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Bently, Lionel --- "Copyright's Fuures: To Expand or Contract?" [1999] DigTechLawJl 11; (1999) 1(2) Digital Technology Law Journal 11

Copyright's Futures: To Expand or Contract?

lbently@central.murdoch.edu.au

[1] Two conferences on closely related themes were held in Queensland in February and March. The Australian Key Centre for Cultural and Media Policy, based at Griffith University held its third annual seminar on copyright, entitled 'Copyright Futures', at the offices of Minter Ellison in Brisbane on February 12, 1999. And the Law School at Southern Cross University, host of the Australian Law Teachers Association Intellectual Property Workshop, organised what it called the 'Australasian Intellectual Property Conference' on the theme of 'The Protection of Intellectual Property in the Digital Age' in Coolongatta on March 5 and 6. While the two conferences had different orientations and different audiences, as it turned out, many of the policy issues raised at the first conference were usefully developed at the second.

[2] As readers of this journal will be well aware, the advent of digitisation and digital dissemination of works raises a variety of issues for copyright law. Some of those issues have been thoroughly discussed, and action is starting to be taken to adapt international and Australian copyright to the new environment within which it now has to operate. Some of these proposals were first publicly announced at the Copyright Futures Seminar.

[3] Most notably, in opening the seminar, the Attorney General, Daryl Williams, outlined the Commonwealth's new draft Copyright Amendment (Digital Agenda) Bill 1999 which embodies reforms following from the 1997 Digital Agenda Discussion Paper, intended largely to align Australia's laws with the standards established in the WIPO Copyright Treaty 1996 and WIPO Performances and Phonograms Treaty 1996. These reforms include the introduction of a general right to communicate a work to the public.[1] The proposal would add a definition of the term 'communicate' to the effect that communicate means 'electronically transmit or make available on line...' The Bill, the Attorney General explained, would also add provisions prohibiting the circumvention of technological measures of protection and for the protection of rights management information. [2]

[4] Also at the Copyright Futures seminar, Associate Professor Dr. Andrew Christie from the University of Melbourne (and formerly a member of the Copyright Law Reform Committee) outlined what he described as the 'revolutionary' proposals contained in Part 2 of the Copyright Law Review Committee's Report on the Simplification of the Copyright 1968: Categorisation of Subject Matter and Exclusive Rights (February, 1999). Currently, the Australian Copyright Act 1968, following the Imperial model developed in 1911, defines copyright protection by way of an exhaustive list of specifically defined works and provides that the owner of copyright for each type of work has specifically delineated rights. According to the CLRC, this approach to definition is not only long and complex, but it is also inappropriate given the emergence of digital technology which has produced new means of creating and exploiting subject matter.[3] In order to promote simplification, and simultaneously to produce a categorical system which can accommodate recent technological developments, the CLRC proposes a 'technologically neutral' model of defining subject matter and rights. The preferred option is to create a bifurcated system, similar to that operating in many civil law countries, where protected subject matter is defined in two categories. The CLRC proposes that subject matter in the 'literary or artistic domain' (where that phrase is interpreted in a 'flexible manner') be divided into two categories of 'creations' and 'productions'.[4] Creations are defined as those works which are the result 'of a significant intellectual effort by the person who undertakes its creation' whereas 'productions are such works which are merely the result of 'the application of time, effort and resources by the person who undertakes its production.'[5] The CLRC proposes, again imitating a model largely used by civil law countries, that both creations and productions would be protected by two generally defined rights, the right of reproduction and the right of 'dissemination to the public'.[6] Only creators, as opposed to producers would be the beneficiaries of moral rights.[7]

