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Contact Officer & Copyright Details
Copyright Amendment (Importation of
Sound Recordings) Bill 1999
Date Introduced: 26 May 1999
House: The Senate
Commencement: Upon Royal Assent except Items 3
and 4 of Schedule 1 (which commence when the section that they
amend, s. 44C, commences).
The Copyright Amendment (Importation of Sound
Recordings) Bill 1999 amends the Copyright Act 1968 (the
Copyright Act) to allow for the parallel importation into, and sale
in, Australia of compact discs and other 'sound recordings' which
contain film clips or other ancillary material protected by
copyright, or which are packaged with other copyright protected
Copyright protects the way ideas are expressed
- in the language of copyright the expression of an idea is known
as a 'work'. It does this by giving the person who creates a work a
monopoly over the way in which the work may be exploited.(1)
Exploitation of a work includes amongst other things its
reproduction, publishing, broadcast or performance. Creators can
license different aspects of the exploitation of their work, for
instance, the right to import into, and sell in, Australia, copies
of their work.
One type of work protected under Australian
copyright law is a 'sound recording', which is defined to mean the
collection of sounds embodied in a disc, tape or other device in
which sounds are embodied.(2) Compact discs (CDs) are nowadays the
main example of 'sound recordings'. There are other works, and
hence copyrights, associated with a CD. The words of the songs
(lyrics) on a CD are separate works and have their own copyright.
In the same way, if a CD includes a film clip, the film clip is a
separate work which may be protected by a separate copyright.
Parallel importing is the importation of works
which have been legitimately purchased overseas (purchased without
infringing the creator's copyright in the overseas country) by
someone other than the authorised importer.(3) Until legislative
reforms in 1991, parallel importing into Australia of all types of
work was prohibited.(4) Historically this has allowed authorised
importers to control the Australian market for items such as books
and recorded music. However, in 1991 the Parliament relaxed the
prohibition on the parallel importation of books.
In 1998 the Parliament passed the Copyright
Amendment Act (No. 2) 1998 which removed the prohibitions on
parallel importation in respect of 'sound recordings'. The passage
of the legislation was strongly opposed by members of the
Australian music industry, including both artists and record
companies.(5) The Act has the potential to significantly diminish
the major record companies' monopoly over the Australian recorded
The record companies have reacted in two ways.
Firstly, they have challenged the provisions of the Copyright
Amendment Act (No. 2) 1998 in the Federal Court, in a test case
brought against an unauthorised importer.(6) Those proceedings have
not yet been determined.
Secondly, the record companies have also found a
practical way to circumvent the intended effect of the Copyright
Amendment Act (No. 2) 1998. The companies, which are the authorised
importers into Australia of CDs, often also own the copyright under
which the CDs are produced for purchase by parallel importers
overseas. This has enabled the record companies to combine other
copyright protected works with sound recordings, and to use the
prohibition on the parallel importation of certain works other than
sound recordings, to prevent the importation of the combined
Thus the record companies have begun to include
film clips on CDs, even although it is not possible to view the
film clip with devices that normally play CDs (such as CD players).
The film clips are included simply so that the record companies can
invoke the protection of the Copyright Act over the entire CD as an
article. The companies have been threatening parallel importers of
the CDs with legal action under Pt V of the Copyright Act (dealing
with infringement of copyright), in order to discourage parallel
The parallel importers have brought the practice
of the major record companies to the Government's attention.(8) The
Minister in his Second Reading Speech(9) described the practice as
taking advantage of a loophole currently in the Copyright Act. This
Bill seeks to close the loophole in the Copyright Act. By so doing,
the major record companies' monopoly on recorded music will again
To date, there does not seem to have been much
publicity about the Bill, probably because it only further
implements the Government's plan to open up the recorded music
industry, revealed in the Copyright Amendment Bill (No. 2) 1998. It
appears that the peak interest groups, including the record
companies, have yet to comment on the Bill.
It may be reasonably assumed, however, that
significant parts of the music industry will oppose the Bill on the
grounds that they opposed the Copyright Amendment Bill (No. 2)
1998. For a discussion of those grounds, the reader is referred to
IRS Bills Digest No. 197 of 1997-98.
In summary, the main objections to allowing the
parallel importation of CDs included:
- that to confine the Bill to CDs alone and not other forms of
copyright material constituted a half-hearted commitment to the
economic principle said to underlie the Bill;
- parallel importers gain the benefit of CD marketing and
promotion at the expense of the authorised distributors;
- the major record companies would have less resources and less
incentive to invest in up and coming Australian artists;
- there would be less or no incentive for organisations such as
the Australian Record Industry Association (ARIA) to fund
operations for the detection and apprehension of infringing copies
of CDs, and this task would fall to the Australian Customs Service
which is ill equipped to perform it;
- the Bill is inconsistent with Australia's obligations under
Arguments to the contrary, in favour of the
parallel importation of CDs included:
- the Bill will result in cheaper CD prices and a greater variety
of copyright protected recorded music in Australia;
- the Bill will increase competitiveness in the Australian
recorded music industry and will lead to the eradication of
inefficient industry practices.
The salient items are items 2 and 7.
Item 2 inserts a new section (proposed s.
10AB) into the Copyright Act, that is designed to close
the loophole referred to above. Section 10AB deems cinematographic
films and other works included on an article, or works which are
included in the packaging or container of an article, to be
accessories,(11) when the article contains a sound recording
a likely use of the article is to play it by
using a machine that, as ordinarily used, is not capable, whether
with or without the aid of some other device, of causing visual
images to be seen.(12)
This section aims to treat any film clips that
are included on a CD, or any artwork that appears on the packaging
of a CD, as accessories to the sound recording on the CD. The
section is somewhat complex because it also seeks to exclude from
its operation other multi-media articles which happen to contain
both sound recordings and cinematographic films, such as digital
video discs (DVDs) and CD-ROMs. The impact of the Bill is intended
to be limited to the recorded music industry, and so the section
focuses on articles which are primarily sources of sound or
In this regard, the operation of s. 10AB is
further refined in s. 10AB(2), which provides a non-exhaustive list
of the factors which should be taken into account when deciding
whether or not an article is designed to be used by a machine not
capable (in its ordinary use) of causing visual images to be seen.
