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UNIVERSITIES AUSTRALIA SUBMISSION

RESPONSE TO THE PRODUCTIVITY COMMISSION INQUIRY FINAL REPORT ON INTELLECTUAL PROPERTY ARRANGEMENTSFEBRUARY 2017

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CONTENTS

Executive Summary..........................................................................................................

Fair use...............................................................................................................................

Governance of declared collecting societies.......................................................................

Safe harbours......................................................................................................................

Orphan works......................................................................................................................

Contracts and technological protection measures...............................................................

1 What would fair use man for Australian universities?...........................................

1.1 Text and data mining...................................................................................................

1.2 Universities engaging in collaborative research with business and industry – fair dealing is not enough............................................................................

1.3 Facilitating public access to research outputs.............................................................

1.4 MOOCs........................................................................................................................

2 Setting the record straight about fair use.............................................................

2.1 Fair use would not harm Australian authors and creators..........................................

2.2 Confusion about the difference between fair use and fair dealing.............................

2.3 The groups fighting fair use in Australia rely on, and support, fair use in the US.......................................................................................................................

2.4 The evidence supports the case for fair use..............................................................

3 Governance and oversight of collecting societies...............................................

3.1 How are declared collecting societies using funds obtained under the statutory licences?.....................................................................................................

3.2 To what extent do authors benefit from the money that the education sector pays?..............................................................................................................

4 Safe harbours..........................................................................................................

5 Orphan works...........................................................................................................

6 Contract and TPMs..................................................................................................

6.1 Copyright and contract...............................................................................................

6.2 TPMs.........................................................................................................................

7 Conclusion...............................................................................................................

3 UNIVERSITIES AUSTRALIA | RESPONSE TO THE PRODUCTIVITY COMMISSION INQUIRY FINAL REPORT ON INTELLECTUAL PROPERTY ARRANGEMENTS

EXECUTIVE SUMMARYUniversities Australia is the peak body representing Australia's 39 universities in the public interest, both nationally and internationally. These universities employ more than 100,000 staff, and educate more than one million students. We have a significant interest in copyright law and policy. We appreciate this opportunity to comment on the recommendations made by the Productivity Commission (the Commission) in its Intellectual Property Arrangements Inquiry Report (Report). Universities Australia (UA) strongly welcomes the copyright reforms that the Commission has recommended, in particular the enactment of a flexible fair use exception.

FAIR USE

Australia’s existing copyright exceptions are inflexible and unsuited to a digital environment. As it currently stands, innovative and useful technologies, and new ways of using content in socially beneficial ways that cause no harm to right holders, automatically infringe copyright in Australia unless their use falls within one of the existing narrow, purposed-based exceptions. Any use that cannot be pigeon-holed within one of the existing fair dealing exceptions is not permitted, however "fair" it might be and whatever social benefit may flow from the use. For the Government’s innovation agenda to flourish, this situation must be corrected.

The effects of inflexible exceptions are felt every day in Australian universities.

1. Australian researchers and innovators are unable to make full use of text mining and data mining technologies that their colleagues with more flexible copyright exceptions take for granted. The potential implications for Australia are enormous. The best and brightest re-search students are naturally drawn to environments where innovation can flourish, and in the digital age, copyright increasingly plays a vital part in that. Today, text and data mining are blocked by copyright, but as new technologies emerge, they too will be impeded by Australia's outdated and inflexible copyright regime, and universities will continue to be dis-advantaged as a result.

2. Australian academics are prevented from engaging with other researchers using commu-nications technologies such as wikis, blogs and social media because of the risks of copy-right infringement. While academics can rely on fair dealing to copy small amounts of work for their own research purposes, the fair dealing exception no longer applies if they want to share a copy with a colleague for the purposes of discussion.

3. Australian universities have to cut third party content from student theses before making these publicly accessible online. The result is that the integrity of the thesis is comprom-ised, and the academic community is denied the opportunity to engage fully with the work.

4. Australian universities are being urged to engage in greater collaboration with industry, but none of the existing copyright exceptions or statutory licences apply to this kind of use.

5. Australian universities have much less flexibility than their US counterparts when determin-ing what kinds of content will be included in courses offered via new Massive Open Online Course (MOOC) delivery platforms. In a globally competitive higher education market it is imperative that Australian universities be on a level playing field with universities in com-parable jurisdictions.

The innovation-friendly fair use exception recommended by the Commission - and the Australian Law Reform Commission before it - would address each of these concerns. It would put Australia on a level playing field with leading digital economies such as the United States, Israel, South Korea and Singapore.


Since the Australian Law Reform Commission’s (ALRC) Review of Copyright and the Digital Economy, rights holder groups have engaged in a misleading public campaign - based on discredited data - about the likely impact of a fair use exception on Australian authors and creators.1 Many of the companies that constitute these groups are US-based, and their profitability has not in any way been compromised by the fair use exception that has operated in that country since the 1970s. In fact, they themselves rely on fair use.2 In other words, they are not opposed to fair use as such, just to Australian users having the benefit of it. They must not be allowed to prevent much-needed copyright reform in Australia.

