SUBMISSION TO THE AUSTRALIAN LAW REFORM COMMISSION
COPYRIGHT AND THE DIGITAL ECONOMY
NOVEMBER 2012

About the Copyright Council
The Australian Copyright Council supports a creative Australia by promoting the benefit of copyright for the common good. 
We believe in the values copyright laws protect: creative expression and a thriving, diverse, sustainable, creative Australian culture. A society's culture flourishes when its creators are secure in their right to benefit from their creative work and when access to those creative works is easy, legal and affordable. Copyright effectively and efficiently enables this balance between protection and access.   
The Australian Copyright Council is an independent, non-profit organisation. Founded in 1968, we represent the peak bodies for professional artists and content creators working in Australia’s creative industries and Australia’s major copyright collecting societies. 
We are advocates for the contribution of creators to Australia’s culture and economy and the importance of copyright for the common good. We work to promote understanding of copyright law and its application, lobby for appropriate law reform and foster collaboration between content creators and consumers.  
We provide easily accessible and practical, user-friendly information, education and forums and pro bono legal advice on Australian copyright law for content creators and consumers.  
The Australian Copyright Council has 24 member organisations. Many of them are making separate submissions to this Inquiry. We have had the opportunity to review some of those submissions in draft form.  Where appropriate, we refer to them in this submission.
A full list of our members is attached at Appendix 1.

EXECUTIVE SUMMARY
Australia has an extensive system of copyright exceptions and statutory licences.  The Copyright Council is not persuaded that the existing exceptions and statutory licences are not adequate and appropriate in the digital economy. 
The digital economy facilitates licensing and this should be preferred over the creation of further exceptions. The advantage of a licensing solution is that it can apply internationally, unlike an exception based in domestic law. 
Having said that, we make the following suggestions to assist the ALRC in its inquiry:
Any proposals for new exceptions to copyright should be based on clearly identified policy grounds (including an articulation of the intended beneficiary of the exception) and should be directed at fulfilling socially useful purposes.
1. Extending the definition of ‘carriage service provider’ in the safe harbour scheme may be a way of addressing issues in relation to caching.  This would require a commitment to a code of conduct. 
2. It may be possible to make existing exceptions more operational by:
- applying a general set of fairness factors to all the fair dealing exceptions;
- industry agreed guidelines in relation to flexible dealing under s 200AB.
3. There is a high level issue about interactive uses of copyright material by individuals and whether copyright law should be amended to accommodate such behaviour.
In reality, it is unlikely that an individual would be sued for infringement of copyright for such uses. However, there is an argument that failure to legitimate common consumer behaviour brings the copyright regime into disrepute.
In our submission, the creation of broad exceptions is problematic. 
There may be limited scope for an exception for non-commercial or private and domestic ‘transformative’ uses of copyright material by individuals.  However a licensing regime would need to apply in relation to commercial entities hosting that material online. 
Alternatively it may be possible to address this issue through a license it or lose it model whereby uses are allowed unless there is a licence on offer.  Such a mechanism would need to be crafted so as not to discriminate against individual creators.  Hooper suggests that licensing is feasible for individual creators and small businesses as well as copyright collecting societies.
Another approach is to limit the liability of individuals subject to meeting certain criteria.  This would provide some comfort to individuals engaged in interactive uses of copyright material but would preserve the creator’s ability to control use of their material and to license it to commercial entities.
4. Existing and future exceptions to infringements in relation to economic rights should not vitiate moral rights. For example, a creator should be able to request that a derivative work be taken down.

I INTRODUCTION
The terms of reference ask the ALRC to consider whether the exceptions and statutory licences in the Copyright Act 1968  (the Copyright Act) are adequate and appropriate in the digital environment.  It also asks the ALRC to consider whether further exceptions should be introduced for certain purposes.  For example, fair use, transformative, innovative and collaborative use and online use for social, private or domestic purposes.
There is a large number of exceptions and statutory licences in the Copyright Act.  Many of them are interrelated. The Issues Paper does not examine all of these in order to address the broad question raised by the terms of reference.  Rather, it focuses on some specific issues.  It is necessary to say something at the outset about limitations and exceptions to copyright and about statutory licences.
LIMITATIONS AND EXCEPTIONS
Copyright has been recognised as part of the infrastructure of a modern economy. 
Copyright gives the copyright owner a bundle of rights.
Those rights are subject to certain limitations. For example, they endure for a specified period of time; they only apply to expressions and not to the ideas or information behind them; and  they require a degree of originality.  These limitations establish the boundaries of copyright.
In addition, there is a range of exceptions.  These are generally expressed in the Copyright Act as acts which do not constitute infringement of copyright.  It is an open question whether they should be seen merely as defences to infringement or as a derogation of the exclusive rights of the copyright owner.
Statutory licences restrict the ability of a copyright owner to exclude others from making certain uses of their copyright material, but recognise the right of the copyright owner to be remunerated for that use.  Australia has a well-established system of statutory licences in its copyright regime.
The exceptions and statutory licences reflect a range of policy objectives.  Some are merely pragmatic, whereas others embody core values. In its Issues Paper for the 2005 Fair Use Review, the Attorney-General’s Department identified three broad categories of exceptions and statutory licences: 

"(i) It may recognise that particular uses and commercial arrangements have developed before the right of copyright owners to control that use was fully recognised or developed. Examples are the recording licence that permits record companies to make sound recordings of musical works (ss 55-64) and the broadcast licence allowing broadcasters to use sound recordings for television and sound broadcasts (ss 109).
(ii)	A particular use may be so minor and incidental that it causes the copyright owner no substantial financial harm. It also may be impractical for the copyright owner to prevent the conduct because it is difficulty to detect. The exception permitting the copying of a live television or radio broadcast for private use is an example (s 111).
(iii)	A provision may reflect a specific situation where Parliament has decided that a broader policy goal cannot be met through unregulated market exchange. The provisions with respect to fair dealings and uses by educational institutions, persons with disabilities, libraries, archives and governments illustrate this category.”

In our submission, it is necessary to have regard to these objectives in assessing the adequacy and appropriateness of exceptions and statutory licences in the digital economy.  
CONTEXT
The Internet Treaties were concluded in 1996.  Australia was one of the first countries to implement its obligations in the Copyright Amendment (Digital Agenda) Act 2000.  There has been a large number of inquiries examining Australia’s copyright law in the digital environment both before and since the Digital Agenda Amendments came into force in 2001.  These include:
Copyright Convergence Group, Highways to Change, 1994;
Attorney-General’s Department, Copyright Reform and the Digital Agenda, 1997;
Copyright Law Review Committee: Simplification of the Copyright Act 1968, 1996-1998;
Review of Intellectual Property under the Competition Principles Agreement, 2000 (the Ergas Review);
Copyright Law Review Committee (CLRC), Copyright and Contract, 2002
Phillips Fox, Digital Agenda Review, 2004
Attorney-Generals Department, Fair Use and Other Copyright Exceptions: An examination of fair use, fair dealing and other exceptions in the Digital Age, 2005; 2005
Attorney-General’s Department Private Copying Review, 2008;
Book Industry Strategy Group Report, 2011.
In addition, there are some relevant reviews that are not focused on copyright such as the Convergence Review.  There have also been significant reviews of copyright in other common law countries such as the Hargreaves Review in the UK (and the consequent Hooper Review), the 2009 Copyright Consultations in Canada which led to their Copyright Modernization Act 2012 and the current review by the Copyright Review Committee of Ireland on Copyright and Innovation.  The ALRC has been asked to take into account recommendations from related reviews, in particular, the Convergence Review.
There is also a number of other reviews being conducted in parallel with this review: For example, the Attorney-General’s Department is looking at Technological Protection Measure (TPM) Exceptions, the definition of Carriage Service Provider in the Safe Harbour Scheme and extending the Legal Deposit Scheme as it relates to the National Library of Australia.  While the ALRC has been directed not to duplicate work being done elsewhere, the Council acknowledges that it may not be possible to examine all the issues in the ALRC’s Issues Paper without traversing some of this ground.
It has been recognised from the outset that technological neutrality is key to copyright adapting to the digital economy. After all, that was one of the professed goals of the Digital Agenda Amendments:
“The new right of communication to the public will replace and extend the existing technology-specific broadcasting right which applies only to `wireless' broadcasts. It will also replace the limited cable diffusion right. The right of communication will encompass the making available of copyright material online, so as to provide protection to material made available through on-demand, interactive transmissions. An example of the exercise of this right would be the uploading of copyright material onto a server which was connected to the Internet.
The new right will substantially improve protection for many important industries that publish or distribute copyright material on the Internet and will also protect copyright material included in cable pay TV broadcasts. Being a technology-neutral right, it will also mean that the development of new technologies such as `Internet broadcasting' will not require repeated technology-specific changes to the Copyright Act.”
So, one might ask, why the need for another review?  As we suggested in our submission to the Attorney-General’s Department on the draft terms of reference, the number of reviews indicates an ongoing level of discomfort with copyright in the digital economy.   
It is true there has been a quantum leap in technology in recent times. However, in our submission, this is the very stuff of copyright law and policy.  For example, sixty years ago, the Gregory Committee observed:   
“It will be found that a considerable part of our Report is concerned with the technical developments which have occurred since 1911.  Many of these have produced new situations, which could not possibly have been foreseen 40 years ago, but are now inevitably judged and governed by the provisions of the Act of 1911. The Copyright Committee of 1909 were concerned with only a few technical developments calling for special consideration in connection with copyright.  In particular, they were faced with the growth of the gramophone industry, and after taking evidence on this matter made a recommendation which we find was not followed in the Act itself: the provisions in the Act relating to gramophone records remain one of the most controversial topics with which we have been required to deal.  But the treatment provided in the Act for gramophone records, while itself controversial, does not now attract the same concentration of public interest, as do broadcasting and television in the context of copyright.  In considering these, we have been deeply conscious that we are dealing with something which is of great and continual interest in millions of homes, and that our recommendations may well be the subject of criticism, controversy and debate.” 
The Inquiry is taking place at a time when business models are in a state of transition as they adapt to new technology and different consumer expectations.  At present, there remains a gap between some business modes and what consumer want (legitimately or otherwise).   In our submission, the ALRC needs to be mindful of not making recommendations to deal with issues that are peculiar to this point in time, thereby stifling incentives for copyright owners to develop new business models.
THE INTERNATIONAL DIMENSION
The ALRC has been asked to take into account Australia’s international treaty obligations in proposing solutions.  The ALRC has indicated in its Issues Paper that it may recommend policy parameters for future treaty making.  The Issues Paper does not, however, examine in detail the central plank underlying exceptions to copyright in international law, that being the three-step test set out in the Berne Convention on the Protection of Literary and Artistic Works (Berne Convention) and the Agreement on Trade Related Aspects of Intellectual Property (TRIPS) and replicated in other agreements to which Australia is a party such as the WCT and the WPPT.
 The three-step test is set out in Article 13 of TRIPS as follows:
“Members shall confine limitations or exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder”
Breaking it down into its constituent parts, the three steps require than exceptions are confined to:
1. certain special cases;
2. that do not conflict with the normal exploitation of the work; and
3. do not unreasonably prejudice the legitimate interests of the right holder. 
This is the prism through which all exceptions need to be viewed.
A further relevant consideration is the international dimension of the digital economy and the effectiveness of any domestic policy reforms in the absence of international norms.

II EVIDENCE
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;
b.	affects the introduction of new or innovative business models;
c.	imposes unnecessary costs or inefficiencies on creators or those wanting to access or make use of copyright material; or
d.	Australia at a competitive disadvantage internationally.        
The digital economy is the global network of economic and social activities that are enabled by platforms such as the Internet, mobile and sensor networks.
It is significant that this definition includes both economic and social activities.  In our submission, social activities are harder to quantify.  According to the Government:
“The key elements to a successful digital economy are a Government that is digitally aware and enabling; industry that is digitally confident, innovative and skilled; and a community that is digitally empowered and literate”
In its report on the Economic Contribution of Australia’s Copyright Industries 1996-7 to 2010-11, PwC found that copyright industries make a significant contribution to Australia’s economy.  For example:
•	6.6% GDP
•	8% Australian workforce
•	almost 3% total exports
PwC also found that the emergence of the digital economy has meant that:
•	many copyright products are moving from physical to electronic distribution;
•	copyright products are more easily accessed and at lower prices;
•	there is an increased risk of unauthorised copying.
At the launch of the PwC report, a number of creators spoke about what copyright means to them.  We note that some stakeholders have referred to the results of member surveys in their submissions. These testimonials provide an insight into the importance of copyright from parishioner’s perspective.
The PwC report recognises the importance of an appropriate regulatory model. This is recognised by the Government itself:
“Regulatory restructures are important to provide business certainty, address market failures and protect the interests of consumers. If not carefully constructed, however, regulation can stifle innovation and investment, particularly in dynamic areas. The digitisation of commerce means that Australian companies are also increasingly competing directly with foreign businesses, even if those same businesses are based off-shore and operating under different regulatory structures. Governments must continue to review regulatory structures as technology and markets evolve. Ongoing review allows these frameworks to continue to provide an environment in which businesses can grow and consumers can act with confidence.”
In this context we submit that it is artificial to look at exceptions, without having regard to some of the conditions that are affecting business confidence and the economic contribution of Australia’s copyright industries.  As we note in relation to principle 8 below, it is necessary to have regard  to the broader copyright ecosystem. In this connection, we refer to and support the initial observations Copyright Agency|Viscopy make in response to question 2.
The PwC Report does not look separately at industries relying on exceptions to copyright.  This is the focus of Lateral Economics’ report, Exceptional Industries.  The report cites impressive figures.  However, at one level, this is not surprising, given that most Australians utilise copyright exceptions. 
The companion report Excepting the Future posits the economic benefits of a more flexible copyright system.  The report proceeds on the basis that more flexible exceptions are necessarily better.  However, it does not deal with the policy issues underlying exceptions to copyright and who the beneficiary of these exceptions should be.  In our submission, this requires greater analysis than claiming a benefit to society as a whole. Furthermore, it does not deal (other than cursorily) with the effect of these exceptions on creators of copyright material. 
We note that the Lateral Economics reports are among a growing body of research looking at the economic value of flexible copyright exceptions. Of particular interest is a paper on The Economic Value of Fair Use in Copyright Law: Counterfactual Impact Analysis of Fair Use Policy On Private Copyright Technology and Copyright Markets in Singapore. Singapore offers an interesting case study given its geographic location, the fact that it has free trade agreements with both Australia and the United States and that based on the work of PwC, its copyright industries occupy a comparable level of GDP to Australia.  The paper cites a 6.68% average annual growth rate of copyright industries following Singapore’s ‘fair use policy amendments’.
It is necessary to say something about the legal premise of that study.  The Singapore Copyright Act owes much to the Australian Copyright Act.  It provides for fair dealing for news reporting, criticism and review and judicial proceedings.  It also provides for a range of other specific exceptions such as back-up copying. The 2005 amendments opened up the possibility of fair dealing applying to other purposes on the same basis as it does for research or study. The amendment needs to be understood in the context of the Australian exceptions for fair dealing for research or study which include five factors for determining fairness.  As discussed below, these factors were implemented following a recommendation of the Franki Committee.  And while four of them resemble the fair use factors, they are actually derived from Australian case law.  

