Copyright, fair dealing and educational use in the Internet age

Aaron Magner
Legal Counsel UNSW

SYNOPSIS
The Internet has revolutionised the way we communicate, educate and
manage our lives. Our educational institutions are in a flurry of digital
and online change. Despite rapid advances in digital technology our
copyright laws have been relatively stagnant, stuck in the analogue
era. As a result there are significant barriers to getting educational
content online and available to a wider audience. Educational
institutions seeking to improve access to knowledge and offer new
ways of learning are too often hampered by regulation that thwarts
collaboration, the free flow of knowledge and expression of ideas. The
impact of the Internet necessitates major reform to the scope of fair
dealing for educational use in the Copyright Act. Copyright holder
initiated litigation is likely to force legislative change.

CONTENTS

I. INTRODUCTION
II. COPYRIGHT LAW AND FAIR DEALING FOR EDUCATIONAL USE
a. The analogue era
b. The digital era
c. The digital era – Copyright Act reforms
III. THE CASE FOR REFORM OF THE COPYRIGHT ACT
IV. RECENT LITIGATION – LESSONS FOR EDUCATIONAL INSTITUTIONS
V. CONCLUSION

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I. INTRODUCTION
During this first decade of the 21st century we have moved from an analogue world of
print media, books, photocopiers, videocassettes, blackboards, analogue television
and radio, into the digital world of the Internet, podcasts, vodcasts, video and audio
streaming, wikis, blogs, iPhones and WiFi. Those fortunate enough to have an
Internet connection can access and share knowledge in a way never imagined just 20
years ago. The capacity for sharing ideas and collaboration between academics and
students, business and consumers, government and citizen, locally, nationally and
internationally, is unprecedented.

These technological developments bring exciting opportunities for teachers and

students with educational institutions embracing the Internet and tools like YouTube,
iTunesU and other web based platforms for teaching, learning and research.1
Australian copyright law, however, is not well equipped for the Internet with
significant legal obstacles and costs associated with getting educational content online
and available to a wider audience. To be fair, new Internet technologies are
developing so rapidly it is difficult for copyright law to keep abreast. The Australian
Copyright Act 1968 (Cth) (Copyright Act) has constantly played catch-up with
amendments made some time after technological developments. We may require a
landmark judgement in resolution of a copyright dispute to force further reforms to
the Copyright Act to accommodate the impact of the Internet.

This essay will focus on the educational use exceptions in the Copyright Act and their
evolution in response to landmark judgments concerning the use of photocopiers,
videocassette recorders and peer-to-peer file sharing networks. These decisions have
been instrumental to the development of the Copyright Act and remain relevant in
recent copyright disputes involving the Internet Service Providers (ISPs) iiNet.2
Copyright judgments from Australian and United States (US) courts also give an
indication of the liability of educational institutions, students and teachers when using
copyright material from the Internet for teaching and learning or when facilitating the
copying and distribution of material not covered under the educational statutory
licences in Parts VA and VB of the Copyright Act. This essay also considers the case
for reform of the Copyright Act and looks at some possible Internet copyright
collection schemes.

II. COPYRIGHT LAW AND FAIR DEALING FOR EDUCATIONAL USE

a. The Analogue era
The photocopier and the videocassette are the two most significant technological
advances from the 20th Century that lead directly to changes in the Copyright Act.
Photocopiers enable the distribution of multiple copies of extracts from textbooks,
journals and other publications for distribution to students, yet this infringes copyright
in the original material, and deprives the copyright owners of revenue from sales and
licensing. The landmark judgment in UNSW v Moorhouse (1975)3 determined a claim
1 All Australian Universities use one or more of the Internet based e-learning platforms including My
eLearning Vista, eLIMS and Lectopia. UNSW’s YouTube channel <www.youtube.com/user/unsw>
has had more than 1.5 million views since its launch in October 2007. UNSW’s iTunesU portal has had
180,000 podcast downloads since its launch in July 2008. Access to iTunesU is generally password
protected and therefore within the scope of the educational use licence in Part VA of the Copyright Act,
while YouTube is open to the world at large and therefore not covered by the Part VA.
2 The Federal Court of Australia is currently hearing the case of Roadshow Films Pty Ltd & Ors v iiNet
Ltd (“AFACT v iiNet Ltd”), discussed below.
3 University of New South Wales v Moorhouse [1975] HCA 26, where Justice Gibbs held that a person
who has under their control the means by which an infringement of copyright could be committed
(such as a photocopying machine) and who made it available to other persons, knowing, or having

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from the Australian Copyright Council that UNSW had authorised photocopying of
pages of books in the UNSW library thereby infringing the copyright of Australian
author Frank Moorhouse. The High Court of Australia found that photocopying
Moorhouse’s book in this way was not permitted under the Copyright Act.

