The Australian Productivity Commission’s Copyright Recommendations: Using a Sledgehammer to Kill a Fly (or Killing the Golden Goose)

When that pesky fly lands on your morning toast or afternoon scone, you can ignore it, or you can take reasonable responsive measures, such as closing the window, putting up a screen, or shooing it away. But if you don’t care about the consequences, you can take really draconian action like grabbing a sledgehammer to exterminate it once and for all. Of course, there might be some collateral damage, like broken chinaware, smashed fingers and a destroyed table, but for sure the fly will no longer be part of your life. That, it seems to me, is exactly what the Australian Productivity Commission has done in its Draft Report on Intellectual Property Arrangements, released on April 29 of this year.

“Highlights” of the Commission’s Draft Report

In its report, subtitled Copy(not)right, the Commission proposes a fundamental shake-up of many of the established principles of copyright that have been developed over decades if not several hundred years of practice. Among the changes proposed are

• a draconian reduction in the term of copyright protection, from Australia’s current term of 70 years to something in the range of 15 to 20 years;
• introduction of an open-ended US-style “fair use” regime to allow use of copyrighted material without the permission of the rights-holder;
• denial of copyright holders right to prevent publication of their work;
• legalization of parallel import of books published abroad even where an Australian company has the exclusive distribution rights and;
• the legal right to bypass and disable geo-filters used by companies such as Netflix to limit access to online content to the markets where they own the rights.

And that’s just for starters! The full report which runs to some 600 pages also makes recommendations on patents, trademarks and industrial designs. I think it is fair to say that none of them are friendly to the community that invests in and depends economically on the development and protection of intellectual property.

What is the Productivity Commission?

The Commission which bills itself as “the Australian Government’s independent research and advisory body on a range of economic, social and environmental issues affecting the welfare of Australians” is a sort of in-house government think-tank designed to investigate and make non-binding recommendations on a range of issues. Past inquiries have ranged from early childhood learning to the import of processed tomato products to superannuation regulations. I guess it is not unexpected that an institution of this nature would make it a practice to challenge conventional wisdom and not conclude, after an extensive and expensive review, that the system they are investigating actually works pretty well. Tasked by the Australian Government to research the intellectual property system to ensure that it “provides appropriate incentives for innovation, investment and the production of creative works while ensuring it does not unreasonably impede further innovation, competition, investment and access to goods and services”, the Commission seems to have taken as its initial premise that the balance is tilted irremediably in favour of rights holders. In doing so the Commission has pulled out the sledgehammer (its excessive recommendations) to kill the fly (the desire of the Australian government to ensure that copyright-and other areas of IP-strike the appropriate balance between creators and users.) To use another popular analogy, it has grabbed the golden goose of content creation by the neck and given it a good wringing.

If its key recommendations are accepted, it will have succeeded in destroying the copyright eco-system in Australia in one blow, crushing the fly and creating massive collateral damage. Having worked for many years in the creative IP industry in Asia and viewing the growing attacks on the global IP ecosystem from my home in Canada (unfortunately Canada is not exempt from this “new religion” of free access), what is happening in Australia is cause for alarm. At this stage at least the report is a draft, with public comment invited between now and June 3. The controversial nature of the recommendations has ensured that there will be no shortage of comment, and the understandable criticism was not long in coming.

The Collateral Damage

Foxtel was quick to point out that the elimination of geo-filters would undermine the business model of content providers in Australia who purchase the rights to broadcast popular offshore productions to Australians, in the process generating revenues that go to sustain local productions. In countries such as Australia and Canada, to name two examples, where domestic broadcasters are expected or required to contribute to local production, geographic segmentation allows them to sustain their business model by obtaining the distribution rights to popular US programs, and building a subscription base. This in turn allows them to contribute funding to the creation of local programming. Removal of geo-filters to allow consumers unfettered access to content hosted abroad could drive a stake through the heart of the domestic broadcasting platforms in Australia, undercutting essential distribution channels for the dissemination of Australian culture. Is that the outcome the Productivity Commission wants?

