03 May 2016
by Marianna Papadakis

Foxtel hits out at proposed copyright changes

Foxtel has criticised changes proposed by the Productivity Commission, including allowing Australians to circumvent "geo-blocking".
Meanwhile, lawyers have raised concerns that some changes could stifle innovation and inhibit economic growth.

A Foxtel spokesman said the company disagreed with the Productivity Commission's views on geo-blocking, saying if Foxtel was not able to licence relatively inexpensive content from overseas it could not afford to invest in the much more expensive Australian content that it created.

The commission suggested reform to copyright laws enabling Australian consumers to circumvent offshore retailers' attempts to charge them more by "geo-blocking" access to cheaper products and services overseas.

"Nor would it be able to employ thousands of Australians," the spokesman said. "Economic and cultural activity would be curtailed in Australia and money would flow offshore to companies which would have no reason to make a contribution to Australia."

But Choice chief executive Alan Kirkland said the commission's proposed reforms could rebalance the system towards interests of consumers from mostly United States-based rights holders, including pharmaceutical companies, Hollywood studios and publishing houses.

This was appropriate, given Australia effectively exported $1 of patented goods and services for every $4.50 it imported.

"Allowing consumers to circumvent geo-blocking would take down digital trade barriers that shield Australia from competition and mean consumers have poorer choices and pay higher prices," Mr Kirkland said.

Destabilise industry
Copyright Agency chief executive Adam Suckling said the introduction of a long-debated US-style "fair use" exception for the use of copyright material would curtail the production of Australian content and destabilise an industry that contributed $7.4 billion to the economy.

The proposal was supported by the Australian Law Reform Commission in 2014 but has thus far been rejected by Attorney-General George Brandis, after strong pushes by giants in the US film, music and publishing industries for Australia not to adopt it.

Mr Suckling pointed to a report by PwC in February that showed the introduction of a fair-use exception could reduce gross domestic product by $1 billion, as well as lead to increased litigation over the use of content.

"Authors, publishers and artists working in the Australian market rely on our fit-for-purpose copyright regime for a return on their investment. To remove their right to give permission when someone wants to use their work – either for a payment or not – can only be seen as a retrograde step," he said.

MinterEllison partner Paul Kallenbach said the draft report did not address the financial and reputational costs involved in renegotiating complex multilateral and bilateral treaties that would be necessary to introduce key proposed reforms, including a reduction in the duration of copyright from 70 years after the death of an author to 15 to 25 years after creation.

"If Australia's economy is to ultimately transition to being an intellectual property producer and therefore net exporter, an underlying theme of the current federal government's innovation agenda, then adopting a strong pro-consumer or net importer stance may not lead to favourable long-term growth outcomes," Mr Kallenbach said.

More litigation
Gilbert + Tobin partner John Lee said tightening the criteria for patents could eliminate the ability of smaller entities to obtain protection and could lead to more litigation between applicants and opponents.

"This is critical for the success of a lot of start-ups, particularly in the tech space," he said. "We are starting to develop and export our own IP. We don't want changes stifling that trend."

The commission's proposed redesign of extensions of terms on patents by pharmaceutical companies, to reduce delays for generics entering the market, could lead to reduced investment in research and development by drug companies, Mr Lee said.

Enforcement and infringement better
Executive director of Creative Content Australia Lori Flekser said the commission's suggestion that making content more accessible was the key to reducing online copyright infringement, rather than increasing enforcement efforts or penalties was wrong.

"There is no lack of evidence showing that movie piracy peaks when the DVD, Blu-ray and SVOD versions become available," Ms Flekser said.

Ms Flekser said the main reason for piracy was because the content was free.

Pointing to the recent premiere of Game of Thrones season six on April 25, Ms Flekser said Australia represented the highest percentage of all BitTorrent downloads despite the episode was available for local audiences for a reasonable cost and at the same time as the rest of the world.

"I consider the cost – around the cost of two or three cups of coffee - a fair price to pay for an hour of this popular culture phenomenon, which costs in excess of $US6 million per episode to make," she said.