The Australian government dealt with the consequences of UNSW v Moorhouse in

1980 introducing a compulsory statutory licensing scheme in Part VB of the
Copyright Act to allow the copying of literary and artistic works for educational
purposes.4 The Part VB statutory licence is administered by the Copyright Agency
Limited (CAL) a non-profit statutory collection society.5 CAL conducts a sample
survey requiring educational institution staff to record their use of copyright material.
Based on survey results universities, education departments and other educational
institutions negotiate the payment of an annual licence fee as equitable remuneration
for the use of copyright material.6 The money paid to CAL under the licence is then
distributed to copyright owners. The policy objective behind Part VB is to
compensate copyright owners for the loss of sales of commercially published
materials when education institutions make multiple copies of extracts or whole
works for educational purposes. In this respect the Part VB statutory licence and the
establishment of CAL are intended to protect an existing market threatened by
technological change.7

The videocassette recorder enables the recording of television programs for viewing
at a later more convenient time and was, like the photocopier, a technological
development that lead to litigation and further Copyright Act amendments. Typical
educational uses for the videocassette recorder include taping news, documentaries
and other programs to show in classrooms, lectures and tutorials or make available in
the library. As Moorhouse v UNSW did for Australia, the decision in Sony
Corporation v Universal City Studios Inc8 (Betamax) set the scope of indirect
copyright infringement in the US. In Betamax the US Supreme Court refused to hold
Sony Corporation, the manufacturer of the Betamax videocassette recorder, liable for
either contributory or vicarious copyright infringement despite prima facie evidence
that the Betamax video machines could, and were, used to infringe Sony’s copyright
in television programs.9 The Court determined that for Sony to be liable for the
copyright infringements of the users of this technology, actual knowledge of specific
breaches was required, rather than a general knowledge that infringement could, and
likely would, take place.10
reason to suspect, that it is likely to be used to infringe copyright, and omitting to take reasonable steps
to limit its use for lawful purposes, would authorise any infringement from that use.
4 Browne, Delia; Educational Use and the Internet – Does Australian, Copyright Law Work in the Web
Environment?, Volume 6, Issue 2, August 2009, <www.law.ed.ac.uk/ahrc/SCRIPT-ed/vol6-
2/browne.doc> (22 October 2009).
5 The Copyright Agency Limited (“CAL”) is recognised under Part VB of the Copyright Act as the
declared society that administers the scheme on behalf of copyright owners.
6 In 2009 UNSW, for example, paid just under $1million to CAL under Park VB licence. The
University receives approximately $255,000 from CAL of which approximately $141,000 is
redistributed by the University to copyright owners.
7 Jennifer Wilson, “The Digital Deadlock: How Clearance and Copyright Issues are Keeping
Australian Content Offline”, Screenrights and AFRTS White Paper 2009, p.2.
8 Sony Corporation v Universal City Studios Inc 464 US 417 (1984); 104 S Ct 774; 78 L Ed 2d 574;
1984 US LEXIS 19.
9 Rimmer, Matthew (2006) “Robbery Under Arms: Copyright Law and the Australia-United States
Free Trade Agreement”, First Monday (3). <http://firstmonday.org/issues/issue11_3/rimmer
/index.html> (26 October 2009).
10 Betamax was approved in the High Court of Australia in Australian Tape Manufacturers
Association Ltd v Cth (1993) 176 CLR 480.

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The Australian Government, following Betamax, introduced further reforms in 1989
to set up a Part VA statutory licence to permit educational institutions to make off-air
copies of broadcasts for educational purposes.11 The Part VA licence is administered
by Screenrights a collection society that, like CAL, requires educational institutions to
pay equitable remuneration for all licensed copying and communication of radio or
television. Part VA applies to previously or simultaneously broadcast programmes
available on an Australian free-to-air broadcaster’s website but does not extend to
similar broadcast material available on international broadcasters’ websites or to
online audio-visual material in general.12

Together the Part VA and VB statutory licences enable educational institutions to

legally use photocopiers, videocassette recorders and other analogue copying
technologies while ensuring that the author and/or copyright owner is remunerated for
their work.13

b. The Digital Era

Photocopiers and videocassettes were typical analogue technologies from the pre-
digital era. The dawn of the digital era began with the introduction of the CD and
DVD formats allowing the digitisation of music, video and other media, followed by
the rapid development and widespread use of the Internet.14 Internet use in Australia
took off from about the year 2000.15 Until then, ownership and access to computers
was not common in the average household and computer use as a mainstream tool for
learning and teaching was still in its infancy. In Australian schools and universities
computers were usually confined to computer labs, and Internet speeds were slow and
limited in bandwidth.16

By 2009 however all Australian University students and a large majority of Australian
school students have access to a computer with broadband Internet.17 Advances in
technologies such as file compression and MP3 for music and a range of digital video
formats including AVI, MPEG4 and others enable copyright works to be perfectly
copied and then shared via the Internet.18 The availability of broadband and continual
advances make file sharing easier, faster and more prevalent, with increasing
download speeds making the distribution of entire movies, TV series, albums and
11 Copyright Act Amendment Act 1989 (Cth).
12 Jennifer Wilson, “The Digital Deadlock: How Clearance and Copyright Issues are Keeping
Australian Content Offline”, Screenrights and AFRTS White Paper 2009, p.2.
13 For a history of the evolution of Copyright in Australia see: Atkinson, Benedict, The True History
of Copyright: The Australian Experience 1905-2005, 2007, Sydney University Press.
14 CD players and discs were first released in the US and Australia in 1988. The DVD format was first
introduced in Australia in March 1999. <http://en.wikipedia.org/wiki/Compact_Disc> and
<http://en.wikipedia.org/wiki/DVD> (22 August 2009).
15 Between 1998 to 2007-08, household access to the Internet at home has more than quadrupled from
16% to 67%, while access to computers has increased by 31 percentage points to 75%. See Australian
Bureau of Statistics - Household Use of Information Technology, Australia, 2007-08
<http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/8146.0> (accessed 25 October 2009).
16 Browne, Delia; Educational Use and the Internet – Does Australian, Copyright Law Work in the
Web Environment?, Volume 6, Issue 2, August 2009, <www.law.ed.ac.uk/ahrc/SCRIPT-ed/vol6-
2/browne.doc> (22 October 2009).
17 See Australian Bureau of Statistics - Household Use of Information Technology, Australia, 2007-08
<http://www.abs.gov.au/AUSSTATS/abs@.nsf/mf/8146.0> (25 October 2009).
18 MP3 is an abbreviation for “Moving Picture Experts Group-1 Audio Layer 3”, AVI is an
abbreviation for “Audio Video Interleave” and MPEG4 is an abbreviation for Moving Picture Experts
Group 4. See also Buskirk, V. (2005) “Top five ways MP3 has changed the world?
<http://reviews.cnet.com/4520-6450_7-6266276-1.html?tag=txt> (25 October 2009).

