Arguments in favour of fair use for Australia

4.34 There were four main arguments advanced in support of fair use in submissions, that it:

• provides flexibility to respond to changing conditions as it is principles-based and technology neutral;
• assists innovation;
• restores balance to the copyright system; and
• assists with meeting consumer expectations.

4.35 While some characterised these arguments slightly differently—for example, referring to ‘responsiveness’, ‘efficiency’ and ‘justice’—arguably they align.

Fair use provides flexibility to respond to changing conditions

4.36 Stakeholders acknowledge that the digital economy facilitates many new developments, such as new technologies, services and uses, at a rapid rate. A number of submissions suggested that a broad, principles-based exception, which employs technology-neutral drafting such as fair use, would be more responsive to rapid technological change and other associated developments than the current specific, closed-list approach to exceptions.^[32]

4.37 Many stakeholders suggested that specific exceptions will inevitably reflect the circumstances that prevailed at the time of their enactment, while a general exception can respond to a changing environment. Furthermore: ‘there is nothing “natural” or inevitable about the current fair dealing defences in Australian law’.^[33] Rather, the privileging of these particular uses as exceptions is the product of certain historical conditions. For example, the time shifting exception is an example of a technology-specific exception that has limited application beyond the technologies specified.^[34]

4.38 As Telstra noted:

the current exceptions are generally created in response to existing technologies, economies and circumstances. As a result, they tend to have a narrow ‘patchwork’ application to circumstances existing at the time the exception is introduced.^[35]

4.39 There was a view that there were various uses that ought to be permitted, but for which the Copyright Act does not make allowance because of the closed-list approach.^[36] Yahoo!7 submitted that ‘the existing exceptions under the Act are no longer sufficient by themselves to protect and support the new services introduced by Internet and technology companies’.^[37] For example:

In Australia, the absence of a robust principle of fair use within the existing fair dealing exceptions means that digital platforms offering search tools are not able to provide real time high quality communication, analysis and search services with protection under law.^[38]

4.40 Telstra referred to caching,^[39] others to certain uses by government bodies and the ‘incidental inclusion’ of copyright material in a subsequent work or production.^[40] Many examples are given in other parts of this Discussion Paper.

4.41 Stakeholders were concerned about the lengthy delay between the emergence of a new use and the legislature’s consideration of the need for a specific exception.^[41] The Law Council of Australia explained that, at present, ‘each new situation needs to be considered and dealt with in separate amending legislation which usually occurs well after the need is identified’.^[42] A copyright exception permitting time-shifting was not enacted in Australia until 22 years after time-shifting had been found to be fair use in the US.^[43] Electronic Frontiers Australia submitted that the inflexibility of the current purpose-based exceptions, together with the increasingly rapid pace of technological change, ensure that ‘the law now lags years behind the current state of innovation in technology and service delivery’.^[44]

4.42 One submission noted that ‘[p]olicymakers simply cannot be expected to identify and define ex ante all of the precise circumstances in which an exception should be available’.^[45] Similarly, Yahoo!7 and Google were of the view that no legislature can anticipate or predict the future.^[46] Google submitted that ‘innovation and culture are inherently dynamic’ and that ‘you cannot legislate detailed rules to regulate dynamic situations; you can only set forth guiding principles’.^[47]

4.43 Others submitted that one of the advantages of a technology-neutral, open standard such as fair use, is that it has the requisite dynamism,^[48] agility^[49] or malleability^[50] to respond to ‘future technologies, economies and circumstances—that don’t yet exist, or haven’t yet been foreseen’.^[51] That is, fair use may go some way to ‘future-proof’^[52] the Copyright Act. As the Law Council saw it, ‘a flexible fair use provision … will enable the Act to adapt to changing technologies and uses without the need for legislative intervention’.^[53]

Fair use assists innovation

4.44 Another argument advanced in some submissions was that fair use may assist in encouraging innovation.^[54] This is because, unless the use of third party copyright material would come within one of the existing exceptions, there is an ‘automatic no’^[55] to its use, regardless of whether that use could be perceived as innovative or socially useful and regardless of whether it would affect the rights holder’s market.^[56]

4.45 It is argued that Australia is ‘a hostile regulatory environment for technology innovators and investors’ and this has ‘long discouraged innovation and investment by technology providers and content owners alike’.^[57] Yahoo!7 submitted:

Under Australia’s existing copyright regime, very many socially useful and economically beneficial technological innovations would simply have no breathing space to emerge. They would be blocked at the first post by a copyright regime that is insufficiently flexible to accommodate technological innovation.^[58]

4.46 Yahoo!7 provided an example of a technology that was ‘only possible due to the flexibility offered by the US copyright regime’.^[59] One of its innovative mobile applications reproduces less than 1–2 seconds of the audio stream of a television program that a user is watching and matches that thumbprint against a database of thumbprints in order to inform the user of the program that they are watching.

