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Environment and Communications Legislation Committee
06/03/2018

HADDOCK, Ms Kate, Chair, Australian Copyright Council

McAVANEY, Mr Grant, Chief Executive Officer, Australian Copyright Council

[09 :4 1 ]

CHAIR: Welcome. I understand that you have both received information on parliamentary privilege and the protection of witnesses. I invite you to make an opening statement before we go to questions.

Ms Haddock : We are grateful for the opportunity to appear today. We endorse the bill in its current form but we strongly urge against its extension to all service providers. Put simply, our members are responsible for the creative content that is carried online by firms ranging from internet service providers through to libraries and educational and cultural institutions to content delivery systems such as YouTube, Facebook and so on. A strong copyright regime enables creators to earn an income from creative efforts. Copyright legislation does recognise that there are some circumstances in which there should be exemptions and it is in the public interest to dilute the exclusive rights, including by exempting a person for infringement—such as the safe harbour regime. It is very clear from the material surrounding the introduction of the safe harbour regime in the US and Australia that the principle behind the provisions is that passive carriers with no control over the material carried on the services should not be liable for copyright infringement, provided that they, in essence, take steps to remove infringing content when they are notified.

As you are no doubt aware, these provisions are said by copyright owners in the US to be not operating as they should; they are far too broadly applied in that territory and they are the subject of current review. The provisions were drafted in the US and then later introduced in Australia at a time when there was no anticipation of the way digital platforms would evolve and develop. In fact, these provisions are a very good example of the way that the Copyright Act has failed to keep pace with technology—because they really were drafted at a time when the technology as it currently operates was simply not envisaged.

This bill would extend the safe harbour provision to libraries and educational and cultural institutions. We endorse that proposal because those institutions manage large networks on which infringing material may be carried but they are not engaged in the business of selling content and they are not engaged in the business of using content to sell other goods or services. Provided they take down infringing material when they're notified and terminate the accounts of repeat infringers, and otherwise comply with the safe harbour regime, we agree that it's appropriate to grant these very important institutions exemption from liability for damages for copyright infringement.

If the act extended the safe harbours to all online platforms which are not passive carriers, there'd be four major detrimental consequences. First, for those platforms where licences to use copyright material are available, the incentive to enter into a licence agreement would be significantly diminished. If the platform isn't going to be liable for damages for infringement, provided it takes down infringing material, it will have little interest in paying licence fees to copyright owners. Such licences provide significant financial and other benefits to copyright owners whose works are used online, and the loss of that revenue would be a great detriment to copyright owners.

Secondly, online platforms wouldn't have to bear the risk of publication which other publishers bear. This would give online platforms an unfair advantage over traditional publishers. Broadcasters, for example, are liable for infringing material on their services, and, accordingly, they take steps to ensure that they don't usually broadcast infringing material. Publishers of books and newspapers similarly bear the risk of publication. The reason for this is clear: those publishers seek to profit from the sales of, or other dealings with, their content. It would be wrong if they didn't have to take reasonable steps to ensure that the published material didn't infringe the rights of third parties. There's no obvious reason why online publishers should not also bear that risk.

Thirdly, when the publisher doesn't bear the risk of publication, all of the risk is placed on the author of the infringing content. That means that, although the publisher has profited from the publication of the content, it's only the uploader who's liable to pay damages. Even with the best will in the world, an uploader is unlikely to have the resources to make appropriate inquiries. I note that most of the online platforms, and the kinds of people who are making submissions to you, recommend their uploaders obtain the services of expert intellectual property attorneys, which is not really a realistic proposition for the types of uploaders you are often dealing with.

Fourthly, the only stakeholder who really suffers in the infringement scenario is the original copyright owner. Under the safe harbour model, the copyright owner has to monitor the platform, instigate the takedown procedure, and take legal action against the uploader if possible. If the uploader can't be found, or has no assets, it might not be viable or even possible to prosecute them through the legal system, so there'll be no compensation for damages. So the only actor who suffers is the copyright owner, who is also the only actor who hasn't profited from the use of the work.

Any other business that provides access to copyright material bears copyright infringement as a risk of the business. Retail stores infringe copyright if they sell infringing goods and if they knew, or ought reasonably to have known, that the goods were infringing. Publishers are liable for infringing material they publish. If they weren't, copyright owners would be at an immense disadvantage because they'd be unable to enforce their rights against the entity that benefits the most from the infringement. Books, newspapers and other outlets would publish and sell anything without the need to do any sort of due diligence, because the liability would be borne entirely by the journalist or the author or the other supplier, who may be impecunious or even impossible to find.

