'The god of cheaper prices: New threats to our literary culture from the Productivity Commission' by Colin Golvan

The federal government has been promoting the innovation economy, but is considering recommendations for legal reform which will undermine the financial and cultural interests of creators. This conflict captures the tension around real reform in this area. Are they being serious? The recommendations are contained in the report of the Productivity Commission, an independent panel which reviews options to make our economy more productive, favouring free markets, and eschewing monopolistic practices.

Intellectual property laws are all about monopolies which have long existed to foster creativity and invention. With respect to copyright, the Productivity Commission has recommended the abolition of restrictions on parallel importation and the introduction of a defence of fair use in copyright in place of the fair dealing defence.

I share the widely reported publishers’ and authors’ perspective on the problems of removing the restrictions on parallel importation. Parallel importation restrictions limit the ability to import editions of books without the permission of the copyright owner. The concept is not unique in intellectual property law. There is, for example, a comparable provision in trade marks law which prevents parallel importation, or grey marketing, where the mark on the goods has not been applied by or with the consent of the Australian trade mark proprietor.

The proposed removal of restrictions on parallel importation on books will have the practical effect of significantly inhibiting the ability of Australian authors to transact in rights in different copyright territories – undermining their capacity to obtain advances on royalties with every rights sale. Advances are a key part of the earnings of many Australian authors.

Australia’s leading copyright owners will invariably be required to transact on a one-off basis with a publisher in the United States or the United Kingdom, with the work being absorbed into an international publishing program and the offering of Australian editions as a secondary consideration. There are significant risks to the integrity of our Australian literary culture, as well as the prospect of the loss of jobs and know-how in our domestic publishing market, when key publishing decisions concerning the Australian market are coming from New York or London. And then there is the harm to our unique language as our spelling and idiom are changed to accommodate the international edition.

On fair use, I am also concerned that the open-ended nature of the fair use defence will significantly harm the important work being done by collecting agencies, in particular Copyright Agency Limited (CAL) in its dealings with tertiary and other educational institutions. For many authors, CAL payments are a key part of their earnings from writing. CAL collects well over $100 million per year from educational institutions (schools and tertiary) for copying of works.

Under fair use, the collection activity of CAL will inevitably be impeded by educational institutions declaring that their copyright usage, which has been outside the much more limited defence of fair dealing and thus required remuneration to authors and publishers, ought now be permitted as ‘fair use’ and thus not within the copyright collection system. The concept of ‘fair use’ derives from US copyright law, where a centralised copyright collecting system barely functions. It is difficult to understand the point of this proposed reform. It is not at all clear what is wrong with the defence of fair dealing such that we should have a new and much broader, and essentially ill-defined, defence to infringement of copyright.

I worry about the undue emphasis in this report to the interests of consumers. This lauding of the god of cheaper prices for consumers at all costs is a mistake, especially when it comes to issues of the creation of culture. There are no ready substitutes for the small body of often poorly remunerated authors who create the works that shape our literary culture, unlike substitutes in the ordinary economy for commodity products. To me, the report is seriously inadequate in dealing with the significant national interest in the development of culture and ensuring that our creators are able to earn proper payment for their creative work. The focus of the reform agenda should not be on saving purchasers of books a dollar here or there, but on providing proper incentives for those engaged in the innovation and creation enterprise. There is a serious lack of perspective here.

From a legal point of view, we also have a significant jurisprudence concerning fair dealing which has been extensively reviewed by the High Court. The defence of fair dealing is well understood, and it works. Fair use would create a new regime of inquiry. There is a false economy around the idea of legislating in this area in the hope of making copyright works more available for use when there is no good case being mounted for undue restriction on access under the present law.

I do not see the advantage in these proposed reforms. The present system is well understood and works well. There is no imbalance requiring correction in addressing the interests of creators and users of copyright works. There is also no demonstrated incapacity to acquire copyright works because they are too expensive. Any sojourn on the Amazon website will assuage concerns about the expense of copyright works. Given the current pricing, it is a wonder to think that anyone involved in the production (as distinct from electronic distribution) of books is being properly remunerated.

Australia is a small country with a proud and independent literary culture. If we are to have these kinds of interventions from the Productivity Commission, then it might be as well to get input from a Cultural Commission.


You can listen to a podcast recording of Peter Rose in conversation with Colin Golvan about new threats to Australian creativity, chiefly the proposed removal of restrictions on parallel importation, as recommended by the Productivity Commission.

Published in November 2016, no. 386