2016-2017-2018

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

COPYRIGHT AMENDMENT (ONLINE INFRINGEMENT) BILL 2018

 

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Communications and the Arts,

Senator the Honourable Mitch Fifield)

COPYRIGHT AMENDMENT (ONLINE INFRINGEMENT) BILL 2018

 

OUTLINE

The Copyright Amendment (Online Infringement) Bill 2018 (the Bill) amends the scope of the online copyright infringement scheme in section 115A of the Copyright Act 1968 (the   Act) to enable copyright owners to more effectively enforce their rights by disrupting the supply to Australians by online locations operated outside Australia of material that infringes copyright, or facilitates the infringement of copyright.

The Bill amends section 115A of the Act to:                                                                      

·          provide that an injunction may be granted in respect of an online location that has ‘the primary purpose or the primary effect ’ of infringing, or facilitating an infringement, of copyright (whether or not in Australia);

·          include a rebuttable presumption that the online location is outside Australia, to reduce the evidentiary burden on copyright owners;

·          enable copyright owners to seek injunctions requiring online search engine providers to take such steps as the Court considers reasonable so as not to provide search results that refer users to online locations blocked under the scheme;

·          clarify that the Federal Court may grant injunctions in terms that allow:

• • the copyright owner and carriage service provider, by agreement, to apply the injunction to block other domain names, URLs and IP addresses that start to provide access to the online location after the injunction is made;
  • the copyright owner and online search engine provider, by agreement, to apply the injunction to not provide search results that include domain names, URLs and IP addresses that start to provide access to the online location after the injunction is made ; and
• enable the Minister, by legislative instrument, to declare that particular online search engine providers, or classes of online search engine providers, be exempt from the scheme.

FINANCIAL IMPACT STATEMENT

The Bill will not have a significant impact on Commonwealth expenditure or revenue.

REGULATION IMPACT STATEMENT

The Regulation Impact Statement for the Bill is at the end of this Explanatory Memorandum.

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Copyright Amendment (Online Infringement) Bill 2018

The Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of Bill

The purpose of the Copyright Amendment (Online Infringement) Bill 2018 (Bill) is to amend the online copyright infringement scheme, as set out in section 115A of the Copyright Act 1968 (the Act), which is aimed at blocking access by users in Australia to overseas online locations that facilitate large-scale infringement of copyright.  

Under the current scheme, a copyright owner may apply to the Federal Court of Australia (Federal Court) to grant an injunction requiring a carriage service provider to take reasonable steps to disable access to an online location outside Australia that infringes copyright, or facilitates an infringement of copyright, and the primary purpose of the online location is to infringe, or to facilitate the infringement of, copyright.

The Bill amends the scope of the current scheme by:

(a)     amending the threshold for capturing overseas online locations to those with the ‘primary purpose or the primary effect ’ of infringing, or facilitating the infringement of, copyright;

(b)    including a rebuttable presumption that the online location is outside Australia, to reduce the evidentiary burden on copyright owners;

(c)     enabling copyright owners to seek injunctions requiring online search engine providers to take such steps as the Court considers reasonable so as not to provide search results that refer users to online locations blocked under the scheme;

(d)    clarifying that the Federal Court may grant injunctions in terms that allow:

a.        the copyright owner and carriage service provider, by agreement, to apply the injunction to block other domain names, URLs and IP addresses that start to provide access to the online location after the injunction is made;

b.       the copyright owner and online search engine provider, by agreement, to apply the injunction to not provide search results that include domain names, URLs and IP addresses that start to provide access to the online location after the injunction is made ; and

(e)     enabling the Minister, by legislative instrument, to declare that particular online search engine providers, or classes of online search engine providers, be exempt from the scheme.

Human rights implications

The Bill engages the following rights:

·          the right to freedom of expression in Article 19 of the International Covenant on Civil and Political Rights (ICCPR);

• the right to a fair hearing in Article 14 of the ICCPR, and

·          the right of everyone to take part in cultural life in Article 15(1)(a) of International Covenant on Economic, Social and Cultural Rights (ICESCR).

Right to freedom of expression

The proposed amendments would engage the right to freedom of opinion and expression as contained in article 19 of the ICCPR.  Amongst other things, article 19 states that individuals must have the ‘freedom to seek, receive and impart information and ideas of all kinds, regardless of frontiers’. Under article 19(3), the right to freedom of expression may be subject to limitations that are necessary to protect the rights or reputations of others, national security, public order, or public health or morals.  Limitations must be prescribed by law, pursue a legitimate objective, be rationally connected to the achievement of that objective and a proportionate means of doing so.

The Bill would amend section 115A to enable the Federal Court to order an online search engine provider to take such steps as the Court considers reasonable so as not to provide search results that refer users to online locations blocked under the scheme. 

The effect of the order would be to prevent users located in Australia of the online search engine provider from receiving search results that provide a pathway to certain online locations that host and distribute unauthorised films, television programs and music, or provide programs or other tools that facilitate the infringement of copyright.

As noted in response to concerns raised about the current section 115A by the Parliamentary Joint Committee on Human Rights (PJCHR) during its Parliamentary passage in 2015, the scheme does not seek to limit the ability of persons to access or communicate information or ideas, other than where doing so would infringe another person's copyright. Moreover, the primary purpose or primary effect test, combined with the factors in subsection 115A(5) (as detailed below) make it clear that only online locations that are deliberately and flagrantly infringing copyright will be captured. The injunction power is not intended to capture incidental infringement.

An injunction against an online search engine provider is a reasonable, necessary and proportionate response to the need to protect the rights of creators and their licensees from infringing material being distributed to, or accessed by, persons in Australia. The injunctions power would be subject to a number of threshold limitations. The provision would only capture online locations that have the primary purpose or primary effect of infringing copyright, or facilitating the infringement of copyright. This excludes online locations that are mainly operated for a legitimate purpose, but may contain a small percentage of infringing content.

The Bill provides further safeguards for sites that may be sought to be removed from the search results of online search engine providers by enabling the Court to have regard to a wide range of factors under subsection 115A(5) before granting an injunction.  For example, the Court may consider:

·          the flagrancy of the infringement, or the flagrancy of the facilitation of the infringement;

·          whether not providing search results that refer users to the online location is a proportionate response in the circumstances , e.g. the Court may consider the percentage of infringing content at the online location compared to the legitimate content, or the frequency in which the infringing material is accessed by users in Australia;

·          whether it is in the public interest not to provide search results that refer users to the online location;

·          the impact on any persons likely to be affected by the grant of an injunction, for example, the operator of the online location or the online search engine provider; and

·          any other remedies available to the copyright owner under the Act.

Right to a fair hearing

Article 14 of the ICCPR provides that all persons shall be equal before the courts and tribunals. Further, in the determination of an individual’s rights and obligations in a suit at law, everyone shall be entitled to a fair and public hearing by a competent, independent and impartial tribunal established by law. This requires that each party be given the opportunity to contest the arguments and evidence adduced by the other party.

As it currently does for carriage service providers and operators of online locations, the Bill would ensure the right of due process for online search engine providers. Under subsection 115A(3), an online search engine provider would be a party to the proceedings and able to contest the making of an injunction.

In addition, as is currently the case under section 115A, the operator of the online location would also be able to apply to the Federal Court to be joined as a party to the proceedings. To ensure that the operator of the online location would be able to exercise this right effectively, the copyright owner is required to notify the operator of the application. However, there may be some circumstances where the copyright owner may not be able to ascertain the identity or address of the operator of the online location despite reasonable efforts. 

As noted by the PJCHR during the Parliamentary passage of section 115A in 2015, this type of measure is likely to be compatible with the right to a fair hearing. In particular, the PJCHR noted that:

·          if the identity or address of the operator of a website cannot be ascertained, they may not be notified of the proceedings, however if the requirement for notification was absolute the copyright owner would be left with no remedy in such cases; and

·          where the user has a contractual relationship with the operator of the online location, this relationship will govern the consequences for the user of an injunction order.

