of legitimate television, Pay-TV and film studio operations which is then transferred to storage servers in identifiable countries. Almost always these operations have ‘back-up servers’ in at least one other country to ensure their business continuity and customer service.

5.	Local or ‘national’ representatives of these international pirate operations typically employ between one and a dozen employees. Operations are usually conducted from shopfronts. A recent police operation in suburban Sydney identified the revenue of one such local operation as being in the order of $500,000.00 per annum. 

6.	These pirate operations conduct their business openly and advertise in mainstream media. They proactively target the legitimate operators and their customers. 

7.	As a result of their international structure any enforcement action that relies solely on action in a single jurisdiction or market has no discernible impact on the pirate operations. Indeed the local operators are merely ‘straw men’ and are effectively made available as targets by the principals of the pirate operations to diminish enforcement resources and divert attention. As such reliance on the available civil remedies is almost always of ineffective. 

Issues

As with all forms of intellectual property infringement there are very limited law enforcement resources available to respond to criminal infringements. It is our experience that this is so regardless of how brazen, entrenched or sophisticated the criminal operations are, the impact on the reputation of the Commonwealth of the infringing operations, the potential for impact to the Commonwealth’s trade relations or the associate illicit enterprises.

Even when the victims of these crimes are able to obtain the assistance of law enforcement agencies resourcing issues prevent action being taken in other jurisdictions against identified principals or upstream participants. We understand that this action requires little more than a coordinated communication with law enforcement agencies in the identified jurisdictions.

Other regulatory agencies that one might have assumed would have an interest in regulating these illicit activities, such as Crimtrac, Austrac, the Australian Taxation Office and the Australian Communications and Media Authority (ACMA), have not been engaged. (Indeed ACMA seems intent on regulating the legitimate media industry only.) Furthermore, I have made contact with the International Intellectual Property Section Services and Intellectual Property Branch Department of Foreign Affairs and Trade.

Australian foreign language Pay-TV operators have not been able to rely upon the local peak industry bodies or collecting societies for assistance in engaging with government. A stark example of this can be seen in the failure of the relevant collecting societies to pursue television retransmission royalties from the pirate operations. To date, any engagement only occurs with sharing of intelligence with rogue IPTV/Pay TV pirates.

As the criminal conduct in question does not rely on unauthorised decoders or otherwise ‘access to encoded broadcasts’ the offences provisions found in Part VAA of the Copyright Act 1968 provide no remedies.

As the criminal conduct in question is in the form of the (re-) transmission via the internet of television broadcasts rather than the ‘uploading’ or ‘downloading’ of infringing files most of the offence provisions found in Part V, Division 5 of the Copyright Act 1968 provide no remedies.

Question 37.  Does the application of the statutory licensing scheme for the retransmission of free-to-air broadcasts to internet protocol television (IPTV) need to be clarified, and if so, how?
The relevant provisions do not need clarification. IPTV falls outside the statutory licensing scheme. Section 135ZZJA is unequivocal and it would take considerable imagination to read it otherwise. I urge the Commission not to be swayed by hypothetical academic argument here.

Question 38.  Is this Inquiry the appropriate forum for considering these questions, which raise significant communications and competition policy issues?
I believe that the questions the Commission is raising are so inter-related with such a wide range of issues outside its terms of reference that a Parliamentary Inquiry into copyright and copyright enforcement is the appropriate venue.