Please find below comments on behalf of the Department of Defence (‘Defence’) in relation to ALRC Issues Paper: “Copyright and the Digital Economy” (‘the Paper’). Defence welcomes the opportunity to provide input in relation to this paper. Defence’s comments are provided as a consolidated response to the issues raised in the paper.

Crown use of copyright material

Defence strongly supports the objective intention of the special privileges that the Crown is afforded under the Copyright Act 1968 (Cth) (‘the Act’). While the preceding statement may seem somewhat obvious it is, perhaps, the reasoning behind the statement that is not quite so obvious.

Primarily, the ability for Government Agencies, such as Defence, to rely on these provisions is important for the proper functioning of Government. The ability of the Commonwealth to use copyrighted material without infringing the copyright owner’s rights is important from a practical perspective – in matters of national security or where there is a justifiable public interest, it is important that government has the ability to meet its objectives. The concept behind s183 exemption is also reflected in the Commonwealth’s powers under the s163 of the Patents Act 1990 (Cth).

This ability is tempered by the fact that where the ability is utilised, equitable remuneration must be provided through the statutory licensing scheme. This situation is, in some ways, an extension of the Commonwealth’s ability to acquire property on just terms where it is deemed to be necessary for the national interest. 

The exemption created under s183 of the Act is also fundamental in establishing a boundary under which the Commonwealth can negotiate with its commercial suppliers for Intellectual Property (IP) rights under its contracts. While the exemption to use copyright material in accordance with s183 is, in our experience, rarely if ever used by the Commonwealth, it does create an environment by which private companies know that, should the need arise, the Commonwealth could obtain the IP it needs. This has the effect of encouraging commercial entities to release necessary IP to the Commonwealth under specified, generally favourable, terms within the IP licence. 

As a general observation, Defence is not aware of any evidence of misuse of such provisions within the organisation. Indeed, as a matter of policy and practice, such provisions would only be applied by Defence in exceptional circumstances, for the proper purposes of discharging its duties.

For these reasons, Defence does not support the introduction of any legislative changes to reduce the ability of the Commonwealth to rely on s183 of the Act. 

However, in light of the judgement in Copyright Agency Ltd v New South Wales (2008) there is a concern that at some point the view may be taken that the payment of fees is a requirement under s183 for any instance of the Commonwealth’s use of copyrighted material. If this view were to be adopted, the Commonwealth would be liable to pay fees under the statutory licensing scheme for complying with its obligations under various statutory or regulatory requirements. Although, as pointed out in the paper, both the immunity from proceedings contained in legislation such as the Freedom of Information Act 1982 (Cth) and the licensing scheme within s183 of the Act can operate together, the effect may end up leading to significant increases in Commonwealth costs.

Defence notes that the Attorney General’s Department is currently engaging with key stakeholders for the renegotiation of the Copyright Agency Limited (‘CAL’) Agreement (the ‘CAL Agreement’). These negotiations are highlighting issues surrounding the effectiveness of the Act versus the practicality of those mechanisms utilised under the ‘Crown Use’ provisions. In Defence’s view, more effective management of the licences (and the scope of use covered by those licences) is just as critical as any amendment to the legislation itself.

Because of the potential for the Commonwealth to incur significant costs in performing its legislated or regulation required tasks, Defence takes the view that it would be sensible to amend the Act in a way that creates specific exemptions/authorisations to allow Government Agencies to use deposited or registered material both for the purposes for which it was provided, and for any purposes incidental to that provided purpose (perhaps phrased along the lines of, for that purpose as well as for any purpose required by law or overarching government policy). Any additional authorisation to use such material more broadly should be limited to the proper purposes of the government function for which it was deposited (potentially including a fairness/reasonableness test in order to limit abuse of the power and reassure the copyright holder). In our view, the permitted purpose would specifically exclude any commercial uses of such material without the specific consent of the relevant copyright owner, including the release of the material to the public for a fee (as was the situation in the Copyright Agency Ltd v New South Wales case).

A potential method of facilitating this could be to create for corporate and other ‘intangible’ legal entities, similar rights as those provided to individuals under the Act. By doing this, these intangible entities would be granted limited reproduction rights with the concept of ‘personal use’ being extended to the organisation’s personal use. Under this concept, individuals working within the organisation would be able to make copies of copyrighted material in accordance with the exceptions created under the Act, but the personal use authorised under the reproduction would extended to some degree to the organisation as a whole. Of course, there would need to be some limitations on the extent to which copies could be made – either a fixed number, or a ‘reasonableness’ test to ensure the privilege isn’t abused. 