[5] While much of the existing discussion of copyright laws's relations with digitisation have focussed on the need to provide copyright owners with new rights and to remove some of the anomalies presented by technologically specific definitions of copyright subject matter, the theme that cemented these two conferences together was the vexed question of defences or exemptions from copyright, that is, 'users rights.' At the Brisbane conference, Professor Sam Ricketson of Monash University, opened up this theme, by revisiting Part 1 of the Copyright Law Reform Committee's Report on the Simplification of the Copyright Act 1968: Exceptions to the Exclusive Rights of Copyright Owners (September, 1998). It will be recalled that Part 1 recommended that Australia introduce a general 'fair use' type of exemption along the lines of that contained in Section 106 of the US Copyright Act 1976.[8] One reason for that recommendation was to minimise the number of technologically specific formulations contained in the Act and replace them with a technologically neutral provision suitable for the 'digital age.' Professor Ricketson explained that while he had formerly been an advocate of such a general defence he had recently begun to question its suitability.[9] One obvious problem with such open-ended provision is that it is vague and thus fails to provide concrete guidance to parties, and thus fosters litigation. Moreover, it leaves the decision of whether an act is infringing or exempt to be determined by a judge through the weighing of a list of factors. Professor Ricketson argued that on further reflection, there might to be found to be great value in the existing, if rather odd looking, catalogue of specifically defined exemptions (some of which the CLRC proposed should be absorbed in the general test).[10] Professor Ricketson said that each of those exemptions could be seen as reflecting a legislative compromise between relevant industry groups. For sure, he admitted, some looked anachronistic and had remained on the statute book even after the relevant concerns or groups had evaporated. But, he argued, there was something to be said for allowing those groups and the legislature (rather than judges) to determine the scope of the rights, and the specific form of such exception could provide valuable legal certainty.

[6] If Professor Ricketson provided the most thoughtful of the days contributions, Professor Jim Lahore made perhaps the most telling point. Having provided what he referred to as a general 'European perspective' on defences, he highlighted an issue which he observed had not hitherto received much discussion in Australia, namely, the relationship between copyright law and contract law. In a number of situations, the harmonisation directives of the European Union have specified that certain exemptions from copyright infringement may not be over-ridden by contract law. For example, under the Software Directive 91/250 of May 14, 1991 member states are required to provide defences for the decompilation of computer programs, making a back-up program necessary for lawful use, as well as observing, studying, or testing the functioning of a program in order to understand the ideas and principles which underlie any of its elements. According to the Directive contractual provisions to the contrary are declared void.[11] Likewise, the Database Directive 96/6 of March 11, 1996 requires member states to restrict the operation of contract law intended to circumvent defences to infringement of copyright in databases.[12] In contrast, the exception for other copying or adaptation necessary for lawful use is susceptible of contractual waiver.[13] Moreover, in a separate United Kingdom provision, contractual restrictions on what would otherwise fall within the defence of fair dealing for the purpose of reporting current events are void in so far as the restriction relates to the inclusion of visual images taken from a broadcast or cable programme in another broadcast or cable programme.[14]

[7] Two factors render this question of contracting out of defences important. First, because of digitisation, today many more acts carried out by users require the consent of the copyright owner. In the past, a purchaser who bought a book could do most acts that they wished with the book without needing any further consent: the book could be read, lent to a friend, and sold to a charity shop without raising any potential liability. Today, as a result of technological developments there are many such acts that might require permission: not least, reading an electronic version on screen. The second reason why contracts are becoming important is that the making of such contracts is increasingly likely. This is because the new techniques of distribution, particularly digital dissemination, are removing intermediaries from the distribution process: a consumer who formerly would have bought a hard copy of a phonogram from a retailer can increasingly be supplied with an equivalent digital version over the Internet and directly from the copyright holder.[15] This direct contact allows the copyright owner to supplement and reinforce any rights it may have under copyright with obligations imposed as part of a direct contract. So, such licences might set conditions for use of works in which copyright has lapsed, or in the case of software might prohibit the making of back-up copies or decompilation, or in other cases might prohibit criticism or review. As use of electronic resources increases, and such standard contracts become the norm, the worry is that the 'delicate balance' between owners and users encapsulated in statutory copyright will, it is argued, be sacrificed.