GOVERNANCE OF DECLARED COLLECTING SOCIETIES

Universities Australia supports the recommendation to review governance arrangements for declared collecting societies. Collecting societies play an important role in the educational copying framework. Their declared status puts them in a monopoly role, making it vital to ensure that the governance arrangements relating to their performance of this role reflects the highest standards of checks and balances and transparency.

Any governance review should also consider the appropriateness of collecting societies using money paid by universities and schools under the statutory licences to fund lobbying and advocacy activities, rather than being distributed to the owners of copyright in the particular works used under the relevant licence. UA has recently become aware of a Copyright Agency fund of more than $15 million that it seems is largely intended to be used for these advocacy purposes, including campaigns to oppose fair use reforms that have been sought by the education sector and recommended by the Commission3.

We question whether it is appropriate for licence fees received from universities to be used to fund that advocacy. This money is paid to the collecting society as agent for the particular copyright owners whose works are being copied. This raises a fundamental governance issue that was not before the Commission: What are the appropriate limits on how declared monopoly collecting societies use the licence fees that they collect, and on the different roles that they play?

SAFE HARBOURS

We also support the Commission’s recommendation that the Government expand the copyright safe harbours to include all online service providers, including universities. Like exceptions, safe harbour regimes are an important mechanism for balancing the rights of end users, rights holders and intermediaries. Universities Australia submits that providing certainty around the potential liability of service providers is a crucial element of any successful copyright regime.

1 These groups, who claim to be speaking on behalf of Australian authors, represent large multinational publishing conglomerates (and their local subsidiaries) who are opposed to Australia having a fair use exception. The Australian educational publishing sector is “overwhelmingly under the control of overseas corporations” according to the Australian Society of Authors. See Educational Publishing in Australia What’s in it for authors? P 3

2 LexisNexis, a division of Reed Elsevier, recently relied on the US fair use exception to defend its use of legal briefs and motions filed with US courts in a commercial database which it markets to lawyers. The product can be used by LexisNexis customers to “research how other litigators have framed similar, successful arguments‟ and to “gain a better understanding of emerging issues or unfamiliar areas of law." Reed could not have created this useful research tool in Australia: it needed a fair use exception to do so.

3 This is based on the only publicly available information regarding this fund. This information includes a note to Copyright Agency’s 2014/2015 Directors’ Report and Financial Report which states that in June 2013, the Copyright Agency Board considered the issues which would arise “in the event of a sudden and material decrease of revenue” in the event of copyright law reform, and resolved that “in order to safeguard and manage the rights of members including but not confined to taking such necessary actions in communications, research and advocacy”, it would establish a Future Fund to provide adequate reserves to resource these activities. See http://copyright.com.au/wp-content/uploads/2015/04/CA-financials-2015-FinalLR.pdf p 26.


http://copyright.com.au/wp-content/uploads/2015/04/CA-financials-2015-FinalLR.pdf

http://copyright.com.au/wp-content/uploads/2015/04/CA-financials-2015-FinalLR.pdf

ORPHAN WORKS

We support the Commission's recommendation to limit the liability for use of orphan works where a user has undertaken a diligent search to locate the relevant rights holder. While the proposed fair use exception would go some way towards addressing the orphan works problem, it would not be a complete answer.

CONTRACTS AND TECHNOLOGICAL PROTECTION MEASURES

Finally, we support the Commission’s recommendations with respect to contracting out and technological protection measures (TPMs). Contracts and TPMs are increasingly being used to override exceptions and rewrite the copyright balance determined by parliament.


1 WHAT WOULD FAIR USE MEAN FOR AUSTRALIAN UNIVERSITIES?

We cannot anticipate what new and innovative digital technologies will emerge over the coming years and decades, but we can be sure that many of them will feel the impact of copyright law. Almost every use of digital technology involves making copies.

The existing, prescriptive, fair dealing exceptions are unsuited to a rapidly evolving digital environment. They are blocking innovation. Australian universities need fair use to be able to fully seize the opportunities that the digital age has to offer.

1.1 TEXT AND DATA MINING

Text and data mining technologies are transforming scientific research by enabling automated searches of vast quantities of text and data to look for patterns, trends and other useful information. They encourage innovation by allowing for additional value to be extracted from the publicly-funded research base.

In Australia, these technologies potentially infringe copyright. Regardless of whether or not a university has paid for staff and student access to the content that it wants to mine, the act of digitally scanning the content to allow for computational analysis will infringe copyright unless the rights holder has expressly allowed this. Many commercial content licences are either silent on the question of whether text or data mining is a permitted activity, or they expressly prohibit such mining. Obtaining permission will in many cases be impractical (given that a researcher may wish to mine publicly accessible content that has been obtained from thousands of distributed sources).

