Chapter 3 - Intellectual Property
Chapter 17 of the AUSFTA, the Intellectual Property
(IP) Chapter, is the largest chapter in the AUSFTA in content and substance. It
refers to all the major forms of intellectual property rights and their enforcement
including copyright, trademarks, domain names, industrial designs and patents.
The IP Chapter contains 29 Articles and 3 exchanges of
letters. The exchanges of letters are in relation to Internet Service Provider
(ISP) liability, various aspects of IP that apply to Australia,
and national treatment in respect of phonograms.
The IP Chapter contains several obligations concerning
copyright. One of the key obligations requires Australia
to extend its term of copyright protection by an additional 20 years. Australia
is also committed to ratifying certain international IP agreements such as the
World Intellectual Property Organisation (WIPO) Copyright Treaty 1996. Australia
has already implemented most of its obligations under the WIPO Copyright
Treaty, however the AUSFTA requires Australia
to go further in some respects, to more closely align with US
law. For example, Article 17.4.7 requires a ban on devices for circumventing
technological protection measures (TPMs) and extends the scope of criminal
offences relating to the manufacture and sale of circumvention devices.
DFAT advised the Joint Standing Committee on Treaties
(JSCOT) that a large number of the obligations in the AUSFTA are drafted in a
way that reflects the highly sophisticated IP regimes both in Australia
and the US and
to ensure consistency with the US
template approach to its free trade agreements.
terms, IP rights are the legal rights which arise as a result of intellectual
activity. There are two main reasons for the creation of these rights. The
first is to give public recognition of the creative, moral and economic rights
of the creator and the rules to govern the rights of the public for access. The
second reason is to foster creativity and promote innovation by rewarding the
creator a monopoly economic right for a limited period of time.
exclusive right to exploit the innovation quite often conflicts with the idea
of competition policy which at its basic level seeks to remove impediments to
the functioning of markets such as by minimising the power of monopolies. The
crucial consideration in the creation of any IP rights is the balance between
the incentive that those rights give to innovation or creativity and the impact
that the creation or extension of a monopoly right will have on consumers. The
IP Chapter of the AUSFTA reinforces IP rights, and in some places strengthens
them to take account of developments in technology.
Paris Convention for the Protection of Industrial Property of 1883 (the Paris
Convention) is the earliest multilateral treaty to recognise the value of
intellectual property and its importance to protecting the value of ideas. The
Paris Convention was closely followed by the Berne Convention for the
Protection of Literary and Artistic Works in 1886. These two conventions
recognise the two distinct branches of IP, namely industrial property and
the Paris Convention, there are now more than 23 different IP multilateral
treaties all administered by the World Intellectual Property Organization
(WIPO). Australia is a party to many of these treaties.
Rationale for inclusion of Intellectual Property in the Free Trade
There is some debate about whether it is appropriate to
include IP in agreements that aim to advance free trade. The purpose of free
trade is to eliminate or reduce government interference in trade across
international borders. In contrast, stronger IP rights interfere in the market
for the benefit of rights holders. The AUSFTA reinforces and, in Australia's
case broadens, the protection given to holders of IP rights.
Since IP rights are a restraint on commerce and can be
used to preserve monopoly power and to inhibit technological developments, to
some it is not clear why measures to strengthen these rights should be included
in a free trade agreement. Many
believe that the IP Chapter of the AUSFTA will in fact limit free trade between
the US by
effectively expanding US barriers to cover Australia,
rather than reducing barriers to trade.
Although traditionally treated by many countries as a
cultural issue not subject to negotiation, at the persuasion of the US,
stronger IP protections are now often included in trade discussions and trade
agreements. One example is the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) under the auspices of the World Trade
Organisation. In addition, the coverage of IP rights has extended into new
areas such as software and genetic material. Since TRIPS, the US
has engaged in a series of free trade agreements in which it has promoted
stronger IP rights than those provided under TRIPS.
Geist, a Canadian IP law expert, has argued
The delay in spreading
the WIPO standard throughout the world has frustrated the U.S., which as a major producer of movies,
music, and books, has long promoted stronger copyright protections. In
response, it has begun to demand inclusion of copyright protections akin to
those found within the WIPO treaties when negotiating bi-lateral free trade
interests in this context need to be taken into account. While to date there
has not been a comprehensive economic evaluation of IP rights in Australia, the
Productivity Commission has found that, as a net importer of IP, Australia would lose more than it
gains by strengthening IP rights. Further it suggests that strong IP rights are
turning the terms of trade against Australia.
A significant amount of evidence presented to the
Committee throughout the course of its inquiry supported this proposition,
arguing that extension of the copyright term in Australia,
in particular, will come at a cost to the Australian economy. Since Australia
is a net importer of IP and a small economy, it is likely to benefit from lower
protection for IP while larger economies and exporters of IP, such as the United
and Europe, are likely to benefit from stronger
protection. The effect on a
country like Australia
may be to turn the terms of trade towards those countries that disproportionately
hold IP rights.
Professor Geist has also contended that:
such as Australia may recognize the importance of a balanced
copyright policy to both their cultural and economic policies, but they are
increasingly willing to treat intellectual property as little more than a
bargaining chip as part of broader negotiation. Since most trade deals are
judged by an analysis of the bottom-line, economic benefits that result from
the agreement, and since quantifying the negative impact of excessive copyright
controls is difficult, the policy implications of including copyright within
trade agreements is often dismissed as inconsequential.
DFAT has been dismissive of such arguments. Although
conceding that extension of the copyright term 'is the single biggest
concession that Australia
made in the negotiations',
representatives from DFAT have stressed the positive aspects of the extension.
For example, Ms Harmer
told the Committee that
- term extension
applies to all copyright works, so it will apply also and equally to Australian
authors, artists and musicians as it will to Disney corporation and their copyright works. I
think that is an important issue to remember. I think our copyright industry is
a growing industry. It remains a fact that currently we are a net importer of
copyright material, but that may change in the future. Certainly, it is
something which our copyright industry strongly supported through the
negotiations. Term extension was something that they saw as being beneficial to
Mr Stephen Deady from DFAT reiterated this view:
- we are a net importer
of copyright material-and that is not at issue-but at the same time we do have
very active creative industries that would benefit from the copyright extension
- There are some groups within the Australian community and economy that
certainly see some of the benefits that accrue even from something like
copyright extension. We had this debate about what are the actual costs. There
would be some-there is no doubt about that-with copyright extension, but we do
not believe they would be that great, and there are those offsetting gains.
The Commonwealth Government commissioned the Centre for
International Economics (CIE) to undertake an economic analysis of the impact
of the AUSFTA on certain outcomes in the negotiations, including changes to IP
legislation. Although the CIE's report contains some discussion of IP in the AUSFTA
it does not attempt to quantify its economic impact. For example, the report
states that the copyright extension in the AUSFTA 'does not seem likely to
provide additional incentives to create new works, but may in some cases impose
costs on consumers.' While in many
cases 'the increased cost faced by consumers is not likely to be significant' the report states that 'it is
difficult to quantify the extent of this effect'. The report also fails to quantify
the other IP issues it identifies as arising under the AUSFTA.
The CIE's report,
has been widely criticised because, amongst other things, it 'fails to contextualise
the major changes that have taken place [in the AUSFTA] and fails to grapple
with some of the main economic studies that have been done in relation to
particular areas.' It has also
been described as 'utterly implausible',
on 'legal grounds or economic grounds or political grounds', particularly because it puts
forward the proposition 'that there will just be a marginal impact' from the IP Chapter of the AUSFTA.
motive for the strong protection of IP rights is clear. The US has a disproportionately
high share of IP rights and products that contain IP rights in its exports. It
has therefore been proactive in promoting the rights of its own IP owners.
The US International Trade Commission's report U.S.-Australia Free Trade Agreement: Potential
Economywide and Selected Sectoral Effects,
has acknowledged that the IP Chapter of the AUSFTA addresses 'many of the most
significant concerns that US industry representatives have expressed' about IP
law in Australia. Tellingly, the report noted numerous advantages for the US,
its economy and its corporate interests:
The FTA is expected to result in increased revenues for U.S.
industries dependent on copyrights, trademarks, patents, and trade secrets.
However, owing to the much smaller size of the Australian economy compared to
that of the United States,
and the relatively small contribution of Australia
to U.S. IPR receipts from the world-, any increase in revenues for the U.S
IPR industries likely would have a limited
effect on U.S IPR-related industries and the U.S economy as a whole.
Among the U.S copyright industries that would potentially
benefit most due to the increased digital technology features of the FTA are
the motion picture, sound recording, business software applications, entertainment
software, and book publishing industries. Industries that might benefit from
the greater patent and trade secret protections, including the protection of
confidential data, are the pharmaceutical and agricultural chemicals
industries. A broad range of U.S.
industries should benefit from strengthened trademark and other IPR provisions
of the FTA. By comparison, because the United
States already meets the relatively high
standards of IPR protection and enforcement included in the U.S.-Australia FTA,
there would be little if any effect on U.S.
industries or the U.S.
economy based on U.S implementation of its obligations under the FTA
Similarly, in a report entitled, The U.S.-Australia Free Trade Agreement (FTA) The Intellectual Property
Provisions, the Industry Functional Advisory Committee on Intellectual
Property Rights for Trade Policy Matters (IFAC-3) has highlighted the
significant advantages garnered by the United
States in the AUSFTA:
The United States
is the world's largest producer and exporter of copyrighted materials and at
the same time loses more revenue from piracy and other inadequate copyright
protection than any other country in the world. High levels of copyright
protection and effective enforcement mean more revenue and more higher-paying
jobs benefiting all Americans. The copyright industries account for over 5% of
U.S. GDP and have employed new workers at over three times the rate of the
economy as a whole over the last 25 years.
In particular, the copyright extension under the AUSFTA
is seen as a major 'win' for the United States.
However, the IFAC-3 report states that the United
States will push for even further extensions
of the copyright term in future negotiations with Australia:
In a major advance, Australia
has agreed to extend its term of protection closer to that in the U.S.-to
life of the author plus 70 years for most works. While industry sought to have
the term of protection for sound recordings and audiovisual works extended from
50 years from publication to a term matching the U.S.
law's 95 years, a compromise was struck at 70 years. We urge that future
agreements move that level to the full 95 years-
The report congratulates the United
States negotiators on the outcomes they
achieved in negotiations:
Other than [a few perceived shortcomings], the substantive
copyright text achieves all that U.S. industry sought in this negotiation and
the negotiators are to be commended in achieving this most important result
that expands U.S. economic opportunities for some of America's competitive
Rimmer has argued that:
- copyright term extension is not a final upper limit set by the
Australian Government. Rather, it is a provisional standard that will be open
to further negotiation in the future. Copyright law will be a moveable feast
for the United States
industry in the years to come- the free trade agreement represents a down
payment on perpetual copyright on the instalment plan.
The IP issues arising under the AUSFTA reflect the
general tension between the goals of promoting competition in the economy at
large and providing appropriate protection for new works. However, it is clear
that those tensions take on new meaning in the context of commercial and trade
relations between Australia
and the United States.
Not only does the AUSFTA push Australia further than it has previously gone in
the past in relation to the protection of IP rights, there are also concerns
that the AUSFTA prevents Australia from retreating from this position in future
and implementing policies and laws which do not accord with the provisions of
Objections to the process
Many submissions and witnesses raised strong objections
to the process by which the IP Chapter has been formulated and negotiated, as
well as the requirement of consequential major legislative changes in Australia.
These objections were across the board and included creators, users, consumer
protection organisations and economists.
For example, the Australian Vice-Chancellors' Committee
(AVCC) expressed the following concerns:
The AVCC is deeply concerned about the nominated timeframe and
consulting process under which the necessary legislative changes will be
effected, given the level of detail and the extent of changes needed to the
Copyright Act and the implications that these changes will have on the daily
operations of the universities. In the rush to consolidate the AUSFTA Australia
risks introducing a serious imbalance between the interests of owners and users
which it has achieved under current arrangements.
