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Bills Digest No. 169  1998-99
Copyright Amendment (Computer Programs) Bill 1999

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Glossary

[These definitions are compiled from the following dictionaries:

Collins dictionary of personal computing, 2nd ed., by Ian Sinclair, Glasgow, HarperCollins, 1997.

The dictionary of multimedia: terms and acronyms, by Brad Hansen, Wilsonville, Oregon, Franklin, Beedle & Associates, 1997.

The Hutchinson dictionary of computing, multimedia, and the Internet, Oxford, Helicon, 1997.]

Passage History

Date Introduced: 21 April 1999

House: Senate

Portfolio: Communications, Information Technology and the Arts

Commencement: The operative provisions commence on Proclamation or otherwise six months and one day after the Bill receives Royal Assent.

(Note: New section 47E which allows reproduction or adaptation of a computer program in order to correct errors, is to apply to activities on or after 23 February 1999. This was the date on which the Government announced its decision to make this amendment to the Copyright Act.(1))

Purpose

To amend the Copyright Act 1968 to add new exceptions to activities which infringe copyright in computer programs.

Background

The amendments proposed in this Bill originate from recommendations in the 1995 report of the Copyright Law Review Committee (CLRC) on computer software protection.(2) The Copyright Law Review Committee was established in 1983 to consider and report to the Attorney-General on specific copyright matters referred to it from time to time. In 1988 the Committee was asked to report on whether the Copyright Act 1968 (the Copyright Act) adequately and appropriately protected computer programs. The Committee released an issues paper in 1990 and a draft report in June 1993. The final report, which was published in 1995, analysed the 1984 amendments and recommended numerous changes to the Copyright Act which would resolve a number of perceived existing anomalies. Among the key areas covered by the Committee's report were parallel importation (addressed by the Copyright Amendment Act (No. 2) 1998), multi-media, and decompilation (addressed by this Bill).

The Committee recommended that decompilation of computer programs be allowed in only two circumstances:

• to achieve interoperability of computer programs, and
• to correct errors.(3)

This Bill enacts the Committee's recommendation and adds a third circumstance under which decompilation is to be allowed, that is, for the purpose of testing the security of computer programs and the security of computer networks of which they are a part.

Copyright and computer software

The Copyright Act 1968 regulates the extent to which computer software can be copied. Software is largely treated in the same manner as a 'literary work' although there are also a number of specific software-related provisions in the legislation. Copyright protection is automatic. There is no requirement for owners of copyright to register their rights. Copyright protection provides the copyright owner with certain exclusive rights. In the case of literary works, the most important exclusive right is the right to reproduce the work in a material form(4) - in other words, the right to prevent unauthorised copying of the work. Other important exclusive rights contained in section 31 include the right to publish the work(5) and the right to make an adaptation (or translation) of the work.(6)

Computer software poses a number of problems to traditional copyright law because, unlike other protected works, it is impossible to use a computer program without incidentally copying it. In many instances, it would be imprudent to use a computer without seeking to make regular copies of the software for back-up purposes.

The Copyright Act specifies a number of exceptions in respect of actions that might otherwise constitute a breach of copyright. One of these is 'fair dealing', under which the copying of a portion of a protected work may be permitted for the purpose of research or study.(7) Of particular significance in the present context is section 43A which allows people who have purchased computer software to copy the program for back-up purposes.

International obligations

Australia is a party to two major international copyright conventions: the Berne Convention for the Protection of Literary and Artistic Works(8) and the Universal Copyright Convention.(9) Over 100 other countries belong to one or both of these conventions. (In addition, Australia is a member of the Rome Convention which protects performers, producers of sound recordings and broadcasters and the Geneva Phonograms Convention, which gives additional protection to record producers against piracy of their recordings.(10)) Australia is also a member of the World Trade Organization (WTO). Australian law has been amended to comply with Australia's copyright obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which adopts and expands on many of the obligations under the Berne, Rome and Geneva Conventions.(11)

In December 1996 two new treaties were agreed to at the World Intellectual Property Organisation (WIPO) Diplomatic Conference on Certain Copyright and Neighbouring Rights Questions held in Geneva. These treaties are the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonogram Treaty (WPPT). Australia is yet to sign or ratify the treaties, so the obligations they contain do not apply to Australia at this time.

International copyright protection is achieved under international conventions by the principle of 'national treatment'. Broadly speaking each convention member country gives the same rights to the nationals of other convention countries as it gives to its own nationals under its own law. In Australia, the provisions of the Copyright Act extend to works of nationals, citizens and residents of other convention countries and to works made or first published in those countries by virtue of the Copyright (International Protection) Regulations. Copyright will therefore subsist in Australia in a work made by a national of a country that is a party to one of the copyright conventions to which Australia is also a party, provided that the type of work concerned is covered by the convention and subject to certain restrictions in the regulations. For example, as Australia and the United States of America are members of the Berne Convention, original works of US nationals or works first published in the USA will receive the same copyright protection as Australian nationals receive under the Copyright Act.(12)

Technical issues concerning computer programs

(An explanation of all the technical terms used in this section is provided in the Glossary at the beginning of the Digest.)