While the Singaporean amendment incorporates some elements from the first fair use factor (including whether such dealing is of a commercial nature or is for non-profit educational purposes) in our submission it is better understood as having its origins in fair dealing under Australian law and should not be seen as an adoption of fair use.  This is borne out by the other specific exceptions in the Singapore legislation. In our submission there is nothing to suggest that the Singaporean regime is more permissive than Australia’s. Indeed the inclusion of the ‘commercial availability factor’ as a criteria for fair dealing may mean that it is a good deal less permissive. 

Questions about flexible copyright exceptions raise fundamental issues about the benefits of standards compared with rules.  This issue is examined more closely below.

STANDARDS OR RULES: ACHIEVING A WORKABLE COPYRIGHT REGIME
The goal of achieving a flexible and simplified copyright exceptions regime needs to be understood in the context of the broader debate about legal rules or standards.  Theoretically, a flexible exception could encompass many of the issues which are the subject of the ALRC’s inquiry.  However, the Council has serious reservations about how this could be implemented and what benefits it would bring.
It is appropriate to make some preliminary observations about the American fair use doctrine.
1.	Fair use developed outside the tradition of the three-step test as expressed in the Berne Convention.
When it was introduced in 1976, s 107 of the United States Copyright Act was intended to codify US case law on ‘fair use’. It is important to emphasise that this had developed outside the traditions of the Berne Convention, with the United States not joining the Berne Union until 1989.
2.	It is underpinned by a different constitutional setting.
There are two significant differences between the Australian and American  constitutional setting that are relevant to an examination of exceptions to copyright.  
Firstly, the purpose of copyright is quite specific in the US Constitution:
“To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries”.
By contrast, the copyright power in s 51 (xviii) of the Australian Constitution falls under the plenary power to make laws for ‘the peace order and good government’ of the Commonwealth.  In a recent speech, French CJ observed that ‘[a]lthough much inspired by the Constitution of the United States, Inglis Clark's draft [for the 1891 Convention]  did not reflect the purposive terms of Art 1, s 8 of that Constitution”.
Secondly there is a First Amendment guarantee of freedom of expression in the United States.  On the other hand, Australia has only a limited, implied freedom of political communication and no federal bill of rights. 
In our submission, the prescribed copyright power in the US Constitution and the guarantee of freedom of expression inform the operation of fair use in the United States.  There is a strong argument that purposive exceptions are more appropriate to Australia’s constitutional setting given the broad copyright power and the lack of a federal bill of rights.  For example, a number of Australia’s fair dealing exceptions are directed at preserving freedom of expression: news reporting, criticism or review, parody or satire. In his Second Reading Speech for the Copyright Amendment Bill 2006, the then Attorney-General, Philip Ruddock said “ [a] further exception promotes free speech and Australia’s fine tradition of satire by allowing our comedians and cartoonists to use copyright material for the purposes of parody or satire”. 
Likewise, it is also relevant to consider whether the creation of any new exceptions would require ‘just terms’ under s 51(xxxi) of the Australian Constitution.
Section 51(xxxi) gives the Parliament the power to makes laws for the peace order and good governance of the Commonwealth with respect to :
“the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws”.
This provision has been considered by the High Court in a number of intellectual property cases.  See, for example, Nintendo Co Ltd v Centronics Systems Pty Ltd [1994] HCA 27; (1994) 181 CLR 134; (1994) 121 ALR 577; (1994) 68 ALJR 537; (1994) AIPC 91-077; (1994) 28 IPR 431 (in relation to circuit layout rights); Phonographic Performance Company of Australia Limited v Commonwealth of Australia [2012] HCA 8  (in relation to broadcast rights) and T International SA v Commonwealth of Australia [2012] HCA 43 (in relation to trade marks).  While the s 51 (xxxi) argument did not succeed in the above cases, in our submission they are distinguishable on their facts.  This should not be taken to mean that there could be no ‘acquisition of property’ issue where there is a derogation of the rights of a copyright owner. 
3.	While fair use might provide flexibility, one has to consider the inherent uncertainty that is a concomitant of that.  
Some commentators argue that such concerns have been overstated.  For example, Samuleson identifies common patterns in fair use case law and categorises them into a number of purpose-based groupings.  In our submission, that analysis relies on making fair use more ‘rule-like’.  This type of analysis suggests that Australia should be wary to abandon the purposive approach of its fair dealing exceptions in favour of a more flexible, but possibly less easily applied, fair use exception. 
4.	The law is only part of the answer
As Hudson shows in her study of cultural institutions, reliance on copyright exceptions is highly dependant on cultural norms.  For example, many educational and cultural institutions have been cautious to take advantage of the flexibilities introduced by s 200AB of the Copyright Act.
The relevance of non-legislative factors was  also recognised by the Hargreaves Review in response to submissions about the benefits of a fair use regime:
“Does this mean, as is sometimes implied, that if only the UK could adopt Fair Use, East London would quickly become a rival to Silicon Valley? The answer to this is: certainly not. We were told repeatedly in our American interviews, that the success of high technology companies in Silicon Valley owes more to attitudes to business risk and investor culture, not to mention other complex issues of economic geography, than it does to the shape of IP law. In practice, it is difficult to distinguish between the importance of different elements in successful industrial clusters of the Silicon Valley type.” 

5. Case law
As recognised in the Issues Paper, introduction of a fair use doctrine would necessarily lead to an increase in litigation.  The US experience shows that this would not necessarily decrease over time. For example, since the Attorney-General’s Department published the draft terms of reference for this inquiry, three major fair use decisions have been published, not all of them easily reconcilable.  By contrast, there have been no Australian cases dealing with fair dealing for parody or satire since that exception was introduced in 2006.  Indeed, the sample of copyright cases analysed by Copyright Agency|Viscopy suggests that a very small number of cases concern exceptions.
It is generally accepted that litigation is expensive and time consuming. We query whether this is the best vehicle for determining issues related to copyright policy.  This is discussed further below.
6. Public policy considerations
There are some important public policy considerations that arise form a broad fair use-style exception.  The advantage of fair use is said to be its flexibility.  This is posited as a particular advantage in the digital economy. The parameters of fair use depend on elucidation by the courts.  Litigation is out of reach of most citizens.  This is likely to influence the kind of cases that proceed to court.  In our submission, where there are policy issues about the application of exceptions to copyright, it is more appropriate for them to be addressed by the legislature than litigated in the courts.  This is consistent with the principle of evidence-based policy making, rather than policy based on the law of evidence. 
A further public policy consideration relates to transparency.  The Australian Copyright Council is aware that there are fair use guidelines which operate in the United States. In our submission, it is preferable as a matter of administrative law, to have the exceptions articulated in the principal legislation (as they currently are) rather than in a range of other instruments.  
7. Application of the three-step test
Whether explicit, as in s 200AB or not, the three-step test will inform the application of a fair use exception in Australia.   This will mean that the exception will apply differently to different markets.
We note that there are some doubts about whether Australia’s existing exceptions comply with the three-step test. This is discussed further in response to question 19. 
8.	Other Reviews
In 1998 and again in 2005 the Australian Government has looked at whether it should introduce a fair use model here. As a result of the 2005 review it introduced some new private copying exceptions, a new fair dealing exception for parody or satire and the flexible dealing exception in s 200AB.  In light of the very limited case law, we query why a different approach is required at this time?
We note that other common law countries have considered and rejected fair use. The Hargreaves Review considered and rejected fair use.  While that was partly informed by constraints of EU law, in our submission the fact that Europe does not follow a fair use model is itself significant.  Likewise Canada considered and rejected fair use as part of the process leading up to the enactment of the Copyright Modernization Act 2012.
9.	Rationalisation
If the object in considering a fair use style exception is to simplify the legislation as well as making it more flexible, it would seem logical not to merely graft a fair use provision on to the existing regime (for example, by adding an open-ended fair dealing exception).  Rather, some rationalisation would be required.  
For example, could fair use replace all the specific exceptions which are part of the Copyright Act?
While the Australian Copyright Council does not favour the introduction of a fair use exception, in our submission, if the Commission is minded to recommend such an amendment, it must grapple with this issue.
10.	Evidence
Rather than starting with the solution, in our submission it is better to look first at the underlying policy issues. Are the existing exceptions adequate and appropriate in the digital economy?
III GUIDING PRINICPLES 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?

Principle 1: Promoting the digital economy
The Australian Copyright Council supports the principle of promoting the digital economy.  In our submission this should support innovation in relation to technologies and content as well as access to technologies and content.  We emphasise the fact that access need not be understood as free access.
The Issues Paper quotes Australia’s Digital Economy: Future Directions which cautions that “without open access to appropriate categories of information, Australia may not enjoy the potential innovation of the digital economy”. It is worth noting in this context that copyright does not protect information.  Rather it protects the form in which the information is expressed.  This principle is known as the “idea/expression” dichotomy.
Australia has traditionally applied a low threshold of originality for copyright protection.  This has meant that a large amount of informational material or compilations of facts have been protected by copyright as literary works. This did not prevent use of the information itself, although it did prevent reproduction of substantial parts of such material without the copyright owner’s permission.
There has been a trend away from this in recent times.  This commenced with the High Court’s decision in Ice TV which found that copyright did not subsist in television guides.
Following on from this, the Federal  Court has held that copyright does not subsist in telephone directories.  This was contrary to an earlier decision of the Court.  A key factor was the automation in the process of producing the directories, and the lack of any evidence of human skill, labour or judgment. Likewise, Justice Bennett has held that there is no copyright in newspaper headlines.  This is in distinction to similar cases overseas.
Principle 2:  Encouraging innovation and competition
The Australian Copyright Council supports this principle.  This acknowledges the important relationship between copyright and competition law and policy as seen in the Competition Principles Agreement 1995 and s 51(3) of the Competition and Consumer Act 2010. And in the role of the Copyright Tribunal of Australia, which was extended as part of the 2006 amendments.  
Principle 3: Recognising rights holders and international obligations
This principle seems to conflate two separate concepts: rights holders and international obligations.  We suggest that they be dealt with as separate principles. 
The Issues Paper refers to the Universal Declaration of Human Rights as a platform  for the rights of copyright owners. We note that this is also reflected in a number of other instruments.  For example, Article 15(1) (c) of the International Covenant on Economic, Social and Cultural Rights recognises the right:
“To benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.” 
And Article 31 of the UN Declaration on the Rights of Indigenous Peoples refers inter alia to “the right to maintain, control, protect and develop their intellectual property over such cultural heritage, traditional knowledge, and traditional cultural expressions”.
The key obligation in relation to exceptions to copyright is contained in the so-called three-step test. The Australian Copyright Council submits that it might be helpful if the three-step test were included as a guiding principle for reform.
The Issues Paper notes that the ALRC’s inquiry may provide an opportunity for suggesting policy parameters within which future international negotiations may take place. This reflects the Joint Standing Committee on Treaties (JSCOT) recommendation that the Anti-Counterfeiting Trade Agreement not be ratified until after the ALRC had published its report. We note that this aspect of the Committee’s recommendation has not been accepted by Government. We observe that exceptions to copyright are but one component of an international treaty negotiation and that the treaty as a whole is subject to a National interest Analysis.
A significant issue that will require the ALRC’s attention is the extent to which domestic solutions are effective in the digital environment.  For example, while certain conduct might be permitted under Australian copyright law, that may not be enough if the conduct is occurring online.

Principle 4: Promoting fair access to and wide dissemination of content
This principle encompasses a number of concepts that are not part of copyright law.
Firstly, it refers to “content”.  We note that this may encompass copyright as well as public domain material.
Secondly we note that the right to control access is not one of the exclusive rights of the copyright owner.  A qualification to this is the extent to which an access control TPM might be applied to copyright material.  Specific exceptions may facilitate circumvention of TPMs in those circumstances. We note that issues associated with TPMs are beyond the scope of this review.
The Issues Paper quotes Peter Banki’s presentation at a Copyright Society seminar to suggest that it is a matter of what should and should not be paid for.  Inherent in the concept of fairness is identifying the beneficiary of any new copyright exceptions.  For example, should it be applicable to both private individuals and corporations?  
Principle 5: Responding to technological change
It has been recognised since the outset that technological neutrality is central to the ability of Australia’s copyright regime responding to the digital economy. 
There is an interesting discussion of technological neutrality by Rothstein J of the Supreme Court of Canada delivering the judgment of the minority in Entertainment Software Association, et al v. Society of Composers, Authors and Music Publishers of Canada [2012] SCC 34 at paras 49 and 50:
“Generally, a technologically neutral copyright law is desirable.  However, technological neutrality is not a statutory requirement capable of overriding the language of the Act and barring the application of the different protected rights provided by Parliament.  My colleagues’ basic propositions pre-empt the application of other rights of the copyright holder to this set of facts and divest these rights of their independent content.  There is no need to revive rights that have never been exhausted.
In many respects, the Internet may well be described as a technological taxi; but taxis need not give free rides.
I cannot agree with my colleagues that the “principle of technological neutrality requires that … we interpret the Copyright Act in a way that avoids imposing an additional layer of protections and fees based solely on the method of delivery of the work to the end user” (para. 9).  Characterizing the Internet transmission as a mere “method of delivery” of the work pre-empts the application of the right to communicate by telecommunication in s. 3(1)(f).  Further, the proposition is inconsistent with the approach to media neutrality as described by the majority of this Court in Robertson v. Thomson Corp., 2006 SCC 43, [2006] 2 S.C.R. 363, at para. 49, per LeBel and Fish JJ.: 
Media neutrality means that the Copyright Act should continue to apply in different media, including more technologically advanced ones.  But it does not mean that once a work is converted into electronic data anything can then be done with it.  … Media neutrality is not a licence to override the rights of authors — it exists to protect the rights of authors and others as technology evolves.”
We submit that while technological neutrality is an important principle, it should not override the rights of creators and owners of copyright material.
Principle 6: Acknowledging new ways of using copyright material
The Australian Copyright Council acknowledges that consumer behaviour is a relevant consideration, although to some degree this conflicts with the principle of technological neutrality.  We note that many of the exceptions in the Copyright Act are not grounded by high-minded policy objectives, they are purely practical.  For example, the exceptions relating to reproduction and publication of works in public places contained in ss 65, 66 and 68 of the Copyright Act.  Likewise, the suite of private copying exceptions introduced by the Copyright Amendment Act 2006 was introduced to recognise consumer behaviour.  In his Second Reading Speech, the then Attorney-General said “the reforms recognise that common consumer practices of time shifting of broadcasts and format shifting of some copyright material should be permissible”.  
It is worth noting that while the law must be cognisant of how people are using copyright material, it does not automatically follow that all such uses should be legitimated.  
Principle 7: Reducing the Complexity of Copyright Law
The Australian Copyright Council acknowledges the complexity of the Copyright Act and supports the principle that reform should not compound that by adding further complexity. However, we note that despite the work of the CLRC Simplification Review 1995-1998, the Copyright Act has grown in both length and complexity.  To some extent this reflects drafting style and the rules-based approach of the legislation.
While it may be possible to rationalise aspects of the Copyright Act, we note that copyright is necessarily a technical area of law.  Like any technical area, the intricacies of copyright may not be apparent to non-specialists.   Arguably, those issues can be addressed through education and information.  This is an important part of what organisations such as the Australian Copyright Council do.
Principle 8: Promoting an adequate, efficient and flexible framework
The Australian Copyright Council supports this principle. We note that while this inquiry is focused on the adequacy and appropriateness of exceptions to copyright, it is necessary to have regard to the broader copyright ecosystem and the broader policy objectives. 

