COMMUNICATIONS LAW Communications & Media Law Association Incorporated Volume 35, No 2

SPECIAL COPYRIGHT EDITION CAMLA BULLETINCOMMUNICATIONS LAW Communications & Media Law Association Incorporated Volume 35, No 2. June 2016

in the Online Space Copyright Developments in the Online Space INTRODUCTION to play a significant role in public policy and in commerce – particu- Eli Fisher, lawyer and co-editor Is Sports Clip Sharing Legal in of the Communications Law Bul- larly as content in Australia shifts to Australia? Applying the letin, moderates a discussion be- new digital platforms. UK Fanatix Decision tween two of the most prominent Some commentators have referred voices in the Australian debate to debates on copyright policy be- about copyright policy in the on- tween rights holders and consum- Copyright and Social Media line space. Laurie Patton CEO of ers as “the copyright wars”, and Internet Australia, and Jonathan while discourse is somewhat pola- Summary note on the Productivity Carter President of the Copyright rised at times, it can only be valu- Commission’s Intellectual Property Society of Australia and General able to consider reasonable argu- Arrangements Draft Report Counsel of the Australian song- ments from both sides. writers and music publishers’ collective, APRA AMCOS. Laurie Patton is 500 Versions of Software and the CEO of Internet Subsistence and Infringement They discuss recent developments Australia, the peak of Copyright – The Full Court’s in connection with site-blocking, body representing extended safe harbour provisions, Internet users and a Decision in JR Consulting v the development of an industry chapter of the influ- Cummings code governing how ISPs deal ential global Inter- with copyright infringement, the net Society. An In- After DBC: Can Piracy Be Curbed Dallas Buyers Club litigation, the ternet evangelist, he believes in the Outside of the Court? Productivity Commission’s Draft need to build our economic and so- Report and geo-blocking. cial future around a connected world where everyone has access to the In- Profile:Nicholas Cole Copyright policy has taken on enor- ternet and has the skills required to Legal Practitioner Director of mous importance in recent years. use it. Laurie’s career spans politics, Cole Media & Entertainment The ALRC conducted in 2012-14 journalism, senior management and Law and Producer at Talk Films the most comprehensive review non-executive directorships in me- of the Copyright Act 1968 since it dia, IT and the events industry, much came into effect almost a half cen- of which is detailed in his Wikipedia tury ago, and there have been nu- entry: merous other inquiries since, includ- http://bit.ly/1nk9eqU ing the inquiries into IT pricing and Jonathan Carter Editors online copyright infringement. The is President of the Victoria Wark & Productivity Commission’s review of Copyright Society Eli Fisher Australia’s IP arrangements is ongo- of Australia and ing, and the Government continues General Counsel Editorial Assistant to consider implementing a Fair of the Australian Imogen Yates Use regime in Australia. And with songwriters and innovation being promoted as the music publish- Printing & Distribution centrepiece of Australia’s economy ers’ collective, APRA AMCOS. As a BEE Printmail going forward, copyright continues music lover, he believes that songs

Communications Law Bulletin, Vol 35.2 (June 2016) Page 1 play an integral role in shaping Australia’s ing in recent times has come from the film and televi- identity and culture. He is an advocate for an sion industry and, I’d argue, for reasons of self-interest economic and social framework that support that are not advantageous to Australian producers music creators and allow music to have value much less consumers. That said, recent US reports are in the online marketplace. Jonathan’s career showing that live streaming of music (paid for) is now has been dedicated to advancing the interests taking off big time. This means that the Internet will be a of music creators, firstly as a solicitor in private critical platform for delivering music rather than current practice, then as a business affairs executive at physical forms like CDs (although I note an interesting major record labels, and now in his current role revival in vinyl is also occurring!) at APRA AMCOS. As a former television producer I am fully supportive of The Communications Law Bulletin is grateful copyright protections so long as they achieve the aims for their contributions. that Jonathan highlights. We also need to educate people about the purpose of copyright so that they The Federal Government is fo- understand the long-term downsides from copyright If we want cused on setting up the national abuse. Unfortunately, largely at the behest of overseas economy so that it can thrive in (Hollywood) rights holders and their local representa- Australia’s the digital age. Where do you tives, our government seems determined to introduce digital see copyright fitting into that, regulations and processes that we know from interna- and what if anything needs to tional experience just don’t work. A recent research economy change so that the industries report from Carnegie Mellon University found that a to continue you each represent may take massive UK site-blocking exercise only saw a 22 per- better advantage of what the cent reduction in unlawful downloading and a measly to flourish, future has in store for us? 10 percent increase in downloading from legitimate we need JC: The Australian music industry sites. Hardly a great outcome, especially given the to ensure is fully supportive of the Govern- costs involved for the ISPs required to implement the ment’s stated goal of creating a blocking (which will inevitably be passed on to con- we have a modern, dynamic, 21st century sumers in increased Internet access fees). regulatory economy for Australia. As physi- Curiously, it has since emerged that Hollywood has framework cal sales of music become obso- provided Carnegie Mellon with millions of dollars to lete, a strong and vibrant digital undertake their copyright research! Unfortunately, site- which market is crucial to the sustain- blocking does create a risk of damaging the efficient op- discourages ability of our industry. Innovation erations of the Internet. A while back, ASIC inadvertently is obviously a buzzword right now put 250,000+ sites offline for several days in an effort to free-riders and there is a lot of rhetoric in close down a few sites they alleged were committing and supports the media about how copyright consumer fraud. It is also worth noting that these “anti- hampers innovation. I genuinely piracy” moves are basically designed to assist overseas legitimate don’t see it that way. Innovation content producers, and not the local creative industry. operators comes in lots of different shapes For example, how many Australian feature films do you and sizes - the term should not think are being downloaded via overseas “pirate” sites? who can be limited to notions of techni- Not many. It might be different for music as Jonathon then cal or scientific creativity. Cultural suggests. If that’s the case let’s look for ways that help creativity (such as the art of song the Australian music industry as opposed to propping compete writing) is of course a form of in- up the price-gouging activities of the overseas rights on a fair novation, and it is just as impor- holders. Site-blocking is designed to help Hollywood, tant to set a regulatory framework not Australian film and television producers. playing field. that encourages the creation of content as well as the creation of JC: Laurie’s correct that that music streaming sites are the technical means for distribut- beginning to take off, not just in the US but also here ing that content. Either way, copyright is a key in Australia. The Internet is already a critical platform framework by which that innovation (techni- for delivering music, but it’s still early days for the sub- cal or cultural) is rewarded. In recent years the scription streaming services - by our calculations the music industry has embraced innovation in the number of Australian subscribers to legitimate music online market, and the music industry’s contri- streaming sites will need to increase four-fold before bution to the digital economy is significant – 62 the Australian music industry returns to the revenue percent of revenues from recorded music sales levels it generated before unauthorised overseas in 2015 were as a result of digital exploitation. If websites decimated the recorded music market. How- we want Australia’s digital economy to continue ever, I disagree with Laurie on his two other points. to flourish, we need to ensure we have a regulatory framework which discourages free-riders First, I think legislative intervention does work, admit- and supports legitimate operators who can then tedly it’s not a silver bullet but it’s an important part of compete on a fair playing field. the overall framework for a legitimate market. The international data we’ve seen from the UK supports this LP: Firstly, I think we need to differentiate be- proposition. There’s the Carnegie Mellon study, which tween the music industry and film and televi- Laurie rightly points out was funded by rights holders. sion. I’m not sure that they are exactly the same Of course, I’m sure tech companies would never fund in how they are being challenged by the advent academic studies to support their lobbying activities! of the Internet. Most of the more overt lobby- But there’s also a lot of music specific evidence we’ve

Page 2 Communications Law Bulletin, Vol 35.2 (June 2016) seen that supports our position, more on that later. over 20 legitimate online services in Australia Secondly, in the evidence that we’ve gathered for for a number years now. And every month thou- our upcoming “site-blocking” injunction, it’s clear that sands of Australians still download music from there is plenty of Australian music available on unau- illegal sites for free. Go figure. thorised overseas websites – even a cursory search for your favourite Australian artist on any of those sites will LP: I was at the parliamentary in- confirm that point. In my view, any measure that dis- quiry when the local rights hold- In my view, rupts access to “pirate” sites is intended for the benefit ers put their argument in favour of local producers just as much as overseas ones. of Internet site-blocking. At the any measure time I never doubted their sin- The Government has been concerned about the ef- cerity. I only questioned whether that disrupts fect of online piracy on the Australian marketplace they had actually considered the access to for creative content. Do you share the Govern- fact that site-blocking doesn’t ment’s concerns? How are the industries you each work. I also wondered if they “pirate” represent involved in responding to the issue of had differentiated between the sites is online piracy? unlawful downloading of overseas versus local content. By the intended for LP: I’m just not sure that the Government has actually way, there was nothing “reason- the benefit been all that concerned about the effects of unlawful able or proportionate” in what of local downloading of content, so much as they have been the “high profile representatives subjected to a concerted lobbying campaign by a select of overseas rights holders” had producers group of high profile representatives of the overseas to say – just blunt force trauma. just as much rights holders. Sadly, the claims from the rights holders I’m not saying that the Govern- that they are losing money through unlawful download- ment only consulted the rights as overseas ing of content have never been seriously questioned and holders. It’s just that they ignored ones. they have provided no evidence of significant losses. everyone else’s advice. The fact As I noted earlier, Australians have been ‘price-gouged’ that people started unlawfully on overseas content ever since the days of VCRs. Any- downloading and sales started to fall is not one who’s been to the US in the last 20 years knows that sufficient evidence. There’s no direct causal DVDs are much cheaper there than here. And if you’ve relationship that can be proved. People were been to the cinema in America you’ll also know that we copying music on tape recorders when I was pay a good deal more than they do to go to the mov- at school. Perhaps price has something to do ies. Our Prime Minster, Mr Turnbull, back when he was with this? I’m pretty certain more people would Minister of Communications, summed up the situation go to the movies if the price was lowered and pretty well when he stated that the best way to deal with it didn’t cost ten bucks for a bucket of popcorn! unlawful downloading is for the rights holders to make That said, it’s time in this conversation that I re- their content more easily available and at reasonable minded everyone that I support copyright pro- prices. Internet Australia backs this viewpoint. In fact tection. I just don’t believe that we should muck there is mounting evidence that unlawful downloading around with something as technically fragile as of video content is declining now that we have Netf- the Internet by introducing requirements that lix and the local streaming platforms, Presto and Stan, we know don’t work. There are more than 400 available. Internet Australia is concerned at the trend to ISPs in this country. It is ludicrous to think that blame the Internet and seek to solve the problem of un- we can stop unlawful downloading by taking a lawful downloading through methods that have the po- handful of them to court. tential to damage the Internet and to see our Internet access fees rise to cover the costs of implementation. Finally, for now, the relative price of content delivered online is certainly relevant in that JC: First, I’d like to clarify that it wasn’t just “high profile the Internet is essentially a free delivery mech- representatives of overseas rights holders” that lobbied anism so it costs no more to have someone the Government to introduce (some reasonable and download or stream content here or in LA. proportionate) measures to help tackle online piracy last Again, I repeat it is about educating people as year. APRA AMCOS was also there asking Government much as anything. to make some changes and we represent over 86,000 local songwriters and music publishers from Australia Let’s explore the site-blocking development and New Zealand. I can also recall seeing a number of that you have both raised a little further, highly paid lobbyists from the large ISPs and tech firms particularly given your respective roles. down in Canberra arguing against the Government’s Laurie, with you representing Internet us- proposals, so it would be misleading to suggest that ers in Australia, and Jonathan, with you be- Government only consulted with rights holders on its ing involved in one of the first applications, proposed changes. If Laurie’s after evidence of the im- your thoughts on this could not be more pact of unlawful downloading of content on legitimate timely. By way of background, last year, content sales, here’s some: unauthorised download the Copyright Act was amended to include sites first became popular in Australia in around 2000. a section 115A. The purpose of this new Since that time revenue from recorded music sales in provision was to give rights holders a new Australia has halved. As for the price of DVDs in the US, mechanism for protecting their interests. In well, debating comparative DVD pricing feels a bit last particular, it would allow a rights holder to century to me. Suffice to say, the world’s repertoire of apply to the court seeking an order that ISPs music has been easily available at reasonable prices via block their customers’ access to an “online

