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Brennan, David J --- "Locksmiths and Safecrackers in Cyberspace" [2000] DigTechLawJl 2; (2000) 2(1) Digital Technology Law Journal 2

Locksmiths and Safecrackers in Cyberspace

David J Brennan*

Abstract

Contained in Australia's Digital Agenda Reforms is a new regime which proscribes the circumvention of technological measures protecting copyright subject matter. Similar provisions have already been enacted in the United States Digital Millennium Copyright Act 1998. European Union countries may shortly be subject to a directive that they provide adequate legal protection against the circumvention of such technological measures. This article, with a focus upon the Australian position, explores how the fair dealing exception to copyright should relate to this new copyright law.

Introduction

1. On 17 August 2000 the Copyright Amendment (Digital Agenda) Act 2000 ("the Digital Agenda Reforms") was passed by the Australian Parliament. Contained within it were two new provisions (added to the existing Part V of the Copyright Act 1968) which created new civil and criminal liability for the supply of circumvention devices or circumvention services.[1] "Circumvention" is a relatively new term in copyright lexicon. It is a short-hand way to describe the breaking of a technological lock placed upon copyright subject matter. Such locks (whether they be password-protected access controls, a hardware device such as a cable television "black box", digital encryption of data or something else) are essentially self-help measures. They are technological measures to ensure that access to copyright subject matter is only authorised by the content provider, on terms set down by it.

2. Some argue that this new branch of copyright law (the creation of liability for circumventing such technological measures) will be a critical feature in the digital age.[2] Others have acknowledged that social norms may be a more important determinate:

"It's a fair assumption that the eternal arms race between safecrackers and locksmiths is never going to be won by one side or the other. So long as the general public believes that private copying for non-commercial use is not wrong in the digital environment, it is simply a given that we will see the immediate uploading and free downloading of best-selling novels, music, and - once the bandwidth is there - theatrical motion pictures by millions of people."[3]

In any event, concerns have been expressed as to what scope there will be for existing exceptions (particularly fair dealing) if all copyright subject matter is protected by technological measures, the circumvention of which is illegal.

3. This article will examine the evolution of the anti-circumvention provisions in Australia as a prologue to this country's accession to the World Intellectual Property Organisation (WIPO) Copyright Treaty of 1996 and the tension between fair dealing and these new provisions.

Fair Dealing

(i) Background

4. Fair dealing is a free exception to the exclusive rights attached to copyright. The scope of the exception is exhaustively[4] circumscribed by four purposes, of which at least one must apply to an activity for the activity to attract the fair dealing exception. The four purposes are: research or study, criticism or review, reporting of news, and professional advice given by a legal practitioner or patent attorney.[5] In respect of "research or study" a list of criteria apply to help assess the "fairness" (or otherwise) of the dealing. These are:

(a) the purpose and character of the dealing;

(b) the nature of the work or adaptation;

(c) the possibility of obtaining the work or adaptation within a reasonable time at an ordinary

commercial price;

(d) the effect of the dealing upon the potential market for, or value of, the work or adaptation;

and

(e) in a case where part only of the work or adaptation is copied - the amount and substantiality of the part copied taken in relation to the whole work or adaptation.[6]

5. In addition to these factors a special deeming provision also applies in respect of the research and study fair dealing purpose. The copying of a "reasonable portion" of a work or adaptation is deemed to be fair, notwithstanding any of the above factors.[7] A copy will be a "reasonable portion" if the pages copied, in relation to a published edition of a literary, dramatic or musical work,

(a) do not exceed, in the aggregate, 10 per cent of the number of pages in that edition; or

(b) in a case where the work is divided into chapters exceed, in the aggregate, 10 per cent of the number of pages in that edition but contain only the whole or part of a single chapter of the work.[8]

The fair dealing exception, particularly in so far as it relates to "research and study", creates the most significant exception to copyright in Australia.

(ii) Fair Dealing and Technological Measures in the 1996 Treaties

6. In December 1996 the WIPO Copyright Treaty and Performances and Phonograms Treaty were adopted by a Diplomatic Conference in Geneva. A desire to accede to those treaties in part explains the enactment of the Digital Agenda Reforms.

7. An article in both treaties relates to "Obligations concerning Technological Measures". In the WIPO Copyright Treaty the relevant article reads:

"Contracting Parties shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or the Berne Convention and that restrict acts, in respect of their works, which are not authorized by the authors concerned or permitted by law."[9]

Importantly, protection under the treaty extends to technological measures which restrict activities "not ... permitted by law". This is unclear in so far as it provides no ready answer to whether the obligation extends to protecting a measure which persons may wish to circumvent in order to make a fair dealing.

(iii) The role of the Fair Dealing Exception

8. December 1996 was also the month in which the Commonwealth Attorney-General announced revised terms of reference for the Copyright Law Review Committee (CLRC), which terms asked it to focus on simplification of the Copyright Act 1968 (Copyright Act) rather than conduct a more wide-ranging review of copyright protection.[10] In September 1998 the CLRC's Report on Simplification of the Copyright Act 1968, Part 1, Exceptions to the Exclusive Rights of Copyright Owners (Part 1) was published.

9. The most critical recommendation of Part 1 concerned the fair dealing provisions of the Copyright Act. Part 1 recommends the abolition of the exhaustive nature of the four purposes for which the fair dealing exception applies.[11] This is to be replaced with a more generalised fair dealing exception which may be supported by any purpose, including the existing four, where that purpose meets certain criteria. In so doing, the CLRC recasts the nature of the fair dealing exception from a defence to infringement to a positive right of users. This proposal's raison d'être seems to arise from the CLRC's view that:

"Fair dealing provisions are needed to ensure the free use of copyright material in the digital environment for purposes that are socially desirable, especially as digital technology has the potential to restrict such use so as to enforce voluntary licensing agreements."[12]

In Part 1, the CLRC states that "Strictly speaking, fair dealing is not a defence to infringement; rather, it defines the boundaries of copyright owners' rights."[13] These boundaries should be curtailed by the test of "social desirability".[14]

