EXPORTING CONTROVERSY? REACTIONS TO THE COPYRIGHT PROVISIONS OF THE US-AUSTRALIA FREE TRADE AGREEMENT: LESSONS FOR US TRADE POLICY
O wad some Power the giftie gie us
To see oursels as ithers see us![1]
(WORK IN PROGRESS – LAST UPDATED 04/09/08)
For those interested in Australian copyright law, February 8, 2004 was a watershed date. On that day, the United States and Australia concluded a Free Trade Agreement (the AUSFTA) that contains a large and detailed intellectual property chapter, the bulk of which relates to copyright.[2] Australian copyright law has now gone through three waves of amendment to bring it into compliance with the AUSFTA, with the final stage of implementation only being completed in December 2006.[3] But while momentous in Australia, the AUSFTA seems to have gone largely unnoticed in U.S. copyright circles. One consequence of the AUSFTA that may not be widely appreciated in the U.S. is the political controversy caused by the intellectual property chapter of the agreement.[4] Some of this controversy was caused by concerns over the effects of the provisions of the AUSFTA relating to pharmaceutical patents, concerns that were bound up with broader disquiet about the potential impact of the AUSFTA on the operation of Australia’s Pharmaceutical Benefits Scheme (PBS).[5] Much of the controversy, however, and the issues that attracted the most sustained attention, related to the copyright provisions of the agreement.[6] One limited aim of this article is to provide an overview of the effects of the intellectual property chapter of the AUSFTA and to explain to an American audience why such a broad spectrum of Australian opinion found the provisions of the agreement relating to copyright, in particular, so troubling.
Much more importantly, however, we demonstrate that the Australian reaction to the copyright provisions of the AUSFTA raises questions about the wisdom of recent US trade strategy. We believe that, leaving to one side whether the provisions are good for Australia or ‘good copyright policy,’ the current strategy is irrational, even when judged solely against U.S. interests. We demonstrate that these provisions contributed significantly to an increase in anti-American sentiment in Australia – an effect diametrically opposed to the stated aim of using the agreement to foster good relations with a long-standing ally and partner. More specifically, we argue that the attitude with which the United States approached its negotiations with Australia over copyright, and its apparent disregard for Australian traditions, helped generate a perception of U.S. unilateralism, double standards, and high-handed ignorance. As a consequence, it may be less likely that Australia’s political class and the Australian public generally will be prepared to support the United States’ agenda on the international stage. In short, we demonstrate that the United States’ approach to intellectual property in bilateral free trade agreements is damaging the United States’ broader political interests in entering into such agreements. This must be counted as a significant cost.
The question thus becomes whether the agreement secures sufficient benefits, particularly economic benefits, to offset the costs we identify. It would be easy to assume from the text of the copyright provisions that the United States had made significant gains: the text is, after all, almost entirely drafted by the United States.[7] Through a detailed analysis of the changes wrought to Australian copyright law, however, we demonstrate that in the copyright sphere, the gains produced by the agreement were limited at best. If Australia is any guide, current United States strategy (a strategy also reflected in agreements signed with a range of other countries[8]) will not secure substantive harmonization of copyright, will not build support for future multilateralization of the United States’ preferred copyright standards, and will produce only a limited increase in returns for copyright owners. Moreover, the small increase in protection that has been secured has to be weighed against other costs for copyright owners. Weighing even more emphatically against current strategy is the fact that a very different form of agreement on copyright could have secured the same benefits, without incurring either the costs for copyright owners or the broader political costs we identify. Thus, whilst we do not provide a definitive answer to the question of whether the benefits secured by the AUSFTA outweigh its costs, we do show, in one key area, that current policy has incurred significant and unnecessary costs for only limited gains. We believe that this lends a new dimension to the argument that there needs to be a fundamental reassessment of United States trade policy. At the very least there needs to be a much more sophisticated cost-benefit analysis of the likely impact of agreements on partner countries. This requires a willingness to engage with the details. It is primarily for this reason that we describe and critique the substantive provisions of the intellectual property chapter of the AUSFTA and the Australian implementing legislation at some length in the course of this article.