The fair use exception recommended by the Commission would put Australian universities on a level playing field with their counterparts in fair use jurisdictions such as the US (who rely on fair use to engage in non-consumptive uses such as data mining and text mining for socially useful purposes)4 as well as the UK (which recently enacted a text and data mining exception that cannot be ‘contracted out of’ by rights holders).5 As it currently stands, researchers in these jurisdictions have a competitive advantage over our researchers.

The real cost of failing to enact laws that facilitate text and data mining

A recent policy paper by the Lisbon Council6 highlighted the cost of failing to enact copyright laws that facilitate rather than hinder use of text and data mining technologies.

The authors were commenting on the 2015 EU proposal for a mandatory text and data mining exception for member states, but their observations are of equal relevance to Australia.

They noted that in the absence of a text and data mining exception, European scholars were being forced to “outsource their text-and-data-mining needs to researchers elsewhere in the world”.

4 See for example Authors Guild v. HathiTrust, 755 F.3d 87 (2d Cir. 2014)5 s 29A of the UK Copyright, Designs and Patents Act 1988 6 Sergey Filippov and Paul Hofheinz, T ext and Data Mining for Research and Innovation: What Europe Must do Next ,

Lisbon Council, 2016


They refer to reports of “university and research bureaux deliberately adding researchers in North America or Asia to consortia because those researchers will be able to do basic text and data mining so much more easily than in the EU.”

They said there was “increasing evidence that European research institutions are being forced to reach outside of Europe to build better teams for text-and-data-mining-related consortia – not because the foreigners’ researchers are more able, but because their laws are smarter and more straightforward than the ragged patchwork of rules which apply in Europe.”

They note that “the doctrine of fair use, deployed in countries like Israel, Republic of Korea, Singapore and the U.S., has enabled researchers and the organisations that employ researchers to see deployment of text and data mining as an acceptable business risk, in legal terms. European researchers and the organisations which employ them, by contrast, face a maze of restrictions, which are in themselves often detrimental, but which in aggregate generate confusion and undermine the self-confidence of the research community. The publishing industry itself continues to put a premium on “licensing,” preferring to retain control – and potentially the right to collect rents – over every use, reuse and even derivative use of any material they may have helped put into the public arena. The result is a minefield of hidden obstacles for European researchers, forcing them to avoid the kind of technology-driven value creation which is routine in North America and surging in Asia.

It is likely that a similar study in Australia would result in the same findings.

1.2 UNIVERSITIES ENGAGING IN COLLABORATIVE RESEARCH WITH BUSINESS AND INDUSTRY – FAIR DEALING IS NOT ENOUGH

Greater collaboration between the research sector and business is a central plank of the Government’s innovation agenda, but this is being hampered by copyright law. None of the existing copyright exceptions or statutory licences permit universities - or their academics - to use small amounts of copyright content in this way. Instead, they draw a line between uses within the closed confines of an educational institution and uses that involve the broader community or industry.

For example, the educational statutory licence that universities rely on to make copies for educational purposes (and for which they pay more than $32 million a year) applies only if the copying is done solely for the educational purposes of the university.7 In many instances of university/industry collaboration there will be a dual purpose; i.e. the educational purpose of the university and the commercial purpose of the industry partner. As a result, the statutory licence would not apply.

Nor does the fair dealing for research and study exception8 apply. While individual academics can rely on that exception to copy small amounts of work for their own research purposes, the exception no longer applies if they want to share that work with colleagues - whether inside the university or outside - for the purposes of discussion or collaboration. Lest there be any suggestion that universities are adopting an overly restrictive view of the existing fair dealing exceptions,

7 See s 135ZMC of the Copyright Act, which permits universities to copy journal articles for educational purposes provided that they agree to pay equitable remuneration

8 Ss 40 and 103C of the Copyright Act


Copyright Agency has stated publicly that “the transmission of copyright works for discussion with colleagues could not be a fair dealing for research or study purposes".9

There is no such limitation with fair use. If the use was "fair", it would be allowed.

1.3 FACILITATING PUBLIC ACCESS TO RESEARCH OUTPUTS

Australian universities must remove third-party content from student theses before making them publicly accessible online, even though the student was able to rely on the research and study fair dealing exception to include the content in the thesis. Fair dealing is inflexible: it applies only to the student’s own research and study purpose in writing the thesis. It no longer applies when the university makes the thesis available in electronic form. Unless the student can obtain a licence to include the work in the thesis, the university will generally remove any third-party content in order to avoid the risk of being sued for copyright infringement. The result is that the integrity of the thesis is compromised, and the academic community is denied the opportunity to engage fully with the work.

No such impediment existed in the pre-digital environment. Universities are free to permit members of the public to have access to paper-based student theses - regardless of whether or not they contain third party content that has been included by the student in reliance on his or her own fair dealing exception - without any risk of infringing copyright.

In the digital environment, this very same activity - i.e. allowing members of the public to read student theses that contain third party content that was included by the student in reliance on their own fair dealing rights - will infringe copyright in Australian unless the rights holder grants permission.