The Music Council of Australia was also apprehensive:
We have come to the view that regardless of the merit or demerit
of the changes in [intellectual property rights] in AUSFTA, it was not the
appropriate place to make these decisions. AUSFTA has displaced or forestalled
a more democratic consideration of the issues within Australia
and makes our position effectively irreversible regardless of success or
failure of the measures, unless the US
consents to change. The FTA seems to change Australian law to match United
States law, possibly more for the benefit of
the US than Australia.
Similarly, the submission on behalf of the Australian film and television production industry by the
Australian Writers Guild, the Australian Screen Directors Association and the
Screen Producers Association of Australia stated that:
We informed DFAT that
the US audiovisual industry saw intellectual property as the 'main game' and
that making concessions in this area should be seen as part of an overall
concession in regards to audiovisual services. DFAT indicated that the
Government was unwilling to make any concessions to the US on intellectual property.
response to a question on notice from the Committee, the Australian Writers
Guild reiterated this point:
- a bilateral trade
agreement is not the forum through which such monumental changes to Australian
copyright policy should have been made and we had been assured by Australian
negotiators throughout the negotiating period, that those changes would not be made.
Indeed we were assured of this again in our meeting with the Prime Minister in
ALCC stated that:
The process of
negotiating the FTA- has been accelerated. Although some consultation
processes took place throughout last year, the negotiation process had been
closed; participants in consultation were not privy to information at an
appropriate level of detail as to the nature of provisions being considered
until the release of the draft text in March this year. Current political developments
have created unrealistic pressures in time and a climate that could lead to the
enactment of rash and ill-considered legislation.
Mr Peter Gallagher
from Inquit Communications Pty Ltd told the Committee that the AUSFTA would
result in Australia
being a 'wealthier and more economically secure country' and that 'the benefits plausibly
outweigh the costs'. However, he
noted some problematic issues pertaining to, amongst other things, the
inclusion of IP in the agreement:
The copyright extension
creates a new property right. It seems to me that no substantial decisions on
intellectual property should be made on the basis merely of an economic
exchange with a foreign government. The key consideration in the creation of
any intellectual property is a balance to be struck between the interests of
our society in the incentive that the IP right gives to innovation or
creativity and the impact that the creation or extension of a monopoly right
will have on the welfare of Australian consumers. Foreign commercial interests
do not appear on either side of this ledger, because intellectual property is
inherently a territorial right- Even the WTO TRIPS agreement provides only for
the harmonisation of procedures and minimum standards as they apply in the
territory of individual member states.
Mr Gallagher continued:
In my view it was
inappropriate for the Australian government to undertake to change this
property right for reasons mainly of a balance of rights and obligations in a
trade agreement rather than on the basis of an evaluation of a balance of
rights and benefits in Australia of such an extension. Although I think it
is possible given the benefits of integration- that the recommendation if they
had made the judgment on this basis would have had the same effect, this does
not allay my disquiet with the way in which this concession was made.
The Australian Digital Alliance pointed out the IP
Chapter's language is 'opaque' and its structure 'complex'. This means that
'some margin exists for different interpretations of the provisions.' It is certainly clear, however, that
overall the provisions in the IP Chapter significantly raise the level of IP
rights protection if adopted into the current Australian IP regime. This is
particularly apparent in the text of the AUSFTA:
- the FTA is concerned solely with strengthening the rights of
copyright owners, scarcely mentions the rights of users and makes no reference
to the need for balance.
Weatherall argued that IP law is a policy
instrument designed to achieve certain social and economic aims. It must be
flexible, and balanced, and subject to constant review for its appropriateness
in light of technological developments. The AUSFTA is an overly detailed,
inflexible agreement, containing many provisions which prevent Australia
from introducing new exceptions or changes to its laws in the future.
also argued that disputes may arise because of Australia's
chosen form of implementation of its obligations under the IP Chapter. Her
concern was that, since the provisions are largely modelled on United
States law, it could be said that the United States has
certain 'expectations' about what they mean, regardless of Australia's
views of their legal effect and interpretation. In Australia,
on the other hand, there is a lack of official information about what the legal
effect of the FTA is because negotiations did not occur in public. Although
DFAT has made some statements to the Committee in previous hearings, Ms
Weatherall's view was that these statements
have been 'vague', 'qualified' and 'too often [referred to as being] matters
DFAT has expressed strong disagreement with this
Australia's implementing legislation is now in the public domain and negotiators
have clearly stated Australia's understanding of its obligations to the Committee. These statements
are available through Hansard.
The final text of the Agreement represents the negotiated outcome agreed
by the two Governments. Should any dispute cases be taken under the dispute
settlement provisions of the Agreement these will be considered by a panel on
the facts of the particular case and in a manner consistent with the
international law standards of treaty interpretation.
As is the case in any treaty level negotiations,
the final text of the FTA represents the negotiated outcome agreed by the two
Governments. Both Parties will implement
the Agreement in good faith. Should any
dispute cases be taken under the dispute settlement provisions of the Agreement
these will be considered by a panel on the facts of the particular case and in
a manner consistent with the international law standards of treaty
Further, Ms Weatherall
submitted that any appearance of flexibility in the language used in provisions
of the AUSFTA:
- is likely to prove illusory in practice, in light of the
proven attitude of IP Owners, particularly US IP Owners, who will, I believe,
not hesitate to urge use of the Dispute Settlement Chapter (Chapter 21) if they
do not agree with Australian implementation of the AUSFTA.
To the extent that IP Owners support provisions in this
Agreement, as good policy for Australia,
their submissions do not answer a more basic problem: that putting these
provisions in a treaty is a very damaging way to implement that policy. Even if
you thought these provisions were good IP policy- they shouldn't be in a
also submitted that the negotiation of the IP chapter was a 'failure of sound
and transparent policy making' and that it is 'far too detailed and will
seriously hinder future IP policy making'.
lead negotiator, Ms Toni
Harmer from DFAT, disagreed with this
We certainly would disagree with that and we would argue that,
whilst there are criticisms of the IP chapter, intellectual property is a very
important sector of our economy, particularly in developing value added
exports. I do not see somehow strengthening our IP protection at the same time
as providing the ability to make exceptions where they are appropriate in the
national interest as a bad policy outcome for Australia
informed the Committee that DFAT consulted widely about the impact of the AUSFTA
on IP law in Australia,
and will continue to do so:
We conducted very broad consultations across the community and
industry in relation to the intellectual property chapter, as we did across the
It is fair to say that
the response has been unsurprising in the sense that you can see continuing
divergent views on some aspects of intellectual property. We have been at pains
to explain to those music interests that are concerned that, whilst we have
strengthened copyright in some areas, we have retained the ability to make
exceptions and that, whilst we have agreed to adopt elements of United States law, we have not agreed to implement US law word for word. Therefore, continued
consultations with industry about the most appropriate way to do that in the
context of our regulatory and legal environment are important.
Australia's obligations under the
Intellectual Property Chapter
The most significant evidence received by the Committee
in relation to the IP Chapter was the obligations relating to the extension of
the term of copyright protection and technological protection measures (TPMs).
The following section of the Committee's report will focus on these issues, as
well as issues relating to 'contracting out' of exceptions to copyright
infringement, temporary copying, ISP liability and patents.
Extension of the term of copyright
Article 17.4.4 of the AUSFTA sets out the obligations
on both parties in relation to the term of copyright protection. Australia
is required to extend the term of copyright protection by an additional 20
years, bringing it into closer conformity with the United
States. The AUSFTA provides for an extension
of the general term of copyright protection in Australia
from 50 years from the death of the author to 70 years after the death of the
author, in line with United States
law. This is beyond the minimum international standard stipulated in the Berne
The United States
extended copyright protection from 50 years to 70 years under the Sonny Bono Copyright Extension Act 1998.
Several submissions and witnesses to the Committee noted that this legislation
was the result of intense lobbying by the Motion Picture Association of
America, the United States
copyright owner group which represents such corporations as the Disney
Corporation, Sony Pictures Entertainment, MGM, Paramount Pictures, Twentieth Century
Fox, Universal Studios and Warner
The main advocate for the copyright term extension was the Disney Corporation
which was facing the expiration in 2003 of its copyright on Mickey
Mouse and other characters.
In 2000, the Australian Intellectual Property and
Competition Review Committee (IPCRC) recommended that the current copyright
protection term should not be extended and that no extension of the copyright
term should be introduced in Australia
in the future 'without a prior thorough and independent review of the resulting
costs and benefits.' The
Commonwealth Government accepted that recommendation in 2001, stating that it
'has no plans to extend the general term for works'. The AUSFTA will require Australia
to extend its copyright term, without any significant independent analysis of
the costs and benefits of the extension being undertaken.
The Committee notes that the inclusion of extension of
the copyright term contradicts assurances by the Commonwealth Government
throughout the negotiation process that it was resistant to such an inclusion.
The Trade Minister, the Hon Mark Vaile MP, is reported as saying that the
copyright term extension was one of the 'standout issues' where Australia
and the United States
remained at odds in the IP part of negotiations. Specifically, he is quoted as
saying that '(t)here is a whole constituency out there with a strong view
against copyright term extension and we are arguing that case'.
Evidence presented to the Committee expressed
disappointment in relation to the Commonwealth Government's considerable 'about
face' in relation to IP issues. For example, Create Australia
noted that AUSFTA negotiators had 'informed cultural representatives a number
of times that the government would not support an extension' of the copyright
term. The Music Council of
Australia expressed a similar view.
Evidence received by the Committee in relation to the
copyright extension was split between those who support the copyright extension
and those who strongly oppose it. The weight of evidence was overwhelmingly
against the extension. The following discussion provides a summary of arguments
for and against that were presented in the course of the Committee's inquiry.
Arguments for extension of
Evidence supporting the extension of copyright was
mainly from organisations which represent or protect the interests of copyright
owners, such as the Copyright Agency Limited (CAL), the Australian Copyright
Council (ACC), and the Australian Film Industry Coalition (AFIC). The main
arguments presented to the Committee included advantages resulting from
harmonisation with Australia's
trading partners and the increased benefits for copyright owners ensuing from
an extended term.
Fraser from CAL
told the Committee that:
CAL strongly supports the intellectual property chapter in
respect of the copyright provisions in the free trade agreement, and we believe
these provisions will benefit all copyright owners in Australian and ultimately
the nation's long-term economic and social well-being- it is in the national
interest for Australian society and the Australian economy to have strong
copyright protection as provided for in this agreement.
also offered the following opinion:
In my view it is an opportunity for Australian creators to have
strong copyright laws. The US
wants strong copyright laws, I presume in their own national interest. Their
copyright based industries are worth more to their economy than agriculture. I
think the fact that we are a net importer of copyright should not dictate to us
a short-term view about copyright. I think the better and more productive
argument is not to say that we should weaken copyright so we can get cheaper
access to other creators' work, but to strengthen copyright so that we can
support our own creative industries, giving them the security to create and
produce and distribute product knowing that they can get a good return and
compete with the international providers, both in providing material to our own
community, education and readership in general, and create products and
services that will compete successfully into our region.
Several proponents of the extension referred to the
report produced by the Allen Consulting Group in 2003 on the costs and benefits
of a copyright extension to Australia
(the Allen Report). The Allen
Report was commissioned by the Motion
Picture Association and supported by Australian proponents for extension of the
term of copyright such as the Australasian Performing Rights Association, the
Copyright Agency Limited, and Screenrights.
The Allen Report recommended extending the term of copyright to harmonise Australian law
with that of its major competitors, to encourage further foreign investment and
create incentives to copyright owners whose protection has been undermined by
technological developments. The Allen Report also stated that harmonisation would result in cost savings in managing
IP rights, with portfolios expiring at the same time across Australia's major markets and argued that additional
costs to users from an extension of the copyright term would be minimal.
