United Kingdom Journals

Creating an Innovation Exception? Copyright Law as the Infrastructure for Innovation

Dilan Thampapillai *

1. Introduction

No business can really succeed unless there is some form of public infrastructure to support its operations. Without workable roads, telecommunications, postal systems, ports and many other utilities, many enterprises would be unable to carry out their basic functions. In a sense, law is a type of infrastructure that supports enterprise and individual endeavour.1 Using the metaphor of law as infrastructure is a helpful way to think about the issues surrounding the interaction of copyright law and technological and cultural innovation. There are many difficult issues at play in this area, particularly where Australian law is concerned. On one level copyright law is a matter of international concern as evidenced by the various multilateral treaties and bilateral free trade agreements that address copyright.2 On another level copyright owners have legitimate rights and expectations that need to be accommodated within the law.3 On another level, consumers and users of copyright material also have legitimate needs and expectations both with regard to technology and the use of copyright materials.4 Consumers want to take advantage of the increased functionality of the devices that are available in the marketplace.5 They want to use materials in different ways and without having to pay the owners of copyright several times for much the same material. To enable any of these things to happen the creators and developers of technology must have the freedom to experiment, design and to bring to market new products without having to face the prospect of crippling lawsuits.

From this perspective the state of Australia’s copyright laws, particularly those that deal with secondary liability, create the “infrastructure” within which technology innovators operate. But if it is desirable for technological innovation to occur then the law needs to reflect that and needs to create the type of environment in which such innovation can occur. This is very much an issue of determining where the default rules lie, that is, when a new and innovative technology emerges that makes use of copyright in some way, are the copyright laws geared towards finding liability or are they more likely to support the new innovation?

This article addresses the question of whether Australia’s copyright laws should be revised to accommodate an innovation exception. That is, an exception that protects technology innovators from liability where their devices can facilitate potential copyright infringement. It is impossible to predict how new technologies will develop in the future. With this in mind it makes sense to have in place laws that are forward-looking and more neutral where potential liability is concerned. In effect, the argument that this article makes is that Australian law should bring the Sony rule, a product of the United States’ fair use jurisprudence, into its own statutory law.6 The Sony rule provides that where a product is capable of substantial non-infringing uses no form of secondary liability will be imposed on the producer of that product. Australia’s High Court has previously considered the Sony rule in the Australian Tape Manufacturers case.7 There is an obiter remark in Australian Tape Manufacturers that suggests that the Australian High Court would support a Sony-type rule. In Australian Tape Manufacturers the High Court stated:

[T]hat manufacture and sale of articles such as blank tapes or video recorders, which have lawful uses, do not constitute authorization of infringement of copyright, even if the manufacturer or vendor knows that there is a likelihood that the articles will be used for an infringing purpose such as home taping of sound recordings, so long as the manufacturer or vendor has no control over the purchaser's use of the article.8

But this obiter remark has been superseded by the digital era. Since Tape Manufacturers was decided two notable authorisation liability cases, Universal v Sharman9 and Cooper v Universal,10 have been decided by the Federal Court. In both of these peer-to-peer cases liability has been found irrespective of whether the defendant had control over the consumer’s infringement. Further, the changes to the Australia’s Copyright Act 1968 (Cth), most notably the partial codification of the rules on authorisation as a result of the 2000 Digital Agenda amendments, have created a very different environment to that which existed when the Australian High Court last considered a matter like Australian Tape Manufacturers.

Australia’s initial response to the digital era, the Copyright Amendment Digital Agenda Act 2000 (Cth), was arguably a more balanced approach than the changes that followed the signing of the Australia-United States Free Trade Agreement (AUSFTA). As a result of the AUSFTA, Australia made several changes to its copyright laws. Notably, Australia increased the penalties for copyright infringement, created a harsher scheme for the circumvention of technology protection measures,11 lengthened the copyright term, ratified the WCT and WPPT and modified its internet service provider’s liability scheme.12 The United States made no changes to its own copyright laws. The AUSFTA was very controversial in Australia and in response to stakeholder pressure the then Howard Government commenced the Fair Use Inquiry.13

The Fair Use Inquiry set out to examine what type of new exceptions could be inserted into Australia’s Copyright Act.14 Many of the stakeholders wanted Australia to adopt the fair use doctrine. At first glance this would have made sense. Australia had broadly aligned itself with the United States and brought its copyright regime into harmony with that of the US. It appeared that Australia had adopted the harsher aspects of US copyright law, whilst neglecting to adopt the most significant free use exception available in the US. However, there have long been concerns that the fair use doctrine does not comply with the three step test from article 9(2) of the Berne Convention. Moreover, as the three step test has now become the international standard for copyright exceptions, non-compliance would have left Australia in violation of a number of treaties including the TRIPS Agreement and the AUSFTA itself.

Perhaps, somewhat disappointingly, the results of the Fair Use Inquiry did little more than legalise much of the status quo concerning the behaviour of copyright users. In Australia, consumers were already time-shifting television programs and format-shifting mp3s. The amendments brought about by the Copyright Amendment Act 2006 (Cth) simply legalised these practices. The Act permitted time-shifting, some format shifting, created a new fair dealing exception for parody and implemented section 200AB as a free use exception for certain institutions. Apart from section 200AB, these changes mirrored past developments in US copyright law. For example, time-shifting had been legal in the United States since the Supreme Court’s decision in Sony Corporation v Universal.15 Similarly in RIAA v Diamond Rio16 the Ninth Circuit held that format shifting was fair use. The fair dealing exception for parody was also based on the US Supreme Court’s decision in Campbell v Acuff-Rose.17 These changes then accorded only to the limits of US copyright law and went no further than that. The inherently conservative nature of the Australian Government’s approach to copyright exceptions is evident in the terms of section 200AB.18 This provision is intended to provide a free use exception for public and cultural institutions where the existing statutory schemes do not apply. However, the terms of section 200AB mirror the terms of the three step test. Section 200AB provides:

(1) The copyright in a work or other subject matter is not infringed by a use of the work or other subject matter if all the following conditions exist:

(a) the circumstances of the use (including those described in paragraphs (b), (c) and (d) amount to a special case;

(b) the use is covered by subsection (2), (3) or (4);

(c) the use does not conflict with a normal exploitation of the work or other subject matter;

(d) the use does not unreasonably prejudice the legitimate interests of the owner of the copyright.