4.47 Similarly, Google stated that it could not have created and started its search engine in Australia under the current copyright framework, as ‘innovation depends on a legal regime that allows for new, unforeseen technologies’.^[60] The Australian Interactive Media Industry Association’s Digital Policy Group noted the adverse effect the Australian copyright regime was having on the Australian digital industry’s ability to innovate and compete globally.^[61] Other stakeholders shared the view that the current copyright regime puts Australian companies and individuals at a disadvantage compared with those in the US, or other countries that have a fair use exception.^[62]

4.48 As with a number of other stakeholders, the Law Institute of Victoria considered that fair use ‘would promote a framework to encourage innovation and investment in technological development in Australia’.^[63] eBay submitted that a fair use exception ‘would enhance the environment for e-commerce in Australia’,^[64] and both Google and Yahoo!7 considered that a regime based upon a flexible, broad, principles-based exception would assist local start-ups.^[65] Yahoo!7 submitted:

Application development can thrive in Australia if there is a broader approach to how content can be used by others while still ensuring that such use does not deprive the rights holder of a legitimate revenue stream or impact the market value of the underlying work. Given the relatively low barrier of entry to the digital innovation marketplace, it would also provide software and application developers the ideal regulatory environment to capitalize on the roll-out of the National Broadband Network.^[66]

4.49 The Copyright Advisory Group—Schools stated:

The flexibility of the fair use exception in the US has in effect operated as innovation policy within the copyright system because it creates incentives to build innovative products, which yield complementary technologies that enhance the value of the copyright works.^[67]

Fair use restores balance to the copyright system

4.50 Some submissions argued that a fair use exception would restore the balance between rights holders and users.^[68] It was said that fair use ‘counterbalances what would otherwise be an unreasonably broad grant of rights to authors and unduly narrow set of negotiated exceptions and limitations’.^[69] iiNet submitted that fair use would ‘play a role’ in countering the effects of the AUSFTA, especially for consumers.^[70]

4.51 There were calls from parts of the educational sector for a better balance in the Copyright Act.^[71] Universities Australia submitted that there was a need for ‘an appropriate balance’ to ‘enable universities and their students to make full use of technology to create and disseminate knowledge’.^[72] The Copyright Advisory Group—Schools compiled a table comparing a number of differences between the copyright laws that apply to schools in Australia, the US and Canada and submitted that the results suggest that the ‘balance struck in the Australian Copyright Act does not adequately recognise the public interest in allowing limited free uses of copyright materials for educational purposes’.^[73]

Fair use assists with meeting consumer expectations

4.52 Related to this view about balance was the idea that fair use would assist with meeting consumer expectations^[74]—the ‘common standards in society’.^[75] The Hargreaves Review identified a ‘growing mismatch between what is allowed under copyright exceptions, and the reasonable expectations and behaviour of most people’ as a ‘significant problem’.^[76]

4.53 Consumers expect to be able to post a photo of goods on eBay in order to sell them. However, eBay stated that those using its services may infringe copyright when the photograph includes an artistic work on the cover of a book or a garment bearing an artwork. In its view, in such a case ‘there is no loss or damage suffered by a copyright owner’. It submitted that within its business, and ‘a wide range of markets’, a fair use exception would provide ‘an opportunity to prevent the occurrence of repeated technical infringement of copyright’.^[77]

4.54 Similarly, Google submitted that there was a ‘disconnect between the law and practices that are both ubiquitous and unlikely to harm copyright owners’.^[78] This disconnect was said to be undermining the copyright system and bringing the law into disrepute.^[79] Electronic Frontiers Australia commented that:

Many Australian consumers, when the limitations of fair dealing exceptions are explained to them, roll their eyes in disbelief that the law insists that things they consider to be legitimate everyday activities are in fact illegal. Discussions on this topic tend to ridicule the law.^[80]

4.55 A number of submissions cited with approval the statement that ‘fair use exceptions keep copyright closer to the reasonable expectations of most people and thus help make sense of copyright law’,^[81] or made similar points.^[82]

4.56 Google submitted that flexible and technology-neutral exceptions permitting consumers to make personal uses of legitimately purchased content would ‘greatly restore people’s faith that the law makes sense’ and would not harm rights holders’ economic interests.^[83]