However, the Allen
Report has been widely criticised and
discredited. One submission received by the Committee argued that the Allen
Report 'is deeply flawed in terms of its
methodology and legal analysis' and 'fails to produce any empirical economic
evidence that supports an extension of the copyright term.'
A United States IP law expert, Professor Lawrence
Lessig of Stanford University, has been highly critical of the Allen
Report. On his website he wrote that '(t)he
report is embarrassingly poorly done.'
was particularly disparaging of the economic value of the Allen
More frustrating is the pudginess of this argument that purports
to be economics. There's lots saying that both sides exaggerate their claims,
but nothing to provide any actual evidence to evaluate whether any claim is
exaggerated. And then, after acknowledging there is no useful evidence at all,
the report concludes that on balance, the effect of the extension would be
neutral, and so Australia
should do it.
has also been a sardonic observer of the effect of 'Australia's
caving to United States
pressure' in relation to the
copyright term extension in the AUSFTA:
The result: Australian film and culture will be harder to spread
and preserve; Hollywood will get
richer. I hope the voters in Australia
are ok with that, because god knows, we Americans need lots of help with our
balance of trade debt.
The Australian Digital Alliance has also been extremely
critical of the Allen Report:
Given the difficulty of accurately assessing such economic
effects, it may be forgiven that the report presented little meaningful data.
However, it remains baffling the manner in which its acknowledgement of the
lack of evidence is reconciled into a conclusion that extension of term would
be advantageous to the Australian economy.
The report is also alarmingly dismissive of what would seem to
be an extremely important factor in the consideration of economic costs and
benefits of copyright term extension in Australia;
remains by far a net importer of copyright materials. The report brushes over
the point as if it were a pesky detail rather than a primary concern for Australia's
present and future trading strategy and does not provide any basis for its
assertions that copyright extension would be positive for the future of Australia's
Some of the other arguments advanced in favour of the
copyright extension were:
harmonisation of the term of protection with
that of Australia's major trading partners can assist copyright compliance with
clearance of rights for material distributed or made available overseas,
the benefits of harmonisation will assist in
ease of negotiations for global contracts with living copyright creators;
standardised copyright term arrangements will
reduce the costs associated with processing royalties, thereby increasing the
proportion of royalties made available to copyright holders; and
counter-balancing the increased risk proposed by
piracy and the losses it causes is assisted by an extension of the term.
told the Committee that CAL was
aware of concerns raised by the educational sector and libraries in relation to
the copyright extension. CAL
presented the results of its own research into copying of out-of-copyright
materials in the education sector:
We have looked at works that are currently over 50 years but
less than 70 years from the death of the author, and asked what would be the
impact of an extension tomorrow on the payments for copying to copyright owners
from educational institutions and who would be the copyright owners that
It is interesting to know that there has been a lot of comment
about how it would be of benefit to foreign copyright owners and not to
Australian copyright owners. The proportion of copying in the educational
sector of out-of-copyright material within the period of extension-that is, 50
to 70 years-is 0.02 per cent. That would be the increase. These results have
not surprised us because copying in schools and universities is of the most
recent material, typically. It is mainly of books and journals which have
recently been published.
The Commonwealth Government argues that harmonisation
with United States
law will be economically beneficial to Australia
through increased trade and investment.
The essence of this view has been summarised as meaning that a stronger IP
rights regime will encourage growth through trade and investment, closer
alignment of IP rights will increase exports to the United
States, and closer alignment of IP rights
will increase United States
investment in Australia.
Mr Stephen Deady from DFAT told the Committee that harmonisation under the AUSFTA does
not actually oblige Australia to harmonise its laws with those of the United States:
On the question of
harmonised IP laws- If you look at that language, it talks about ‘endeavouring
to work together’. It is a best-endeavours clause; it does not commit Australia. There are no obligations there for
Australia to harmonise anything but rather to work with the United States and
where appropriate-if future governments decide it appropriate-to work together
in those areas. It is a best-endeavours clause and there are no obligations
Arguments against extension of
The vast majority of evidence received by the Committee
in relation to the extension of the copyright term expressed strong opposition
towards it. Much of this evidence referred to the adverse economic impact on
libraries, universities, cultural institutions, and the wider public. The main
arguments against extension included the extended term of payment of royalties,
increased costs through the statutory licenses issued to educational
institutions by collecting societies, the increase in transactional and tracing
costs for an extra twenty years, and the reduction of the incentive to create
more works. Some submissions and witnesses focussed on broader IP policy issues,
arguing that the copyright extension inappropriately alters the balance between
the interests of copyright owners and users.
A number of submissions noted that the extended term of
payment of copyright royalties will impose significant economic burdens on educational
and research providers. For example, the Australian Vice-Chancellors' Committee
(AVCC) stated that:
- our education institutions will now be required to pay licence
fees under the statutory licences for the additional 20 years of copyright- the
USA education sector is not impacted by the FTA but the Australian sector is,
and in a significant way.
The extension of the term of copyright means an increase in the
net cost of access to copyrighted material- for universities, for libraries,
and for all other users. In simple terms, universities and other users will now
have to re-assess their copyright and information budgets. The actual increase
in costs that they are face is difficult to approximate- but given high demand
and static funding it is likely that some trade-offs will be required.
The AVCC also noted the considerable flow-on effects of
the copyright extension:
If the balance between owners and users is upset it is not just
a question of higher costs to users. The more significant loss will be the
capacity for further creation through all researchers having open access to all
source materials once passed a reasonable period of protection. If copyright
becomes too strong, innovation will be shackled.
The Australian Digital Alliance (ADA) noted that:
Chapter 17 creates obligations to amend the Australian copyright
regime in ways that will reduce access to materials, increase costs for
institutions which provide public access to knowledge, and ultimately curb
innovation. The neglect is disturbing and unsatisfactory given that a balanced
intellectual property regime forms the research and resource base upon which
our knowledge and creative industries depend.
The Australian Libraries' Copyright Committee (ALCC)
expressed the following view:
is a net importer of copyright materials from the U.S by a substantial margin;
an extension of copyright term will, other things being equal, lead to a
reallocation of resources and adversely affect our balance of trade. An
extension of copyright term has serious consequences for libraries, cultural
and educational institutions in relation to raised costs of maintaining access
to information and increased costs associated with the already formidable and
resource-intensive task of tracing copyright owners and requesting permissions.
The group of people who will be ultimately affected by the added burden of term
extension include historians, scholars, teachers, writers, artists and
researchers of all kinds.
has admitted that there may be some increased costs involved for the education
and research sector. Ms Harmer told the Committee:
To the extent that the
uses that people wish to make of that material- relate to exceptions for
research and education, that will be no different. Certainly in relation to
works that do not fall within those exceptions there may be some increased cost
involved in seeking permission to use those works. That is not something that
we were to know.
The ALCC argued further that extension of the term of
copyright is also likely to 'restrict traditional dissemination of copyrighted
works, inhibit new forms of dissemination through the use of new technology,
and threaten current efforts to preserve historical and cultural heritage.' Dr
pointed out that, in some cases, copyright works will be 'orphaned' because the
owner of a copyright work will be impossible to trace.
Dee's report also highlighted the
significant estimated costs arising from extension of the copyright term:
The DFAT/CIE report made some simplifying assumptions in order
to quantify the benefits of extending the term of copyright protection. While
the report was not able to make the same assumptions to quantify the costs,
this has been done in Box 2. The net effect is that Australia
could eventually pay 25 per cent more per year in net royalty payments, not
just to US
copyright holders, but to all copyright holders, since this provision is not
preferential. This could amount to up to $88 million per year, or up to $700
million in net present value terms. And this is a pure transfer overseas, and
hence pure cost to Australia.
noted that 'even the current term of copyright protection is probably too long,
The Committee notes that DFAT strongly disagrees with Dr
Dr Dee took some of the
assumptions that were cited in the CIE report-assumptions that were identified
as unrealistic in the CIE report-and she came up with a figure of something
like $88 million per annum as additional costs of extending the copyright from
50 to 70 years. However, this assumption overlooked what everybody involved in
copyright knows, and that is that copyright material typically depreciates over
time and has an economic life which typically is quite short. If we make
allowance for that in our analysis, that $88 million becomes relatively
Nevertheless, the Committee considers the evidence
expressing opposition to the copyright extension to be extremely valid. The
Committee also notes that since the United
States extended its term of copyright
protection from life of the author plus 50 years to life of the author plus 70
years under the Sonny Bono Copyright Term
Extension Act 1998, three constitutional challenges have been made.
In the first of these, Eldred v Ashcroft,
Justice Breyer made a dissenting judgement and noted, amongst other things, the
significant impact of transactional and tracing costs and 'the serious public harm and the
virtually nonexistent public benefit'
arising from the extension. Justice Breyer
also observed that the economic effect of the copyright extension is to make
copyright almost perpetual in nature:
The economic effect of this 20-year extension- the longest
blanket extension since the Nation's founding- is to make the copyright term
not limited, but virtually perpetual. Its primary legal effect is to grant the
extended term not to authors, but to their heirs, estates, or corporate
successors. And most importantly, its practical effect is not to promote, but to
inhibit, the progress of "Science"- by which work the Framers meant
learning or knowledge.
provided the Committee with a number of examples where the extension of
copyright has had significant impacts on cultural and socially significant
projects in the United States. Dr
Rimmer also pointed out that the Public
Domain Enhancement Bill 2004 (US) was introduced into Congress in 2003 with a
view to addressing some of the impacts of the Sonny Bono Copyright Term Extension Act 1998, in particular various
concerns relating to 'orphaned' works.
Despite the Commonwealth Government's argument
about the need for and benefits of international harmonisation in light of the
'International Standard- emerging amongst our major trading partners for a
longer copyright term, Dr Rimmer
contested that the extension of the term of copyright is following an emerging
international trend. Dr Rimmer
argued that under the Berne Convention and the TRIPS Agreement, Australia
is not obliged to provide any more protection than life of the author plus 50
years. Further, Australia
has not followed emerging international trends in other important fields and
has not adopted, for example, sui generis
database laws or traditional knowledge laws:
Indeed Australia has preferred to wait for the development
of multilateral agreements on such matters- before passing domestic
legislation of its own.
The Committee also notes that, despite the arguments
promoting the concept of harmonisation, there do not appear to be any examples
that show Australia
has missed out, or evidence that it might miss out, on investment or trade
opportunities through inadequate levels of protection for IP rights.
Many submissions questioned the benefits of
harmonisation. For example, the Australian Writers Guild (AWG) asked:
The AWG queries the fundamental use of the extension to
copyright in a context where there will be little Australian product to protect
for an additional twenty years. The AWG asks what is the point of harmonising
our copyright laws with the US
and the EU if the cultural material which is protected for an additional 20
years is primarily American in origin?
The Australian Libraries' Copyright Committee (ALCC)
- no compelling rationale has been put forward to demonstrate
how an extension of copyright might yield significant trade benefits; the vague
position that term extension would encourage trade due to increased U.S
confidence in the strength of the Australian copyright protection is laboured.
No claims have been made that the economic benefits of harmonisation with the
U.S. is any more than marginal and no data has been presented to substantiate
even this weak assertion. Although the benefits of harmonisation are
theoretically plausible, the reality is that the beneficiaries of harmonisation
will be multinational companies, who are based mostly in the U.S.
and European Union.
