ACCC endorses Fair Use and calls for Copyright reform

In their submission to the ALRC Copyright and the Digital Economy inquiry, the ACCC came out in support of fair use, was cautious about proposals to repeal the statutory licences (but supported changes to them) and called again for the removal of s51(3), which prevents the ACCC looking after competition in IP markets. 

Anna Harley has prepared a quick run down on the major points of the ACCC submission, illustrating what happens when you take a competition framework and apply it to copyright reform: 

Introduction

The Australian Competition & Consumer Commission (ACCC) submission to the ALRC Copyright and the Digital Economy Discussion paper emphasised the need to balance the interests of owners and their exclusive rights to their works with social utility, innovation and creativity. The ACCC premised their submission with the objectives of copyright as a legal protection that enables the operation of competitive intellectual property markets. The ACCC submitted that competition in such markets will generally self-regulate and optimise incentives for the creation of copyright materials and promote fair licensing regimes to ensure that copyright material is disseminated throughout the community.

ACCC Submission - Detailed recommendations

Framework

The ACCC recognize that copyright is a legal protection that enables the operation of competitive intellectual property markets, noting a ‘balance must be struck between providing incentive for the creation of copyright material and incentives for the use of that material’.  They use this ‘cost-benefit’ analysis as the basis for their analysis. 

They submit that competition in such markets will generally self-regulate; optimising incentives for the creation of copyright materials and promoting fair licensing regimes to ensure that copyright material is disseminated throughout the community.  However if copyright laws are ‘too extensive and not balanced by appropriate exceptions’ then there may be ‘significant costs for economic efficiency and consumer welfare’.  The two potential sources of market failure that are most relevant ‘are:

·         transactions costs associated with licencing of copyright materials; and

·         the potential for the extent and use of the rights conferred by copyright to restrict competition and create market power.’

Fair Use

The ACCC support the introduction of a fair use exception, and its application to third party users. 

They note that ‘copyright law as it currently stands does not provide the flexibility to required to be able to respond to changes in the way copyright material is consumed and used’ and that more flexible laws would ‘accommodate and foster technological advances and innovations’.  Significant delays between developments in the market and legislative change would be reduced by a ‘standards-based’ technology-neutral form of exception such as fair use.  This is important ‘to ensure that the law does not unnecessarily hinder business in Australia’.

·         Certainty

The ACCC notes that the current legislation is often uncertain, and suggests that fair use may be more certain if it contains more examples/illustrative purposes in its drafting.  They note that codes of conduct, produced by industry or preferably regulators, would also reduce uncertainty. 

·         Third Parties

The ACCC suggests that where the use does not have a ‘free riding’ effect on the value of the copyright then it should fall within the fair use exception.  It notes cloud computing as an important example where third party use should be facilitated. 

·         Contracting out

ACCC submits that the Copyright Act ought to limit the ability of parties to contract out of fair use provisions as this is likely to be in the best interests of consumers and competition with a view to ensuring balance between negotiating parties.

Overall a fair use exception is likely to strike an appropriate balance between social utility, incentivizing creation, disseminating knowledge and use of copyright material.

Statutory Licences

Whilst not in opposition to the ALRC’s proposal of statutory licencing regimes, the ACCC noted the potential for competition concerns to arise in an environment of voluntary licencing, in particular, for collecting societies and their ability to exercise their market power. The ACCC reiterated the need for the reform proposal of the Copyright Act to include competition and market concerns that may have flow on effects.

Inability of Competition and Consumer Act 2010 to regulate anti-competitive conduct in IP markets

The ACCC expressed concern about the role the Competition and Consumer Act 2010 (‘CCA’) may play in regulating anti-competitive conduct in relation to copyright licensing. The ACCC noted that the reliance on the CCA to address market failure was worrying – especially with respect to s 51 (3) of the CCA which was outside the Terms of Reference for the Copyright Inquiry by the ALRC. The ACCC resubmitted their desire to see s51 (3) of the CCA repealed and considered by the ALRC simultaneously with the proposed reform of the Copyright Act 1968 (‘Copyright Act’). 

Retransmission

With respect to the retransmission of free-to-air (‘FTA’) broadcasts the ACCC submitted that the transaction costs of the retransmission needed to be considered in full.   They did however lend limited support to the second of the ALRC’s retransmission proposals. 

Overall conclusion

In essence, the ACCC desires legislative reform that is flexible enough to encourage dynamic creativity and innovation in Australia yet respects originators’ proprietor rights. The ACCC is particularly mindful of the effects any legislation reform may have on competition within markets for copyright material. In this respect the ACCC supports the ALRC’s proposition for standards-based legislation and the drafting of the fair use framework with the involvement of industry stakeholders. 

The original submission can be read here

 

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