In brief

In its final report on Copyright and the Digital Economy, the Australian Law Reform Commission (ALRC) recommends that if an exception to copyright infringement is introduced into the Copyright Act based on ‘fair use’, parties should be able to contract out of it. If, on the other hand, the ALRC’s back-up recommendation to expand the current ‘fair dealing’ exceptions is accepted, parties should not be able to contract out of those exceptions.

Summary

The ALRC recommends:

  • if an exception to infringement is introduced into the Copyright Act (the Act) based on ‘fair use’, that parties be able to contract out of it
  • if ‘fair use’ is not introduced, and the Act’s existing ‘fair dealing’ regime is expanded to cover new exceptions, that parties not be able to contract out of those exceptions, and
  • that the Act be amended to make unenforceable any contractual provision that restricts or prevents acts otherwise permitted by the specific library and archives exceptions.

Other jurisdictions

In coming to its recommendations, the ALRC considered the UK and US systems, and their legislative histories. In particular the ALRC noted:

  • the US follows a ‘freedom to contract’ approach, which allows contracting parties to agree contracts on terms that override the ‘fair use’ exception. However, the ALRC also noted that the US has a copyright specific defence to copyright infringement, on the basis of copyright misuse. The ALRC does not recommend adopting this principle in Australia. 
  • the UK Government has announced that it will legislate against contracting out of specific copyright exceptions (to be introduced). The new exemptions in the UK will cover similar ‘fair dealing’ uses to those recommended by the ALRC in its report.
  • the Irish Copyright Review Committee recommended that any contract term which ‘unfairly’ restricts an Irish copyright law exception should be void, with reference to the circumstances of the contract. This includes grounds similar to Australian unconscionability considerations such as whether the contract has not been individually negotiated, and whether the term causes a significant imbalance in the parties’ rights and obligations.

Tension between freedom to contract and public policy purposes

There are already certain provisions of the Act permitting certain acts in relation to software programs which are expressed to be unable to be excluded by contract1. One view is that because these provisions are expressed specifically and because there is no general prohibition against doing so under the Act, other exceptions to copyright infringement provided for by the Act can be overridden by contract.

However, other commentators2 argue that because the statute has set out exceptions to copyright monopoly where public interest calls for such exceptions, seeking to contract out of those exceptions is contrary to public policy and should be therefore void or unenforceable. This is particularly relevant where permitting such contracting out would subvert the intent of the statute.

A further argument is made by others that philosophically the exceptions to copyright infringement set out the bounds of copyright do not offer a defence to copyright infringement. This suggests that a copyright owner seeking to contract out of the exceptions is seeking to impermissibly extend its monopoly.

There is tension between:

  • the principle that parties should be free to contract on agreed commercial terms, This enables copyright owners to determine whether a use of copyright material in a requested situation is appropriate, and if not, to refuse to grant a licence3, and
  • public policy principles in ensuring that the monopoly given to copyright owners under the Act does not prevent uses that are beneficial to society as a whole.

Why allow contracting out of fair use, but not fair dealing?

The ALRC considered that the best approach towards determining whether the ‘fair use’ exception or ‘fair dealing’ exceptions should be able to be overridden by contract was to look at what public policy purposes would be served.

  • Because the ‘fair use’ exception is intended to be as flexible and broad in application as possible, providing that fairness factors are met, it is possible that some uses that fall within the ‘fair use’ exception are not necessarily those that serve public interests.

    However, the ALRC does not go so far as to specify which ‘fair uses’ serve public policy purposes, noting that it may have the effect of creating a tiered system of ‘fair use’, and therefore impact on the way in which the exception is interpreted.

    For these reasons, the ALRC recommends against amending the Act to restrict how parties may contract out of the ‘fair use’ exception, if it is introduced. 

  • If the ‘fair use’ exception is not taken up, the ALRC recommends that the Act be amended to provide limitations on the ability to contract out of the existing and new ‘fair dealing’ exceptions, because those exceptions serve important public interests, including education, news, obtaining legal advice, and critical analysis.

    The ALRC comments that industry should be well versed in how existing ‘fair dealing’ exceptions operate, so that there should be no significant disruption to contracting practices. However, the earlier CLRC report4 identified that often agreements between copyright owners and copyright users contain provisions that exclude or limit fair dealing exceptions, thus suggesting that adopting the ALRC recommendation may still require industry change.

    The ALRC specifically commented that the archives and library exception promotes fair access to copyrighted material, which is clearly a public policy concern. For that reason, the ALRC recommends a specific amendment to protect those exceptions, whether under ‘fair use’ or ‘fair dealing’.

The ALRC also recommends looking at whether similar amendments are required to provisions relating to technological protection measures (TPMs), as otherwise copyright owners may use TPMs to circumvent the ‘fair use’ or ‘fair dealing’ exceptions, which is not in the public interest.