ARL Policy Notes
Fair Use Gaining Popularity: Australian Law Reform Commission Proposes Fair Use, Prohibition Against Contracting Out of Specific Copyright Exceptions for Libraries

On February 13, 2014, the Australian Law Reform Commission (ALRC) issued a 478 page report on “Copyright and the Digital Economy” which made a number of positive recommendations for copyright reform in Australia. A significant portion of the report focused on limitations and exceptions including a recommendation that Australia adopt fair use (or, failing that, to revise its current fair dealing provision), noting the benefits of a flexible standard. In addition to its numerous other recommendations, the ALRC report also examined the practice of using contracts to prohibit or hinder the use of particular limitations and exceptions and recommended an express prohibition against contractual provisions that would restrict specific libraries and archives exceptions.

Below are some highlights from the ALRC report on these two issues.

Fair Use

The ALRC report expressly recommended inclusion of a fair use exception largely modeled after the United States’ statutory provision on fair use, including a non-exhaustive list of factors—essentially mirroring the four fair use factors in the United States Copyright Law—and a non-exhaustive list of illustrative uses or purposes that may qualify as fair use. This recommended list of illustrative purposes includes all of the uses contained in the chapeau to 17 U.S.C. 107, while also recommending the additions of parody or satire; professional advice; quotation; non-commercial private use; incidental or technical use; library or archive use; and access for people with disabilities. Of course, although the United States’ provision does not contain these exact phrases within the statutory language of the fair use provision, courts have often upheld fair use in the context of such purposes.

Arguments for Fair Use

The ALRC report summarized the arguments made in favor of introducing a fair use provision into Australian Law, including that fair use is flexible and technology-neutral; promotes public interest and transformative uses; assists innovation; aligns with reasonable consumer expectations; helps protect right holders’ markets; is sufficiently certain and predictable; and is compatible with moral rights and international law.

ALRC emphasized the benefits of fair use in adapting to evolving technology:

Fair use differs from most current exceptions to copyright in that it is a broad standard that incorporates principles, rather than a detailed prescriptive rule. Law that incorporates principles or standards is generally more flexible than prescriptive rules, and can adapt to new technologies and services. A fair use exception would not need to be amended to account for the fact that consumers now use tablets and store purchased copies of copyright material in personal digital lockers in the cloud.

As a flexible standard, capable of adapting to changing environments, particularly in the digital age, legislatures need not respond to each new circumstance with a new specific limitation or exception. Thus, the ALRC report noted that “Almost 30 existing exceptions could be repealed, if fair use were enacted. In time, others might also be repealed. Replacing so many exceptions with a single fairness exception will make the Copyright Act considerably more clear, coherent and principled.”

In addition, the ALRC report made several references to the benefits of fair use in the educational context. It noted, for example, that the Google Books decision “demonstrates the potential of fair use to advance education and learning and to benefit authors and content owners.” Additionally, pointing to the flaws of the currently enacted fair dealing provision under Australian Law, the ALRC report noted that universities

were in a “worse position” than large commercial enterprises in terms of being able to use third party copyright material for socially beneficial purposes. Commercial news organisations can rely on the fair dealing exception for news reporting, but there is no equivalent specific exception for universities for fair use for educational purposes. Universities Australia submitted that, from a policy perspective, ‘”this makes little sense.”

In addition to the general public benefits to a flexible fair use provision, the ALRC report suggested that adopting fair use will actually increase respect for copyright. It pointed out that the independent UK Hargreaves Review found that growing disagreement over what is permitted under copyright and reasonable consumer expectations undermined the copyright system. The ALRC agreed with Hargreaves’ assessment and noted, “The public is more likely to understand fair use than the existing collection of complex specific exceptions; the exception will seem more reasonable; and this may even increase respect for and compliance with copyright laws more broadly.”

Predictability of Fair Use

The report also addressed criticisms that a flexible fair use standard resulted in too much uncertainty and concluded that fair use is actually quite predictable. The report pointed to Professor Pamela Samuelson’s 2009 article, Unbundling Fair Uses which found that “fair use is both more coherent and more predictable than many commentators have perceived once one recognizes that fair use cases tend to fall into common patterns.”

Furthermore, the ALRC noted that inclusion of a fair use provision in Australian Copyright Law would not introduce a “novel or untested” concept:

Fair use builds on Australia’s fair dealing exceptions, it has been applied in US courts for decades, and it is built on common law copyright principles that date back to the eighteenth century. If fair use is uncertain, this does not seem to have greatly inhibited the creation of films, music, books and other material in the world’s largest exporter of cultural goods, the United States.

Finding that fair use is predictable and “no less certain than Australia’s current copyright exceptions,” the ALRC report went on to point out that fair use determinations can be “guided by the fairness factors, the list of illustrative purposes, existing Australian case law [on fair dealing], other relevant jurisdictions’ case law, and any industry guidelines and coeds of practice that are developed.”

Furthermore, in concluding that adoption of a fair use provision would be beneficial, the ALRC report found that, “Although standards are generally less clear in scope than detailed rules, a clear principled standard is more certain than an unclear complex rule. The Report recommends replacing many complex prescriptive exceptions with one clear and more certain standard—fair use.”

Contracting Out

Another significant recommendation of the ALRC report would prohibit contractual provisions that limit or prohibit libraries and archives from exercising the specific limitations and exceptions from which they benefit. The report concedes that while freedom of contract is an important principle, specific contractual provision may lead to significant problems:

contracting out has the potential to render exceptions under the Copyright Act inoperative. Contractual terms excluding or limiting copyright exceptions are commonly used. While contracts may create clarity and provide copyright users with permission to use materials in ways that would otherwise be an infringement, some contractual terms can also erode “socially and economically important uses of copyright works.” Further, copyright users are often unable to negotiate the terms on which copyright materials are licensed, particularly where contracts are entered into online.

The report concluded that allowing such contracts “puts at risk the public benefit that copyright exceptions are intended to provide.” In particular, ALRC found this issue to be particularly relevant to libraries and archives, noting that the beneficiaries of specific exceptions and limitations for libraries and archives are “users of the libraries” and “The fact that users of libraries and archives benefit from these exceptions, but are not parties to the licensing arrangements entered into by libraries and archives, makes it easier to argue that these exceptions should not be able to be removed by contract.” Thus, the ALRC report expressly recommended that:

Recommendation 20–1 The Copyright Act should provide that any term of an agreement that restricts or prevents the doing of an act, which would otherwise be permitted by specific libraries and archives exceptions, is unenforceable.

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