The rapid development of digital technologies and changes in user behaviours have been acknowledged by the Australian Government’s Productivity Commission (“The Commission”) as causing some disruptions in the ‘supply and demand side of the copyright ‘coin’.
The Commission has recommended that it be made clear in the Copyright Act 1968 (Cth) that Australian consumers be able to circumvent geoblocking restrictions and that this right be enshrined in the Copyright Act.
Geoblocking is a method by which rights holders and intermediaries carve up the Internet into country specific markets. Different prices are charged according to a consumer’s location. Survey analysis has shown that geoblocking results in Australian consumers paying a substantially higher amount for digital goods such as software, music, games and e-books.
Research submitted to The Commission shows that Australians pay on average 50% more for digital goods in comparison with the price paid by consumers in the US. Some tech savvy consumers are able to avoid the price disparity by acquiring goods using measures such as the use of virtual private networks (VPNs) or proxy servers. Ms Karen Chester, a commissioner with the Productivity Commission, recently commented that “Unless you’ve got a teenager that can help you get around the geoblocking, some people will be able to access and others won’t,” and “Those that won’t will just breach copyright, do what we’re all doing and get around the geoblock and access the US Netflix or the Canadian Netflix”.
It is not clear whether this recommendation will result in any unintended consequences for the IT industry. Interestingly, the European Commission has recently published its issues paper [PDF1.3MB] on ‘Geo-blocking practices in e-commerce’ in which it concluded that geoblocking is used in relation to digital-content services mainly as a result of contractual restrictions imposed by rights holders. Businesses engaged in e-commerce within the EU should be aware that the European Commission will now be conducting an assessment of licensing agreements containing geoblocking restrictions under EU competition law.
The Commission also recommends that the Australian Government avoid entering into trade agreements or deals which support geoblocking.
Introduction of a ‘fair use’ exception in Australia
A new US style broad ‘fair use’ exception is proposed in place of the existing fair dealing exceptions where the permitted copying must be for a particular purpose such as research or study or reporting news. This is as a result of the exiting laws being considered to be too heavily in favour of copyright owners to the detriment of users. The aim of the new fair use model is to shift the focus to whether an infringement would undermine the ability of a rights holder to commercially exploit their work at the time of the infringement.
Criticisms of The Commission’s new model are that it extends ‘far beyond’ the Australian Law Reform Commission’s earlier fair use model put forward in 2014. For example, the new model would extend the defence to third parties who use material on behalf of users and would not require a court to consider the nature of the work. The new model is intended to operate by setting out a number of ‘factors’ for a court to consider when determining whether the use of copyright material interferes with the normal exploitation of a work.
Numerous submissions were made by rights holders and those involved in copyright industries against the adoption of the Commissioner’s new fair use model in Australia. In particular, the Copyright Council, in its Information Sheet of May 2016 ‘Fair Use and the Productivity Commission’, points out that The Commission has not addressed the likely costs to creators and copyright owners. These include reduced opportunities to license works or control how works are used, as well as a greater level of uncertainty for business, users and rights holders. This criticism is also based on there being a higher likelihood of inconsistency with Australia’s international obligations.
Removal of parallel import restrictions on books
The Commission recommends the removal of parallel import restrictions (“PIRs”) on books and that this occurs by no later than 2017. PIRs are considered to be the analogue equivalent of geoblocking as they enable rights holders to charge different prices for books in different countries.
Notwithstanding the many submissions from rights holders and the Australian Publishers Association (APA) in support of maintaining PIRs, The Commission considers that any resulting chill on local writing could be addressed through subsidies for authors, such as literary prizes, aimed at encouraging Australian writing. Authors and publishers will no doubt continue to strongly oppose the removal of PIRs [PDF 77KB]. The APA’s position is that The Commission has ‘dismissed international experience of damage caused by similar changes in Canada and New Zealand, where the industry has been severely impacted.’ Numerous rights holders and agencies, such as the APA, Australian Society of Authors, the Australian Print Industries Association, the Copyright Agency and Copyright Council have joined in roundly ‘condemning’ the recommendations of the report [PDF 77MB].
Copyright term for unpublished works
Perhaps less controversially, The Commission considers that the term of protection afforded to unpublished works, such as diaries, letters, journals and sketches should accord with the current term of protection for published works. Currently unpublished works enjoy an indefinite term of protection compared with a term of 70 years after the death of the author for published works.
 Intellectual Property Arrangements – Productivity Commission Draft Report (Draft Report), April 2016, Chapter 4, Copyright term and scope, at 98
 Draft Report Chapter 5, at 127
 Draft Report Chapter 5, at 127 (research submitted by CHOICE in 2012)
 Draft Report Chapter 5, Copyright Licensing and Exceptions, Draft Report at 121
 EC Issues Paper, Geo-blocking practices in e-commerce’ Issues Paper at p. 71
 EC Issues Paper, Geo-blocking practices in e-commerce’ Issues Paper p. 72
 Draft Report Chapter 4, Draft Report at 159
 Draft Report Chapter 5, at 159
 Draft Report Chapter 5, at 159
 Draft Report Chapter 5, at 159
 Copyright Council, Information Sheet, May 2016, Fair Use and the Productivity Commission, p 5
 Draft Report Chapter 5,
 Draft Report Chapter 5, recommendation 5.2 at 132
 Draft Report Chapter 4, at 118