IV THE QUESTIONS
CACHING INDEXING AND OTHER INTERNET FUNCTIONS
Question 3.  What kinds of internet-related functions, for example caching and indexing, are being impeded by Australia’s copyright law?
As noted in the Issues Paper, the Copyright Act includes a number of technical exceptions to deal with internet-related functions. For example, s 200AAA provides an exception for proxy web caching by educational institutions.  While there’s no general exception for caching or indexing in the Copyright Act, we are not aware of any practical impediment to such internet-related functions in Australia.  To our knowledge, there have been no instances of a search engine being sued for copyright infringement for caching or indexing in Australia.
We note that the terms ‘caching’ and  ‘indexing’ can refer to a wide range of activities.  We refer to and support ARIA’s  observations on this point. If the ALRC were considering making a recommendation in relation to such internet-related functions, it would be very helpful if it included a working definition of these terms.
Question 4.  Should the Copyright Act 1968 (Cth) be amended to provide for one or more exceptions for the use of copyright material for caching, indexing or other uses related to the functioning of the internet? If so, how should such exceptions be framed?
We query the need for an additional exception for caching and indexing.  In our submission, issues of intermediary liability could be dealt with under the definition of Carriage Service Provider in the Safe Harbour provisions.
In order for this to be a realistic option, copyright owners would need to have confidence that this would not reduce incentives for licensing content and that there would need to be commitment to a code of conduct. We note that this is beyond the scope of the terms of reference.
CLOUD COMPUTING
Question 5.   Is Australian copyright law impeding the development or delivery of cloud computing services?
Cloud computing covers a broad range of activities.  Gervais has predicted that  ‘everything digital will be in the Cloud. Almost every bit of human culture, every song, every book, document and movie ever made”.
Ficsor has recently observed that the Cloud is a metaphor and cautioned against being  “carried away by this smart metaphor and think[ing] that everything is ‘merged in an amorphous cloudy phenomenon where one cannot know who does what, where and in which way and thus, it is impossible to apply copyright”.
While the Optus TV Now service has been widely discussed as a business model that was held to be outside the time shifting exception in s 111, there are many other business models that do comply with Australia’s copyright regime. And reports indicate that cloud computing is growing in Australia. 
Cloud-based services are continuing to evolve.  Some services offer content, some offer email, blog and social networking facilities whereas others merely operate as storage lockers. We refer to Appendix 2 which details some cloud-based services operating in Australia. We also refer to the submissions of ARIA and APRA|AMCOS in this regard.
Question 6.  Should exceptions in the Copyright Act 1968 (Cth) be amended, or new exceptions created, to account for new cloud computing services, and if so, how?
As stated above the Cloud is becoming ubiquitous. Whether any new exception for cloud computing services should be introduced requires an analysis of what kind of activities should be covered and who the beneficiaries of such an exception might be.
For example, different considerations might apply if an individual is using a locker in the cloud to store copyright material they have acquired legitimately than where a company is offering content on a cloud-based service.  In the latter example, it is difficult to see why the company would not need to clear the content, in the same way as a bricks and mortar retailer would need to buy stock.
Our primary position is that cloud-based service should be licensed.  Gervais observes that licensing is an interface between exclusive rights and exceptions and limitations.  We acknowledge that the format shifting exception for sound recordings in s 109A(1)(b) does not apply to communications and restricts copying to devices owned by the person making the copy and would therefore exclude cloud-based services.  However, as a practical matter, the music industry has been successful in developing licensing models to meet consumer demand. Therefore it seems to us that any difficulty is more at a theoretical rather than a practical level.  In our submission the existing copyright regime, together with licensing models are equipped to support cloud computing. We canvass possible exceptions in the sections below.

PRIVATE COPYING
Question 7.  Should the copying of legally acquired copyright material, including broadcast material, for private and domestic use be more freely permitted?
Part of the challenge in addressing private copying is that it is not an activity that copyright law was originally designed to regulate. The Copyright Act  employs the term ‘private’ and ‘domestic’ in several provisions (for example, s 109A).  ‘Private and domestic use’  is defined in s 10 as ‘private and domestic use on or off domestic premises’.  This makes it clear that it is intended to extend to activities of a private and domestic nature that occur outside the home. 
Traditionally issues around private and public behaviour have arisen in the context of the pubic performance right.  For example, s 46 provides an exception in relation to the public performance of works in a place where people reside, such as a nursing home.  However, concepts of private use are much harder to apply in the digital environment.  That is not least because uses are likely to extend beyond mere copying to communications to the public.
It is important to acknowledge that other jurisdictions such as Europe and (to a limited extent) the United States and Canada have private copying levies.  For example, Sweden and the Netherlands have recently announced new private copying levies to apply to devices such as smartphones and tablets. By contrast, Australia’s existing private copying exceptions are not based on a levy system.  Because of the application of the three-step test, this necessarily means the exceptions in Australia are likely to have a narrower operation.
As noted in Appendix 2, business models are reducing the need to engage in private copying.  The Australian Copyright Council does not see a need to extend the existing private copying exceptions. 
Question 8.  The format shifting exceptions in the Copyright Act 1968 (Cth) allow users to make copies of certain copyright material, in a new (eg, electronic) form, for their own private or domestic use. Should these exceptions be amended, and if so, how? For example, should the exceptions cover the copying of other types of copyright material, such as digital film content (digital-to-digital)? Should the four separate exceptions be replaced with a single format shifting exception, with common restrictions?
We note that the existing format shifting exceptions were carefully drafted with Australia’s international treaty obligations in mind.  In addition to requiring identification of a special case, the three-step test involves a market-based analysis of the normal exploitation of the work. 
As the WTO Panel noted in Homestyle 
‘What is a normal exploitation in the market-place may evolve as a result of technological developments or changing consumer preferences. Thus, while we do not wish to speculate on future developments, we need to consider the actual and potential effects of the exemptions in question in the current market and technological environment.’ 
The above extract emphasises that fluid nature of what is a ‘normal exploitation’.  In our submission, while a single format shifting exception might seem attractive at a superficial  level, it is likely to create difficulties in application and should be approached with caution.
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; and
b.	should the exception apply to content made available using the internet or internet protocol television?
The Copyright Council does not support extension of the exceptions in s 111.  In our submission, who makes the copy is relevant to the policy basis of the exception.  Here, the policy intention was to enable individuals to time shift free-to-air broadcasts for private or domestic use. In our submission, a ‘volitional acts’ analysis is inconsistent with this policy.  It is the individual who is the intended beneficiary of the exception. As the Full Federal Court noted in its decision:
'There is nothing in the language, or the provenance, of s 111 to suggest that it was intended to cover commercial copying on behalf of individuals. Moreover, the natural meaning of the section is that the person who makes the copy is the person whose purpose is to use it as prescribed by s 111(1). Optus may well be said to have copied programmes so that others can use the recorded programme for the purpose envisaged by s 111. Optus, though, makes no use itself of the copies as it frankly concedes. It merely stores them for 30 days. And its purpose in providing its service – and, hence in making copies of programmes for subscribers – is to derive such market advantage in the digital TV industry as its commercial exploitation can provide. Optus cannot invoke the s 111 exception.' 
Critics of the Optus decision have focused on the ‘old world’ understanding of ‘making’ in s 111 of the Copyright Act.  In doing so, they have cited Cartoon Network LP, LLLP v CSC Holdings Inc 536 F 3d 121 and Record TV Pte Ltd v MediaCorp TV Singapore Pte Ltd [2011] 1 SLR 830. In comparing the iDVR with the traditional VCR, the Court of Appeal of Singapore noted three factors in common: 
‘(a) it is the user who chooses which show to record;
(b) the request to record a show is made to a recording device (the traditional DVR/VCR) or recording system (the iDVR); and
(c) it is the recording device/system which records the selected show.’
In our submission, s 111 requires a sufficient nexus with the end-user and is entirely consistent with the policy basis of the exception.  While this was absent on the facts in Optus, it may not be so in other cases. 
It is also worth noting that arguments about human ‘agents’ in copyright law can cut both ways.  For example, it was the lack of an identifiable human author that led the Full Federal Court to hold that copyright did not subsist in Telstra’s telephone directories.
In our submission the source of the content is also relevant. This means that the IPTV example poses difficulties. For example, free-to-air TV is based on an advertising model.  This does not necessarily follow for material made available in other media. 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.
We note that at a practical level, the growth of catch-up TV and other licensed time shifting services (such as Foxtel IQ) may well be making the time shifting exception redundant.
Question 10.   Should the Copyright Act 1968 (Cth) be amended to clarify that making copies of copyright material for the purpose of back-up or data recovery does not infringe copyright, and if so, how?
Business models exist whereby copyright owners permit consumers to do certain acts with the content they purchase. For example, when purchasing a DVD you may receive a code which allows you to load the film on a specified number of devices. Examples of such models are provided in Appendix 2.
These examples demonstrate that business models are responding to consumer concerns.  In our submission, it is not clear that further exceptions are required for back-up copying.
Furthermore, the advent of streaming services is overcoming the issue of consumers only being able to access content through a single device. It may be that format shifting will cease to be an issue over time.  For example, an iTunes library roams with the customer and is available on any Apple device. 
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?
Intuitively we know that people are using online platforms to share and create content.  For example, posting a photo on Facebook, or a link to an article on Twitter, creating a blog which incorporates content from other sources, or even making a video mashup and uploading it on to YouTube or Vimeo.  The CCI Digital Futures 2012 : The Internet in Australia report provides data on how people are using the Internet in Australia. 
Interestingly, Australia reports very high use of social media compared with other countries surveyed.  Particularly relevant in this context is the section on Creative Uses of the Internet.  It looks at activities such as personal websites, blogs, posting content such as photos and videos and the use of the Internet to share creative work.  According to the report’s findings, only a quarter of respondents agreed that the Internet had encouraged them to produce and share their own creative work. 
This data suggests that the Internet is still largely being used for consumptive rather than creative purposes by Australians. This is directly relevant to the question of whether, as a matter of public policy, new exceptions are required to accommodate such uses.   In our submission, any new exceptions should be confined to socially useful purposes.  Mere consumptive uses of copyright material can be dealt with under licensing models and do not require further exception.
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?
This question and the following series of questions (through to question 18) examine the issue of ‘user-generated content’ and whether copyright law should better accommodate the interactive nature of copyright material on the Internet.
At first blush the notion of online uses of copyright material for private or domestic purposes seems to be a contradiction in terms.  That is because online uses of copyright material will generally involve a “communication to the public”. 
As noted above, the Copyright Act already contains exceptions for some private and domestic uses of copyright material.  Significantly, they only apply to reproductions and not communications. 
The Copyright Act currently includes no references to ‘social uses’.  While s 46 is an example of where the Copyright Act facilitates a social use of copyright material in a domestic context, it is difficult to apply this analogy to the online environment.  This is because notions of ‘minimal harm’ are not applicable.  
It is helpful to look at a common example of how copyright material may be used on social media.
With the inclusion of cameras on mobile devices such as phones, it has become commonplace for people to attend an art exhibition and to photograph the artworks.  While the person who took the photograph would own copyright in it, the photograph would also amount to a reproduction of the underlying artwork.  
It is also common for people to share those images, for example, by posting them on their Facebook wall.  Depending on the person’s privacy settings, the image could then be viewed by their friends only or the world at large.  Either way, the act of uploading the photograph would be a communication to the public.  And, if done without the permission of the owner of copyright in the underlying artwork and not permitted by an exception in the Copyright Act, would amount to an infringement.
This scenario raises a number of policy, legal  and practical considerations.
Policy considerations
It is relevant to consider the possible policy rationale for such an exception. Would such an exception facilitate social discourse in the digital economy and be justified on the grounds of freedom of expression?  Alternatively would the rationale for such an exception be purely pragmatic? That is, would it merely be designed to legitimate common consumer behaviour? In our submission, the latter rationale seems more plausible.  While this may have the goal of improving respect for copyright, this hardly seems a cogent policy rationale when one considers the concomitant risks of making material available online without the permission of the copyright owner.
From a policy perspective, it is also necessary to consider who should be the beneficiary of any such exception.  For example, while some artists may not mind an individual photographing an artwork in a gallery, this is unlikely to apply to broader uses. For example, Facebook acquires a broad licence as a condition of uploading images to its platform which purports to give it the ability to on-license the material.
In our submission, it is the purpose of the individual user that is relevant to any exception for online use of copyright material for social, private or domestic purposes.  It follows that any exception would need to be limited to uses by individuals and would not extend to online platforms hosting the copyright material.   In our submission, the interests of such commercial entities could be met by a licensing model.  We note that online platforms such as YouTube already negotiate licensing agreements with copyright owners.
Legal considerations
The first limb of the three-step test requires that exceptions be limited to ‘certain special cases’.  This was interpreted in Homestyle as ‘clearly defined and should be narrow in its scope and reach’.  Given that use of copyright material online is now mainstream, in our submission it is doubtful that use of copyright material online, even if limited to social, domestic or private purposes, is likely to constitute a ‘special case’. 
In our submission, the activity would need something additional to qualify as a special case.  For example, it would need to be directed at specific activities in relation to specific copyright material.  We discuss this further under Transformative Use in response to question 16 and Fair Dealing in response to question 17.
Practical considerations
In considering how such an exception might work in practice, it is also necessary to have regard to the difficulty of controlling the use of copyright material, once it is made available online.  As we have indicated above, if an individual makes an image available on their Facebook wall, Facebook would acquire a licence to use that image and to license others to use it. In our submission, it is also likely that when an individual posts an image online, it would become a source for use by others.  For example, during the London riots in 2011, the BBC sourced images from Twitter. 
In our submission, an Australian exception for online uses of copyright material for social, domestic or private purposes would have limited utility.  This is because, it would only cover acts done in Australia and would not cover acts done in other jurisdictions.   Returning to the example of a photo of an artwork on Facebook, an exception might protect an individual from liability for copyright infringement in Australia, however they would still have a potential liability for communication of that photo in other jurisdictions.  It would also not resolve issues associated with the Facebook terms and conditions which require users to warrant that they own the copyright in photos that they post and to indemnify Facebook in relation to claims arising from such content. It is worth noting that the Facebook terms and conditions apply the law of California. 