2. The AUSFTA: An Overview
2.1 Background to the Agreement
Proposals for a free trade agreement between Australia and the United States date back many years.[9] However, the recent push for such an agreement can be traced to a decision taken by the Australian Cabinet in November 2000 to pursue negotiations with the United States, and a subsequent speech delivered by Australia’s ambassador to the United States that same year.[10] It became an official proposal from the Australian Trade Minister in April 2001.[11] Talks between Australia and the United States about the possibility of negotiating an agreement occurred throughout 2001 and 2002.[12] In November 2002, the President notified Congress of his intention to negotiate such an agreement, with formal negotiations beginning in March 2003.[13] The first round of these negotiations commenced on March 17, 2003.[14] By international standards, the negotiations proceeded rapidly – the agreement was concluded some eleven months later on February 8, 2004.[15] The parties also adopted a tight timetable for implementation, aiming for a commencement date of January 1, 2005.[16]
Australia’s desire for a free trade agreement seems to have been motivated by a number of factors: there was growing concern that Australia was being disadvantaged in trade into Asia;[17] the Howard government was in any event less Asia-centric in its focus than its predecessor and was hence more prepared to seek to build closer economic and political ties with the United States;[18] the apparent stalling of WTO talks left the government less willing to focus on multilateral trade negotiations alone;[19] the imposition by the United States of punitive tariffs against the Australian wine industry in June 2000[20] and the dispute about United States tariffs on lamb imports[21] left some agricultural producers keen to lock the United States into a bilateral free trade agreement;[22] and finally, the Howard Government believed it was likely to enjoy good access to senior figures within the Bush administration, making an agreement seem timely.[23] On the American side, the willingness to negotiate a free trade agreement with Australia represented a continuation of a policy begun in the mid-1980s[24] to pursue bilateral as well as multilateral trade negotiations.[25] Australia had been identified since that time as a potential partner to a bilateral agreement.[26] More immediately, however, after the events of 9/11, the Bush administration expanded the use of bilateral trade instruments as a tool to secure support for America’s security and general foreign policy agendas.[27] In this climate, Australia’s staunch support of United States military intervention in Afghanistan and Iraq did much to bolster the case for an agreement.[28]
Domestic political factors also seem to have played an important role during the final stages of the negotiations. The Australian government and George W. Bush both faced elections in late 2004 and the Australian government, in particular, was keen to go to the polls with an agreement in place.[29] Indeed, it has been suggested that political considerations ultimately forced many within the Australian government to swallow their reservations about the deal.[30] This was because, on the one hand, they were keen to avoid the impression that the effort put into negotiating the agreement had been wasted or that the Howard government enjoyed little influence in Washington and, on the other hand, because they knew that the successful conclusion of an agreement was likely to create division within the opposition Labor party and leave it open to a charge of being anti-American.[31]
2.2 The Copyright Content of the Agreement
As noted above, the AUSFTA covers a diverse range of issues, but this article takes as its case study the copyright provisions of the agreement. These are to be found primarily in chapter seventeen of the AUSFTA, which deals with intellectual property rights generally, although this chapter needs to be read alongside three ‘side letters’ that contain further obligations and clarifications relating to copyright and other intellectual property matters.[32] The complexity of the copyright provisions means that it is not easy to provide a satisfactory summary of their effects, but it may nevertheless be useful to group the provisions into four categories.
The first category relates to the multilateral IP framework. The agreement requires the parties to affirm their commitment to a series of multilateral treaties, including the Berne Convention, the Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite, TRIPS, and the WIPO Copyright and WIPO Performances and Phonograms Treaties.[33] It also reaffirms some of the core principles that underpin the international copyright system, including national treatment[34] and the requirement that treaty provisions be applied retrospectively to copyright content already in existence and not yet out of copyright.[35] With the exception of the 1996 WIPO treaties,[36] Australia was already party to all the multilateral conventions in question. Insisting on compliance with earlier multilateral treaties might have been thought desirable, because, by so doing, the provisions of these treaties were brought within the AUSFTA’s dispute settlement regime.[37] However, if this was the rationale, this was never explained. By requiring Australia to comply with multilateral treaties that she had long been a member of, these provisions helped to create the impression that Australia was not being presented with a bespoke agreement on copyright matters, but rather with something more like a standard form contract that was being put forward by negotiators who had little interest in familiarising themselves with Australia’s copyright tradition. This impression may be unfair,[38] but it has certainly been pervasive.[39]
The second type of copyright provision in the AUSFTA can be grouped under the rubric ‘multilateral-plus,’ that is, provisions that expand on the obligations found in TRIPS and/or in the 1996 WIPO treaties, or that reduce or remove flexibilities found in these multilateral instruments. These include obligations:
· to extend the copyright term to the life of the author plus seventy years in the cases where the term is calculated by reference to the author’s life, and, in other cases, to seventy years from publication, provided such publication occurs within fifty years of creation;[40]
· to make available civil remedies and to introduce criminal penalties in relation to the decoding and distribution of encoded broadcasts, and the manufacture of, or dealing with, devices for decoding encoded broadcasts without authorization;[41]
· to comply with detailed provisions relating to the enforcement of intellectual property rights. The obligations in question cover such matters as payment and calculation of damages, award of costs, seizure and destruction of infringing goods, border measures, and criminal liability for commercial-scale copyright infringement;[42] and
· to ensure that central government agencies do not use infringing copies of computer software and only use computer software in accordance with the terms of the relevant licence.[43]
The third ‘category’ is really one provision, but is one worthy of singling out for specific mention. Article 17.4.6(a) of AUSFTA requires that all economic rights in copyright be “freely and separately transferable” by contract, and that persons acquiring copyright by contract shall be able to exercise that right in their own name and “shall enjoy fully the benefits derived from that right.”[44] More or less identical provisions are to be found in other recent bilateral free trade agreements entered into by the United States.[45] These provisions appear to be aimed squarely at preventing trade partners from introducing unwaivable or unassignable rights of a type that enjoy some currency in Europe.[46] Most obviously, the requirement that copyright be “freely and separately transferable” by contract would prevent a partner country from prohibiting the outright assignment of copyright (as, for example, is the case in Germany and Austria).[47] In addition, and in practice perhaps rather more importantly, this language is arguably sufficient to prevent the introduction of unwaivable rights to equitable remuneration such as those created by the European Union’s Rental Rights Directive.[48] This language might also be treated as excluding the compulsory collective administration of rights[49] – a form of control on the exploitation of copyright that also enjoys some popularity in European copyright policy making circles.[50] Admittedly, it is difficult to be certain of these conclusions, because the provision in question presents a number of difficulties of interpretation. Nevertheless, it is striking that at a time when respected international copyright scholars have pointed to the need to protect individual authors, the US is excluding such measures both for itself and its trade partners.[51]