Communications Law Bulletin, Vol 35.2 (June 2016) Page 3 location” (such as a website) that is oper- has been marginally reduced it is probably because of ated outside of Australia and which has the the publicity that site-blocking cases have had more so primary purpose of facilitating the infringe- than the actual intervention. As Graham Burke of Village ment of copyright. What are your thoughts Roadshow told Fairfax media last year, “The high profile about this new right, and its prospects for case helped educate people about the threat that piracy reducing online infringement? imposes on the creative industry to those who didn’t re- alise or understand the implications.” This perhaps belies JC: APRA AMCOS is very support- what could be their ultimate motive for heading to the APRA ive of the new section 115A. By courts. That and the embarrassment presumably caused the time this article goes to print to the Government in the rights holders not rushing to AMCOS the music industry will have filed use a law for which they lobbied with such gusto (they its first set of proceedings under took more than six months to mount a case). is very the new provisions. I really don’t supportive think s115A is a particularly con- Others have reported that pressure was brought to troversial amendment to the Act. bear by the Government to finally see some action. So of the new Trying to disrupt access to over- in the end are we going to take such problematic ac- section 115A. seas websites which do nothing tion in the hope the publicity works to stop people? but exploit the creativity of others For those of us at Internet Australia that’s a pretty blunt By the time while giving nothing back to the instrument. Better to have a constructive education this article people whose music they exploit campaign. We’d happily support one. goes to print on their sites, as they make mil- JC: Firstly, as I alluded to earlier, the evidence that I have lions of dollars from the advertis- seen coming out of the UK relating to unauthorised the music ing which appears on them, can music services paints a very different picture to the one industry will hardly be equated with censor- Laurie describes. Once a critical mass of illegal websites ship or “breaking the internet”. I’m have filed had been blocked, the UK music industry saw a decline confident that the various actions in unauthorised music downloads and an increase in its first set of brought under the new s115A will subscriptions to legitimate music services. If this change be effective in reducing online in- proceedings was in part because of the publicity that the site-block- fringements. ing cases have had then that’s fine by me! There are a under My understanding is that the in- number of academic studies out there which support the new junctions sought so far in the UK this analysis. One study stated the following: “Website (under very similar provisions) are blocking has proved effective where applied. While provisions. having a positive impact on the blocking an individual site does not have a significant legitimate online content market impact on overall traffic to unlicensed services, once a over there. In any event, the Austra- number of leading sites are blocked then there is a ma- lian Government has indicated it will undertake jor impact. In the three years since The Pirate Bay and a review of the impact of the provisions after 18 numerous other sites were blocked in the UK, there has months, although I worry that may be too soon to been a 45% decline (from 20.4m in April 2012 to 11.2m form a conclusive view. I think we need to be re- in April 2014) in visitors from the UK to all BitTorrent sites, alistic about the amendment’s potential impact. whether blocked by ISPs or not. In Italy, where courts While it will certainly be of great assistance to the have ordered the blocking of 24 BitTorrent sites, there content industries, s115A is no panacea. Disrupt- has been a decline of 25.6% in the number of overall Bit- ing access to illegal sites is not enough in and Torrent downloads in the country in the two years from of itself to stem the flow of unauthorised digital January 2013.” (IFPI Digital Music Report 2015). content into Australia. Disruption will need to be As for the “whack a mole” issue, it’s true that the unau- combined with improved consumer education, thorised websites sometimes pop again under a dif- a reduction buying advertising on unauthorised ferent URL. But the court orders are formulated in such sites, and easy access to content at reasonable a way that these reincarnations are able to be quickly prices, if we are to achieve lasting and significant blocked without too much trouble. As for the time it change in the online content market. has taken rights holders to bring proceedings under LP: I can absolutely understand why APRA AM- the new section 115A here in Australia, I can assure COS would be keen to see something done to Laurie we haven’t been sitting on our hands the last address this situation. It’s their job to look after 6 months. We’ve been negotiating with ISPs about the interest of their members after all. I can only to what extent the applications can be brought co- repeat that site-blocking doesn’t work. The UK operatively, gathering evidence, satisfying the notice is in fact a good example of the problem we requirements to the infringing sites, all of these things face in getting people to understand this fact. take time and given it’s a brand new provision in the Yes, the UK legislation has seen countless sites Act we want to get it right first time around. blocked. On that basis you might think it was Finally, I agree with Laurie that constructive education successful. However, what happens is the own- campaigns are important and it’s great to hear his organ- ers of the blocked “pirate” sites simply set up isation would support one. As I keep saying, addressing another one, and/or change the name. It is col- the issue of online copyright infringement is not about loquially called “whack a mole”. choosing between “legislative intervention” or “educa- As cited above, an academic report on the UK tion”, they are just two of many factors which need to be experience release recently clearly debunked implemented to disrupt the illegitimate services. the theory that site-blocking works. If “piracy” CONTINUED ON PAGE EIGHT

Page 4 Communications Law Bulletin, Vol 35.2 (June 2016) Is Sports Clip Sharing Legal in Australia? Applying the UK Fanatix Decision Sally McCausland considers the implications of a UK copyright decision for Australian sports media.

On March 18, 2106 the England & Wales Cricket Board 2016 these figures had more than doubled. and its host broadcaster Sky UK Ltd won a legal action Revenue figures from advertising or other against the Fanatix sports fan clip sharing app (the “Fa- sources were not detailed in the judgment. natix app”). SUBSTANTIAL REPRODUCTION - According to marketing documents tendered as evi- PROTECTING THE INVESTMENT OF dence, the Fanatix app was intended to “disrupt the SPORTS BODIES AND BROADCASTERS $40 billion global sports media rights market” by creating “a single brand that users can access from any terri- The court found that the taking tory in the world”. However, only a year after its launch, of 8 second clips of highlights a UK court has found that the app infringes copyright. from broadcasts and films of 8 second The case, England & Wales Cricket Board Ltd v Tixdaq1, sports events was a “substan- excerpts has important implications for the development of the tial” reproduction and there- global sports rights licensing market, and more gener- fore an exercise of copyright. showing ally for those seeking to rely on copyright exceptions HIGHLIGHTS MARKET key match to distribute copyright material on social media. As UK courts are now bound moments It also raises the question, considered below, of how an by EU law, Arnold J interpreted shared on Australian court might rule on a sports video sharing app. the UK Act “as far as possible” in the light of wording and objec- the app were A KILLER APP tives of relevant EU Directives substantial The Fanatix app was advertised on the UK Apple App and of relevant international reproductions Store as: agreements directly adopted “Capture, Caption. Share! by the EU. These included of the TRIPS3 and the EU Information broadcast Create 8 second sports news snippets. Caption with Society Directive.4 Arnold J Attitude. Share sports video with millions of fans”. cautioned against reliance on or film from The Fanatix app works by letting fans “point their mo- UK case law decided before which they biles at their TV screens, and capture the moment that these instruments applied. were taken. matters most to them, adding their own comments as Justice Arnold acknowledged they do”. The clips can then be replayed in near live that the Information Society time by other fans worldwide for free. Directive rationale for copyright protection of The app makers acknowledged it would “[push] legal broadcasts and films is to protect the investment boundaries” as the clips it distributed were unlicensed. of the producer and broadcaster. In his Honour’s Instead, its business model relied on the “reporting view, a key investment made in a sports broad- current events” free exception under s 30 of the UK cast or film was the skilled, multiple angle cap- Copyright, Designs and Patents Act (the UK Act).2 (It ture and editing of highlights such as wickets. also relied on a safe harbour intermediary host de- His honour applied a qualitative as well as fence not discussed here). quantitative test to the question of what was To fit within the exception, the conditions of use re- a substantial reproduction of such moments. quired that fans add commentary to their clips, which Arnold J defined the “highlights market” it appears most did, and attribute the broadcaster by for sports clips as separate to the market for capturing its logo. Further restrictions were added in continuous live television coverage of sports later versions, such as expiry of clips after 24 hours, events. This meant that some parts of a match and a limit on how much video a user could see or up- would be commercially more valuable than other parts. Applying this test, Arnold J found load within certain periods. that 8 second excerpts showing key match The first version of the app launched in February 2015. moments shared on the app were substantial By June 2015 when the applicants became aware of it, reproductions of the broadcast or film from the app had over 50,000 active monthly users. By early which they were taken.

1 England and Wales Cricket Board Limited & anor v Tixdaq Limited & anor [2016] EWHC 575 (Ch). 2 Copyright, Designs and Patents Act (1988) (c 48, UK). 3 Agreement on Trade Related Aspects of Intellectual Property Rights 1869 UNTS; 33 ILM 1197 (1994). 4 Directive 2001/29/EC.