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other copyright works fast, free and increasingly popular.19 The digitisation of
education content; from textbooks, journals, lectures and tutorials to medical,
scientific and research data, means that students can access educational material on
the Internet via podcasts, vodcasts, YouTube, iTunesU, from their desktop computers,
laptops and mobile phones. These developments present untold opportunities to
enhance teaching and learning, facilitating educators and students to create, modify
and share educational and research resources.

The rapid development of these Internet tools for learning and teaching raises a range
of copyright conundrums. There is a degree of uncertainty regarding the liability of
educational institutions when using copyright material from the Internet or
authorising and facilitating the copying and distribution of material not covered under
the educational Parts VA and VB statutory licences. Despite rapid technological
change there have been only limited reforms to the Copyright Act in response.

c. The digital era - Copyright Act reforms

In 2000 changes to the Part VB and Part VA statutory licences were made to extend
cover to electronic reproductions, communications of literary and artistic works, and
television and radio broadcasts.20 The Part VA licence now allows educational
institutions to make digital copies in any format of radio and television programmes
and place these on an intranet, provided that access is password protected and it is
used only for educational purposes.21 These amendments mirror the hard copy
photocopying provisions with the focus on the type of electronic materials used, or
likely to be used, being the already dated technological platforms of CD ROMs and
eBooks, rather than Internet material.22

In 2007 the Part VA licence was further extended to cover podcasts, vodcasts and
other free downloads of online programs of Australian free-to-air broadcasters.23
Significantly for education providers, section 28 was extended to allow them to
communicate material for free in the classroom for educational purposes24 and a new
stand-alone exception, section 200AB, allowing so-called ‘flexible dealing’ was
introduced.25 Section 200AB enables teachers and students to communicate literary,
dramatic and musical works, film and sound recordings, television and radio
broadcasts, including works embodied in those broadcasts, and artistic works in a
classroom, including a virtual classroom. It also allows education providers and
19 In Australia the ARIA Survey, referred to in footnote 1, reports that the primary software used for
file sharing were Bit Torrent; 37%, Limewire; 33%, Kazaa; 2%, BearShare; 1% and a variety of others;
27%. See < http://www.themusic.com.au/survey.php > (22 August 2009). See also The State of Music
Online: Ten Years After Napster <http://www.pewinternet.org/Reports/2009/9-The-State-of-Music-
Online-Ten-Years-After-Napster.aspx?r=1> (22 October 2009).
20 Copyright Amendment (Digital Agenda) Act 2000.
21 Delia Browne, Educational Use and the Internet – Does Australian Copyright Law Work in the Web
Environment?, (2009) 6:2 SCRIPTed <www.law.ed.ac.uk/ahrc/SCRIPT-ed/vol6-2/browne.doc> (25
October 2009).
22 According to a recent survey approximately 90% of the pages copied and communicated by
Universities are from free and publicly available websites. Jennifer Wilson, “The Digital Deadlock:
How Clearance and Copyright Issues are Keeping Australian Content Offline”, Screenrights and
AFRTS White Paper 2009, p.2.
23 Copyright Amendment Act 2006. Copyright Act, section 135C.
24 Copyright Act sections 28 (5)-(7). A communication means making copyright material available
online or electronically transmitting copyright material. “Making available” can include putting
material on an intranet. “Electronic transmission” includes email, streaming or electronic reticulation.
25 Copyright Amendment Act 2006 commencing 1 January 2007. Previously, section 28 allowed a
literary, dramatic or musical work to be performed, or a film or sound recording to be played in class
for the purposes of educational instruction.

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students to display material from an interactive whiteboard or data projector, stream
content from the Internet, or play a DVD through a centralised system for education
purposes.26

Section 200AB includes guidelines for teachers to apply when deciding whether a
particular use of material will be allowed with some flexibility for the online
environment. Significantly however section 200AB only applies where no statutory
licence is in place and where the use complies with a three-step test.27 The
implications of this are significant in light of the blanket nature of the Part VB
licence, which treats the educational use of all online literary and artistic material as
potentially remunerable. Part VB is a broad compulsory licence that applies to all
literary, musical, dramatic and artistic works, including works of very low
originality.28 It is effective for copyright materials offered for sale, such as eBooks,
CD ROMs and other discrete digital products, but is not well adapted for free and
publicly available Internet material.