The fourth category in the AUSFTA is the set of provisions addressing copyright in the online environment.[52] These provisions are both detailed and highly prescriptive, even compared to other provisions in chapter 17:
· Each party is required to have anti-circumvention laws (that is, laws giving protection to technical measures used by copyright owners to limit use of their works) in accordance with the detailed model set out in the agreement.[53] This model closely mirrors the basic provisions in the WCT, WPPT, and § 1201 of the US Digital Millennium Copyright Act (“DMCA”) of 1998.[54] Liability must be imposed both for the act of circumventing access controls (that is, circumventing technological measures that protect access to copyright material), and for dealing in circumvention devices and services.[55] Both criminal (where conduct is wilful and for the purposes of commercial gain) and civil penalties must be provided.[56]
· The parties are obliged to “provide adequate and effective legal remedies to protect rights management information” by prohibiting the knowing removal or alteration of such information, the knowing distribution or importation of rights management information removed from a copyright work, and the distribution of copyright content with knowledge that rights management information has been removed.[57] These obligations apply where the person knows that her act “would induce, enable, or conceal infringement of [] copyright.”[58] Again, both criminal and civil penalties are required.[59]
· The parties must adopt a “safe harbor” regime for online service providers whose networks or facilities are used for copyright infringement. As under US law,[60] the safe harbors only apply to service providers who do not control or initiate the relevant acts, or select the material or its recipients,[61] and whose activities fall within one of four exhaustive categories.[62] Provided the service provider fulfils the detailed conditions set out in the agreement, including acting expeditiously to remove or disable access to material on becoming aware of the infringement (for example, through notification by the copyright owner),[63] the safe harbor provisions serve to limit online service provider liability. More specifically, the provisions exclude financial liability and limit the copyright owner’s remedies to orders compelling acts such as terminating specified user accounts.[64]
· The parties must ensure that the exclusive right to authorize reproductions extends to “all reproductions, in any manner or form, permanent or temporary (including temporary storage in material form).”[65]
· In a complex set of provisions, the parties are prevented from extending statutory licenses that currently allow the retransmission of broadcasts via cable,[66] to retransmission via the Internet.[67] This removes the general freedom of parties to the WCT and WPPT “to carry forward and appropriately extend into the digital environment limitations and exceptions in their national laws which have been considered acceptable under the Berne Convention.”[68] The relevant provisions of the AUSFTA thus seek to pre-empt decisions on how best to regulate Web sites (such as YouTube) that offer alternative means of accessing television.
In relation to this fourth category of provisions (dealing with the online environment), it should also be noted that the agreement attempts to define not only the nature and scope of the rights the copyright owner is to enjoy, but also to set up specific, exhaustive lists of exceptions.[69] For example, again following the approach adopted by the DMCA, the AUSFTA only allows a limited range of exceptions to the anti-circumvention provisions.[70] Admittedly, in relation to the act of circumvention, there is a further limited freedom to introduce new exceptions to safeguard non-infringing uses following an administrative review process, but even here the AUSFTA attempts to establish limits on how such review processes are to be conducted.[71] Still more importantly, as with the DMCA, this ability to introduce new exceptions does not apply to the prohibition on dealing with circumvention devices, a limitation that caused particular controversy in Australia.[72] Similarly, the provisions of the AUSFTA relating to copyright management information set up a limited list of exceptions and leave no capacity to introduce new exceptions.[73] In relation to the right to control the making of temporary copies, while the text of the AUSFTA itself does not limit the exceptions that may be created to the temporary copying right, an exchange of letters in November 2004 deals with this issue in some detail.[74]
As we have tried to suggest at a number of points, much of what has been described in this section would sound familiar to an audience conversant with U.S. copyright law. It is hard, however, to over-emphasize the detailed nature of the provisions just described - unusual in an international treaty. As we explain below, despite this detail, the provisions of the AUSFTA have gone through a process of implementation into domestic law that has at times produced outcomes that diverge significantly from the position in the U.S.[75] Taken together with the fact that significant conceptual and structural differences remain between U.S. and Australian copyright law (to say nothing of the broader differences between the legal systems of the two countries), and with the fact that implementing the AUSFTA required various political compromises that led to changes in areas of copyright law untouched by the agreement, it will be seen that the AUSFTA has done very little to bring the copyright systems of the two countries closer together.[76] We will come back to this point in considering the benefits that the U.S. obtained from AUSFTA, but we turn first to outline the process of Australian implementation and the nature and causes of Australian reaction to the agreement.
2.3 Australian Implementation
As noted earlier, implementation of chapter 17 required no changes to U.S. copyright law.[77] On the Australian side, however, transposing the AUSFTA’s copyright obligations into domestic law was a complex process extending over three years and three separate pieces of legislation.[78] The purpose here is not provide an exhaustive examination of the changes that were necessary, but rather to give a picture of the scope and detail of the changes required, and to highlight some aspects of the implementation that might be unexpected to an American audience.
Implementation of much of the AUSFTA, and in particular the bulk of chapter 17, had to begin in good faith by the January 1, 2005 effective date of the agreement.[79] Omnibus legislation covering the majority of the changes required by the agreement was passed in mid-August 2004.[80] Before turning to the details, it is worth noting the unusual process of its passage, which curtailed ordinary parliamentary processes, as this is relevant to Australian reactions to the agreement. Under the Australian Constitution, Parliamentary approval of treaties is not formally required: treaty-making power lies with the executive.[81] As a matter of practice, however, treaties signed by the government are referred to a Parliamentary committee, the Joint Standing Committee on Treaties (JSCOT),[82] which may offer recommendations both on ratification and implementation. The Senate may also establish its own committee, which in the case of AUSFTA it did.[83] Parliament then has a further opportunity for scrutiny when it considers and passes legislation necessary to implement a treaty.[84]
In the case of AUSFTA, the political imperative to bring the treaty into effect within an election year compressed this process. The draft text of the agreement, was released on March 4, 2004.[85] Both JSCOT and the Senate committee held hearings in May and June of 2004.[86] The large number of submissions received by these committees illustrated a high level of interest in the agreement.[87] Simultaneous with these hearings, the government was drafting implementing legislation.[88] JSCOT reported the same day the omnibus implementing legislation, the US Free Trade Agreement Implementation Act, was introduced into Parliament, and the House of Representatives passed the legislation the very next day.[89] The Senate Committee reported on August 5 – a mere 7 days prior to the final passage of the legislation by the Senate on August 13.[90] Parliament was prorogued on August 31, pending the October 2004 election.[91] The Senate committee referred to this truncated process as ‘self-evidently a mockery of the process that was set up by the parliament ostensibly to ensure that a proper examination of international treaties and agreements took place.’[92] While the timetable was largely outside U.S. control, the limited opportunities for consultation exacerbated concerns about the agreement itself.[93] This was particularly the case in relation to copyright, where the lengthy consultations with competing stakeholders that typify copyright reform were bypassed.
