Copyright in the digital age media release

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A new approach to copyright can help drive innovation, growth and a $139bn digital economy

9 February 2018: As the digital economy creates new opportunities, Australia can drive economic growth and innovation by introducing greater flexibility in its copyright laws.

Copyright in the Digital Age, a new report by Deloitte Access Economics, finds that a more flexible approach to copyright exceptions, such as fair use, would provide more legal certainty for a range of digital activities and innovations – from text and data mining to machine learning and cloud computing – to take place in Australia and help grow the country’s digital economy to $139 billion by 2020 (from a current $79 billion).

Australian copyright law currently specifies a number of ‘fair dealing’ exceptions when use of copyright material are permissible. This can be made more flexible by adding exceptions or shifting to a principles-based ‘fair use’ system, which allows use provided it is socially beneficial, transforms the work and does not adversely affect the market for the original material.

Key findings of the report, which was commissioned by Google in Australia, include:

  • Because of the narrow scope of fair dealing provisions, major new and innovative uses of copyright material are occurring outside of any clear, supportive legal framework
  • The allowed scope of transformative uses of creative materials, such as digital remixing, remains shrouded in uncertainty and hindered by unnecessarily high transaction costs, leaving smaller, individual creators and public institutions such as universities vulnerable to litigation that seeks, or inadvertently seeks, to stymie innovation and creativity
  • A move to a fair use approach would cut through these problems and make it more likely that any contentious issues would be resolved in a manner that promotes creativity, innovation and growth.

Australia’s current copyright system wasn’t designed with digital in mind and rules-based exceptions have failed to keep pace with technology.

A more flexible approach to copyright exceptions will provide real benefits to people wanting to make innovative and productive use of ‘orphan works’, with no identifiable author, and reduce the transaction costs of negotiating licences for uses that would be judged fair. Two examples of innovations that depended on a flexible copyright system were the search engine analysis of copyright material on webpages, and using digital music players to copy songs from CDs to computers.

According to report co-author, Deloitte Access Economics Partner John O’Mahony, “The system as it stands doesn’t support innovation as much as it could, and without change, Australia will find it harder achieve the full productivity dividend of the digital age without a more flexible approach to copyright exceptions.”

Report contributor and Deloitte Access Economics Senior Advisor Dr Ric Simes said that adopting a fair use system would bring Australia into line leading innovator nations.

“The United States, Israel, South Korea and Singapore are leaders when it comes to digital innovation, and therefore major beneficiaries. The United Kingdom and Canada have also recently increased flexibility in their copyright exceptions, and copyright is currently being reviewed in New Zealand,” he said.

The report acknowledges concerns of a fair use system regarding impacts on the incomes of copyright holders, however finds that alongside protections built into the fair use principles, there are greater opportunities for rights holders to themselves rely on fair use as part of remix and other transformative works. Potential uncertainty during transition can be minimised based on international experience and the right policy guidance.

"With technological change becoming ever more rapid, the flexibility a principles-based fair use system offers has become increasingly important, because it avoids the need to pile specific exception on specific exception and allows more timely adaptation to market realities," said copyright expert Henry Ergas, who contributed to the report.

The Deloitte Access Economics report provides input into the Federal Government’s commitment to publicly consult in the first half of 2018 on the implementation of a fair use exception as part of its response the recommendations of the Productivity Commission Inquiry into Intellectual Property Arrangements.

It analyses a range of academic, legal and commercial evidence from a range of countries, and case study material from universities, publishers and other businesses.

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