In our view, this concept could be applied to specific categories of reproduction, such as converting a hardcopy of a submitted plan or document to an electronic format in order to use the information contained therein for the purposes which the hardcopy was provided. Likewise, certain types of material that is commercially acquired by an entity (for example, computer software or physical books) for its use would be excluded from the authorisation. Defence acknowledges that the wording of the Act to create such an exception will be difficult, but has the view that the concept is sound.

Flowing from this, the Act would need to be amended to specifically exclude the s183 license from ‘activating’ where another exemption contained within the Act could instead be relied on by the Commonwealth.

As a final point in relation to the statutory licensing scheme, Defence takes the view that it may also be useful, from a functional perspective, to update the legislation to allow the relevant authorised collecting society (in this case CAL) to collect the licence fees in relation to more broadly applying electronic material. This would simplify, and hopefully streamline, the licence collection function.

Cloud Computing

Currently, Defence does not use cloud computing to any significant extent, primarily due to the security requirements associated with Defence’s business. However, the Australian Government has publicly stated an intention to begin using cloud technologies in the future and for this reason it would be prudent to address some of the current inadequacies of the Act. 

As discussed in the Paper, Defence takes the view that the current wording of the Act is insufficient to allow full usage of cloud computing advancements. While Defence strongly advocates the need to ensure copyright holders are appropriately compensated for the usage of their material, there needs to be some ability for the users of that material to conduct their business activities in an efficient manner.

As discussed above, Defence advocates the extension of some of the individual exemptions within the Act to intangible legal persons (such as corporations). If this concept were implemented, it could also be used as a basis for facilitating cloud computing by treating the cloud service providers as agents of the organisation, wit the limits of their agency being defined by the services they are providing (e.g. an authorisation to ‘copy’ the material for the purposes of storing it in the cloud, transferring the relevant server, etc). Again, Defence advocates the need to place reasonable limits on this exemption in order to properly protect the copyright holders.

Contracting out

The ability to contract out of the exceptions in the Act creates the ability for entities to establish the commercial IP provisions for the products and services they are purchasing. This has the potential, in DMO Legal’s view, to generate cost savings in certain circumstances and that the current regime of being able to contract out has not, in our experience, created any issues which would warrant the changing of the current position.

In the absence of any compelling evidence to support the position otherwise, DMO Legal does not see any justification to amend the existing position whereby the exceptions under the Act can be contracted out of.

Format shifting 

Noting that Defence does not currently benefit from the individual rights to undertake ‘format shifting’, Defence does hold the view that the current status of format shifting is both confusing and out of step with current societal norms. Defence understands that format shifting may be addressed within the revised CAL Agreement, and holds the view that this would be an appropriate mechanism for dealing with this issue in the interim.

For example, the exemption for format shifting text, which allows only one copy to be made, is both problematic (by back-up data, individuals are then making, as a minimum, a 2nd copy) and unrealistic (as the current normal practice for most of the public seems to be to have an electronic version of a document on more than one device at a time anyway). Additionally, it is likely that an attempt to enforce this single copy rule would be both difficult and generally ignored. 

Similarly, the fact that making a copy of a videotape for personal use is authorised but making a copy of a DVD is not is both confusing to the public and broadly unenforceable. This confusion and unenforceability is, in our view, a contributing factor to the broader public’s unwillingness to strictly adhere to the Act – brought about through misinformation, lack of knowledge of the intricacies of the Act and a general perception of the unreasonableness of the Act.

Consequently, it may be useful to consider soliciting further views from relevant stakeholders on the implications and benefits of allowing the public to format shift any textual, audio or video item they have the legal right to use into other formats.

Defence’s interest in this area stems from the suggestion provided above to extend individual exemptions to intangible legal entities. By implementing such concept, Defence would be able to utilise the format shifting exemptions, but within a defined framework. In our view, two types of copyrighted material would exist:
1.	copyrighted material purchased by an entity for its use in fulfilling its function/purpose (‘enabling material’); and
2.	copyrighted material obtained by an entity as a direct consequence of its function/purpose (‘primary material’)

‘Enabling material’ would, in our view posses characteristics such as being commercially available in the broader marketplace and would include material such as computer software, video/audio material, and printed or electronic material that is incidental to the entities function/purpose. 

‘Primary material’, on the other hand, would be exemplified by the material which was the subject of the Copyright Agency case – namely material that was required to be provided to entity as part of it’s core purpose, whether that requirement arose thorough legislation, regulation or (potentially) customary acts. Naturally, this material would be of most relevance to government, but there may be some scope to expand it use if that was desirable.

Again, Defence notes that if the concepts of ‘primary and enabling material’ are implemented, the Act will need to be amended to ensure that the s183 statutory licensing scheme complements the additional exceptions rather than limiting them.