III. THE CASE FOR REFORM OF THE COPYRIGHT ACT

The existing approach of our copyright law is premised on enabling exclusive
distribution privileges, however to date it has not proven feasible to properly control
the distribution of copyright material over the Internet. While the existing approach of
copyright enforcement was effective when there were a finite number of publishers,
the Internet has brought about a paradigm shift whereby every consumer could also be
a creator and distributor of digital media. The Part VA and VB statutory licences and
the collection agencies were devised to protect an existing market threatened by
technological change but the extension of Part VB to content available on the Internet
creates a market for Internet material that is free, publicly available and not offered
for sale.29

Electronic use surveys from CAL and Screenrights record activities such as a teacher
printing, saving, downloading, displaying, projecting or emailing Internet material for
educational purposes, or telling a student to print, save, or download Internet material
for educational purposes.30 Requiring payment for this kind of educational use of free
and publicly available material from the Internet is akin to a copyright tax on access
to educational knowledge for otherwise free, publicly available material that is not
offered for sale.31
26 Delia Browne, Educational Use and the Internet – Does Australian Copyright Law Work in the Web
Environment?, (2009) 6:2 SCRIPTed <www.law.ed.ac.uk/ahrc/SCRIPT-ed/vol6-2/browne.doc> (25
October 2009).
27 In order to comply, the use must be non-commercial and limited to “certain special cases”; not
conflict with “normal exploitation” of the work; and not “unreasonably prejudice” the interests of the
copyright owner. In section 36(1A). They are: the extent (if any) of the person’s power to prevent the
doing of the act concerned; the nature of any relationship existing between the person and the person
who did the act concerned; whether the person took any reasonable steps to prevent or avoid the doing
of the act, including whether the person complied with any relevant industry codes of practice.
28 Delia Browne, Educational Use and the Internet – Does Australian Copyright Law Work in the
Web Environment?, (2009) 6:2 SCRIPTed <www.law.ed.ac.uk/ahrc/SCRIPT-ed/vol6-
2/browne.doc> (accessed 25 October 2009).
29 Jennifer Wilson, “The Digital Deadlock: How Clearance and Copyright Issues are Keeping
Australian Content Offline”, Screenrights and AFRTS White Paper 2009, p.2.
30 In 1999 Australian universities paid around $9.1 million under the Part VB licence. In 2008, they
paid around $50 million.
31 In practice, education pays where a website has no terms and conditions of use or no terms or
conditions but a standard © notice, and the following words are contained in a website’s terms of use:
personal use; personal, non-commercial use; personal and non-commercial; private or individual use;
copying is not permitted; or any reference to copyright protection such as ©, i.e. most websites.

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Websites increasingly incorporate social media functions that encourage the use of
their material in ways that are effectively an exercise of their copyright rights. For
example having buttons like ‘Print this’, ‘Email this’ or ‘Share this’; on Facebook,
Twitter, Digg and other social networking sites. For free publicly available websites
to fall within the scope of Part VB therefore does not make sense. Non-subscription
websites that do not require payment for access and use of material are not likely to
expect or rely on receiving equitable income from educational use as currently
required under the Copyright Act.32 Urgent consideration should be given to removing
free and publicly available material on the Internet from the scope of the Part VA and
VB statutory licence and introducing a new exception allowing educational
institutions to copy and communicate free and publicly available material from the
Internet for non-commercial educational purposes.

To place educational content online educational institutions need permission to adapt,

copy, perform and communicate to the public all the elements of the copyrighted
work need to be obtained from, for example, the producer, the owner of the source
material, owners of any artistic works, literary works, sound recordings, underlying
musical works, and performances. If one copyright owner refuses permission or
cannot be found then the process stalls. Producers may be unwilling to grant online
rights, or there may be complex industry agreements (blanket licences offered by
music collecting societies for example), actors agreements, and contracts that did not
contemplate online use. Moral rights standard consents that do not deal with online
use or segmentation of the work. If the archive material is an orphan work, or the
copyright owner cannot be found or contacted, the process stalls.33 In this digital age
there is still no centralised register for owners of copyright works. To efficiently
operate in this digital era our copyright law needs a more efficient legal clearance
regime with Copyright Act exceptions allowing copyright material to be put online for
educational use. In this digital age there is still no centralised register for owners of
copyright works. The alternative is that educational institutions assume a greater risk
of copyright infringement litigation.

It is in Australia’s best interests to ensure that our students and teachers are digitally
literate, able to live and work in a digital world and able to participate in a digital
economy. A more sophisticated system is needed gives enables copyright owners and
creators the ability to be paid for online exploitation but which also allows
educational institutions to use free and publicly available material with no expectation
of payment. It is important to get the copyright law right as soon as possible, as the
educational use of the Internet materials will only increase with time. If education
institutions have to pay licence fees for copying and communicating website material
intended to be freely available the costs to the education sector will rise.

The fair dealing for educational use provisions in the Copyright Act needs to be
broadened to allow the use of copyright material for legitimate activities that advance
education and are in the collective good.34 The law also needs to find ways to make it
32 Jennifer Wilson, “The Digital Deadlock: How Clearance and Copyright Issues are Keeping
Australian Content Offline”, Screenrights and AFRTS White Paper 2009, p.2.
33 Giles, Katherine; Lawyer, Australian Broadcasting Corporation, Current Issues in Broadcasting &
Publishing: user-generated content and unlocking public broadcaster archives, presentation at the
14th Biennial Copyright Law and Practice Symposium, hosted by the Australian Copyright Council
and the Copyright Society of Australia, 15 & 16 October 2009.
34 Rimmer, Dr Matthew, 'Digital Copyright and the Consumer Revolution: Hands off my iPod'.
Cheltenham, UK; Northampton, MA: Edward Elgar, 2007.

