Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Monday, 4 June 1984
Page: 2418


Senator GARETH EVANS (Attorney-General)(3.49) —I move:

That the Bill be now read a second time.

It is a long second reading speech and I seek to read only the first three pages of my speech to explain what I am doing and thereafter I will seek leave for incorporation.

The purpose of the Bill which I am introducing today is to amend the Copyright Act 1968 to protect computer software as a literary work and to clarify the nature and scope of that protection. These measures were foreshadowed in a joint Press statement which I issued with the Minister for Industry and Commerce ( Senator Button) and the Minister for Science and Technology (Mr Barry Jones) on 15 May 1984. We announced then that the Government had decided that the state of uncertainty regarding the legal protection of computer software should not be allowed to continue beyond the current sittings of Parliament and that legislation was being prepared to clarify the protection of software under the Copyright Act. The Government has decided that the legislation should proceed, notwithstanding the decision of 29 May 1984 by the Full Federal Court of Australia relating to copyright protection for computer software. I shall say more about this decision shortly.

I shall outline, for the benefit of honourable senators, the background to the need for these amendments and their main features. A detailed description of the provisions of the Bill is contained in the explanatory memorandum which has been circulated to honourable senators for information. It should be noted that this explanatory memorandum was, in fact, prepared before the Full Federal Court decision.

Background

On 7 December 1983, Mr Justice Beaumont of the Federal Court held in the Apple Computer v Computer Edge case that certain categories of computer software were not protected as literary works under the Copyright Act. An appeal was lodged against that decision and there was therefore uncertainty regarding the correct legal position. This situation created significant problems for the Australian software industry and on 21 December 1983 I announced jointly with my abovementioned colleagues that the Government would undertake such legislative action as was necessary to ensure that software was adequately protected.

The decision of the Full Federal Court, to which I have already referred, reversed by a majority of 2:1 the decision at first instance of Mr Justice Beaumont. On the face of it, therefore, the Full Federal Court has ruled that computer software is subject to the Copyright Act. We have been advised that an appeal to the High Court of Australia has been lodged. The dissenting judgment related to the important issue of whether object code is subject to copyright protection. Although the majority decision provides in its clear terms substantial protection for software, it seems clear that a degree of uncertainty would remain at least for a time. There was considerable discussion by the Federal Court of the concept of a computer program; however, the Bill will introduce a comprehensive definition. All three judges held that source code was protected as an original literary work. However, two of the judges did not decide whether object code was of itself protected as a literary work, whilst the third found that it was not so protected. The majority did hold that object code was protected as an adaptation of source code.

The Bill will include computer programs in the category of literary works, whether originally created in source or object form and whether on paper or in a computer readable form. It will expressly treat as 'adaptations' programs derived by translation for one language to another-for example, by a process of 'compilation' of source code into object code. Other matters included in the Bill not dealt with in the judgments include the removal of the requirement for visible form in respect of tables and compilations in the definition of ' literary work' and certain changes in the definition of 'infringing copy'. The Bill would also introduce two important new provisions-firstly, to strengthen the offence provisions of the Act relating to advertising the supply of infringing copies of computer programs and, secondly, to include a presumption that a 'back-up' copy of a program may be made without infringing copyright.

The purpose of the Bill I am now introducing is to remove that uncertainty and to enable the continued development of the software industry against the background of copyright protection provided expressly by the Copyright Act. I should emphasise, however, that this Bill will operate as a short term measure to enable a full review to be conducted of the long term policy.

I seek leave to have incorporated in Hansard the remainder of the speech.

Leave granted.

The speech read as follows-

Public Consultation

Our announcement of 21 December 1984 recognised that the decision had broad implications for intellectual and industrial property in Australia. My Department had already consulted with industry regarding international developments on the legal status of computer software, computerised data banks and computer-created works and some issues had been raised in the current review of audiovisual copyright laws. Officers had also participated in studies of these matters at the international level.

Regarding legislative protection of software, a major issue to be resolved in the long term is whether a copyright style of protection is to be preferred or a form of protection more analogous to patents. International consensus on that issue still seems some way off. It is also necessary to ensure that proposed solutions were consistent with existing copyright, patent and design laws and with Australia's obligations under the relevant international conventions.

We stressed that legislative action would be taken in the short term if necessary. A first step might be amendment of the Copyright Act to confer copyright protection on computer software. Interested parties would be consulted .