Australian Digital Alliance (ADA) submitted that even though the Commonwealth
Government has repeatedly run with the argument that the overall benefit of the
IP Chapter is the harmonisation of Australian and United States copyright legislation, the AUSFTA
provisions closely mirror the provisions of the United States legislation. Therefore, in reality, in the ADA's view:
- harmonisation equates
to unilateral action to amend Australian copyright legislation to U.S. legislation. The alignment of our copyright
legislation to meet obligations created by the FTA has dangerous potential to
create severe distortions within our domestic regime. Although Australia and United States share a common law tradition, some
divergence has developed in recent years, marked by the emergence of powerful
U.S copyright markets which have been extremely successful at legislative
lobbying. Consequently, the U.S copyright regime sets one of the highest
standards of copyright protection in the world but one which is not recognised
as providing a balance between the interests of users and copyright owners.
witnesses agreed. For example, Mr Charles Britton from the Australian Consumers' Association told the Committee that
Australian consumers would be the real losers under the AUSFTA:
the copyright clauses
in the free trade agreement threaten consumer rights and upset the balance with
producers’ rights. It is difficult to discern the consumer benefit in a closer
harmonisation of Australian and United States intellectual property rules. It is
imperative to note some critical differences between the two systems. The United States has a constitutional guarantee of free
speech; we do not. The United States has fair use provisions which provide some
protection for consumers in home copying; we do not. The United States constitution establishes some ground rules
for intellectual property; our Constitution does not. Therefore, adopting the
more draconian United States line on intellectual property without
attending to the crucial aspects of consumer protection would, in our view,
deliver a bad result for Australian consumers.
While the extension of copyright has been touted as
being beneficial for creators, arguably the IP Chapter actually does little
more than concentrate power in the hands of major IP-owning businesses. EFA was of the
view that the extension of the copyright term:
- comes not from a desire to promote innovation and enhance our
nation's public domain, but rather from a corporate desire to enhance monopoly
profits. In practice, given that the extra 20 years would be enjoyed long after
the author's passing, it is large corporations that are most likely to benefit
from the change.
warned that 'copyright industries' should not be confused with Australian
creators and innovators:
We need to avoid "slippage" between copyright owners
and managers and copyright creators- they are not the same thing and they
quite often do not have the same interests.
The only proper conclusion is that views from those involved in
the creative industries are mixed. Some organisations support copyright
Notably, however, many organisations representing creators and
authors are not supportive of copyright term extension.
Further, EFA argued that it is unlikely that the
extension will have a significant impact on the creation of new works:
[In the US]
there is no evidence that the extension has resulted in increased innovation
and creative effort. In fact, there is no evidence suggesting that further
incentives are needed at all. Even if such a need were present, the very
abstract benefit provided to creators by the proposed 20 year extension would
be unlikely to have any real impact on rates of development.
Indeed, the opposite effect may be more likely:
- any lengthening of copyright terms would tend to impede
creativity and development. In the next 20 years, the monopolies over many
works are due to expire- Building upon public domain material is a rich source
of creativity and anything that serves to further limit the public domain also
serves to impede creativity.
Some submissions and
witnesses pointed out that implementation of the AUSFTA will not actually
result in a complete harmonisation of Australian copyright laws with those of Australia's
major trading partners such as the United States
and the European Union. In fact, 'there will be a number of important
discrepancies between the copyright duration in Australia
and the term provided for in other countries.' Dr
Rimmer described the issue of international
harmonisation with respect to the copyright extension as 'a myth'.
A significant number of Australia's
trading partners provide copyright protection for the
life of the creator plus 50 years. The AUSFTA will not necessarily result in
harmonisation between Australia
and trading partners such as Asian countries, countries in the Middle
and South Africa.
Indeed, Dr Rimmer
submitted that 'the copyright term extension in Australia
will only exacerbate the wide variations in the treatment of copyright
DFAT told the Committee that the Commonwealth
Government does not agree with this view:
Enhancing ‘harmonisation’ reduces differences in law and
practice so that owners and users of intellectual property may interact in a
familiar legal environment, thereby reducing transaction costs. The fact that
complete harmonisation is not achieved at any point in time does not lessen the
value of movement towards greater harmonisation. Also so long as Australia
remains consistent with its international obligations, then the AUSFTA does not
constrain future government’s abilities to make laws relevant to intellectual
property to suit our social and legal environment.
The Select Audio-Visual Distribution Company submitted
The world has managed with different copyright regimes in
different countries for a long time and will continue to manage without
harmonization. If anything, in the interest of the consumer, copyright
protection should be harmonized at the lowest level, which is prevailing in
most of the developed world and not at the level prevailing in the United
The effect of the application of Article 18 of the
Berne Convention is that there is no obligation
on Australia to
enact retrospective protection of copyright material that has already fallen
into the public domain. This means that in Australia
the copyright extension will be prospective so that the term of protection will
be extended for works created after 1955. By contrast, the United
States retrospectively extended copyright in
1998 to protect works created from 1928. Therefore, while the United
States has provided copyright protection for
works created between 1928 and 1954, Australia
will not have equivalent protection.
There will remain discrepancies in other important
areas, including protection for works made for hire, anonymous works
performers' rights and moral rights. In relation to moral rights, for example:
The United States is very hostile to moral rights-the moral
right of attribution and the moral right of integrity for creators. Australia will supposedly provide comprehensive
protection of moral rights for the life of the author plus 70 years, but the United States will only provide protection for life in
relation to the visual artists’ rights regime. So there are fundamental and
significant differences in the way harmonisation is dealt with.
has rejected that this will be problematic:
Moral rights are not
specifically addressed in the IP chapter, so I have a lot of difficulty seeing
how those rights could be somehow subject to dispute resolution under the FTA-
I have to say that I do
not see any foundation for that concern at all.
The Committee notes the views of DFAT in relation to
the issue of moral rights and particularly acknowledges its statement that,
under the AUSFTA, either party may wish to provide for more extensive
protection than that provided for by the IP Chapter. Moral rights provide important
protection, particularly for Indigenous Australian interests, and the Committee
is not convinced that such important protections currently enshrined in
Australian law can be guaranteed under the AUSFTA, particularly in the event of
any dispute arising between Australia
and the United States
in relation to them.
Standard of originality and 'fair
dealing' v 'fair use'
The Committee heard evidence and received submissions
that should the term of copyright protection be extended, consideration should
be then given to extending the fair dealing doctrine to a much more open-ended
defence, similar to the situation in the United
States. The arguments centred around the
balance between copyright owners and users in the Copyright Act 1968, and the change in that balance under the AUSFTA.
In his submission, Dr
Rimmer noted that the AUSFTA is very
selective in its harmonisation of copyright laws between Australia
and the United States:
In this agreement, Australia
has adopted the harsher measures of the Digital
Millennium Copyright Act 1998 (US) and the Sonny Bono Copyright Extension Act 1998 (US). However, Australia
has not adopted features of the United States
law which support copyright users- such as the higher standard of originality
or the open-ended fair use defence of United
Weatherall agreed that the AUSFTA will
distort the balance of interests between IP owners and IP users in Australia:
One important reason why the provisions may not strike an
appropriate balance of interests is that the Australia-US FTA seeks to
introduce IP-protective US
laws but does not "harmonise" aspects of US
law protective of the interests of members of the public. The result of
introducing these provisions in Australia
without making appropriate adjustments to strengthen users' interests may be to
skew IP law in Australia
to be even more protective of IP owners than American law.
For example, Australia
has one of the lowest standards of originality in the world: it appears that
copyright protection will be granted on the basis of the expenditure of skill
and labour alone. In the United
States, however, the threshold of
originality is much higher, requiring some degree of creativity. This means that there will be a
wider range of copyright material protected in Australia
than in the United States.
In particular, a greater amount of factual information which would not be
protected by copyright law in the United States
(or which would have only limited protection) is protected under copyright law in
In evidence, Dr Rimmer
told the Committee that the disparity in the standard of originality would have
That means that [in Australia] more material qualifies as copyright work
and a whole range of junk, for instance, would be affected by the copyright
term extension. The copyright term extension would apply to such things as the
White Pages, the Yellow Pages, blank accounting systems and gambling mechanisms and
forms. Material that you would not think was particularly creative is being
given very long protection and very strong protection. That is a very important
difference between United States law and
Australian law. That will have a quite significant impact- because a much
wider range of material is going to be protected in Australia that will have an
important impact in terms of what will happen.
In her submission, Ms
Weatherall made a similar argument:
The effect of adopting the AUSFTA without addressing this
difference may be to tip the balance too far in favour of copyright owners, and
in particular, in favour of the compilers of collections of fact, at the
expense of the interests of users. At the very least, this issue needs to be
The Australian Vice-Chancellors' Committee (AVCC) was
also concerned about upsetting the balance between the interests of copyright
owners and users:
- the AUSFTA is very much pitched at the interests of copyright
owners at the expense of users to such an extent that it alters the balance-
very much in favour of owners. There is no surprise that the USA would want to
do this because most of the international publishers and major copyright owners
are multinational organisations based in the USA, and combined they have been a
formidable lobby both in the USA and internationally in changing the balance to
suit owners. The so-called harmonisation outcome of the AUSFTA will benefit the
USA and EU
based multinational publishers but Australia
will lose out- and the main losers will be the users of copyright material, notably
the education sector.
Likewise, the Australian Consumers' Association noted
that the IP Chapter :
embod(ies) consumer detriment because of the way [it] shift(s)
the balance in favour of the producer interest. This is illustrated by the
extremely scant reference to users of IP in Chapter 17- users are mentioned
chiefly in terms of obligations and limitations, and never in terms of rights,
exceptions or expectations. Consumers are not mentioned at all.
Doctrines exist in both the Australian and United
States copyright regimes which allow for
exceptions to when copyrighted material may be used without payment of a
royalty. In Australia
this is known as 'fair dealing', and in the United
States it is known as 'fair use'.
The 'fair use' defence to copyright infringement in the
operates more broadly than the Australian 'fair dealing' defences to copyright
infringement. In Australia,
to gain the benefit of the defence, the alleged infringer is required to show
that the purpose of their use of copyright material falls within one of those
enumerated in the Copyright Act: criticism and review, research and study, news
reporting, or judicial proceedings.
However, the defence is not confined to those purposes and there has been much
confusion in Australia
about the scope of 'fair dealing'.
In the United States,
a non-exhaustive, flexible list of purposes is provided which has allowed United
States courts to find 'fair use' for uses
such as parody or other transformative use, time-shifting, space-shifting and
device-shifting. Simply put, in
the United States
courts have the power to find new, or unforeseen but economically insignificant
uses 'fair'. Australian courts do not have that power.
The Committee notes that, in 1998, the Copyright Law
Review Committee (CLRC) recommended 'the expansion of fair dealing to an
open-ended model that specifically refers to the current exclusive set of
purposes- but is not confined to those purposes'. However, this recommendation has not
been adopted in Australian law. As a result, under the AUSFTA, Australian users
of information will have more restricted access to copyright material than
users in the United States due to the higher standards of copyright protection
overall and the lesser usage rights available.
Nothing in the AUSFTA would prevent Australia
from implementing legislation to raise the level of originality and to
introduce a 'fair use' defence to copyright infringement. However, the
Committee received evidence which suggested that IP owners would oppose any
move to adopt a 'fair use' defence,
and comments from DFAT in the course of the inquiry have suggested a preference
for a continued 'purpose-based' approach
which 'would not provide the kind of flexibility that is important if IP law is
to be strengthened'. In relation
to raising the threshold for originality, the Attorney-General's Department did
not indicate that the standard of originality in Australia
However, in its response to a question on notice from
the Committee, DFAT stated that:
The Government is still considering this recommendation of the
Copyright Law Review Committee- The report of the Joint Standing Committee on
Treaties (JSCOT) on the AUSFTA has recommended consideration of the US
‘fair use’ defence to copyright infringement. The Government will be responding
to that report.
It is open to the Government to consider a fair use style
exception or any other exceptions in the future provided that any exceptions
comply with international treaty standards.