Communications Law Bulletin, Vol 35.2 (June 2016) Page 5 FAIR DEALING EXCEPTION UNDER S (2) which do not conflict with a normal exploitation of 30 UK ACT the copyright material; and The most interesting issue in the case was (3) which do “not unreasonably prejudice the legiti- whether the app fits within the fair dealing mate interests of the rights holders”. purpose of “reporting current events” in sec- Arnold J accepted evidence that the high volume of tion 30(2) of the UK Act. The key requirements near live clips offered free on the Fanatix app were of this exception are: affecting sales of the host broadcaster’s licensed TV • Purpose of the use of copyright material is subscription packages. More significantly, he found for “reporting current events”; that future rights deals were being threatened by the • Only a “fair” amount may be used; and “possibility the defendants might be able to offer clips via the App for free”. He did not consider relevant the • Requirement to attribute the copyright fact that existing industry practice, reflected in the lo- owner. cal industry code between broadcasters, enabled free MEANING OF “REPORTING CURRENT news access to footage by non-rightsholders in “lin- EVENTS” ear” news services. Nor did he consider relevant that Justice Arnold was prepared to give a rela- the applicants were not offering any standalone clip tively wide interpretation to the term “report- service to the public. Despite evidence that the ap- ing current events”, and both parties con- plicants’ clips constituted only a small portion of what ceded that reporting could include “citizen was shared, he considered the potential audience of journalism” and not merely reporting by tradi- “millions” of fans to be excessive. tional media outlets. Accordingly, he found that the use of the clips was not Unfortunately for the defendants, Arnold J con- fair. sidered that the primary purpose of the app was ATTRIBUTION not “reporting current events” but sharing of highlights from sports events. While noting that His honour held that in accordance with settled law, the the commercial nature of the venture was not of attribution requirement was satisfied by the inclusion itself determinative, his Honour found that the of the broadcaster logo. However, it was noted that in defendant’s objective was “purely commercial some cases the broadcasters’ logo was not included in rather than genuinely informatory”. the screen capture, and those were infringing uses. “FAIR” AMOUNT ARE THESE KINDS OF APPS LEGAL IN While finding that the app was not for the pur- AUSTRALIA? pose of current event reporting in s30(2), Ar- The following is a brief review of the potential out- nold J made some obiter comments about the come were a similar case to be brought under Austra- issue of fairness. The fairness issue is a notori- lian copyright law. ously difficult issue to litigate, as it is not simply SUBSTANTIAL REPRODUCTION – SAME RESULT a matter of measuring quantity via seconds or minutes used, but takes into account how the The determination of what is substantial reproduction use impacts the rights of the copyright owner. of a broadcast or film in the Fanatix decision is probably reasonably consistent with current Australian law. A key determining factor in fair dealing cases Arnold J cited the dual qualitative and quantitative therefore, is the court’s conception of the test used by the Australian Full Federal Court in TCN market that the copyright owner should le- Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2)5 (the gitimately control, and how far that protected “Panel case No 2”). In that case, a majority of the Full market extends into new areas of licensing Federal Court found that the respondent had taken which the owner is not yet exploiting. a substantial amount of the applicant’s broadcasts in In a precedential decision, Arnold J decided instances where the excerpts were between 8 and to directly apply Article 5(5) of TRIPS, known as 26 seconds of “highlights” or “memorable moments” the “three step test”. His Honour acknowledged taken from broadcast segments of up to 42 minutes. that the question of whether the three step test should apply to UK courts, or was directed only THE FAIR DEALING EXCEPTION FOR NEWS at the UK legislature when framing national REPORTING laws, had not been previously resolved. How- The general equivalent to the UK “reporting current ever, as defence counsel agreed with the appli- events” exception under Australian copyright law is cant’s counsel that it should apply, his Honour the fair dealing exception for “reporting the news” in proceeded on this basis. section 103B of the Copyright Act.6 The three step test consists of the following While there are some minor wording differences be- elements: tween the Australian and UK sections, the relatively (1) Exceptions should be confined to “certain broad construction of “reporting current events” in the special cases”; Fanatix case is also generally consistent with Australian

5 TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) [2005] FCAFC 53. 6 Copyright Act 1968 (Cth).

Page 6 Communications Law Bulletin, Vol 35.2 (June 2016) courts’ interpretation of “news reporting”, as applied in future UK cases if not overturned on appeal. the first Panel case before the Full Federal Court7 and Such an approach could make it more difficult in Telstra v Premier Media Group,8 discussed below. for UK copyright users to avoid a “future market impact” argument by the copyright owner. “FAIRNESS” AND MARKET IMPACT – A DIVERGENT APPROACH? To date Australian courts have not imported the TRIPS three step test into their fairness While UK decisions remain persuasive in Australian analysis of copyright exceptions. courts, the directive impact of EU law on UK decisions means that Australian and UK copyright law is diverg- Another difference which may ing. This divergence may be apparent in Arnold J’s emerge is the Australian “expec- comments on the issue of fairness in the Fanatix case, tation” of free access to sport But at first and in his construction of the purpose of the app. given judicial notice in Telstra v glance it Premier Media Group. While the In Telstra v Premier Media Group, the only reported UK court in Fanatix considered seems that Australian case on fair dealing and digital sports rights, that highlights which were “of a carefully Telstra sought an interlocutory injunction to prevent the interest” to fans were not suffi- designed first respondent from supplying video clips of up to two ciently newsworthy to permit fair minutes, with accompanying voiceover commentary, of dealing, it’s hard to overestimate video sharing NRL match highlights compilations to online services. how important sport news is to app may fare It was acknowledged that Telstra had paid premium Australians. It would be interest- sums for digital highlights rights to NRL broadcasts. Tel- ing to see how an Australian court better here stra claimed that these rights were being devalued by would weigh the arguments by than in the the respondents’ activities. Telstra sought orders to limit a sports rights holder if a video the duration and availability of clips to what it consid- sharing app case were run here. UK. ered a “fair” amount. IMPACT OF THIS CASE In rejecting Telstra’s application, Allsop J referred to the INTERNATIONALLY fact that Telstra had factored news access by third parties into its calculations for buying the rights. He also re- The UK decision is not binding on Australian ferred to the “public interest” in sports news, and that courts, but is likely to be influential. It is one the Australian public had “come to expect” sport news of the first international cases to comprehen- to be delivered to them. While Telstra v Premier Media sively review fair dealing in the context of so- Group was only an interlocutory hearing, the case since cial media. seems to have confirmed that there is scope for new The UK is a key territory in the global sports forms of unlicensed services using sports clips under rights market. The Fanatix decision may im- fair dealing in the Australian market, provided such us- pact international contractual sports and other age is not excessive. There have been no reported cases event rights negotiations, where provision is on sports fair dealing disputes since this case in 2007. made for news access to non-rights holders, In contrast, Arnold J’s judgment in the Fanatix case and fair dealing laws are factored into pricing. does not acknowledge that in future, if not already, legitimate news reporting by third parties will encom- WHAT NEXT? pass new forms of online distribution of sports news While at first blush theFanatix decision looks and that this would be a factor in any valuation of the like a clear win for rights holders seeking to “highlights market”. protect their interest in emerging digital licensing markets, the decision still leaves quite a lot A key difference in the approaches taken in these of scope for those who may wish to design a cases may lie in the direct import of the TRIPS three “genuinely informatory” unlicensed sports step test by Arnold J. The judicial application of the video sharing service. If such an app were to three step test is controversial. While evidence of the be tested in court here, the outcome is uncer- market impact of the defendant’s use has always been tain. Arguably, there were factors in the Fanatix relevant, the three step test is about protecting the in- case, such as the high volume of the videos terests of rights holders. As a directive to legislatures shared and the distribution of clips worldwide, considering how to frame a copyright exception in which would have been just as problematic in the public interest, it is appropriate. However, used an Australian court. But at first glance it seems in court it may invite the court too readily to quaran- that a carefully designed video sharing app tine “future” markets for the applicant, leaving little may fare better here than in the UK. room for new uses by third parties. Although Arnold J proclaimed that the use of the three step test did not substantially change the fairness analysis, he seems SALLY MCCAUSLAND has worked as a media to have emphasized the question of whether the use lawyer for over twenty years and is the princi- “conflicts with normal exploitation of the work”. While pal of McCausland Media Law. An earlier ver- the Fanatix case turned on purpose rather than fair- sion of this article first appeared at medialaw. ness, the import of the three step test may be felt in net.au.

7 TCN Channel Nine Pty Ltd v Network Ten Pty Ltd [2002] FCAFC 146. 8 Telstra Corporation v Premier Media Group Pty Limited [2007] FCA 568.

Communications Law Bulletin, Vol 35.2 (June 2016) Page 7 CONTINUED FROM PAGE FOUR

The section 115A amendment allows of the Bill, and something that has been taken up rights holders to try to minimise copy- in the Draft Report of the Productivity Commis- right infringement by trying, at the ISP sion, is the proposed extension of the Safe Har- level, to block access to websites that in- bour provisions. Currently an ISP would receive fringe copyright. But what about pursu- certain protections against an infringement ac- ing individual infringers themselves? I’m tion, provided it complies with the requirements interested to hear your thoughts about of the scheme. The proposal is to extend those the recent case brought by the production protections to a broader range of service provid- company of Dallas Buyers Club. There, the ers. What are your thoughts? production company, based in the USA, sought personal details of the Australian JC: APRA AMCOS is strongly opposed to expand- customers of various ISPs, so that it could ing the protections offered by the Australian Safe then pursue infringement cases against Harbour provisions to a broader range of online them (or at least look to settle each matter service providers. The intended beneficiaries of our upon payment of an amount of money). Is Safe Harbour provisions were always persons who pursuing individual Internet account hold- provide facilities for online services, not those who ers a viable option? themselves provide online services. In our view there is a clear distinction between an entity that does LP: First, it’s worth noting that in the DBC no more than provide the facilities for a communi- case we are talking about less than 5000 al- cation over the Internet and someone who is in the leged unlawful downloads. Thankfully, the business of providing or aggregating content on a court realised what was going on and set a website. Entities such as cloud music services, so- bar so high that the rights holders eventually cial networking and video sharing sites exercise a gave up and went away. On the available evi- different level of control over the material on their dence it appears there was an attempt to in- site or network and should not be protected by the troduce what’s called “speculative invoicing”, Safe Harbour Scheme – they should obtain a licence where rights holders send letters to alleged from the relevant rights holders. It’s worth noting that infringers threatening legal action unless the Government’s proposal to extend the Australian they agree to pay large sums of money, often Safe Harbour scheme purports to mirror the relevant in the thousands of dollars. Hapless consum- provisions of the United States’ safe harbor scheme ers knowing no better have been known to under their DMCA. But the United States’ safe har- hand over money when they didn’t actually bor scheme is at this very moment the subject of a need to. Or at least far more than any court formal review by the US Copyright Office as a result would logically order them to pay. of claims it is 20 year old law that is no longer fit for purpose. So why on earth would we want to amend JC: I think it’s fair to say that APRA AMCOS our Act now, to mirror the existing US provisions, and would have approached this matter some- not wait to see the outcomes of that review first? what differently from the manner in which the producers of Dallas Buyers Club appear LP: I am still thinking through the implications of to have done. My personal view is that bring- a “safe harbour” provision and other associated ing legal proceedings against individual ac- changes to the copyright law as they would affect the count holders is never going to be a viable Internet. I’m nominally in favour of a provision that al- option when it comes to discouraging online lows fair use and I have many well-versed colleagues copyright infringement. What I will say is that who are strong proponents of safe harbours. On the Perram J’s reasons for judgment in these pro- other hand, I’m never in favour of slavishly follow- ceedings are well worth a read, if only for his ing other jurisdictions, especially the US. We have a Honour’s highly entertaining turn of phrase. unique market structure and so we always need to It’s good stuff! tailor solutions to match our circumstances not copy others. LP: Perram J certainly had some fun at the expense of the DBC mob. And good on him. JC: I’ll only add that there is some great material cur- I agree with Jonathan that singling out in- rently circulating in the US at the moment describ- dividual consumers is the wrong way to go. ing how their existing safe harbor scheme has been However, that’s exactly what the rights hold- abused by content services in order to pay rights ers convinced the Government we should do holders below market rates for the content that drives by proposing the “three strikes” warning no- their advertising revenue. Do a search for the recent tice system. “Open Letter to YouTube” from the legendary artist manager Irving Azoff; it’s a good read. The Exposure Draft of the Copyright Amendment (Disability Access and Other Connected to the Safe Harbour scheme is the idea Measures) Bill 2016 was released earlier of an industry code. Could you give a little back- this year by Government. One of the most ground into that, and explain where industry is up controversial items in the Exposure Draft to in the development of that Code?