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easier for education providers and students to navigate the minefield of copyright
clearances, music rights and performer fees and accommodate transformative, non-
commercial derivatives of copyright content for education use.

The education sector, and the entire global economy, increasingly depends on
effective mechanisms for the generation, protection and exploitation of intellectual
property. Inappropriate, defective or dated copyright laws will only stifle creativity,
productivity, technology, growth and our quality of life. The disruptive impact of the
Internet and copyright controversies, conundrums and confusion present a strong case
for reform of the Copyright Act.

III. RECENT LITIGATION – LESSONS FOR EDUCATIONAL INSTITUTIONS

While there have been some well publicised private prosecutions, rather than sue
individual users for breach of copyright, the large copyright owners are primarily
seeking to protect their revenue streams by shutting down the means by which
individuals share copyrighted material.35 The large copyright owners have shifted
their focus to aggressively targeting ISPs and peer-to-peer networks rather than end
users.

The US is seen as the world leader in both Internet innovation and legal jurisprudence
surrounding copyright and the Internet. While the Australian parliament, the courts
and the bureaucracy all have a central role in determining how copyright laws are
applied, both the framework and a large amount of the detail in Australia’s copyright
laws is determined at the international level.36 These international copyright law
forums are driven and dominated by the US, which as the world’s leading producer
and exporter of commercial creative products, sought and obtained strong protection
of intellectual property.37 This makes some appreciation of US law and copyright
litigation concerning the Internet and relevant to an understanding of the area from an
Australia perspective.

Napster was the early trailblazer of peer-to-peer file sharing. Its enormous, albeit brief
popularity attracted claims from record companies that Napster was responsible for
the copyright breaches of its users.38 The US Supreme Court concluded that Napster’s
future revenue was directly dependent upon “increases in userbase” and that it could
have, and should have, done more than it claimed it did to restrict users from sharing

35 The copyright owners often do not have the resources to chase down individual who downloads
music subject to copyright. For example, in 2009 it was estimated that almost 20 billion tracks were
illegally swapped or downloaded.
36 Australia has implemented all the relevant international treaties including the Berne
Convention for the Protection of Literary and Artistic Works of 1886, the Agreement on Trade Related
Aspects of Intellectual Property Rights, the World Intellectual Property Organization Copyright Treaty
and the World Intellectual Property Organization Performances and Phonograms Treaty. The treaties
allow countries to limit the rights of copyright owners provided the limitation or exception: applies in
special cases; does not conflict with a normal exploitation of the work; and does not unreasonably
prejudice the legitimate interests of the creator/rights holder.
37 The TRIPS Agreement, the WIPO agenda and the AUSFTA. Peter Drahos and John Braithwaite,
Information Feudalism: Who Owns the Knowledge Economy (2002); Susan Sell, ‘Intellectual Property
Rights’, in D Held and A McGrew (eds), Governing
Globalization: Power, Authority and Global Governance (2002) referred to in Terry Flew, Creative
commons and the creative Industries (2005) 10 Media & Arts Law Review 257 at 258.
38 Verified Napster use peaked with 26.4 million users worldwide in February 2001. Jupiter Media
Metrix (July 20, 2001). Global Napster Usage Plummets, But New File-Sharing Alternatives Gaining
Ground. Press Release. <http://www.comscore.com/press/release.asp?id=249>. For a short historical
background note on Napster see <http://en.wikipedia.org/wiki/Napster >. (accessed 25 October 2009).

Page 8
copyrighted material.39 Napster was shut down after the court found it was both
vicariously and contributory liable for the copyright infringement its users.40 The
central servers used by Napster made it a convenient legal target41 but in its wake new
peer-to-peer networks, designed to be more decentralised, emerged to fill the void.42

The US Supreme Court dealt with a more decentralised peer-to-peer network in

Metro Goldwyn Mayer Studios Inc v Grokster Ltd (MGM v Grokster)43 where it was
undisputed that at least some of the users of the Grokster software were engaged in
direct infringement of copyrighted works.44 It was subsequently successfully argued
by MGM (and others) that the defendant companies did not attempt to develop
filtering tools or other mechanisms to diminish the infringing copyright activity by
users of Grokster’s peer-to-peer software.45

There is disagreement over whether the MGM v Grokster is substantially different

from Betamax, and whether the precedent established by Betamax should be
modified.46 The court accepted MGM’s argument that, unlike Sony’s promotion of the
Betamax videocassette recorder, Grokster “acted with a purpose to cause copyright
violations by use of software suitable for illegal use.”47 The test that emerges from
MGM v Grokster to determine whether the peer-to-peer software is protected by the
Betamax ruling requires it to be shown that the distributors of the peer-to-peer