The Australian Writer’s Guild was dismayed by the proposals to roll back the term of copyright protection, a means of protecting author’s rights that dates back to the establishment of the Berne Convention in 1886, and earlier. The Berne standard is 50 years of protection from the death of the author. In recent years, that minimum term has been extended to 70 years in many countries including Australia. For Australia to unilaterally roll back the period of copyright protection that it has agreed to in both multilateral and bilateral treaties is a non-starter, and even the Productivity Commission admits that its recommendation is constrained given Australia’s international commitments. Not to be deterred, however, the Commission suggests that “scope exists to collaborate with other countries to seek mutual amendment” to bring about shorter terms. So, if the Commission gets its way, Australia will be in the forefront of rolling back more than a century of accepted copyright principles, undermining the international treaty regime on intellectual property rights that has managed to strike a widely accepted balance between IP users and rights holders over many years.

Creative Content Australia took issue with the Commission’s statement that easier access to online content is the answer to curtailing online piracy rather than better enforcement of copyright holders’ rights. Of course in a digital world, more access to content on a timely basis is important. The industry recognizes this and new product offerings are being rolled out on a regular basis. The example is given of Episode One of the new season of Game of Thrones that was available in Australia on a day and date basis, yet despite this availability there were still a massive number of BitTorrent downloads in Oz. Why? Because while having access to legal content on a timely basis is an important element of deterring piracy, some people will always prefer a free ride. That is why there has to be a mix of availability and deterrence.

Is “Fair Use” in the Australian Context Fair?

And then there is the “fair use” argument. The Commission’s draft report states bluntly that “Australia’s current exception for fair dealing is weighted too much in favour of rights holders”. The solution proposed, to introduce a US-style fair use defence (but without the legal precedents and history of over a hundred years of testing in courts of law), is guaranteed to create a lack of clarity over what is, and what is not, legal use. The US system is so fraught with complexities and legal uncertainties that the US Copyright Office hosts a “Fair Use Index” on its website designed to “to make the principles and application of fair use more accessible and understandable to the public by presenting a searchable database of court opinions.” Once you have figured out which of the thirteen court circuits and which of 16 categories to search in, you can find a list of cases that either ruled for or against fair use, or in some cases reached a mixed result. But this listing does not provide a definitive interpretation, only a guide—so if you are planning on using the index to tell you whether or not your intended use is “fair”, good luck! You had better hire a lawyer.

Creation of uncertainty is the exact opposite of what the Commission was charged to do by the government in its terms of reference, which was to “provide greater certainty to individuals and businesses as to whether they are likely to infringe the intellectual property rights of others”. A recent report prepared by PwC estimated that the costs to the Australian economy of introducing a fair-use type regime would be in the order of $1.3 billion with litigation costs alone rising from some $26 million annually to over $133 million. Copyright Agency Chair Kim Williams has described the Commission’s recommendations as treating “Australian creative content and its production with a disdain bordering on contempt”, and goes on to outline some of the pitfalls of introducing fair use into Australia, including a significant rise in litigation costs as well as pulling the pins out from under the domestic educational publishing industry. This has happened recently in Canada where a new wide and undefined educational exception to the country’s fair dealing laws has resulted in an almost total collapse of licensing revenues for this sector, leading to closing of educational publishing houses—and a major lawsuit.

It is difficult to understand where the authors of the Commission’s report are coming from. They have taken a workable copyright system, (a system that according to a 2006-07 WIPO report employed 837,507 people–8.0% of the Australian workforce, generated economic value equal to 10.3% of gross domestic product–$97.7 billion, and generated $6.873 billion in exports, equal to 4.1% of total exports), and brought down their sledgehammer on it--hard. The shattering of value, cultural creativity, livelihoods, and business eco-systems, and the resulting legal bottlenecks and international confusion that would result if their recommendations are implemented are, frankly, frightening to contemplate. Can they be serious? Unfortunately, it appears so. Now it is up to the public to comment, and to the government to respond.

Let’s hope that saner heads will prevail, for the sake of Australia, for its culture and its creators, and for the sake of those who create and use copyrighted materials every day world-wide. Don’t kill the golden goose of content creation, Australia. Put away the sledgehammer. If copyright rules need to be updated, do it responsibly, proportionally and in a balanced way.

© Hugh Stephens, 2016. All rights reserved.