Fair use would fix this. The Association of Research Libraries in the US provides the following advice to its members:

It is fair use for a library to receive material for its institutional repository, and make deposited works publicly available in unredacted form, including items that contain copyrighted material that is included on the basis of fair use.10

1.4 MOOCS

The educational statutory licences11 that universities rely on to make copyright content available to their enrolled students will generally not apply to courses that are offered via MOOC platforms. Nor does the research and study fair dealing exception apply to this kind of use. This is limiting the ways in which Australian universities - as opposed to their counterparts in fair use jurisdictions such as the USA - can deliver course content via MOOCs. Fair use is not a "free for all" for universities operating MOOCs in fair use jurisdictions, and nor would it be in Australia. It would, however, enable Australian universities to use third party content sparingly and appropriately - in ways that did not unreasonably harm the interests of rights holders - when creating MOOC courses and when participating in alliances involving overseas universities to create and share joint MOOC products that compete worldwide.

9 Copyright Agency submission to the Department of Attorney General in relation to Copyright Amendment (Digital Agenda) Bill 1999, 19 March 1999, para 33

10 CODE OF BEST PRACTICES IN FAIR USE FOR ACADEMIC AND RESEARCH LIBRARIES, p 2311 Parts VA and VB of the Copyright Act


2 SETTING THE RECORD STRAIGHT ABOUT FAIR USE During the process of the Productivity Commission’s Inquiry there have been many false claims made regarding the likely impact of fair use on Australian authors and publishers. There has also been a great deal of confusion about the difference between the existing fair dealing exceptions and fair use.

2.1 FAIR USE WOULD NOT HARM AUSTRALIAN AUTHORS AND CREATORS

Copyright Agency/Viscopy and other rights holder groups have run a misleading campaign, claiming that fair use would put the livelihoods of Australian authors at risk. This is a distortion of how a fair use exception would operate. Fair use would not mean that universities would, or could, copy everything for free. It does not operate this way in countries that have adopted fair use, and it would not operate this way in Australia. Claims to the contrary are without foundation.

To understand why, it’s necessary to set out a little background. Australian universities spend hundreds of millions of dollars each year on library resources. In 2016, the amount was close to $300 million, most of which was on e-resources such as electronic journal subscriptions and e-books. This money is not paid to a collecting society: it is paid directly to rights holders; i.e. academic publishers. A fair use exception would have no impact whatsoever on this spending.

Universities also pay copyright collecting society Copyright Agency when they make copies for student use under the educational statutory licence in Part VB of the Copyright Act. In 2016, the university sector paid $30.7 million for this copying. Rights holder groups have suggested the universities would cease relying on the statutory licence for any copying if fair use was enacted. This is simply not true. The statutory licence would continue to operate - and universities would continue to make payments to Copyright Agency - because a great deal of the copying that universities currently do under the licence would not come within the scope of a fair use exception.

Some of what universities are currently paying for, however, would potentially come within the scope of a fair use exception. This includes copying content from freely available blogs and wikis where the copyright owner clearly had no expectation of being paid. It also includes copying of “orphan works”; i.e. works where the copyright owner is either unknown or not able to be located. Universities and schools pay millions of dollars a year for these uses, something which the ALRC found to be a significant flaw in the existing educational copying regime. There is an even more significant flaw, however, that neither the Productivity Commission, nor the ALRC, was aware of: that the money that the education sector is paying for these uses is no longer being distributed to rights holders, but is now being retained by Copyright Agency for use in its advocacy against fair use. See section 3 below on Governance for more on this.

Fair use would also enable universities to undertake uses that are not covered by any of the existing exceptions of statutory licences, including data mining and text mining. Again, however, it could not be suggested that authors or publishers would suffer any harm if universities could do this. We support the Commission's view that retaining a copyright law that doesn't permit this is not in the interests of the wider Australian community. It is certainly contrary to the interests of universities competing in a global market with peer universities in the United States that have long had the benefit of a flexible fair use exception.

What really happened in Canada?


In submissions to the Commission, and in public statements since then, Copyright Agency has claimed that copyright reform in Canada led to the collapse of the educational publishing industry, and that the same would happen in Australian if fair use was enacted. In support of this claim, Copyright Agency relies on a report by PwC that it jointly commissioned.

The Commission found that the PwC report had “significant shortcomings”, and was “methodologically flawed”. 12

In its cost benefit analysis, Ernst & Young noted that sales of educational books had been falling in Canada long before the 2012 copyright reforms that Copyright Agency claimed caused the demise. 13

Canadian copyright expert Professor Michael Geist recently provided a detailed assessment of the educational copying landscape in Canada, and the real reasons why Canadian schools and universities are relying less on collective licences from Access Copyright (the Canadian equivalent of Copyright Agency/Viscopy) than they had in the recent past14. Universities Australia submits that this analysis provides further evidence that Copyright Agency’s claims that "fair use killed Canadian educational publishing" are misleading and should be disregarded:

Canadian educational institutions continue to pay millions of dollars every year to publishers and authors for access to their works. The Canadian Research Knowledge Network - a partnership of 75 Canadian universities representing 1.2 million researches and students - spent over $100 million in licensing fees for electronic content in 2015. The recent copyright reforms had no impact whatsoever on those payments. Geist notes that these licenses "provide access to an incredible array of electronic journals and primary source content in both the sciences and social sciences and humanities".