Much is said, including this morning, about the innovative nature of online platforms. Copyright owners support and benefit from innovation. In Australia licences are available from most content distributors, ensuring that all contributors, including copyright owners, are compensated. There is no reason why innovative technology should be subsidised by copyright owners alone. There's no justification for businesses not having to assess the risk of doing business. Extending safe harbours to online content platforms would make this aspect of their business effectively risk-free, and the only people who'd bear the risk would be the copyright owners.

The safe harbour system, when it's applied to content platforms that are not passive providers, including those that generate billions of dollars a year in revenue, encourages wilful blindness on the part of the platform proprietor. The only stakeholder who bears a risk is the creative copyright owner, which is why we urge that the bill remains in its current form. Thank you.

CHAIR: Thank you very much, Ms Haddock.

Senator STEELE-JOHN: This might be for you, Mr McAvaney, but either one of you can take a punt at it. This morning we've heard some very compelling evidence, presented to us by Redbubble, that the bill establishes a scheme that will be impractical to administer, complex and generally confusing, and will also hamper partnerships between providers and educational facilities such as libraries. How do you respond to this view?

Ms Haddock : If I understand the submission correctly, as to partnerships between libraries and other cultural institutions and content providers, I don't know what is envisaged. You would look to the substance of the transaction. If what is actually proposed is a commercial arrangement whereby a content platform is using material that might have been collected by a library, we don't see why the commercial platform should not have to bear the risk of that transaction as it would for any other type of material, whether that be defamatory content or copyright infringement or any other law that the provider has to comply with. We don't see why they should be exempted from assessing whether there's a risk. In relation to Redbubble, I note that the court said, in the Pokemon case, that Redbubble chose to conduct its business in a way that was likely to cause infringement. There were steps that it could have taken to minimise the risk of infringement, and nobody is immune to that risk. Newspaper publishers infringe copyright and remove the material and pay damages. Book publishers have to pulp books, but they take steps to minimise the risk. As the best resourced party in that transaction, they are the party that is best placed to take those steps.

Senator STEELE-JOHN: It was presented to us by Digital Rights Watch that in, I believe, the Hells Angels case it was not clear what steps under the current framework Redbubble could have taken to avoid liability.

Ms Haddock : Again, all I can say is that, in the commercial world in which most of our members operate, people take steps that are appropriate for the level of business that they are doing. If you are running a company that generates billions of dollars a year in revenue, it's probably going to be worth your while to spend a bit of money on lawyers and IT consultants to put in the search facilities that enable you to assess the risk of infringing the rights of certain copyright owners.

Senator STEELE-JOHN: We heard this afternoon we're not talking about billion-dollar companies really being affected by this. This is primarily having the most detrimental effects upon much smaller companies. Again, complex, confusing and almost impossible to administer, it's having quite a profound impact on the creation of these entities here in Australia. I just wonder how you envisage a small start-up company being able to take the steps necessary to satisfy your desires here, when something such as YouTube's content ID system, which performs this task, cost $50 million to create.

Ms Haddock : I think it's also important to recognise that Google in Australia operates under an extensive licensing regime from a number of copyright owners, so the steps that Google and YouTube take to minimise their risks are comprehensive. It depends very much on the type of service you're talking about, but, for most online platforms, copyright owners are very willing to enter into licence arrangements. In fact, that is probably the most efficient way for a lot of this business to be transacted. The Redbubble case is different because, as I understand it, a lot of the types of products available on Redbubble are not the types of products that copyright owners or trademark owners would be willing to grant a licence for. So you're much more in the realm of that entity, which is, of course, not a start-up and not a small business by any stretch, taking steps such as instituting some kind of monitoring system of the high-risk content it carries. I've looked at Redbubble a great deal, and the high-risk content is pretty easily identifiable.

Senator STEELE-JOHN: The Law Council of Australia has also suggested that the bill be amended to make clear that safe harbours extend to activities carried on by a third party provided on behalf of an entity that is a service provider under the bill. Do you have a view on this proposal?

Ms Haddock : The council's view on that is that we would need to see the drafting that's proposed. I note that that principle picks up the language of the educational statutory licences, which have also recently been extensively simplified. The principle behind that is that if an educational institution is otherwise doing things within the statutory license—that is, for the educational purposes of the institution—the mere fact that they outsource some of the tasks to a third party shouldn't remove the benefit of the statutory licence. Obviously, we support that principle but we would need to see the drafting.

Senator STEELE-JOHN: Again I take you to the Australian Libraries Copyright Committee. Their submission was in support of the expansion of the scheme, as the proposed regime will—again, this keeps cropping up—remain complex and confusing for creators and users alike. Do you have any comments on that?