Page 8 Communications Law Bulletin, Vol 35.2 (June 2016) LP: Representatives of the ISPs worked with a rights Code has been parked for a year by all stake- holder group on a code only to find the rights hold- holders.] ers walk out on the process because they didn’t want to pay for it. One has to wonder if they are facing real The Productivity Commission has just re- identifiable financial losses of any magnitude if they leased its Draft Report in connection with couldn’t see the value in a system designed to stop its enquiry into Australia’s IP arrange- people unlawfully downloading because it wasn’t ments. Broadly speaking, what have been worth the cost to them! By the way, they have such the reactions of those in your professional a scheme in New Zealand and it is hardly ever used. circles, and what are your early thoughts?

JC: I was closely involved in the negotiation of the JC: It won’t come as any sur- code that was submitted to the ACMA for registra- prise to Laurie or your readers tion last year (it has not yet been registered). It was that rights holders were ex- No ISP I’ve a great process to be involved with and we achieved tremely disappointed by the spoken a lot in five months of discussions. For APRA AM- Productivity Commission’s re- COS, the code was not about “three strikes” leading cent draft report. Particularly to thinks to “potential legal action” as Laurie suggests. It was frustrating was the Commis- that they about asking ISPs to take reasonable steps to help sion’s characterisation of vari- should be rights holders notify and educate those consumers ous rights holder submissions who were repeatedly downloading illegal content as “self-interested” while the responsible over the ISPs’ networks. Rights holders were more submissions of large technol- for what than happy to pay for the majority of costs involved ogy firms set to benefit from in implementing the code. But we felt strongly that the proposed reforms were people if ISPs were genuine in their stated desire to help re- quoted and relied upon ad download duce online piracy and if compliance with the code nauseam. Frankly, there are any more meant ISPs were going to be protected from liability simply too many false assump- for copyright infringements on their networks, then tions and factual inaccuracies in than tollway they also needed to at least make a meaningful con- the Commission’s draft report operators tribution towards the costs of the code. And that is to address in the space avail- where the negotiations stalled. It’s true that Village able here but please feel free should be Roadshow ultimately pulled out of the negotiations to read APRA AMCOS’ public responsible (without prior notice to the ISPs or its fellow rights submission in response to the for the holder negotiating partners!) and that was unfortu- draft report in early June where nate. But the code has not been abandoned by rights all of our arguments will be set driving holders and I hope not by the ISPs. Rather, ISPs and out in full. habits of rights holders have agreed to put their negotiations over the code’s costs on hold until such time as we LP: All I’d say at this point is that motorists. have reviewed the impact of upcoming s115A ac- the Productivity Commission tions. During that time, the ISPs may also have im- has acknowledged what every- proved their automated notice sending capabilities, one has known for years, which is that histori- which may dramatically reduce the cost of the code cally Australians have paid an excessive price for all involved. for overseas originated video and content and that this is the result of geo-blocking. It is LP: I beg to differ with Jonathan. I was also involved extraordinary when you think about it that we in the formulation of the “three strikes” code. Perhaps have spent decades refining our consumer APRA AMCOS was happy to pay, but in the end the laws and our international trade agreements agents of Hollywood walked away. Village Roadshow and yet this outrageous price-gouging has unilaterally pulled out of the negotiations via an an- been allowed to continue. Once again, I’d nouncement at a news conference. I can personally ask that we differentiate between moves that corroborate reports that ISP representatives only would assist the local industry as opposed to became aware of this from reading newspapers the those that are simply designed to help large next day. On the matter of ISPs paying for the notice overseas content rights holders. scheme, I can’t speak for the big telcos but I think that the majority of ISPs were always of the view that JC: I think the issues around geo-blocking if the rights holders wanted a scheme like this they are more complex than simply equating it to should pay for it. No ISP I’ve spoken to thinks that the price-gouging of Australians by overseas they should be responsible for what people down- content owners. The reality is that funding for load any more than tollway operators should be re- Australian content depends on geo-block- sponsible for the driving habits of motorists. The no- ing at least to some extent – local producers tion that somehow 400+ ISPs are about to improve need the ability to sell exclusive rights in their their automated notice sending capabilities so they content to different distributors in different can send out threatening letters to their customers territories in order to recoup their invest- on behalf of rights holders is somewhat fanciful in ment. Lots of companies price their goods my opinion. [Editors’ note: after this piece had been and services differently in different countries completed, it was reported that the negotiation of the based on any number of variables - cost of

Communications Law Bulletin, Vol 35.2 (June 2016) Page 9 living, currency fluctuations, willingness to pay, competition in the local market, to name but a few. Plus, services are sometimes geo- blocked not just on pricing grounds but because the content or advertising is targeted to the local audience.

Finally, could you each provide some con- cluding remarks about moving forward – in particular, what are your concerns and hopes for copyright in a digital age?

LP: The protection of copyright is a fundamental element of our legal system and something that Internet Australia fully supports. We just do not believe that this justifies the imposition of costly processes that don’t work, apart from perhaps having some PR value. We are also opposed to slavishly doing what overseas rights holders want us to do. The same rights holders that have used geo-blocking to price-gouge Australian content consumers for decades. I’ve met with APRA AMCOS previously and would wel- come the opportunity to sit down with them and look at ways to deal with unlawful downloading that might actually work. One that would have the major benefit of looking after local rights holders. Thus far the schemes that have been proposed have been largely to the benefits of overseas interests. I spent six year as deputy-chair of the NSW Film and Television Office (now Screen NSW) and I am a former television producer. So I think my record of supporting the local content industry is such that I can argue against site-blocking without being seen to support so-called “pirates”.

JC: Content is such an important part of Aus- tralians’ digital experience and as more and more content is consumed online it is crucial from both an economic and cultural perspective that Australia gets its regulatory setting right in this area. Copyright is simply a framework by which creators (and those who invest in them) can be remunerated for their endeavours. I don’t think it’s such a bad thing for that framework to discourage consumers from using illegal services and encourage them to use legitimate ones instead. Laurie and I probably agree on that principle, where we diverge is over what are the most effective ways to achieve that end. I know Laurie’s been in this game, having debates like this, a lot longer than I have so of course I’d be very happy to meet with him and learn about his ideas on alternative ways to address the issues that continue to undermine the Austra- lian music industry, especially if they benefit Australian songwriters and music publishers. The coffee is on me Laurie!

Page 10 Communications Law Bulletin, Vol 35.2 (June 2016) Copyright and Social Media

Rebecca Dunn, Peter Pereira and David Krasovitsky1 provide some high level observations about copyright subsistence and infringement in the social media environment. The rise of social media has meant that individuals • whether there was sufficient effort of a lit- now produce and publish material to the public, a erary nature being expended by one or privilege that was previously held only by mass media more authors; and publishers. The freedom to create and the opportu- • whether the form of expression is the re- nity to share those creations online is unprecedented sult of particular mental effort which is not and powerful. This article considers the role that copy- essentially dictated by the nature of the right law plays in this new publishing environment. In information conveyed. particular, we address two questions: first, when does copyright subsist in a social media post and second, As to original skill, it is not enough to demon- how is any such copyright infringed? strate originality by the deployment of a literary device like a pun or double entendre. If COPYRIGHT SUBSISTENCE ON SOCIAL MEDIA the expression (in this case the headline) con- The subsistence of copyright in social media posts will veys no more than the fact or idea conveyed, depend on the nature and content of the publication, it will not be protected by copyright. The chal- and this will be informed to some extent by the social lenge for all publishers is to do more than this. media platform being used. For example, Instagram Ultimately, the issue of copyright subsistence enables users to publish photographs, and to incor- is an evidentiary one. porate their own editorial control over the appearance of the photographs via application of filters and other Like headlines, a tweet with sufficient origi- tools. It is very likely that copyright will subsist in most nality could also attract copyright protection. original photographs published on Instagram. Consider the following tweets from the comedian Jimmy Fallon: The situation is more complex in relation to the micro- publishing application Twitter, which allows users to tweet to their followers and the world at large. A tweet is capped at 140 characters, and in relation to copyright subsistence there is a live question as to whether a publication of such insubstantial length has sufficient originality to enable copyright to subsist. In considering whether a tweet can be a literary work, guidance can be drawn from the headlines case of It is likely that these tweets from Jimmy Fallon Fairfax Media Publications Pty Ltd v Reed International would not attract copyright protection under Books Australia Pty Ltd (2010) 189 FCR 109 (Reed). In Australian law because, as the court said in that case, copyright was found not to subsist in certain Reed, copyright does not protect facts or in- headlines of newspaper articles. Those headlines information or even ideas; it protects the origi- cluded the following: nal expression of ideas. • “Investors warned on super changes” On the other hand, consider the following • “Blackout probe sheds little light” tweets from the same comedian: • “Laser a ray of hope for eye problems” As can be seen, these headlines were mostly descrip- tive in nature with little originality in their exposition. In finding that copyright did not subsist in the headlines in issue, Bennett J acknowledged that this did not exclude the possibility that copyright could subsist in a particular headline (at [50]). As with the subsistence of copyright generally, the question is whether the party asserting copyright can adduce sufficient evidence to show that the headline is an “original literary work” within the meaning of s 32 of the Copyright Act 1968 (Cth). A find- Assuming these tweets have not been pub- ing of originality typically involves consideration of: lished elsewhere prior to Jimmy Fallon pub- • a number of factors including: original skill, labour, lishing them, they would appear to contain judgment or ingenuity in the expression of the idea; the requisite originality to attract protection.

1 Rebecca Dunn and Peter Pereira are lawyers in Gilbert + Tobin’s Intellectual Property group and David Krasovitsky is a graduate in Gilbert + Tobin’s Intellectual Property group.