Turning to the detail of implementation, it is important to note first that there were parts of chapter 17 that required no change to Australian copyright law; in particular, several provisions restate basic copyright requirements reflecting existing multilateral treaties of which Australia was already a member, or basic systems of enforcement which Australia already provided.[94] For present purposes, it is sufficient to focus on three areas where change was required. First, the term of copyright was extended from the Berne Convention standard of life of the author plus fifty years, to life of the author plus seventy years.[95] This term applies, in Australian law, irrespective of whether the author is the first owner of copyright or of any subsequent transfers. For films and sound recordings, copyright was altered from fifty years after the date of publication, to seventy years after that date.[96] The extension applies to material still in copyright as at January 1, 2005; complex transitional provisions were introduced to mitigate and require benefiting copyright owners to compensate for any disruption the extension might cause, for example, to contractual arrangements made in the expectation that works would fall into the public domain.[97]
Secondly, the implementing legislation introduced economic and moral rights for performers in sound recordings of their performances.[98] The introduction of a new regime of performers’ rights was considered necessary to enable Australia to fulfil its obligation under AUSFTA 17.2.4 to ratify the WPPT.[99] Prior to these amendments, performers’ rights under Australian law were limited to the right to prevent unauthorized recording of their performances, and dealing with such recordings:[100] performers had no rights once a recording was made with their consent. Following the US FTA Implementation Act, the starting point under the Act is that all ‘performers’ (that is, anyone who ‘contributed sounds of the performance,’ plus the conductor[101]) share equally with the producer the economic rights in sound recordings of their live performances.[102] Thus, subject to any contractual arrangement to the contrary,[103] the permission of all performers is required for dealings with sound recordings of live performances. In order to avoid a proliferation in the number of permissions required, the Act allows permission to be presumed or inferred in certain circumstances.[104] In addition to the economic rights just outlined, performers have also been given a set of non-transferable,[105] unwaivable[106] moral rights,[107] namely, a right to be attributed as performer,[108] a right of integrity in the performance (that is, a right to prevent the performance being subjected to a derogatory treatment),[109] and a right against being falsely attributed as a performer.[110]
The third key area amended in mid-2004 was the law relating to temporary copies. Prior to these amendments, making a copy of a work under Australian law would only infringe copyright where the copy was in “material form,” which was defined to include forms of storage from which the work could be reproduced.[111] Courts in Australia had held that this covered most short-term copies made in computer memory, but excluded temporary electronic copies made in the buffer memory of ‘black box’ devices (such as DVD players) which did not allow for an extraction of further copies from temporary memory.[112] The omnibus legislation altered the definition of “material form” to remove the requirement that the work be able to be reproduced (thus expanding the copyright owner’s rights to all temporary copies, however inaccessible),[113] and inserted specific exceptions so that copies ‘incidentally made as a necessary part of a technical process of using a copy of the work’ would not infringe, provided they are not made from an infringing copy.[114] The result is that playing a legitimate electronic copy of a work is allowed, but playing a ‘pirate’ copy, where playing results in temporary copies in the memory of a computer, is an infringement.
The United States Trade Representative (USTR) was not satisfied with all aspects of Australia’s implementation of the AUSFTA.[115] Most notably, the USTR took the view that the exceptions to the right to control the making of temporary copies were too wide and that the ISP safe harbor provisions were inconsistent with the agreement (the USTR was concerned, in particular, about Australia’s attempt to ensure that ISPs would not be considered to be benefiting financially from infringement merely because of ‘increased activity’ on their networks).[116] Negotiations ensued, with Australia required to provide detailed written explanations of how aspects of Australian copyright law operate.[117] In November 2004 the USTR consented to the exchange of diplomatic notes necessary to bring the agreement into effect,[118] on terms that made it clear that US approval was conditional on further amendments.