The Bill enables the Court to have regard to a wide range of factors to ensure that the interests of an online search engine operator would be taken into account before the Court makes a decision concerning that provider. The Court may have regard to:

·          the flagrancy of the infringement, or the flagrancy of the facilitation of the infringement;

·          whether not providing search results that refer users to the online location is a proportionate response in the circumstances , e.g. the Court may consider the percentage of infringing content at the online location compared to the legitimate content, or the frequency in which the infringing material is accessed by users in Australia;

·          whether it is in the public interest not to provide search results that refer users to the online location;

·          the impact on any persons likely to be affected by the grant of an injunction, for example, the operator of the online location or the online search engine provider;

·          any other remedies available to the copyright owner under the Act; and

·          any other relevant matter.

Right of everyone to take part in cultural life

Article 15 of the ICESCR creates the right to take part in cultural life, to enjoy the benefits of scientific progress and its applications, and to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which the individual is the author. The steps to be taken to achieve the full realisation of this right shall include those necessary for the conservation, development and the diffusion of science and culture. The Committee on Economic, Social and Cultural Rights’ General Comment No. 17 (2005) states that in order to avoid rendering the provision on protection of moral or material interests ‘devoid of any meaning, the protection afforded needs to be effective in securing for authors the moral and material interests resulting from their productions’.

The proposed amendments would promote the right to benefit from the protection of the moral or material interests in a production, by strengthening the protection provided to copyright owners in enforcing their copyright. In many cases copyright infringement results in lost sales for creators and their licensees, detracting from the protection of the material interests that result from their literary or artistic productions. The proposed measures would enable copyright owners to disrupt large-scale infringing online locations operated outside Australia from supplying Australians with infringing material. This would ensure that copyright owners, including Australian creators, are able to receive the full benefits of their creative endeavours.

As is currently the case with carriage service providers, the proposed amendments create a no-fault remedy against online search engine providers to prevent access to infringing copyright material. The granting of an injunction by the Court is not intended to have any impact on whether an online search engine provider has authorised a particular copyright infringement under sections 36 or 101 of the Act. 

Conclusion

The Bill is compatible with and facilitates human rights because it promotes important rights for creators and other copyright owners. To the extent that it may limit human rights, these limitations are of an incidental nature and are reasonable, necessary and proportionate. 

 

abbreviations

The following abbreviations are used in this explanatory memorandum:

Act	Copyright Act 1968
Bill	Copyright Amendment (Online Infringement) Bill 2018
Federal Court or Court	Federal Court of Australia
IP address	Internet Protocol address
URL	Uniform Resource Locator

 

 

NOTES ON CLAUSES

Clause 1 - Short title

Clause 1 provides for the short title of the Act to be the Copyright Amendment (Online Infringement) Act 2018 .

Clause 2 - Commencement

Clause 2 provides for the Bill, when enacted, to commence as set out in the table.

Item 1 in the table provides that the whole of the Act commences on the day after this Act receives the Royal Assent.

Clause 3 -Schedules

Clause 3 is a machinery clause that enables the Schedules to amend the Act. It provides that legislation that is specified in a Schedule is amended or repealed as set out in the applicable items in the Schedule, and that any other item in a Schedule has effect according to its terms. The Bill contains one Schedule.

Schedule 1--Amendments

Copyright Act 1968

Item 1 - Section 115A (heading)

Item 1 repeals and substitutes the heading to section 115A of the Act.

Currently, the heading to section 115A refers to ‘Injunctions against carriage service providers providing access to online locations outside Australia’.

The new heading ‘Injunctions relating to online locations outside Australia’ reflects that under the amended Act, injunctions will be able to be obtained against online search engine providers in addition to carriage service providers.

Item 2 - Subsections 115A(1) and (2)

Item 2 repeals subsections 115A(1) and (2) of the Act and substitutes them with new subsections 115A(1), (2), (2A) and (2B). 

Background

Section 115A of the Act provides for a scheme to disable access to online locations that infringe copyright, or facilitate the infringement of copyright. The scheme only applies to online locations outside Australia and is aimed at disrupting access by users located in Australia to locations that facilitate large-scale infringement of copyright. This provides a more effective and efficient alternative to seeking to locate and take direct enforcement action against operators of the overseas online locations.

Currently, under subsections 115A(1) and (2) of the Act a copyright owner may apply to the Federal Court for an injunction requiring a carriage service provider to take reasonable steps to disable access to an overseas online location that has the primary purpose of infringing copyright or facilitating the infringement of copyright. ‘Carriage service provider’ is defined in the Act by reference to the definition in the Telecommunications Act 1997 .

The amendments in this Bill follow a review of the current scheme undertaken by the Department of Communications and the Arts in early 2018. The review found the scheme is working as intended, but also identified some potential gaps and areas in which the scheme could be strengthened.

In particular, this Bill aims to:

·          ensure that a broader range of overseas infringing online locations, including those used to store music and audio-visual (movie) files, are within the scope of the scheme;

·          enable a copyright owner to apply to the Federal Court for an injunction to require online search engine providers to take such steps as the Court considers reasonable to disable or demote search results for users located in Australia to infringing online locations blocked under the scheme, and

·          clarify that the Federal Court has the power to make more responsive blocking orders which follow copyright infringing activity where operators of an overseas online location attempt to avoid the application of an injunction by creating new pathways to online locations.

Application for an injunction: new subsections 115A(1) and (2)

Subsection 115A(1)

Some overseas online locations that have the primary effect of facilitating large-scale copyright infringement may not be captured under the current scheme as it could be difficult to establish that this is the ‘primary purpose’ of the online location. For example, this may include but is not limited to, some online file-hosting services, such as certain cyberlockers, which are widely used as tools for sharing infringing music and movie files.

Item 2 repeals existing subsections 115A(1) and (2) of the Act and substitutes a new, consolidated subsection 115A(1) that amends the ‘primary purpose’ test for overseas online locations so that an injunction may be granted in respect of an online location that infringes, or facilitates the infringement of copyright and has ‘the primary purpose or the primary effect ’ of infringing, or facilitating an infringement, of copyright, whether or not in Australia.

This new threshold test will ensure that the intent of the online location operator, or of the location’s users, are not conclusive factors in granting an injunction. This new threshold is sufficiently high to exclude online locations that are primarily operated for a legitimate purpose but may contain a small proportion of infringing content.

New subsection 115A(1) also provides that the injunction requires a carriage service provider to ‘take such steps as the Court considers reasonable’ to disable access to the online location outside Australia. Under the section 115A cases to date, the injunction orders have identified the reasonable steps as the blocking of pathways to the online location, i.e. the blocking of domain names, URLs and IP addresses. The new wording in subsection 115A(1) is not intended to make any change to the ‘reasonable steps’ test that the Court has applied. In particular, it would not require a carriage service provider to take steps such as to terminate the account of users. It is intended to reflect the manner in which the Court has applied the test to date, i.e. the Court determines the reasonable steps, which are reflected in the order.

Subsection 115A(2)

Online search engines enable users to discover the existence of online locations that may be the subject of an injunction, which may rank highly in search results. Search results often also disclose alternate pathways to these online locations, which can undermine the effectiveness of injunctions granted under section 115A. For example, search results often contain, or disclose, online locations with links to domain names and URLs that are not specified in the injunction but will allow the user to access the online location.

Item 2 inserts a new subsection 115A(2) that enables a copyright owner who seeks an injunction against a carriage service provider, to also request that the injunction require an online search engine provider to take such steps as the Court considers reasonable so as not to provide search results that refer users to the online location to which the injunction applies. Online search engine providers that are covered by a declaration under new subsection 115A(8B) of the Act will be exempt (Item 9 refers).

Under new subsection 115A(2), injunctions directed at online search engine providers can be made only where an injunction is granted in relation to a carriage service provider, and only apply to search results that would link to an online location to which the injunction directed at the carriage service provider applies. If a copyright owner has already obtained an injunction against a carrier service provider, the copyright owner may seek a variation of the injunction under subsection 115A(7) to include orders directed at an online search engine provider.