10. The fair dealing recommendation is also justified on the "real limitations of the current provisions" being "inflexibly linked to specific purposes and ... difficult to apply to new technologies".[15] Later in Part 1, these "real limitations" of the current provisions are described as a "criticism" of the "current fair dealing provisions".[16] At both points the sole reference given is to a 1997 journal article published in the European Intellectual Property Review.[17] The relevant portion of that article, authored by an Australian commentator, reads:

"There has been some criticism of the fair dealing provisions being inflexibly linked to specific purposes and difficult to apply to new technologies outside hard-copy books and journals."[18]

11. In the journal article this criticism was unattributed. The commentator did not otherwise substantiate the fact of such criticism. The background to the preparation of Part 1 included the CLRC publishing Issues Papers, conducting a public forum and receiving over 250 submissions.[19] One could be forgiven for wondering why, notwithstanding this extensive consultative process, the CLRC resorted to the use of an unsubstantiated assertion in a journal article to support its key recommendation. Was there an absence of such criticism being levelled at the current four exclusive fair dealing purposes by user interests? If so, such an absence of criticism would be unsurprising. It is difficult to understand how any of the current fair dealing purposes of research or study, criticism or review, reporting of news, or giving legal advice are anything but apt to be applied flexibly to new technologies. They are technology non-specific.

12. However, the CLRC's treatment of fair dealing touches upon an important philosophical debate which continues within copyright. The question central to the debate is: "Should anti-circumvention provisions allow copyright users to circumvent technological measures if users wish to avail themselves, under an exception to copyright, of copyright subject matter protected by the measure?" Alternatively, should exceptions to copyright be regarded as positive users' rights or merely a defence to infringement? In Part 1 the CLRC answers these questions with an unequivocal "yes".

13. Article 10(1) of the WIPO Copyright Treaty offers the following broad principle in answer:

"Contracting Parties may, in their national legislation, provide for limitations of or exceptions to the rights granted to authors of literary and artistic works under this Treaty in certain special cases that do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author."

14. An agreed statement concerning Article 10 explains:

"It is understood that the provisions of Article 10 permit Contracting Parties to carry forward and appropriately extend into the digital environment limitations and exceptions in their national laws which have been considered acceptable under the Berne Convention. Similarly, these provisions should be understood to permit Contracting Parties to devise new exceptions and limitations that are appropriate in the digital network environment."[20]

15. This statement is not helpful in answering the questions posed above. Providing that exceptions may be "carried forward and appropriately extend[ed] into the digital environment" begs the questions as to how the exceptions currently apply, how they will be carried forward and what constitutes an appropriate extension.

16. The immediate precursor to the Digital Agenda Reforms was the Copyright Amendment (Digital Agenda) Bill 1999 ("the Digital Agenda Bill").[21] The Explanatory Memorandum to the Digital Agenda Bill 1999 echoed a sentiment similar to that contained within the WIPO treaty documents:

"As far as possible, the exceptions replicate the balance struck between the rights of owners and the rights of users that has applied in the print environment."[22]

17. This statement is an equally unhelpful expression of policy. Again, it fails to grapple with the difficult issue of whether circumvention should be lawful for a fair dealing purpose. Therefore, notwithstanding the criticisms which may be leveled at the CLRC's position, it has at least put forward a clear view as to how fair dealing does and should apply in the future. How fair dealing and anti-circumvention inter-relate is a hard issue which the Australian Parliament has dealt with largely unguided by the WIPO treaties.

Circumvention Devices and Services

(i) Fair dealing and circumvention devices: Digital Agenda Exposure Draft

18. The philosophy expressed in Part 1 that "fair dealing provisions are needed to ensure the free use of copyright material in the digital environment for purposes that are socially desirable, especially as digital technology has the potential to restrict such use"[23] was initially adopted by the drafters of the Digital Agenda Bill. This can be seen in the anti-circumvention provisions contained in the Bill's earlier Digital Agenda Exposure Draft which was released with accompanying Commentary in February 1999 ("Digital Agenda Exposure Draft").[24]

19. The Digital Agenda Exposure Draft made unlawful the supply of a circumvention device or service, or the making of a circumvention device. To so supply or make attracted both civil and criminal liability.[25] Under the Digital Agenda Exposure Draft a "circumvention device" and "circumvention service" meant something which has:

"only a limited commercially significant purpose or use other than the circumvention, or facilitating the circumvention, of any effective technological protection measures."[26]

20. Further, the Digital Agenda Exposure Draft defined a "technological protection measure" to mean:

"a device or product designed to prevent or inhibit the infringement of copyright subsisting in any work or

other subject-matter."[27]

This was deemed to be "effective" only if:

"access to the work or other subject-matter protected by the measure is available solely by use of an access code or process (including decryption, descrambling or other transformation of the work or subject-matter) with the authority of the owner of the copyright in the work or subject-matter."[28]

21. Importantly, this was merely a deeming provision for when a technological protection measure will be taken to be "effective". Where copyright subject matter was protected by an effective technology protection measure, the Digital Agenda Exposure Draft made unlawful the supplying of a device or service capable of circumventing those measures only if the supplier knew or was reckless as to whether it was to be used "for the purpose of infringing copyright in the work or other subject-matter".[29] This was to be a rebuttable presumption in civil actions.[30]

22. The "anti-circumvention" regime in the Digital Agenda Exposure Draft contained three clear drafting

limitations:

(a) that "technological protection measures" might be construed to require such measures to possess an ability to discriminate between infringing and non-infringing uses;

(b) such a measures may be held to be not "effective" if able to be circumvented and,

(c) the mental requirement for liability permitted supply for any non-infringing use, including

fair dealing.