In early January my Department wrote to interest groups, including industry and user representatives, inviting them to make submissions on the manner in which the Copyright Act might be amended to provide protection in the short term. To facilitate consideration of the issues a short options paper set out two possible alternatives, namely the inclusion of computer software in the category of copyright literary works or creation of a special new category of copyright computer software. The paper mentioned some of the arguments for and against these options.

Almost one hundred organisations and individuals responded and copies of these submissions were made available for public inspection at Patent office libraries in the capital cities.

Further, a National Symposium on Legal Protection of Computer Software was held on 15-16 March 1984 in Canberra to consider both domestic and international policies for Australia and also to cover other computer-related copyright issues , such as the protection to be accorded to works stored in, or created with the aid of, computers.

Although intended primarily to promote consideration of long term policy, the Government made it clear that it would take into account the views expressed at the Symposium when considering short term measures.

The Symposium was attended by over 200 persons including computer industry representatives, educators, librarians, academics, lawyers, patent attorneys, and representatives of professional societies, consumer groups, the Press and several Government departments. Proceedings included statements by industry and user representatives, papers and possible legal solutions and forum discussion led by a panel of experts.

Independently of these formal processes, I have also received many submissions from interested persons and organisations. These have been carefully considered.

Finally, in April, at the invitation of the Government, the World Intellectual Property Organisation convened in Canberra a working group to consider technical questions related to the legal protection of computer software. Officers participating in that meeting had the fortunate opportunity to bring themselves fully up to date with technical and legal developments around the world. At a public seminar within that meeting, experts from four leading industrialised countries (Japan, USA, Britain and Germany) spoke of developments in their countries.

Honourable senators will thus appreciate that, notwithstanding the urgency of the situation and the short-term nature of the present legislative proposals, there has been extensive consultation with affected interests. The proposals in this Bill take into account all of these consultations and discussions.

The Nature of Copyright

The laws relating to intellectual and industrial property-that is, the copyright, patent, trade marks and designs laws-have as their purpose the legal protection of creations and inventions from unauthorised use so that the creators and inventors will be able to profit by having for a time certain exclusive rights.

This is seen as being in the overall interest of the public as we would not have the benefit of inventions or creations, or the industries upon which they are based, without the incentive of the certain economic return which the legal protection permits.

Of course, details of the protection mechanism depend on the subject matter itself and on the legal system within which it is provided. However, most countries have for many decades reached a similar result by one route or another and there is a broad measure of international consensus on intellectual and industrial property laws.

The form of intellectual property with which we are concerned here-copyright- has had a legislative basis since the Statute of Anne of 1709. Unlike patents, which evolved to encourage the publication of novel inventions in return for a broad monopoly for a certain period, copyright was directed towards encouraging creativity by giving a limited monopoly which protected an author's investment of skill and labour against unauthorised copying, performance, and other specified uses of his work. The monoply was less absolute than for patents- reflecting the lower standard of originality required-since it did not protect against independent development. In other words it protected not ideas but only their expression in particular forms.

Thus, in the particular case of computer software, copyright protection would not prevent third parties independently developing their own software based on a particularly successful idea, such as spreadsheet calculating for financial management.

Initially concerned with the rights of printing and publishing books, copyright was soon extended to other literary, dramatic, musical and artistic works. Further, with technical development of new ways of using works, the basic rights were extended and copyright was also applied to new forms of creation such as sound recordings, films and broadcasts.

Past extensions were seen merely as new applications of the established public policy underlying legal protections conferred on the products of intellectual endeavour. That extension may not have been needed initially because copyright was a generic right but, sooner or later, in each case legislative provisions specifically directed to the new technology were necessary.

Balancing of Interests

Of course, this policy has always been tempered by a balancing consideration- that there was little point in encouraging creativity if its results were not readily available for use. The copyright monopoly might be limited in the public interest. Thus existing copyright laws contain a variety of exemptions, statutory licences and other mechanisms to ensure availability of protected materials to certain classes of user.

In practice, the relative economic importance of the different rights comprising a copyright depends very much on the nature of the protected material and on the technology available for its exploitation. Thus, in achieving an optimum balance between the interests of creators and users of copyright materials, it is necessary to have regard to technological factors.

This is the reason for my Department's review of audiovisual copyright laws which was initiated because it appeared that the 1968 legislation was no longer adequate to meet new technological uses of copyright materials.

Of course, such a review involving extensive consultation requires a substantial period of time. While appropriate where ''fine tuning'' is required, this may not be appropriate where protection of an entire industry such as the computer software industry may be at stake.