Consistent with the general operation of the Act, this provision is limited in its operation to Australia. The aim of the scheme in section 115A is to reduce the visibility and availability of infringing material to users located in Australia. The intention is that the Federal Court would not make orders applying to online search engine providers that extend beyond the Australian operation of the Act. That is, the Federal Court would not be able to make an order that would require an online search engine provider to ‘delist’ search results for relevant online locations on a worldwide basis.

Granting the injunction: new subsections 115A(2A) and (2B)

Subsection 115A(2A)

Item 2 also inserts a new subsection 115A(2A) that makes clear that the Federal Court may grant the injunction in the terms, and subject to the conditions, that it considers appropriate. This goes to the issue of what steps the Federal Court considers reasonable for a carriage service provider to take to disable access to an online location (subsection 115A(1)), or an online search engine provider to take so as not to provide search results that refer users to the online location (subsection 115A(2)).

Subsection 115A(2A) is necessarily broad, making clear that the Federal Court may grant an injunction in terms, and subject to conditions, that it considers are reasonable and practicable in the particular circumstances.

In determining applications under section 115A of the Act, the Federal Court must determine whether to grant the injunction (that is, should access to the online location be disabled, or the search results referring users to the online location not be provided) and, if so, the terms and conditions of the injunction (that is, how the disabling of the online location is to be implemented or the search results are to be delisted).

As indicated in Note 1 to subsection 115A(2A), subsection 115A(5) of the Act sets out matters that the Federal Court may take into account when determining whether to grant the injunction.

Note 2 to new subsection 115A(2A) makes clear that the terms and conditions of the injunction that apply to a carriage service provider under subsection 115A(1) may be different from those that apply to an online search engine provider under subsection 115A(2).

Subsection 115A(2B)

The operators of online locations may attempt to avoid injunctions under current section 115A by, for example, using another domain name, creating a new URL for the same content or obtaining a new IP address. Once the domain name, URL or IP address is changed, blocked online locations can quickly become accessible to users again, including through online search engine results.

Item 2 inserts a new subsection 115A(2B) which makes clear, without limiting the terms and conditions that may apply to an injunction, that the Federal Court may make injunctions in terms that require carriage service providers and online search engine providers to take reasonable steps to, respectively, block, or not provide search results that include, certain domain names, URLs and IP addresses that provide access to the online location. These can be either domain names, URLs and IP addresses that are specified in the injunction at the time the injunction is made, or new domain names, URLs and IP addresses that emerge after the injunction is made and that the carriage service provider or online search engine provider (as applicable) and the owner of the copyright agree, in writing, have started to provide access to the online location after the injunction is made (or both).

This subsection clarifies that the Federal Court is able to issue responsive and adaptive injunctions. The intention is to build greater flexibility in the scheme so that infringing online locations can be captured more quickly as they relocate and re-emerge, saving the parties and the Court time and expense.

Any agreement that is made under an injunction granted in the terms of subparagraph 115A(2B)(a)(ii) or subparagraph 115A(2B)(b)(ii) must fall within the ambit of the injunction, and would be limited to blocking access or limiting search results to domain names, URLs and IP addresses that direct users to the particular online location specified in the injunction.

The process for copyright owners and carriage service providers/online search engine providers to agree on domain names, URLs and IP addresses that have started to provide access to the online location after the injunction is made, will ultimately be a matter for the parties, within the terms and conditions of the injunction determined by the Court. However, it is expected that, after the injunction is granted, the copyright owner would be able to identify new domain names, URLs and IP addresses that start to provide access to the online location subject to the injunction after the injunction is granted. The copyright owner and carriage service provider/online search engine provider would then agree, in writing, that the new domain names, URLs and IP addresses are providing access to the online location, and to block them or not provide search results for them, in accordance with the injunction. It is not intended that the injunction would permit a copyright owner to unilaterally determine new domain names, URLs and IP addresses, without written agreement between themselves and carriage service provider or online search engine provider.  

An agreement between a carriage service provider and copyright owner in accordance with an injunction under 115A(2B)(a)(ii) would be independent from, and made separately to, an agreement between an online search engine provider and copyright owner in accordance with an injunction under 115A(2B)(b)(ii). An agreement between a carriage service provider and copyright owner would place no obligations on a search engine provider, and an agreement between an online search engine provider and copyright owner would place no obligation on a carriage service provider.

To block or limit searches to other, new online locations, the copyright owner must make a new, separate application to the Court. This will ensure that new online locations are not blocked without appropriate judicial scrutiny.

Item 3 - After paragraph 115A(3)(b)

Item 3 inserts a new paragraph 115A(3)(ba) that enables an online search engine provider to participate as a party, as of right, in proceedings where the copyright owner seeks an injunction to apply against the online search engine provider.

Item 4 - After paragraph 115A(4)(a)

Item 4 inserts a new paragraph 115A(4)(aa) that requires the copyright owner to notify an online search engine provider of the making of an application for an injunction under subsection 115A(1) if the copyright owner has sought for the injunction to apply against the online search engine provider.

Item 5 - Paragraph 115A(5)(a)

Item 5 makes a minor technical amendment to paragraph 115A(5)(a) consequential to amendments to subsection 115A(1).

Item 6 - After paragraph 115A(5)(e)

Item 6 inserts a new paragraph 115A(5)(ea) to add a proportionality factor to the discretionary matters that may be considered by the Federal Court in determining whether to extend an injunction to an online search engine provider. New paragraph 115A(5)(ea) provides that the Court may take into account whether not providing search results that refer users to the online location is a proportionate response in the circumstances. For example, the Court may consider the percentage of infringing content at the online location compared to the legitimate content, or the frequency by which the infringing material is accessed by users in Australia.

Item 7 - After paragraph 115A(5)(g)

Item 7 inserts a new paragraph 115A(5)(ga) to add a public interest factor to the discretionary matters that may be considered by the Federal Court in determining whether to extend an injunction to an online search engine provider. This measure recognises that any requirements imposed on an online search engine provider to limit search results may have an impact upon the broader public.  For example, the Court may, before making an injunction order, consider the public interest in promoting freedom of expression, or in access to information and ideas.  

Item 8 - After subsection 115A(5)

Presumption that the online location is outside Australia 

Item 8 inserts a new subsection 115A(5A) to include an evidentiary presumption that provides that for the purposes of proceedings under section 115A, the online location is presumed to be outside Australia, unless the contrary is established.

At present, in seeking a Court injunction under section 115A, rights holders are required to prove that an infringing online location is located outside Australia. This is particularly difficult for rights holders given the use of proxy servers and other devices which can mask the true location of an infringing online location. 

Changing the evidentiary burden will address these issues, streamline Court proceedings and lower costs for copyright owners. It is also consistent with other provisions in the Act which enable evidential presumptions to be used in civil proceedings to prove issues such as ownership and subsistence. A carriage service provider, online search engine provider or owner/operator of an online location would still be able to contest the issue of whether the online location is outside Australia in Court.

Item 9 - After subsection 115A(8)

Item 9 inserts new subsections 115A(8A) and (8B) relating to declarations excluding online search engine providers from the operation of the scheme.

Subsection 115A(8A) precludes a party from applying for a variation of an injunction under subsection 115A(7) so that it applies to an online search engine provider that is covered by a declaration under subsection 115A(8B).

Declarations excluding online search engine providers

Subsection 115A(8B) gives the Minister the power to declare, by legislative instrument, that a particular online search engine provider, or an online search engine provider that is a member of particular class, must not be specified in an application for an injunction under subsection 115A(1), or an application to vary an injunction under subsection 115A(7).

The intent is that the scheme will enable injunctions to be sought against major internet search operators that index search results on the World Wide Web and are likely conduits to online locations that host infringing material. It is not intended to capture: smaller operators that do not have the same reach; entities that offer internal (intranet) search functions, entities that provide search services to employees, members or clients that are confined to discrete sites (such as educational and cultural institutions, not-for-profit organisations); or entities that provide search functionality that is limited to their own sites or to particular content or material (such as real estate or employment websites or the National Library of Australia’s Trove search).

