Productivity Commission re-ignites copyright wars by recommending 'fair use'

The Australian Government has just released the Productivity Commission’s report into Australia’s Intellectual Property Arrangements.

It’s a move that appears to have been designed to avoid some of the controversy of the copyright wars by releasing the report just before most Australians settle into their summer break.

The report does something that is very difficult in copyright debates: it sets out a rigorous, evidence-based case for reform. Academics have praised the “independent and systematic study that has assessed the effectiveness, efficiency, adaptability and accountability of Australia’s IP [intellectual property] laws”.

Good evidence about how well intellectual property laws are working is sometimes hard to come by. Intellectual property laws, including copyright and patent law, have to be very carefully calibrated. If they are too weak, it is difficult for investors to recoup their expenses in bringing new inventions, books, music and films to the market.

But when intellectual property laws are too strong, they restrict innovation and access to knowledge. They prevent people from making new inventions and creating new works, because access to existing materials becomes too expensive or difficult.

For consumers, they can make access to knowledge and culture much more expensive, and they can get in the way of education and the legitimate needs of disadvantaged members of society.

Scholars have pointed out for many years that the optimal balance between protection and access to knowledge is extremely difficult to pinpoint. As a result, intellectual property policy is a deeply controversial and emotional political arena. In the past, decisions about IP policy have been made on the basis of heavy corporate lobbying, gut-instinct, hunch and guesswork.

The Productivity Commission’s report is important because it reviews the available evidence and provides recommendations that we have good reason to think will improve Australia’s intellectual property laws.

After reviewing the evidence, the Productivity Commission’s view is that copyright law is not balanced, and that our laws:

[…] are skewed too far in favour of copyright owners to the detriment of consumers and intermediate users.

Making Australian copyright law ‘fair’

Probably the most significant – and controversial – recommendation is that Australia should introduce a “fair use” exception for copyright infringement.

Fair use allows people to use copyright material in ways that are fair, without asking for permission first. It has been extremely important in the United States for many different industries.

Filmmakers use it to make documentaries, libraries use it to digitise and preserve their collections, scholars use it for important data- and text-mining research, and search engines use it to index the web.

The Productivity Commission’s report is just the latest in a string of reports to recommend that Australia introduce a fair use exception. It found that Australia’s current exceptions to copyright:

[…] are too narrow and prescriptive, do not reflect the way people today consume and use content, and do not readily accommodate new legitimate uses of copyright material.

Other recommendations

The report is detailed and comprehensive, and covers a lot of ground. The Productivity Commission recommended a raft of other changes to modernise Australia’s copyright laws, including:

• preventing copyright owners from overriding consumer rights through restrictive contractual agreements

• allowing Australian consumers to break digital locks on content that prevent lawful activities (like fixing a tractor)

• fixing a decade-long oversight in our “safe harbour” regime that makes it extremely difficult for home-grown equivalents of YouTube or social media platforms to host content in Australia

• clarify the law to ensure Australian consumers can use VPNs to access content lawfully available in other countries

• ensure that the results of publicly funded research are made freely available to the public under Open Access policies

• remove an exception from competition law that allows software and content companies to create exclusive deals and other restrictive licensing agreements that would otherwise be anti-competitive.

Restarting the copyright wars

The timing of this report seems to be designed to minimise some of the controversy that it will generate. The commission’s report warns that it will be extremely difficult to “pursue change in the face of strong vested interests”.

The Copyright Agency, the Australasian Performing Right Association and the Australasian Mechanical Copyright Owners Society (APRA AMCOS), prominent players in the book industry and several authors have all issued statements that are highly critical of the commission’s report.

Their essential concern is that the expansion of user rights will result in reductions in revenues and investment in Australian creative industries and Australian creators.

The great difficulty here is that copyright law is extremely complex, and the debate is so emotive that the details often get lost in the heated arguments. What little empirical evidence we do have to guide policy is glossed over in a strong reaction against change.

The reaction of the established copyright industries is understandable. It has been very difficult for publishers and distributors to adapt to the internet, and they are only now beginning to develop business models that work in the digital age. The process has been painful to say the least.

In this context, many publishers, distributors, and creators feel besieged by efforts to reform copyright law for the digital age. But it is too late now to go back to a pre-digital world.

The restrictions on parallel importation, which have kept prices high for books in Australia, are a good example of laws that just don’t work for digital markets. If we expect consumers to obey copyright rules, it is clear that we need to work to make sure that the law and business models treat them fairly.

The great shame about the copyright wars is that sensible, evidence-based proposals for reform get mixed up with highly emotive reactions to “piracy”. The proposals by the Productivity Commission are careful and well justified. The evidence we have is that they are not likely to harm the actual revenues of Australian creators.

There is no doubt that we need new business models – and public funding – to support creators in the digital age. This is the hard work of real practical change that needs to happen to enable our creative industries to thrive.

The good news is that overseas examples show that it is possible for creators to make money in the digital economy. The Productivity Commission’s recommendations are a bet that digital is the future, and that making Australia’s laws more efficient and effective is critical to the health of our future industries.

We’re looking forward to the government’s plans to implement these recommendations, but it looks like 2017 will be a heated year for copyright debates.