Canadian universities spend "millions more" on their own site licences or on transactional licences that permit usage for specific works. This spending is not affected by the recent copyright reforms.

Canadian students still spend "millions each year" on print and electronic books. This spending is not affected by the recent copyright reforms.

Transactional licensing is becoming easier and more efficient (as it is also in Australia). "The electronic environment has facilitated cheaper, faster licensing mechanisms that reduce overhead costs and allow institutions to ensure that payments are made where required". Canadian universities simply have less need for the collective licence that Access Copyright offers.

The emergence of open access publishing has enabled free access (as the author intended) to millions of articles. Geist notes that a European Commission-funded report by Montreal-based Science-Metrix found that more than half of all research publications in some countries and fields of study are now freely available online. He says that Canada "is on the verge of joining those countries, falling just shy at 49 percent. "That percentage is only going to increase in the coming years: in 2016 the EU announced a new open access target which would see all scientific papers freely available by 2020.

12 Final report p 17813 Ernst & Young Cost benefit analysis of changes to the Copyright Act 1968, 2016 p 5914 3 http://www.academicmatters.ca/2016/01/2279/


Universities are incorporating these licensed works - both paid and open access - into course materials. Geist notes that "institutions are paying for so many works that there is frequently a risk of double-payment. According to a Stanford University study in 2013, students were spending over $100,000 on course materials that the university was already paying millions to license".

Geist notes:

Access Copyright and its supporters argue that in addition to the millions being spent on access to materials, Canadian educational institutions should pay millions more for an Access Copyright licence to compensate for copying that falls outside of these new forms of access.

Canadian educational institutions would undoubtedly acknowledge that there are works being used that fall outside these new forms of paid access. The issue, however, is whether the usage qualifies as either insubstantial (a small amount that the law says falls outside copyright) or as fair dealing. If either apply, the copying is permitted by the law and no further compensation is required.

This is a very different picture to that painted by Copyright Agency.

2.2 CONFUSION ABOUT THE DIFFERENCE BETWEEN FAIR USE AND FAIR DEALING

The concern that authors and creators have expressed about fair use is based on a misunderstanding about the difference between fair use and fair dealing.

In submissions to the Productivity Commission, some authors expressed support for the existing fair dealing exceptions - which they say are “clear”, and “fair”, and should be retained - and alarm at the proposal for fair use - which they say is “uncertain”, and “not fair”, and would erode their incomes.

However, both fair dealing and fair use involve an analysis of whether or not a particular use is “fair”. And in undertaking that analysis, the very same “fairness factors” need to be weighed up. The only real difference between fair use and fair dealing is that fair dealing will be automatically ruled out - even if your intended use would be fair – if your use does not fall within one of the specific fair dealing purposes set out in the Copyright Act.

2.3 THE GROUPS FIGHTING FAIR USE IN AUSTRALIA RELY ON, AND SUPPORT, FAIR USE IN THE US

US publishers and their Australian subsidiaries have been at the forefront of the anti-fair use campaign in Australia. And yet, the same content owners who say that Australia shouldn’t have fair use defended the right of US film makers and other content creators to rely on fair use when they want to use small amounts of other people’s work in their own creative works.

For example, in court proceedings in 2013, the Motion Picture Association of America (MPAA) told a US court that it had a “keen interest” in ensuring its members’ fair use protections “remain robust and intact”. 15 It said that fair use was “critical” to filmmakers, news organisations, public broadcasters and television networks, and that “much creative culture is iterative; new works often do not arise in a vacuum, but rather are influenced by and draw upon the creative works that came before”.

15 See Amicus brief filed by the International Documentary Association and the Motion Picture Association of America in support of the rights of filmmakers to rely on fair use.


These statements hold just as true in Australia as in the U.S. The U.S. content industries are not opposed to fair use per se, they just don’t want Australia to have it.

The reasons they have put forward to deny fair use here are numerous: Australian judges wouldn’t know how to apply fair use; it would be “uncertain and unpredictable”; it would allow anyone to just come along and appropriate another person’s work without permission or payment. The U.S. content industries do not advance these arguments when defending their access to fair use.

Double standard on fair use

In 2013, Ben Sheffner, counsel for the MPAA responded to comments about the group’s amicus brief supporting fair use:

[W]e do want to push back a bit on the suggestion in some of the commentary about our brief that the MPAA and its members somehow “oppose” fair use, or that our embrace of it in the Baltimore Ravens brief represents a shift in our position.

That’s simply false, a notion that doesn’t survive even a casual encounter with the facts. Our members rely on the fair use doctrine every day when producing their movies and television shows – especially those that involve parody and news and documentary programs.