The declaratory power in subsection 115A(8B) will provide a safety net, in addition to the built-in safeguards in subsection 115A(5) of the Act (including, for example, the proportionality principle and public interest considerations), to ensure that applications for injunctions do not unfairly target smaller operators that do not have the same reach or entities that provide only internal (intranet) or limited search functions.

As any declarations made under subsection 115A(8B) are legislative instruments, they will be subject to parliamentary scrutiny and disallowance.

Item 10 - Subsection 115A(9)

Item 10 amends subsection 115A(9) so that an online search engine provider cannot be held liable for any costs in relation to proceedings commenced by a copyright owner under section 115A if they do not participate in the proceedings.

This measure puts online search engine providers on the same footing as carriage service providers who do not participate in the proceedings.

Item 11 - Subsection 131A(2)

Item 11 makes an amendment to subsection 131A(2) of the Act consequential to amendments to section 115A.

Currently, subsection 131A(2) provides that the Supreme Court of a State or a Territory does not have jurisdiction in relation to ‘injunctions against carriage service providers providing access to online locations outside Australia’.

Item 11 amends subsection 131A(2) to clarify that the Supreme Court of a State or a Territory does not have jurisdiction in relation to any applications made under section 115A of the Act.

This amendment has been made as, under the amended Act, injunctions will be able to be sought against online search engine providers in addition to carriage service providers.

Item 12 - Application of amendments

Item 12 is a machinery provision that applies the amendments made by Schedule 1 to the Bill to applications that are made under section 115A of the Act on or after the commencement of this Schedule in the following cases:

(a)     where the application to make an injunction is made after the commencement date or,

(b)    where an application to vary or rescind an injunction is made, whether the injunction is made before or after that commencement.

 

 

 

 

 

 

 

Regulation Impact Statement

 

 

 

 

 

 

 

Copyright Amendment (Online Infringement) Amendment Bill

 

 

 

 

 

 

 

OCTOBER 2018

 

 

 

 

 

 

 

 

 

 

Table of Contents

Background . 2

The need for government action . 9

Policy options . 10

Impact anaylsis . 11

Option 1: No change . 11

Option 2: Extend to online search engine providers and extend the ‘primary purpose’ test 12

Option 3: Extend to online service engine providers and lower threshold to ‘substantial purpose or effect’ 15

Consultation . 18

Preferred option . 19

Implementation and evaluation . 19

 

 

Background

 

1.         The Copyright Act 1968 (Cth) (Copyright Act) protects the form or way an idea or information is expressed. The Copyright Act creates exclusive rights for copyright owners, including the right to copy, adapt, publish, communicate to the public and publicly perform copyright material. These exclusive rights provide an essential mechanism that underpins the viability and success of Australia’s creators and creative industries. The scope of works protected under the Copyright Act include literary, artistic and musical works, and films and sound recordings.

2.         Australia’s copyright system balances incentives to create and disseminate new works by allowing fair access and use of these works by Australian consumers and other intermediaries and users (e.g. libraries and archives) for public policy benefits. These include free uses for purposes such as research and study, news reporting, criticism and review, disability access and parody and satire. The Copyright Act also contains statutory licences that enable governments and educational institutions to use copyright material for certain purposes on the condition that the copyright owner has the right to be paid equitable remuneration, often through an approved collecting society.

3.         There have been a number of studies attempting to estimate the size of Australia’s copyright industries. For example, the Productivity Commission found that the capital expenditure on ‘artistic originals’ (the category of goods covered by copyright) was estimated at $2.7 billion in the year ending June 2015 — this equates to about 0.16 per cent of Australia’s gross domestic product (ABS 2015a). [1]   On the other hand, a PwC report commissioned by the Australian Copyright Council valued the contribution of the copyright industries at more than seven per cent of gross domestic product per year. [2]

4.         The Productivity Commission noted that Australia’s copyright trade has shifted away from physical goods towards services with the emergence of digital distribution and consumption. The use of the internet to access and consume copyright material has led to increased opportunities for copyright owners to more broadly disseminate their products, while allowing consumers the opportunity to consume and enjoy content in new ways. 

5.         However, the downside has been that websites that contain infringing material, or facilitate the infringement of copyright, have emerged in larger numbers to enable users to illegally download copyright material such as music, television programs and movies.

6.         Although it is difficult to quantify in revenue lost, it is clear that online copyright infringement poses a significant threat to Australia’s creators and creative industries, due to the ease in which copyright material can be copied and shared through digital means without authorisation. 

7.         There are competing views about the causes of online copyright infringement, and these include the high price and inaccessibility of some film and TV content, the lack of information about legal alternatives, the ease with which consumers can access illegal content, and the lack of respect for copyright amongst some consumers.

8.         The Productivity Commission noted that timely and competitively-priced access to content appeared to limit copyright infringement [3] , citing surveys on consumer attitudes undertaken by CHOICE and the Communications Alliance. This is an important factor that should be a key part of an overall strategy to combat online copyright infringement. However, the Productivity Commissions report was completed in September 2016, which is before any decisions under section 115A were handed down and before any studies about the effectiveness of the subsequent blocking were undertaken.

9.         It is clear that one essential measure to address online copyright infringement is an effective enforcement regime that enables a copyright owner to take action to protect their rights, particularly where their copyright interests are being infringed. This is consistent with obligations that the Australian Government has under international agreements, such as the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS Agreement). For example, Article 41 of the TRIPS Agreement provides that:

 “ Members shall ensure that enforcement procedures as specified in this Part are available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements.”

10.     In that respect, the Copyright Act contains a number of civil remedies through court action that copyright owners can seek where there has been an infringement of their copyright material. Section 115 of the Copyright Act provides the following remedies for copyright infringement, or authorisation of copyright infringement:

·          an injunction to restrain an infringement of copyright occurring or continuing.

·          damages as compensation for infringement. In the case of a blatant infringement, or where some particular benefit has accrued to the defendant, additional damages may be awarded to a copyright owner. In determining the amount of damages for copyright infringement, a court may consider whether the infringement involved converting hardcopy material into digital form, as well as whether a stronger penalty would deter others from committing the same infringement.

·          an account of profits, i.e. payment to the owner of copyright of the profit made by the infringer as a result of the infringement.

11.     These remedies have proven to be effective in addressing large scale infringement that occurs in Australia.  For example, the music industry succeeded in  Universal Music Australia Pty Ltd v Sharman License Holdings Ltd   (2005) 65 IPR 289 against particular individuals and entities responsible for the ‘Kazaa’ file sharing system, and in  Universal Music Australia Pty Ltd v Cooper  ( Cooper ) (2005) 150 FCR 1 against the creator and host of a website which contained links to copyright infringing music files. 

12.     However, while copyright owners are easily able to take action against domestic sites, a number of foreign-based websites have emerged to provide access to infringing copyright material.  Many of these are based in jurisdictions which have lax copyright enforcement or where it is difficult for Australian copyright owners to take civil action. Even where criminal action has been taken directly against the operators of a particular location, sometime the brand is used for mirror sites which continue to operate and attract significant web traffic (eg KickAss Torrents). 

13.     To address this, section 115A of the Copyright Act was introduced in 2015 with the aim of disrupting overseas online locations that facilitate large-scale copyright infringement and which is accessible by Australian consumers.  The new section amended the Copyright Act to enable a copyright owner to apply to the Federal Court of Australia for an order requiring a Carriage Service Provider (CSP) to block access to a foreign online location that has the primary purpose of infringing copyright or facilitating the infringement of copyright.

14.     The Explanatory Memorandum to the Copyright Amendment (Online Infringement) Bill 2015 stated that the amendments would provide that:

·          “… copyright owners would be able to apply directly to the Federal Court for an injunction to disable access to an infringing online location, without having to first establish the CSP’s liability for copyright infringement or authorisation of copyright infringement. This judicial process would be more efficient and avoid implicating CSPs unnecessarily.” (page 2)

15.     Importantly, the Bill contained safeguards to ensure that the injunction would only be ordered in the most serious cases. First, the ‘primary purpose’ test was included to set an intentionally high threshold for the copyright owner to meet as a safeguard against any potential abuse. For example, it was intended that the ‘primary purpose’ test would exclude online locations that are mainly operated for a legitimate purpose, but which may contain a small percentage of infringing content.