[8] The general discussion of defences presented by Professors Ricketson and Lahore was the prelude to a heated afternoon at the Copyright Futures seminar. First Simon Lake from the audiovisual collecting society, Screenrights, put a case for strong protection for rightholders and recognition of a 'users pay' principle. This was forcefully countered by a presentation by Annabelle Herd from the Australian Digital Alliance, a lobby group formed towards the end of 1998 to represent 'user' interests. The Australian Digital Alliance (ADA), which has widespread support from libraries, universities as well as computer firms favouring laws which promote the development of interoperable systems, puts its arguments largely in terms of the importance, when legislating for the digital era, of maintaining a balance between owners and users. The ADA therefore supports maintenance of fair dealing exceptions in the digital environment and only limited rules for the protection of technological systems from anti-circumvention. Kylie Brown, from the Intellectual Property Branch of the Department of Communications, Information Technology and the Arts, made a valiant attempt at reconciliation between the competing arguments of 'rightholders' and 'users', by emphasising the common ground and, indeed, the fact that it is common for the same people to be simultaneously copyright owners and users.

[9] Professor Lahore's observations were also the central link between the Copyright Futures seminar and the Digital Age conference at Coolongatta. The primary theme of the Coolongatta conference was the extent to which the law should interfere with copyright-contracts for the benefit of 'users', that is, individual consumers who wish to utilise copyright protected material. Whereas Professor Lahore's observations had been stimulated by developments in Europe, many of the keynote speakers at the Digital Age conference were from the United States - and, indeed, many of the issues had been aired at a conference in Berkeley in the spring of 1998. [16]

[10] As the papers delivered by Professors Jerome Reichman,[17] Rochelle Dreyfus, Wendy Gordon, Jonathan Band and Gail Evans indicated, the question of giving users protection became a huge concern as a result of certain legislative proposals in the United States with the aim of adapting the US Uniform Commercial Code to electronic transactions through the addition of a new 'Article 2B.'[18] Those provisions would establish as valid (and binding on third parties) mass market contracts for informational goods entered into by 'conduct', such as merely by clicking an icon on a computer screen.[19] The main criticism of these developments, explained emphatically by Professor Reichman, derives from the likelihood that click on standard contracts will be formulated to extend copyright owner's rights beyond their existing scope - those contracts will become 'privately legislated' copyright. Or as Wendy Gordon put it, the danger is 'that contract will make copyright legally irrelevant to plaintiffs' causes of action to restrain copying, and with it copyright's protection's for the public interest.'[20]

[11] At the Coolongatta conference Professor Jerome Reichman proposed one solution to the danger of Article 2B: namely, that courts conduct a case by case review of mass licensing contracts and non-negotiable terms. He explained that certain standard form contracts should be upheld because they reduce transaction costs and increase efficiency. But Professor Reichman argued that such assent should not necessarily bind users to harsh or oppressive terms. Rather he proposed that mass-market contracts should be made on fair and reasonable terms with due regard for the public interest in education, science, research, technological innovation, freedom of speech and the preservation of competition.[21] In contrast with affirmatively negotiated terms, the idea is that the onus be placed on the person imposing the standardised contract to show that the benefits of the agreement outweigh the harms.

[12] Whether these fears (which sometimes have a hysterical feel to them) are justified in the United States has yet to be determined.[22] Even if some contracts do expand into the arena currently left free by copyright law, it must not automatically be assumed that such extension is inevitably going to be treated as valid,[23] or worth enforcing.[24] There are proposals in Australia, as in the US and Europe, that will validate 'electronic contracts' and there can be no doubt that it is appropriate for legislators in Australia to consider when these contracts should be valid: including the question of when they should be allowed to erode the compromises contained in the existing regimes.

[13] It sometimes happens that collections of papers interact so as to provide new unexpected insights, and, in some respects this is true of those given at Copyright Futures seminar and the Digital Age conference. First, there is the obvious thematic link of concern with defences and contracts which has just been outlined. Moreover, there is a second theme of American-orientation. This could be seen in Brisbane through the discussions of the legislative proposal of the CLRC Report Part 1 that Australia adopt a fair use defence and at Coolongatta through the preponderance of U.S. speakers. (Indeed, occasionally it was implied that Australia already had a fair use defence).