39 A & M Records Inc v Napster Inc, 239 F 3d 1004 (9th Cir, 2001), 1021
40 Silverthorne, Sean. Music Downloads: Pirates- or Customers?. Harvard Business School Working
Knowledge, 2004. <http://hbswk.hbs.edu/item/4206.html> Napster shut down its entire network in July
2001 in order to comply with the injunction. In September 2001, the case was partially settled. Napster
agreed to pay music creators and copyright owners a $26 million settlement for past, unauthorized uses
of music, as well as an advance against future licensing royalties of $10 million. In order to pay those
fees, Napster attempted to convert their free service to a subscription system, but it had significant
trouble obtaining licenses to distribute major-label music.
41 Napster's use of a central server distinguishes it, from the next generation P2P technology, in which
the communication of files is truly P2P.
42 Among P2P networks there are both “centralised” networks (such as Napster) from “decentralised”
ones (such as Kazaa, Gnutella, Morpheus and Limewire).
43 Metro-Goldwyn-Mayer Studios, Inc v Grokster, Ltd; Jerry Lieber v Consumer Empowerment Bv
259 F Supp 2d 1029; 2003 US Dist LEXIS 6994; 66 USPQ 2D (BNA) 1579 (23 April 2003) (Wilson J,
Overview, http://www.eff.org/IP/P2P/MGM_v_Grokster/030425_order_on_motions.pdf (Grokster)
viewed 6 June 2004.
44 Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd (Cal, 25 April 2003, Wilson J) 9.
45 Grokster 259 F Supp 2d 1029 at 1039 (2003). One of the defendants, Streamcast, the maker of
Morpheus, was found to be liable for Copyright Infringements under the standards enunciated by the
Supreme Court in MGM v. Grokster, Round 2. Grokster “distributes a branded version of the
KaZaa Media Desktop” – that is, it is not the proprietary owner of the source code that runs the
platform. Contributory liability requires that the secondary infringer know or have reason to know of
direct infringement, mere constructive knowledge is not enough. In other words, evidence of actual
knowledge or specific acts of infringement is required for contributory infringement liability.
Traditionally, under US law, to be held liable as a contributory infringer, one must ‘with knowledge of
the infringing activity, induce, cause or materially contribute to the infringing conduct of another’.
46 On one hand, Justice Ginsburg, joined by Kennedy and Rehnquist, claim that "[t]his case differs
markedly from Sony" based on insufficient evidence of non-infringing uses. On the other hand, Justice
Breyer, joined by Stevens and O'Connor, claims "a strong demonstrated need for modifying Sony (or
for interpreting Sony's standard more strictly) has not yet been shown," primarily because "the nature
of ... lawfully swapped files is such that it is reasonable to infer quantities of current lawful use roughly
approximate to those at issue in Sony."
47 These non-infringing uses include sending open source software, public domain files and out of
copyright works. The entertainment industry submitted a massive volume of evidence to show that
both Grokster and StreamCast clearly knew that many, if not most, of those individuals who download
their software subsequently use it to infringe copyrights.

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software neither advertised and/or otherwise induced its use for copyright
infringement.48

Around the time that MGM v Grokster was litigated, the Australian based peer-to-peer
network, Kazaa,49 owned by Sharman Networks, attracted simultaneous law suits in
the US and Australia.50 The Australian Record Industry Association took Sharman to
the Federal Court of Australia alleging breaches of their copyright.51 The Federal
Court ruled that Sharman and the other defendants, though not guilty of copyright
infringement themselves, had “authorized” Kazaa users to illegally share copyrighted
songs. The company was ordered to modify the software within two months to
prevent further copyright infringements by Kazza users and the Federal Court later
ceased all downloads of Kazaa after Sharman failed to modify the software by the
deadline set by the Court.52 Sharman ultimately settled both the US and Australian
cases as part of its global settlement with the record labels and studios in the United
States.53

Both the website operators and ISP’s may be liable for authorising copyright
infringement by the users of their services according to the Full Federal Court in
Cooper v Universal Music Australia Pty Ltd [2006] FCAFC 187 (Cooper). Cooper
also provided guidance as to what amounts to ‘authorising’ an infringement of
copyright clarifying that website operators can be liable for authorising copyright
infringement via their websites, and ISPs can also be liable for authorising
infringement of copyright on websites they host.54 Mr Cooper structured his
48 For example, MGM et al. had asserted that the defendants' refusal to incorporate protocols that
would filter copyrighted materials from the file-sharing network constitutes intent to promote copyright
infringement.
49 Kazaa was once one of the world’s most popular P2P networks and had a peak audience of 4.2
million simultaneous users. In early 2003, Sharman claimed that it had 239 million downloads.
50 For a background account to the litigation over Kazaa, see Matthew Rimmer, 2005. “Hail To The
Thief: A Tribute To Kazaa,” University of Ottawa Law and Technology Journal, volume 2, number 1,
pp. 173–218, at <http://www.uoltj.ca/articles/vol2.1/2005.2.1.uoltj.Rimmer.173-218.pdf.>
51 See Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (with Corrigendum dated
22 September 2005) [2005] FCA 1242 (5 September 2005). Kazaa was created by the inventors of
Skype who sold it to a complicated mesh of offshore companies, including Sharman Networks,
headquartered in Australia. Sharman was initially sued in Los Angeles by the major record labels,
motion pictures studios and music publishers. While the other defendants initially prevailed the
decision was unanimously reversed by the US Supreme Court.
52 See Needham, Kristy, “Kazaa end on a sour note” Sydney Morning Herald, 7 December 2005 <
http://www.smh.com.au/news/technology/kazaa-music-ends-on-a-sour-
note/2005/12/06/1133829597895.html> (25 October 2009).
53 Sharman Networks settled with the record companies for between US$20 million and US$50
million. The amount of the settlement was significant, albeit less than what the recording studios had
originally hoped for through litigation. Further, in a move that may prove equally valuable to the
recording industry, Sharman also undertook in the settlement to use all reasonable means to discourage
online piracy, and to find robust and secure ways to prevent users from using the software to infringe
copyright. See Sharman cuts off Kazaa downloads in Australia, 5 December 2005
<http://news.com.com/Sharman+cuts+off+Kazaa+downloads+in+Australia/2100-1027_3-
5983455.html> (25 October 2009).
54 The Full Federal Court’s decision addressed two main issues: what amounts to authorisation of
copyright infringement in a sound recording, and the extent of protection of the carrier exclusion in
section 112E of the Copyright Act. The Copyright Act provides that copyright in a sound recording will
be infringed by a person who, not being the copyright owner, and without the licence of the copyright
owner, authorises the making of a copy of a sound recording in Australia or the communication of a
sound recording to the public in Australia. The Copyright Act lists the following three factors as being
relevant to consider when determining whether a person has authorised the infringement of copyright
in a sound recording: the extent (if any) of the person’s power to prevent the copyright infringement
the nature of any relationship existing between the person and the person who infringed copyright, and
whether the person took any other reasonable steps to prevent or avoid the copyright infringement,