The level of detail in this November exchange is striking:[119] it effectively made the agreement conditional on a specified form (at that time, a draft) of implementing legislation. Even more remarkable, however, is the overtly grudging, even threatening tone of the USTR letter. The letter stated expressly that the US was proceeding “based on the Australian government’s commitment to introduce [amending] legislation and have it enacted into law expeditiously,” itself an interesting comment given that Parliament still, at that time, had the right to reject or amend that legislation.[120] The letter also stated that the US “remained concerned” about some provisions and “intend[ed] to monitor” their effect,[121] and that if subsequent practice “reveal[ed] problems with the full exercise of US rights . . . Australia should expect that we will take appropriate remedial action.”[122] This attitude, showing a disregard for Australian parliamentary processes and only curmudgeonly acceptance of her right to choose how to implement treaty provisions, had implications for the Australian response to the agreement, which we discuss below.[123] Following this exchange, Australia passed legislation making the changes required: amending several aspects of the new copyright laws in December 2004, refining the ISP safe harbor provisions, and limiting the scope of the exception for temporary copies made as part of a technical process of using an electronic copy of a work.[124] Again, the process in Australia was rushed, apparently in compliance with the desire of the US for the implementation to be “fixed” prior to the agreement coming into effect. In order to ensure the legislation could be passed before the end of the year, a Parliamentary committee convened to conduct an “inquiry” was given twenty-four hours to report.[125] The committee in turn gave stakeholders approximately three hours notice of the hearing, and rather than writing a formal report, simply tendered the transcript of the hearing and evidence to Parliament.[126] The truncated process once again elicited considerable concern and protest from members of Parliament.[127]
The passage of these amendments in December 2004 left one key area to be implemented: the anti-circumvention provisions, which under the agreement were not required to be in force until January 1, 2007.[128] As we explain in the penultimate section of this paper, Australia already had its own anti-circumvention laws, negotiated through an extensive domestic consultation process over the period 1997-2000 and reviewed in 2003; but the model was quite different from the US model reflected in Article 17.4.7 of the AUSFTA.[129] Australia had chosen in 2000 not to ban the act of circumvention of technical protections, on the basis that the real harm to copyright owners occurred through the creation of a market for circumvention devices, and that banning circumvention intruded too significantly into the private sphere. Following a further set of Parliamentary committee hearings in late 2005,[130] which provided another opportunity for extensive public criticism of the agreement, new anti-circumvention provisions were passed in December 2006. As a consequence, Australian anti-circumvention law now looks superficially much more like its US counterpart. However, as we explain in detail later in this paper, it would be erroneous to assume that this change has produced any noticeable benefit for copyright owners and it is also notable that a deliberate decision was taken to depart from the US model as embodied in the DMCA in various respects.[131]
One final unexpected twist occurred during Australia’s implementation: the agreement ignited a local debate that led to an expansion of the exceptions to copyright infringement, in particular, as regards the personal use of copyright material.[132] During the process of implementation, two things happened. First, politicians’ attention was focused on Australian copyright law.[133] This happens relatively rarely, and when it does, critics can take the opportunity to point out all the areas where they see problems. Thus opponents were able to point out the fact that under Australian law most acts of personal copying – including recording a television program to watch at a later time and copying music from a lawfully purchased CD onto an iPod – involved infringement of copyright.[134] Since politicians tend to record television, and they or their children have iPods, this was met with dismay.[135]
Secondly, this domestic debate interacted with a widespread – and justified – perception amongst legislators, policy-makers, and groups representing user interests (such as libraries, galleries, archives, and educational institutions) that the amendments required by the agreement were all tending in one direction: increasing the level of copyright protection.[136] US readers would be familiar, however, with the way that copyright reform tends to work: for political purposes it is always necessary to present reforms, at least rhetorically, as giving something to both users and owners. This is as true in Australia as it is in the US. Because the provisions in the AUSFTA were all aimed at increasing protection, opponents were able to claim that the effect was to change the copyright “balance” in favor of copyright owners.[137] At the same time, in Committee hearings, members of Parliament were told that the US fair use defence allowed activities, such as limited personal copying and using copyright material for the purposes of parody, that were unlawful in Australia.[138] We even had, during this period, counsel for the US Recording Industry in the Grokster case conceding in argument that copying sound recordings to portable players was likely to be fair use, even as the Web site of the Australian Record Industry Association continued to state that copying music to MP3 players was an infringement of copyright.[139] It is therefore unsurprising that both Committees made specific recommendations that Australia should either introduce a fair use defence or broaden the existing exceptions in some other way.[140] The government sought to defuse this issue going into the 2004 election by promising to review Australia’s copyright exceptions regime.[141]
The promised review of the exceptions commenced in May 2005.[142] The government ended up rejecting the introduction of an open-ended fair use defence, on the basis that it would lead to uncertainty.[143] Instead, in the interests of “equal treatment” with American consumers, it chose to enact a series of specific new exceptions to allow for:
None of these exceptions require remuneration to rights holders.[148] The private copying exceptions are not qualified, as the US defence of fair use is, by any reference to the market impact on copyright owners.[149] Their introduction is a direct result of the way that domestic political considerations impacted on implementation of that agreement and, in particular, of the rhetorical power of demands that Australian users be left no worse off than their US counterparts. Such demands would always have had force, but, in the climate of hostility that developed towards the copyright provisions of the agreement, these demands were irresistible.
Because the AUSFTA required few changes to US law generally, and no changes to US copyright law at all, it is understandable that a US audience would lose sight of the processes that followed on from its conclusion. However, in Australia the implementation process was drawn-out over three years, complicated, involved changes of minute detail in Australian law, and was carried out under the continuing supervision of the USTR.[150] As we show in the next section, this had important implications for the Australian reaction to the AUSFTA over time.
3. The cost of including copyright in the AUSFTA
Having outlined the effects of the agreement and the process of Australian implementation, in this section we seek to chart the nature of Australian reaction to the copyright provisions of the agreement, show how this reaction fed a more general anti-American sentiment, and try to explain why this reaction was so overwhelmingly negative. Before doing so, however, it is important to acknowledge that there is an argument to be had about cause and effect. A segment of Australian society believes that Australia is not sufficiently assertive of its own interests, and has long been much too ready to align itself unthinkingly with the interests of larger Western powers.[151] Holders of this view incline naturally to an anti-American stance and were almost inevitably going to oppose the AUSFTA, regardless of its content. For some of these critics, the copyright aspects of the agreement were one of several tools used in an attempt to marshal opposition more generally.[152] Copyright is useful for these purposes precisely because concerns about the scope and expansion of intellectual property rights were already matters of public interest and political concern. In our view, however, the copyright provisions were a major independent source of hostility. As we will show, a great deal of alarm was caused in political and policy circles, and in the Australian media, by the style of chapter seventeen in particular, and by the tone of the accompanying official correspondence.[153] These misgivings about the copyright provisions served to recruit new opponents to the anti-copyright cause, to increase opposition to the AUSFTA generally, and in the longer term, to increase suspicion and hostility towards the US itself.