The Importance of Computer Software in Australia

We are all aware of the rapidity with which computer technology has spread. First used for complex research projects, computers rapidly found applications in commerce and government and are now entering the education, entertainment and domestic spheres.

The availability of software well suited to the requirements of organisations or individuals is critical to the efficient functioning of their computer systems. It follows that the efficiency and competitiveness of Australian industry and commerce are in part dependent upon the availability of appropriate computer systems. Australia can best ensure this by fostering a strong capability for systems development. This capability needs to be able effectively to integrate locally developed (as well as imported) hardware and software to provide systems best suited to our requirements and which have the potential to be marketed overseas. A strong local software industry is an integral part of this capability.

We are fortunate to have such an industry. Indeed the Australian computer software industry is internationally competitive and there are a growing number of organisations in this country whose main activities are software research and development. The industry is important in its own right and is capable of making a valuable contribution to the Government's industrial development objectives.

Need for Protection

From the consultations it was clear that the absence of legal protection and continued uncertainty as to the state of the law would jeopardise the local software industry and that it was urgently necessary for there to be some legal protection.

Computer software is, of its nature, at once expensive and time consuming to develop but cheap and easy to exactly duplicate. This is the situation copyright protection is designed to meet and it was not surprising that most computer interests urged immediate copyright protection.

A large number of submissions were also received from educational and research interests. These largely acknowledge that some protection of software is necessary, both as a matter of justice and to ensure its continued creation. However, those interests wanted to participate in consultations to determine appropriate provision to facilitate education and research.

Teachers were also anxious that provision be made for the use of electronic means of storing, retrieving and transmitting copyright works for educational purposes.

There were also submissions, particularly from consumer groups, which argued that there should be no legislative protection for computer software. As I said when opening the National Symposium, the onus lay heavily upon those so contending to demonstrate why software should be treated differently from other technological developments.

The Government has concluded that that onus was not met, at least in relation to the need for short term protection while the long term position is examined.

Submissions in favour of protection differed as to whether this should be achieved simply by including computer software in the category of literary works or by the definition of a new copyright subject matter with its own set of exclusive rights.

In inviting comment, the Government pointed out that if legislative protection were to be accorded it might be necessary to think in terms both of short-term and long-term legislative action.

It has concluded that what is required is a measure which provides immediate protection, without prejudice to development of the most appropriate long-term solution. Short-term measures must be capable of rapid and simple implementation . In all the circumstances the Government has decided that the best solution is amendment of the definition of 'literary work' in the Copyright Act to cover computer software, together with clarification of the nature and scope of the protection conferred, having regard to the distinctive nature of software. To have created a new category of copyright subject matter would be a substantial change in the law which could prejudice the long-term consideration of the issue of protection. The adopted solution will preserve what was believed by many to be the status quo before the first Apple decision, namely that software was protected as literary work.

Copyright protection will stimulate innovation and further growth of Australia' s software industry and, to the extent international copyright conventions apply , ensure protection for exported software.

Protection also has important consequences for users. There are risks of a withdrawal or limitation on the availability of imported software in the absence of copyright protection. Such a limitation would seriously jeopardise the viability of most local computer manufacturers since many obtain their systems' software under licence from overseas' suppliers.

The majority of software packages used throughout manufacturing, mining and commerce are imported under licence, and limitations on the availability of such packages would be a major setback to productivity and to modernisation of Australian industries.

Although some micro-computer software could be available on a 'pirated' basis, the bulk of systems and applications software packages are not available through this route.

Provisions of the Bill

Let me now describe briefly the main provisions of the Bill and outline their significance.

Not surprisingly, important additions and changes are made in the definitions in section 10 of the Act.

The most fundamental is a change to the definition of 'literary work' to include a computer program. Computer programs will therefore be subject to copyright in the same way as other literary works and the copyright owner will have the exclusive rights to authorise reproduction, adaptation, and various other uses of his program.

The term 'computer program' is also defined in some detail. Without going into all aspects, let me just mention that the definition is intended to make it clear that abstract ideas or procedures for solving problems are not protected but only particular expressions of them. The program may be written in any language, code or notation and may include related information. It may be expressed in a high level language intelligible to humans, such as FORTRAN, COBOL, ALGOL or BASIC. Equally, it may be expressed in a lower level or machine language such as is obtained after compilation or assembly and as may be directly suited to the operation of a computer.

The definition of 'computer program' also makes clear that a program may require conversion to a different material form before it can be used to operate a computer. A simple example would be transferring a handwritten program onto magnetic disk.