Communications Law Bulletin, Vol 35.2 (June 2016) Page 11 There is clearly some ingenuity and effort of a his website to advertise a trip to Hawaii without the literary nature that went into their publication. photographer’s permission. The Federal Circuit Court ordered the travel agent to pay almost $24,000 in Given the millions of Twitter users the amount damages. Almost 18 months after the order, the ABC of potentially copyrightable material be- reported that the travel agent had yet to pay a cent in ing generated on a daily basis is enormous. damages. Tweets can also be ‘commercialised’. For example, the Twitter handle ‘The Grade Crick- READ THE TERMS OF USE! eter’ expresses humorous tweets based on Most if not all social media platforms have quite ex- the experiences of a participant in and ob- tensive terms and conditions regarding copyright. For server of the Sydney grade cricket competi- Facebook, Twitter and Instagram the terms state that tion. By way of example: the author of the post retains full copyright. Contrary to “Umpire warned me for running on the pitch. the popular view that anything posted to a social media I warned him he was wasting his twilight years platform is owned by the platform, users actually retain officiating meaningless grade cricket fixtures.” rights in material they publish online and as such can, to an extent, control what happens with their material. “Donald Trump bats 8 and doesn’t bowl”. Allowing publishers of material to retain rights miti- The success of the Twitter ac- gates the risk of legal liability to the platform itself. If count has now found expres- a tweet with Facebook, Instagram or Twitter retained rights in every- sion in a book called “The Grade thing posted on their platforms they could find them- sufficient Cricketer”, which essentially selves exposed to claims of infringement by third party originality takes the many tweets published rights holders. For example, if a user posts a video on by the author and converts them Facebook that features audio belonging to a recording could also into narrative form. This demon- label, Facebook purports to avoid all liability by stating, attract strates the importance and value under its terms of use, that it does not condone copy- of copyright protection, which as copyright right infringement and that it has no rights in what is Bennett J said in Reed “is con- posted. Instead, the record label would need to ap- protection cerned with rewarding authors of proach the platform or the user directly to have the original literary works with com- material removed. Facebook itself (and the other major mercial benefits having regard to platforms) have processes by which owners may re- the fact that literary works in turn benefit the quest the removal of copyright infringing material. reading public”. From a user perspective, it is important to appreciate INFRINGEMENT the consequences of posting material on social me- Copyright is infringed when material in which dia platforms. While the benefits of owning the intel- copyright subsists is used without the permis- lectual property rights in material are obvious, it is sion of the owner of the material. A person equally important to ensure the material posted does who infringes copyright exposes themself to not infringe the copyright of other people, and in the legal action by the owner of the copyright. event it does, to take measures to remedy this. There are examples both in Australia and internationally of actions brought in relation For publishers and media outlets, it is important to to the infringement of copyright works pub- recognise the intellectual property rights that users lished on social media. may have in material which warrants publication. As the cases described above show, it can be an expen- In 2013, a jury in New York ordered two media sive exercise to fail to treat material posted on social companies to pay $1.2 million to a freelance media in the same way as traditional methods of pro- photojournalist, Daniel Morel, for their unau- ducing content. thorised use of photographs he posted to Twit- ter (Agence France-Presse v. Morel, U.S. District For lawyers, appreciating the terms on which material Court for the Southern District of New York, No. is posted to social media is the first step in working out 10-02730). An editor at one of the media com- where intellectual property rights lie. Whether copy- panies had discovered Morel’s photos through right subsists in material depends on the same prin- another Twitter user’s account and provided ciples that apply to other content. the photos to Getty who went on to distribute CONCLUSION the photos widely, including to The Washing- While the interaction between copyright and social me- ton Post. The jury found that the media com- dia is evolving, the underlying legal principles remain panies had wilfully infringed Morel’s copyright, the same. The challenge for publishers is to generate and ordered the maximum statutory penalty original content, no matter what medium the content is available. It did not matter, for example, that expressed through. The challenge for media platforms is Morel’s Twitter feed was publicly available. to balance the need to allow users to express themselves Since then, Morel has posted photos to Twitter freely while providing robust protection for those whose with a large text box saying “(C) Daniel Morel”. own material might be infringed in the process. And the In Australia, in Tylor v Sevin [2014] FCCA 445 a challenge for lawyers is to deal with the fine lines in rela- landscape photographer from Hawaii sued an tion to the application of copyright law to subsistence Australian travel agent who used a print from and infringement in this new media landscape.

Page 12 Communications Law Bulletin, Vol 35.2 (June 2016) Summary note on the Productivity Commission’s Intellectual Property Arrangements Draft Report

By Michael Williams and Xavier Fijac

BACKGROUND Fair Use The Productivity Commission (PC) has released its In- • Replace Fair Dealing with a US-style Fair tellectual Property Arrangements Draft Report on 29 Use exception, with the acknowledge- April 2016 (Draft Report) (http://www.pc.gov.au/in- ment that legal uncertainty and increased 6 quiries/current/intellectual-property/draft). litigation will be the result. The fair use exception includes a new list of ‘fairness The Draft Report follows the PC Issues Paper dated factors’:7 October 2015. - effect of the use on the market or value KEY ISSUES of the copyright protected work at the time of the use; The PC has recommended sweeping changes to copyright law in Australia based on its adoption of the - amount, substantiality or proportion following positions: of the work used, and the degree of transformation applied to the work; • Copyright arrangements are “weighed too heav- - existing commercial availability of the ily in favour of copyright owners, to the detriment work; of the long term interests of both consumers and intermediate users”.1 - purpose and character of the use, including whether the use is commercial • Enforcement measures to encourage Internet ser- or private. vice providers to cooperate with rights holders, and litigation, have only had a “modest impact in reduc- There would also be a non-exhaustive list of ing infringement”, and further legislative change is “illustrative uses” which will constitute fair use. unlikely to improve compliance with the law.2 • Extend fair use to cover the use of orphan • Infringement declines with better content avail- works and commercially unavailable or ability and the timely release of content to Austra- out-of-commerce works.8 lian consumers.3 Parallel Importation • Increased protection for rights holders will have • Repeal parallel import restrictions for limited impact on infringement.4 books in order for the reform to take effect no later than the end of 2017.9 SUMMARY ADVICE Safe Harbour Scheme Topline PC recommendations: • Expand the safe harbour scheme to cover Term the broader set of online service provid- • Reduce copyright term from 70 year duration to ers such as search engines.11 25 years, by seeking mutual amendment of terms 5 Promoting global cooperation in collaboration with other countries. • Australia should revive its role in supporting • Reduce the term of protection for unpublished opportunities to promote global coopera- works from perpetuity to the current terms of tion on intellectual property policy among copyright protection.10 intellectual property offices through the

1 Draft Report, p 16. 2 Draft Report, p 477. 3 Draft Report, p 477. 4 Draft Report, p 477. 5 Draft Finding 4.2; Draft Report, p 17. 6 Draft Report, p 18. 7 Draft Report, p 18. 8 Draft Report p 121. 9 Draft Recommendation 5.2, Draft Report p 30. 10 Draft Recommendation 4.1, Draft Report p 119. 11 Draft Recommendation 18.1, Draft Report p 37. 12 Draft Finding 17.1; Draft Recommendation, 17.1, Draft Report p 37.

Communications Law Bulletin, Vol 35.2 (June 2016) Page 13 WIPO and the WTO to avoid duplication and reduce transaction costs.12 Geo-blocking • Legalise circumvention of geo-blocking as recommended by the 2013 House of Representatives Committee Report At What Cost? IT Pricing and the Australia Tax (House Report) to make it clear that Aus- tralian consumers may legally circumvent geo-blocking technology.13 • Avoid entering international treaties and trade agreements which impose obliga- tions to prevent consumers using circumvention of geo-blocking technologies.14 • The geo-blocking recommendation was not present in the Issues Paper. • There are more radical proposals on geo- blocking in the House Report which have the potential to impact commercial licensing arrangements. Other than legalising circumvention for consumers (explicitly referred to by the Draft Report), these recommendations include: 1. A right of resale for digital content for consumers, business, and educational institutions, including restrictions on vendors’ ability to ‘lock’ digital content into a particular ecosystem; 15 2. enacting a ban on geo-blocking as an option of last resort, should persistent market failure exist in spite of the changes to the Competition and Con- sumer Act and the Copyright Act recommended in the report;16 3. investigating the feasibility of amend- ing the Competition and Consumer Act so that contracts or terms of service which seek to enforce geo-blocking are considered void.17 Competition Law • The Draft Report reiterates the Harper Re- port18 recommendation that the Australian Government should repeal s. 51(3) of the Competition and Consumer Act which currently provides an exception or intellectual property transactions from prohi- bitions under competition law.19

MICHAEL WILLIAMS is a partner of Gilbert + Tobin and is head of the firm’s Intellectual Property group. XAVIER is a lawyer in the Intel- lectual Property Group

13 Draft Recommendation 5.1, Draft Report p 30; House Report, July 2013, Recommendation 5, p xiii. 14 Draft Recommendation 5.1, Draft Report p 30. 15 House Report, Recommendation 7, p xiii. 16 House Report, Recommendation 9, p xiii. 17 House Report, Recommendation 10, p xiii. 18 Competition Policy Review, Final Report, March 2015. 19 Draft Recommendation 14.1, Draft Report p 36; Recommendation 7, Competition Policy Review, Final Report, March 2015.

Page 14 Communications Law Bulletin, Vol 35.2 (June 2016) 500 Versions of Software and the Subsistence and Infringement of Copyright – The Full Court’s Decision in JR Consulting v Cummings

Anna Spies, King & Wood Mallesons, takes a look at the recent Full Federal Court decision in JR Consulting v Cummings and navigates a path through the vexed issue of subsistence of copyright in software releases.

The Full Court of the Federal Court of Australia, in its than 500 versions and updates recent decision in JR Consulting & Drafting Pty Lim- of the QSS. ited v Cummings [2016] FCAFC 20, considered the The Full difficult question of copyright subsistence and in- The appellant parties were all as- Court fringement in the context of multiple releases or ver- sociated with Mr Pacione. The ap- sions of software. emphasised pellant parties conducted a busi- the need The software developer in JR Consulting v Cummings ness that involved the supply of had developed and released more than 500 versions equipment to manufacture steel to take a or updates of the software in issue, some of which con- frame structures for residential commercial and commercial construction and tained a relatively insubstantial update to the previous approach to version. The Full Court ultimately found that copyright associated software. The system subsisted in each version of software. Each was origi- that was supplied was integrated the issue of nal, taking into account the independent intellectual with computer aided design soft- construction effort that was required to develop each version. ware and computer aided manu- facturing software. by The Full Court’s decision is important for its analysis identifying of the basic principles of originality, authorship and In 2002, Mr Cummings and the the subsistence of copyright, as well as for its consider- first appellant (JRC) entered into ation of the relevance of originality in an infringement an agreement for the transfer of commercial claim. In particular, the principles established are an a non-exclusive interest in re- purpose or important development on the discussion of inde- spect of QSS (the 2002 Agree- pendent intellectual effort and authorship from the ment). In February 2004, Mr object of the High Court’s decision in IceTV Pty Ltd v Nine Network Cummings’ company, Tanmari, agreement Australia Pty Ltd (2009) 239 CLR 458. It is also an im- granted the second appellant by reference portant case for legal representatives to consider in (HSFS) an exclusive licence to the context of pleading and preparing evidence on use and exploit QSS in Australia to the subsistence and infringement of copyright in circum- (the Exclusivity Agreement). In interests of stances where there are multiple similar versions of August 2004, Tanmari granted both parties software, in particular on what inferences might be HSFS a perpetual non-exclusive able to be drawn. licence in relation to QSS in the THE FACTS OF JR CONSULTING V world (this excluded Australia, CUMMINGS except if the Exclusivity Agreement was ter- minated or expired) (the 2004 Agreement). The commercial dispute in the proceeding concerned the ownership and control of the “Quik Se- ries Software” (QSS). The QSS was software used in The Cummings parties (the respondents) the design and manufacture of cold form metal light contended that copyright in the QSS was in- gauge wall frames, trusses, flooring and roofing used fringed by the appellants by the sublicensing in construction. by JRC of the QSS to SFSI (the fourth appellant) and by SFSI in turn sub-licensing the use The facts of the dispute and the relationship between of that software to a number of its customers the parties are complex, but in broad terms, Mr Cum- pursuant to contracts between SFSI and those mings, the first respondent to the appeal, developed customers. The Appellants claimed that they and was the author of the QSS. The other respon- derived an interest under the 2002 Agree- dents, Tanmari and FIPL, were companies controlled ment that entitled JRC to non-exclusively use by Mr Cummings. Between 1990 and November the QSS and to sub-licence the QSS to others, 2011, Mr Cummings developed and released more including its customers.