Question 13.   How should any exception for online use of copyright materials for social, private or domestic purposes be confined? For example, should the exception apply only to (a) non-commercial use; or (b) use that does not conflict with normal exploitation of the copyright material and does not unreasonably prejudice the legitimate interests of the owner of the copyright?
This question is concerned with the framing of an exception for online uses of copyright material for social, private or domestic purposes and the second and third limbs of the three-step test.  As stated above, this proposal raises some serious policy and practical issues.  In our submission it is also doubtful that such an exception would satisfy the first limb of the three-step test. It is against that background that we address this question.
We note that the new Canadian ‘user-generated content’ exception does not approach (a) and (b) in a binary way as suggested by the question.  That is, it requires both that the use be ‘solely for non-commercial purposes’ and that it not adversely affect the exploitation of the work or a market for the work. In doing so, they reflect Canadian case law. 
29.21 (1) It is not an infringement of copyright for an individual to use an existing work or other subject-matter or copy of one, which has been published or otherwise made available to the public, in the creation of a new work or other subject-matter in which copyright subsists and for the individual — or, with the individual’s authorization, a member of their household — to use the new work or other subject-matter or to authorize an intermediary to disseminate it, if
(a) the use of, or the authorization to disseminate, the new work or other subject-matter is done solely for non-commercial purposes;
(b) the source — and, if given in the source, the name of the author, performer, maker or broadcaster — of the existing work or other subject-matter or copy of it are mentioned, if it is reasonable in the circumstances to do so;
(c) the individual had reasonable grounds to believe that the existing work or other subject-matter or copy of it, as the case may be, was not infringing copyright; and
(d) the use of, or the authorization to disseminate, the new work or other subject-matter does not have a substantial adverse effect, financial or otherwise, on the exploitation or potential exploitation of the existing work or other subject-matter — or copy of it — or on an existing or potential market for it, including that the new work or other subject-matter is not a substitute for the existing one.
As the Issues Paper acknowledges, defining commercial and non-commercial uses of copyright material in the digital economy is complex.  APRA|AMCOS also address this issue at length in their submission.  The Australian Copyright Council considers that it would be helpful for the Commission to develop some guidance in order to facilitate a common understanding of the term.
In our submission, a good starting point is the way that the term ‘commercial’ is currently used in the Copyright Act. There is no definition in the Act, however, the term appears in a number of provisions.
For example, s 30A deals with ‘commercial rental arrangements’ of sound recordings.  Relevant features of commercial rental arrangements are that they are made in the course of the conduct of a business and that they involve payment of money or money’s worth.  
There are also a number of criminal offence provisions which include the term ‘commercial’. These provisions are consistent with  Article 61 of TRIPS and Article 17.26. of the Australia-United States Free Trade Agreement (AUSFTA).  Article 17.26 of AUSFTA provides that:
(a) Each Party shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. Wilful copyright piracy on a commercial scale includes:
(i) significant wilful infringements of copyright, that have no direct or indirect motivation of financial gain; and
(ii) wilful infringements for the purposes of commercial advantage or financial gain.
For example, s 132AJ deals with possessing infringing articles for commerce. The provisions covers possession for sale, hire, distribution for trade but also introduces the concept of an act done for the purpose of obtaining a commercial advantage or profit and ‘distribution to the extent that will affect prejudicially’ the copyright owner.  
Similarly, s 248QF which sets out an offence for commercial possession or import of unauthorised sound recordings of performances uses the concept of selling, hire, offering for sale or hire and distribution for trade or to an ‘extent that will affect prejudicially the financial interest’ of the copyright owner.  
Given that we are looking at online uses of copyright material, it is instructive to look at some provisions that were drafted with these in mind.
For example, s 132AC provides an indictable offence for infringement on a ‘commercial scale’ that has a substantial prejudicial impact on the copyright owner.   Sub-section 132AC (5) provides that in determining whether an infringement is on a commercial scale, the volume and value of any infringing articles and any other relevant matter are to be taken in to account.  The Explanatory Memorandum makes it clear that the provision is intended to cover infringing activity which has no profit commercial gain or profit motive but that results in a clear loss for the copyright owner. 
The other area which uses the concept of ‘commercial scale’ is the factors that a court may have regard to in determining relief in civil actions for infringements online in s 115.  The Explanatory Memorandum makes it clear that this provision  “is intended to be wide enough to capture commercial- scale Internet infringements that occur through peer-to-peer file sharing or by way of hypertext linking or downloads from remote websites. This is consistent with the definition of `communicate' in sub-s 10(1) which includes `to make available online or electronically transmit'.” 

The WTO looked at the meaning of ‘commercial scale’  in the dispute brought by the United States against China in relation to measures for the protection and enforcement of intellectual property rights. The Panel stated:

‘A review of the uses of the word "commercial" throughout the TRIPS Agreement indicates that it links various activities, not simply selling, to the marketplace. It also shows that "commercial" activities cannot be presumed to be on a larger scale than others, such as "public non-commercial" activities, even though they would generally be larger than, say, "personal" or "domestic" use. The distinguishing characteristic of a commercial activity is that it is carried out for profit.’
Australia made a third party submission as part of the dispute, contending for a construction of ‘commercial scale’ consistent with its use in the Copyright Act. This was noted by the Panel:

‘Australia argues that "commercial scale" encompasses any act or series of acts of trademark counterfeiting or copyright piracy that adversely affects the financial rewards available to a right holder within a Member territory and that the ordinary meaning of the word "scale" incorporates the notion of a comparative assessment. Whether an individual case is on a commercial scale can only be determined case-by-case, taking account of all relevant circumstances, including the potential impact of digitally-based technologies. This can include infringement activities with no financial advantage for the infringer, which nevertheless have substantial prejudicial impact on the right holder because of the availability of infringing material on digital networks.’
In its recent response to the JSCOT report on the Anti-Counterfeiting Trade Agreement,  the Australian Government has also noted that the definition ‘commercial scale’ in that treaty is consistent with the Copyright Act. 

The preceding discussion highlights the case-by-case nature of determining whether an activity is commercial or not. For example, it is not only necessary to have regard to motive, but also to look at the prejudicial effect on the rights holder.  Given the difficulty in formulating a useful definition of ‘non-commercial’, an alternative may be to apply the existing definition of ‘private and domestic use’.  This may also more closely reflect the underlying policy rationale of such an exception.  This is dealt with in detail in the submission of APRA|AMCOS.   The Australian Copyright Council supports this as a possible alternative to  the term ‘non-commercial’.

Whether one prefers to characterise conduct as ‘private and domestic’ or ‘non-commercial’  (in the sense of lacking a commercial advantage or profit motive) this is relevant to defining a ‘special case’ under the first limb of the three-step test.  In our submission,  any exception for online uses of copyright material for social, private or domestic purposes would also need to meet the second and third limbs of the three-step test.  That is, it should not conflict with the normal exploitation of the copyright material or unreasonably prejudice the legitimate interests of the copyright owner. 

An example of this is the flexible dealing provision in s 200AB.  It  requires the relevant dealing not to be for the purpose of obtaining a commercial advantage or profit and it requires that it not conflict with the normal exploitation of the copyright material and that it not unreasonably prejudice the legitimate interests of the copyright owner. This is similar to the Canadian approach.  It is also consistent with the approach under the fair use doctrine in the United States which requires an examination of the nature and purpose of the use and the effect on the market.

In our submission, whether it used the language of the three-step test or not, any new exception for use of copyright material for online social, private or domestic purposes  would need to be a special case.  Attributing a non-commercial or private and domestic  purpose may go some way to articulating a special case.  However, it would also need to satisfy the remaining elements of the three-step test.  That is hwy we say that the choice is not a binary one, as suggested by the question.

TRANFORMATIVE USE
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?
As APRA\AMOCOS note in their submission, the terminology used in this question raises some difficulties.
Copyright material has always been used to create derivative works.  However, the availability of copyright material in digital formats has led to the rise of ‘user generated content’. For example, at one end of the scale there is Gotye’s use of a Luiz Bonfa sample in ‘Somebody that I Used to Know’  and at the other end there are the many parodies of the Gotye hit that one can find on the Internet.  Some uses clearly have a commercial purpose.  For example, it seems equitable that Gotye should clear the rights to the Bonfa composition. Other uses may fall more into the category of ‘self-expression’.  For example, many of the parodies of Somebody that I Used To Know may be permitted under Australian law as a fair dealing for parody or satire.  Other uses may begin as purely creative enterprises and later become ‘monetised’.  In such cases, the initial creation may be covered by an exception but it may be necessary to seek a licence at the point of commercialisation. 
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?    
Copyright law and theory recognises the iterative nature of creativity.  This is reflected in some of the inherent limitations of copyright.  For example, copyright protection is for a limited duration and protection cannot be revived once material has fallen into the public domain.  Hence, there was no copyright issue when the artist, Marcel Duchamp reproduced an image of the Mona Lisa with a moustache in 1919.  Another important limitation is that copyright does not protect ideas, but rather the expression of those ideas. It only protects ‘original’ material. And you only need a copyright owner’s permission if you use a substantial part of their material and then, only providing the use falls within one of the copyright owner’s exclusive rights.  
In addition to these inherent limitations in the copyright regime, the Copyright Act includes a number of exceptions which serve the public interest in freedom of expression.  For example, fair dealing for criticism or review, news reporting and parody or satire.  In addition, specific exceptions provide for the incidental filming of artistic works (s 67) and for reproduction of part of an artistic work in a later artistic work by the same artist (s 72).
It is worth noting that not all these exceptions are ‘free’.  For example s 55 provides a statutory licence for the making of cover versions of musical works.  This is discussed in more detail in response to question 41.
In our submission, these limitations and exceptions already permit a wide range of ‘transformative’ uses of copyright material. The question then arises whether there are activities that the current law does not permit that it should permit?  And if so, what is the policy rationale?
We note that the Issues Paper uses the term ‘transformative’ 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.’ For example, mashups.
The underlying policy issue seems to be whether creative uses of copyright material not currently permitted under the Copyright Act should be subject to a new exception. 
The Australian Copyright Council acknowledges that creators often quote other cultural references in their work.  This has always been so. As Leval put it “all intellectual creative activity is in part derivative”.  Such uses may fall outside existing exceptions.  A well-developed copyright clearance system facilitates such uses.  We also acknowledge that there may be a limited case for some creative, non-commercial uses of copyright material to be permitted.
As mentioned above, in our submission, use of copyright material for online social, private or domestic purposes would not of itself be a ‘special case’ within the meaning of the three-step test.  However, there may be some scope for certain productive or ‘transformative’ uses of copyright material by individuals to amount to a special case.
In our submission, the proper basis for such an exception would be innovation and social discourse, rather than a practical inability to regulate such activities.
Such an exception should be limited to private individuals and should not be extended to corporations, such as online platforms hosting such material.  
The framing of such an exception raises some complex issues.  Some of these issues are canvassed below.
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?
The concept of transformative use comes from the US doctrine of fair use. It was first used by the United Stated Supreme Court in Campbell v Acuff-Rose Music Inc. where the Court held that ‘the goal of copyright is generally furthered by the creation of transformative works”.  While that case involved a musical parody, recent US case law has seen uses of copyright material that may be better characterised as a ‘recontextualisation’ held to be ‘transformative’.  For example, in Kelly v Arriba Soft Limited and Perfect 10, the use of thumbnail images was held to be transformative. In Bill Graham Archives v Dorling Kindersley Limited the use of images in a biographical publication was held to be transformative.  And in Blanch v Koons the use of fashion magazine images in a painting by Jeff Koons was held to be transformative.
Most recently, Justice Baer of the United States District Court has held that making digital copies of books to facilitate access for people with a print disability is transformative.  In doing so he observed: 
“Several courts have upheld wholesale copying of works where the use and purpose for the copies was clearly distinguishable from those of the original. See A.V. v. iParadigms, LLC, 562 F.3d 630, 640 (4th Cir. 2009) (concluding that copying and archiving of student papers “was completely unrelated to expressive content and instead aimed at detecting and discouraging plagiarism”); Perfect 10 v. Amazon.com, Inc., 508 F.3d 1146, 1165 (9th Cir. 2007) (finding that Google’s copying of Internet content to make it searchable was transformative because “a search engine transforms the image into a pointer directing a user to a source of information”); Kelly v. Arriba Soft Corp., 336 F. 3d 811, 819 (9th Cir. 2003) (finding that copying to produce exact replicas of artistic works displayed in thumbnail form on the internet to facilitate searches was transformative because it was “unrelated to any aesthetic purpose”).23 Plaintiffs’ argument that the use is not transformative merely because defendants have not added anything “new” misses the point. Perfect 10, 508 F.3d at 1164 (“[E]ven making an exact copy of a work may be transformative so long as the copy serves a different function than the original work.”).
Some commentators have observed that the case law tends to be ‘conclusory – they appear to label a use as “non-transformative” as shorthand for “not fair” and correlatively “transformative” for “fair”. Such a strategy empties the term of meaning’.
The notion of change is inherent in the concept of something being ‘transformative’.  Transformation is defined in the Macquarie Dictionary as ‘to change in appearance, condition, nature, or character, especially completely or extensively’.  In our submission, mere recontextualisation is not sufficient to be transformative.  There would need to be creation of a new work.