[14] But there was a third, rather more interesting link between Professor Ricketson's paper in Brisbane and Professor Reichman's at Coolongatta. For Professor Ricketson, with an eye on the history of copyright in Australia, exposed the artificiality of the idea that copyright is a unitary body of laws and to emphasise that many elements of copyright have long amounted to legislatively sanctioned bargains. And yet, Professor Reichman, with a pessimistic eye on the future of US law, was fearful of exactly that thing: copyright privately legislated through the machinery of electronic contracts and click on licences. The juxtaposition of these presentations suggests that things will not be necessarily as bleak as Professor Reichman's talk suggests: indeed the new digital contracting could lead to arrangements better formulated to accord with the needs of those involved and more nuanced than those which Australia has inherited. On the other hand, the juxtaposition also suggests that the extent to which Professor Reichman's fears turn out to be well founded will depend upon how the standard terms of such arrangements come to be negotiated. It seems important that the relevant user groups organise themselves so as to influence whatever standard terms are to be written into click-on arrangements.

[15] Of course, the two conferences covered much more ground than has been indicated here. Indeed, because the Coolongatta conference was, in part, the Australian Law Teachers Association Intellectual Property Workshop there were a host of other contributions - many, unfortunately, delivered in parallel sessions. Amongst the many topics neglected from this review but discussed were moral rights (Helen Daniels at Copyright Futures), databases (Warwick Rothnie at Copyright Futures; Jonathan Band, Jerome Reichman and Arthur Hoyle at Digital Age), reverse engineering (Cristina Cifuentes and William Caelli at Digital Age), software patenting (Natalie Stoianoff at Digital Age), trade secrets (Rochelle Dreyfuss and Megan Richardson at Digital Age), domain names (Phillip Hourigan at Digital Age), theory of authorship (Judith Bannister at Digital Age). It is understood that the Key Centre for Cultural and Media Policy intends to publish its proceedings. It is to be hoped that the papers delivered at Coolongatta, too, receive further publication.

1 Into sections 31(1), 85, 86, 87 of the 1968 Act. Back to Text

2 This paper can be fetched from [Internet] URL:http://law.gov.au/ministers/attorney-general/articles/Futures. Back to Text

3 Copyright Law Review Committee, Simplification of the Copyright Act 1968 Part 2: Categorisation of Subject Matter and Exclusive Rights (Canberra: February, 1999) para 5.07. Back to Text

4 Ibid, para 5.29. Back to Text

5 Ibid, para 5.34. Back to Text

6 Ibid, para 5.65. Back to Text

7 Ibid, para 5.66. Back to Text

8 Copyright Law Review Committee, Simplification of the Copyright Act 1968 Part 1: Exceptions to the Exclusive Rights of Copyright Owners (Canberra: September, 1999) paras 2.01-03, 6.29, 6.35. Back to Text

9 See also F. Macmillan, 'Adapting the Copyright Exceptions to the Digital Environment' (1999) 1(2) Digital Technology Law Journal [Internet] URL: http://wwwlaw.murdoch.edu.au/dtlj/articles/vol1_2/macmillan.html who questions whether the proposals comply with Berne Convention Art 9(2), TRIPs Art 13 and WIPO Copyright Treaty Art 10. Back to Text

10 Op cit, para 8.09. Back to Text

11 Article 5 implemented in the UK by Copyright Designs and Patents Act 1988 (CDPA) ss 50A, 50B, 296A(1)(a), 296A(1)(b), 296A(1)(c). Back to Text

12 Article 15. See the CDPA s 296B ('Where under an agreement a person has a right to use a database or part of a database, any term or condition in the agreement shall be void in so far as it purports to prohibit or restrict the performance of any act which would but for CDPA s 50D infringe the copyright in the database.'). See also Database Reg. 19(2) (where a person has a right to use a database which has been made available to the public in any manner, any term or condition in the agreement shall be void in so far as it purports to prevent that person from extracting or re-utilizing insubstantial parts of the contents of the database, or of that part of the database, for any purpose.). Back to Text