16.     Secondly, before ordering an injunction, the Court may take into account a number of factors.  These include:

·          the flagrancy of the infringement or its facilitation;

·          whether disabling access to the online location is a proportionate response in the circumstances

·          the impact on any person likely to be affected by the grant of the injunction, and

·          whether it is in the public interest to disable access to the online location.

17.     Section 115A of the Copyright Act commenced on 27 June 2015 and, since that time, there have been a handful of cases brought by film and music industry copyright owners. All of these have been successful for copyright owners in obtaining injunctions. The cases are as follows:

·          15 December 2016: Roadshow Films Pty Ltd v Telstra Corporation Ltd  and Foxtel Management Pty Ltd v TPG Internet Pty Ltd [2016] FCA 1503 : These proceedings resulted in the blocking of domain names, Internet Protocol (IP) addresses and Uniform Resource Locators (URLs) that provided access to online locations known as “SolarMovie”, “The Pirate Bay”, “Torrentz”, “TorrentHound” and “IsoHunt”.

·          28 April 2017: Universal Music Australia Pty Limited v TPG Internet Pty Ltd [2017] FCA 435: This proceeding resulted in the blocking of domain names, IP addresses and URLs that provided access to online locations known as “KickassTorrents” or “KAT”.

·          18 August 2017: Roadshow Films Pty Ltd v Telstra Corporation Limited [2017] FCA 965 : This proceeding resulted in the blocking of domain names, IP addresses and URLs that provided access to 49 online locations, including “Demonoid”, “LimeTorrents”, “EZTV” and “CouchTuner”.

·          1 September 2017: Foxtel Management Pty Limited v TPG Internet Pty Ltd [2017] FCA 1041: This proceeding resulted in the blocking of domain names, IP addresses and URLs that provided access to online locations, including “YesMovies”, “LosMovies”, “CartoonHD”, “Putlocker”, “Torlock” and “1337x”.

·          27 April 2018: Roadshow Films Pty Limited v Telstra Corporation Limited [2018] FCA 582: This proceeding resulted in the blocking of domain names, IP addresses and URLs that provided access to the online location “HD Subs”, and other specific locations from which various files may be downloaded by certain applications that operate on the Android operating system and enable access to content by the use of certain set-top boxes.

·          19 June 2018: Foxtel Management Pty Ltd v TPG Internet Pty Ltd   [2018] FCA 933 : This proceeding resulted in the blocking of domain names, IP addresses and URLs that provided access to 15 online locations, including “HDO”, “123Hulu”, “Watch32”, “WatchFreeMovies”, “SeriesTop”, “ETTV”, “Torrent Download” and “Torrents.me”.

·          20 September 2018: Television Broadcasts Limited v Telstra Corporation Limited [2018] FCA 1434: This proceeding resulted in the blocking of domain names, IP addresses and URLs that provided access to online services linked to seven Android-based set-top boxes (“A1”, “BlueTV”, “EV Pad Pro”, “FunTV”, “MoonBox C”, “Unblock TV Gen 3”, and “hTV5”).

18.     During Parliamentary debate for the Copyright Amendment (Online Infringement) Bill 2015, the then Minister for Communications, the Hon Malcolm Turnbull MP, committed to review section 115A in response to a recommendation of the Senate Legal and Constitutional Legislation Committee .

19.     The Department of Communications and the Arts conducted a review of section 115A in February/March 2018.  The Department received 22 submissions, mostly from representatives of copyright owners, internet service providers, tech sector firms (including online search engine providers) and digital rights groups. 

20.     In general, most stakeholder submissions agreed that section 115A has been a positive Government initiative which is working as intended. Rights holders noted film industry commissioned studies which indicated that the traffic to blocked sites had declined. Research commissioned by the Department of Communications and the Arts (2015-2018) has found that there has been a decrease in those who consume infringing content from 42 per cent in 2015 to 38 per cent in 2017, and down to 33 per cent in 2018.  This is a significant drop and confirms a trend in reduction in online copyright infringement rates in Australia.

21.     Many noted that the Court proceedings were largely running smoothly, although they suggested section 115A could be improved in a number of ways.  For example, copyright owners were concerned about the requirement to prove that an online location was located outside Australia, and the process to obtain an extended order to seek the blocking of new domain names, URLs and IP addresses.

22.     The Department concluded that, while section 115A was achieving most of its aims, there was scope to consider modest improvements to address gaps in the scheme that enabled overseas locations to continue to be accessed by Australians through other means. 

23.     These suggested improvements form the basis of possible reforms to section 115A which are considered below. 

The problem

 

Australian consumers access infringing copyright material through search engine results

24.     There are genuine concerns from copyright owners about online copyright infringement in Australia. An annual survey conducted by the Department of Communications and the Arts has demonstrated that despite some gains, copyright infringement amongst digital consumers is higher in Australia (33 per cent) [4] than the UK (25 per cent) [5] . The UK has a long established website blocking regime that enables responsive Court orders and the ability to consider a broader range of websites for blocking.

25.     All but one of the section 115A cases to date have involved infringing film and TV content, which is the copyright content that is the most popular target for online copyright infringement. Although trending downwards, the rate of consumption of infringing film and TV content in Australia remains higher than that for music and computer games.

26.     Film commissioned studies indicate that traffic to blocked websites is down [6] , but a smaller percentage of Australian users are still continuing to get to blocked sites through other avenues. This gap in section 115A enables these sites to remain viable and allows infringing content to continue to be supplied to Australian users. 

27.     In a 2016 report, the Productivity Commission also noted a variety of stakeholder experiences with blocking websites. One stakeholder pointed to the UK experience with blocking orders as an example of successful blocking. However, some concerns were raised that parts of section 115A were not sufficiently defined, creating uncertain impacts (e.g. the lack of statutory definitions for “primary purpose” of an online location and whether infringements are “flagrant”). There were also concerns that website blocking might be ineffective where the block was avoided by changing the online location.

28.     In addition, online search engine providers enable users to discover the existence of sites that may be the subject of an injunction and which are blocked by CSPs. This may occur where the user may not be looking for the site in the first place. Even though these sites are blocked, these results may appear on the first page of search results, or autocomplete results lead a user to these results, giving these sites an appearance of legitimacy and credibility.

29.     Search results often contain alternative domain names and URLs that are not captured by the original injunction, or a list of websites that claim to have a list of alternate domain names or URLs, that will allow the user to get access to the blocked site.

30.     At the moment, online search engine providers are not subject to s 115A and no injunction can be made to compel them to take reasonable steps to disable access to blocked sites. 

 

 

Large scale infringing sites such as “cyberlockers” are still available to be accessed by Australians

31.     Section 115A requires the Court to be satisfied that the “primary purpose” of the online location in question is to infringe, or facilitate the infringement of, copyright.  The Explanatory Memorandum to the Copyright Amendment (Online Infringement) Bill 2015 stated that this was:

“… an intentionally high threshold for the copyright owner to meet as a safeguard against any potential abuse. For example, the “primary purpose” test would prevent an injunction to disable access to an art gallery website operated outside of Australia that may contain an unauthorised photograph. Thus, a website such as www.youtube.com or www.blogger.com would not prima facie satisfy the test as being an online location that infringes or facilitates infringement of copyright. Technology and technological change is not to be chilled or targeted by this amendment.” (page 9)

32.      The Explanatory Memorandum also stated that the primary purpose test “would direct the Court to consider the principal activity for which the online location exists and the principal intention of users of that online location” (page 9).

33.     The effect of this high threshold has been to cast doubt on whether particular sites, such as “cyberlockers” would be captured by section 115A.  Cyberlockers are third-party file-sharing services, sometimes also known as “file hosting” services. Access is provided through password-protected hard drive space online.  Users of these sites can share the cyberlocker password information with others, who can privately download the contents that the original user maintains on the site.  Cyberlockers are able to house large movie and music files, and unlike BitTorrent file-sharing which is traceable, cyberlockers are very hard to monitor, as they employ one-to-one connectivity which is difficult to detect through surveillance tools. Because of this, cyberlockers are often used to trade infringing movie and music files. 

