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Why Geo-dodging to watch US Netflix should be officially OK

Published on May 9, 2016 by Patricia Monemvasitis and Kim Leontiev

Why Geo-dodging to watch US Netflix should be officially OK and other insights of the Productivity Commission Intellectual Property Arrangements Draft Report

If you’re one of the tech-savvy cats out there who has been accessing US Netflix, or Canadian Amazon, or any other foreign geo-blocked version of a movies, TV, music or e-books content provider, the Productivity Commission Draft Report on Intellectual Property (IP) Arrangements has some good news for you! Fret no more (if you even have been) about the legality of using that Virtual Private Network (VPN) to “geo-dodge” or circumvent the country-specific blocks to access the much larger libraries of US or Canadian content services because the Productivity Commission is on your side! In its IP Draft Report released last Friday (29 April 2016), the Productivity Commission concludes, amongst other things, that Australia’s copyright legislation (the Copyright Act 1968 (Cth)) should be amended to “make clear that it is not an infringement of Australia’s copyright system for consumers to circumvent geo-blocking technology”.

The close to 600 page IP Draft Report (“the Report”) follows several months of public inquiry and submissions from key industry stakeholders such as IP rights holders and their representatives, consumer groups, internet service providers, and the broader IP legal community on various aspects of IP and whether current arrangements provide the appropriate balance between access to ideas and products and encouraging innovation, investment and production of creative works. The lengthy Report deals with a wide array of IP matters, but we’ve compiled some of the highlights below.

Copyright –fair use should be the new deal

Currently under Australian law, if you are not the copyright owner or the copyright owner’s licensee there are a select few exceptions available should you seek to use the copyright content without licence or fee. These are known as “Fair Dealing” exceptions and include the use of copyright material for the purposes of: research or study (Section 40), criticism or review (section 41), parody or satire (Section 41A) and reporting news (Section 42). Each of these is tightly regulated with a multi-factor test for determining “fairness” in the dealing having regard to the nature of the work/adaptation, possibility of obtaining the copyright at a commercial price, the effect on potential market value, and the amount or substantiality of the copyright content dealt with and of course the purpose of the dealing as prescribed by the legislation and decided cases.

The Report argues that this system of exceptions operates in a too narrow and inflexible way that is divorced from realities of copyright content use in Australia today. The recommended approach to an exceptions regime is a US-style general exception known as “Fair Use”. Unlike, the specific, purpose-based Fair Dealing exceptions, a general Fair Use exception would remove the formal complexities of determining purpose of the use and provide greater certainty as to a number of modern copyright uses not covered by the fair dealing system, although they would otherwise be considered “fair” or legitimate uses. These include use scenarios such as: the publication on an internet search engine result of thumbnail images of websites, the quoting by an author of unpublished letters and journal entries in a biography, the use of opening lyrics of a copyright song as a way of paying homage to that song, or the creation of a collage using images from other copyright photos.[1] The significant shake-up proposed is likely to make this recommendation much discussed in the nearer and farther future.

Duration of copyright works –  a lifetime’s too long!

Apart from making exceptions fairer, the Report has also identified the duration of copyright works and other content as significantly longer than what is necessary to incentivize the creation of most works. The issue appears to be that the commercial lifespan of many copyright works is far shorter than the duration of legal protection of the copyright rights. Based on the Productivity Commission’s findings, the commercial exploitation life of copyright materials would rarely exceed 20 years, whilst the duration of legal protection (in many instances) runs for 70 years from the death of the creator. A book published in 2016 by a 35 year old author who lives until 85 would be still protected by copyright laws until 2136 – arguably long after the commercial life of the work.[2]

According to the Report this disparity indicates that the current duration imposes costs on the community in accessing copyright material for far longer than what is necessary for the commercial incentive to the creators/owners. This could be hindering the creation of fresh works and faster dissemination of ideas far more than necessary for the recognition of the original copyright holders’ interests. The optimal term for the duration of legal protection for copyright materials should therefore be closer to 15-25 years after creation.

On an additional note, the Report also took aim at the current state of copyright protection for unpublished works which in Australia are granted copyright protection in perpetuity, which is an anomalous position in relation to other jurisdictions such as the UK, USA, Canada, New Zealand and much of the EU. The large proportion of unpublished copyright protected works such as letters, diaries, recipes, sketches are held in libraries and archives collections across Australia and the effect of perpetual copyright protection for works which remain unpublished is that permission is always required for their use and exploitation and as time elapses the task of tracking down rights holders becomes increasingly difficult. The Report therefore recommends the harmonizing of copyright duration of unpublished works with those of published works whereby if the author’s identity is known, the duration will be the author’s life plus 70 years and if the author’s identity is not known, the duration will be 70 years from the date the work was made.