Page 10
mp3s4free website so that hyperlinks to music files on other Web sites could be
automatically added to the site. The Federal Court held that Mr Cooper had not taken
any reasonable steps to prevent copyright infringement occurring as a result of his site
and was therefore liable for authorising copyright infringement in the sense of
permitting or sanctioning and facilitating the infringements by the Internet users who
accessed the Web site as well as the owners and operators of the remote Web sites
from which the infringing recordings were downloaded.55

Cooper may be of particular relevance to education providers if students or staff are

found to be using university owned facilities to infringe copyright, the courts are
likely to look expect that they demonstrate having taken reasonable and practical
steps to prevent their IT systems from being used in this way. Also of note is that
Cooper considered whether the safe harbour scheme introduced by the US-Australia
Free Trade Agreement, although the Court found that they did not apply to the Web
site’s ISP.56 The US-Australia Free Trade Agreement included a number of
provisions relating to intellectual property law, driven by the US, required a range of
amendments to the Copyright Act.57 These amendments included changes to the
period of copyright protection, when a technological protection measure may be
circumvented, penalties for copyright infringement and the responsibilities of carriage
service providers for infringements by people using their services.58

The Federal Court of Australia is currently hearing the case Roadshow Films Pty Ltd
& Ors v iiNet Ltd (AFACT v iiNet Ltd) where a key argument of the Australian
Federation Against Copyright Theft (AFACT) and film studios is that iiNet authorises
its users to breach copyright as it is in control if its network, similar to the university’s
control over use of the photocopy machines in the UNSW library. Interestingly the
AFACT’s tactics, revealed in opening arguments of the case of becoming an iiNet
customer and using BitTorrent to share copyrighted files,59 are similar to those of the
ACC who engaged a UNSW graduate to make photocopies of pages of Moorhouse’s
books in the UNSW library.60

including whether the person complied with any relevant codes of practice.
55 Universal Music Australia Pty Ltd v Cooper [2005] FCA 972.
56 For a discussion see Rimmer, Matthew (2006). "Robbery Under Arms: Copyright Law and the
Australia-United States Free Trade Agreement". First Monday (3). SSRN 855805. Amendments did
not have a retrospective application in Cooper, however the court observed that the ISP would not have
been able to take advantage of the “safe harbour” scheme. His Honour observed that there was a failure
to adopt and reasonably implement a policy that provides for termination, in appropriate circumstances,
of the accounts of repeated infringers: “The evidence indicates that despite the respondents’ awareness
that copyright material was likely to be infringed, they have not taken any steps to implement such a
policy.” The judge noted that the ISP received a financial benefit directly attributable to the infringing
activity if the service provider has the right and ability to control the activity.
57 Intellectual Property was covered in Chapter 17 of the US Free Trade Agreement and the Australian
Parliament implemented its obligations in the US Free Trade Agreement Implementation Act 2004.
58 The AVCC recommends Universities act as if covered by the safe harbour.
Bringing the period in Australia into line with the period provided after the US Copyright Term
Extension Act of 1998 in general, from author’s life plus 50 years to life plus 70 years, This is
pejoratively known as the Mickey Mouse Protection Act, because of the extensive lobbying in support
of the time extension from the Walt Disney company, Mary Bono (Sonny Bono's widow and
Congressional successor) and the estate of composer George Gershwin.
59 Van Buskirk, Eliot, Three Major Record Labels Join the ‘Choruss’, Wired, 8 December 2008
<http://www.wired.com/epicenter/2008/12/warner-music-gr/> (Accessed 25 October 2009).
60 Moorhouse did not know Brennan was asked to make copies of sections of his work, but later joined
with the Australian Copyright Council to bring a test case against the university after he was informed
of the breach of his copyrighted books.