34.     A number of these sites have been identified by the U.S. Trade Representative’s 2017 Out-of-Cycle Review of Notorious Markets Report as being sites that are “prominent and illustrative examples of online and physical marketplaces that reportedly engage in, facilitate, turn a blind eye to, or benefit from substantial piracy” [7] .  In particular, according to Australian Film and TV bodies, there are three cyberlocker type sites that are ranked in Australia’s top 50 large scale infringing sites.  These are openload.co (ranked No. 6 in Australia’s top 250 infringing sites according to INCOPRO), rapidgator (ranked No. 31) and uploaded.net (ranked No. 33) [8] . These figures indicate that Australians use these sites and that there is a high likelihood that they are used by Australians for infringing purposes.

New avenues to a blocked site readily appear after an initial Court order

35.     Operators and owners of online locations are quickly able to circumvent blocking orders by changing domains names, IP addresses and URLs. These are available to users who can access these blocked sites until a copyright owner can return to the Court to obtain an extended order to add the new domains names, IP addresses and URLs.

36.     Copyright owners currently have a procedure through which they can return to the court and apply for an extension of the orders to cover these new domains names, IP addresses and URLs.  All extensions requested by copyright owners have so far been granted (Foxtel - June 2017, December 2017, February 2018, and Roadshow - February 2018). 

37.     The process usually takes about two to four weeks from start to finish and the CSPs then have up to 15 working days to implement the blocks. This process operates too slowly to allow copyright owners to address this the emergence of new pathways to the blocked site. The Department understands that the Court has the power under the existing s 115A to make more responsive orders and that could be made more clear through a clarifying amendment. 

The need for government action

 

38.     In response to the Department’s 2018 consultation, film industry copyright owners argued that section 115A does not fully achieve the policy objective of disrupting the supply of online infringing content to Australians.  Amongst other issues, these stakeholders identified that the section 115A does not:

·          require online search engine providers to disable access to search results to websites that are already subject to a Federal Court injunction that applies to a CSP.

·          enable efficient injunctions against some online locations which disregard the rights of copyright owners but might not have the primary purpose of infringing copyright or facilitating the infringement of copyright. Proving the intent of operators of these foreign online locations and their Australian users can be a particular problem.

·          efficiently disable mirror and proxy online locations which disregard the rights of copyright owners and are subject to an existing Federal Court injunction under section 115A , now and into the future .

 

39.     There have been attempts to address these concerns in other countries through voluntary measures, such as in the UK [9] .  Voluntary measures are welcome, and legislative changes to section 115A will not prevent these arrangements from being entered into. Indeed, there is unlikely to be a call for copyright owners to seek an injunction under section 115A if these voluntary measures are effective. However, it is important to have a legislative fallback if such measures are not adequate, or where they are no longer being adhered to by CSPs or online search engine providers.  

40.     Concerns raised in the 2018 consultation point to the need for a clearer and more effective legislative framework for copyright owners to protect and enforce their rights. In the absence of more effective tools, online copyright infringement in Australia may continue to be higher than some other countries. As noted above, comparing the results of our online copyright infringement survey with comparable surveys shows that copyright infringement amongst digital consumers is higher in Australia (33 per cent) than the UK (25 per cent) and Canada (26 per cent).

41.     In the case of the UK, part of its success may be attributable to the more extensive copyright enforcement regime that applies, including a website-blocking scheme that is more far-reaching and responsive. For example, in the UK, “live blocking injunctions”, have been obtained by the Premier League both in respect of the final portion of the 2016/17 season (in a test case before the High Court in March 2017) and subsequently in respect of the entire 2017/18 season.

42.     There is a strong case to consider reforms to the current website blocking arrangements to ensure that creators and investors get a fair return from lawfully acquired films and music.

Policy options

43.   The Department has considered three policy options, which are:

               i)           No change. Under this option, there would be no change to section 115A, which would operate as it currently does.

             ii)           Extend section 115A to online search engine providers and lower the threshold to “primary purpose or primary effect”. Under this option, section 115A would be updated to apply to online search engine providers and a broader range of foreign sites (e.g. cyberlockers) could be blocked under a section 115A injunction. It would be made clear that a Court has existing power to make more responsive orders.

 

           iii)           Extend section 115A to online service providers and lower the threshold to “substantial purpose or effect”. Under this option, section 115A would be updated to apply to online search engine providers and a broader range of foreign sites (e.g. cyberlockers and some websites/platforms) could be blocked under a section 115A injunction. It would be made clear that a Court has existing power to make more responsive orders.

Under all options, voluntary measures would continue to apply. However, it is highly unlikely that a copyright owner would seek an order from the Federal Court - either under existing arrangements (Option 1) or under the revised arrangements (Option 2 or Option 3) - if those voluntary arrangements were effective in addressing copyright infringement. 

 

Impact analysis

Option 1: No Change

44.     Option 1 would enable s 115A orders to continue to be made against CSPs for new online locations, and the current process for obtaining extended orders for new domain names, IP addresses and URLs would need to be followed. A number of stakeholders to the 2018 review argued that there should be no change on the basis that the applications had been successful, that traffic to blocked sites was lower, and that voluntary measures were already in place to complement the existing s 115A regime.

45.     Under a no change option, consumers would be able to readily access blocked sites via alternate domain names that could appear on search engine results, and would be able to freely access cyberlocker sites to store and share material, including infringing material. For those consumers who already comply with the law, there is likely to be no change as there is no evidence to suggest that prices for legitimate content are increasing. The introduction and rapid consumer take up of streaming services, with an increasingly broader repertoire of content, will provide a competitive environment amongst these services, with a wider range of options for consumers to access.

46.     Copyright owners would continue to derive significant benefits from the current scheme because they would be able to disrupt the majority of large-scale infringing websites that appear in the future. However, it is uncertain whether they would be able to block sites that have large amounts of infringing content but where the purpose of the site is not clear (e.g. cyberlockers). Left unchecked, there is a risk that Australian users will begin to utilise these types of sites to access and share infringing material. 

47.     It is possible that, if parties seek changes, the Federal Court may adopt a more streamlined process in the future to deal with the challenge of addressing new pathways to an online location (e.g. through the development of a practice note). Parties could agree before Court proceedings on a set of injunction order terms that would facilitate further blocking of future pathways to an online location with the future agreement of both parties. However, it is unclear whether the Court will adopt such an approach. 

48.     In terms of online search engine providers, copyright owners could also seek to develop voluntary agreements similar to UK arrangements, where infringing domain names and URLs are demoted from particular search results, and autocomplete results are modified to not return terms that lead users to pirated sites. If these arrangements work as intended, users would not be able to access blocked sites and less savvy internet users will not be able to discover the existence of the sites.

49.     However, there is uncertainty in relying entirely on voluntary arrangements between copyright owners and online search engine providers, particularly where these involve multi-national businesses, or where the arrangements are developed in other jurisdictions. These arrangements may be subject to change in the future without any notice. The Australian Government would have no control over the content of the arrangements (the UK Government does have some oversight) and would not be in a position to advise on, or assist with, any future improvements or implementation issues. 

50.     Maintaining the status quo would not change regulatory costs to business, community organisations or individuals.

Regulatory Costs

Business ($ million)	Community Organisations	Individuals	Total change in costs
$ 0	$ 0	$ 0	$ 0

 

Option 2: extend to online search engine providers and extend the “primary purpose” test

51.     Under this option, section 115A would be updated to apply to online search engine providers. Copyright owners would be able to seek an injunction against CSPs, who could be required to take reasonable steps to disable access to an overseas online location that had the primary purpose or primary effect of infringing, or facilitating infringement of, copyright. If a copyright owner seeks blocking by a CSP, they may also seek blocking by an online search engine provider.