The role which the copyright provisions would play was not fully evident in the immediate period following the conclusion of the AUSFTA: at that time, the bulk of media attention and debate in Australia was directed at agricultural trade, relaxation of foreign investment rules, Australian media content quotas, and the potential impact of the agreement on Australia’s Pharmaceutical Benefits Scheme.[154] However, a review of mainstream media coverage at the time reveals that whenever the copyright provisions were mentioned, the commentary was almost universally negative, even in news outlets that were supportive of the agreement overall.[155] Over time this attention and the criticisms of the copyright provisions increased.
It would be easy to dismiss negative commentary on the copyright provisions of the AUSFTA as an inevitable interest group reaction: copyright is a famously politicized area with vocal and active stakeholders. Such a view would not only be simplistic, it would be incorrect. In fact, the most notable thing about Australian reactions to the copyright provisions of the agreement is that criticism was not confined to longstanding critics of the copyright regime, that is, left-leaning members of the legal academy, non-governmental organizations, librarians, educational establishment representatives and campaigners for “digital freedoms.” These groups were, of course, actively involved in protesting the effects of the copyright provisions of the agreement.[156] But, in addition, an entirely different set of critics emerged. Among them were press commentators not normally concerned with or involved in intellectual property debates,[157] union officials,[158] senior academic economists,[159] and the chief economics editors of the main broadsheet newspapers in both Sydney and Melbourne.[160]
Trade economist Philippa Dee, who was commissioned to write an independent assessment of the economic impact of the AUSFTA for the Senate Committee, described the IP provisions as “pernicious” and “market closing.”[161] The former chief economist at the Department of Foreign Affairs and Trade, Peter Urban, was highly critical of the intellectual property provisions of the AUSFTA and identified chapter seventeen as providing one reason for not accepting the agreement.[162] Independent assessments by both the Parliamentary Library and the international relations think-tank, the Lowy Institute, came to similar conclusions.[163] Dr. John Hewson, a former leader of the (right of centre) governing Liberal Party, singled out the intellectual property chapter as being a key issue of concern in the AUSFTA, because it might give rise to “a dramatic change to sovereignty [t]hat will have a medium to long term impact on this country which is very significant and should not be underestimated.”[164] Four of the six state governments (New South Wales, Queensland, Victoria, and Western Australia) expressed concern about the copyright provisions, despite having supported the negotiations and despite being in favor of the agreement overall.[165] Leading figures in the legal community, such as Justice Sackville of the Federal Court of Australia, were also critical.[166]
Parliamentarian after Parliamentarian during debates on the AUSFTA referred specifically, and sometimes at length, to the new copyright rules, calling the copyright aspects of the agreement “a major concern,”[167] “one of the most significant aspects of the Agreement . . . essentially trade restrictive measures rather than trade liberalising,”[168] “dangerous,”[169] or “one of the worst aspects of this deal.”[170] The opposition Labor party was sufficiently concerned that it drew up a series of proposals for “managing” the copyright issue, which became part of its election platform.[171] On the very last night of debate on the AUSFTA implementing legislation, most of the discussion, late into the night, was about the impact of the copyright provisions, as minor parties sought to move amendments to the implementing legislation to reduce what they saw as the negative effects of chapter seventeen.[172]
For critics such as Dr. Hewson, for media commentators, and for many Parliamentarians, it was not only the immediate costs of the new rules for consumers or educational institutions, nor the concern that adoption of the rules would lead to "litigious bullying” of Australian companies by large American corporations, that worried them.[173] Rather, a consistent theme was one of real disquiet at the loss of sovereignty and freedom to determine matters of economic and social policy. As one Senator put it, “[w]hy should we embrace the US model of intellectual property rights when we have a perfectly good model ourselves?”[174] The complex form of the agreement also ensured that the commentary was ongoing: the more time people had to consider the chapter, the more potential problems were identified, giving rise to a steady stream of negative commentary over a period of months.[175]
What is more, the negative reaction engendered by the copyright provisions did not end with the passage of the first round of implementing legislation: chapter 17 is the gift that keeps on giving. In November 2004, when further legislation was passed amending Australia’s implementation as required by the US, the event generated renewed attention and controversy.[176] Media stories again canvassed the copyright problems caused by the AUSFTA,[177] raising fears of “bully-boy tactics” and an “avalanche of litigation.”[178] Once again, the impact on Australia of “changes to copyright law forced by the US free trade agreement” was debated in Parliament, with members wondering aloud about future possible US demands in the copyright field given the level of detail in the agreement and tone of the accompanying correspondence.[179] Two years later, in late 2006, as the last of the copyright changes were passed by Parliament, both the media and members of Parliament continued to relate many of the “bad things” about Australian copyright law to the AUSFTA and the demands of the United States;[180] one colorful description pegged the amending legislation as “an Australian-US love child spawned by the free trade agreement.”[181] Nor is this effect of the chapter likely to cease any time in the foreseeable future. Consideration of compliance with the AUSFTA is now necessary every time Australia considers any reform to its copyright law (or other laws that may impact on the interests of copyright owners). Because of its detail and inflexibility, the AUSFTA will continually be brought up as a barrier to otherwise desirable changes to copyright law. Thus Australian stakeholders, policymakers, and Parliamentarians will repeatedly be reminded of these provisions.