The standard of originality in Australian copyright law is not
an issue which is addressed in the AUSFTA. It is a matter for judicial
interpretation on a case by case basis, according to a consideration of well
established copyright principles. In examining the issue of originality the
courts may have regard to legal precedents in other jurisdictions especially
those of other common law countries such as the United
The Government is currently considering its response to a
recommendation in the JSCOT report on the AUSFTA that the present standard of
originality under Australian copyright law be reviewed.
argued that the Commonwealth Government should undertake a review to ascertain
precisely how Australia's
obligations under Chapter 17 of the AUSFTA will sit with its domestic
- it is not appropriate to take on extensive obligations to
enact further laws protective of IP interests without a full analysis of how
these provisions will operate in the context of Australian law, which is- and
under the AUSFTA provisions, will remain- different from US
law in certain key respects. Any Australian government considering acceding to
such a treaty should undertake to review those areas of Australian IP law is
stronger than that provided elsewhere in the world, and undertake to redress
told the Committee that the defence of 'fair use' should have been enunciated
in the AUSFTA:
It is such a
fundamental doctrine that affects all the different areas of intellectual
property, and its absence from the free trade agreement is very significant.
Even if this government, for instance, made legislative changes and recommended
that there should be a defence of fair use, they could be wound back. But if
you tried to make changes in relation to the areas that are mentioned in the
free trade agreement and you violated those articles, you would be subject to a
trade action. So the failure to include the fair use provisions in the free
trade agreement makes it very provisional. Even if this parliament makes those
reforms, they can be very easily wound back by a later parliament. That is the
real significance: what is included in the free trade agreement is then locked
into that free trade agreement because it is subject to those very strong
alternative dispute resolution mechanisms and the possibility of trade
sanctions if you violate a particular article or even if you violate the spirit
of the agreement.
Britton from the Australian Consumers'
Association informed the Committee that a 'fair right' defence would guarantee
the rights of consumers:
At the very least, in
the legislative changes required to implement the free trade agreement there
should be an enactment of a fair use right for Australian consumers, which
would harmonise the law with current consumer behaviour and protect consumers
as the digital environment moves control from control of copying to control of
However, the adoption of a 'fair use' defence in Australia
to redress the imbalance that might be caused by AUSFTA implementation may not,
according to some, provide a solution. The ADA
articulated this view as follows:
While the ADA
recognises the merits and importance of the fair use exception within the U.S.
copyright regime, careful thought must be given to the real impacts of such an
introduction before foregoing our current mechanisms of balance. Although the
fair use exception in the U.S regime offers a broad and flexible defence, its
current operation in the U.S regime lacks the certainty that our "fair
dealing" provisions provide within the Australian regime to users of
copyright material. The ADA would
support the introduction of a "fair use" type provision as an
addition but not necessarily a replacement of our current "fair
Similar concerns were raised by Viscopy:
The broader US concept of ‘fair use’ is very different to
the Australian concept of ‘fair dealing’. To suddenly use the United States concept, as has been proposed by some user
groups interested in free access to works of Australian copyright, would have
many additional implications for Australian law.
CAL told the Committee that these issues are 'for another day and another
place' and said that it would be opposed to such a move.
Australian Record Industry Association (ARIA) expressed strong opposition to
the introduction of a US-style 'fair use' exemption and argued that, amongst
other things, it would constitute 'an unjustified abrogation of the rights of
copyright owners' and would
'significantly increase enforcement difficulties'.
also heard evidence of an alternative balancing mechanism which would involve
creating a system of registration for aging copyright material:
- material deemed
valuable could be registered for ongoing protection (at an escalating fee to
recompense society for the deprivation of public access) while less valuable
material would fall automatically into the public domain where it would benefit
the culturally enriching processes of recycling and reuse.
The Committee notes that a similar mechanism has been
proposed by Landes and Posner and
in the Allen Report.
also notes that the application of 'fair use' in the United States as determined by its legal system
specifically provides for several unique copyright doctrines, namely
time-shifting and space-shifting. An example of time-shifting is when consumers record a television
program for later use, on a device such as a video recorder, or more recently
other types of storage mediums. Space-shifting is when digital content is
recorded onto a different device than that for which it was originally
assigned, for example purchasing a CD and copying it onto an MP3 player.
Australian legislation makes these activities illegal. The Committee is of the
view that the application of a broad, open-ended 'fair use' doctrine, similar
to that in the United States, may resolve this long-standing legal anomaly in
Australian copyright law and assist in legitimising several commonplace actions
undertaken regularly by Australians perhaps unaware that they are infringing
copyright. The Committee sees
this as an opportunity to regulate the fair use environment to harmonise the
activities of many Australians with the legal environment. In making its
assessment, the Committee is particularly mindful of the recommendation by the
CLRC in 1998 to adopt an open-ended United States-style 'fair use' approach.
acknowledges the comment in JSCOT's report that the term of copyright
protection was defended vehemently by the Australian negotiators, but that the
final outcome was necessary to secure the overall package. However, the Committee is concerned
that the balance of interests between copyright owners and users will be
substantially altered under the AUSFTA, with potentially serious implications
for Australian consumers. The Committee is also of the view that
extending already very broad copyright protection is likely to increase
anti-competitive effects in circumstances where it remains unclear that there
are significant offsetting benefits.
At a Senate Foreign Affairs, Defence and Trade
Committee Estimates hearing Mr Stephen
Deady from the Department of Foreign Affairs
and Trade, stated that the rights of consumers would remain appropriately
balanced with those of copyright owners:
Under the terms of the agreement we have commitments, which,
whilst they require some legislative changes, still provide Australia
with sufficient flexibility in these areas to ensure the very high level of
intellectual property protection that we already have and balance that against
consumer interests and other things. That is what the text of the agreement
provides us as we go through this process of putting together the legislative
A similar assurance was made by Ms
Harmer of DFAT to the JSCOT in the course of
its inquiry. Ms Harmer told that Committee that there is nothing in the AUSFTA
to prevent Australia from creating exceptions which meet internationally agreed
standards and which are, perhaps, comparable to United States-style exceptions
if they are considered appropriate:
- we can put in Australian specific exceptions so they may look
something more like the US-style exceptions, or we may indeed choose to do
something different that we think is better for Australia
and the Australian market where we perceive that there is a need to provide
more balance. In that way, we actually think that is a more preferable outcome
than having just taken exceptions that have been designed for the US market and
putting them in place in legislation.
The concerns raised in submissions and by witnesses in
relation to these issues were dismissed by DFAT as being unfounded. The
Committee accepts assertions by DFAT that flexibility is retained under the AUSFTA
to create appropriate exceptions which reflect the interests of Australian
groups and which accord with Australia's
legal and regulatory environment. However the Committee is concerned that the United
States Free Trade Agreement Implementation Bill 2004 extends the term of
copyright protection to 70 years with immediate effect, without including any
additional exceptions to counteract the increased rights this gives to
The Committee is of the view that such exceptions
should have been considered as part of the initial AUSFTA implementation
legislation package. The increased copyright protection term is a major
amendment to the Copyright Act 1968
and, without amendments that correspondingly protect the interests of copyright
users, the Committee believes that the changes tilt the balance towards
copyright owners to an unacceptable degree. This is particularly in light of
statements made by DFAT that, throughout the implementation process of
translating the agreement into domestic legislation, the Commonwealth Government
would be looking at maintaining the balance and how it fits within the
Further, the Committee is not convinced by comments
from DFAT that Australia's competition laws will protect against possible
abuses of strengthened IP rights under the AUSFTA The Committee has been informed that
Australian competition law is less likely to impose controls on the use of IP
than United States anti-trust laws, or the European Union authorities. Without the Commonwealth Government
changing the nature of competition law in Australia
(which seems unlikely), the Committee cannot see how potential abuses of
stronger IP rights under the AUSFTA can be adequately controlled in this way.
The Committee is also concerned about the general ability
of DFAT, DCITA and Attorney-General's department officials to answer questions
on the IP issues at the Committee's public hearings. The officials had to take
on notice many questions that the Committee believes they should have been able
to answer on the day, and took significant amounts of time to provide answers. When
answers were eventually provided, they frequently lacked sufficient detail,
were dismissive and opaque, and often did not appropriately correspond to the
With IP law emerging as an important area of public
policy as well as being a key aspect of the AUSFTA, the Committee considers
that greater technical expertise should have been demonstrated. Whether the
difficulties answering questions result from lack of departmental cooperation
and coordination or from insufficient expertise within relevant departments,
the Committee is of the view that the Commonwealth Government must upgrade its
IP expertise and ensure that any future changes to IP law are based on a whole-of-government
approach. The Committee considers that the performance of the relevant
departments at hearings throughout the inquiry invites speculation that proper
technical expertise may not have been brought to bear in the negotiation of the
The Committee believes that there are measures, in
relation to the issue of copyright extension, that can be taken that will
assist in redressing the imbalance and ensuring the rights of Australian
consumers are appropriately protected.
'Contracting out' of exceptions to
Article 17.4.6 of the AUSFTA allows copyright owners to
transfer their rights by contract which would mean that contracts could prevail
over exceptions to copyright infringement such as 'fair use'. However, there
are some doubts as to whether the relevant provision in the AUSFTA actually
achieves this intention.
The Commonwealth Government has indicated that this
provision is consistent with section 196 of the Copyright Act, however
it contradicts a recommendation of the Copyright Law Review Committee in its
2002 report, Copyright and Contract,
that the Copyright Act 1968 should be
amended to provide that a contract that purports to exclude or modify certain
exceptions would not be enforceable.
The Commonwealth Government has not responded to this recommendation.
told the Committee that:
The Copyright Law Review Committee recommended that you should
not be able to contract out of the defence of fair dealing. They provide lots
of evidence that publishers were including in their contracts clause which cut
down what people could do legitimately in terms of the defence of fair dealing.
DFAT told the Committee that:
The contracts with which the recommendation in the CLRC report
was concerned are contracts relating to the use of copyright material by
consumers and other users. The contracts to which Article 17.4.6(a) refers are
contracts relating to the transfer of ownership of copyright in a work or other
subject matter, not to the use of that material. Thus that provision of the
AUSFTA does not appear to contain any obligation with regard to contracting out
of exceptions to copyright.
told the Committee that contracting out of exceptions is a controversial issue
and may be problematic when interlinked with issues relating to TPMs and 'fair
I think the FTA is
making it worse because there are strong interactions between technological
protection measures and fair use. There are many arguments that the ability to
engage in, say, fair dealing or fair use is cut down once you have
technological protection measures happening and once you have contracts that
try to do things like contract out of exceptions, which is also a very
controversial matter. The Copyright Law Review Committee recommended that you
should not be able to contract out of the defence of fair dealing. They provide
lots of evidence that publishers were including in their contracts clauses
which cut down what people could do legitimately in terms of the defence of
DFAT's response to such concerns has been evasive:
The interaction of copyright rights, exceptions to those rights
and the extent to which those exceptions may be affected by contract, remains
an on-going policy issue extending beyond the AUSFTA.
Anti-circumvention provisions of
TPMs or anti-circumvention devices are certain types of
technology that are associated with copyright material. The IP Chapter of the AUSFTA
contains a set of obligations in relation to TPMs which will require
significant legislative change in Australia.
Under Article 17.12, Australia
will have a two year period from date of entry into force of the AUSFTA to
implement its obligations in relation to TPMs.
Article 17.4.7 limits the scope of exceptions in which
TPMs may be used and extends the scope of criminal offences relating to the
manufacture and sale of circumvention devices. It goes beyond the Copyright Amendment (Digital Agenda) Act
2000 (Digital Agenda Act), by taking a much more expansive definition of
'controlling access' to a work than is currently embodied in the Digital Agenda
Act. The Digital Agenda Act does not currently criminalise the actual use of
TPMs, just the manufacture and distribution of them.
