Inhibiting innovation

5.18 Others submitted that blanket prohibitions on third parties benefiting from such uses of copyright material may inhibit innovation. For example, iiNet submitted that it should not matter who makes a recording from a broadcast, if it is made ‘in a domestic setting’ and ‘if the underlying purpose of the recording is fair’. In this way, iiNet said, ‘competition between technologies will be promoted’.^[12]

5.19 Ericsson also submitted that it should not matter who makes the recording.

The success of the digital economy, enabled primarily by the IT and telecommunications sectors, has been based on sustained and continuous innovation. This has driven continuous improvement of technologies and services and has provided a competitive incentive for differentiation amongst competing players across different industries. Therefore, using [information and communications technology] to simplify or differentiate services or offerings should not be prohibited by law.^[13]

5.20 Dr Rebecca Giblin saw the Full Federal Court’s Optus TV Now^[14] decision as a potential threat not only to new digital technologies, but also to established recording devices. Rights holders, Giblin submitted, may now ‘exert pressure on Australian [digital video recorder] providers to reduce the features they offer’.

Australians may be limited to ‘dumb’ technologies that don’t offer the most convenient and useful features. Alternatively, technology providers may be obliged to license rights to avoid the threat of litigation, forcing consumers to pay higher prices and effectively abrogating their statutory right to time-shift. The judgment also introduces uncertainty for providers of unrelated technologies, particularly cloud or remote storage providers.^[15]

5.21 Others drew a distinction between ‘pure copying’ and ‘value-added services’. The ACCC said there was potential for growth in products and services that enable consumers to use copyright material for personal use. If confined ‘purely to copying, as opposed to transforming or value-adding’, the ACCC said, ‘these markets should be opened to parties other than copyright owners’.

Limiting the development of such services risks reducing the incentives for copyright owner to innovate to meet consumer demands.^[16]