Review of technological protection measures exceptions

Background to the inquiry

The Australia-United States Free Trade Agreement (AUSFTA) came into force on 1 January 2005. Chapter 17 of the AUSFTA deals with intellectual property rights, and in particular requires that parties to the agreement create a liability scheme for certain activities relating to the circumvention of ‘effective technological measures’ (ETMs).¹ A number of exceptions to that liability scheme are already set out in the Agreement, and there is provision for a party to introduce other exceptions to the liability scheme under specific circumstances.² The Committee has been asked to examine whether additional exceptions are warranted and, if so, to ensure that any proposed exceptions are within the parameters set by the AUSFTA.

The Committee was also conscious that the Attorney-General’s Department (AGD) was conducting, concurrently with the Committee’s inquiry, a review of fair dealing and other possible exceptions under the Copyright Act 1968, and was also working on translating the already specified exceptions to TPM circumvention liability contained in the AUSFTA into proposals for legislative amendment. While the Committee has not sought to examine the same issues as the Department, it has made some comment on issues in an effort to assist the policy formulation process and reflect the concerns placed before it.

The Committee’s inquiry and report

Referral of the inquiry

On 19 July 2005 the Attorney-General, the Hon Philip Ruddock MP, sought the Committee’s agreement to review technological protection measures exceptions. The Committee agreed to that request on 9 August 2005. The Attorney-General agreed to a request by the Committee that the reporting date be extended until the end of February 2006.

Conduct of the inquiry

The inquiry was advertised in The Australian on 24 August 2005 and letters were sent to approximately 100 organisations and individuals with a possible interest in this matter. Submissions were requested by 7 October 2005, but extensions were granted to allow the High Court decision in Stevens v Kabushiki Kaisha Sony Computer Entertainment³ (hereafter referred to as Stevens v Sony), released on 6 October, to be taken into account. The Committee received 64 submissions, 15 supplementary submissions and 11 exhibits. Details are at Appendices A and C to this report.

Public hearings were held in Sydney ( 14 November 2005), Melbourne ( 15 November 2005) and Canberra (28 November and 5 December 2005). Details of witnesses are at Appendix B.

The Committee appreciated both the quantity and quality of input from a wide range of groups and individuals on what is a quite technical and complex issue.

The Committee’s approach

A number of submissions provided the Committee with advice as to its role and the way in which it should undertake its inquiry. These ranged from suggestions that the Committee focus exclusively on the question of whether any additional exceptions to circumvention prohibitions are warranted at the present moment, to suggestions that the Committee consider a wide range of issues associated with technological protection measures and copyright more generally. Ultimately, a number of practical issues affected the way in which the Committee undertook its inquiry.

In terms of the implementation of the AUSFTA, there are still 10 months or so remaining before Australia is required to have completed its implementation of the Agreement. Consultations, policy development and policy approval relevant to the implementation process have not yet been completed. The legislation implementing Australia’s obligations under Article 17.4.7 and establishing the liability scheme does not yet exist, and there is little information on what the particulars of this legislation might be.⁴ This means of course that the eventual legislative form of the exceptions to TPM circumvention liability set out in Article 17.4.7(e)(i) – (vii) is also unknown. In addition, there are a number of definitional issues that remain to be settled, including, crucially, exactly what will be covered by the term ‘effective technological measure’. This lack of context and high degree of uncertainty on important points has significantly complicated the work of the Committee, particularly its central task of assessing additional proposed exceptions to the liability scheme.

Some of the difficulties facing the Committee in conducting the inquiry were recognised in a submission from the US-based International Intellectual Property Alliance (IIPA):

• First, the prohibition on the act of circumventing access controls has not been enacted yet, so the committee is in the dark about the exact scope of the provision for which it has been asked to recommend exceptions
• Second, the terms of reference do not advise the committee about whether the statute is expected to contain an exception in any of the seven specified areas in which the FTA authorizes the recognition of a permanent exception to the prohibition
• Third, it seems to be the intention of the government to bring the new prohibition into force simultaneously with any exceptions that might be enacted, including any that might be based on this committee’s recommendations. Thus the committee will have to base its recommendations upon its prediction about the impact of the new prohibition, rather than upon any actual experience with it.⁵

It is also important to note that, as Article 17.4.7 has not yet been passed into Australian law, no party is currently able to identify an actual adverse impact due to the liability scheme in order to justify further exceptions under Article 17.4.7(e)(viii). The Committee has therefore only been able to consider likely adverse impacts that might occur. The adverse impact requirement is examined in Chapter 3.

In light of its practical difficulties, the Committee also came to the view that it was not in a position to develop prescriptive, detailed formulations of key definitions or criteria or to draft technical recommendations on the text of proposed exceptions. The approach suggested in one submission on this point struck the Committee as sensible:

[The Committee can] make recommendations about the process for determining exceptions, both now and in the future, and the way the exceptions should be dealt with… and identify, from an Australian policy perspective, what activities, which may be impacted by technological protection measures, must be allowed...⁷

It is more appropriate that the Government, particularly given the time and processes remaining before implementation, consider the conclusions and recommendations of this report and use the technical expertise at its disposal to develop authoritative formulations and acceptable exceptions in appropriate legislative terms where required.

Given the requirements in Article 17.4.7 regarding a regular review mechanism, the Committee was very conscious of the fact that this was but the first of many examinations of this issue. While the format of future reviews is not within the Committee’s Terms of Reference, many of the submissions raised this issue. The Committee has therefore made some comment on how the review process might operate in the future.

The report

Chapter 2 provides an overview of the nature of TPMs and related issues, copyright regulation in Australia, the interpretation of Article 17.4.7 and its differences with the Copyright Act 1968, and the regulatory framework in the United States. The issue of region coding is also discussed in this Chapter.

Chapter 3 addresses the exceptions to liability specified in Article 17.4.7(e)(i) – (vii) and the criteria for further exceptions under Article 17.4.7(e)(viii). The lack of a device exception for Article 17.4.7(e)(viii) under Article 17.4.7(e)(f) is also considered in this Chapter.

The final chapter examines the possible format of the future review process required under the AUSFTA.

Ms Kimberlee Weatherall, Submission No. 38, p. 4. Back