This mirroring of the international standard for copyright exceptions is a curious decision. The three step test is designed to measure the compliance of a nation’s domestic copyright laws against a particular international standard. The three step test is not designed to actually operate as part of domestic legislation. There is even a passable argument that section 200AB, which is open-ended, actually fails the first step of the three step test as it exists in art 9(2) of the Berne Convention and other copyright treaties as it does not delineate specific uses.19 The provision has been described as “unworkable” and as “a poor substitute to the open-ended, flexible defence of fair use.”20

On the whole the Australian Government’s approach to copyright law and exceptions is conservative. The advent of the AUSFTA and its consequent changes has ramped up the rights of copyright owners. The penalties that apply for liability have increased thereby increasing the risk factor associated with any innovations that might infringe copyright law. The question that now faces Australia is whether it needs to counter-balance the laws favouring copyright owners with an exception or scheme that encourages technology innovation. The answer to this question may lay in an analysis of US law and copyright policy, in particular, the jurisprudence and theory surrounding the Sony decision.

1.1. Copyright and Innovation

History has shown us that new technologies will disrupt older established copyright interests. Invariably, the taxonomy has been the same, the users face primary liability, whilst the developers of the new technology face secondary liability. The users are either too numerous, their individual liabilities too small or too difficult to capture, while the developer as intermediary is an easier target for copyright liability.21 The photocopy machine, video-cassette recorders, tape recorders, DVD recorders, CD burners and peer-to-peer technologies have all demonstrated the capacity of innovation to enable the infringement of copyright.22 Litigation invariably followed the advent of these technologies. Arguably, it is in the nature of technological development and progress that older, entrenched interests will be disrupted and even displaced.23 The question for copyright law is how this process is managed. That is, when should copyright law step in and impose liability, thereby culling a new technology or an innovator and protecting an established interest?

For the most part, recent history does suggest that new technologies will eventually be accommodated by the established copyright interests. Despite the litigation in Sony v Universal the content industry eventually came to rely on video-cassette recorders to provide it with a secondary market for renting movies.24 Even with peer-to-peer copyright technologies, were it not for cases such as Napster25 and Aimster26 Apple’s i-tunes service and other legal music download stores would not have emerged.27 With the more recent personal copying technologies that have emerged, and the websites such as YouTube that present their work, copyright owners have begun to engage commercially with the emerging market. For example, Warner Music and Universal Music have both licensed some of their material to YouTube.28 This process of engagement is somewhat slow. It took a few years from the beginning of Napster for the music studios to recognise the existence of a potential market and to act accordingly.29 The threat of litigation is ever present. This is particularly true where new personal copying technology; especially those that support remix, and hosting sites such as YouTube and MySpace are concerned.

The issue of accommodation and challenge between copyright owners and the developers of new technologies continues to be relevant today. The digital era has seen the rise of new private copying technologies.30 Users can now remix content, format shift music, library mp3 and other files and experience content in numerous different ways. For all of these things to happen technology had to be invented and brought to market. This type of innovation requires a legal system that allows it some space to breathe before liability or any other type of restriction is brought to bear upon it.31 Even though some form of market accommodation and compromise might eventually take place between the new technologies developers and the established copyright interests, there is the very real risk that in the interim copyright liability will crush or chill innovation. In this sense, law is the vital infrastructure that either supports or restrains innovation.

But it is not that technological innovation is an end in itself. Innovation matters because it makes human life easier in some way or because it opens up new productive and creative possibilities. Those technologies that support the creation of user-generated content and remixing can be seen in this light as they allow users to interact with culture and content.32 As Lessig has written, the current copyright laws of the United States and other jurisdictions favour a Read-Only culture.33 That is, a culture where a certain group of people, the creative classes (invariably copyright owners), are the writers of culture whilst the vast majority of copyright users are passive. Lessig argues that remix technologies allow the vast majority of users to write back to the culture.34 Lessig writes that consumers now, “add to the culture that they read by creating and recreating the culture around them…culture in this world is flat, it is shared person to person”.35 On websites such as YouTube users can post the results of their mash-ups and remixes for other users to view and respond.36 In this way technologies that allow for copying enable a Read-Write culture to emerge, wherein the audience can respond and participate in the creation of culture.37 Lessig argues that an exemption should be provider for non-commercial amateur remixing.

The copyright law issues relating to user-generated content are unclear. As Gervais has noted, “the shift from a one-to-many entertainment and information infrastructure to a many-to-many infrastructure has deep consequences on many levels”.38 This is a change in the market dynamic that is as profound as the one that occurred when consumers started home-taping and time-shifting in the late 1970’s and early 1980’s and as significant as the peer-to-peer crisis of recent times. In sum, this is a challenge to monopoly. Moreover, it is a challenge that is taking place in a real world climate of copyright infringement where users will download, file-share and remix provided that they can evade liability.39

It is possible that many of the remixes and mash-ups would be legal in Australia under sections 41A and 103AA as fair dealings relating to parody.40 But this would necessarily turn on a case by case basis. An individual user might be faced with bankruptcy were they to have to defend an infringement suit. Regardless of the legal merits of remix culture, it is clear that there is a substantial portion of society that sees some cultural value in this practice. There are also democratic concerns that attend remix culture. Writing back is an exercise in autonomy and speech.41 Particularly in a liberal democracy, where copyright law is just one subset of rules within a greater constitutional architecture, these issues of participative democracy cannot easily be discounted.42 This provides some support for allowing innovative technologies that assist in this practice room to develop. Further, if the legal position of the end-user is unclear it would make sense to safeguard the position of the intermediary even if there is the possibility that some uses of the relevant product will result in copyright infringement.