In sum, the Australian reaction to the copyright provisions of AUSFTA was sustained, hostile, and came from a range of sources, many of whom did not have a personal stake in the issue and have not usually participated in copyright reform debates. In our view, this reaction should be counted, from a US perspective, as a cost of the agreement. The constant reiteration – over a period starting in 2004, and continuing even now – that the US had imposed its copyright rules on Australia; and that it was watching the implementation of those rules with a hostile eye and scant regard for Australia’s sovereignty or Parliamentary processes, has contributed to a more general decline in the United States’ standing in Australia. The copyright provisions helped to foster the belief that Australia’s long-standing, steadfast support of the United States foreign policy objectives counted for little in American eyes. This is ironic given that one of the perceived advantages of the AUSFTA was that the agreement would strengthen ties with a steadfast ally. If this was the US way of saying ”thanks mate,”[182] it felt, to many Australian observers, like a slap in the face, not a pat on the back.
3.2 The Causes of Australian Hostility
Having charted the nature of Australian reaction to the copyright provisions of the agreement, in this section we attempt to explain why the reaction was so negative. As we have already emphasized, we do not believe that Australian reaction can be explained as the consequence of the fact that the AUSFTA forced Australia to raise its copyright standards. On the contrary, as we explain in detail in the next section, the AUSFTA did very little in this respect. Rather, we believe that the form of the agreement did much to contribute to the sense that the US had adopted a petty and patronising attitude towards Australia in the negotiations. These concerns about the form of the agreement need to be viewed in the context of the sometimes strained history of copyright relations between the two countries; alongside the belief that the agreement seeks to lock Australia into various positions at a time when it is too early to say whether these positions are sensible; and the concern that the US may simply choose to ignore its obligations under the agreement if they subsequently prove to be inconvenient.
In describing chapter seventeen as petty, we are referring to the fact that it seems that there is no aspect of intellectual property law or administrative practice too trivial to have found its way into the agreement. One such example that jumps out is a provision in the AUSFTA that “neither party may require, as a condition of registration, that [trade] marks be visually perceptible, nor may a Party deny registration of a mark solely on the ground that the sign of which it is composed is a sound or a scent.”[183] This provision seems to have been designed to ensure that Australia does not follow the European approach to graphic representation of trade marks, which has made it more or less impossible to register an olfactory mark in Europe.[184] Are scent marks of such overwhelming significance to the US that they require treaty-level protection – in a context where Australia already allowed such registration and had shown no inclination to follow the EU approach?[185]
More relevantly for present purposes, there are similarly petty, nitpicking provisions in the copyright area. This is perhaps most obviously seen in the side letter dealing with ISP liability.[186] This letter sets out model notices and counter-notices – all the way down to requiring that such notices include “the identity, address, telephone number and electronic mail address of the complaining party,” “the signature of the person giving notice” (which, a footnote to the letter specifies, includes an electronic signature), and “a statement that the information in the notice is accurate” (as if any of this needed to be stated at the level of a treaty).[187] Another example is the provision relating to border measures. Article 17.11.24 requires that parties “provide that where an application fee or merchandise storage fee is assessed in connection with border measures to enforce a trademark or copyright, the fee shall not be set at an amount that unreasonably deters recourse to these measures,”[188] as if the principle that parties ought in practice to be able to avail themselves of the remedies provided by law needed to be stated. Similarly, the AUSFTA provides that “final judicial decisions . . . for the enforcement of intellectual property rights . . . shall be in writing and shall state any relevant findings of fact and the reasoning, or the legal basis on which the decisions or rulings are based.”[189] This of a trading partner which has had a common law legal system for more than 200 years.
By seeking to regulate and control relatively trivial matters, the AUSFTA helps to create the impression that Australia was being spoken down to on intellectual property matters. This patronising quality of the AUSFTA is amplified by the fact that it looks and feels like a “standard form” agreement (as was described earlier) which conspicuously fails to pay any respect to Australia’s legal traditions. The AUSFTA and the accompanying official correspondence leave the reader with the impression that the USTR descended, Prometheus-like, to present the torch of intellectual property to the benighted savages of the antipodes. Deviation from American norms is, at best, to be tolerated begrudgingly and certainly the United States has nothing to learn from Australia.
The projection of the United States as a model intellectual property citizen exhorting Australia to provide an appropriate level of protection jars with anyone familiar with the history of intellectual property relations between the two countries. In the early years of the twentieth century, Australian authors and publishers were exasperated by the decision of the US to remain outside of the international copyright system.[190] Australian copyright owners were particularly aggrieved by the discriminatory effects of the manufacturing clause in the 1909 US Copyright Act, which required English language works to be printed in the US in order to attract US copyright protection.[191] It was said that “[t]o an Australian author, unknown in America, this condition amounts to a practical prohibition of copyright in that country, and within a few months of the publication of his book in Australia it becomes fair prey to any enterprising publisher in America, where it is uncopyrighted, and indeed then uncopyrightable.”[192] In contrast, American publishers were able to get Australian protection by arranging for their works to be simultaneously published (that is, offered for sale) in the US and any Berne Convention country.[193] Dissatisfaction with the effects of the manufacturing clause led lobbyists to seek to persuade the Australian government either to increase the tariff on imported books[194] or to take more direct retaliatory action against the US.[195] These demands found a sympathetic audience in government circles, but the position was complicated by the fact that copyright was still seen as an imperial issue and the British government was also seeking to apply pressure to the US.[196] Part of the standard American response to such pressure was to intimate that the US might join the Berne Convention “at no distant date,” a strategy that gradually began to try the patience of Australian activists.[197]
If copyright relations between Australia and the United States in the early years of the twentieth century were dominated by Australian frustration at the refusal of the US to comply with the international copyright norms, over more recent years the position has, superficially, been reversed. In the 1990s Australia was placed repeatedly on the special 301 watch lists, appearing on the “priority watch list” from 1991-1993, and on the “watch list” in 1994 and from 1996-1999.[198] On closer inspection, however, it seems that the single most important reason for Australia being categorized by the USTR as a country whose intellectual property system gave cause for concern was Australia’s decision to loosen prohibitions on the parallel importation of goods.[199] Australia was targeted primarily over an issue that is left unregulated in the principal international conventions relating to copyright (TRIPS even contains an express provision that makes it clear that Member States are free to determine whether or not to allow parallel imports[200]), despite the fact that there is a good case to be made that allowing parallel importation offers significant economic benefits.[201] Other issues that were identified by the USTR, such as Australian moves to allow decompilation of computer software[202] and the temerity of an Australian court expecting Hollywood Studios to prove that they owned copyright in the works in which they were suing for infringement,[203] also tended to be treated in Australia as more evidence of regulatory capture of the USTR by American owner interests than they did of deficiencies in domestic law. Other issues that were identified by the USTR, such as Australian moves to allow decompilation of computer software[204] and the temerity of an Australian court expecting Hollywood Studios to prove that they owned copyright in the works in which they were suing for infringement,[205] also tended to be treated in Australia as more evidence of regulatory capture of the USTR by American owner interests than they did of deficiencies in domestic law.