A computer program is a set of instructions which directs a computer to perform certain tasks in order to produce a desired result. Programs are generally written in high level programming languages. The source code containing the high level language instructions must be translated into machine readable object code before the computer can execute the program. Prior to the distribution of a computer program, the computer programmer usually compiles or assembles the source code into object code which is in machine readable form. Generally only the object code of the computer program will be distributed on disks. The source code will usually be kept secret. Both the source code and object code are protected under the Copyright Act.(13)

The 'reverse engineering' of a computer program involves decompiling or disassembling the object code of the program to produce the source code in which the program was originally written, thereby facilitating the extraction of the underlying ideas through analysis of the source code. Decompiling or disassembling a computer program essentially involves the opposite process to that undertaken when compiling or assembling the program. The reverse engineering of a computer program may be undertaken for a number of purposes. In a noncommercial context, it may be undertaken for purposes involving research to understand the ideas underlying a program. In a commercial context, reverse engineering may be conducted for purposes involving the correction of errors in a program ('debugging'), the modification of a program, the development of an interoperable program or the development of a competing program.

The susceptibility of computer programs to reverse engineering has resulted in the issue receiving considerable attention, both in Australia and overseas. Some writers have questioned whether software developers should be able to rely upon copyright legislation effectively to prevent rival products being created when those rival products do not embody a direct copying of the original program. The counter argument is that if reverse engineering is allowed to proceed unchecked, the creativity and profitability of genuine innovators will be stifled.

Overseas comparisons

Overseas there is an emerging trend which favours the right of reverse engineering in certain circumstances. In 1991 the European Union issued a Council Directive on the Legal Protection of Computer Programs ('the EC Software Directive').(14) Article 6 of the EC Software Directive allows decompilation for interoperability with other software and for error correction. This Article has now been adopted into the English law as from 1 January 1993 by introducing new section 29A-D into the Copyright Design and Patents Act 1988 (UK).(15) The effect of the amendments to the English law is to remove from infringement the taking of a back-up disk, the decompiling of a computer program to achieve interoperability, and the avoiding of contractual restrictions to defeat these objectives, and the studying of programs and error recovery for the purpose for which the program was purchased.(16) The proposed amendments to the Australian law go further than the EC Software Directive and the English law by allowing decompilation of hardware as well as software, and by allowing copying and decompilation for security testing.

According to the Explanatory Memorandum, it would appear that decompilation for purposes of interoperability between software and hardware is permissible in the USA.(17) It is suggested that if decompilation for the purposes of interoperability between software and hardware was not permitted, Australian software producers might find themselves still at a disadvantage in the market compared to US producers.(18) In 1998 the US Congress passed the Digital Millennium Copyright Act to implement the World Intellectual Property Organization Copyright Treaty and Performances and Phonograms Treaty, and for other purposes. The US Act provides exemptions to copyright prohibitions for, inter alia, 'purposes of achieving interoperability of computer programs' and 'lawfully authorized investigative, protective, information security, or intelligence activities of the United States'. The Act defines 'information security' as 'activities carried out in order to identify and address the vulnerabilities of a government computer, computer system, or computer network'.(19)

Computer programs and piracy

Unlike a majority of 'literary works' protected by copyright legislation, computer programs are particularly susceptible to unauthorised copying. Piracy has been a key concern of the major software producers. A report commissioned by the Business Software Alliance suggests that Australia had an average software piracy rate of 32 per cent, compared with a rate of 27 per cent in the United States.(20) The Government has said that the changes proposed by this Bill 'will not in any way weaken the existing sanctions against making pirate copies of computer programs'.(21) The proposed amendments will allow decompilation only if the owner of the computer source code unreasonably refuses to provide the information. It will not be allowed for other purposes, such as producing software that directly competes with the original product. On 1 April 1999 the Government announced an investigation to examine the cost and scope of piracy in Australia, the adequacy of existing penalties and the resources available to police and customs services to deal with this problem.(22)

Simplifying copyright law

In September 1998 the Copyright Law Review Committee released Part 1 of its most recent report on the Simplification of the Copyright Act 1968. Part 1 deals with 'Exceptions to the exclusive rights of copyright owners'. In it the Committee has recommended the introduction of a revised, open-ended fair dealing exception for all copyright material, including computer software.(23) The Committee's recommendation has received a mixed reaction from Australia's copyright community.(24) The Government has indicated that it will be some time before it can review all the comments and make a decision on the recommendation.(25)

It has been suggested that, in the digital age, access to copyright material will depend as much, if not more, on the contracts and technological systems under which rights' holders make their works available to the public. If those contracts and systems override the access that fair dealing is supposed to ensure, the careful balance of rights and exceptions set out in the Copyright Act will become largely ineffective.(26)

Main Provisions

New sections 47B-47H, dealing with exemptions to activities which infringe copyright in computer programs, are inserted in the Copyright Act 1968 by item 2 of Schedule 1 of the Bill.