And it’s routine for our members to raise fair use – successfully – in court. …

No thinking person is “for” or “against” fair use in all circumstances. As the Supreme Court and countless others have said, fair use is a flexible doctrine, one that requires a caseby-case examination of the facts, and a careful weighing of all of the statutory factors. Some uses are fair; some aren’t. (emphasis added) 16

MPAA members include Disney, Paramount, sony Pictures, 20th Century Fox, Universal, and Warner Bros.

Compare this to the position adopted by the Motion Picture Distributors Association of Australia (MPDAA) - representing the Australian subsidiaries of these very same companies - in its submission to the Commission17:

There is no consensus in support for a broad new fair use exception in Australia and there is substantial opposition to it.

There is also no evidence that it would either serve the core functions of copyright, to incentivize creation and dissemination of works, or assist in fostering innovation or participation in the digital economy.

MPDAA members include Disney (Walt Disney Studios Motion Pictures Australia), Paramount (Paramount Pictures Australia), Sony Pictures (Sony Pictures Australia), 20th Century Fox (Fox Film Distributors), Universal, and Warner Bros (Warner Bros Entertainment Australia).

The Government should not be persuaded into believing that fair use would be bad for Australia.

2.4 THE EVIDENCE SUPPORTS THE CASE FOR FAIR USE

The evidence overwhelmingly supports the case for replacing the current inflexible fair dealing exceptions with fair use. The Commission’s review is the most recent in a long line of policy

16 http://www.mpaa.org/mpaa-and-fair-use-a-quick-history/17 Response to the Productivity Commission Draft Report dated April 2016: Intellectual Property Arrangements Joint

Submission from the Australian Film/TV Bodies 3 June 2016


reviews - reaching back more than 20 years - to conclude that a fair use exception would benefit the Australian economy, Australian consumers, and Australian universities and schools, without harming authors or publishers.18 The exhaustive cost benefit analysis undertaken by Ernst & Young confirmed this.19 It is time to act on this long overdue reform.

18 See Universities Australia Submission to the Productivity Commission's Draft Report on Intellectual Property Arrangements, June 2016, p 3-4 http://www.pc.gov.au/__data/assets/pdf_file/0019/201187/subdr453-intellectual-property.pdf

19 Ernst & Young, Cost benefit analysis of changes to the Copyright Act 1968 https://www.communications.gov.au/node/9031


http://www.pc.gov.au/__data/assets/pdf_file/0019/201187/subdr453-intellectual-property.pdf

http://www.pc.gov.au/__data/assets/pdf_file/0019/201187/subdr453-intellectual-property.pdf

3 GOVERNANCE AND OVERSIGHT OF COLLECTING SOCIETIES

UA agrees with the Commission that there is a need to strengthen the governance and transparency arrangements for declared collecting societies, and we support the recommendation for a review of the current governance arrangements.

There are two matters in particular that in our view should be included in any such review:

The need for greater oversight and transparency regarding the ways in which declared collecting societies use funds obtained under the statutory licences; and

The need for greater transparency regarding the extent to which authors benefit from the money paid to collecting societies under the statutory licences.

3.1 HOW ARE DECLARED COLLECTING SOCIETIES USING FUNDS OBTAINED UNDER THE STATUTORY LICENCES?

If Copyright Agency or Screenrights are unable to distribute money to the relevant rights holder in any particular year, the money is held in trust for four years after which it is “rolled over”. The reasons include:20

The collecting society was unable to identify or locate the rights holder (i.e. the work is an “orphan work”);

The rights holder was notified that their work had been copied, but opted not to claim the payment;

The amount owing to the relevant rights holder fell below the threshold which the collecting society sets for making distributions; and

The rights holder was from a country where the collecting society has no reciprocal agreement with the relevant collecting society.

The amounts involved are significant. In 2015, the amount of money that was rolled over under the educational statutory licence was more than $2 million.21 Of this, the amount for orphan works was $566,285, and the amount where the rights holders had not claimed the payment (despite being notified by Copyright Agency) was $1.3 million.22

Until recently, Copyright Agency had a long-standing practice of distributing these roll over funds as a windfall to its members whose works were copied in the year that the money was rolled over, notwithstanding that these rights holders had no connection at all with the works that had been copied by universities and schools. In submissions to the ALRC during its Copyright and the Digital Economy review, and in submissions to the Commission, UA raised concerns about this use of roll over funds.

Since making these submissions, we have become aware that in 2013, Copyright Agency implemented a new practice regarding the treatment of roll over funds. Rather than paying this money to members, Copyright Agency opted instead to retain the rolled over funds for use in its anti-fair use advocacy. As at 30 June 2016, Copyright Agency had amassed $15.5 million in a

20 See Copyright Agency 2015/16 Annual Report p 3621 See Copyright Agency 2014/15 Annual Report p 3522 Ibid


“Future Fund” earmarked for spending on “communications, research and advocacy” in relation to the copyright reforms recommended by the ALRC23 (and now the Commission).