(a) Definition of "technological protection measures"

23. The definition of "technological protection measures" ("a device ... designed to prevent or inhibit the infringement of copyright")[31] suggested that measures which simply denied access without permission were excluded from the definition. Instead, the definition seemed to require measures which could discriminate between infringing and non-infringing activities for the purpose of preventing the former. However, access regulation describes the actual functionality of technology locks.[32] While the deeming provision in respect of "effective" was drafted in terms of "access", this did not affect the underlying purpose of preventing copyright infringement which the definition of "technological protection measure" required. This definition appeared to require measures to possess a functionality which permitted access where a particular use was within a particular exception. In order for such measures to permit free access for fair dealing required abilities both in copyright law and mind-reading. The definition of "technological protection measures" within the Digital Agenda Exposure Draft defined a fantasy. Technology locks merely prevent access in the absence of authorisation.[33] The definition rendered the anti-circumvention regime potentially nugatory. It left open argument that unless a technology lock could discriminate between infringing and non-infringing activities, and regulate only the former, it fell outside the definition and could be circumvented without liability under copyright law. The penal nature of certain of the provisions rendered the success of such an argument not fanciful.[34]

(b) Deeming provision for "effective"

24. Further, the provision setting out when a technological protection measure was deemed to be "effective" was drafted in such absolute terms ("access to the work ... is available solely"), that it opened the door to the argument that circumvention of a measure necessarily rendered the measure ineffective, and as such, outside the definition.

(c) The mental requirement for liability

25. However, even assuming the above interpretations were not given to "technological protection measure" and the "effective" deeming provisions, the Digital Agenda Exposure Draft's anti-circumvention regime was conspicuously drafted to limit its applicability. This was through the requirement that the provider of a circumvention device or service knows that, or is reckless as to whether, the device or service is used "for the purpose of infringing copyright".[35] The Commentary which accompanied the Draft explained:

"This element has been included to ensure the enforcement measures do not limit the operation of the exceptions to the exclusive rights of copyright owners."[36]

Presumably, this meant that supply of a circumvention device or service for any fair dealing would not

attract liability.

(d) Quokka and Equitech: a hypothetical

26. Consider the Digital Agenda Exposure Draft's potential application to the following hypothetical

situation.[37]

Quokka Pty Ltd (Quokka) distributes literary works electronically through its web site. Quokka always takes a full assignment of copyright from authors whose works Quokka makes available. Quokka's web site customers must accept the following conditions of access:

* a monthly $10 charge for access to the web site; this enables viewing on screen of Quokka's catalogue, a summary of the literary works and selected critical reviews

* a charge of 1 cent per 200 words if a customer wishes to read the text of any literary work on screen

(Thus, under these terms, reading an 80,000 word literary work would cost $4.)

Quokka uses state-of-the-art web technology. Access to the site is password protected. Text is available in a format such that it can not be digitally copied or printed out by the customer. Transactions are facilitated through an internet credit card billing service.

Equitech Solutions Pty Ltd (Equitech) has developed a new software product called fair dealer 1.1. It has no other function but to enable full access to the Quokka site without payment to Quokka. The software enables a user to obtain not only access, but also to digitally copy and print out the works on Quokka's web site.

One of the terms on which equitech licenses fair dealer 1.1 is:

“The user agrees to use the software only for fair dealings permitted under the Copyright Act 1968.”

27. Firstly, it is not clear whether Quokka's technological lock on its literary works would fall within the definition of "technological protection measure". It is not designed to prevent copyright infringement; rather it is designed to prevent access without Quokka's permission. If it does not fall within the definition, Equitech's activities would be outside the anti-circumvention regime.

28. Secondly, Equitech could contend that the circumvention by Fair Dealer 1.1 of Quokka's measure meant that the measure could not be said to be "effective".

29. Thirdly, assuming that Quokka's technological access bar does fall within the definition of "technological protection measure" and is deemed to be "effective", has Equitech the requisite mental element for liability?[38] In respect of criminal liability it would need to be proved beyond reasonable doubt[39] that Equitech knew, or was reckless as to whether, Fair Dealer 1.1 was to be used for the purpose of infringing copyright. In respect of civil liability, Equitech would need to rebut the presumption of knowledge or recklessness.

30. Isaacs J in National Phonograph Co of Australia Ltd v Menck[40] explained that "the right of the licensee is coextensive with the permission granted - no greater, no less".[41] His Honour went on to state that not only may a rights holder:

"mark off any [exclusive rights] from the rest and exclude it altogether from the freedom he confers upon another person, but within the area of each several operation he may erect limitations. Cujus est dare, ejus est disponere. He cannot be compelled to give more than he will. And whoever transgresses beyond the limits conferred, is a trespasser."[42]

31. Any use of Fair Dealer 1.1 to infringe copyright necessarily falls outside the terms of the Equitech software licence. Such use could not be said to have been authorised by Equitech. Indeed, to use Fair Dealer 1.1 to infringe a third party's copyright would breach the software licence. It is unlikely that criminal liability could attach to Equitech in these circumstances. It is probable that Equitech could rebut the presumption of knowledge or recklessness in a civil action. These conclusions are bolstered by the express intent which lay behind the requirement that the provider of a circumvention device or service knows, or is reckless as to whether, the device or service is used "for the purpose of infringing copyright".[43]

32. It would have been extraordinary that the mere inclusion of a simple software licence term could effectively evade the anti-circumvention regime. However, this is a consequence of copyright reform proceeding not on the basis of protecting the rights of authors, but with a paramount concern for enshrining existing free use exceptions.

(e) The Digital Agenda Exposure Draft and the CLRC simplification report

33. The focus of the Digital Agenda Exposure Draft was on the wholesale translation of exceptions into the digital environment. To this extent, the Draft might be regarded as sharing a common philosophy with the sentiments on fair dealing expressed in Part 1 of the CLRC's report. This is hinted at in the Commentary to the Digital Agenda Exposure Draft, when the "Request for Comments" explains:

"In the course of consultations on the draft Bill, the Government also intends considering the relevant recommendations of Part 1 of the report of the Copyright Law Review Committee on the Simplification of the Copyright Act 1968 - Exceptions to the Exclusive Rights of Copyright Owners. Comments are therefore invited in relation to these recommendations in so far as they are applicable to the draft Bill."[44]

34. However, the CLRC Part 1 report is merely part of a wider philosophical push to transform what have traditionally been regarded as defences into positive user rights.[45] Although the Digital Agenda Exposure Draft adopted this philosophy, it should be identified and resisted. Proscriptions upon picking technological locks placed upon copyright subject matter may be critical to the effective operation of the information economy.[46] The sentiment of Part 1, reflected in the Digital Agenda Exposure Draft of the Digital Agenda Bill, has as its practical consequence that once a work is electronically published it becomes everyone's common property. Uncontrolled access in the digital environment by downloading or other copying too easily lends itself to the generation of uncontrollable user copies. The copyright is rendered a valueless form of property.