Trade Marks – clearing up the clutter

Whilst not the most prominent sections of the Report, some trade marks issues and recommendations are also discussed in Chapter 11. The Report raises the concern of an increasingly cluttered Register of Trade Marks in Australia whereby lower quality and broadly cast trade mark applications are being registered and potentially stifling competition in the promotion of goods and services in the market. According to the Draft Report, one effective (although not entirely perfect) measure to address cluttering may be to restore the “mandatory disclaimers” power to the Trade Marks Examiner as existed prior to the 1995 Trade Marks Act. “Mandatory disclaimers” would allow Trade Marks Examiners to grant registration to applications but reign in the scope of elements and/or classes in which the application is made because the elements “disclaimed” would not be afforded Trade Mark rights and protections.

Conceding that there are imperfections of the mandatory disclaimer method such as increased costs, complexity and disruption to the trade mark system, the Report provides some alternative recommendations. Amongst these is the recommendation that the presumption of registrability should be qualified with a presumption that it does not apply to trade marks that could be misleading or confusing and lifting the threshold from “intent to use the trade mark” to “demonstrated use” – although concerns were also raised about the uncertainty that this would create.

The Report also considered abolishing defensive trade marks and increases on the fees for Trade Mark application and registration. Defensive Trade Marks are provided for under Part 17 of the current Act which allows traders who effectively have famous brand reputations in relation to some good/services to register their famous trade mark in goods/services in which they do not offer goods/services. The rationale for allowing defensive trade marks is to prevent confusion that could arise should another trader start using an identical or similar trade mark in another class as for example consumers thinking that Qantas has entered the fitness market should a trader (other than the airline) start offering gym services using “Qantas” as part of the name. The Report notes that whilst defensive trade marks are not extensively used in practice, they are a source of clutter and their immunity for removal for non-use and increase in power for larger traders makes them anticompetitive and unjustifiable as a safeguard to consumer confusion when other remedies such as passing off and the consumer law are available. 

Additionally, the Report argues for an increase to the application and registration fees for trade marks as a means to discourage cluttering, particularly by larger firms seeking multiple class registrations. To shield smaller and medium-sized enterprises (SMEs) from the effects of the cost increase, the increase should apply only to registrations in more than one class of goods/services.

Better IP Enforcement for SMEs

In further concern for SMEs, the Report notes the problems of IP enforcement that SMEs face, especially against larger enterprises. Whilst rejecting the ideas of a UK-style dedicated IP Court, the Report does propose a process of reform within the Federal Court system with an emphasis on lower cost of, and informal alternatives to litigation of IP matters and more straightforward dispute resolution options for contentious IP matters with a lower value quantum that could be dealt with in a separate jurisdiction of the Federal Court. Measures such as these could make a significant and positive difference for many SMEs that may have invested in the IP rights, but are daunted by the complexity and resource-intense process of effectively enforcing their rights.

Parallel Imports and the final word on geo-doging your Netflix account

The importation of legitimately trade-marked goods produced in another country such as that cheaper DSLR camera or smartphone you bought online from a trader in Hong Kong can be blocked in Australia by owners and/or licensees of the trade mark in Australia. Of course, Section 123 of the Trade Marks Act has for the most part been there to ensure that parallel imports are allowed, but increasingly the consent of the application of the trade mark by the trade mark owner is becoming difficult to prove such as where the consent may have been restricted, conditional, or implied. The evidentiary and legal burdens increase the risk for consumers and parallel importers which the Report seeks to remedy with the reform of Section 123 to clarify that parallel imports of trade marked goods do not infringe Australian registered trade marks so long as the trade marked goods have been brought to the market in other jurisdictions by the owner or licensee of the trade mark.

And to return to that all important observation with which we began, the Report has acknowledged what many Australian consumers have long protested: price discrimination for IP content across a range of platforms. Australian consumers are according to the Report paying on average 50% more for software, music, 84% more for games, and some 16% more for books. This together with availability and timing of release has been a significant factor in prevalence of geo-dodging and (on a more serious note) piracy by individual consumers in Australia. In fact, geo-dodging, fair use, extensive durations, parallel imports, trade mark clutter and enforcement effectiveness discussed in the Report ultimately project an overall expression for a more economically practical and use-focused approach in the regulation of IP in Australia. In other words, to be in touch with the realities of consumption and exploitation of IP both currently and the projected future, IP laws should be sharpened to respond to commercial realities including consumer behaviors online and elsewhere.

The Draft Report will be open for further written submissions until 3 June 2016 which can be made via the Productivity Commission website: http://www.pc.gov.au/inquiries/current/intellectual-property/draft#fact

May the tech savvy geo-dodgers be buoyed till then.

 


[1] http://www.pc.gov.au/inquiries/current/intellectual-property/draft/copyright-factsheet.pdf

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