Communications Law Bulletin, Vol 35.2 (June 2016) Page 15 THE CONSTRUCTION OF THE 2002 date or new version of QSS. The Full Court found that AGREEMENT copyright subsisted in each version of the QSS that The question of whether the appellants had was created by Mr Cummings up to November 2011. infringed copyright was dependent in part The respondents to the appeal contended that each upon the construction and continued opera- update or new release, being the whole or a substan- tion of the 2002 Agreement. tial part of the previous version with additional mate- The primary judge found that rial, was a “new literary work”. In contrast, the appel- the 2002 Agreement did not lants denied that each update or new release of QSS The key effect an assignment of copy- was a new literary work, as each update or new release copyright right. Rather, JRC was given a was “not substantial enough” to be a new work. The question non-exclusive licence in rela- deleted or amended material was “not original”. In ad- tion to QSS which was limited to dition, the appellants argued as an evidentiary ques- in the the version of software as at the tion that the respondents had failed to establish that proceeding date of that agreement. The pri- Mr Cummings had contributed sufficient effort, skill, was whether mary judge found that it was im- labour and judgement, as author, in order to establish probable that the parties could that each version of the software was an original work copyright have objectively intended that of authorship. subsisted Mr Cummings would grant a li- At first instance, the primary judge found that the re- in each cence to use all future versions spondents had established that copyright subsisted update or of QSS without any time limita- only in three versions of the software, being the only tion and allow JRC to sublicense versions in respect of which there had been evidence new version others without imposing signifi- of the time and effort spent by Mr Cummings and a of QSS. The cant controls on the use of that significant increase in the line count of the source Full Court software. The agreement was code. The primary judge found that the evidence directed to the software as it ex- which had been led did not allow a finding that all up- found that isted at a point in time. dates were original in the relevant sense, even though copyright The Full Court upheld this find- it was likely that that many such updates were original. subsisted in ing on appeal. The Full Court The principles of originality explained each version emphasised the need to take a commercial approach to the is- The Full Court set out an important analysis of the of the QSS sue of construction by identify- principles applicable to the subsistence of copyright that was ing the commercial purpose or in circumstances where an original work has been altered by a number of changes that are insubstantial in created object of the agreement by reference to the interests of both the context of the foundation work (at [244] to [385]). by Mr parties. The Full Court found that In particular: Cummings the 2002 Agreement was poorly • Authorship is central to the overall scheme of Part up to drafted, and while there were III of the Copyright Act 1968 (Cth). There is a “cor- matters that could be advanced November relative” relationship between authorship and in favour of the construction con- originality. The requirement that a literary work be 2011 tended for by the appellant (that original requires that the literary work originated the agreement extended to new with the author and that it was not merely copied releases), they were outweighed from another work. In this context, the Full Court by the matters identified by the primary judge’s extracted and considered the relevant principles commercial construction. The finding that the set out by the High Court in IceTV v Nine Network 2002 Agreement did not effect an assignment Australia and in Data Access Corporation v Power- of copyright was not challenged on appeal. flex Services Pty Ltd and others(1999) 202 CLR 1. The Full Court also upheld the primary judge’s • The Full Court stated that the “contemporary ques- finding that the 2002 Agreement had been tion is simply this: Has the author deployed per- abandoned. Even though HSFS was not a sonal independent skill, labour, intellectual effort, party to the 2002 Agreement, the Full Court judgement and discrimination in the production of found that the inference was irresistible that the particular expression of the work?” (at [264]; by the date of the 2004 Agreement the par- emphasis original). ties considered that future licensing of the QSS would be governed by the Exclusivity • The reference to “effort of a literary nature” in the Agreement and the 2004 Agreement. High Court’s decision in IceTV was not likely intended to introduce any notion of literary “merit” SUBSISTENCE OF COPYRIGHT IN or “creativity” into the statutory correlation of au- UPDATES AND NEW RELEASES thorship and originality (at [260]). Neither literary The key copyright question in the proceeding merit nor novelty or inventiveness is required and was whether copyright subsisted in each up- although the law of copyright does not protect

Page 16 Communications Law Bulletin, Vol 35.2 (June 2016) function and extends only to the expression of a pended sufficient independent skill and la- work, a work may serve utilitarian ends ([261]). bour in bringing it into material form. Profes- sor Ricketson stated that it may be assumed • The observations of the High Court in IceTV may that the author has carefully reviewed and have “raised the bar” on the threshold skill, labour considered the preceding text as a whole. and judgment required for originality. However, The Full Court stated that this “assumption” the Full Court noted that the High Court in IceTV might be properly regarded as an inference also affirmed that “too much” has been made from foundation facts. of the kind of skill and labour that must be expended: the requirement is that the work “origi- The Full Court’s findings on nates” with the author from “some independent the QSS particular intellectual effort” (at [285]). The Full Court found that the • In relation to database “compilations” of pre-exist- evidence was sufficient to prove revision ing data and information,1 the Full Court stated that that Mr Cummings was the au- of the the “selection” and “arrangement” is likely to be the thor of all source code for the programs authorial or original contribution and noted that the QSS and that Mr Cummings had degree of originality may require close examination applied enough skill and judge- on each for subsistence more broadly. The Full Court also ment to make each version an occasion noted that in such cases, it may be difficult to iden- original work in its own right. as part of tify which author or group of authors undertook the The Full Court took into account selection and arrangement (at [282]). the history of the development the whole of QSS by Mr Cummings, his of the work The Full Court found that particular considerations authorship of each sequential arise in relation to the correlative relationship be- change to the code, the dedica- with the tween the author and original work in the context of tion of his time, effort and judg- application a work which requires regular revisions and updates, ment to writing the code and his of sufficient which may be insubstantial in the context of the foun- release of “entire package” of dation work. As an illustrative example, the Full Court programs after making each set skill and considered a hypothetical legal text on equitable of changes or updates. The Full judgement remedies which requires relatively regular changes Court concluded (at [304]): to make to update the text, which may be individually insubstantial in the context of the foundation work. For ex- To the extent that each sequen- each version ample, only a number of paragraphs of the text may tial update … reflects changes as updated be altered to reflect one or more new decisions. The to the source code by addition and released Full Court asked (at [275]): or deletion (whether the recti- fication of errors or a new set an original Is the text as altered, as a whole, to be regarded as of instructions to bring about work in its a new original work? Are the changes, when ana- a certain result) that might be lysed, just too insubstantial to bring about a new regarded as, quantitatively at own right work? Do the alterations themselves reflect original least, insubstantial, an infer- authorship? If there is no new work as a whole (that ence arises from the circum- is, a revised, updated whole), what “work” is the stance of his authorship of the entire pro- true source of the rights of the copyright owner? grams comprising QSS, over time, and his What would be the “work” once the foundation election to release, with each numerical ver- text has been amended in, for example, 30 or 50 sion of QSS, the entire program as updated, “insubstantial” ways? To identify “precisely” the to the following effect: that he has carefully “work” (and thus the source of the author’s rights) considered the preceding state of the suite is it necessary to identify the state of the founda- of programs and that the alterations, inser- tion text and then identify each and every change tions or deletions are intended to be con- by addition and deletion to that text to show that at sistent with and enhancements of what has some point the “work in suit” emerged. gone before. In other words, Mr Cummings The Full Court considered the commentary of Profes- has undertaken a particular revision of the sor Ricketson,2 who noted that each successive draft programs on each occasion as part of the needs to be considered in overall terms as the ap- whole of the work with the application plication of fresh authorial effort in revising, review- of sufficient skill and judgement to make ing and “settling” what has gone before. Providing each version as updated and released an the work is not a mere slavish copy, it will constitute original work in its own right. an original work in its own right if the author has ex- (emphasis added).

1 The present proceeding did not concern database compilations and the database and compilation cases were mentioned by the Full Court for the principled approach to originality and subsistence (see [284]). 2 Ricketson S and Cresswell C: The Law of Intellectual Property: Copyright Designs and Confidential Information, Thomson Reuters.

Communications Law Bulletin, Vol 35.2 (June 2016) Page 17 INFRINGEMENT OF COPYRIGHT quality, because the part taken may be something Since the Full Court found that copyright sub- that is itself largely unoriginal (at [267]). sisted in each version of QSS, it necessarily • In determining whether the quality of what is taken followed that any version of the QSS repro- makes it a substantial part of the copyright work in duced by SFSI or communicated, to its cus- suit, as the source of the rights, it is important to tomers, without licence, infringed copyright. enquire into the importance which the taken portion bears in relation to the work as a whole. Is it The appellants argued that the respondents an essential or material part of the work in suit (at failed to prove objective similarity between [268])? the software used and licensed by SFSI and a relevant work in suit. They argued that it was • In the context of a computer program, it is there- necessary to identify the version or update of fore necessary to examine what was allegedly the QSS relied upon and then demonstrate taken, the set of statements or instructions com- that the relevant work has been infringed. It prehended by what was taken and compare it was not permissible, the appellants argued, with the original. A person will be unlikely to have to use a “representative sample” of the work reproduced a substantial part where they repro- in suit to draw an inference of infringement duce parts that are “data” or “related information” about all elements of the work at all moments and which are not relevant to the statements or in time (including for new versions and up- instructions to be used to bring about a certain dates). result (at [269]-[271]). The Full Court found that the evidence dem- CONCLUSION onstrated that SFSI was supplying a version of The Full Court’s decision constitutes an important QSS. In addition, there had been no contest development in principle on the question of original- of whether SFSI was supplying something to ity and copyright subsistence. In deciding whether its customers other than a version of QSS. Ac- copyright subsists in a version of software, the ques- cordingly, there was no probative or forensic tion was not whether a particular change made in that need for the appellants to conduct an analysis version was substantial or insubstantial. The question of a version of QSS with the version used and was whether there has been some independent intel- licensed by SFSI in order to prove objective lectual effort deployed in the context of making that similarity. Accordingly, the Full Court upheld small change that was sufficient to establish that each the finding of copyright infringement. version was protected by copyright. This independent intellectual effort might include careful revision and As part of its discussion of originality in the consideration of the preceding version as a whole. context of subsistence of copyright, the Full Court also (obiter) considered the question of originality in the context of infringement. ANNA SPIES is a solicitor in the intellectual property The Full Court stated: dispute resolution group at King & Wood Mallesons.