We question the appropriateness of a declared collecting society being in a position to adopt a policy of this kind. It is not just money paid by the education sector that is finding its way into Copyright Agency’s Future Fund: in 2015/16, there was an amount of $1.13 million rolled over under the Government statutory licence.24

UA does not suggest that Copyright Agency acted beyond its power in using roll over funds in this way. We do, however, consider that there is a need for independent oversight as to how funds that cannot be paid to rights holders are able to be used by declared collecting societies, particularly given the amounts in question, and the fact that this money has been received from publicly funded institutions.

In its final report, the Commission said that any licensee payments that Copyright Agency was unable to distribute to the relevant rights holder (for example because the works are orphaned) “should be returned to government”. 25 UA endorses this view.

3.2 TO WHAT EXTENT DO AUTHORS BENEFIT FROM THE MONEY THAT THE EDUCATION SECTOR PAYS?

In a context where benefits to content creators are said to be important incentives to creativity, and to the balance to be achieved by copyright exceptions and the educational statutory licence, there needs to be full transparency as to how much of the money paid under the statutory licences is distributed to content creators, and how much to publishers. Currently there is no such transparency. Universities pay these licence fees, and are entitled to know in general terms who benefits from the money that is paid. Academic authors also have an interest in ensuring that there is full transparency.

UA has reason to be concerned that authors may not actually be benefiting to nearly the same extent as publishers from the money that universities are paying under the statutory licence.

For example, the Australian Society of Authors (ASA) has publicly complained that authors of educational content actually receive little - and in some cases none - of the payments that Copyright Agency receives from educational institutions. That is not because universities and schools are not paying to use this content, but because the money is going to the publishers rather than the content creators.

The ASA has set these concerns out in a report titled, Educational Publishing in Australia: What’s in it for authors? 26

To bolster declining profits, publishers have turned on authors and used their market dominance to force them to sign over all copyright, write for a one-off, minimal fixed fee rather than royalties, and forgo their right to additional sources of income such as [Copyright Agency] payments and Lending Rights payments. …

23 See http://copyright.com.au/wp-content/uploads/2015/04/CA-financials-2015-FinalLR.pdf p 2624 Copyright Agency 2015/16 Annual Report p 3725 Final report, p 16026 Australian Society of Authors Educational Publishing in Australia: What’s in it for authors? (2008)


http://copyright.com.au/about-us/governance/copyright-agency-annual-report-2016/

There has also been consolidation in the educational sector in response to the threat of digitally available educational materials. The sector in Australia remains overwhelmingly under the control of overseas corporations.

Evidence from ASA members suggests that a number of large educational publishers are offering contracts that allocate all or a major portion of [Copyright Agency] payments to themselves. Some educational authors are asked to accept only 20% of payments from [Copyright Agency] and other collecting societies.

Other countries have more transparent regimes. In Canada, for example, copyright collecting society Access Copyright provides information in its annual report setting out the percentage of licence payments that were paid to publishers and authors.27 In 2015, publishers received 54 per cent of the licence fees, and creators received 46 per cent.28

In the UK, book authors are guaranteed an equal share with publishers of any payment that is received by Copyright Licensing Agency (CLA) when their works are copied in universities and schools. CLA publishes the following information on its website:

The division between rights holders of licensing revenues collected by CLA has been independently determined for the first time ever in a valuation process. The following is a summary of the resultant distribution model.

After CLA has deducted its costs of 11%, the remaining balance is distributed in the following shares:

UK revenue relating to copying from books

Publishers Authors Visual artists

Schools 42.0% 42.0% 16.0%

Further education 42.5% 42.5% 15.0%

Higher education 48.0% 48.0% 4.0%

27 Access Canada Annual Report 2015, pp7-8.28 Access Copyright, Annual Report 2015 p 8


4 SAFE HARBOURSUA strongly welcomes the proposed expansion of the copyright safe harbours to include universities and other online service providers. Universities provide internet access to millions of students, teachers and academics every day, but as the law currently stands, they have less protection than commercial ISPs (such as Telstra) when it comes to being potentially liable for claims of having authorised any infringements by users of their systems. The safe harbour provision contained in the draft Copyright Amendment (Disability and Other Measures) Bill 2016 (CADM Bill) would fix this. We urge the government to introduce this bill at the first opportunity.


5 ORPHAN WORKS

There is an urgent need to unlock the value of orphan works. As the Commission has noted, the inability for users to access and use orphan works reduces the efficiency of Australia's copyright arrangements without any corresponding benefit to rights holders.

A flexible fair use exception of the kind the Commission has recommended would go a long way towards solving the orphan works problem, particularly in the education sector. In the US, for example, universities have relied on fair use to digitise works - including orphan works - for the purpose of enabling the works to be searched, and to facilitate access to print for disabled users.29

Fair use is unlikely, however, to provide a complete solution to the orphan works problem. UA therefore welcomes the Commission's recommendation for the Government to adopt the ALRC's proposed model for orphan works. This model - which would limit the liability for use of orphan works where a user has undertaken a diligent search to locate the relevant rights holder - strikes an appropriate balance between facilitating greater use of the vast trove of content that is currently effectively “locked up”, while at the same time protecting the interests of rights holders who are subsequently identified. It would ensure that the potential education, cultural and commercial benefits of orphan works can be fully realised.