(ii) Fair dealing and circumvention devices: Digital Agenda Bill

35. The anti-circumvention provisions within the Digital Agenda Bill were somewhat different from those contained in the Digital Agenda Exposure Draft. The definition, the deeming provision and the mental requirement for liability were all altered significantly.

(a) The definition and the deeming provision

36. The Digital Agenda Bill marries from its Digital Agenda Exposure Draft the definition of "technological measure" and the provision for when such measures will be deemed "effective", into a revised definition of "effective technological protection measure". That revised definition reads:

"[A] device or product, or a component incorporated into a process, that is designed to prevent or inhibit the infringement of copyright subsisting in a work or other subject-matter if, in the ordinary course of its operation, access to the work or other subject-matter protected by the measure is available solely by use of an access code or process (including decryption, unscrambling or other transformation of the work or other subject-matter) with the authority of the owner or licensee of the copyright in a work or other subject-matter."[47]

37. This drafting overcomes the separate objections to the drafting of "technological protection measures" and the "effective" deeming provision in the Digital Agenda Exposure Draft.

38. Firstly, while the definition continues to be in terms of copyright infringement functionality, such a measure is defined to achieve this functionality where access to the work requires a user to obtain an access code. The definition does not on its face give rise to an argument that a measure ought to be able to discriminate between infringing and non-infringing uses.

39. Secondly, the inclusion of the words "in the ordinary course of its operation" answers an argument that any circumvention of a measure renders the measure ineffective, and thus outside the definition. This is confirmed in the Explanatory Memorandum to the Bill,[48] which may be a useful aid if the meaning of the words "in the ordinary course of its operation" is ever brought into question.

(b) The mental requirement

40. In place of the requirement of knowledge that the device was to be "used for the purpose of infringing copyright", the Bill provides for both civil and criminal liability the broader requirement that:

"the person knew, or ought reasonably to have known, that the device or service would be used to circumvent, or facilitate the circumvention of, the effective technological protection measure."[49]

41. For criminal liability, the mental requirement is similarly broadened, however the "ought to have known" alternative requirement is substituted for "is reckless as to whether".[50] While the mental requirement remains a rebuttable presumption in civil actions[51] it is coupled with the proviso that neither civil nor criminal liability will arise when the device or service was made or supplied for a "permitted purpose".[52] A circumvention device or service will be taken to be supplied for a permitted purpose if:

· the device or service is used for the purpose of doing an act comprised in the copyright in a work or other subject-matter; and

· the doing of the act is not an infringement of the copyright in the work or other subject-matter under sections 47D, 47E, 47F, 49, 50, 183 or Pt VB.[53]

42. Sections 47D, 47E and 47F are the new free exceptions permitting the reproduction of computer programs to make interoperable products, to correct errors and for security testing. Sections 49 and 50 are the free exceptions for libraries and archives. Part VB and s 183 are the remunerated exceptions for educational institutions and the Crown. Absent from the list of "permitted purposes" are the fair dealing exceptions.[54] In respect of the supply of devices or services, the recipient of the circumvention device or circumvention service must give a declaration confirming that the use is for a "permitted purpose" and specifying the purpose.[55]

43. Equitech under this regime would not be spared liability through mere contractual reliance on fair dealing. A "permitted purpose" exception may only apply when a circumvention device or service is supplied:

· to one of the limited classes of users,

· for an allowable purpose and,

· where the purpose is specified and declared in writing prior to the supply.

44. The Bill became the subject of further submissions by interested parties as it entered its Parliamentary

Committee stage of review.

(iii) The House Committee Review

45. In December 1999, the House of Representatives Standing Committee on Legal and Constitutional Affairs, after submissions from various copyright owner and user interests, released its Advisory Report on the Digital Agenda Bill ("House Report").[56] In respect of circumvention devices, the House Report contains an opinion on both the definition of "effective technological protection measure" and the scope of "permitted purposes" for the supply of circumvention devices and services. More generally, it recommended that devices promoted as having the purpose of circumvention be included within the definition of circumvention device.[57]

(a) The definition and the deeming provision

46. The House Report offers the following opinion to Government:

"In the view of the Committee, the definition of effective technological protection measure in the Bill is a hybrid of access control and copy control measures ... For this reason the Committee does not consider the proposed definition of effective technological protection measure ineffective."

47. This is an accurate appraisal by the House Report. The Bill's definition operates to describe the reality of technology locks, particular where such locks are mere access controls. Unfortunately, the House Committee then provides a suggestion which returns the definition to where it began in the Digital Agenda Exposure Draft:

"However, in the Committee's view, it may be preferable to define effective technological protection measure simply in terms of copy control measures. In other words, an effective technological protection measure is a device or product, or component incorporated into a process, that, in the ordinary course of its operation, is designed to prevent or inhibit the infringement of copyright subsisting in a work or other subject-matter."[58]

48. The effect of this recommendation would see the drafting revert to essentially that contained in the Digital Agenda Exposure Draft.[59] A technology lock would again require a functionality which enabled it to discern infringing from non-infringing uses. Access control measures would be excluded. For all the reasons explained above, this would be an undesirable change which would define a fantasy and render the anti-circumvention provisions meaningless.