The concept of a computer is impliedly defined as a device having digital information processing capabilities which can perform more than one function. This is intended to cover not only computers in the conventional sense but also devices which have some programmed computing ability, such as computerised ignition systems or computerised telecommunications switching networks.

One of the important rights in literary works is the right of adaptation, which includes translation. Although computer scientists speak of translation of a program from one computer language to another, this may not presently be taken by courts to be translation in the sense in which it appears in the present Copyright Act where it arguably refers to translation between human languages. The definition of adaptation in relation to a computer program is intended to make clear that it covers translation between computer languages of different levels such as happens when a program is being compiled or assembled.

The are also changes to the definition of 'infringing copy'. These have two purposes. The first is to make clear that the term applies to a reproduction of an adaptation of a work in the same way as it applies to a reproduction of the work itself. The second is intended to remove a technical drafting anomaly which could have the apparent result that an imported copy of a work might be an infringing copy even though it was imported with the permission of the copyright owner.

As earlier mentioned, the fundamental right of copyright is to copy or reproduce the work. The present Act makes it clear in many cases that reproduction goes beyond mere copying and includes such techniques as audio or video tape recording and microfilming. However, following the decision of Beaumont J in the Apple case, doubts had been expressed as to whether ' reproduction' using modern technologies such as digital magnetic tape or disk, bubble memories, or integrated circuits would be covered by the present Act. The new definition of 'material form' is intended to put this beyond doubt.

The definition of material form is also relevant to the 'making' of works which the Act states occurs when a work is first reduced to writing or some other material form. It will now be clear that work can be made by, for example, direct keying of words into a computer memory.

I note that there have been assertions that recognition of copyright in relation to computerised data bases would mean a restriction of access to information. This is incorrect for three reasons.

First, copyright law does not and never has protected information as such. As mentioned earlier, it only protects particular expressions of information and there is nothing to prevent independent development of the same or similar creations.

Second, it is already clear that computerised access is destined to be a most important means of using works. Were authors not to be able to control this means of access, their possibility of obtaining reward for their labours would be severely diminished.

Third, storing literary and other works in computers is by no means a simple and cheap process. Persons will not be encouraged to invest in setting up extensive computerised data systems if they cannot recover that investment. The amended definition of literary work so far as tables and compilations are concerned is intended to meet this problem.

Proposed section 43A is a new provision to provide a presumption that the owner of a legitimate copy of a computer program is entitled to make a back-up copy for use if the original copy is lost, destroyed or rendered unusable. It is well known among computer users that it is very easy to erase accidentally or inadvertently or otherwise make useless a machine-readable copy of a program. Most users therefore make a back-up copy as a safeguard and this practice is recognised and accepted by many software producers. The provision will make it clear that the practice is legitimate save only that a software producer may negative the presumption by a clear notice to a purchaser who will be able to take that factor into account before deciding whether to buy the program.

This provision will, in particular, meet the main requirement stated by education interests to be a problem in the short term.

One of the features of computer technology is that a copy of a program is normally every bit as good as the original. A pirate copy may sell for only a few per cent of the normal price of a legitimate copy. The incentive to piracy is thus extraordinarily great. Further, it is feasible and convenient to transmit programs by telecommunications links. The present anti-piracy provision in section 132 of the Copyright Act only applies to dealings with infringing copies. It would not appear to cover provision of pirate copies by transmission of programs to persons who would record them. The proposed amendment to section 132 would broaden its application to make it clear that a transmission of a program for recording is to be regarded as distribution of a copy of the program . This would then be an offence if the other requirements of the section, particularly that the resulting copy be an infringing copy and that the distributor knew this, were met.

Any large scale operation of supply of infringing copies is likely to depend for publicity on advertising. Accordingly, a new section 133A would make it an offence to advertise or publish advertisements for supply of infringing copies and ''supply'' would again be deemed to include transmission of programs which when received and recorded would result in creation of infringing copies.

Clause 7 of the Bill covers application and transitional matters. It is proposed that existing computer programs should become subject to copyright. However, it is made clear that where copyright so subsists only by virtue of the amendments nothing done before their commencement is to be considered an infringement, nothing so done is an offence, and no copy made before commencement is an infringing copy. I stress these provisions because I have seen some quite irresponsible and alarmist assertions that the Government planned legislation which would make existing unauthorised copies of programs or computers subject to seizure or destruction. As a matter of policy, the Government considers in this situation that it would be quite wrong to subject articles to seizure of destruction which were made when there was genuine uncertainty as to the law.