52.     Consumers would face more restrictions in attempting to access blocked sites because alternate domain names would be blocked more quickly, and would be less likely to appear in search engine results. Instead of returning to the Court to obtain an extended order (which can take between 2-4 weeks), the copyright owner could agree with a CSP and / or an online search engine provider to more swiftly block access to a location through new domain names, URLs and IP addresses. 

53.     Consumers would also face more restrictions in being able to access cyberlocker sites to store and share material, including infringing material. Consumers who wanted to store legitimate material would have to find a legitimate site elsewhere. 

54.     T he online search engine market in Australia is dominated by Google (92%) and Bing (5%) [10] and it is expected that copyright owners will seek injunction orders against these providers only. These providers would have to decide whether to contest applications by rights holders under section 115A, and be in a position to implement any orders made by the Court.

55.     In terms of the infrastructure required to disable access to online locations, it is clear at least in the case of Google that it possesses the technical means to delist entire websites and has done so in other contexts, such as in response to Court orders in the following instances:

·          Google Inc. v Duffy [2017] SASCFC 130 (Oct. 4, 2017) (Australian case involving defamation);

·          Google Spain SL, Google Inc. v Agencia Española de Protección de Datos, Mario Costeja González (2014) (European Court of Justice on the “right to be forgotten”); and

·          Google Inc. v Equustek Solutions Inc. 2017 SCC 34, [2017] 1 S.C.R. 824 (Canadian case involving trade secrets).

56.     In addition, Google and Bing have agreed with rights holders on a “code of practice” in the UK that includes demoting UK search results of copyright infringing websites [11] .  We understand that the effect of this is intended to be worldwide, ie infringing websites will be demoted from Australian search results. From this, it is clear that both these online search engine providers have the existing capability to modify their search engine results to implement any orders under s 115A, although there may be a cost of maintaining systems to ensure they are up-to-date and effective (see further discussion below).

57.     During the consultation on the Exposure Draft Bill, concerns were raised that a possible unintended consequence would be to raise costs for providers of online applications that are not a known conduit to sites hosting infringing copyright works, or raising costs or creating other barriers to entry for challengers to the established incumbents in internet search.

58.     However, the risk of this is low because Court actions have been brought, and are far more likely to be brought under Option 2, against online search engine providers that are known conduits to infringing works (the Court must be satisfied that the service provider is providing access to the site otherwise it will not be reasonable to require them to block access), and small operators are unlikely to be targeted as has transpired to date with CSPs under section 115A.

59.     Even where a small operator is targeted, the Court would still be required to order that they take “reasonable steps” to disable access to an overseas online location. In many cases, a small operator may not have the capability to not provide a search result that refers a user to an online location, and therefore there may not be “reasonable steps” that a Court can order. 

60.     In addition, Option 2 will be supported by a power for the Minister to exclude, via legislative instrument, smaller entities from the provisions in the unlikely event of them being subject to injunction orders. This safeguard will ensure that Ministerial oversight is available to ensure that the Scheme does not impede the legitimate operations of, or the entry into the marketplace of, smaller online search engine providers. 

61.     The net annual impact of this option on online search engine providers would total $0.5m in the first year but fall to zero in following years. This is based on the reports of legal costs from the section 115A cases to date. This includes the following costs:

·          An average $0.4m cost of proceedings for online search engine providers. Given the dominant market share of two providers of search results to users in Australia, Google and Bing, copyright owners are unlikely to pursue any other providers. It is expected that these major providers will only bear the cost of proceedings for the first one or two cases, possibly to develop agreed orders. After this, it is likely that they will not make an appearance, similar to the process that CSPs have adopted. 

 

·          An average $0.1m setup and maintenance costs for two online search engine providers to ensure the technical capability to take steps the Court considers to be reasonable. It is understood that online search engine providers have already set up systems to undertake steps to reduce copyright infringement under a UK voluntary code of practice, and court-ordered website blocking in France. [12] Further setup costs are unlikely, in the presence of existing systems, but there may be a cost of maintaining systems to ensure that they are up-to-date and remain effective. To the extent that an online search engine provider also takes steps in other jurisdictions, these costs may be shared across countries.

 

62.     Although there may be costs borne by copyright owners, these are not costs of regulation for copyright owners. It is a commercial decision for a copyright owner to seek an injunction. If an owner does not wish to seek an injunction against online search engine providers for any reason (e.g. the costs exceed the benefits of lower copyright infringement), that is their choice. There is no obligation to seek or even consider an injunction, and therefore no regulatory costs. The cost of implementing the individual blocks incurred by online search engine providers would, consistent with section 115A decisions to date, be recoverable from copyright owners [13] .

63.     During the consultation on the Exposure Draft Bill, concerns were raised that some sites (e.g. Pinterest), might have the “primary effect” of facilitating the infringement of copyright, if a particular copyright owner (e.g. a photographer or studio) decided to make an application under s115A. Similar concerns were raised that the same risk could apply to non-infringing cyberlockers sites used, for example, by legitimate small businesses that need to share large-size files such as wedding videographers or distance education providers.

64.     However, copyright owners would be more likely to seek cooperation from the operators of popular websites to address online infringement issues (e.g. removing pay-per-view content appearing on Facebook Live) rather than seeking a court injunction. If an application was made, the operator of a popular website would be more likely to appear in the Court and oppose the making of an order, and provide detailed arguments as to why it should not be made.

65.     In particular, the likelihood of the Court ordering an injunction would be extremely low when the “primary purpose or primary effect” test is read in conjunction with subsection 115A(5). Under subsection 115A(5), the Court may, in determining whether to grant an injunction, take into account certain factors, such as:

·       whether the owner or operator of the online location demonstrates a disregard for copyright generally;

·       whether disabling access to the online location, or not providing search results that refer users to the online location, is a proportionate response in the circumstances; and

·       whether it is in the public interest to disable access to the online location, or not to provide search results that refer users to the online location. 

66.     Once these factors are applied, a Court would be likely to conclude that an injunction should not be made against popular sites such as Pinterest that have large amounts of legitimate material. The Court would also have regard to the aim of section 115A as noted in the Explanatory Memorandum to the Copyright Amendment (Online Infringement) Bill 2015, which stated that sites such as www.youtube.com or www.blogger.com would not prima facie satisfy the test as being an online location that infringes or facilitates infringement of copyright .

Regulatory Costs

Business ($ million)	Community Organisations	Individuals	Total change in costs
$ 0.5	$ 0	$ 0	$ 0.5

 

Option 3: Extend to online service providers and lower threshold to “substantial purpose or effect ”

67.     Under this option, section 115A would be extended to apply to online search engine providers. If a copyright owner seeks blocking by a CSP, they may also seek a Court order for an online service engine provider to take reasonable steps to not provide a search result that refers a user to an online location.

68.     Option 3 would also lower the threshold for online locations from “primary purpose” to “substantial purpose or substantial effect”. This would provide a much lower threshold, which may open up website blocking targeted beyond worst offender websites to other websites that may also host significant legitimate activity.

69.     Consumers would face stricter restrictions in attempting to access blocked sites because alternate domain names would be blocked more quickly, and would be less likely to appear in search engine results. Instead of returning to the Court to obtain an extended order (which can take between 2-4 weeks), the copyright owner could agree with a CSP and an online search engine provider to more swiftly block access to a location through new domain names, URLs and IP addresses. 

70.     Consumers would face stricter restrictions in attempting to access blocked sites because alternate domain names would be blocked more quickly, and would be less likely to appear in search engine results. Consumers would face more restrictions in being able to access cyberlocker sites to store and share material, including infringing material. Consumers who wanted to store legitimate material would have to find a legitimate site elsewhere. Sites that provide access to legitimate and non-legitimate material could also be blocked from Australian consumers if they meet the “substantial effect” element and the Court has no concerns with the safeguard factors in subsection 115A(5).

71.     As with Option 2, the same issues would be raised for smaller online search engine providers in relation to their capability to enforce section 115A orders, and the likelihood that Google and Bing would be the only online search engine providers that are targeted. However, they may be required to take reasonable steps to not provide a search result that refers a user to a bigger number of online locations.