The sense that the United States is not in a position to be lecturing others is further compounded by awareness of the fact that there are a number of respects in which current U.S. copyright law fails to comply with international norms.[206] It is, once again, important to bear in mind the context. Intellectual property experts and practitioners in other countries pay a great deal of attention to legal developments in the U.S. This is partly due to the sheer size and importance of the U.S. market: many dealings with intellectual property rights in Australia require some engagement with U.S. law. In addition, America’s decision to project itself as the defender of strong copyright protection attracts attention to its own system.[207] Thus, intellectual property lawyers in Australia are very familiar with U.S. derogations from international norms. Australians, for example, are conscious of the fact that the U.S. continues to refuse to provide proper moral rights protection for authors, despite Article 6bis of Berne, and that U.S. law still maintains significant financial penalties for foreign copyright owners who fail to register their works prior to bringing an enforcement action, despite the Berne prohibition on subjecting the enjoyment and exercise of copyright to any formality.[208] Mention might also be made of the method employed for calculating the term of copyright protection in works made for hire[209] and the long period it took to make the implementation of the Berne Convention properly retrospective.[210] Moreover, in the immediate aftermath of the AUSFTA, some commentators began to question whether the U.S. even complies with all of the provisions of that agreement.[211] For example, the AUSFTA contains a provision that requires the parties to define the reproduction right in such a way as to cover all temporary reproductions.[212] But despite this provision, and the fact that identical provisions are to be found in other recent bilateral agreements,[213] it is not clear that under U.S. law, all temporary reproductions fall within the reproduction right.[214]
Thus far, it has been seen that Australian hostility was caused in part by the form of the agreement: its excessively detailed nature made it seem petty and patronising. The patronising quality of the agreement was exaggerated by the historical context. Australians resented being lectured to by a country that for many years failed to provide adequate protection for foreign authors, that continues to refuse to comply with a range of international standards, and that had placed Australia under threat of trade sanctions because of Australia’s approach to parallel importation, an issue left largely unregulated by international law.[215]
A fourth, rather different, reason for Australian hostility to the copyright provisions of AUSFTA is that they seek to lock Australia into a series of US domestic law positions at a time when it is still too early to say whether these positions are sensible and, indeed, at a time when the elements of the US position remain to be fully determined.[216] For example, in the immediate aftermath of the AUSFTA, much of the concern centered on how the agreement dealt with the relationship between the exceptions and technological protection measures.[217] As was noted above, following the approach adopted in the DMCA, the AUSFTA prohibits both the act of circumvention and the manufacture and sale of circumvention devices.[218] However, the agreement does give the parties the freedom to permit users to circumvent protection measures in order to take advantage of a limited range of exceptions and, in an even more limited range of circumstances, gives the parties the freedom to waive the prohibition on the sale of circumvention devices.[219] The problem with this regime is that, for the most part, it restricts the availability of the exceptions to a small subset of highly technologically literate users, that is, to those users who are personally able to decipher a technological protection system.[220] Take, for example, a blind person who needs to circumvent a technological measure in order to make their read-aloud software work with an electronic document. Apparently, the only legal way for this to occur under the AUSFTA is for the blind person personally to circumvent the technical measure: a self-evidently ridiculous result which provided grist to the AUSFTA opponents’ mill.[221] Even in those rarer cases where the prohibition on the sale of circumvention devices can also be waived, there is still no guarantee that users will be able to access a work – users will ultimately be dependent on third parties being willing and able to manufacture the devices in question.[222] Given these shortcomings, there is a good case to be made that a better system for dealing with the relationship between technological protection measures and non-infringing uses is to adopt a ‘fair use by design’ approach. This approach, which has found favor in Europe, places an emphasis on using regulatory mechanisms to encourage copyright owners to build space for users into their copyright protection strategies and, if all else fails, can result in owners being compelled to make non-encrypted versions of works available to users.[223] The effect of the AUSFTA is to prevent Australia from going down the European route, despite the strong case that can be made for the superiority of this model.
If there are elements of the DMCA / AUSFTA scheme for dealing with technological protection measures that are inherently problematic, Australian unease was heightened by the decision of the Court of Appeals for the Federal Circuit in the Skylink case.[224] That decision, which recasts anti-circumvention liability under the DMCA, placed a higher burden on copyright owners than had previously been appreciated.[225] Although the outcome was broadly welcomed by most Australian commentators, the decision also highlighted the fact that the U.S. was seeking to export provisions of the DMCA before their meaning had become fixed in domestic law; commentators openly wondered whether Australia would be ‘allowed’ by the U.S. to take a similar approach in its legislation.