29 See Authors Guild v HathiTrust No 11-CV-6351 2012 (SDNY 10 October 2012)


6 CONTRACT AND TPMS UA strongly supports the recommendations for the government to take steps to prevent rights holders from using contract and TPMs to prevent legitimate uses of copyright content.

In 1998, the Australian Copyright Law Review Committee commented that copyright exceptions such as fair dealing are not “defences” to infringement, but rather define the boundaries of copyright owners’ rights.30 Those rights have been greatly expanded by the use of contracts and TPMs. There is little hope of achieving balanced copyright policy if it is left to rights holders to continue to re-write the balance through the use of contracts or digital locks.

As we discuss below, while preventing contractual override of exceptions would require legislative change, the concerns that the Commission has identified with respect to TPMs being used to prevent legitimate uses can be addressed without the need to amend the Act or enact any new legislation.

6.1 COPYRIGHT AND CONTRACT

It is now 15 years since Copyright Law Review Committee (CLRC) identified contracts that purport to exclude or modify copyright exceptions as a threat to the copyright balance, and recommended that the Act be amended to prevent this.31

Since that time, rights holders have continued to use contracts to seek to exclude copyright exceptions and limitations. While practices vary from publisher to publisher, the most common form of contractual limitations on commercially published journal content are as follows:

Prohibition on use of content in course packs. This is otherwise permitted by the Part VB educational statutory licence.

Prohibition on use of material for interlibrary loans. This is otherwise permitted by the library copying provisions in ss 49 and 50 of the Act.

Prohibition on electronic transmission of content between authorised users. This may otherwise be permitted by the fair dealing provisions in ss 40 and 41 of the Act.

Some broadcasters who have made the content of their broadcasts available via their websites purport to limit use of this content to "personal use", which has the effect of purporting to exclude the operation of the Part VA statutory licence which otherwise permits a university to use this content.

UA submits that the need for a law preventing contractual override of exceptions is every bit as urgent today as it was in 2002. We agree with the Commission that there is no policy justification for restricting this protection to library and archive exceptions.

6.2 TPMSTPMs are being used in ways that prevent universities and their students from using works for purposes otherwise permitted by copyright law. For example, there is an exception in s 200AB of the Copyright Act that permits a university to format shift a work to ensure that sight and hearing

30 Copyright Law Review Committee, Simplification of the Copyright Act 1968 Part 1: Exceptions to the Exclusive Rights of Copyright Owners, Canberra, 1998

31 Copyright and Contract Report (CLRC Report), Copyright Law Review Committee 2002


impaired students have access to course content in formats that are accessible to them, but the exception cannot be relied on if doing so would require circumventing a TPM.

Increasingly, content formats such as e-books are protected by TPMs. This has meant in practice that universities are prevented from relying on s 200AB to do things like activating text-to-speech functionality on e-books in order to make these accessible to sight-impaired students.

TPMs are also limiting the ways in which academics and other university research staff (such as post-doctoral students) can rely on the fair dealing exceptions to use digital content for research purposes, and the ways in which students can incorporate content into class presentations and assignments. As with s 200AB, the fair dealing exceptions do not apply if a work is protected by a TPM.

The proliferation of TPMs applied to electronic content means that while the need to use such content has steadily grown, the opportunity to access it under existing exceptions has steadily shrunk.

There is a very simple way to fix this without the need for any legislative change. The TPM provisions in the Copyright Act contain a process through which exceptions can be made - by regulation - permitting the circumvention of a TPM in certain public interest circumstances.

Fixing the TPM problem is also an essential step in ensuring that Australia can comply fully with its obligations under the Treaty to Facilitate Access to Published Works for Persons Who Are Blind, Visually Impaired or Otherwise Print Disabled (the Marrakesh Treaty), which requires contracting parties to ensure that their TPM laws do not impact on the use of the limitations and exceptions provided for in the treaty. The proposed new disability exceptions contained in the draft CADM Bill will not satisfy this requirement unless the government ensures that TPMs cannot be used to block these exceptions.


7 CONCLUSION Australia's inflexible copyright exceptions are affecting the ability of Australian universities to create and disseminate knowledge. A fair use exception of the kind recommended by the Commission would deliver the flexibility that is so urgently needed to encourage research and innovation, while still protecting the rights of copyright owners.

UA's support for fair use has much less to do with the cost of using content than it does with ensuring that inflexible copyright exceptions do not stand in the way of research and innovation in this country. Universities support a fair use exception not so that they can avoid having to pay rights holders, but because fair use would result in a fairer and more flexible copyright regime. It would remove roadblocks to competing with North American universities for the best and brightest students, and would facilitate our academics using innovative technologies to engage in internationally competitive research. This is imperative if Australian universities are to remain competitive in an increasingly globalised higher education market.


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