13 Reflecting Article 5(1); CDPA s 50C. Back to Text

14 Broadcasting Act 1996, s 137. Back to Text

15 J. Reichman & J. Franklin, 'Privately Legislated Intellectual Property Rights: Reconciling Freedom of Contract with Public Good Uses of Information' (as circulated at Coolongatta) 16-17 (and now (1999) 147 U. Pa. L. Rev. 875, at 897-8) argues that 'the advent of the printing press ended the power of authors or publishers to control third party uses of information goods by means of two party contractual agreements...Telecommunications networks invite the creation of electronic gateways that block transmissions of information goods in digital form without the gatekeepers permission. This gatekeeping function is reinforced by encryption devices, digital watermarking, and other self-help technical measures that permit information providers contractually to impose their own terms and conditions on access to information goods stored at any given network site and on the uses to which end-users can put the information goods they access.' Back to Text

16 See generally Symposium, (1998) 13 Berkeley Tech. L. J.; and (1999) 87 Calif. L. Rev. 17; especially, D. Nimmer, E. Brown, G. Frischling, 'The Metamorphosis of Contract into Expand' (1999) 87 Calif. L. Rev. 17; M. Lemley, 'Beyond Pre-emption: The Law and Policy of Intellectual Property Licensing' (1999) 87 Calif. L. Rev. 111. Back to Text

17 J. Reichman & J. Franklin, op cit, (1999) 147 U. Pa. L. Rev. 875, 907. Back to Text

18 The Commonwealth government has issued an 'exposure draft' of an Electronic Transactions Bill 1999, but this is much more modest in scope than proposed Article 2B of the Uniform Commercial Code. The European Union is also in the process of considering the conditions in which electronic contracts should be recognised as valid: Proposal for a European Parliament and Council Directive on Certain Legal Aspects of Electronic Commerce in the Internal Market November 18, 1998 COM (1998) 586 final. At present this proposes that Member States should adapt their laws to allow for valid electronic contracts, but that the mechanisms for entering such contracts should be set out 'in such a way as to ensure that parties give their full and informed consent.' For commentary see, R. Julia-Barcelo, 'A New Legal Framework for Electronic Contracts: The EU Electronic Commerce Proposal' (1999) 15 Comp. L. & Security Report 147. Back to Text

19 J. Reichman & J. Franklin, op cit, (1999) 147 U. Pa. L. Rev. 875, 900-3. Back to Text

20 W. Gordon, 'Computers, Copyright and Contract: The Public Domain and the State of Nature' (paper circulated at Coolongatta) p 6. Back to Text

21 J. Reichman & J. Franklin, op cit, (1999) 147 U. Pa. L. Rev. 875, 917, 930. Back to Text

22 W. Gordon argues that the same policy reasons support limitations to contracting as to copyright: 'Computers, Copyright and Contract: The Public Domain and the State of Nature' (paper circulated at Coolongatta) Back to Text

23 In the United States, the doctrine of 'pre-emption' may invalidate many such contracts, and the doctrines of unconscionability in contracts and copyright misuse will affect others. See D. Nimmer, E. Brown, G. Frischling, 'The Metamorphosis of Contract into Expand' (1999) 87 Calif. L. Rev. 17 (1999) (emphasising pre-emption); M. Lemley, 'Beyond Pre-Emption: The Law and Policy of Intellectual Property Licensing' (1999) 87 Calif. L. Rev. 111 (emphasising other doctrines as well as pre-emption). In Europe the key doctrines are likely to be derived from Article 85 Treaty of Rome/the Chapter 1 Prohibition in the Competition Act 1998. Back to Text

24 A point made by drafter of Article 2B of the UCC, R. Nimmer in 'Breaking Barriers: The Relation Between Contract and Intellectual Property Law' 13 Berkeley Tech. L.J. 827, 886. Back to Text