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?     
It is important to bear in mind that under the US doctrine of fair use, a finding that use of copyright material is transformative will not of itself be enough for the use to be fair.  There must be a consideration of all four elements of fair use. As the Supreme Court said in Campbell v Acuff-Rose “all [of the factors] are to be explored, and the results weighed together, in light of the purposes of copyright."
While in our submission, it is important that any transformative use exception be confined to non-commercial or private and domestic uses, as stated above, we do not think that the issue should be approached in a binary way.
In our submission any exception for transformative use would need to be non-commercial (or for private and domestic uses) and would also need to meet the second and third limbs of the three-step test. This raises an issue about what rights any exception should apply to.   For example, creating a defence to what would otherwise be an infringement by an individual, may impact on a copyright owner’s normal exploitation of their work.  By way of illustration, an exception might apply to the initial reproduction.  However, if it extended to uploading the copyright material (ie the communication) that is likely to have implications for the copyright owner’s ability to license the communication of that material.
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?
Any discussion of  ‘transformative’ uses of copyright material raises a fundamental issue about the rights of the owner of the copyright in the underlying material, and their ability to control how their work is used.  When a copyright owner releases their work into the world, they want people to engage with it, but it is another thing to say that they are then granting others a right to reproduce that work.
While early formulations of fair use were based on ‘the author's implied consent to "reasonable and customary" use when he released his work for public consumption’ we note that this formulation has not been taken up in modern case law.   In this context, it is interesting to note that unofficial codes of conduct exist in many online communities.  The problem in the case of user-generated content is that the owner of copyright in the underlying material is often not a community member. 
While limiting an exception to non-commercial or private and domestic uses may recognise a copyright owner’s commercial interests, it does not address the personal aspect of the transaction: that is, copyright owners just want people to ask permission to use their work. 
In his speech launching the PwC report, Mark Dreyfus QC, MP remarked “ in the future, we will need to develop national and international copyright infrastructures, not necessarily just the development of copyright laws”. In our submission, the digital economy provides an opportunity for copyright owners to license their material.  For example, Creative Commons establishes a mechanism whereby copyright owners can make their material available online. This includes the ability to object to the creation of derivative works.  There are also a variety of commercial digital exchanges, which facilitate the licensing of copyright material.  For example, iStock is a popular image library.  Likewise work is underway internationally to create copyright hubs and international copyright databases.  These initiatives are aimed at facilitating licensing of copyright material in the digital economy. 
In our submission, licensing models are an alterative to exceptions.
One option might be the establishment of a licensing scheme for the communication of such material. It could operate on an extended collective licence basis.  For example, the license it or lose it model that exists in New Zealand and the UK. The model would need to ensure that individual copyright owners who wanted to directly license their work could retain the ability to do so.  This may be possible through the establishment of a copyright hub. 
This approach has the advantage of facilitating access to copyright material and placing the onus on copyright owners to license the material.
We note that existing exceptions for fair dealing for criticism or review and news reporting require sufficient acknowledgment of the underlying work.  In our submission, similar considerations should apply to any transformative use exception. This is a particular issue in relation to digital material which includes electronic rights management information (ERMI).  For example, could a transformative use exception apply to material including ERMI?  
In our submission any exception for transformative uses could not justify the removal of ERMI (or the decryption of TPMs). Moreover, in order not to contribute to the orphan works issue, where there is no ERMI embedded in the underlying copyright material, the exception should be contingent on sufficient acknowledgement of the work.
Under the current regime something may be a fair dealing in relation to the economic rights but that does not vitiate moral rights considerations.  That, of course, may go to the reasonableness of the conduct in question, but it should not be taken to override an author’s moral rights.  This issue is particularly apparent in relation to fair dealing for parody or satire.  For example, a particular use may be a fair dealing but may nevertheless amount to an infringement of the right of integrity.  In our submission this is consistent with the purpose of the moral rights legislation which is about:
“acknowledging the great importance of respect for the integrity of creative endeavour. At its most basic, this bill is a recognition of the importance to Australian culture of literary, artistic, musical and dramatic works and of those who create them.”
In our submission any new exceptions should not undermine the operation of the moral rights regime. We note that the reference to ‘normal exploitation’ in the second limb of the three-step test includes moral rights.  In our submission, this issue highlights some of the differences between the US and Australian legal systems.   For example, while the US has a First Amendment right to freedom of expression, it does not have a federal moral rights regime. This means that courts in the US have not had to reconcile fair use with authors’ moral rights.
     OPTIONS FOR USER-GENERATED CONTENT (Questions 12 -18)
Developing a copyright response to user-generated content involves some complex issues.
Legitimating common consumer behaviour has been justified in the past on the basis of improving respect for copyright law. We query whether this is a sufficient policy basis. In our submission, there must be some other socially useful purpose. It is also necessary to weigh the apparent benefits of a new exception against the concomitant risks.
In reality it is unlikely that an individual will be pursued for copyright infringements of a private or domestic nature. Therefore, the issue can be seen more as one of theory than reality.
1. One option may be to limit the amount of damages that can be awarded against an individual if they meet certain criteria.  This has the advantage of providing comfort to the individual while preserving the copyright owner’s ability to object to unauthorised uses of their material and to license commercial uses.
We note that the Canadian Copyright Modernization Act 2012 provides for reduced statutory damages for infringements done for non-commercial purposes. The Australian Copyright Act does not provide for statutory damages.  As discussed in our response to question 13, s 115 of the Act deals with the assessment of damages for commercial-scale infringements. On one view, the courts already have discretion under this provision to award reduced damages for infringements by individuals.  Alternatively, it may be possible to explicitly provide for reduced damages on the basis of the kind of factors set out below.
2. Another option is for a limited exception to apply in certain circumstances:
•	non-commercial (in the sense of having no commercial gain or profit motive). An alternative formulation could be ‘private and domestic’; 
•	transformative (in the sense of creating something new)  uses;
•	by individuals;
•	that do not conflict with the normal exploitation of the work or other subject-matter (including the moral right of attribution and integrity)
•	or the legitimate interests of the copyright owner; and 
•	providing there is sufficient acknowledgement of the work or other subject-matter.
3. A further option may be a licensing model.  For example, an exception based on a license it or lose it model.  It would be important to ensure that this option did not discriminate against individual copyright creators. Hooper suggests that a licensing model can work for individuals and small businesses.

LIBRARIES ARCHIVES AND DIGITISATION
Question 19.   What kinds of practices occurring in the digital environment are being impeded by the current libraries and archives exceptions?
We note that the Copyright Act has a detailed series of provisions dealing with library and archives. This reflects the importance of such institutions in a geographically disparate nation.  These provisions were translated into the digital environment by the Digital Agenda Amendments.  And augmented by the flexible dealing provision in s 200AB in 2006. We query whether the policy basis for all these exceptions remains valid in the digital economy. We also note that Ricketson has raised doubts about whether all of the library exceptions conform with the three-step test. 
To the extent that there are impediments, in our submission it is worth considering whether they relate to copyright law or other considerations.  For example, financial constraints or cultural issues.
We refer to and support the Australian Publishers Association’s response to this  question.
Question 20.   Is s 200AB of the Copyright Act 1968 (Cth) working adequately and appropriately for libraries and archives in Australia? If not, what are the problems with its current operation?
The Copyright Council regularly advises libraries.  We are aware that many of these institutions are risk adverse and have difficulty applying s 200AB.  It may be possible to overcome some of these issues through agreed industry guidelines. For example, agreement could be reached in relation to certain, common scenarios.  We understand that this is already occurring in some instances. 
Question 21.   Should the Copyright Act 1968 (Cth) be amended to allow greater digitisation and communication of works by public and cultural institutions? If so, what amendments are needed?
The Copyright Council does not support further exceptions for digitisation and communication of copyright material by public and cultural institutions.  In our submission, if institutions require certainty it may be appropriate to consider some kind of extended collective licence to cover mass digitisation of material that is in copyright. For some institutions this will not be necessary as they will already be covered by the government statutory licence in s 183.
As Copyright Agency|Viscopy note in their submission, different considerations might apply to digitisation for preservation purposes.  We are aware that the Government is currently looking at extending the legal deposit provisions as they relate to the National Library of Australia. The Australian Copyright Council has supported this reform as it relates to preservation of Australia’s cultural heritage.
We refer to and support the response of the Australian Publishers Association in response to this question.
Question 22.   What copyright issues may arise from the digitisation of Indigenous works by libraries and archives?
Digitisation of indigenous works is likely to give rise to issues in relation to the protection of traditional knowledge and traditional cultural expressions.  Protocols might offer a means of managing these issues.  However, we note that protection of traditional knowledge and traditional cultural expressions is a much broader issue.

ORPHAN WORKS
Question 23.   How does the legal treatment of orphan works affect the use, access to and dissemination of copyright works in Australia?
We note that there has been no quantification of the Orphan works issue in Australia.
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?
The Australian Copyright Council acknowledges that there is an issue locating copyright owners in some instances.  This problem is often compounded in the  digital environment where it is easy for copyright material to become separated from its author.  As Copyright Agency|Viscopy note in their response to this question, this issue has been of particular concern to photographers.
This is a relevant issue in considering the introduction of new exceptions, for example, in relation to transformative uses of copyright material.
It is an area where existing provisions in the Copyright Act relating to the protection of ERMI might be of some utility. For example, there could be a positive obligation to include ERMI when digitising copyright material.
In our submission, the approach to orphan works ultimately comes down to risk management.
We are aware that some organisations, such as SBS and the National Film and Sound Archive, have adopted practical polices to manage their risk.  However, if the appetite for risk is less, then some kind of scheme is an option.
There are various discussions about the issue of orphan works occurring internationally.  Most recently, the EU has released its Orphan Works Directive  and the United States Copyright Office has announced an Orphan Works Review.
In Australia, Professor Michael Fraser and Associate Professor David Brennan have authored a White Paper canvassing a possible model for an orphan works regime in Australia.  The Attorney-General’s Department has also recently released an internal review document that canvasses seven options for a possible orphan works regime.
While each of these options bears consideration, the Fraser-Brennan model offers a detailed examination of some of these issues.  The Australian Copyright Council generally supports an extended collective licensing model as a solution to the orphan works issue.
DATA AND TEXT MINING
Question 25.   Are uses of data and text mining tools being impeded by the Copyright Act 1968 (Cth)? What evidence, if any, is there of the value of data mining to the digital economy?
The Australian Copyright Council is not aware of any impediments that the Copyright Act poses for data mining in the digital economy. As previously noted, there is limited protection for informational material under Australian copyright law. Neither is there any sui generis database protection under Australian law.  In this context, data and text mining may not pose a significant issue in Australia.
Question 26.   Should the Copyright Act 1968 (Cth) be amended to provide for an exception for the use of copyright material for text, data mining and other analytical software? If so, how should this exception be framed?
We note that the Hargreaves Review made recommendations for a UK exception for text mining as a fair dealing for non-commercial research.  It was also in favour of amendments to EU database protection laws to support commercial text mining and data analytics.
As noted above, Australia has much more limited protection for databases than in the UK. In our submission, it may be more appropriate to consider this issue in the context of a review of database protection in Australia.
Question 27.   Are there any alternative solutions that could support the growth of text and data mining technologies and access to them?
If, in Australia, text and data mining issues mainly arise in an educational context, it may be possible to consider an extended collective licensing model to address this issue.
EDUCATIONAL INSTITUTIONS
Question 28.   Is the statutory licensing scheme concerning the copying and communication of broadcasts by educational and other institutions in pt VA of the Copyright Act 1968 (Cth) adequate and appropriate in the digital environment? If not, how should it be changed? For example, should the use of copyright material by educational institutions be more freely permitted in the digital environment?
Based on the Copyright Council’s experience of conducting training for educational institutions, the Part VA licence is working well.  We refer to and support the submission of Screenrights in response to this question.
Question 29.   Is the statutory licensing scheme concerning the reproduction and communication of works and periodical articles by educational and other institutions in pt VB of the Copyright Act 1968 (Cth) adequate and appropriate in the digital environment? If not, how should it be changed?
Based on the Copyright Council’s experience of conducting training for educational institutions, the Part VB statutory licence is generally well understood and operates efficiently.  We refer to and support the submission of Copyright Agency|Viscopy in response to this question.
Question 30.   Should any uses of copyright material now covered by the statutory licensing schemes in Pts VA and VB of the Copyright Act 1968 (Cth) be instead covered by a free-use exception? For example, should a wider range of uses of internet material by educational institutions be covered by a free-use exception? Alternatively, should these schemes be extended, so that educational institutions pay licence fees for a wider range of uses of copyright material?
The Issues Paper refers to the recent Canadian Access Copyright decision which held that ‘research or study’ extended to the activities of the educational institutions.  
As noted in the Issues Paper, this decision is at odds with the Federal Court’s decision in Holmes v Copyright Agency Limited (1982) 64 FLR 185. In our submission, it is also important to bear in mind that the Access Copyright decision was concerned with a particular set of facts and that it may not be possible to extrapolate broad principles arising from the decision.
That is a key feature of fair dealing exceptions. They require consideration on a case-by-case basis.  Whereas statutory licences facilitate use of an entire repertoire and therefore minimise transaction costs.
The Copyright Council does not support the replacement of the educational statutory licences by free exceptions.
We refer to and support the submissions of Copyright Agency|Viscopy and Screenrights in response to this question. 
Question 31.   Should the exceptions in the Copyright Act 1968 (Cth) concerning use of copyright material by educational institutions, including the statutory licensing schemes in pts VA and VB and the free-use exception in s 200AB, be otherwise amended in response to the digital environment, and if so, how?
We refer to our suggestion above that s 200AB could possibly be made more operational through industry guidelines.
We otherwise refer to and support the submissions of Copyright Agency|Viscopy and Screenrights in response this question.

CROWN USE
Question 32.  Is the statutory licensing scheme concerning the use of copyright material for the Crown in div 2 of pt VII of the Copyright Act 1968 (Cth) adequate and appropriate in the digital environment? If not, how should it be changed?
We note that s 183A (which deals with the declaration of collecting societies for the purposes of the government statutory licence) is limited to copying services and does not apply to communication.  Therefore communications can only be licensed on a voluntary basis under s 183.  In our submission, this should be extended to communication. 
The Australian Copyright Council frequently receives requests for advice from local governments. As mentioned in the Issues Paper, there is some doubt about whether the government statutory licence applies to local governments.  We support the extension of the statutory licence to local governments.  We refer to and support the submission of Screenrights and Copyright Agency|Viscopy in response to this question. We note that this position is not supported by APRA|AMOCS and PPCA.
Question 33.  How does the Copyright Act 1968 (Cth) affect government obligations to comply with other regulatory requirements (such as disclosure laws)?
The government statutory licence is designed to facilitate the machinery of government by ensuring that government departments and agencies can carry out their statutory functions without first having to clear copyright.  For example, the publication of submissions to government inquiries (where not covered by the government ownership provision in s 176 or a licence).
We note that the statutory licence does not ensure access to copyright material, but where access is provided (either voluntarily or pursuant to information gathering powers such as s 155 of the Competition and Consumer Act 2010) the statutory licence will ensure that the material can be used for the services of the Crown.
Question 34.  Should there be an exception in the Copyright Act 1968 (Cth) to allow certain public uses of copyright material deposited or registered in accordance with statutory obligations under Commonwealth or state law, outside the operation of the statutory licence in s 183?
We note that this question has attracted a significant response from surveyors  who own copyright  in their plans. We refer to and support the submission of Copyright Agency|Viscopy in response to this question.