Leaving aside the issue of cultural development, technological innovations have the ability to enhance the chattel rights of users. This argument, one based on private property, would suggest that where the user has purchased content, they should have the right to use that content for personal use only, without further interference from the copyright owner. In this regard the format shifting exceptions in sections 109AA and 110A of the Copyright Act advance these private property rights. In Stevens v Sony43 the High Court upheld the right of a user to have the region coding locks broken by an intermediary. The High Court held that the circumvention of the region coding technology protection measures by the intermediary Stevens, did not infringe the statutory scheme that then existed. Justice Kirby stated:

Yet, in construing the Copyright Act there are peculiar difficulties that, in my view, may be traced, ultimately, to the constitutional head of power by which the Federal Parliament enjoys the legislative authority to make laws with respect to “copyrights, patents of inventions and designs, and trade marks”. That power is granted in a constitutional and legal setting in which competing legal interests must also be upheld by the law, including, generally, free expression and the normal interest of property owners in the undisturbed enjoyment of their property.44

Having paid for multi-media products consumers have a right to explore their functionality and inter-operability with other devices. These are legitimate chattel rights. But policing the boundaries of usage when file-sharing is a distinct possibility will be seen as an imperative by copyright owners. To the extent that users may share content, and, as remixing and peer-to-peer practices suggest, a culture of file-sharing does exist, there is again uncertainty as to when copyright liability will be imposed. As Marybeth Peters, the US Register of Copyright, private uses have become intertwined with public distribution.45 Though technical infringements of copyright still exist under the Copyright Act, as any act of copying, even for private use, can still give rise to a claim for infringement, it is really copying coupled with distribution or downloading that seems to attract the attention of copyright owners.46 Nevertheless, as any technology that can enhance individual use can also aid and abet distribution the threat of liability is still a concern. As Cohen has stated:

Legal battles over secondary liability are understood as zero-sum games between copyright owners and technology developers, in which the certain risk of widespread lawlessness is pitted against the uncertain benefits of unconstrained innovation. This framing has produced a legal climate that rewards technologies that more tightly constrain private use of copyrighted content and punishes those that do not.47

This zero sum mentality, which recent and immediate past history has proven to be mostly false, is a concerning reality where innovation is concerned. Unduly constraining innovation, and, with that, the private use of copyright, is, as Cohen argues, undesirable.

In the present context, the rise of user generated content, the entrenchment of a file-sharing culture, the legitimate expectations of consumers and the creation of new technologies that facilitate all three, gives rise to heady issues of copyright law and policy. It is innovation that drives this process, as it has done before from the inception of copyright law, and the crucial question is how the process can be managed within copyright law, if, in fact, it can be managed at all. In Part II Australia’s current arrangements, the over-strength of the authorisation liability provisions, the futility of section 112E and the uncertainty of the fair dealing provisions, will be identified as impediments in the path of innovation. In contrast, the Sony rule, although not a cure all, creates a better and slightly clearer infrastructure for innovation.

1.2. The Sony Rule

The value of the Sony rule can in part be discerned from an analysis of the case itself and its subsequent passage through US copyright jurisprudence. Sony demonstrates the way in which a seemingly disruptive technology can pose a challenge for copyright owners and yet ultimately prove to be beneficial to the copyright owners.48 The case also clearly demonstrates the difficulties that new technologies pose for the judiciary. However, the rule that the US Supreme Court ultimately derived from the Sony litigation has successfully stood in place in American jurisprudence for the past twenty-five years.

In the late 1970’s Sony began to market a device known as the Betamax video-cassette recorders.49 The Betamax device had two primary uses; it allowed users to watch video-tapes and it also allowed them to tape programmes from the television. The latter activity earned the ire of some copyright owners. Once the Betamax device left Sony’s control it could not prevent consumers from taping copyright protected material, but Sony was certainly aware that this was a possibility.50

Accordingly, one of the major affected copyright owners, Universal, set out to commence litigation against Sony with regard to the Betamax device. Universal first engaged in litigation against a nominal defendant.51 Universal then sued Sony for secondary liability for copyright infringement.52 At first instance the District Court ruled in Sony’s favour.53 The District Court accepted the proposition that the Betamax was a staple article of commerce.54 The Ninth Circuit demurred and reversed this ruling.55 The Ninth Circuit also viewed time-shifting as not being a fair use of copyright.56 The case made its way to the US Supreme Court where a landmark decision was handed down in 1984.57

The question that came before the Supreme Court was whether to impose liability on the creator of a dual-use device. On the one hand the Betamax could be used for infringing copyright, whilst on the other hand it could safely be employed for non-infringing uses. Further, a number of the copyright owners whose programmes had been taped by Betamax users did not object to the practice. Provided that the users engaged only in time-shifting, that is, taping the show to watch later and then taping over it, many of the copyright owners had no objections. It was only the practice of librarying or collecting copyright-protected programs that attracted objections. Sony argued that time-shifting constituted fair use.

The Supreme Court was split on the issue of liability. Initially the Court was inclined to uphold the decision of the Ninth Circuit, as Blackmun J began to draft the majority opinion.58 However, when Stevens J circulated his draft dissent he attracted the support of the other members of the Court to the proposition that time-shifting was fair use.59 Justice Stevens revised his opinion in response to concerns from the judges and a majority comprising of Stevens, Brennan, O’Connor, Burger and White JJ was formed.60 Justice Blackmun along with Marshall, Powell and Rehnquist JJ dissented.61

The eventual decision of the Supreme Court, that time-shifting constitutes fair use, produced the rule that where a product is capable of substantial non-infringing use liability will not be imposed. The majority held:

The staple article of commerce doctrine must strike a balance between a copyright holder‘s legitimate demand for effective -- not merely symbolic -- protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial non-infringing uses.62

Crucially, there were two arms to the majority’s decision in Sony. Firstly, the act of time-shifting was seen as a legitimate fair use. Secondly, the device was capable of substantial non-infringing use. In other words, a large part of the usage of Sony’s Betamax device was in fact non-infringing.63

In the context of this article, which attempts to explore the question of an innovation exception within Australian copyright law, there are three issues that arise with regard to the Sony decision; firstly, the nature of the analytical framework supportive of such a rule must be determined. Secondly, whether Sony constituted a rule supportive of technology that positively influenced later US jurisprudence needs to be evaluated with respect to later cases. If Australian copyright law is conceived within a different framework then the rule would be unlikely to be successfully transplanted into Australian law. Thirdly, it is worth considering whether Australian law would at all be receptive to the Sony rule.

Several key issues related to the inter-relationship between copyright interests and new technologies emerged in the Sony case. These issues are (i) knowledge of the likelihood of copyright infringement, (ii) future control over the technology in the event of a finding of infringement, (iii) the nature of private copying, (iv) the significance of the substantial non-infringing uses and (v) the amount of disruption to a copyright owner’s monopoly that is tolerable.