This statement applies of course in respect of this Bill, not in respect of any judicial determination of existing law.

General Comments

There are three other matters on which I would briefly comment. It has been asserted that a consequence of having copyright protection for computer programs is that virtually all of the royalties will go abroad.

I am not aware of any firm basis for this assertion. Certainly, some royalties will go to other countries and these will reflect deliberate decisions to buy foreign software. Presumably, the royalties will reflect the value of the software to purchasers.

The statement also ignores the potential flow into Australia of royalties from foreign purchases of Australian programs.

Second, there have been suggestions that public funding would be preferable to copyright as a means of securing a supply of software.

This is properly an issue for long-term policy consideration but at this point I would simply note that copyright protection is certainly not incompatible with public funding and that the Commonwealth already funds much software development directly or though research and education grants. Beyond that I doubt that many users would think that Government officials could better anticipate their needs than could they themselves or entrepreneurs at large. In addition, there is of course a limit to the extent to which users of computer software should be entitled to benefit from access to public funding at the inevitable expense of other applications of these funds.

Third, it has been suggested that education will suffer more than any other sector from copyright protection of software. I simply note that existing provisions facilitating use of printed materials for education and reference purposes will apply to printed copies of the programs and that the exisiting fair dealing provisions will apply to all forms of software.

As mentioned earlier, the new 'back-up copy provision' will give insurance against a common practical problem for educators and other users-damage to working copies of programs.

Finally, I note that at the National Symposium representatives of education institutions pointed out that they were not only users of software but also producers and thus had an interest in an appropriate system of protection.

Review of Long Term Policy

As earlier stated, this Bill is concerned only to ensure some legal protection of software in the short term. It must be clearly understood that the Government will now proceed as a matter of high priority to a consideration of policy for the long term through an appropriate form of enquiry. It might well be that the nature of the protection of software will be substantially altered as a consequence of implementation of that policy.

Without wishing to pre-empt that review I wish to note here four important matters to be taken into account.

The first concerns international developments. Because of the highly international nature of intellectual property laws, Australia would probably not wish to adopt a system of protection which was out of accord with international consensus as to the appropriate form for protection. To do so might leave Australia in a position where its software products were inadequately protected in other countries, thus limiting export opportunities.

However, as international agreement on the best form of protection is far from settled, Australia can seek to influence the nature of any eventual consensus.

Second, the Government is well aware of, and shares the concern of, educators and researchers that, whatever laws may eventually be adopted to protect software, those laws should encourage, not inhibit, the use of new technologies for education and research.

Third, the Government does not blindly accept that detailed copyright principles appropriate to encouragement of the fine arts are necessarily also appropriate to industrial production.

This has long been recognised in the area of design copyright where registration is required and limitations are placed on the nature and duration of the rights. In such mundane areas as the manufacture of spare parts, anticompetitive practices based on copyright in drawings have emerged which are causing some concern. The possibility of industrial monopoly abuse also underlies the existing statutory copyright licence for manufacture of recordings of musical works.

Of course there are several possible measures which might be adopted to meet abuses of monopolies. One is a short term of protection: indeed the recent Canadian White Paper on reform of copyright law proposes a five year term for protection of object code.

Another is compulsory licencing-also familiar in the patents area and recently suggested by the Japanese Ministry of International Trade and Industry as a means of dealing with monopolistic practices in relation to computer software.

Yet another is trade practices legislation-which would readily be applied to attempts to 'bundle' software and hardware packages or to onerous conditions regarding third party maintenance, spare parts supply or connection of compatible equipment.

Others could be envisaged but, hopefully, with a healthy, competitive and innovative industry, such problems will not emerge.

The fourth, and most important, matter concerns consultation. As I have emphasised earlier, copyright law involves a careful balance between interests. Such a law is most likely to be successful if it is broadly accepted by those whom it most affects. The Government therefore welcomes the expressed desires of the various creator and user interests to cooperate in the formulation of Australia's long-term policies for legal protection of-and access to-computer software.

We are presently considering in what way that policy can best be reviewed and look forward to the active cooperation of all interests.

Financial Impact Statement

The Bill is concerned with confirming hitherto largely accepted private legal rights. The Commonwealth will only be affected in the same way as other copyright owners and users. There will be no direct gain or loss of Commonwealth revenues and no administrative responsibilities will be created or abolished. The Bill will therefore have no identifiable impact of Government revenues.

I commend the Copyright Amendment Bill 1984 to the Senate.

Debate (on motion by Senator Collard) adjourned.