RETRANSMISSION
Question 35.  Should the retransmission of free-to-air broadcasts continue to be allowed without the permission or remuneration of the broadcaster, and if so, in what circumstances?
The Australian Copyright Council refers to and supports the submission of Screenrights in response to this question.
In addition, we note that the protection of broadcasters is currently under active consideration by the WIPO Sanding Committee on Copyright and Related Rights.
We also note that the Copyright Tribunal of Australia recently affirmed the value of retransmission of free to air channels (the convenience to the customer).
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?
We support the extension of the statutory licence for retransmission of free-to-air broadcasts to retransmission over the Internet as a matter of principle.  We refer to and support Screenirights’ submission as to how this might be achieved in practice.
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?
We refer to and support the submission of Screenrights in response to this question.
Question 38.  Is this Inquiry the appropriate forum for considering these questions, which raise significant communications and competition policy issues?
In our view, this Inquiry is the appropriate forum for considering copyright issues related to convergence.  We refer to and support the response of Screenrights in response to this question.
Question 39.   What implications for copyright law reform arise from recommendations of the Convergence Review?
As ARIA has observed in its submission, the recommendations of the Convergence Review are at a high level.  There are a number of implications of the Convergence Review in relation to this and other issues. The Australian Copyright Council made a number of submissions to the Convergence Review which are available on our website.
STATUTORY LICENSING
Question 40.   What opportunities does the digital economy present for improving the operation of statutory licensing systems and access to content?
Statutory licences are a means of facilitating access to copyright material while recognising the economic interests of rights holders.  Copyright Agency|Viscopy and APRA|AMOCS explain the theoretical basis for statutory licensing in their responses to this section of the Issues Paper. The submission of Screenrights also illustrates how statutory licensing has been enhanced by digital technology. 
If one of the issues underlying this inquiry is access to copyright material, then it is appropriate to consider the statutory licensing system as a means of facilitating that access.
While it is beyond the scope of the ALRC’s terms of reference, it is also relevant to look at licensing generally.  Copyright collecting societies offer a wide range of voluntary licences. In addition, digital technology facilitates the direct licensing of copyright material, digital copyright exchanges and mechanisms such as Creative Commons.
We note that licensing models are being examined internationally.  For example, as APRA|AMOCS has indicated,  a global repertoire database is being established for music. And, following on from the Hargreaves Review, work has commenced on the establishment of a Copyright Hub in the UK.
In our submission, licensing models provide an important opportunity to address copyright issues in the digital economy.  And this should be borne in mind by the Commission in conducting its inquiry.
Question 41.   How can the Copyright Act 1968 (Cth) be amended to make the statutory licensing schemes operate more effectively in the digital environment—to better facilitate access to copyright material and to give rights holders fair remuneration?
There is a range of statutory licences in the Copyright Act.  The education, government and retransmission statutory licences are dealt with in detail elsewhere in this submission.   
A number of statutory licences deal with broadcasting.  For example, ephemeral reproductions made for the purpose of broadcasting in ss 47, 70 and 107, sound broadcasting of literary and dramatic works by holders of a print disability radio licence in s 47A, and broadcasting of sound recordings in s 109. 
The statutory licence in s 108 deals with the public performance of sound recordings. 
The Copyright Council refers to the submissions of Copyright Agency|Viscopy, Screenrights, APRA|AMCOS and PPCA in relation to the operation of the statutory licences.  In particular, we refer to and support the submission of PPCA in relation to lifting the cap on licence fees payable for the broadcast of sound recordings in s 152.
We wish to highlight the statutory licence in s 55 which provides for the making of ‘cover versions’ of musical works.  In our submission, this is an example of where the Copyright Act has acknowledged a common derivative use of musical works and has facilitated access to those works, while providing for remuneration of the copyright owner.  The licence in s 55 is limited to recordings made for retail sale and therefore would not apply to all uses of copyright material in the digital economy.  However, in our submission, it provides a useful example of how a statutory licence might apply to reproductions and communications of copyright material by commercial entities, such as social media platforms.
Question 42.   Should the Copyright Act 1968 (Cth) be amended to provide for any new statutory licensing schemes, and if so, how?
We have suggested several options for dealing with the issue of user-generated content.  Each involves some kind of let-out for individual users of copyright material, coupled with a licence for the host of the content.   This could be a statutory or extended collective licence, perhaps based on the license it or lose it model such as exists in the UK and New Zealand.  Alternatively there could be a direct licence. 
Another approach could be based entirely on licensing. Collective licensing solutions have been advocated by Gervais in a recent paper.  He notes ‘[w]ithout  proper licensing, each Internet user is simultaneously a potential infringer, a legitimate user and maybe a re-user (new author) of copyright material.  This is a problem at least at the policy level because copyright was not initially designed with individual users in mind’.
In our submission, these approaches have the advantage of reducing the risk of the individual and ensuring that commercial entities are effectively covered in relevant jurisdictions.
Question 43.   Should any of the statutory licensing schemes be simplified or consolidated, perhaps in light of media convergence, and if so, how? Are any of the statutory licensing schemes no longer necessary because, for example, new technology enables rights holders to contract directly with users?
As noted above, a number of the statutory licences relate to broadcasting.  These may require review in light of the Convergence Review. 
While there is an  increased scope for direct licensing, we are not persuaded that  this should replace statutory licensing. 
Question 44.   Should any uses of copyright material now covered by a statutory licence instead be covered by a free-use exception?
The Australian Copyright Council does not support the conversion of any of the statutory licences into free-use exceptions.
We note the debate about material available on the Internet.  In our submission, that issue has been overstated.  Just because material is available on the Internet does not mean that it is freely available for all purposes.  For example, the Australian Copyright Council makes its information sheets available to the public for reference purposes. This would not, for example,  entitle a training institution to reproduce that material as part of a course pack.
We refer to and support the submissions of Screenrights and Copyright Agency|Viscopy in response to this question. We also note that an amendment of this type may raise acquisition of property issues under s 51 (xxxi) of the Constitution.

FAIR DEALING 
Question 45.    The Copyright Act 1968 (Cth) provides fair dealing exceptions for the purposes of:
a.	research or study;
b.	criticism or review;
c.	parody or satire;
d.	reporting news; and
e.	a legal practitioner, registered patent attorney or registered trade marks attorney giving professional advice.
What problems, if any, are there with any of these fair dealing exceptions in the digital environment?
As the Issues Paper notes, fair dealing requires a case-by-case analysis.  While the digital economy may give rise to different fact situations, the Copyright Council is not aware of any specific difficulties in applying fair dealing in this environment.  We note that in Part 1 of its Simplification Report, the CLRC considered the difficulty of setting a ‘reasonable portion’ in relation to works in digital format. Following the Digital Agenda Amendments in 2000 the definition was extended to works in electronic form (10% or one chapter).  We are not aware that this has caused any particular difficulties.
In our submission, the fair dealing purposes reflect well–accepted public policy and are appropriate to Australia’s constitutional setting. We believe they operate effectively in the digital environment. 
Question 46.    How could the fair dealing exceptions be usefully simplified?
In our submission, the fair dealing provisions themselves are not complex.  However, we are aware that people sometimes find the case-by-case nature of fair dealing difficult to apply.  Application of the exceptions may be assisted by applying a general set of fairness factors.  One option is to look at the factors that currently apply in relation to s 40(2) in relation to research and study.  We note that these factors are derived from the case law.  As the CLRC noted, they are remarkably similar to the fair use factors which derive from US case law.  The major area of departure is s 40(2)(c) which refers to the possibility of obtaining the work within a reasonable time at an ordinary commercial price.
Question 47.    Should the Copyright Act 1968 (Cth) provide for any other specific fair dealing exceptions? For example, should there be a fair dealing exception for the purpose of quotation, and if so, how should it apply?
In the 2006 amendments to the Copyright Act, the Government introduced a new fair dealing for parody or satire.  Rather than introduce an open fair dealing exception as the CLRC had recommended in 1998, it instead introduced the flexible dealing provision that applies only to certain institutions.  It also introduced new exceptions for private copying.  The 2005 Fair Use Issues Paper noted that with the exception of the Betamax decision most of the cases “in the United States concerning ‘fair use’ deal “with commercial or business uses rather than private copying. Some commentators observe that the courts generally are reluctant to approve copying that is not for a productive or transformative use but merely reproduces entertainment material for its intrinsic value.” While the 2008 Cartoon Network v Cablevision decision found that Cablevision’s digital video recording system did not infringe copyright, it is worth noting that neither this case or the Aereo litigation that is currently before the courts, was argued on the grounds of fair use.  Therefore in our submission, the observation made by the Attorney-General’s Department in 2005 is still valid.
This may have been why the Government implemented these exceptions separately to fair dealing.  It might also reflect that the policy intention appears to have been pragmatic (recognising widespread consumer behaviour) rather than based on a significant principle of public policy.
In this submission, the Copyright Council has acknowledged that it may be appropriate to consider a limited exception for non-commercial or private and domestic uses of copyright material by individuals.  We have also suggested that such an exception would need to be justified on the basis of fulfilling a socially useful purpose.  We note that Canada has not implemented its new UGC exception as part of fair dealing but as a stand-alone provision.  We note that this was the subject of debate in Canada. Should the ALRC be minded to recommend such an exception, it may be worthwhile considering whether it should be included as a new type of fair dealing or as a stand-alone provision.
Quotation
The Issues Paper asks whether a new exception for quotation should be considered.  While this offers an interesting approach to ‘mashup culture’, the Copyright Council sees a number of difficulties with this suggestion.
Article 10 (1) of the Berne Convention states:
“It shall be permissible to make quotations from a work which has already been lawfully made available to the public, provided that their making is compatible with fair practice, and their extent does not exceed that justified by the purpose, including quotations from newspaper articles and periodicals in the form of press summaries.”
‘Quotation’ is defined in the Macquarie Dictionary as ‘that which is quoted; a passage quoted from a book, speech, etc.’ In our submission, it implies reproduction of less than the whole.  This is in contrast to the line of authority in the US which has held that a reproduction of the whole can amount to transformative use.  
In her thesis The Nature and Scope of Limitations and Exceptions to Copyright and Neighbouring Rights with regard to General Interest Missions for the Transmission of Knowledge: Prospects for their Adaptation to the Digital Environment Lucie Guibault  identifies quotation as the most important of all the exceptions to copyright in safeguarding a user’s freedom of expression.   In his commentary on the WIPO Internet Treaties The Law of Copyright and the Internet: The 1996 WIPO Treaties, their Interpretation and Implementation Ficsor, on the other hand,  interprets this provision narrowly:  
“There is good reason to say that there are, in fact, two levels of purposes involved.  The first level is the purpose of free reproduction, in this case, is quotation, and the second level is the extent of a quotation itself to be determined by the usual, normal purposes of quotations which follow from the very concept thereof, and which are described by Claude Massouye in his authoritative Guide to the Berne Convention as ‘either to illustrate a theme or defend some proposition or to describe or criticism a work quoted from.’ 
Ficsor goes on to note that a number of other second-level purposes such as entertainment and artistic effect were discussed during the preparation for the 1967 Stockholm revision but were not adopted.  Ficsor notes that ‘these aspects of the interpretation of the Berne provisions on quotations seem quite relevant from the point of view of the question of how this exception may be applied in the digital, networked environment, and in particular, along the ‘interface’ with technological measures of protection’.”
In our submission, there are four things emerging from the preceding discussion: 
1. The existing exceptions in the Australian Act for news reporting, criticism or review and parody or satire satisfy this requirement.  
2. Creating a new fair dealing exception for quotation to facilitate mashups and other user-generated content would need to be justified on significant public policy grounds.  For example, freedom of expression.  In our submission, an exception simply to legitimate common consumer behaviour would sit oddly as a fair dealing.
3. Such an exception would not apply to quotations of an entire work.
4. If a new fair dealing exception for quotation went beyond the requirements of the Berne Convention, it would seem to follow that it would still be necessary to establish that it was for ‘certain special cases’ within the meaning of the first limb of the three-step test.
Based on the preceding discussion, we suggest that there is no need to extend the fair dealing exceptions.

OTHER FREE USE EXCEPTIONS
Question 48.    What problems, if any, are there with the operation of the other exceptions in the digital environment? If so, how should they be amended?
Question 49.    Should any specific exceptions be removed from the Copyright Act 1968 (Cth)?
Question 50.    Should any other specific exceptions be introduced to the Copyright Act 1968 (Cth)?
Question 51.    How can the free-use exceptions in the Copyright Act 1968 (Cth) be simplified and better structured?
The Copyright Council will deal with these questions as a group.  We note that a number of other submissions have raised issues in relation to some of the other exceptions.  For example, Screenrights, Copyright Agency|Viscopy, the Australian Publishers Association and ARIA. We refer to and support the submissions of those  organisations in response to this question.
There is a large number of exceptions in the Copyright Act. In our submission, it would be helpful for the ALRC to conduct an audit to examine whether they are meeting their stated purposes. Or indeed, whether that purpose remains relevant in the digital economy.

FAIR USE 
Question 52.    Should the Copyright Act 1968 (Cth) be amended to include a broad, flexible exception? If so, how should this exception be framed? For example, should such an exception be based on ‘fairness’, ‘reasonableness’ or something else?
There has been ongoing debate for many years about whether Australia should introduce a ‘US style fair use’ exception.
As noted above, this raises fundamental issues about whether Australian copyright law should be based on standards or rules. In our submission, Australia should be loathe to abandon its rule-based system in favour of ‘US style fair use’.
The fair use doctrine arose out of US case law and was codified in s 107 of the copyright law in 1976.  Section 107 lists a number of purposes for which reproduction of a work may be considered fair (for example, criticism and news reporting). It also sets out four factors for considering whether a use is fair:
i.	The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes 
ii.	The nature of the copyrighted work 
iii.	The amount and substantiality of the portion used in relation to the copyrighted work as a whole 
iv.	The effect of the use upon the potential market for, or value of, the copyrighted work.
The fair use doctrine has evolved considerably since 1976 and continues to do so.  This makes it difficult to pin down a ‘fair use-style’ exception appropriate to the Australian context.
As the CLRC observed in its Simplification reference, these bear a striking resemblance to the factors in s 40(2).  The major difference is that s 40(2) also requires consideration of the possibility of obtaining the work within a reasonable time at an ordinary commercial price.
Ricketson has described s 40(2) as a ‘shining example of compliance with the three-step test’. 
As noted above, Singapore has adopted an open ended fair-dealing fair dealing exception based on the s 40(2) factors  in ss 35 and 108 of its Copyright Act.  While this approach has superficial appeal, we do not favour it.  That is both because we query how a broad-based exception could be a ‘special case’ within the meaning of the three-step test and, as discussed below, we do not think that simply adding an open-ended exception is appropriate.
Question 53.    Should such a new exception replace all or some existing exceptions or should it be in addition to existing exceptions?
In our submission, simply granting an open-ended exception on to the existing exceptions is not appropriate.  The ALRC has the task in this inquiry of analysing the existing exceptions and considering whether they may be replaced by a ‘fair use style’ exception.  