In short, the anti-circumvention provisions of the AUSFTA
shift the focus from circumventing TPMs that achieves protection of copyright
(through either the specific processes of access codes or through a copy
control mechanism) to the distinctly different notion of 'controlling access'
and the very broad notion of 'protecting copyright' (without specific reference
to illegitimate copying).
The TPM provisions of the AUSFTA have pre-empted the
review of the Digital Agenda Act (the Digital Agenda Review), which was
commissioned by the Attorney-General's Department and undertaken by the law
firm Phillips Fox.
Its report was released in April 2004.
The report by Phillips
Fox in the Digital Agenda Review stated that
'submissions to the review accept that, in general, the Digital Agenda Act is
achieving its objectives and is working well.' Some changes were recommended by the
review, but the overall workings of the Digital Agenda Act were not criticised. In particular, the review
recommended that the Copyright Act
1968 be amended to expand the definition of 'permitted purpose' for use and
sale of TPMs. This would add fair dealing and access to legitimately acquired
non-pirated products and, under these circumstances, make end use an
infringement unless for a permitted purpose.
The AUSFTA does not allow a blanket exemption for non-infringing uses, so it would
not permit these recommendations to be enacted.
Under the AUSFTA, Australia
is able to make certain classes of copyrighted work (for example, films on DVD,
music, video games) exempt from the normal TPM circumvention prohibitions where
the circumvention is for a non-infringing use. However, the decision to exempt
these classes- which may be made by parliament or delegated to a minister or
public servant- must be reviewed every four years.
This is similar to the process used in the United
States in which the Librarian of Congress
may determine that certain users or uses of TPM circumvention devices are
legitimate. Notably, the AUSFTA does not require the adoption of certain
criteria for determining whether or not a use should or should not be allowed,
as in the United States.
This leaves the Australian Parliament with some freedom to choose which
criteria should be relevant, beyond the adverse effects suffered by
On the one hand, this exemption does allow that certain
fair dealing and other non-infringing uses may be allowed. On the other hand,
the AUSFTA requires that a non-infringing use be illegal until 'an actual or
likely adverse impact on those non-infringing uses is credibly demonstrated'.
In the absence of well-resourced or organised lobbies representing consumer
interests, it is foreseeable that these processes could be dominated by those
representing copyright holders. A blanket exemption from non-infringing uses
would avoid this problem but is not allowed under the AUSFTA.
The Australian Digital Alliance informed the Committee:
The Digital Agenda Review Report- considers the issues within
the framework of Australian legal history and policy. Most of the
recommendations made by the Report on topics common to the FTA in fact make
suggestions for legislative change which can more or less be characterised as
moving in the opposite direction to that contemplated by the FTA. The
recommendations largely (and rightly) adhere to the underlying government
policy for balance and does not recommend change in the absence of compelling
evidence demonstrating a need.
The Commonwealth Government has recently announced
- [it] is now moving towards signing its Free Trade Agreement
with the US and
implementing its obligations. In some areas, the copyright provisions of the
Free Trade Agreement supersede the recommendations made in the Phillips
Fox report. Where relevant the Phillips
Fox report is being used to inform the
Government's implementation of the Free Trade Agreement obligations.
Following the implementation of the Free Trade Agreement
obligations, the Government will conclude its broader review of the Digital
Agenda reforms. The broader review will include analysis of the Phillips
Fox report in relation to issues that were
not considered in the implementation of the Free Trade Agreement as well as
other Digital Agenda reform issues that were raised during the review.
This was confirmed by DFAT which informed the Committee
conducted their research and analysis of the copyright Digital Agenda reforms
independently of the FTA process being undertaken by the Government. The Phillips
Fox report was received by the
Attorney-General’s Department in February 2004 by which time the bulk of the
FTA negotiations had been concluded. Where possible, the Government is taking
the Phillips Fox
report into consideration in its implementation of the FTA obligations.
In some areas, the copyright provisions of the AUSFTA
supersede the recommendations made in the Phillips
Fox report. For example, technological
protection measures are dealt with in both the Phillips
Fox report and the AUSFTA. In the event of
inconsistencies between the Phillips
Fox report recommendations and obligations
under the FTA in relation to technological protection measures, the FTA will
However, DFAT also informed the Committee that the
Digital Agenda Review process is ongoing and that the report by Phillips
Fox was a consultancy paper intended to
inform the Commonwealth Government's broader review of the reforms. Further:
Where possible, the recommendations of the Phillips Fox Report
have been used to inform Australia’s
implementation of the Agreement. This will continue to be the case in relation
to the implementation of the TPM obligations under the Agreement. However, some
of the recommendations relating to TPMs have effectively been superseded by the
The Committee remains concerned that the AUSFTA
effectively displaces previous extensive public review processes, such as the
Digital Agenda Review, which involved widespread consultation and
participation. These processes rejected some of the very changes to Australian
IP law that the AUSFTA now requires Australia
to adopt. This suggests to the Committee that at least some of the changes
required to Australian law under the AUSFTA are not desirable from an
Australian policy perspective. The Committee considers it neither desirable nor
appropriate that domestic law reform processes have been made virtually
redundant by the AUSFTA negotiations.
The Committee received evidence reflecting a range of
views, both supporting Australia's
obligations in relation to TPMs and raising concerns on, for example, regional
coding issues and possible adverse impacts on the open source software industry.
Those organisations representing creators and copyright owners were generally
supportive of TPM provisions.
For example, the Business Software Association of
Australia argued that:
Strong anti-circumvention provisions will become increasingly
important as copyright owners in the digital environment rely on technological
protection measures to protect their works and reduce piracy.
CAL made the following argument:
It is CAL's view that Australian content creators
have been reluctant to develop electronic products, as opposed to their US counterparts, and that an important
contributor to this has been the concern Australian content creators have with
circumvention devices generally as well as a perception by them that the
current Australian legislation does not afford them any protection.
The AFIC were keen to see the implementation of tighter
controls on anti-circumvention device as soon as possible:
Given that the US and EU both protect access control measures,
the Coalition considers that maintaining the current "gap" in
Australia will give rise to just the type of trade barriers that the FTA was
designed to avoid, and will discourage online content providers from moving
into the Australian market.
- the Coalition considers that the prejudice caused to
Australia's content industries by failing to implement the extended definition
in line with Australia's trading partners as soon as possible, is far greater
than any possible prejudice that may be caused to users of copyright material.
The provision relating to TPMs are based on the Digital Millennium Copyright Act 1998
(DMCA). It has been an issue of international debate whether the US)
is the appropriate model of compliance with the WIPO treaties. The DMCA is quite different to the
approach in Australia
and has been widely criticised, even within the US.
Australian copyright law is more
pragmatic and regulated, depending less on litigation and the development of
case law than in the United States. Some
submissions pointed out that it may not be appropriate for Australia
to adopt features of the DMCA. For example, concerns were expressed by the open
source software industry that the DMCA has been used to stifle fair competition
and to severely limit a consumers right to fair use:
There is accelerating awareness in the United
States that these laws are unbalanced, and
that the interests of large producers have outweighed the interests of
consumers (and smaller producers) in the crafting of these laws, and that they
are doing real damage. Sites like chillingeffects.org document the effect of
DMCA on the openness of speech and rights. The site catalogues the cease and
desist notices and presents analyses of their claims to help recipients resist
the prosecution of legitimate activities.
Professor Michael Geist submitted:
The reticence to adopt the WIPO standard is understandable. Many believe the U.S. experience illustrates the dangers of
adopting copyright protections that may ultimately stifle innovation. The
Digital Millennium Copyright Act, the U.S. statute that implements the WIPO standard,
has led to scholars declining to publish their research out of fear of
lawsuits, hundreds of individual Internet users having their privacy rights
ignored, and copyright law being strangely applied to garage door openers and
The Committee also heard evidence that the proposed
changes to Australian laws in respect of TPMs would be significantly
detrimental to some industries and to consumers. In its submission, Linux Australia
argued that laws in the United States
give a particular benefit to the producer. If something can be described as a
TPM, it is illegal to circumvent it, even if the real purpose of the TPM is to
restrict access to content. In the
the DMCA has been used to hinder efforts of legitimate competitors to create
The open source software industry is concerned that the
provisions dealing with TPMs might be used to prevent the interoperability of
data or the creation of software programs which can access other people's data.
Scott told the Committee that:
I think the open source
industry would see the inability to manipulate data that has been saved by
other people acting as a barrier to competition to those people trying to put
forward competitive products. Effectively, a customer’s own data is used as a
competitive weapon against competitors for the custom of that customer. If a
competitor is not able to interoperate with the data that the customer has
stored for however long, then the competitor’s product, no matter how good it
is, will not be taken up by the customer because all of their legacy data will
effectively be lost. In short, the concern is that the chapter 17 provisions
will substantially increase compliance costs and that means the engine that is
used for the development of open source, which is a low compliance cost
environment, may be gummed up and potentially stopped.
argued that the AUSFTA provisions in relation to TPMs represent 'a dangerous
transformation of our current law.'
The control of access restricts competition by giving copyright
owners power to control markets and structure distribution streams to maximise
profit. The provisions of article 17.4.7 create opportunities for abuse of
copyright legislation to control access to material not for protection of
copyright but for the purposes of market advantage (a current example of this
practice is DVD zoning). This is at the cost of reducing the options through
which users may access material that they have legitimately purchased or worse,
to effectively prohibit per se the
means by which consumers might access material which they have purchased but
which may have become unavailable for various reasons. 
The ALCC submitted that:
The creation of a blanket ban on the act of circumvention is
effectively an overhaul of the careful approach to balance embodied in the
Digital Agenda Amendments. The disjunction created by this significant
departure from current law is complicated by the lack of clarity and ambiguity
of the provision.
The lack of clarity in the drafting makes it difficult to assess
the impact of the provision and anticipate the standard of protection required
to meet the obligations imposed by the FTA in relation to this issue.
The Australian Consumers' Association warned that
Australian consumers would be the big losers:
- extending such measures would intrude into consumers' lives
excessively, particularly given the unresolved and potentially very broad
definition of Technological Protection Measures (TPM). We are concerned that
TPM devices deliver rights and enforcement by assertion, with little room for
consumer negotiation or appeal.
received evidence expressing concern that the AUSFTA has the potential to
entrench, and legally protect, anti-competitive and market segmentation
practices of copyright owners, as well as undermine Australia's policies in favour of competition in the
supply of legitimate copyright works as implemented through its parallel importation
laws. The Commonwealth Government
has had an active policy of avoiding the price-inflating effects of market
segmentation and has allowed parallel importation on the basis that this would
benefit Australian consumers by reducing prices and increasing the availability
of copyright material.
The Australian Competition and Consumer Commission
(ACCC) has strongly supported this position and has been vocally opposed to
regional coding and to the Digital Agenda Act in general. For example, the ACCC
has stated that:
[It] believes region coding is detrimental to consumers as it
severely limits their choice and, in some cases, access to competitively priced
goods. The ACCC is disappointed that technology which can overcome these unfair
restrictions will not be generally available for consumers' use.
The Australian Consumers' Association explained its
view on regional coding:
The zoning system is not designed to counter consumer-level copying but is intended to structure the
global market to the advantage of the content producers.