72.     As with Option 2, the likely net annual impact of this option on online search engine providers would total $0.5m in the first year but fall to zero in following years. This is based on the reports of legal costs from the section 115A cases to date. This includes the following costs:

·          An average $0.4m cost of proceedings for online search engine providers. Given the dominant market share of two providers of search results to users in Australia, Google and Bing, copyright owners are unlikely to pursue any other providers. It is expected that these major providers will only bear the cost of proceedings for the first one or two cases, possibly to develop agreed orders. After this, it is likely that they will not make an appearance, similar to the process that CSPs have adopted. 

 

·          An average $0.1m setup and maintenance costs for two online search engine providers to ensure the technical capability to take steps the Court considers to be reasonable. It is understood that online search engine providers have already set up systems to undertake steps to reduce copyright infringement under a UK voluntary code of practice, and court-ordered website blocking in France. [14] Further setup costs are unlikely, in the presence of existing systems, but there may be a cost of maintaining systems to ensure that they are up-to-date and remain effective. To the extent that an online search engine provider also takes steps in other jurisdictions, these costs may be shared across countries.

 

73.     Although there may be costs borne by copyright owners, these are not costs of regulation for copyright owners. It is a commercial decision for a copyright owner to seek an injunction. If an owner does not wish to seek an injunction against search engine providers for any reason (e.g. the costs exceed the benefits of lower copyright infringement), that is their choice. There is no obligation to seek or even consider an injunction, and therefore no regulatory costs. The cost of implementing the individual blocks incurred by online search engine providers would, consistent with section 115A decisions to date, be recoverable from copyright owners [15] .

74.     During the consultation on the Exposure Draft Bill, concerns were raised that some sites (e.g. Pinterest), might have the “primary effect” of facilitating the infringement of copyright, if a particular copyright owner (e.g. a photographer or studio) decided to make an application under s115A. Similar concerns were raised that the same risk could apply to non-infringing cyberlockers sites used, for example, by legitimate small businesses that need to share large-size files such as wedding videographers or distance education providers.

75.     However, copyright owners would be more likely to seek cooperation from the operators of popular websites to address online infringement issues (e.g. removing pay-per-view content appearing on Facebook Live) rather than seeking a court injunction. If an application was made, the operator of a popular website would be more likely to appear in the Court and oppose the making of an order, and lead detailed arguments as to why it should not be made.

76.     Concerns about “overblocking” may have some substance if the threshold is lowered from “primary effect” to “substantial effect”.  The likelihood of the Court ordering an injunction would still be low but it will depend on how the Court applies the factors under subsection 115A(5).  That is, the Court may, in determining whether to grant an injunction, take into account certain factors, such as:

·          whether the owner or operator of the online location demonstrates a disregard for copyright generally;

·          whether disabling access to the online location, or not providing search results that refer users to the online location, is a proportionate response in the circumstances; and

·          whether it is in the public interest to disable access to the online location, or not to provide search results that refer users to the online location.

 

77.     Once these factors are considered, a Court would still be likely to conclude that an injunction should not be made against popular sites such as Pinterest that have large amounts of legitimate material. However, there may be other sites with large amounts of both legitimate and non-legitimate material that could be the subject of an injunction. This would raise concerns about “overblocking” and might raise counter-claims from owners/operators of legitimate sites that could be brought against copyright owners and CSPs who have implemented the blocks under the Court order. 

Regulatory Costs

Business ($ million)	Community Organisations	Individuals	Total change in costs
$ 0.5	$ 0	$ 0	$ 0.5

Consultation

 

78.     The options presented here take into account views from a public consultation in February and March 2018, as part of the Department’s review of section 115A. The Department received 22 submissions, mostly from representatives of copyright owners, internet service providers, tech sector firms (including online search engine providers) and consumers.

79.     Most stakeholder submissions agreed that section 115A has been a positive Government initiative which is working as intended. Several stakeholders argued that there was no immediate need for change. In particular, some rights holders and intermediaries believed there should be no substantive amendments. However, the film, sports and broadcasting industries proposed changes to expand section 115A to online search engine providers. Digital rights groups called for the repeal of s 115A altogether.

80.     The Department continued to consult with stakeholders on suggested changes made by copyright owners as part of a limited consultation conducted in September 2018.  Copyright owners were supportive of changes that are reflected in Option 2. CSPs and online search engine providers did not support these proposals, arguing that there may be unintended consequences. Online search engine providers also argued that the legislative requirements are unnecessary as they take voluntary measures in cooperation with copyright owners.

81.       To add clarity and address these concerns, the Option 2 proposal was adjusted to make it clear that:

·          an injunction may require CSPs and online search engine providers to block future pathways to blocked sites where these providers have agreed with copyright owners to take this action. The wording was expressly included in a subsection to make it clear that CSPs and online search engine providers cannot be coerced or forced into agreeing with copyright owners about the blocking of these new pathways. 

 

·          the safeguard factors already in place in section 115A (e.g. public interest, proportionality etc) may be taken into account before a Court orders an injunction. This addressed concerns from CSPs who were concerned that an order could be made requiring them to terminate the accounts of users, or to block sites that have legitimate content, i.e. to go beyond simply blocking of websites .

 

82.     The Department consulted with the Australian Competition and Consumer Commission, Department of Industry, Innovation and Science, Attorney-General’s Department, Department of the Prime Minister and Cabinet, Department of Treasury, and Department of Finance. The Department also consulted with its counterpart agencies in other countries. We understand from these discussions that website blocking by CSPs is operating well in the UK and in Singapore. In addition, as noted above, the UK Government has facilitated a voluntary code of practice that requires action by Google and Microsoft to address online copyright infringement.

Preferred option

 

83.     Option 2 is the best option in addressing ongoing problems with online copyright infringement in Australia. Extending section 115A to online search engine providers, and including a “primary purpose or primary effect” threshold is a balanced and measured approach that will enable copyright owners to more effectively enforce their rights while only providing a modest impact on online search engine providers. The “primary purpose or primary effect” threshold and Federal Court oversight will ensure that Australian consumers will be able to continue to access legitimate websites while only targeting sites that are the worst offenders.

84.     Option 1 would not achieve these objectives because the identified gaps in section 115A (e.g. discoverability, cyberlockers and the lack of certainty around voluntary measures) will not be adequately addressed. Government inaction would not be acceptable given that website blocking measures are contributing to lower levels of online copyright infringement in Australia, and improvements to section 115A are more likely to further improve these outcomes. 

85.     Option 3 would be an unreasonable extension of section 115A and could have an unacceptable impact on lawful and beneficial activities. Lowering the threshold for online location to those with a “substantial purpose or substantial effect” for infringing copyright (or facilitating copyright infringement) is likely to capture many websites that have significant legitimate purposes. Australian consumers could lose reliable access to websites they currently use every day for legitimate purposes, but happen to also host a significant amount of infringing (or at least not expressly permitted) activity. 

Implementation and evaluation

 

86.     The implementation of Option 2 would be achieved by legislative amendments to section 115A of the Copyright Act. Subject to Government decisions and parliamentary timings, these amendments will be included in a Bill that will be introduced in Parliament in the 2018 Spring Sittings. 

87.     The Department will continue to monitor the operation of any amendments, especially any impact on online copyright infringement and legitimate online services . The Department will continue to run an annual survey of online copyright infringement in Australia, including consumer behaviours on website blocking, and compare results with similar UK and Canadian surveys. The Department will examine how the annual survey can be adjusted to monitor the effectiveness of changes to section 115A, including on how the price of digital copyright content influences the behaviour of Australian consumers. It will also review any research commissioned by copyright industries and consumer groups that focus on this issue. The Department will also continue to liaise with stakeholders to understand the impacts of website blocking on communities and industries, and review court orders and judgments.

88.     The Department will also continue to monitor copyright enforcement activities in other countries, and liaise with foreign government counterparts. In particular, the Department will monitor the development of new enforcement mechanisms following the EU Parliament's recent copyright proposals which will require digital platforms, including online search engine providers, to take further steps to assist with copyright enforcement. This will help evaluate Australian copyright enforcement efforts in a global context and with regard to cooperation of digital platforms.