(b) The mental requirement

49. The focus of the House Report was on the scope of the "permitted purposes". It (almost wryly)

observes:

"As may be expected, copyright users advocated the expansion of permitted purposes to include all non-infringing purposes, while copyright owners opposed exceptions for permitted purposes altogether."[60]

50. The House Report, however, proceeded to avoid expressly dealing with the issue of whether fair dealing should be a permitted purpose. While accepting that "users should not be deprived of innovative Australian circumvention devices for uses other than the infringement of copyright", the report merely recommended expansion of the scope of the security testing exception generally,[61] and insertion of new permitted purposes for the study of computer programs[62] and for preservation of works held by libraries and archives.[63] The report's silence on the inclusion or non-inclusion of fair dealing as a permitted purpose is one of its most puzzling features; submissions pleading for the inclusion of fair dealing as a permitted purpose were not addressed in the report.[64]

(iv) The Digital Agenda Reforms

51. Consequent upon the House Report, the Government moved further amendments to the Digital Agenda Bill concerning the anti-circumvention provisions.[65] However, none represented a substantial shift from the position in the Digital Agenda Bill, save for the inclusion of broader liability in respect of the commercial promotion of circumvention devices.[66] Significantly, the suggestion that "effective technological measures" be defined simply in terms of copy control measures was not taken up by Government. Instead, the definition omitted the term "effective" and was reconfigured to now provide:

"technological protection measure" means a device or product, or a component incorporated into a process, that is designed, in the ordinary course of its operation, to prevent or inhibit the infringement of copyright in a work or other subject-matter by either or both of the following means:

(a) by ensuring that access to the work or other subject matter is available solely by use of an access code or process (including decryption, unscrambling or other transformation of the work or other subject-matter) with the authority of the owner or licensee of the copyright;

(b) through a copy control mechanism.[67]

This represented no change in substance to that provided for in the Digital Agenda Bill.

52. By consequential amendments, the word "effective" was removed from both the civil and criminal anti-circumvention provisions, but by drafting over-sight it was not removed from the definitions of "circumvention device" and "circumvention service".[68] Thus the final definition of "circumvention device" means:

"a device (including a computer program) having only a limited commercially significant purpose or use, or no such purpose or use, other than the circumvention, or facilitating the circumvention, of an effective technological protection measure".[69]

53. Presumably, in the absence of a subsequent amendment deleting "effective", a court dealing with these definitions will be faced with two choices. It may either seek to give some operation to the word "effective" in the definitions or, may read the definitions as if the term had been excluded. Notwithstanding the clear indication from all secondary materials that the inclusion of "effective" in the definitions was a slip, there may be one compelling reason why this may not lead to the latter option being followed by a court. As the definitions pertain to the imposition of criminal liability, they may "not be construed so as to make unlawful that which was previously lawful".[70] This might render the circular (but absurd) argument that a circumvention device or a circumvention service which successfully circumvents a measure necessarily renders the measure "ineffective"; as such the device or service must fall outside the definition.

Circumvention per se

54. The Digital Agenda Exposure Draft, the Digital Agenda Bill and finally the Digital Agenda Reforms do not directly proscribe of the act of circumvention. While the Explanatory Memorandum to the Bill pithily states "the actual use of circumvention devices is not proscribed",[71] the Commentary to the Digital Agenda Exposure Draft provided a substantive justification:

"The Government is of the view that adequate legal protection against the circumvention of effective technological protection measures can only be afforded if the manufacture and commercial dealings in circumvention devices are banned. As the proposed EC Directive notes (see above), it would be more effective for owners of copyright to be able to seek remedies against the manufacture and commercial dealings with devices rather than seek remedies against individual users of those devices. The actual use of a circumvention device has therefore not been proscribed in the draft Bill."[72]

55. However, the proposed European Commission Directive referred to in the Commentary was amended by the European Parliament after the preparation of the Digital Agenda Exposure Draft and prior to the introduction of the Bill into Parliament.[73] The relevant provision, Article 6(1) now provides:

"Member States shall provide adequate legal protection against the circumvention without authority of any effective technological measures designed to protect any copyright or any rights related to copyright as provided by law or the sui generis right provided for in Chapter III of European Parliament and Council Directive 96/9/EC, which the person concerned carries out in the knowledge, or with reasonable grounds to know that he or she pursues that objective."

56. This revision, which represents a significant shift on the previous European position, is not referred to within the Explanatory Memorandum to the Bill.

57. The United States approach introduced by the Digital Millennium Copyright Act 1998 in section

1201(a)(1)(A) provides:

"No person shall circumvent a technological measure that effectively controls access to a work protected under this title."

58. The provision goes on to explain that this will only apply after a period two years from the date of enactment. Excluded from its ambit are classes of works in respect of which the Librarian of Congress determines that the ability of persons to make "noninfringing" uses will be adversely affected. The Librarian of Congress will make such a determination every three years.[74] The determination is, essentially, implementation of the recommendation contained in a rule-making by the Copyright Office.[75]

59. The compromise struck in section 1201(a)(1)(A) between the rights of copyright owners and those of users is a cumbersome one.[76] However, both Article 6(1) and section 1201(a)1(A) proscribe an activity absent from mention within the Digital Agenda Reforms; actual circumvention. The Explanatory Memorandum is particularly coy on what policy imperatives led to Australia proposing a course inconsistent with that taken by United States and likely to be taken by the European Union.

60. Notwithstanding the failure to directly and expressly proscribe actual circumvention in Australia, through a circuitous route the Digital Agenda Reforms have created liability in respect of those who own (or presumably, posses) circumvention devices. Section 116(1)(b) of the Copyright Act 1968 has been amended to read:

The owner of the copyright in a work or other subject-matter may bring an action for conversion or detention in relation to ...

(b) a device (including a circumvention device) used or intended to be used for making

infringing copies.[77]

61. The Explanatory Memorandum to the Digital Agenda Bill explains that the effect of the amendment is to clarify that a copyright owner may bring an action for conversion or detention in relation to circumvention devices.[78] However, if a device is used to merely obtain access, or to undertake fair dealings (and in both cases not making "infringing copies") it seems unlikely that this provision will give rise to liability.

62. Thus, under the Digital Agenda Reforms it is possible to consider the following scenario. Reuters Business Briefings is a well-known conditional access, Internet publishing service which is generally accessible by users upon terms and payment to Reuters.[79] A vendor may sell to thousands of companies a device which enables those companies to circumvent an effective technological protection measure adopted by Reuters to restrict access to the service. Through use of the device, those companies may then access the service freely. Under the current Bill, the vendor may be subject to criminal liability, and Reuters may restrain the further sales of the device, seek damages or an account of profits from the vendor. Although, the actual use of circumvention devices is not proscribed under the Digital Agenda Reforms, Reuters may bring an action in conversion or detention against a company which uses such a device. However, this may only be if the company has used or intends to use the device to "make infringing copies".