• The analysis of whether a substantial part has been reproduced necessarily en- gages a consideration of the quality of the part of the work alleged to have been reproduced. The fact that a part reproduced “originates” from the author does not of itself necessarily mean a substantial part has been taken, having regard to the

SAVE THE DATE CAMLA CUP TRIVIA NIGHT THURSDAY 4 AUGUST 2016 BAVARIAN BIER CAFE

Page 18 Communications Law Bulletin, Vol 35.2 (June 2016) After DBC: Can Piracy Be Curbed Outside of the Court? Adrian Dean takes a look at the landscape post Dallas Buyers Club.

INTRODUCTION found that these elements had been met and ordered 6 After much publicity, expense and speculation, the the ISPs to handover details of account holders to DBC. case of Dallas Buyers Club LLC v iiNet seems to have It would appear that the courts are now willing to order finally reached a conclusion.1 Threats by Voltage Pic- ISPs to hand over the details of those who have alleg- tures - the owner of the rights to Dallas Buyers Club – edly engaged in illegal file sharing activities. However, in to bring proceedings against those who have illegally anticipation that DBC would engage in similar standover downloaded the film will not likely bear fruit. There- tactics to those commonly undertaken by content dis- fore, those who decide to illegally download films in tributors in other jurisdictions, Perram J stayed the order, 7 Australia will possibly face only the lightest slap on the pending the approval of letters of demand. wrist. The case has once again brought to the foray the social and economic complexities of internet pi- PENALIZING THE INDIVIDUAL: SPECULATIVE racy. This essay examines the outcomes and ramifica- INVOICING tions of the recent Federal Court case. Further, it will Submissions for damages made by DBC included two explore actions that government and enterprise may permissible demands. Perram J would allow damages take to minimize future piracy and encourage the de- equating to the cost of purchasing the movie for each velopment of a fair basis for creatives to protect their copy downloaded, as well as costs associated with track- professional livelihoods. ing down those who had allegedly downloaded the content.8 The permissible demands equate to what would DALLAS BUYERS CLUB LLC V IINET likely be a relatively small monetary amount. The fur- The Dallas Buyers Club case was of particular interest ther two submissions for damages made by DBC were as it dealt with the relatively unexplored areas of pre- deemed impermissible. DBC argued that they should be liminary discovery and a rights holders’ ability to take able to claim damages for the cost of a licensing fee that action against perpetrators by way of speculative in- each party would have paid to legally share the film. Per- voicing. DBC sought the details of 4276 IP addresses ram J stated that such a submission was “so surreal that it from six Internet service providers (ISPs), alleging should not be taken seriously.”9 A further submission that the account holders of these addresses had illegally punitive damages should be calculated based on how downloaded and shared the film.2 While all ISPs stated many other instances of piracy the infringer had previ- that they did not condone acts of piracy, they resolved ously engaged in was also dismissed. The Copyright Act to fight defiantly for the privacy of their customers.3 does not permit calculation of damages by reference to other instances of the individual’s breach of copyright.10 PRELIMINARY DISCOVERY Preliminary discovery refers to a party discovering limited Speculative invoicing involves sending letters of de- details (such as one’s identity) before the commence- mand for high monetary sums to those who have al- ment of substantive legal proceedings.4 DBC identified legedly engaged in pirating activities. Commonly 4276 IP addresses that allegedly engaged in illegal file used in both the UK and the US, they often threaten sharing. Without specific account holder details (which further legal action should the demands of the rights only ISPs would hold) the IP address details were effec- holder not be met.11 While Dallas Buyers Club did not tively useless. Division 7.22 of the Federal Court Rules deal with speculative invoicing per se, the case sets reads that, where a person may have grounds to ob- a precedent in respect of preliminary discovery and tain relief against a prospective respondent, but is un- the legitimacy of obtaining relief against the prospec- able to identify who that prospective respondent is and tive respondent. The Federal Court Rules state that some third party is likely to know who the prospective preliminary discovery should be granted only on the respondent is, the court may order the third party to as- grounds of obtaining relief.12 As DBC sought to gain sist in identifying the prospective respondent.5 Perram J more than mere relief and arguably wanted to intimi-

1 Dallas Buyers Club LLC v iiNet Limited (No 5) [2015] FCA 1437. 2 Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317, 1. 3 Ibid 2. 4 Federal Court Rules 2011 (Cth) div 7.21. 5 Ibid div 7.22. 6 Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317, 72. 7 Ibid 93. 8 Dallas Buyers Club LLC v iiNet Limited (No 4) [2015] FCA 838, 16. 9 Ibid 23. 10 Ibid 32. 11 Productivity Commission, Intellectual Property Arrangements Productivity Commission Issues Paper (2015) 20. 12 Federal Court Rules 2011 (Cth) div 7.22(1)(a).

Communications Law Bulletin, Vol 35.2 (June 2016) Page 19 date infringers to settle claims (through speculative in- The Bill allows content owners to seek from the Federal voicing), Perram J denied preliminary discovery.13 Court an order for ISPs to block websites whose primary purpose is facilitating copyright infringement.16 WHERE DOES THIS LEAVE PIRATES AND However, such an approach is intrinsically flawed. The RIGHTS HOLDERS? then Minister of Communications made clear in his sec- The case is a ‘win’ for those who engage in download- ond reading speech that no action would be taken on ing pirated films. The case demonstrates that should a websites that can still be accessed by way of a Virtual rights holder wish to compel a third party ISP to iden- Private Network (VPN).17 Therefore, while the blocking tify account holders, they will be able to do so if the of illegal content providers may deter some casual court is satisfied about the nature of the relief sought. downloaders, the reality is that the Bill will likely have minimal impact on dedicated downloaders. Critics After arduous litigation, it seems that the court will only of the Bill argue that a further substantive flaw lies in grant a fraction of what the rights holders had originally the independent manner in which ISPs are allowed to submitted. Given the hassle, cost and the little reward carry out orders to block a website, with no third party associated with such an outcome, it is highly unlikely supervision over the process. Some argue that where that further legal action will be pursued. Critics will no ISPs have full control of the blocking process, file shar- doubt question the decision. The outcome lacks any ing websites such as Dropbox, whose primary function hard notion of deterrence. It seems the Federal Court does not include an intent to host infringing material, believes that such an issue is one best left to Parliament. could be inadvertently blocked.18 THE THREAT TO RIGHTS HOLDERS IS REAL Clearly, the Bill has flaws. However, it is an attempt at While those who use illegal downloading services can providing some form of initial legislative position after sleep easy at night, there is little joy flowing from the many years of government inaction on an issue that decision for producers and creatives, individuals whose has a wide impact on Australia’s creative industries. intellectual and physical efforts are scarcely rewarded at The then minister made clear in his second reading the best of times. Add piracy to the mix, and the impact speech that this is a piece of legislation that is up for on their rightful earnings, as well as broader economic constant review and amendment.19 Statute in this fast consequences for the industry, point to a significant is- moving technical arena does require constant tinker- sue that requires action from lawmakers and industry ing; there is also an inherent element of trial and error. alike. Legitimate movie sales since the introduction of BitTorrent have seen a worldwide decrease of 27%.14 As discussed, critics believe that the Bill may lead to the Take one of Australia’s most successful films, The Sap- potential blocking of websites with little to no illegal phires, as a case in point. The film won the unconveted copyright sharing intent. However, the Bill’s explanatory position of 46th on the ‘100 Most Illegally Downloaded memorandum does give specific guidance as to fac- Movies of 2013’ list. While the film did make an impres- tors to be considered by the court in applying the Bill. sive $14.5 million at the Australian box office, it has These factors include the flagrancy of the infringement been suggested that producers lost over $1 million of or its facilitation, whether the owner or operator of the potential revenue due to piracy. While this figure pales online location demonstrates a disregard for copyright generally, whether blocking access is a proportionate in comparison to US blockbusters, it is a stark reminder 20 that the actions of the armchair thief, whose misguided response, and the public interest. We can reasonably belief that piracy does not equate to stealing, , in fact, surmise that the consideration of such factors would ef- having greater economic consequences closer to fectively assist in the prevention of blocking websites home then one may imagine.15 with little to no copyright sharing intent. ACTIONS: GOVERNMENT THE UK’S ANTI-PIRACY MEASURES: A STORY The introduction of the Copyright Amendment (Online OF MILD SUCCESS Infringement) Bill 2015 (the Bill) by then Communica- So far, the best litmus test as to the success of compa- tions Minister Malcolm Turnbull wisely targets provid- rable legislation is the UK’s 2012 anti-piracy measures. ers of pirated content as opposed to individuals who Similar to the Australian measures, the UK laws allow download or use the content. At best, the new legis- orders for ISPs to block websites whose primary func- lation can be described as a genuine attempt at pro- tion is to facilitate illegal file sharing.21 The legislation tecting content owners by disabling access to pirated has had mixed results. The UK’s banning of the world’s materials. At worst, the Bill can be portrayed as, an in- largest file-sharing website, the Pirate Bay, resulted in effective mechanism used for political point scoring. little success. Predictably, once ISPs blocked the page,

13 Dallas Buyers Club LLC v iiNet Limited (No 4) [2015] FCA 838, 6. 14 Alejandro Zenter ‘Measuring the Impact of File Sharing on the Movie Industry: An Empirical Analysis Using a Panel of Countries’ (22 March 2010) University of Texas at Dallas < http://ssrn.com/abstract=1792615>. 15 Twila Wingrove et al, ‘Why were millions of people not obeying the law? Motivational influences on non-compliance with the law in the case of music piracy’ (2009) 14(3) The Journal of Psychology, Crime & Law 261. 16 Copyright Act 1968 (Cth) s115A. 17 Commonwealth, Parliamentary Debates, House of Representatives, 16 June 2015, 6416 (Malcolm Turnbull). 18 Tim Biggs, ‘Anti piracy site-blocking laws: what you need to know’ The Age (Melbourne) 23 June 2015. 19 Turnbull, above n 17, 6416. 20 Explanatory Memorandum, Copyright Amendment (Online Infringement) Bill 2015 (Cth). 21 Digital Economy Act 2010 (UK), c24, s17.