Ms Haddock : I think that the libraries would benefit from the bill in its current form, and we endorse that. We are very supportive of the work that libraries do in Australia and throughout the world, as well as educational institutions and other cultural institutions. As to the confusion and complexity of the law, our view is that the copyright law is not a textbook. It's not a text that can be analysed by academics; it's a practical working manual for people who make a living out of copyright material. The systems as they operate in real life and in commercial practice can be complex, but the people who operate the systems are expert. Users of copyright material, particularly online, benefit from very widespread licensing arrangements that ensure that most activity that occurs online through the major content providers is not infringing. Most of those commercial relationships are appropriate and amicable, in my experience. I can understand why a person who sits down with the Copyright Act says, 'This is really complex,' but, as a lawyer who practices in copyright every day and who works with major organisations that own copyright and enforce their rights—and sometime defend their rights—it works. Like any area of commerce it's very complex to somebody who doesn't practice in it, but it actually works to the benefit of users and consumers of online content.

Senator STEELE-JOHN: They go on to say in their submission that an expanded safe harbour scheme will assist libraries which engage with commercial players by clarifying potential liability and risks of joint projects. I seem to have a pretty clear view emerging here from the library sector that this is an expansion by a change in the legislation; they need to be able to partner with commercial players to deliver their services.

Ms Haddock : Again, I can't comment on why the libraries would go in to bat for Google, but—

Senator STEELE-JOHN: We're not just talking about Google. We can talk about Facebook, Google and Amazon, but that's just one end of the market, isn't it? There's a whole vibrant plethora that isn't those big players.

Ms Haddock : If they're a commercial player there are almost always licences available, so they don't need the benefit of the safe harbour. If people want to set up a business that distributes copyright material, they need to, and should, enter into the proper commercial arrangements in the same way as they need to enter into leasing arrangements for the premises that they occupy and as they need to pay for their other services.

The safe harbour regime provides an exemption for liability for infringement, which means that it effectively removes a risk to the disbenefit of copyright owners only and means that the person who is making a profit doesn't even have to take account of that risk. To take the benefit of the safe harbour regime, the library falls within the categories of the exemptions. It's very difficult to comment on a hypothetical situation, but, if a library is partnering with a content provider to provide services that are actually library services, it's quite likely that it would come within the libraries exemption. Unless a library had a specific example of a problem that they'd had, it's very difficult to imagine why they think it would cause them a difficulty.

Senator URQUHART: ReCreate has suggested that constraints on safe harbour schemes threaten the freedom of expression that the internet has enabled. What's your view on that?

Ms Haddock : I think that, if freedom of expression is taking other people's work and using it in a way that the Copyright Act prohibits, that's not appropriate freedom of expression. The reason that we have copyright laws in place is to prevent people from effectively free-riding on the work of others. The safe harbour regime protects passive distributors and passive hosts, so I don't really think that that is related to freedom of expression. The freedom-of-expression issues come up more in relation to other exemptions under the act such as the fair dealing exceptions, which do permit use of copyright material in a way that the parliament has thought appropriate. But, no, I think that requiring content platforms to pay copyright owners for their material does not restrict freedom of expression.

Senator URQUHART: The Australian Information Industry Association argued that Australian content is largely already subject to safe harbour because of the platforms that host the majority of Australian content: things like Google and YouTube that benefit from overseas safe harbour regimes. Do you find that that evidence is correct?

Ms Haddock : I actually am not sure that I understand that submission. Is hosted in, say, America, the service will comply with the US legislation. But in Australia, is that service is reproducing or communicating material here, if not have the benefit of safe harbour.

Senator URQUHART: Right—

Ms Haddock : Under Australian law they might still be—

Senator URQUHART: So the American law doesn't translate here?

Ms Haddock : the American law doesn't translate here. What is clear is that an effective takedown regime is a good thing for copyright owners, I use those takedown regimes on behalf of copyright owners and find that, for the most part, there sometimes a bit cumbersome but they work quite well. But that doesn't help when was a copyright owner really needs is to be compensated for damage. And also to have a host—a content platform—that is actually participating in and profiting from that content takes steps to minimise risk in the first place.

Senator URQUHART: Does the ACC have any suggestions for the strengthening of the notice to take down processes to deter copyright infringement?

Ms Haddock : I think that we're quite happy with it. There are individual instances where the takedown procedures are really expensive and it's difficult, but really our concern is that the cultural institutions and the educational institutions should get the benefit of the safe harbour but the non-passive content hosts should not.

Senator URQUHART: Thank you.

CHAIR: That concludes our question. Thank you very much to you both for your evidence and your submission today.