CONTRACTING OUT
Question 54.    Should agreements which purport to exclude or limit existing or any proposed new copyright exceptions be enforceable?
Throughout this submission we have stated that our first preference is for licensing models to address copyright issues in the digital economy.  Such models rely on effective transactional arrangements.  To the extent that the ALRC favours the introduction of new exceptions, it may want to consider whether the digital economy would be served by specific provisions in the Copyright Act dealing with the extent to which those exceptions can be excluded or limited by contract, if at all.  
The relationship between contract and copyright exceptions has become a contentious issue in the digital environment. In Australia, the issue was examined by the CLRC in its report on Copyright and Contract in 2002.  It has also been the subject of academic research.
For example, Carter, Peden and Stammer observe:
“Contractual restrictions imposed on licensees may be many and varied. However, as noted above, most restrictions are designed either to protect the integrity of the work or the owner’s financial interests. Both are legitimate concerns of anyone seeking to maximise the benefit of commercialisation of intellectual property rights, including copyright.”
The authors distinguish restrictions designed to protect the integrity of the work or the owner’s commercial interests from other types of restrictions.  For example, a restriction purporting to exclude fair dealing for judicial proceedings. 
In our submission, this provides a helpful paradigm for looking at freedom to contract and copyright policy in the digital economy.
Question 55.    Should the Copyright Act 1968 (Cth) be amended to prevent contracting out of copyright exceptions, and if so, which exceptions?
In our submission, this question requires an examination of the nature of exceptions to copyright.
Many of the exceptions are grouped under the heading ‘acts not constituting infringement’. For the most part, these provisions list acts that are not infringements of copyright.
The question arising is whether these exceptions are best understood as defences to an action for infringement or are they are a derogation of the rights of the copyright owner?
A different analysis may apply to different types of exceptions.  For example the ‘freedom of expression’ exceptions might have a different standing than a purely utilitarian exception.
If the latter is the preferred interpretation, two things may follow:
1. Any contract purporting to exclude the exceptions may not be enforceable;
2. The creation of any new exceptions may amount to an acquisition of property and require the compensation of the copyright owner.
The issue of contracting out is dealt with in a single instance in the Copyright Act.  Section 47H provides:
‘An agreement, or a provision of an agreement, that excludes or limits, or has the effect of excluding or limiting, the operation of subsection 47B(3), or section 47C, 47D, 47E or 47F, has no effect.’
The CLRC looked at this issue from a statutory interpretation perspective and concluded that the effect of s 47H on agreements which exclude or modify the exceptions is ultimately unclear. Carter et al conclude that “although it would have been most helpful if the legislature had used the insertion of s 47H as a reason to explain the extent to which contracting out of other rights was allowed its failure to do so does not carry any weight in relation to the interpretation of those provisions”.
While the CLRC favoured ‘mandating’ certain exceptions, Carter et al look at the issue from the perspective of contracts that are illegal on public policy grounds.  They suggest that the appropriate way to approach this issue is by considering ‘how far the rights conferred are of a public kind or included for public purposes’. While we accept that the policy rationale of the exception is relevant, in our view, categorising the exceptions as ‘rights’ is overstating the issue. 
Carter et al conclude: ‘we see no pressing need for legislation to declare contractual restrictions invalid because the common law already provides for invalidity in cases where the public interest requires it.  Moreover, even if the Act included provisions declaring certain restrictions invalid that would not by itself prevent contracting parties including such terms.’   
Carter et al’s point about the utility of legislation on this issue is amplified when one considers the international dimension of the digital economy. The applicable law of an online contract often will not be Australian law.  Therefore a restriction on ‘contracting out’ of copyright exceptions may have limited practical utility.
Having said that, if the ALRC favours making recommendations in relation to this issue, we offer some suggestions.
It is appropriate to look to at whether the exception in question serves a broad, public policy purpose.
We note that the Act only allows decryption of access control TPMs for certain exceptions.  This might be a useful starting point for the ALRC’s consideration.
It is also relevant to consider whether different considerations apply to mass-market licences as opposed to negotiated contracts.
Mass-market licences are a feature of the online world.  Such licences raise issues for both copyright owners and users.  For example, just as a user of copyright material might be required to agree to certain terms and conditions when accessing copyright material, so too, an owner of content might be required to agree to certain terms and conditions as a condition of making their material available on particular platform.  In our submission, this is a feature of consumer contracts online and is not unique to copyright.
It would also be valuable to consider whether any restriction on freedom to contract might have an effect on innovation. For example, would it inhibit new business models or affect the willingness of copyright owners to make their material available online? For example, if they could not protect the integrity of the work or their commercial interests.
We also note that WIPO is considering issues of copyright exceptions and UNIDROIT is considering contract law issues. These international fora might provide an appropriate vehicle for these issues.

Appendix 1:		Australian Copyright Council Affiliates

The Copyright Council’s views on issues of policy and law are independent, however we seek comment from the 24 organisations affiliated to the Council when developing policy positions and making submissions to government. These affiliates are:

Aboriginal Artist Agency  
Ausdance
Australian Commercial & Media Photographers 
Australian Directors Guild 
Australian Institute of Architects
Australian Institute of Professional Photography 
Australian Music Centre
Australasian Music Publishers Association 
Australian Publishers Association 
APRA|AMCOS
Australian Recording Industry Association 
Australian Screen Directors Authorship Collecting Society 
The Australian Society of Authors Ltd 
Australian Writers’ Guild 
Christian Copyright Licensing International
Copyright Agency 
Media Entertainment & Arts Alliance 
Musicians Union of Australia 
National Association For The Visual Arts Ltd 
National Tertiary Education Industry Union
Phonographic Performance Company of Australia 
Screen Producers Association of Australia 
Screenrights
Viscopy

Appendix 2:			Some Business Models

This document outlines several examples of new business models that utilise copyright licensing to deliver solutions to users that brings legal certainty into use of material whilst in many cases, making redundant the need for users to back-up or format shift their own material or in some cases, rely on other exceptions to use material.
We have primarily focused on services that are operational in Australia but occasionally mentioned services only available overseas.
Framework 1 – The need for users to back-up material is waning
Relevant ALRC Question 10. Should the Copyright Act 1968 (Cth) be amended to clarify that making copies of copyright material for the purpose of back-up or data recovery does not infringe copyright, and if so, how? 
Two common types of new business model for copyright material lessen the need for users  to make their own back-ups.
Business model type 1 - Direct digital purchases with ability to re-download
Under this model, users purchase specific material in digital format, similarly to the way in which they would purchase a physical product in a shop. Many vendors allow material purchased in digital form to be re-downloaded at a later time. Examples include:
•	Apple iTunes: customers can purchase digital-format Music, Movies & TV, Books and Apps through the store. Many of these purchases may be re-downloaded by that user at a later date – removing the need for users to make their own back-up copies (as Apple is effectively holding them in the cloud on the user’s behalf in the event a copy is needed at a later time).

•	In the publishing context, when a book is purchased on the Kindle, Kobo or Google Books platforms, books are stored with that user’s account on each company’s cloud service and both allow users to re-download purchased books to any compatible devices at a later time.

•	In the magazine sector, the New Yorker magazine App allows users to either buy digital issues on a pay-per issue basis or purchase a monthly or yearly subscription that enables access to every issue in a given time period. Purchased magazines are downloaded to the device(s).

The app contains all the issues of the New Yorker that a user purchased and users are able to re-download any issues they have previously purchased.

The New Yorker’s publisher Conde Nast also has similar apps for its other magazines like Wired, Vogue and Vanity Fair and several other magazine publishers, such as DC Entertainment’s Mad Magazine offer similar functionality.

•	In the software context, digitally purchased software from a range of companies of all sizes allow users to obtain a new licence or re-download material after purchase. On mobile and tablet platforms, Android apps from Google’s Play store can be re-downloaded after purchase and purchasers of certain Microsoft products, such as Microsoft Office 2010, can download backup copies from Microsoft’s site.

The ability to re-download purchases at a later date gives users protection of their purchases against loss or damage and are more advantageous than buying a physical equivalent, as it would be a rare case that a shop will give a customer a free new copy of a CD, DVD or printed book that was lost or damaged weeks or months after purchase.
Business model type 2 - Subscription services hosting their own content
Subscription services give users access to a whole catalogue of content rather than specific items – in the Australian market this is mostly taking place within the music sector, but there have also been developments in the film and TV sectors.

The difference between the subscription and “direct-purchase” model is that rather than buying and retaining copies of specific items, users gain access to a whole catalogue of items that they can watch or listen to on-demand. This content does not need to be backed up because it is always available on-demand from the service operator whenever the user wants to use it.
•	Music subscription services like Spotify, JB HiFi Now and MOG give subscribers access to a complete catalogue of licensed music online and in most cases allow paid subscribers download music to devices for offline listening as well (useful for when there is no internet connection or when a user is on the move).

A user can listen to any music on the service at any time and there is no need to back up content as this is all stored remotely by the subscription music platform and delivered on demand. Users can usually access their music and synchronised playlists on desktops, laptops as well as mobile devices and tablets. Some services offer a limited free account but most offer a range of different monthly or yearly fees that determine what features of the service are available to the user. 

•	In an audiovisual context, the BBC’s iPlayer App for iPhone and iPad allows users to subscribe to receive on-demand access to hundreds of programmes from the BBC – both older and newer material. As the content is available on-demand, a user can, at any time of their choosing, re-watch material or re-download material for viewing without the need to back it up. BBC’s iPlayer will be discussed in more detail later.

•	Similarly, on-demand film service Quickflix runs a subscription service that allows users paying a monthly subscription fee to access an on-demand catalogue of licensed movies and TV shows that can be streamed the user at any time they chose. The streaming service does have a more limited catalogue than Quickflix’s DVD rental service at present, but this is expected to increase over time.

Quickflix can be accessed via a web interface on a desktop or laptop, on mobile devices, tablets, Xbox and ps3 gaming consoles and some smart TVs from Sony, Panasonic and Samsung.

These subscription-based services make the need for the user to back-up redundant, as the content as it is always available on demand when the user wants to access it.
Licences to back-up included with the product
Some services specifically state that users are permitted to back-up purchased material. For example Telstra’s digital music store Bigpond Music (BPM) does not appear to allow re-downloading of purchased music, however, its terms specifically state, “It is advisable to make regular back-up copies of all your Music Files and other important files in case anything should happen to your computer.”
The Apple iTunes store terms state in regard to several different types of content that “As you may not be able to subsequently download certain previously-purchased Eligible Content, once you download an item of Eligible Content, it is your responsibility not to lose, destroy, or damage it, and you may want to back it up.” 
Arguably such terms demonstrate that user-initiated backing up of purchased music and other relevant content from these sites is an acceptable use under its terms and conditions. A licence to back-up content removes the legal uncertainty to do so from a user’s perspective.

Framework 2 – Licensed use on multiple devices and platforms lessens the need for users to rely on private use exceptions
Relevant ALRC Question 7. Should the copying of legally acquired copyright material, including broadcast material, for private and domestic use be more freely permitted?
Copyright owners are licensing their content for use on many devices and platforms in several ways. If content is licensed for access on different devices or platforms, then users do not need to rely on private use exceptions to format shift that material to use on those platforms or on different devices.
Scenario 1 - Licensed catch-up TV services
Free to air TV – ABC iView
ABC’s iView is a video streaming service that allows users to watch programming that has been broadcast on the range of ABC TV channels (and in some cases before programs are broadcast on the ABC). Such a service allows users to view any programming that they may have missed and replaces the need for the user to have to make their own recording of that material at the time it is initially broadcast.
ABC’s iView service can be viewed on desktop and laptop computers via a website, as well as an app for Apple’s iPhone, iPad and iPod devices with an Android app currently in development. The ABC has also integrated iView apps into internet-connected TVs from Samsung, Sony and Panasonic (which allow iView to be watched directly from the TV with no other devices needed) and also integrated iView apps into the Xbox 360 and Playstation 3 console platforms.
Users can view the material on a variety of platforms and devices without needing to do any of their own format shifting or conversion because the ABC has enabled licensed access to the content across multiple platforms and devices.
Other free to air networks are implementing similar services – for example SBS On Demand may be watched on its website as well as on the iPhone and iPad and the Seven Network’s Plus7 catch up service is available via its website as well as viewable on Playstation 3 and as an integrated TV app. There have been reports that the commercial networks will be extending beyond their catch-up TV websites into streaming content to apps on devices.
These licensed catch-up technologies are provided by the broadcasters and copyright owners to their users and may offer a more clearly legal substitute for unlicensed services like the suspended Optus TV Now service.
Pay TV - Foxtel
Foxtel operates its own catch-up TV service that allows users to select from a list of programs that have already been broadcast and download these to their Foxtel set top box for later viewing.
Not all programs are available on this service, but Foxtel also offers an IQ service with built in recording of programs set by the user that can then be played back on the set-top box whenever the user wants to at a later time.
Scenario 2 - Multiple formats as part of the one purchase
A number of copyright owners are now giving customers access to a choice of formats when they purchase the material, thus making the need to format shift applicable material redundant.
Film
Several major film studios have enabled “Digital Copy” technology, which allows purchasers of a DVD or Blu-Ray of a film to also make their own digital copy of that film which can then be watched on a computer or device like a smartphone or tablet.
Usually the purchaser of a DVD or Blu-ray will receive a code that they can use to make a digital copy of the film. To protect against unauthorised distribution, digital copies of films under this scheme are usually protected by DRM and limited to the user that purchased the DVD or Blu-ray.
Music
A resurgence of purchasing music on vinyl has seen a number of music labels include a coupon to download an MP3 (digital) version of an album as part of the purchase of the vinyl album.
This gives the user the physical format they purchased, but also a digital format version which can the be burnt to CD or integrated on to a user’s digital music collection on their computer, console, smartphone, tablet or other device.
Print magazine subscribers
Increasingly, print subscribers to well known magazines and newspapers like the Economist, Time, The Monthly, Sydney Morning Herald, the Australian and others are also being granted access to the digital editions of those magazines.
Such functionality gives customers the ability to experience the content in both physical and digital formats as part of the one transaction and gives the customer a range of choices of format.
Scenario 3 - Making the content available on multiple platforms
Music
Music, film, books and other material purchased through Apple iTunes or Google Play is licensed for used on multiple devices owned by the purchaser such as computers, tablets and smartphones.
Bigpond music shifted to a DRM-free model for selling purchased music. It switched to DRM-free MP3 files as the format in 2008 which means that a user purchasing such a file user can copy it on to portable devices, phones, tablets, computers or for example, burn it to CDs under the current private use exceptions. The cross-format compatibility of the MP3 format was specifically highlighted by Telstra as the reason for switching over from more restrictive DRM-protected music files.
As noted earlier, music subscription services like MOG, Spotify and JBHiFi Now are all licensed for listening on a range of multiple devices and platforms.