Samuelson has noted that Stevens J and Blackmun J approached their opinions in Sony from very different philosophical starting points.64 Samuelson notes that Steven J began his Sony opinion with reference to the Copyright Clause in the US Constitution. Article I, section 8, clause 8 of the US Constitution provides “The Congress shall have Power…To Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Justice Stevens thereby began his opinion with a view that the copyright owner’s monopoly is limited by legitimate public interest concerns.65 In contrast Blackmun J approached his opinion in Sony on the basis of a proprietary view of copyright law.66

In Sony Stevens J stated:

As the text of the Constitution makes plain, it is Congress that has been assigned the task of defining the scope of the limited monopoly that should be granted to authors or to inventors in order to give the public appropriate access to their work product. Because this task involves a difficult balance between the interests of authors and inventors in the control and exploitation of their writings and discoveries on the one hand, and society's competing interest in the free flow of ideas, information, and commerce on the other hand, our patent and copyright statutes have been amended repeatedly.67 [Emphasis added]

Justice Stevens then reviewed the case law to that time before noting that the judiciary had been reluctant to expand the copyright owner’s monopoly in the absence of legislative guidance.68 Approaching the issue from the view that copyright law provided a limited monopoly to the owner Stevens J took a technology and user-friendly view of several key issues in Sony. It was perhaps helpful as well that the particular facts in Sony meant that Sony itself, whilst aware of the possibility or likelihood of infringement, they were unable to control the use of the devices, nor did they have actual knowledge of specific infringements.69 This effectively precluded contributory liability.70 Moreover, the knowledge of possible infringement alone in the absence of any ability to control the unauthorised acts of the infringer meant that the claim of vicarious liability was unsustainable.71 Justice Stevens did, however, express the view that if Sony had control over the possible infringement then a finding of either contributory or vicarious liability would be justified.72

Justice Stevens was thus able to dismiss a number of the claims made by Universal and Disney. One of the issues that arose in Sony was whether the co-plaintiffs could take control or gain a royalty over Sony’s video-tape recorder technology. Justice Stevens dismissed this as “extraordinary.”73 Though, it should be noted that during the time of the peer-to-peer copyright infringement cases there were suggestions that a levy be imposed for using the Internet.74 Similarly, Stevens J was resistant to any suggestion that liability should attach to non-commercial private uses. Justice Stevens stated:

…a use that has no demonstrable effect upon the potential market for, or the value of, the copyrighted work need not be prohibited in order to protect the author's incentive to create. The prohibition of such non-commercial uses would merely inhibit access to ideas without any countervailing benefit.75

Importantly, Stevens J did not accept the proposition that fair use required a “productive” use of the copyright protected material. For Stevens J the demarcation between commercial and non-commercial was of more significance in Sony.76 The majority’s finding of fair use for time-shifting under-pinned its ruling on substantial non-infringing uses. Were it not for the finding of fair use the Betamax device would not have been capable of substantial non-infringing uses.

Justice Blackmun in his dissent took an opposite view. The proprietary view of copyright contained in Blackmun J’s opinion is evident in his first substantive paragraph on the legal issues at dispute in the case. Justice Blackmun stated:

This Nation's initial copyright statute was passed by the First Congress. Entitled “An Act for the encouragement of learning,” it gave an author “the sole right and liberty of printing, reprinting, publishing and vending” his “map, chart, book or books” for a period of 14 years. Act of May 31, 1790, § 1, 1 Stat. 124. Since then, as the technology available to authors for creating and preserving their writings has changed, the governing statute has changed with it. By many amendments, and by complete revisions in 1831, 1870, 1909, and 1976, authors' rights have been expanded to provide protection to any “original works of authorship fixed in any tangible medium of expression,” including “motion pictures and other audiovisual works”.77

This proprietary view of copyright influenced Blackmun J in Sony. It lead to four very notable features of Blackmun J’s opinion that have continuing relevance today in many of the disputes between copyright owners and the developers of new technology. Firstly, Blackmun J demonstrated a significant concern with the future economic interests of the copyright owners. In relation to fair use, Blackmun J emphasised the importance of considering the potential market of the copyright owner.78 Moreover, Blackmun J found this issue all the more compelling in light of his characterisation of time-shifting as an unproductive use.79 Secondly, Blackmun J’s view that the private non-commercial uses were unproductive, and thereby not fair use, demonstrates a very conservative and property-centric view of copyright law and the copyright owner’s monopoly. Thirdly, Blackmun J was willing to accept Sony’s constructive knowledge as sufficient to support a finding of contributory infringement.80 Fourthly, Blackmun J was willing to contemplate allowing Universal and Disney to have some control over Sony’s technology.81 Blackmun J stated:

Remedies may well be available that would not interfere with authorized time-shifting at all. The Court of Appeals mentioned the possibility of a royalty payment that would allow VTR sales and time-shifting to continue unabated, and the parties may be able to devise other narrowly tailored remedies. Sony may be able, for example, to build a VTR that enables broadcasters to scramble the signal of individual programs and “jam” the unauthorized recording of them. Even were an appropriate remedy not available at this time, the Court should not misconstrue copyright holders' rights in a manner that prevents enforcement of them when, through development of better techniques, an appropriate remedy becomes available.82

Had Blackmun J’s view prevailed in the Supreme Court, it is unlikely that Sony would have been hailed as the Magna Carta of the technology age.83 Arguably, the Sony rule influenced the development of technology in the United States. But the rule is not a free for all – the safe harbour does have limits and may be unavailable under certain circumstances as the peer-to-peer cases demonstrated.84 However, the most obvious influences of Sony can be seen in legislative, judicial and consumer attitudes to back-up copying and format shifting. Both have been legalised by common law in the United States and by the legislature in Australia.85

Sony’s influence is evident also in other cases where fair use has been raised in relation to new technologies.86 In the Internet search engine cases, such as Perfect 10 v Google,87 Sony is cited in support of fair use. Similarly in the reverse engineering cases Sony was also influential in the fair use discussion.88 Sony’s legacy was also evident in the Audio Home Record Act 1992 which amended §1008 of the US Copyright Act:

No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the non-commercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings.89

The AHRA set up a statutory levy scheme to protect the interests of both the technology developers and the copyright owners.