The factors include the nature of the article, the way it is
marketed, the nature of the sound recording and the nature of the
cinematographic film contained in the article.
The operation of s. 10AB(2) is best illustrated
by the following example. By reference to the factors listed above,
it is apparent that the film recording on a DVD will not be treated
as an accessory to the sound recording which accompanies it. The
nature of the article - which is played by a DVD video player, the
way it is marketed - as a video, and the nature of the recordings -
the sound recording is integral to the film recording, all indicate
that s. 10AB does not apply to such an article.
Having deemed that film clips and works on the
packaging are accessories to CDs, item 7 then
amends the Copyright Act to allow for the parallel importation of
non-infringing CDs with non-infringing accessories. It does this by
effectively excluding the operation of ss. 102 and 103 of the Act,
which prohibit importing infringing copies for sale or hire, or
selling or letting for hire works which a person knew, or should
reasonably have known, were infringing copies. Under the
new s. 112D, it will be lawful to import both
non-infringing copies of sound recordings and non-infringing copies
of sound recordings with non-infringing accessories.
The Bill also makes some minor consequential
amendments of a technical nature to the definition of
'non-infringing accessory', to provide that a work can be an
accessory, rather than merely be embodied in an accessory.(13)
These amendments extend to the provisions of the Act introduced by
the Copyright Amendment Act (No. 1) 1998, which have not
The Bill is remedial legislation, designed, as
has been seen, to counter an unforeseen response to the Copyright
Amendment Act (No. 2) 1998 with respect to the parallel importation
of recorded music. It is likely that the Bill will succeed in
remedying the defect in that Act.
The Bill has been referred to the Senate
Standing Committee on Legal and Constitutional Affairs, which is
due to report on 10 August 1999.
It should be pointed out that different
requirements apply in relation to non-infringement of copyright by
copies in the case of a sound recording on the one hand, and an
accessory to a sound recording on the other. A copy of a sound
recording does not infringe copyright if it is made with the
consent of the owner of the copyright in the sound recording in the
country where the copy was recorded, or where the original
recording was made, or if those countries do not protect the
copyrights, then with the consent of the maker of the sound
recording.(15) By contrast, a copy of an accessory does not
infringe copyright if it is made in a country which is a party to
the Berne Convention(16) or a member of TRIPS, and without
infringing the owner's copyright in the accessory in that
The difference in requirements with respect to
non-infringing copies reflects the fact that accessories are, and
can relate to, works other than sound recordings. However, it is
arguable that the requirements for non-infringement are stricter in
relation to accessories than sound recordings, which is perhaps
something of an anomaly.
Finally, it is observed that the Copyright Act
now contains frameworks for the parallel importation of books and
recorded music (together with accessories), but not other types of
work, such as cinematographic films (for instance, in the form of
DVDs). As the author of a recent research study states:(18)
The piecemeal approach adopted in the past to
reform parallel importing item-by-item (books, sound-recordings and
packages) cannot be justified on economic grounds. It might be
preferable to reform in one step the entire copyright law.
The removal of all
prohibitions on parallel importation, so as to allow the
importation of all types of works, is likely to be an emerging
- J. McKeough and A. Stewart, Intellectual Property in
Australia, 1991, p. 95.
- s. 10 Copyright Act 1968.
- McKeough and Stewart, op. cit., p. 140.
- Sections 37 and 38 of the Copyright Act; see also
Interstate Parcel Express Co Pty Ltd v Time-Life International
(Nederlands) BV (1977) 138 CLR 534.
- See, for example, Senate Legal and Constitutional Committee,
Official Committee Hansard, 3 February 1998, pp. 18, 27,
- BMG Music Pty Ltd & ors v Much More Music Pty Ltd
(currently before Justice Hill).
- Explanatory Memorandum, p. 1.
- Sen I Campbell, Hansard, Senate, 26 May 1999, p. 5392.
- Agreement on Trade-Related Aspects of Intellectual Property
Rights set out in Annex 1C to the Marrakesh Agreement establishing
the World Trade Organisation, done at Marrakesh on 15 April 1994.
One commentator notes that 'the TRIPS agreement neither sanctions
nor prohibits parallel importing': J. Revesz, Trade-Related
Aspects of Intellectual Property Rights, Staff Research Paper,
Productivity Commission, May 1999, p. 45.
- Accessory is defined in s. 10 of the Copyright Act to mean,
amongst other things the packaging or container for an article, or
a label on an article or its packaging, a written instruction or
other information provided with an article.
- Sch 1 cl. 10AB(1).
- Items 1, 5 and 6 of Sch 1.
- See items 3 and 4 of Sch 1 of the Bill. The relevant provisions
of the Copyright Amendment Act (No. 1) 1998 will commence
on 31 December 1999, unless proclaimed earlier: s. 2(2).
- Note that additional requirements apply where the sound
recording is of a literary, dramatic or musical work in which the
copyright subsists in Australia: s. 10AA(2) Copyright Act.
- International Convention for the Protection of Literary and
Artistic Works concluded on 9 September 1886
- s. 10 Copyright Act.
- J. Revesz, op. cit., p. 51.
27 July 1999
Bills Digest Service
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© Commonwealth of Australia 1999
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