It went on to argue that:
Zoning is a matter of indifference to the US
because firstly it originates most of the material consumers want to access,
and secondly because it is a huge market into which most product will be
released. As a smaller satellite economy, Australia
is affected. The system is an imposition on consumers and does control their access to material. It places an
artificial barrier in the market place where a software product legally acquired by a consumer may not
work with a hardware product expressly designed and advertised for the purpose
of playing the software- consumers have not means or right to negotiate the
nature of the arrangement or its enforcement, irrespective of the impact on
In relation to the issue of parallel importation and
regional coding, Ms Harmer
from DFAT assured the Committee that:
The anticircumvention provisions really go towards piracy rather
than viewing what is a legitimate copy of copyright material. The
anticircumvention provisions I think have to be seen in that context. They are
not really aimed at stopping people from carrying out legitimate copyright
- there will be no change to Australia's
parallel importation laws as a result of the FTA.
made some very encouraging comments in relation to regional coding and parallel
It seems to me that
there is the capacity for Australia to introduce exceptions to allow for the
legitimate use of non-pirated material here. The agreement, I think, certainly
allows for that through exceptions, and I think that is accepted. It does put
restrictions on anticircumvention devices. But the agreement- does provide the
government with the flexibility to introduce these exceptions and then to give
effect to those exceptions. There is no point in our agreeing to exceptions to
allow the ‘fair use’-if that is the right term-of this material with the use of
non-pirated material and then having no capacity whatsoever to allow that
material to be viewed or used- The agreement clearly allows for exceptions for
legitimate use; therefore, in order to give effect to that, to allow that to
occur, we certainly believe that the use of certain devices is provided for
under the agreement.
In answers to questions on notice, DFAT also clarified
the position on regional coding:
The viewing of non-infringing material from other countries is a
legitimate activity and the obligations of the FTA target piracy. We do not
agree that permitting the sale of region-free DVD players in Australia
would contravene the provisions of the AUSFTA provided that the legislation is
implemented in a manner consistent with the FTA.
The issue of multizone DVD players will be considered as part of
the implementation process. The agreement also provides for a 2 year
transitional period to implement these provisions, which will present the
opportunity for public submissions in this area. It is also important to bear in mind that the
IP Chapter does not alter competition law in Australia
and competition law can be used to address anti-competitive conduct.
In response to concerns relating to TPMs, Mr
from DCITA informed the Committee that:
In terms of regional coding itself, if a person is playing a
legitimate, non-pirated product, the government's intention would not be for
that to fall foul of the laws in relation to technological protection measures.
This issue of regional coding is one of the issues that the government will be
looking at in terms of the implementation of our obligations under the free
trade agreement whereby we can introduce exceptions to the protections we are
providing to technological protection measures.
DFAT repeatedly told the Committee that Australia
has retained the ability under the AUSFTA to create appropriate exceptions to
suit its own circumstances. Ms Harmer
provisions- include a list of specific exceptions that we can take advantage
of and a mechanism for us to make further exceptions that we consider to be
appropriate for the Australian circumstances- we very specifically negotiated
a two-year transitional period for us to phase in our obligations so that we
can take account of those concerns that are very specific to Australia. A broad point-and perhaps it is one that I
should have made earlier with respect to the FTA in general and the copyright
provisions-is that it is correct to characterise it as having strength in
copyright in the FTA but we have also been very careful to ensure that we
maintain the ability to put in place exceptions where we regard those to be
appropriate to the Australian circumstances.
Ms Harmer stressed that the main aim of the TPMs provisions is to guard against
- the point that I
would like to make in relation to all of these issues is that the provisions
are designed to assist copyright owners to enforce their copyright and target
piracy, not to stop people from doing legitimate things with legitimate
has attempted to allay concerns raised by the open source software industry:
These obligations do not stifle innovation or require that Australia
must prevent consumers and industry from engaging in legitimate activity,
including obtaining appropriate access to copyright material. The AUSFTA also
allows for the continued development of innovative software products, including
burgeoning open source software development industry.
The Agreement provides for a specific exception to the
anti-circumvention provisions which allows reverse engineering of computer
software for the purposes of achieving interoperability. Further, the Agreement
provides for a review process to be undertaken at least every four years for
additional exceptions to those listed, to permit circumvention where the
adverse impact or likely adverse impact on certain non-infringing uses is
credibly demonstrated in a legislative or administrative review. This would
allow the government to assess what other exceptions may be appropriate to put
in place to allow interested parties, including the open source software
industry to circumvent an access control measure.
However, Mr Russell
from Linux Australia
was not convinced that the exceptions under the AUSFTA would allow Australia
The exceptions we can
make are defined in these clauses, and they are not clear. The ones that are
clear are not sufficient. The uncertainty is a very difficult issue to get
around-without placing blanket bans on all use, basically, of these objects.
The one exception
clause that everybody keeps pointing out is the one where you are allowed to
set up a legislative or administrative review or proceeding whose exceptions
must be specific to a class of works and renewed every four years. The problem
with that is that it is reverse law. That clause is about being guilty until
proven innocent. Just the fact that you are not infringing copyright is not a
defence, and it can only be made a defence after a protracted and probably
expensive procedure. That barrier itself will be high-legal advice at the very
least, a submission for review and argument against the same interests who have
been pushing for control above and beyond copyright-and potentially against our
DFAT insisted that the provisions relating to TPMs do
not prevent the manufacture, distribution, sale or importation of all
circumvention devices or services, nor do they necessarily restrict all
commercial activities in relation to those devices or services.
DFAT insisted that implementation of Australia's
obligations in relation to TPMs will be 'in a manner consistent with Australia's
legislative and regulatory framework.'
While recognising that these obligations represent a departure from the current
law, DFAT has assured the Committee that 'there will be close consultation with
stakeholders so as to minimise implementation problems, including any
ambiguities that would make compliance problematic in practical terms.'
Contrary to assertions made in submissions and in
evidence at hearings, Mr Stephen
Deady, Special Negotiator, Department of
Foreign Affairs and Trade told Senate Foreign Affairs, Defence and Trade
Committee Estimates hearing that the AUSFTA would not involve Australia
being forced to adopt the DMCA:
I know in some of the consultation and discussions we have had
with you, and others on the committee and elsewhere, that there is a question
about how much of that US
legislation we need to bring into our own system. We have tried to explain that
the commitments we have entered into in this chapter do not require us to bring
into our legislation the Digital Millennium Copyright Act.
- these obligations apply as equally to the United
States as they apply to Australia.
We certainly have negotiated long and hard in this area to ensure that we have
the flexibility in certain areas that are important to us to enable us to
introduce legislation to meet the commitments under the agreement without
changes to legislation to the maximum extent we could. Where we have changes,
we will introduce them in a way which is consistent with the agreement but
which still reflects the legal and regulatory framework that is important to
Australians. That is certainly our objective in this.
At one of the Committee's public hearings, Ms
Harmer put forward a similar view:
- the IP chapter does contain elements of the US Digital
Millennium Copyright Act. It also contains flexibility for us to implement that
in a way that is appropriate for us. So I believe it is an incorrect reading of
the IP chapter to think that it requires us to implement US
law word for word in our system. Whilst we have treaty level obligations, we
will be implementing those within our own legal context.
However, the Committee remains concerned that the AUSFTA
goes too far. TPM circumvention may be done for legitimate, non-infringing
purposes, not simply piracy. A ban on TPM circumvention, while possibly
assisting to curb some piracy, may also prevent many legitimate purposes. This
severely interferes with the rights of consumers to do as they wish with
property that they have legally purchased. It is important to ensure that
certain classes of copyrighted work be exempt from the normal TPM circumvention
prohibitions where the circumvention is for a non-infringing use.
Internet Service Provider Liability
Article 17.11.29 and Side Letter 1 cover Internet
Service Provider (ISP) liability obligations. These obligations establish a
system for dealing with allegedly infringing material on ISP systems and
networks. An ISP will receive 'safe harbour' immunity when dealing with alleged
copyright infringements on their system or networks if they comply with certain
DFAT explained the ISP liability provisions as follows:
- what the agreement does is put in place a set of rules, if I
can call it that, so that Internet service providers, copyright owners and
users are clear about their rights and obligations-. I think we would see that
very much as being of benefit to ISPs in providing certainty and of benefit to
copyright owners in providing the ability for a take-down and notice regime. It
would also assist users to have that certainty about how the system works. I
would see the ISP provisions as being something that would certainly assist
copyright owners to enforce their copyright at the same time as introducing appropriate
safeguards for users and ISPs.
argued that, while recognising the perceived problems of uncertainty associated
with current Australian ISP provisions, the need for further clarity does not
necessarily mean that the United States
model should be adopted. Such a model, 'if followed closely, imposes
unreasonable burdens upon ISPs, ignores the requirement for due process and
privacy rights of individuals and enhances the already extensive powers of
The EFA stated that the way in which the provisions of
the AUSFTA would 'effectively empower large copyright holders to control flows
of information and impose various burdens upon ISPs' was of major concern. The EFA also
pointed out some particular problems it sees with the provisions:
EFA is opposed the idea
that mere linking to a website which allegedly contains infringing material is
or should itself constitute infringement of copyright. EFA is also opposed to a
system of take-down notices that allows copyright holders to exert such wide
powers over internet content, forcing content offline without any actual
evidence of infringement-
A system of take-down
notices like that proposed by Chapter 17 would subject a wide array of internet
'service providers' to burdensome compliance requirements, whilst empowering
copyright holders to force content offline without evidence of infringement,
and in situations where the law is unclear or untested. Such a system should be
rejected, as it simply enhances the power of copyright holders to control the
activities of others and, in practice, labels defendants as guilty unless
The University of Melbourne submitted that there should be no liability
for infringement for an ISP in circumstances where the ISP did not know of a
particular infringement and that this principle should be affirmed in the AUSFTA
implementation legislation. It
went on to stress the importance of allowing ISPs to cache materials 'without
running the risk of being held liable for infringement of copyright or the
payment of royalties to copyright owners'.
The ADA agreed with this point stating that ISPs
should not be excluded from limitation of liability when engaging in 'the
configuration of settings or maintenance activities that are designed to enhance
the efficiency of networks'.
The process of caching was explained to the Committee
by Mr Peter Coroneos from the Internet Industry Association:
It is essentially just
temporary storage so that, if your users are requesting material off the
Internet that is being hosted in another country, rather than going and
dragging it back to Australia every time a new user wants it you bring it
here once and store it in a temporary cache. The speed of delivery is quicker
to the end user and you do not have to pay for the same content to be transited
every time. Parliament recognised the public interest in allowing caching,
because it recognised, for the reasons I have just said, that it is better for
Internet users to have this material held here.
The Committee received submissions that expressed
concerns that the failure to appropriately address the issue of temporary
copying in the AUSFTA may disadvantage Australia's
cultural and educational sectors, as well as consumers. Cultural and
educational institutions undertake necessary and extensive caching of internet
material to minimise external bandwidth limitation and to maintain security.
Mr Coroneos from the Internet Industry Association noted
When you look at the free trade agreement, it talks about caching
carried out through an automatic process. The point I am trying to make is that
our current Copyright Act makes no distinction between automatic and
The Committee notes the recommendation in the IPCRC
report that recognised the need for legislation to allow caching activities
designed to enhance the efficiency of systems.
DFAT addressed concerns raised in the course of the
inquiry by informing the Committee that:
The AUSFTA requires Australia
to extend the definition of reproduction to cover all reproductions in any
manner or form, permanent or temporary (including temporary storage in material
retains its ability to include specific exceptions to allow reproductions in
certain circumstances. The AUSFTA will not limit the scope of the caching
exception in the Copyright Act, which will continue to apply to temporary
Most submissions and witnesses who commented on the
issue of ISP liability agreed that current Australian provisions relating to
ISP liability are uncertain.
However, concern was expressed that the level of detail in the ISP liability
provisions of the AUSFTA is inappropriate and does not allow for sufficient
flexibility in implementation.
Fox report in the Digital Agenda Review
determined that greater certainty is required as to what steps ISPs need to
take to protect themselves from liability, however it recommended that a
'co-regulatory' model be adopted.
This would mean that, while minimum standards would be prescribed in
legislation, there would remain freedom for development of a flexible industry
code of conduct. The Digital Agenda Review also noted this approach as the
preference of Australian stakeholders.