In those cases that most resembled Sony v Universal, the peer-to-peer copyright cases, Napster, Re Aimster and Grokster,90 the Sony rule was challenged but preserved. These cases demonstrated that Sony does not provide a complete defence for technology developers. In many of these cases the quantum of infringing and non-infringing uses was a relevant consideration with respect to the issue of potential substantial non-infringing uses. This was a crucial difference from Sony where substantial non-infringing uses existed. Ginsburg and Ricketson have also noted that the technology in Sony “presented the court with an all-or-nothing challenge.”91 However in Napster the system could be amended without deny non-infringing users access to the technology.92

In Napster the Ninth Circuit affirmed Sony but denied its protection to the defendant. Napster’s particular facts differ from Sony in that the infringing materials were transferred from user to user over a peer-to-peer file-sharing system that Napster controlled. Napster provided the support required for the indexing and searching of the infringing MP3 files. Unlike in Sony, Napster could prevent infringing actions, but it chose not to. Napster argued that non-infringing files were available on its system.

Napster claimed that space-shifting was fair use akin to time-shifting in Sony.93 Similarly, Napster claimed that the Sony rule effectively shielded it from contributory liability.94 The Ninth Circuit disagreed with Napster’s time-shifting argument. The Ninth Circuit pointed out that unlike in Sony, Napster’s system meant that space-shifting took place together with online distribution to the public.95 The Ninth Circuit held that while non-infringing uses were relevant under Sony, the fact that Napster had actual knowledge of infringement, and that it could have been stopped without destroying the entire system, gave rise to liability.96

The Napster decision has mixed blessings for advocates of the Sony rule. On the one hand the Napster Court clearly deferred to Sony and affirmed the value of the rule.97 The Ninth Circuit was critical of the District Court for failing to take into account the potential non-infringing uses of the Napster technology.98 But it was clear that where a product enables the vendor to have an ongoing relationship with the consumer, as was the case in Napster, the requisite level of knowledge for contributory knowledge could more easily be satisfied than was the case in Sony where only constructive knowledge existed. This showed that on the other hand Sony could quite easily be confined to its particular facts thereby reducing its efficacy for technology developers.99

The defendants in Arista Records v USENET.com have more recently run a similar argument to that arose in Napster.100 In Arista Records the defendants claimed that Sony shielded them from contributory liability on the basis of possible non-infringing uses.101 The District Court held that the crucial difference was that there was an ongoing relationship between USENET.com and its users unlike in Sony. In the opinion of Judge Baer of the District Court this rendered the potential non-infringing uses immaterial.102 This again illustrates the potential for Sony to be confined to its facts. However, the District Court in Arista Records appears to have repeated the mistake of the District Court in Napster in failing to give due weight to the potential non-infringing uses.103

In Re Aimster the defendant also tried to rely on Sony to evade a finding of contributory knowledge. Aimster argued that to avoid liability all it had to show was that its product was capable of non-infringing uses.104 In Re Aimster the peer-to-peer file sharing system was very similar to that in Napster. The software was available for download free of charge, Aimster hosted the website and assisted in the searches and provided other support, though it did not copy files itself. Judge Posner of the Seventh Circuit rejected Aimster’s argument. Judge Posner stated:

We also do not buy Aimster's argument that since the Supreme Court distinguished, in the long passage from the Sony opinion that we quoted earlier, between actual and potential non-infringing uses, all Aimster has to show in order to escape liability for contributory infringement is that its file-sharing system could be used in non-infringing ways, which obviously it could be. Were that the law, the seller of a product or service used solely to facilitate copyright infringement, though it was capable in principle of non-infringing uses, would be immune from liability for contributory infringement. That would be an extreme result, and one not envisaged by the Sony majority.105

The crucial issue that seems to emerge in Re Aimster is that in order to qualify for the vital last part of the Sony rule, being capable of substantial non-infringing uses, the defendant must actually demonstrate that this is possible. The Supreme Court in Sony did state that the disputed device “need merely be capable of substantial non-infringing uses”.106 However, it appears clear that this must be proved and not merely asserted.

The developers of peer-to-peer technology paid attention to the Napster and Re Aimster decisions and designed their system architecture accordingly. Where control had been a significant problem in Napster, the designers of the Kazaa technology, variations of which were at issue in the Grokster and Sharman107 cases, were careful to put control beyond their grasp. This strategy was successful in frustrating the then existing bases of secondary liability for copyright infringement in the United States when Grokster was litigated before the District Court108 and the Ninth Circuit.109 The absence of control, particularly the right and ability to supervise usage, was sufficient to protect Grokster from liability in the Ninth Circuit.110

The Ninth Circuit affirmed the District Court’s view that the Sony rule exempted Grokster from copyright liability.111 Drawing on the Ninth Circuit’s decision in Napster, Judge Thomas held that the Court had applied Sony so as to prevent a finding of constructive knowledge if the product was capable of substantial non-infringing uses.112 Judge Thomas further opined that if substantial non-infringing uses were shown then the copyright owner would need to demonstrate that the defendant had “reasonable knowledge of specific infringing files.”113 Judge Thomas read Sony quite closely to the terms of the holding and was satisfied that the product need only be capable of substantial non-infringing uses.114

Judge Thomas noted that the Ninth Circuit diverged from the Seventh Circuit’s decision in Re Aimster on this point.115 Judge Thomas characterised the disagreement between the Circuits as “fundamental” but noted that Re Aimster was factually different to Grokster, and as such of little help in the Ninth Circuit to the copyright owners, because in the former case no substantial non-infringing uses existed whereas in the latter case they did.116

The Ninth Circuit’s application of Sony, notwithstanding the blurring of the knowledge element of contributory liability and the Sony safe harbour,117 may well be correct. However, the Ninth Circuit ignored Grokster’s incitement and encouragement of copyright infringement. Moreover, the Ninth Circuit failed to engage with the clearly relevant issue of the quantum of infringing and non-infringing uses. In Grokster 90% of the uses of the system and technology were for infringement, whereas only 10% were non-infringing. In a footnote Judge Thomas asserted that the 10% “would indicate a minimum of hundreds of thousands of legitimate file exchanges.”118 However, as Ginsburg and Ricketson have noted, “that the other 90% would be even more extensive seems not to have troubled the court.”119

The Supreme Court reversed the Ninth Circuit’s ruling and held Grokster liable for inducing copyright infringement.120 The Supreme Court held that Sony does not apply where the defendant has engaged in the active inducement of infringement.121 Even where a device was capable of substantial non-infringing uses this would be displaced by active inducement.122 The Supreme Court preserved the Sony rule stating that mere knowledge of infringing potential, ordinary acts of distribution and customer support, would not subject the technology developer to liability.123 The Supreme Court’s ruling, whilst narrowing the very expansive view that the Ninth Circuit offered in Grokster, keeps Sony in place whilst clarifying that it does not override the other theories of secondary liability.124 This means that where a product is capable of both infringing and non-infringing uses, and the designers and marketers do nothing out of the ordinary to promote infringement, unlike in Grokster,125 the Sony safe harbour would likely preclude liability.

