Australian tech start-ups stand to lose out in proposed copyright reforms

The Australian government quietly introduced the Copyright Amendment (Service Providers) Bill 2017 to the Senate on Wednesday. If enacted, the bill will extend the scope of Australia’s copyright safe harbours - very slightly.

Safe harbours protect internet hosts and platform providers from monetary liability for copyright-infringing content posted or shared by their users. For example, if you post the latest Thor movie to YouTube, YouTube won’t be responsible for copyright infringement if it takes down that video. In Australia, we only extend this protection to internet services providers, not general purpose websites.

This matters because technology firms rely on limits to liability to manage their risks. Companies like Facebook or YouTube, which host millions of pieces of user content, would face serious difficulty starting in Australia because our laws on copyright infringement are so strict.

Read more: It’s time to future-proof Australia’s copyright laws for the 21st century

The new legislation is a step in the right direction, but it doesn’t go far enough to create an environment that fosters Australian innovation.

Excluding platforms from safe harbours doesn’t make much difference to tech giants like YouTube and Facebook, since they already operate within the United States safe harbours. But it does discourage Australian tech start-ups from the chance to experiment in a reduced-risk environment.

It is not just the US with broader copyright safe harbours than Australia - jurisdictions around the world extend safe harbours to internet intermediaries beyond ISPs.

The European Union, for example, provides that member states must ensure that any hosting provider will not be liable for unlawful content posted by users, provided it acts quickly to remove the content upon notice.

Low hanging fruit

It’s the second time this year that the government has amended Australia’s copyright laws. The first was the Copyright Amendment (Disability Access and Other Measures) Act 2017, passed in June, which provides greater access to copyrighted content for people with disabilities such as vision impairment.

Both measures are low hanging fruit for the government. They improve our existing copyright law, but they don’t advance us far from the status quo.

The government is staying well clear of the more contentious, though far more impactful, potential reforms to the Copyright Act recommended by bodies such as the Australian Law Reform Commission and the Productivity Commission.

What are the copyright safe harbours?

The copyright safe harbours came about as a result of the US Digital Millennium Copyright Act (DMCA) in 1998. The DMCA represented an important bargain struck between the established content industry, such as big film and TV studios, and the burgeoning tech industry.

The content industry got a “notice-and-takedown” regime that required online service providers to remove material that infringes copyright. In exchange, the tech industry got copyright safe harbours.

Under this system, the service provider must quickly and efficiently remove infringing content if they are informed about it by the copyright owner. This notice-and-takedown scheme has become fundamentally important to the way the internet works today.

Why are Australian safe harbours so limited?

In the 2005 Australia-US Free Trade Agreement, Australia agreed to adopt these provisions into Australian domestic law.

But in enacting the copyright safe harbours, parliament made a drafting error. Instead of extending protection to “service providers”, as the US law does, we gave protection to “carriage service providers” as defined in the Telecommunications Act.

Essentially, Australia only gave protection to internet service providers like Telstra, Optus and TPG, and not to platform providers like Whirlpool, RedBubble, YouTube or Facebook. For more than a decade, this has been a critical difference between US and Australian copyright law.

What’s changing?

The new bill appears to close the glaring gap between US and Australian law by replacing the term “carriage service provider” with, simply, “service provider”.

But the bill defines “service provider” to be either a carriage service provider; an organisation assisting persons with a disability; or a body administering a library, archives, cultural institution or educational institution.

It does not extend the safe harbour to those who actually need it the most – Australia’s internet hosts and platform providers.

This is a seriously missed opportunity for Australian innovators. There is a real risk for businesses, both large and small, who want to provide online spaces for people to communicate.

Read more: Australian copyright laws have questionable benefits

Our copyright laws potentially make hosts liable for much of the copyright infringing content that users may upload or share. But it can be prohibitively expensive and time-consuming to pre-screen all content before it is uploaded.

This is one of the reasons why many large social media platforms don’t base their operations in countries like Australia, and why Australian businesses are at a major competitive disadvantage compared to those in other countries.

Why not extend the safe harbour to Australian innovators?

There were early indications that the Australian government intended to extend the safe harbours to all online service providers, but these amendments were shelved.

Entertainment industry groups have been lobbying hard in recent years for measures that go beyond the notice-and-takedown scheme that the safe harbours provide. They want what they call notice-and-staydown: proactive filtering of unlicensed copyright content by service providers.

Read more: Explainer: what is ‘fair dealing’ and when can you copy without permission?

At the same time, copyright owners want higher payments. They use the term “value gap” to describe what they see as the difference between sites like Spotify that pay hefty licence fees to make content available to users and sites like YouTube that do not.

Content owners are no longer happy with the bargain they struck in the DMCA – they allege that sites like YouTube are gaming the system of the safe harbours.

There is a false equivalency at work here. Spotify is not a site for user-generated content and does not purport to be; sites like YouTube have everyday users at their core. If we believe that creative discourse, engagement and play matters then there is a cogent reason why sites that facilitate user-generated content might need some legal latitude.

However, this debate misses a more fundamental point. Limited safe harbour provisions hurt Australian creators and innovators. They increase the risk to innovators developing new technology products and platforms.

And, importantly, Australian creators miss the opportunity to exercise greater control over their creations through notice-and-takedown mechanisms that are easy to use and far cheaper than copyright lawsuits.