63. Before the Legal and Constitutional Affairs Committee, the Attorney-General's Department and the Department of Communications, Information Technology and the Arts jointly explained the reason why the Bill omits to proscribe actual circumvention:

"The government believes that the most significant threat to copyright owners' rights lies in preparatory acts for circumvention, such as manufacture, importation, making available online and sale of devices, rather than individual acts of circumvention."[80]

64. The House Report rejected this position. It recommended that the Bill include "a civil remedy where a person uses a circumvention device in an attempt to infringe copyright".[81] Use of the expression "infringe copyright" here is again highly problematic for all the reasons stated above. Nevertheless, the Committee's view points Australia in a direction more in line with that taken by Europe and the United States. While this recommendation was not accepted by Government in the Digital Agenda Reforms, the amendment to section 116(1)(b) appears to give rise to a similar type of liability in certain situations.

Four Concluding Observations

(i) The Deadweight Loss Argument

65. One argument directed against any curtailment of fair dealing revolves around the economic problem of deadweight loss. Assuming a copyright owner is faced with zero marginal costs for each additional user's consumption of a copyright work (a defining characteristic of a public good[82]) then the copyright owner should be willing to permit consumption to anyone willing to pay a positive price. If the copyright owner requires payment of (say) $20, and there exists prospective consumers who a are willing to pay something less than $20, a "deadweight loss" is created. This loss is twofold; it comprises the sum of the consumer surplus that would have been reaped by the excluded consumers and it also comprises the producer surplus that would have been reaped by the copyright owner had access to the work been sold.[83] The argument asserts that free use by those consumers (through fair dealing or fair use) minimises this loss by ensuring the consumers obtain the utility from the work. The copyright owner, on the other hand, is in the same position as before as it does not lose profits which it would not have otherwise obtained.

66. The deadweight loss argument fails to justify the position that free exceptions should be created to anti-circumvention provisions, because the argument ignores the possibilities created by digital technologies for price discriminiation. Copyright owners have traditionally had meagre and crude forms of price discrimination available to them. Thus a publisher of a literary work might have been able to differentiate between consumers with different willingnesses to pay by the early release of a hard-cover edition, and the later release of a paperback edition. Digital technologies permit sophisticated price discrimination.[84] Thus, in the context of the above illustration, all consumers who have a willingness to pay something below $20 might be able to be supplied at about the price each is prepared to pay. The deadweight loss is thus overcome, with mutual gains made by users and the copyright owner. As noted by one commentator the "market failure genre of fair use should fade away in a world of perfect price discrimination and direct enforcement of copyright through access controls".[85]

(ii) "The Exclusive Right to Read" Argument

67. Concerns about the grant of property rights in information per se abound.[86] More particularly, an argument has been made that copyright law has never given to authors the exclusive right to control reading or access[87] and to do so upsets the "balance".[88] However this argument disingenuously glosses over the realities which arise when distribution of copyright subject matter shifts from printing presses to digital networks. Thus, when the only medium of distribution for textual works was the printed page, access to the work was only viable by being able to access the printed pages. Copyright law operated by giving authors the right to control the number of printed copies available to be accessed and read. In this way copyright law has always granted to authors a right to control access, albeit indirectly. As observed recently:

"A printed book can be accessed by one or perhaps two people at once, people who must, of course, be in the same place as the book. But make that same text available in electronic form, and there is almost no technological limit to the number of people who can access it simultaneously, from literally anywhere on the planet where there is a telephone (and hence an Internet connection)".[89]

68. Today, digital technologies enable one copy of a copyright work to be rendered to a limitless number of consumers. Giving to copyright owners the legal ability to enforce controls on access to that one copy is entirely analogous to the grant of traditional exclusive right to control the production of physical copies.

(iii) The Myth of Balance

69. The preservation of an existing "balance" in copyright is often used to support the carry-over of free exceptions into a digital environment.[90] This argument masks a position not supportable in fact. As observed by one commentator "the 'copyright balance' is hardly immutable: the development and distribution of mass market copying devices also shifted the copyright 'balance' - in that case away from copyright owners and toward end-users."[91] The wide-spread and unlawful dissemination of MP3 audio files is a most obvious illustration of this. More colourfully, in 1975 Barbara Ringer, a former US Register of Copyrights noted that the rights of copyright creators "are being sacrificed more and more on the altar of ... the technological revolution".[92]

70. The existence of a legislatively ordained balance between copyright owners and users is a myth. Technology, commerce, social norms and the law dynamically inter-relate to produce a blurred, changing picture of what is generally free and what is generally paid for. It is a futile exercise to attempt to divine some precise balance between the existing interests of owners and users. Rather, more insight may arise from the observation that it is generally considered socially desirable for people to be permitted to protect by their own means what they create.[93] It is difficult to see why copyright industries differ from this norm.

(iv) The Desirability of Payment for Use

71. Digitisation facilitates access to copyright subject matter like never before. Modes of distribution are cheap and global. Markets for copyright subject matter will be of a vastly different character to those currently established. Prior to the imposition of exceptions into those markets, more insightful and sophisticated considerations of their likely nature are required. James Gleick foretells:

"When the coming technologies of on-line commerce allow easy payment of small sums, a few cents here and a few cents there, people who create writing or music or art of value will flourish economically in ways that have been impossible until now - independent, perhaps, of traditional publishers and media empires. But that will be impossible if at the moment a new work reaches the on-line world, it becomes everyone's common property."[94]

72. Fortunately, Australia has moved away from an approach to law reform which would have characterised the fair dealing exception to copyright as a positive user right. Fortunate because such characterisation creates the socially undesirable outcomes which arise when the economic value of copyright as a commodity is reduced to zero, and production of works is determined by their (or their creator's) appeal to governments, patrons or advertisers. In such an environment, copyright creators are economically beholden to powerful interests for funding. Freedom of expression is a meaningless concept unless copyright creators are able to prosper independent from these interests. If such independently created copyright is a good individuals in society value, it must be a good individuals are willing to pay for.