This was the issue that arose as the only point of dispute between the two concurring opinions in Grokster. In a separate opinion Justice Ginsburg advanced a stricter view on the Sony standard.126 Ginsburg J was of the view that even where a new product was capable of non-infringing uses liability might still apply if the uses were not substantial or where there was no potential for substantial non-infringing uses to develop.127 Rehnquist CJ and Kennedy J joined Ginsburg J in her view. The stricter standard advanced by Ginsburg J is likely to be favoured by the entertainment industry.128 Indeed, it seems worthwhile to note, that had Streamcast and Grokster not engaged in active inducement of copyright liability, Ginsburg J’s view would have been the sole basis upon which the defendants would have faced liability.

Justice Breyer, joined by Stevens and O’Connor JJ, took issue with Ginsburg J’s stricter test. Justice Breyer was concerned that the stricter test for the Sony defence would result in greater risk and uncertainty for developers of new technologies.129 In their view the strict test for Sony would have a chilling effect on technological development.130 Justice Breyer was of the view that though the non-infringing uses of Grokster and Streamcast were minimal, at about 9% of their total usage, this would be sufficient for the Sony defence to apply.131

The contrasting views between Breyer and Ginsburg JJ, indicates where the real tension lies for new technologies and copyright infringement.132 Whilst the Grokster decision laid a clear platform for the liability of most peer-to-peer operators, it also created, through the two concurrences, a unique deadlock over Sony.133 There is much to commend Breyer J’s view of Sony. The interpretation of Sony advocated by Breyer J is very favourable for new technologies. Moreover, with Grokster having created some uncertainty for the future of technology development the view put forward by Breyer J still leaves developers with some room to move. Menell has suggested that the effects of indirect copyright liability on technology development are quite complex, and require an analysis of “social balances, market mechanisms, and roles for mediating institutions.”134 However, Lessig has suggested that the Grokster decision may in fact chill innovation.135

Under Breyer J’s view the provider of a new technology could easily evade liability for copyright infringement where they could show minimal non-infringing uses, and where they refrain from actively inducing infringement. The alternative, which is Ginsburg’s view, would effectively discourage innovators from developing any type of risky technology.136 The difficulty with this view may arise where new peer-to-peer operators emerge, and take advantage of an established peer-to-peer infringement culture through minimal advertising of their services and without any active inducement of copyright infringement.137

Despite the seeming deadlock within the US Supreme Court, the Sony rule has value for Australia. In Australia the High Court in Tape Manufacturers and against in Stevens v Sony has demonstrated a high degree of regard for the Sony rule. Whilst its efficacy in protecting technology developers may well depend on the peculiar set of circumstances at play it does serve as a symbol of a jurisdictions predisposition to preserving legitimate technology development. Effectively Sony is not a pure safe harbour; it is instead a potential free space in the absence of guilty conduct. This reflects the need to balance the interests of various stakeholders. In Stevens v Sony, Kirby J stated:

Because a legitimate basis for the taping of television programmes for viewing at more convenient times (“time-shifting”) was found by the Supreme Court to be fair and not an infringing use, the claim of infringement against Sony was rejected. This interpretation of the United States law reflected the bias inherent in the legal systems of the common law in favour of protecting the rights of copyright owners in a context that also protects other legal interests belonging to other persons. As Breyer J has recently pointed out, in a concurring opinion, the rule in the Sony Betamax decision was strongly protective of new technology. It foreshadowed the dramatic evolution of the product's market. It respected the limitations facing judges where matters of complex and novel technology are concerned. And it avoided the introduction of a “chill of technological development” in the name of responding to alleged copyright infringement.138

It is difficult to suggest what the true value of the Sony rule may be. It is certainly clear that having the Sony rule has not prevented copyright owners from threatening new technologies with litigation.139 But, because copyright is so essential to the US economy so too is the Sony rule in creating the type of legal infrastructure and entrepreneurial culture that supports that economy. The value of the Sony rule is hard to assess in raw economic terms.140 But logically, any rule that encourages innovation and risk will support a dynamic economy. The value of the Sony rule is that it steps out of the narrow and often dualistic confines of copyright law, where issues are often devolved to a user-owner dichotomy, and it places copyright law in a somewhat broader societal context. That is, societies and economies need change and renewal. New technologies and the innovators behind them need the legal space within which to operate. From that standpoint the Sony rule offers a lot to a country that is seeking to develop an innovation economy.

2. An Innovation Exception?

There are a number of matters that need to be addressed before an innovation exception can be inserted into Australia’s Copyright Act. Firstly, there is the question of the form that the rule would take. Secondly, there is the issue of the impact that any new exception would have on Australia’s copyright regime. Thirdly, there is the question of how such an exception would interact with existing rules on authorisation liability. Lastly, there is the question of compliance with the three step test.

In terms of the form of the rule it would no doubt need to be a statutory rule.141 Such a rule would also require a redrafting of the authorisation liability provisions in sections 36(1A) and 101(1A) of the Copyright Act. As the Copyright Act contains other authorisation liability schemes, such as the internet service provider scheme, some amendment might also be required in these areas.

In effect importing Sony into Australia’s copyright statute requires rethinking the existing rules and a reordering of their existing relationships. But it is clear from the discussion of Sony in Part I, even in relation to the peer-to-peer cases, that the standard established by the Supreme Court in that case continue to be a relevant concern in the present era. Whilst the waters may have been muddied somewhat by the clear bad faith element present in Napster, Aimster and Grokster, there are still technology developers who are acting in good faith.142 The danger is that the over-strength of secondary liability laws will chill innovation and target the good faith innovators along with the bad faith ones.143

2.1. Creating Policy Space?

There are two issues that arise in relation to the question of creating the policy space required for an innovation exception. The first is winding back the property-centric notion of copyright rights.144 The second is creating a scheme that does not allow “bad faith” innovators to evade liability.