Ms Anne Flahvin, on behalf of the AVCC, argued that:
With respect to service
provider liability, universities in particular need certainty. The current
provisions do not provide the level of certainty that the education system
requires in order to understand what its liability is for infringements taking
place on its networks. We do, however, have some concerns with the highly
prescriptive approach that is contained in the free trade agreement. In
particular we are concerned that it provides little scope for Australia to develop appropriate safe harbour
provisions and to avoid some of the flaws that we see apparent on the face of
the Digital Millennium Copyright Act provisions on which these provisions
appear to be based.
Mr Peter Coroneos from the Internet Industry
Association told the Committee that:
What we would say is that perhaps the free trade agreement gives
us the opportunity to pick up on some of those areas in [the Copyright Act]
that may still be slightly ambiguous and give them further definition so that
the immunities of the ISPs are very clear and it is very clear where their
rights and responsibilities begin and end. There may also be scope to include a
framework for a notice and take-down structure within the [Copyright Act].
Committee acknowledges that several organisations are highly in favour of the
scheme set out under the AUSFTA. For example, Mr
on behalf of the AFIC, explained its opinion as follows:
We see- safe harbours
as an essential trade-off for other obligations that we believe should be
maintained and implemented to their fullest. They are the obligations to
control or monitor to the extent possible activities of individual customers of
ISPs and also to take appropriate action where that information comes to the
knowledge of ISPs along the way. Perhaps some of the submissions that have been
put forward raise more extreme, and in our experience hypothetical, examples of
how Internet service providers might be exposed to liability to their
customers, when no real world examples have ever existed to our knowledge.
In relation to the issue of self-regulation, Mr
Williams stated that:
In short, we do not
believe that leaving the regulation of the online liability arena to the
industries is the appropriate course. The industries have tried over many years
to negotiate a code- Essentially, the FTA process is one which would enable a
super-imposition of a scheme which has been operating in the United States and which will not be delayed by further
negotiations between the industries.
Speck from Music Industry Piracy
Investigations was highly critical of the Internet industry's approach in
relation to liability:
The Internet industry
already submit themselves to a pro-forma take-down protocol. We have for five
or six years sent a single document-a one-page letter-to ISPs in Australia and
indeed many other countries around the world when we have identified sound
recording copyright infringements, and invariably Australian ISPs take that material down
without complaint within 24 hours. Yet they come to this committee and revisit
the entire issue.
accommodate their own concerns, and I suggest the most fanciful is their fear
of being sued by a customer for wrongfully taking material down. Apart from the
protection afforded by section 202 of the Copyright Act, most ISPs protect
themselves with comprehensive terms and conditions. 
Mr Speck also highlighted the benefits derived for ISPs under the AUSFTA:
Quite simply, the one
thing they want is less responsibility than any other corporation for activity
that takes place in their own infrastructure that they profit from. They
already have protections in their contracts almost universally with their
customers. They already take down material almost instantaneously on the
provision of a letter asserting copyright infringement, contrary to what was
said to this committee. They invariably can find customers when they are served
with discovery or preliminary discovery orders, but they consistently take a
position that there is an Internet cloud through which passes a stream of data
into the ether and it is beyond their control-when otherwise it is likely to
have the consequence of diminishing revenue opportunities for that industry.
Nothing in this agreement should come as a surprise; nothing in this agreement
does anything other than slightly improve their position. As a total package,
it provides an effective balance.
Several groups disputed claims that the AUSFTA would
result in increased litigation. For example Mr
Williams, on behalf of the AFIC, argued that
the opposite would be true:
The simplest example is
that the notice and take-down procedures and the procedures for quick and easy
discovery or production of names and identities of Internet infringers or
alleged Internet infringers is all designed with one aim in mind: to reduce the
number of cases that would otherwise be running. Our courts have the capacity
right now, as has been demonstrated in Australian cases, to make orders across
those different areas, but that is after you run a whole case with all the costs
attendant upon that. So we see the FTA as actually part of the solution to what
might otherwise be an environment with a lot of litigation.
notes the assurance given to JSCOT that, although the wording in the AUSFTA
closely resembles some of the provisions of the United States legislation, it is not the United States system and provides Australia some flexibility in implementation. JSCOT
was informed that:
- to some extent I think our implementation will be informed by
some of the issues that the US
have encountered domestically. We do not necessarily have to do it exactly the way
that they do it.
The Committee understands that the United States Free
Trade Agreement Implementation Bill 2004 generally implements the prescriptive
scheme required under the AUSFTA. An assessment of the approach taken to
implementation of the ISP provisions is contained at Appendix 3. The Committee
is unable to comment on the draft regulations required under the Bill
because they have not been made public. The Committee notes that DFAT has not
been forthcoming about what the regulations will contain and is concerned that
the regulations will be enacted without proper consultation and debate. This is
despite claims by the Commonwealth Government that the interests of the
Internet industry would be taken into account in developing legislation to
implement the AUSFTA.The Committee
also notes with some concern that it will not be possible to adopt the
recommendations of Phillips Fox
report in the Digital Agenda Review under the terms of the AUSFTA.
Temporary copying has been the subject of debate in
copyright circles since the emergence of computers, the internet, gaming
machines and so forth. Questions have arisen as to the changing status of a
copy in a temporary state, that is, at what point can the owner of the IP no
longer determine what or how it should be used, or demand remuneration for it.
The Committee notes the recommendations in the Digital
Agenda Review report in relation to temporary copying. Recommendation 15 of the
report provides that:
That the sections [of
the Digital Agenda Act] be further amended by inserting a new subsection to
include a definition of ‘temporary reproduction’ for the purposes of the
section, as meaning any transient, non-persistent reproduction that is
incidental to the primary purpose or act for which the work is made available
and which has no independent economic significance.
16 of the Digital Agenda Review report states that:
That the educational
statutory licence provisions be amended to allow an educational institution to
make active caches of copyright material for the purpose [of] a course of
instruction by the educational institution, in return for a payment of
equitable remuneration to the copyright owner.
An assessment of the provisions of the United States
Free Trade Agreement Implementation Bill 2004 is contained at Appendix 3. The
Committee is pleased that some of the issues raised during its inquiry in
relation to temporary copying are addressed and clarified in the Bill but is
particularly concerned about the 'exception to the exception' anomaly which
could lead to end users of infringing materials becoming infringers in their
own right. This is a significant, perhaps unintentional, extension to the scope
of copyright law in Australia.
The Committee understands that removal of proposed subsections 43B(2) and
111B(2) would not be prevented by the AUSFTA.
Article 17.9 of the IP Chapter deals with Patents.
The Committee received and heard evidence raising
concerns in relation to Article 17.9, specifically in relation to the granting
of software patents. Software and related patents are often considered to be
potentially damaging to commerce and the development of technology. In particular,
the open source software industry expressed grave concerns, arguing that the
provisions of the AUSFTA will have the effect of severely limiting the
industry's ability to function and develop.
The DFAT fact sheet issued shortly after the
finalisation of negotiations referred to harmonisation and reducing differences
in law and practice, including in the area of patents.
In a newspaper article, Mr
the former Chair of the Intellectual Property and Competition Committee,
predicted a worrying future for patent law in Australia:
The FTA foreshadows further "harmonisation" in patent
law, which most likely means future increases in patent protection.
Further, Mr Ergas
highlighted the problems with United States
Ironically, while Australia
is being obliged to adopt IP laws that can disproportionately favour producer
interests, US policy-makers have taken a more critical stance on their IP laws.
Late last year, the US Federal Trade Commission (the US
counterpart to the ACCC) released a report on the proper balance between
competition and patent laws.
The FTC report, which follows a three-year investigation,
highlighted the anti-competitive effects of two emerging problems in the US,
namely the granting of excessively broad patents, that is, those that cover an
excessively wide range of follow-on activities, and the granting of too many
He made the following summation:
- these misapplications of patent law can have an adverse effect
on innovation, especially in those areas where innovation tends to be
cumulative (in that each generation of innovations builds on the one before).
Such problems could be materially greater in Australia
given our status as a large net importer of IP.
Concerns presented to the Committee generally related
to the phrase 'in all fields of technology' in Article 17.9.1. The EFA
expressed its apprehension as follows:
- the FTA would commit Australia
to making patents available "in all fields of technology", regardless
of whether such monopolies are needed or are in our interests. Australia
would only be permitted to exclude from patentability medical treatments and
inventions that are against public order or morality.
This would mean that Australia
would be committed to a system of patents of processes, software and any yet to
be conceived technology. There is no evidence to suggest that patents are at
all necessary in order to promote innovation in business processes or computer
software. The only apparent reason for such patents is to provide profit and
power opportunities to those companies able to secure the strongest patents.
This is an abuse of the proper purpose of the patent system and service only to
raise the cost of dong business and reduce levels of innovation.
Russell from Linux Australia,
the peak body representing the wider open source and
the Linux community in Australia,
voiced concerns about the United States
approach to patents:
- we have serious doubts about the US tendency to broaden patent
ability to cover software and business methods, doubts that are so strong that
we believe binding ourselves, as we do in clause 17.9.1, to patents ability for
'any invention in all fields of technology' is a mistake as business methods
and software patents are causing real harm in the United States, growing debate
both in the United States and elsewhere, and it is in general a mistake to use
these laws as a model.
In its submission, Linux Australia
Taking on the American system of software patents will stifle
Open Source software initiatives and force Australian users and businesses into
using costly and potentially inferior software, without the ability to alter it
to suit their needs.
asserted further that the AUSFTA binds Australia
'to a blanket statement that anything is patentable, despite widespread
disagreement on the utility and wisdom of granting software and business method
patents'. It also pointed to the
restriction under the FTA for 'future Australian lawmakers to support Open
Source software innovation and infrastructure against patent claims, should the
situation get out of control'.
Scott summarised his major concern as
The main issue I see
for the open source industry in Australia is that the chapter 17 provisions are likely
to create or increase compliance costs that these small enterprises are going
to incur in the development of their software. Assuming that they are not
infringing or intending to infringe on anyone else’s material, they are still
required to put in place processes to ensure compliance. For example, in the
case of patents, to date they have been able to rely on the structure of the
copyright law, which says that if you have not copied something-if there is not
a causal connection between something you have started and the ultimate
copy-then you are safe. So these organisations could put processes in place
which say, ‘Develop everything in-house and you are safe.’ However, patents do
not allow you to put those processes in place, because independent creation is
not a defence against a patent infringement.
However, DFAT assured the Committee that the various
concerns raised in relation to software patents will not eventuate under the AUSFTA
and the AUSFTA will not change what is patentable in Australia
under current law:
The free trade agreement does not change in any way the scope of
what we currently consider to be patentable or what would be patented in Australia.
We currently allow patents for software, and there will be no change to that.
We are not being required to take a United
States approach in relation to that type of
patent, so I do not think that that concern is well founded. It will be
business as usual for IP Australia in terms of granting patents.
In relation to the patentability issue, it is not envisaged that
there will be any changes to our laws concerning what can be patented in Australia
as a result of the Free Trade Agreement. Nor is it considered that the FTA
requires or will lead to any change to Australian practice regarding the grant
of patents in relation to business methods or software. Business methods and
computer software inventions are already patentable in Australia
provided they meet the patentability requirements set out in the Australian
Patents Act. Nothing in the Free Trade Agreement requires Australia
to adopt a US
approach to the grant of such patents.
The Committee is satisfied that fears about
'harmonisation' of Australian and United States
patent law are probably unfounded. It bases this conclusion on DFAT's assurances
that the AUSFTA will not change the nature of what is patentable in Australia.
Further, the Committee considers that that many of the concerns expressed about
the patent provisions might be assuaged by what is not articulated in the United States Free Trade Agreement
Implementation Bill 2004.
It is clear from the Bill
that the Commonwealth Government already considers that current patent law
reflects the 'all fields of technology' element of the AUSFTA. The Committee
notes also that the changes to the grounds of opposition to patents actually expand
the grounds for opposition which, unlike most of the other changes required
under the IP Chapter, reduces the rights of IP rights holders in favour or
competitors or consumers.