Notes

* B Comm LLB (Hons) (Melb). Research Fellow, Law School, University of Melbourne. Many thanks to Mr Simon Cordina, Principal Legal Officer, Intellectual Property Branch, Attorney-General's Department and Mr David Lindsay, Law School, University of Melbourne. This article was also greatly enhanced by the comments of an anonymous referee. All errors are my own.

[1] Sections 116A and 132 (5A), (5B), (5E)-(5J) which provide for civil and criminal liability respectively.

[2] Kenneth W. Dam, "Self-Help in the Digital Jungle" (1999) 28 Journal of Legal Studies 393.

[3] Christopher Murray in the Symposium "Digital Technology And Copyright: A Threat Or A Promise?" (1999) 39 IDEA 291 at 334.

[4] The exhaustive nature of these criteria is a matter which greatly troubled the Copyright Law Review Committee in its report on Simplification of the Copyright Act 1968, Part 1, Exceptions to the Exclusive Rights of Copyright Owners discussed below.

[5] Copyright Act 1968, sections 40-43 and 103A-C.

[6] Copyright Act 1968, sections 40(2) and 103C(2).

[7] Copyright Act 1968, section 40(3).

[8] Copyright Act 1968, section 10(2). The Digital Agenda Bill includes a proposed amendment which deems a "reasonable portion" no more than ten per cent of the words of certain works in electronic form: Sch 1, item20.

[9] Article 11. The Corresponding Article in the Performances and Phonograms Treaty is Art 18.

[10] Report on Simplification of the Copyright Act 1968, Part 1, Exceptions to the Exclusive Rights of Copyright Owners, at 1.01.

[11] These existing four purposes are: research or study, criticism or review, reporting of news, and professional advice given by a legal practitioner or patent attorney (Copyright Act 1968, sections 40-43, 103A-C).

[12] Part 1 at 6.19.

[13] Part 1 at 4.01.

[14] In Part 1 at 6.143 the CLRC enumerates five criteria to assist in ascertaining whether a dealing is "fair". The first of these is the "purpose and character of the dealing" which rather than providing guidance on the question of "fair", merely begs the question.

[15] Part 1 at 6.30.

[16] Part 1 at 6.33.

[17] Tim Power, "Digitisation of Serials and Publications" [1997] 8 European Intellectual Property Review 444.

[18] Ibid. at 452-453.

[19] Part 1 at 1.16-1.22.

[20] Agreed Statements Concerning The WIPO Copyright Treaty, Agreed Statement concerning Article 10.

[21] The Bill was introduced into the Australian Parliament on 2 September 1999. In the Bill's Second Reading Speech the Attorney-General stated: "Importantly, the reforms in the bill are consistent with new international standards to improve copyright protection in the online environment adopted in the 1996 World Intellectual Property Organisation (WIPO) Copyright Treaty and WIPO Performances and Phonograms Treaty. Australia was an active participant in the Diplomatic Conference in December 1996 that agreed to the WIPO treaties, and the enactment of this bill will be a major step towards aligning our copyright laws with the obligations imposed by the treaties." The Digital Agenda Exposure Draft of the Bill and associated Commentary were released in February 1999. The Discussion Paper Copyright Reform and the Digital Agenda - Proposed transmission right, right of making available and enforcement measures was published jointly by the Attorney-General's Department and the Department of Communications and the Arts in July 1997.

[22] Explanatory Memorandum, p 3.

[23] Part 1, para 6.19.

[24] The Digital Agenda Exposure Draft of the Bill and associated Commentary were published in February 1999.

[25] Digital Agenda Exposure Draft Sch 1, items 85, 87. (However, under the Digital Agenda Exposure Draft civil liability was not attached to the provision of a circumvention service. Presumably this was an unintended omission; under the Digital Agenda Bill civil liability is attached to provision of a circumvention service: Digital Agenda Bill,

Sch 1, items 98, 100.)

[26] Digital Agenda Exposure Draft, Sch 1, items 4, 5.

[27] Digital Agenda Exposure Draft, Sch 1, item 14 (emphasis added).

[28] Digital Agenda Exposure Draft, Sch 1, item 18.

[29] Digital Agenda Exposure Draft, Sch 1, items 85, 87.

[30] Digital Agenda Exposure Draft, Sch 1, item 85. In respect of civil liability for the provision of circumvention devices, the onus of proof is reversed; a presumption of knowledge or reckless indifference is made.

[31] Digital Agenda Exposure Draft, Sch 1, item 14.

[32] Dam supra note 2, at 398.

[33] Ibid.

[34] If a penal provision is ambiguous, the provision "will not be construed so as to make unlawful that which was previously lawful": R v Coster [1978] 1 NSWLR 515 at 520 (Street CJ). See also Beckwith v The Queen [1976] HCA 55; (1976) 135 CLR 569 at 576 (Gibbs J).

[35] Digital Agenda Exposure Draft, Sch 1, items 85, 87.

[36] Commentary to the Digital Agenda Exposure Draft, para 92.

[37] A hypothetical situation similar to that of Quokka and Equitech formed the basis of a discussion at a Seminar on the Digital Agenda Exposure Draft of the Digital Agenda Bill, attended by Mr Simon Cordina, the Principal Legal Officer responsible for the Bill within the Attorney-General's Department: Davies Collison Cave, Seminar on the Digital Agenda Exposure Draft of the Digital Agenda Bill, Melbourne, 17 March 1999.

[38] Tesco Supermarkets Ltd v Nattrass [1971] UKHL 1; [1972] AC 153 at 170 (Lord Reid) approved by the High Court in Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121 at 127.

[39] Holder v Searle (unreported, Federal Court of Australia, Spender J, 23 October 1998) where offences under s 132 of the Copyright Act were required to be established at the criminal standard of proof, beyond a reasonable doubt.

[40] (1908) 7 CLR 481. Although this case involved a patent licence, similar reasoning would apply to Equitech's software licence.

[41] Ibid. at 539.

[42] Ibid.

[43] Commentary to the Digital Agenda Exposure Draft, para 92.

[44] Commentary to the Digital Agenda Exposure Draft, page 3.

[45] See, for example, Pamela Samuelson, "The Copyright Grab" (1998) 29 University of West Los Angeles Law Review 165.