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Some of the legal issues at stake and the tactics employed by the AFACT in its civil
case against iiNet have their origins in a landmark copyright case UNSW v
Moorhouse in 1975. 1
• 2
• 3
• 4
• 5
In UNSW v Moorhouse the source of control was the fact the university owned the
photocopier and the library where the book and the photocopier were located, so it
was argued UNSW had a high level of control because they owned the physical
property. A similar argument is being made by the AFACT. It claims iiNet has a high
degree of control over what a person using their carriage facility can do. Just as
UNSW could evict somebody from its Library AFACT argues, iiNet can disconnect a
user accessing the Internet.61

As was the case following UNSW v Moorhouse if the case of AFACT v iiNet Ltd goes
to judgement it is likely to trigger reforms to the Copyright Act, whichever side wins.
If iiNet is found liable there will need to be a system to manage the liability and
responsibilities of ISPs similar to when UNSW was found liable and the Australian
Government introduced statutory licences and copyright collection agencies. If iiNet
is not found liable there could still be reforms to the Copyright Act to introduce some
form of Internet copyright collection society.

Options being canvassed include an industry-supported collection society or industry

building and administer a peer-to-peer network for content sharing.62 Three of the four
major music labels, lead by Warner Music, are proposing a blanket licence scheme to
Universities in the US which would allow peer-to-peer sharing and downloading for
the payment of a small annual fee for each student. The proposal includes setting up a
non-profit collection society, referred to as ‘Choruss’, which would collect the funds
and distribute them to the rights holder.63 If successful such a model could be
expanded to require that ISPs collect these payments. The large copyright owners are
changing their business models but have not given up on technologies like Digital
Rights Management and digital fingerprinting technology to prevent copyright
infringement.64

The decision in AFACT v iiNet Ltd will impact on educational institutions who could
also be found liable for authorising the infringing conduct of staff and/or students
where they have provided access to the equipment used to carry out the infringing
conduct, such as servers providing Internet access or personal computers, and if it is
proven they have not taken reasonable steps to ensure that this equipment is not used
to infringe copyright. A difference between UNSW v Moorhouse and AFACT v iiNet
Ltd is that the US-Australia Free Trade Agreement signed in 2005 brought in Safe
Harbour provisions aimed to reduce liability of ISPs.65 The sparse case law relating to
authorisation liability does not, unfortunately, provide much assistance in determining
61 Crozier, Ry, “Revealed: iiNet's film copyright defence” ITnews 2 October 2009
< http://www.itnews.com.au/News/157336,revealed-iinets-film-copyright-defence.aspx> (accessed 26
October 2009)
62 Jennifer Wilson, “The Digital Deadlock: How Clearance and Copyright Issues are Keeping
Australian Content Offline”, Screenrights and AFRTS White Paper 2009, p.2.
63 Van Buskirk, Eliot, Three Major Record Labels Join the ‘Choruss’, Wired, 8 December 2008
<http://www.wired.com/epicenter/2008/12/warner-music-gr/> (Accessed 25 October 2009).
64 See for example discussion from Hsiang-Cheh Huang ,Yueh-Hong Chen; Genetic fingerprinting for
copyright protection of multicast media, Soft Comput (2009) 13:383–391

Page 12
what steps an education institution should take to minimise its risk of being found
liable for copyright infringement.66

IV. CONCLUSION
For educational institutions the framework of our copyright law has wide ranging
impacts. The significant legal barriers to getting educational content online, confusion
about the existing copyright law, particularly in relation to content available on the
Internet, and the absurdity of educational institutions having to pay for content that is
freely available, all suggest that the existing approaches to copyright regulation are no
longer effective. Clearly authors and artists need to be protected from copyright theft
of their work by competitors and from its use for commercial profit without
permission. Yet it is undesirable for the laws to result in education providers, teachers
or students, innocently or otherwise, using copyrighted work for educational use
being dragged into court or having to pay for public and freely available material.

The difficult public policy objective of the law is balancing the interests of copyright
owners and those of the society in an optimum way. An ideal copyright regime should
strive to strike a balance between private incentives for copyright owners and the
legitimate public interest in maximising access to knowledge, the free flow of
information and transfer of ideas. Government and the courts also need to
acknowledge the significant imbalances in market power between content creators,
users and re-users on the one hand, and the large-scale distributors and publishers
which constitute the copyright industries on the other. Laws and policies that impose
a strict oppressive system of regulating copyright create the danger of a culture in
which creators get to create only with the permission of the powerful, or of the
creators of the past.67

A coherent resolution to all of the issues raised in this area is, unfortunately, beyond
the scope of this essay; in part because the issues and challenges raised by copyright
law are vast, complex and continually evolving. More research and consultation must
occur to ensure our copyright laws are effective in the digital era if we are to realise
the full potential that the Internet can have for education providers and society.
To ensure our copyright laws have the right balance will require continuous and
vigilant examination with continuous fine-tuning and regular reviews.

65 These can be found in Division 2AA of Part V of the Copyright Act 1968 (Cth) and Part 3A of the
Copyright Regulations.
66 Universities Australia, formerly the Australian Vice Chancellors Committee (AVCC), suggest a
conservative approach of implementing strong access policies, Clear terms of use, Take down notice
procedures, Permission templates, Citations and attributions for all material, update Copyright policies
and procedures, Enforce copyright policy, communication and training students and staff to minimise
risk of liability for copyright infringement. In other words act as if they were covered by the safe
harbour provisions.
67 Lessig, Lawrence, Free Culture: How Big Media Uses Technology and the Law to Lock Down
Culture and Control Creativity (2004). Available under Creative Commons licence at
<http://www.free-culture.cc/> (22 October 2009).

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