Publishing
Many ebook platforms such as Kobo and Amazon’s Kindle permit purchased material to read in a variety of contexts and devices. Looking at the Kindle platform, purchased books can be read from a dedicated Kindle e-reader but also from Kindle apps on desktop and laptop computers, Android and Apple smart phones and tablets, Windows phone 7 devices and Blackberry devices. Amazon also provides a web-based platform-independent cloud reader that enables most internet-connected devices to access purchased books.
The user only needs to purchase an item once and it is made available on any of the compatible platforms, thus making redundant the need for the user to make their own copies or format shift material for particular devices.
An alternative approach is the approach adopted by educational, business and technology publisher O’Reilly Media. When a user purchases an ebook directly from O’Reilly Media, he or she gets lifetime access to re-download the books they purchased. However, a key differentiating point is that O’Reilly Media allows its users to download their ebooks in the format of their choice and free of any DRM. This means users can download books into appropriate formats for kindles, EPUB-based e-readers, PDF-reading devices, and the DAISY spoken word format for readers with a visual or print impairment. Purchasers can re-download in any other format they want, if for example they buy a different device.
Whilst implementation differs between publishers, the end result is that in most popular ebook platforms, users don’t need to make their own copies as licenses are in place to facilitate access to the content across platforms.
BBC iPlayer 
This service was launched in Australia in late September 2011. It runs on iPad, iPhone and iPod and Android devices and gives users access to a wide range of BBC programming on demand.
The app allows free users to watch material from a changing collection of free programming on a streaming-only basis.
Paid users can either pay a monthly or yearly subscription that enables on-demand access to the complete iPlayer catalogue and may either stream or download the content through the app.
Users don’t need to make their own copy of the content as they have licensed access via the app to use the content within all the devices on the platform on which they have subscribed to the service.

Scenario 4 – Content licensed for use on social media
There are a number of situations in which content-owners are making licensed copies of their content available to users on social media or user-generated platforms.
If this is the case, then someone incorporating the licensed content into their material or wanting to share licensed content can do so without having to rely on any specific exceptions enabling this.
Vimeo Music
Video hosting site Vimeo offers a range of pre-licensed music that can be used on videos that users upload to the site. Tracks are either free or available on a paid basis depending on the track and music can be either downloaded by the user and then edited into the video or integrated into the video by the user via Vimeo’s own video editing platform.
Such a service means that users creating videos have access to arrange of pre-cleared material be it free or paid which they can use on their videos without being concerned about any legal uncertainty as to their use.
YouTube Audioswap
YouTube offers a service called Audioswap which allows users that have uploaded videos to the website to add music from a list of music that has been cleared for use on YouTube.
Users can replace audio in their videos with the Audioswap tracks as part of the YouTube platform when editing their videos once uploaded.
Vevo
Vevo is an initiative jointly operated by a number of music companies which hosts music videos from a range of acts signed to Sony, Universal and EMI for free viewing online. Vevo has its own website which allows sharing through Facebook or Twitter and Vevo has a YouTube channel which allows users to watch music videos through Youtube as well as share these through the platform or embed the videos on their own pages.
Videos can be watched for free and in high quality HD video via the aforementioned social media platforms, but also through apps for iPhones, iPads, Andrioid, Xbox and Windows Phone platforms.
In this case, music companies are making high-quality free versions of their video clips for popular artists available and allowing linking to and sharing of that content via several social media platforms.
The existence of a high quality licensed version of the videos online brings into doubt the need for any user to have to upload or share their own copies of the same video content.
Movieclips.com
Movieclips.com is a website that hosts thousands of licensed clips from movies from all the major US studios. Access is free and movie clips are tagged by mood, character, actor, director, year made and other tags that enable very specific search and discovery of film clips.
Any clips on the site can shared via links with other users on social networking sites like Twitter, Facebook, Gmail, Tumblr, Youtube or screenshots pinned to Pinterest or embedded by users into their own sites or PowerPoint presentations provided this is for personal, non-commercial use.
Users can trim clips to get the exact part of the scene they want and create virtual greeting cards featuring scenes from movies.
Clips may be watched in standard or high definition and links to purchase the full movie are provided with the clip. Movieclips.com has it’s own YouTube channel facilitating viewing and sharing of clips through that platform.
The site also contains a number of “licensable” clips that can be licensed online via the site by users that want to use clips in a commercial setting. If a clip is licensable, then the a ‘”licence clip” button becomes visible. The button leads to a page with several options that determine the licence fees for permission.
A similar site called Anyclip.com also operates an equivalent service that enables viewing of clips and sharing on social media.
Framework 3 - Cloud computing
Relevant ALRC Question 5. Is Australian copyright law impeding the development or delivery of cloud computing services? 
“Cloud” is really too broad a term to make specific conclusions about in terms of copyright. Instead, the question of whether copyright law is impeding the development or delivery of cloud computing services comes down to how those services use copyright-protected material and how the user interacts with the service.
Scenario 1 - Cloud-based storage
If no unauthorised use is taking place, then copyright doesn’t impede the service.

A number of providers offer online remote storage of material, which a user can then access at a later time. These are commonly referred to as a “digital locker”, “cloud storage” or “remote storage”. Examples include Dropbox, Google Drive and Microsoft SkyDrive.
Usually, these services offer a limited amount of storage for free and then for a fee, offer increased storage space. Files can often be accessed either from the user’s computer or from a smartphone, tablet or other device through a specific app or web app. The files can only be accessed by the user, but some platforms allow specific files or directories to be shared with other users or the public.
If a consumer wants to remotely store material in which they own the rights, then copyright doesn’t impede the process. For example, someone wanting to back-up or remotely store their personal documents and personal photos and home videos they have taken can upload and download these from cloud-based storage services. The same goes for a business wanting to upload and download their own material.
People wanting to store material in which they don’t own copyright face a number of issues.
•	Firstly, they may want to consider whether they still need to store the third party material at all? As we have seen, some vendors of digital music, books and software enable later re-downloading of purchased material lessening the need for a user to upload it to the cloud themselves.

•	However, if someone does want to store third party content remotely in the cloud, then unless this is licensed either by the cloud provider or the user themselves, or covered under one of the existing exceptions, copyright issues could be raised under present legislation.

Scenario 2 - A sampling of licensed cloud services
In other cases, copyright licensing has actually enabled cloud models to provide new features:
Music Matching Services
iTunes Match is a fee-based service which uses a process called Scan & Match to scan a user’s music library, cross-check the user’s list of music with Apple’s own music database, and then give that user access to Apple’s high-quality copies of matched songs on all of the user’s iDevices (iPhone, iPod, iPad, etc.). 
We understand that Apple’s iTunes database currently contains about 18 million songs, and where a user’s music cannot be matched in the Apple database, it is uploaded from the users computer to the cloud.
It doesn’t matter where a user’s music files come from: whether the files have been ripped from a CD, purchased at another digital music store or otherwise obtained online, they will be matched to Apple’s music database and the user provided with a legitimate version of that song from Apple. Rights holders receive the agreed royalties from distribution of the music.
Amazon has a similar licensed service called the Amazon Cloud Player that scans and matches music and delivers this to the user from its cloud. Additionally, Google has announced it is launching a similarly licensed cloud-music service soon. At present, only Apple’s service is currently operating in Australia and there has been no indication of when Amazon and Google’s services will be launched here.
Book.ish
Book.ish is an Australian cloud-based ebook platform operated largely though independent bookstores.
When users purchase a book through the service, their book is stored as part of their virtual “satchel” online. A user logs in and can access all their purchased books. Book.ish allows purchased books to be read on most devices that can access the internet and local copies are downloaded to such devices when the material is being read. Books sold through the platform have been licensed by the publishers for such use.
The reading functionality is for the most part platform-independent and this combined with the cloud-based storage of all the books means that a user could access their whole purchased collection of books wherever they are. 
Ultraviolet
A number of major movie studios have established the Ultraviolet service.
Customers create a user account and then enter a code when buying a particular physical or digital ultraviolet-enabled copy of a movie from a participating vendor. The code is then entered into Ultraviolet which enables that film to be available in that user’s cloud-managed virtual film library.
A single user’s account can be shared with up to 5 other household or family members, so for example, a family can have one account that covers everyone’s movie purchases. We understand that people sharing an account can watch up to 3 different movies at the same time if streaming or any amount if watching downloaded local copies.
Movies can be streamed or downloaded on a range of devices including TVs, computers, consoles and mobile devices. There is a minimum set of rights related to streaming and downloading, and we understand that it is at a vendor’s discretion as to whether they offer any features or functionality above this minimum.
Such a system uses a licensed cloud-based solution to manage a user’s virtual film library that enables consumption of that content across devices and platforms.
Steam & EA Origin
Steam is a cloud-based software distribution platform – mainly for games, but expanding into other software.
Users purchase games via steam and can install that game on any compatible device and always have access to that game on the cloud. Users can also save their game data and other materials directly to Steam’s cloud and synchronise this across devices. Users don’t have to use their own equipment to play games; they can login from any computer using their account details.
This means a user has their library of games permanently saved on the cloud at all times with updates and patches being automatically integrated into the software. It means that users can play their games on any compatible device – whether or not they own that device.
Similarly, EA one of the largest game developers has their own “Origin” digital purchasing system. When a game is purchased on Origin, it gets added to that user’s virtual library and can be run and played on any compatible system from which the user logs in – it doesn’t have to be equipment they own, which means that users can access and play their purchased games and game data directly from the cloud anywhere they go and provided they have a compatible device.
In these circumstances, developers and cloud providers are working together to provide a licensed service to users that enables access and use of purchased software across compatible devices and takes away the need for users to store back-ups of their own software. 

Adobe Creative Cloud
This is an example of a developer that is operating its own licensed cloud service.
Adobe is a large developer that creates industry standard image, design and development software. The company launched its “Creative Cloud” service in April 2012.
Unlike the traditional model where people purchase individual software packages and run these locally on each machine, this service changes the model to a subscription model whereby subscribers get access to several software packages for a monthly fee (which they would have otherwise had to have purchased as separate items) – any piece of software can be installed on a user’s computer and reinstalled from the cloud and updates are automatically pushed from the cloud.
For example, a user could have a cloud-sourced copy of Photoshop image editing software running on their desktop and laptop with common files and elements synchronised over the cloud so that these do need to be copied by the user on to each device.
Other similar examples include Google Apps and Microsoft Office 365 in which a subscriber gains access to cloud-based office software suite and hosting for saved documents that can be run on any device they log in from rather than having to be specifically installed and run on a particular machine in a specific location and rather than people having to physically carry around copies of documents with them (for example, on a USB drive).
Framework 4 – Digital content & online licensing
There isn’t a universal copyright permissions destination but a number of organisations facilitate their own online content licensing hubs. The following a examples of such portals throughout a variety of industries:
Images
•	National Geographic operates a stock image website that facilitates discovery of images and then direct licensing of those images based on the expected audience numbers and the nature of that use. The National Geographic service has images tagged based on location, dominant colour and year taken. Users select images and enter in details that are used to determine the relevant prices and rights and after payment, users obtain the licence to use the images right away.
•	There are many similar image licensing sites from a variety of publishers such as the Associated Press’s AP Images service, New York Times Agency and Fairfax Syndication (which licenses for both home and professional use). All such sites facilitate immediate licensing of images.

•	Aside from publishers, institutions with their own image collections are offering online platforms for direct licensing. The UK National Gallery’s Source Art serviceallows users to browse for images of artwork from its collection. May be undertaken based on several factors such as artist, title and theme (for example, Work & Leisure, Envy, Greed and Historical). Users select an image and enter details about how and in what context they want to use the image via an online form and are given a quote. A licence to use the images is delivered after payment.

•	Several galleries have external organisations such as Scala Archives and Art Resource administer licensing and permission for their image collections. Similarly, collecting societies such as Copyright Agency|Viscopy are able to provide licensing for images of creators they represent.

•	Amateur, semi-professional and professional photographers that upload their images to the Flickr platform are able to make use of a “Request-to-license” feature that Flickr operates in partnership with Getty. If selected, a “license” option appears with the photo and others wanting to use that photo can click through to an online licensing process (administered by Getty) that determines the relevant cost. 

Music
Commercially released music
•	Collecting societies like APRA|AMCOS, PPCA and ARIA facilitate permission to use well-known commercially released music and in several ways. The blanket licences that such organisations are able to provide allows music to be used in the relevant ways without needing separate permission for each piece of music.

•	Clearances for uses not covered by licences from the aforementioned organisations is usually managed by the relevant publishing companies and record labels.

Production music

•	Production music is specifically created for use in film, TV, advertising and similar contexts. APRA|AMCOS maintain a lists of production music providers on its website. People wanting to use music in their productions register for free and receive a Production Music Client Number (PMCN) which can be used with any of the production music companies that licence through APRA|AMCOS. The service features online music licence applications, fee calculations and usage reporting using the PMCN.

•	Examples of participating providers include the EMI Production Music library, Beatbox Music, Universal Publishing Production Musicand Sonic Dojo. In many cases, the online music libraries offer digital distribution of music, categorise tracks in terms of mood, genre or the like, which make it useful for filmmakers or content producers looking for appropriate music for particular contexts.

Film

•	A number of well known stock image providers like Corbis, Associated Press, and National Geographic operate stock footage licensing platforms that operate similarly to their image licensing platforms;

•	Broadcasters also manage their own clearance portals, examples include the BBC Motion Gallery, Discovery Access and CNN’s Image Source service - it for example, enables direct discovery and licensing of film content from CNN and offers a free low-resolution “comp” version of the footage to test with a project;

•	Traditionally, licensing movie clips or footage from studio-produced films required directly approaching the relevant studio, but as mentioned earlier, new start-ups like Movieclips.com and Anyclip.com are beginning provide a facility for online discovery and licensing of movie clips from major-studio movies at the one online hub;

•	Users not wanting to pay for certain types of film material are able to use a source like Al-Jazeera’s Creative Commons Repository which has range of its news footage available for sharing and use under a creative commons licence.

Publishing
Unlike some of the other industries, there appear to be fewer platforms for licensing text other than directly approaching the publisher. To this end, many websites of publishers have a dedicated permissions section that explains the process and provides contact details or relevant permission application forms
Examples include the permissions pages of Penguin, HarperCollins and the Melbourne University Press.
Concluding points
Even though it is still early days for many of the examples outlined in this document, new business models, services and approaches to licensing content necessitates re-evaluating users’ need to deal with that content in certain ways:
•	Digital content bought from providers that allow later re-downloading of that content of access to that content over the cloud makes redundant the need for that user to back-up content themselves;

•	Digital content licensed for multiple platforms and devices removes the need for the user to format shift their own material to access it across those platforms and devices;

•	Content licensed for use on social media and other websites eliminates the need for users to make their own copies or even rely on their own fair dealing provisions to post and share content online;

•	Any use of material in which the user owns rights in, such as personal photos or home videos or documents, won’t necessarily raise any copyright issues; and

•	Licensed cloud-based services, when available, remove the legal uncertainty associated with communicating material to and from the cloud as well as hosting and backing up software to the cloud.