[46] See generally, Tom W. Bell "Fair Use v. Fared Use: The Impact of Automated Rights Management on Copyright's Fair Use Doctrine (1998) 76 North Carolina Law Review 557.

[47] Digital Agenda Bill, Sch 1, item 8.

[48] Explanatory Memorandum, para 15 where it provides: "The definition is intended to ensure that an argument cannot be advanced that a measure was not an 'effective technological protection measure' on the basis that access had in fact been gained through illicit means."

[49] Digital Agenda Bill, Sch 1, item 98.

[50] Digital Agenda Bill, Sch 1, item 100.

[51] Digital Agenda Bill, Sch 1, item 98.

[52] Digital Agenda Bill, Sch 1, items 98 and 100.

[53] Ibid.

[54] Given the assertion of policy in the Commentary to the Digital Agenda Exposure Draft that enforcement measures ought not limit the operation of the exceptions to exclusive rights, it is odd that no explanation is offered in the Explanatory Memorandum as to why this policy now applied to only a select few exceptions. It may be observed that the "permitted purposes" relate to three of the more important interest groups: Australian libraries, Australian educational institutions and the Australian software industry.

[55] In criminal actions, the defendant needs only to establish on the civil standard of proof that the circumvention device was made or supplied, or the circumvention service was supplied for a "permitted purpose": Digital Agenda Bill, Sch 1, item 98.

[56] Advisory Report on the Copyright Amendment (Digital Agenda) Bill 1999, House of Representatives Standing Committee on Legal and Constitutional Affairs, 6 December 1999.

[57] Ibid. Recommendation 12. This recommendation took the form of broader liability for the promotion of circumvention devices; it did not affect the definition of circumvention devices per se: see Copyright Act 1968, sections 116A (1)(b)(ii) and 132 (5A).

[58] Ibid. at 4.19 (emphasis added).

[59] Digital Agenda Exposure Draft, Sch 1, item 14 ("a device or product designed to prevent or inhibit the infringement of copyright subsisting in any work or other subject-matter").

[60] Advisory Report on the Copyright Amendment (Digital Agenda) Bill 1999, House of Representatives Standing Committee on Legal and Constitutional Affairs, 6 December 1999, 4.53 (footnotes omitted).

[61] Ibid. at 4.67.

[62] Ibid. at 4.74.

[63] Ibid. at 4.75.

[64] For example, the First Submission of the Australian Libraries Copyright Committee, 1 October 1999 at 14.14 submits: "As a minimum, the scope of permitted purposes should be expanded to cover fair dealing." Notwithstanding this submission and others like it, the issue was ignored by the Committee.

[65] These were introduced by the Government in the House of Representatives on 19 June 2000.

[66] Copyright Act 1968, sections 116A (1)(b)(ii) and 132 (5A).

[67] This definition is now included within section 10(1).

[68] Telephone conversation between the author and Mr Simon Cordina, Principal Legal Officer, Intellectual Property Branch

Attorney-General's Department, 21 August 2000.

[69] Copyright Act 1968, section 10(1) (emphasis added).

[70] R v Coster [1978] 1 NSWLR 515 at 520 (Street CJ). See also Beckwith v The Queen [1976] HCA 55; (1976) 135 CLR 569 at 576 (Gibbs J).

[71] Explanatory Memorandum, para 141.

[72] Commentary to Digital Agenda Exposure Draft, para 89 (emphasis in original).

[73] The proposed European Commission Directive on the harmonisation of certain aspects of copyright and related rights in the Information Society (COM(97)628 final of 10.12.1997) referred to in the Commentary to the Digital Agenda Exposure Draft was supplanted by an Amended proposal for a European Parliament and Council Directive on the harmonisation of certain aspects of copyright and related rights in the Information Society (Brussels, 21.05.1999 COM(1999) 250)

[74] Section 1201(a)(1)(B)-(E).

[75] Section 1201(a)(1)(C).

[76] Pamela Samuelson, "Intellectual Property and the Digital Economy: Why the Anti-Circumvention Regulations Need to be Revised" (1999) 14 Berkeley Technology Law Journal 519 at 537.

[77] Emphasis added.

[78] Explanatory Memorandum, para 140.

[79] <http://www.reuters.com/rbb/products/rbbweb.htm> . The service is discussed in Carl Shapiro and Hal R. Varian, Information Rules (Harvard Business School Press, 1999), at 28-30.

[80] Advisory Report on the Copyright Amendment (Digital Agenda) Bill 1999, House of Representatives Standing Committee on Legal and Constitutional Affairs, 6 December 1999, at 4.38.

[81] Ibid. at 4.44.

[82] See generally, Stephen Shmanske, Public Goods, Mixed Goods and Monopolistic Competition, (Texas A & M University Press, 1991).

[83] William W. Fisher III, Reconstructing the Fair Use Doctrine, (1988) 101 Harvard Law Review 1661 at 1702.

[84] Shapiro & Varian, supra note 79, chapter 2.

[85] Jane C. Ginsburg, "From Having Copies to experiencing works: the Development of an access Right in US Copyright Law", Columbia Law School, Public Law & Legal Theory Working Paper Group, Paper No 8 at 11, available at: <http://papers.ssrn.com/paper.taf?abstract_id=222493>

[86] See for example, Samuelson supra note 76, Julie H. Cohen, "Some Reflections on Copyright Management Systems and

Laws Designed to Protect Them" (1997) 12 Berkley Technology Law Journal 161.

[87] Jessica Litman, "The Exclusive Right to Read" (1994) 13 Cardozo Arts & Entertainment Law Journal 29.

[88] The concept of there being a "balance" is dubious and is discussed below.

[89] Committee on Intellectual Property Rights in the Emerging Information Infrastructure, National Research Council, The Digital Dilemma: Intellectual Property in the Information Age, (1999).

[90] Cohen, supra note 86.

[91] Ginsburg, supra note 85, at 5.

[92] Grossman, Omnibus Copyright Revision (1976), Volume 16, House Hearings Part 3, 1955.

[93] Dam, supra note 2, at 397.

[94] James Gleick, "I'll Take the Money, Thanks", The New York Times, 4 August 1996, Section 6, p 16.


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