Page 20 Communications Law Bulletin, Vol 35.2 (June 2016) there was a sharp increase in the site being accessed 23% of illegal downloads respectively.27 While the ma- with the help of VPNs and mirrored websites, meaning jority of Australians do try to first source a legal means little to no drop in traffic to the site.22 However, this par- of download, the historically tardy release dates of con- ticular example aside, the culmination of blocking 19 of tent into Australia does not gel with modern expecta- the most popular file sharing portals has, in fact, led to tions.28 For example popular television shows such as a sizeable decline in total piracy and a resulting correla- Sherlock (45 days delay), Inside Amy Schumer (62 days tion of an increased usage of paid, legal services such delay) and Louie (78 days delay).29 When consumers are as Netflix. not be able to access content legally it is no surprise that some turn to file sharing websites.30 While film dis- A recent study on the effects of consumer behaviour and tributors bemoan the plague of piracy in Australia and illegal file sharing confirms the above statistics. When denounce the practice for eroding profits, should they file sharing websites are blocked, and where effective not instead ask themselves some questions? Are we de- and cost competitive digital services are available, there livering the consumer what they want, when they want is a sizable decrease in illegal downloads, especially it, and for a competitive price? If the answer is no, it is amongst persistent offenders, with a decrease in illegal 23 not unreasonable that a consumer will find what they downloads around the vicinity of 25%. desire from another source. Instead of employing stan- The takeaway message is that anti-piracy measures dover tactics by issuing speculative invoicing to occa- can be successful, but require industry buy-in, an ef- sional downloaders, surely resource allocation should fective product, and timeliness in taking advantage of be shifted to a proven method of piracy reduction: new laws. timely and widely available distribution. FILM DISTRIBUTION IN AUSTRALIA: AN The past few years in Australia have seen some clar- INDUSTRY THAT FELL ON ITS OWN SWORD? ity emerge as to the how piracy can be significantly There are two substantive drivers behind piracy in reduced. While the war on piracy will likely never be Australia: price and distribution. The inordinate delay won, the current climate provides an arena in which of market entry by streaming services such as Netf- illegal downloads can be meaningfully reduced. The lix has, in part, caused the pricing of legal content in outcome of the Dallas Buyers Club decision is ulti- Australia to be out of step with that of other advanced mately the right one. At present, it should not be the economies. Netflix, the dominant player in streaming duty of the court to allow anything more than tradi- legal content, only entered the Australian market in tional damages when the film industry contributes to early 2015, as did its main competitor, Stan. By con- a number of circumstances that actively encourage pi- trast Netflix has been operating streaming services racy. The introduction of legal streaming services such in the US since 2007.24 Pre-Netflix, when Australians as Netflix has already led to a reduction in piracy. Film wished to purchase legal digital content, they had distributors must take advantage of such distribution to utilize services such as iTunes. The prices offered channels, ensuring that content is available in Australia by these services in Australia are not in line with the in a comparable time frame with other countries. Im- prices offered in other markets. For example, in 2011 proving infrastructure to further support legal stream- when the Australian dollar was trading at $1.05 USD, a ing services, as well as blocking offending websites digital download of a Beatles album on iTunes in the will also likely lead to an increase in the uptake of paid US was $12.99.25 Comparatively, Australian consum- legal content. Only once film distributors have met the ers were paying $20.99. Presently, the price of Netf- reasonable expectations of modern Australian con- lix ranges from $9 to $15 per month. Having access sumers by providing consistent, timely and accessible to digital content at an equitable price has, in a very content, should lawmakers allow distributors to pursue short time, had a positive effect on piracy levels. Thirty any form of relief or damages beyond that granted in three per cent of respondents in research conducted Dallas Buyers Club. by IP Awareness Australia were pirating content at a significantly lower rate due to the common availability of legal streaming services.26 ADRIAN DEAN is a third year Law Student at Deakin University, Melbourne. After working as an actor for Alongside pricing, poor distribution of content in Aus- several years, he decided that maybe law might be a tralia has traditionally been an equal contributor to pi- more lucrative career. He aspires to work in the realm racy. Timeliness of distribution and a lack of available of media law – hopefully at the bar. He recently came legal content in Australia is the driver behind 28% and second in the CAMLA essay competition.

22 Brett Danaher et al, ‘The Effect of Piracy Website Blocking on Consumer Behavior’ (November 2015) Carnegie Melon University Initiative for Digital Entertainment Analysis . 23 Ibid. 24 Netflix Media Centre, A brief history of the company that revolutionized watching of movies and TV shows (2014) Netfix . 25 Chris Griffith, ‘Why Australians are paying higher prices for technology’The Australian (Sydney), June 14 2011. 26 ‘Australian Piracy Behaviors 2015’ (2015) IP Awareness Foundation Australia. 27 The Australian Consumers Association, above n 25, 5. 28 Ibid. 29 Graham Spencer, Watching TV in Australia: The Australian Delay Under The Microscope (14 July 2014) Reckoner, . 30 Ted O’Donoghue et al ‘The Economics of Immediate Gratification’ (2000) 13, Journal of Behavioral Decision Making, 233-250.

Communications Law Bulletin, Vol 35.2 (June 2016) Page 21 Profile: Nicholas Cole Legal Practitioner Director of Cole Media & Entertainment Law and Producer at Talk Films

CAMLA Young Lawyers representative, Betheli O’Carroll, recently spoke to Nicholas Cole about his roles at Cole Media & Entertainment Law and Talk Films, as well as his predictions for the media and entertainment industry.

Thanks so much for agreeing to share an in-house role. After a couple of years at the some of your insights, Nick. Firstly, where Film Finance Corporation, I went to work at do you work and what are your roles? DLA Phillips Fox as it was, and was made Spe- cial Counsel. I am the Legal Practitioner Director of Cole Media & Entertainment Law, which is a firm After a while the “big firm” wasn’t working out I established at the end of 2012. So to cut a and it seemed like a good idea to set up on my long story short, I’m self-employed. own. It just felt like it was the right time to back I think our readers would be very myself. So I left DLA Piper, worked very briefly interested in Talk Films. Can you tell us a with a boutique entertainment firm, then set bit more about that company and your up on my own and haven’t looked back. I’ve work there? been lucky and have managed to work on some great projects. One of the first projects I That’s a company that I set up in 2001. It’s the got involved with was Marco Polo. Then I went vehicle I use to develop and to produce films. on to The Water Diviner. After that, I worked on My background is in production so it works Truth, which was the Cate Blanchett film and well with my legal practice as I genuinely un- more recently I’ve been on Hacksaw Ridge, derstand the needs of my clients and their which is the Mel Gibson film that’s currently businesses. filming in Australia. I’ve also been working on You’ve had a very interesting career, some interesting television projects and some could you please tell us a bit more about small indigenous projects. yourself and your previous positions? What do you consider to be some of the The day after my final law exam I went to work biggest legal challenges facing the media as a runner on a feature film. I always wanted and entertainment industry? to work in film, so I worked my way up through In terms of legal challenges, there’s quite the business. I moved into editing, and then often a level of tension between the law be- became second unit director on a show called ing behind where industry practice is at. For Big Sky. I eventually ended up as a director on example, the Copyright Act doesn’t always Water Rats. equate with where technology underpinning It was when Water Rats was cancelled unex- IP and content rights are at, so there can be pectedly that I had to think hard about what a disconnect at a basic level. Also, on the fi- would happen next. I decided it was better for nancing side, the concepts underpinning the my family and raising children if I were doing Producer Offset scheme which was set up in something that offered stability so that’s when 2007, are already out-dated. So that’s a chal- I made the switch to law. I managed to get a lenge—trying to help clients work within the job as a paralegal with Lloyd Hart Lawyers. I parameters of legal constraints that exist and went to College of Law part-time and after devising ways to work around them. What that I did my Masters of Law. I then moved to clients are doing can be constrained by con- the Film Finance Corporation and performed cepts and legislation that are redundant.

Page 22 Communications Law Bulletin, Vol 35.2 (June 2016) What opportunities do you think are tinue to dominate and independent films will available in the media and entertainment struggle, so it’s unlikely that we’re going to be industry? seeing many small Australian films on screens. However, on a longer term basis, I think there OK, this is going to sound tough, but it’s the will be a resurgence in independent film. truth: “opportunities?” There are none. Film Audience’s interest in tent-pole projects will and media are tough businesses so no oppor- wane and I’m looking forward to there being tunity is going to be presented to you. The only niche opportunities for independent projects opportunities that exist are the ones you create that can potentially reach out to a global mar- for yourself. I have a very simple philosophy. ket in a way that was never before possible. Keep doing something, anything. Always keep working. Take the project that’s going, not the If you could give one piece of advice one that might be going. Every day, do and act. to someone interested in working in a Don’t procrastinate or wait. In my experience, boutique environment, what would it be? it’s quite rare for opportunities to be presented Back yourself. The value of being in a firm is to you. I’ve had to create them for myself other- the technical training that it can bring and ex- wise nothing would have happened. posure to big transactions, government work Fast-forward 15 years, what do you think and stuff that you can’t get in a boutique en- the media and entertainment industry will vironment. But at a certain point, if you want look like? to take a greater level of control over your destiny and do something that’s close to your One side of the business will remain exactly the passion, back yourself. Just go and do it. same because it’s remained the same for 2,000 years, and that is the need for stories. Stories are a fundamental part of our community, our lives. People love to hear and tell stories. The economics and distribution models for how we disseminate those stories will change. There’s been profound structural change within the media industry over the last five to ten years and that structural change will con- BETHELI O’CARROLL is a Research and tinue. However within the last two years there’s Standards Officer at been greater clarity coming into the market in the Australian Press terms of what the future will look like. I’m not Council, and a member going to say I have all the answers but, in the of the CAMLA Young short term, the big tent-pole project will con- Lawyers Committee.

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Communications Law Bulletin, Vol 35.2 (June 2016) Page 23 About CAMLA The Communications and Media Law Association Incorporated (CAMLA) brings together a wide range of people interested in law and policy relating to communications and the media. CAMLA includes lawyers, journalists, broadcasters, members of the telecommunications industry, politicians, publishers, academics and public servants. Issues of interest to CAMLA members include: • defamation • contempt • broadcasting • privacy • copyright • censorship • advertising • film law • information technology • telecommunications • freedom of information • the Internet & online services

In order to debate and discuss these issues CAMLA organises a range of seminars and lunches featuring speakers prominent in communications and media law policy. Speakers have included Ministers, Attorneys-General, members and staff of communications regulatory authorities, senior public servants, executives in the communications industry, lawyers specialising in media and communications law, and overseas experts. CAMLA provides a useful way to establish informal contacts with other people working in the business of communications and media. It is strongly independent, and includes people with diverse political and professional connections. To join CAMLA, or to subscribe to the Communications Law Bulletin, complete the form below and forward it to CAMLA. Disclaimer The Communications Law Bulletin is the journal of the Communications and Media Law Association which is an independent organisation which acts as a forum for debate and discussion and welcomes the widest range of views. The views expressed in the Communications Law Bulletin and at CAMLA functions are personal views of the respective authors or speakers. They are not intended to be relied upon as, or to take the place of, legal advice. For further information: Visit the CAMLA website at www.camla.org.au for information about CAMLA, CAMLA seminars and events, competitions and the Communications Law Bulletin. #

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Page 24 Communications Law Bulletin, Vol 35.2 (June 2016)