The criticism advanced above of the Australian Government’s approach to copyright law reform and exceptions is that it has tended to be overly conservative. In part Australia is a minor player in a larger world trade order, where the rules on trade law, as they relate to intellectual property have largely shifted in favour of the owners.145 Having made a deal with one of the nations who was a prime mover in the change in international intellectual property laws it was predictable that Australia’s laws would also tilt in that direction. What is lacking is the policy space to support an innovation exception. This can be said to arise from several sources such as the proliferation of the three step test which restricts exceptions, the timidity of legislators, the conception of copyright as property and bad faith acts by some innovators.

The question of the three step test will be addressed below. The question of the willingness of Australian lawmakers to engage in copyright law reform depends greatly on whether they value innovation. The evidence suggests that the Rudd Government does value innovation but it is imperative that it moves to safeguard the legal infrastructure required for innovation to take place.146 Rethinking copyright law, less as property and more as a “limited federal grant” is also crucial. Netanel, writing in the context of free speech and copyright law, has stated:

The primary, immediate cause for copyright’s untoward chilling of speech is that copyright has come increasingly to resemble and be thought of as a full-fledged property right rather than as a limited federal grant designed to further a particular public purpose. As traditionally conceived, copyright law strikes a careful balance. To encourage authors to create and disseminate original expression, it accords them a bundle of exclusive rights in their works…But to promote public education and creative exchange, it both sharply circumscribes the scope of those exclusive rights and invites audiences…to freely use existing works in every conceivable manner that falls outside of the copyright owner’s domain.147

The Blackstonian view of copyright challenges the notion of balance.148 Netanel is correct in noting that copyright has been used to chill free speech. The Ed Felten case149 and the Dimitri Skylarov150 incident are all instances of copyright law being used to limit and curtail speech. In much the same way, technology development, a type of speech act itself, has been curtailed at times. If the view of the Seventh Circuit in Re Aimster triumphs, then both the courts and copyright law will effectively be able to intrude on the actual process of technology development, as it relates to system design, before infringement has occurred. Surely this is undesirable. It is also undesirable, having regard to the democratic concerns that attach to remix and its technologies, to elide over the legitimate interests of the broader public in favour of private property interests. It can be said, that the push towards a Blackstonian view of copyright is at odds with the historical basis for copyright law and the greater political-constitutional structure within which that law exists.151

The Blackstonian view of copyright has also had draconian results where copyright infringement is concerned. Whilst, it cannot be denied that downloading copyright protected files via a peer-to-peer file-sharing system is copyright infringement, the level of penalty imposed is almost too high. In a recent decision in the US the District Court in Sony BMG Music Entertainment v Tenenbaum152 stated:

As this Court has previously noted, it is very, very concerned that there is a deep potential for injustice in the Copyright Act as it is currently written. It urges, no implores, Congress to amend the statute to reflect the realities of file sharing. There is something wrong with a law that routinely threatens teenagers and students with astronomical penalties for an activity whose implications they may not have fully understood. The injury to the copyright holder may be real, and even substantial, but, under the statute, the record companies do not even have to prove actual damage. “Repeatedly, as new developments have occurred in this country, it has been Congress that has fashioned the new rules that new technology made necessary.”…It is a responsibility that Congress should not take lightly in the face of this litigation and the thousands of suits like it.153

But creating policy space does not mean ignoring the latent dangers that attend the subject area. The Napster, Aimster and Grokster cases aptly showed that some developers of technology will set out, mainly in bad faith, to profit from the works of others. A copyright law that fails to account for bad faith acts would be deficient. The Sony safe harbour is a type of equitable protection, it is aimed at fairness and justice, but it cannot be applied so as to subvert the traditional maxim of equity where the innovator lacks clean hands.154 As discussed above, it is imperative to put a Sony type safeguard in place whilst retaining appropriate laws to catch bad faith innovators. The alternative, the current arrangements, which are overly strong, are discussed below.

2.2. Authorisation Liability

One simple observation might be enough to suggest that Australia’s laws on secondary liability for copyright infringement are overly strong. In contrast to the United States, which took three court cases, three levels of the Federal courts and eleven judges155 to reach a clear verdict, it took Australia only one trial and one judge to find the same technology and much the same respondents liable for authorisation infringement.156 This might suggest that the wording of ss 36(1A) and 101(1A) is almost tilted towards a finding of liability.

Sections 36(1A) and 101(1A) were inserted into the Copyright Act as part of the 2000 Digital Agenda amendments. Sections 36(1A) and 101(1A) provide:

(1A) In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in the copyright in a work, without the licence of the owner of the copyright, the matters that must be taken into account include the following:

(a) the extent (if any) of the person's power to prevent the doing of the act concerned;
(b) the nature of any relationship existing between the person and the person who did the act concerned;
(c) whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.157

The factors listed in both sections 36(1A) and 101(1A) needs only to be taken into account. The statute does not require that the factors are elements, each of which need be satisfied in order to sustain a finding of liability. The factors listed in both sections 36(1A) and 101(1A) are more to provide guidance and there is sufficient scope for the common law to operate.

Prior to the 2000 amendment the general rule was that a defendant cannot authorise an infringing act unless they have the power or ability to prevent the infringing act.158 Prior to the amendments the question of authorisation was determined by the common law. The comments of Gibbs J in University of New South Wales v Moorehouse are also illustrative of the Australian approach to the issue of authorisation and the key element of control. Gibbs J stated:

It seems to me…That a person who has under his control the means by which an infringement of copyright may be committed, such as a photocopy machine, and who makes it available for other persons, knowing, or having reason to suspect that it is likely to be used for the purpose of committing an infringement, and omitting to take reasonable steps to limit its use to reasonable purposes, would authorise any infringement that resulted from its use.159

In the University of New South Wales v Moorehouse it was held that “inactivity” or “indifference” as constituted by acts or omission on the part of a defendant may be sufficient to be authorisation.160

But physical proximity was an issue in Butterworths. This idea of control would obviously come under stress in the digital era. In Nationwide News Pty Ltd v Copyright Agency Limited161 Sackville J, with whom Jenkinson and Burchett JJ concurred, stated: “Nonetheless a person does not authorise an infringement merely because he or she knows that another person might infringe the copyright and takes no steps to prevent the infringement.”162

Similarly, in Australasian Performing Right Association Ltd v Metro on George Pty Ltd163 Bennett J stated:

Control is necessary to constitute authorisation to infringe copyright; mere facilitation of the infringing conduct is insufficient, as is knowledge that there is likelihood that there will be infringing use.164

However, the amendments in sections 36(1A) and 101(1A) appear to have greatly expanded the concept of authorisation. It is notable that subsection (a) refers to “the extent (if any) of the person's power to prevent the doing of the act concerned.” Moreover, this is just one factor to be taken into account in determining liability. This suggests that the statutory conception of authorisation, though intended as a partial codification of the common law,165 has resulted in an expansion of the concept.166 In effect this means that the authorisation provisions are titled towards a finding of liability.167

Traditionally, cases where authorisation has been at dispute invariably turned on a factual basis, there was no ready-made formula for determining liability.168 Accordingly, the requisite degree of control would vary according to the facts in each case.169 But the more expansive concept of authorisation that exists in the Copyright Act means that there is no certainty for innovators where their products may affect copyright interests. This suggests that the current laws will have a chilling effect on technology.

After the 2000 Amendments, but prior to the Sharman case Lahore prophetically noted:

Where defendants have put it beyond their power to prevent the infringement, for instance by selling or giving away the means by which such an act can be committed, it will be less likely that this will amount to authorization, unless further acts by way of encouragement or incitement can be shown.170

At issue in Sharman was whether the defendant has authorised the infringing conduct. Justice Wilcox found Sharman Networks and the other respondents liable for authorising copyright infringement under section 101(1A) of the Copyright Act.

Justice Wilcox made three significant factual findings that helped shape his ruling on authorisation liability. Firstly, though the Kazaa website had warnings against copyright infringement, and an end user licence agreement in which the user had to agree to not infringe copyright, it was obvious to the respondents that these measures were ineffective.171 Secondly, the respondents could have implemented technological controls to reduce copyright infringement but had failed to do so. Significantly, Wilcox J found that the respondents failed to implement such controls because it was not in their financial interest.172 That is, the respondents would have earned little advertising revenue from Kazaa if it was not being used for copyright infringement. Thirdly, the respondents placed material on the Kazaa website, which though not expressly advocating copyright infringement, was likely “to encourage visitors to this it is ‘cool’ to defy the record companies by ignoring copyright constraints.”173

The decision in Sharman was no doubt correctly decided. So too was the case of Cooper, where the defendant put up hyperlinks to copyright protected music. In Cooper the defendant ran a website called MP3s4free.net and encouraged infringement. In Cooper the applicants contended that the 2000 Amendments had “strengthened and broadened the concept of infringement by authorization”.174 Notably, Tamberlin J did not disagree with this contention.

The risk now is that the bad faith defendants in Sharman and Cooper distract attention from the implications of the expanded concept of authorisation. Designing a technology with the specific intent to trade on other peoples copyright and structuring business affairs to further this end are examples of bad faith.175 But a technology developer who wishes to explore new technologies, and who does so with no overt agenda to infringe, is acting in good faith. This type of innovation is useful for society. The real danger of the overly strong authorisation provisions is that they may attach liability to such an innovator, where that innovator is aware that some copyright infringement might occur, but where they still bring the product to market.

The Australian Copyright Act does contain a bare safeguard that has some slight resemblance to the Sony rule. Section 112E provides of sorts. Section 112E states:

A person (including a carrier or carriage service provider) who provides facilities for making, or facilitating the making of, a communication is not taken to have authorised any infringement of copyright in an audio visual item merely because another person uses the facilities so provided to do something the right to do which is included in the copyright.

However, the essential precondition to section 112E is that the person providing the facilities must not have done anything other than “merely” making the facilities available. This most likely precludes any person who has marketed a device, provided information on its capabilities or done anything else from the protection of section 112E. It would appear that the provision was drafted with internet service providers in mind. Though it was considered in Sharman it has yet to be considered in a case where blatant authorisation was not at play. As such, the actual utility of section 112E remains very much unknown, and its bare terms suggest that it will be of little value where an innovator brings to market a product that is capable of infringing and non-infringing uses, with the knowledge that infringement might occur.

2.3. The Three Step Test

No advocacy for any copyright exception can be complete without briefly acknowledging at least the realities of the three step test. The three step test provides that exceptions to copyright owners’ rights be limited to certain special cases, which do not conflict with the normal exploitation of the work, and which do not unreasonably prejudice the legitimate interests of the author. Even during the 2005 Fair Use Inquiry, when a majority of stakeholders clearly favoured a fair use option, the Australian Government decided against the uncertainties of fair use. To be fair to the then Howard Government, there is much commentary that has questioned whether the fair use test is three step test compliant.176 As such the conservative nature of Australia’s law-makers may have been justified.

But the Sony rule is much clearer and more likely to comply with the strictures of the three step test. The Sony rule provides that where a product or technology is capable of substantial non-infringing uses no liability for copyright infringement shall be imposed. Were the Sony rule to ever be drafted into Australia’s Copyright Act it could no doubt be characterised as an exception to the rights of owners. But given the clear public policy nature of the exception it could arguably satisfy the strictures of the three step test.177 Moreover, the exception is specific enough to satisfy the three step test, and the inter-relationship of the Sony rule with other heads of secondary liability demonstrates that there is no unreasonably prejudice to the interests of copyright owners.

3. Conclusion

Innovation is clearly essential for economic growth, cultural development and personal autonomy. Moreover, it is impossible to predict what technologies will emerge and how they will develop over time. Certainly, the Sony court could not have anticipated the Internet and the digital era. But they crafted a rule that was forward looking and supportive of technology. In doing so, they helped create a socio-economic culture supportive of innovation. Regrettably, the relationship between innovation and copyright law in Australia is uncertain and perhaps overly restrictive. After the Australia-United States Free Trade Agreement Australia now has a copyright regime that can broadly be described as a lock up and lock out scheme. This is a copyright regime dominated by the Blackstonian view of property. It lacks the sense of balance found in Justice Stevens’ opinion in Sony. Furthermore, whilst the Australian Government has paid lip service to innovation, the Australian Copyright Act, which provides the essential legal infrastructure for innovation, now privileges the rights of owners over the interests of the public to a dangerous extent. The particular neglect of a specific exception for technology innovation is an undesirable oversight, as is the expansion of authorisation liability. If there is to be some coherence in Australia thinking with regards to innovation and copyright policy it is crucial that such an exception be created.

 

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