Exceptions relating to normal use and study of computer programs

Subject to two exceptions, the copyright in a computer program will not be infringed by the copying of it if:

• the copy is made in the course of running a copy of the program for the purposes for which it was designed; and
• the running of the copy is done by, or on behalf of, the owner or licensee of the copy used [proposed subsection 47B(1)].

Proposed subsection 47B(2) provides two exceptions to the exemptions provided by proposed subsection 47B(1), namely:

• copying from a copyright infringing copy of the computer program, or
• copying contrary to any express direction or licence of the owner of the copyright in the program to the owner of the copy from which the copy is made when the owner of the copy acquired it.

Subject to one exception, the copyright in a computer program will not be infringed by the copying of it if:

• the copy is made in the course of running a copy of the program for the purpose of studying ideas behind the program and the way in which it works, and
• the running of the copy is done by, or on behalf of, the owner or licensee of the copy [proposed subsection 47B(3)].

Proposed subsection 47B(4) provides one exception to the exemptions provided by proposed subsection 47B(3), namely:

• copying from a copyright infringing copy of the computer program.

Exemptions relating to back-up copies of computer programs

Subject to two exceptions, the copyright in a computer program will not be infringed by the copying of it if:

• it is made by, or on behalf of, the owner or licensee the copy (the original copy) from which the copy is made, and
• the copy is made only for the use of, or on behalf of, the owner or licensee of the original copy, and
• the copy is made for either use as a working copy, back-up copy, or to replace either the original copy or another copy in the event of either of such copies being lost, destroyed or rendered unusable [proposed subsection 47C(1)].

In addition, the copyright in a computer program will also not be infringed by the copying of it if the copying is part of the normal back-up copying of data for security purposes [proposed subsection 47C(2)].

Proposed subsection 47C(4) provides three exceptions to the exemptions provided by proposed subsections 47C(1) and (2), namely:

• copying from a copyright infringing copy of the computer program
• if the owner of the copyright in the computer program has designed the program in a way so that copies of it cannot be made without changing the program, or
• if a license to use the original copy has expired or been terminated.

Exemptions relating to copies of computer programs to make interoperable products

Subject to one exception, the copyright in a computer program will not be infringed by the copying or adaptation of it if:

• the copy or adaptation is made by, or on behalf of, the owner or licensee of the copy (the original program) used for making the copy or adaptation
• the copy or adaptation is made for obtaining information needed to allow the owner or licensee to make independently another program (the new program), or an article, to connect to and be used together with or interoperate with the original or any other program
• the copy or adaptation is made only to the extent necessary to allow connection and interoperability with the original program or any other program
• the new program copies or adapts the original program only to the extent necessary to allow it to connect/interoperate with the original or other program, and
• the information needed to allow the owner or licensee to make independently another program, or an article, to connect to and be used together with or interoperate with the original is not readily available from another source when the copy or adaptation is made [proposed subsection 47D(1)].

Proposed subsection 47D(2) provides one exception to the exemptions provided by proposed subsection 47D(1), namely:

• making a copy or adaptation from a copyright infringing copy of the computer program.

Exemptions relating to copies of computer programs to correct errors

Subject to one exception, the copyright in a computer program will not be infringed by the copying or adaptation of it, on or after 23 February 1999, if:

• the copy or adaptation is made by, or on behalf of, the owner or licensee of the program (the original copy) used for making the copy or reproduction
• the copy or adaptation is made for correcting an error in the original copy that prevents it from operating as intended or in accordance with its specifications or supplied documentation
• the copy or adaptation is made only to the extent reasonably necessary to correct the error, and
• when the copy or adaptation is made, another copy of the program that does operate in the intended way is not available to the owner or licensee within a reasonable time at an ordinary commercial price [proposed subsection 47E(1)].

Proposed subsection 47E(2) provides one exception to the exemptions provided by proposed subsection 47E(1), namely:

• making a copy or adaptation from a copyright infringing copy of the computer program.

Exemptions relating to copies of computer programs for security testing

Subject to one exception, the copyright in a computer program will not be infringed by the copying or adaptation of it if:

• the copy or adaptation is made by, or on behalf of, the owner or licensee of the copy (the original copy) used for making the copy or adaptation
• the copy or reproduction is made for testing in good faith the security of the original copy, or a computer system or network of which the original copy is part, or investigating, or correcting, in good faith a security flaw in, or the vulnerability to unauthorised access of, the original copy, or a computer system or network of which the original copy is part
• the copy or adaptation is made only to the extent reasonably necessary to achieve such security testing purposes, and
• the information resulting from the copying or adaptation is not readily available to the owner or licensee from another source when the copy or adaptation is made [proposed subsection 47F(1)].

Proposed subsection 47F(2) provides one exception to the exemptions provided by proposed subsection 47F(1), namely:

• making a copy or adaptation from a copyright infringing copy of the computer program.

Unauthorised use of copies or adaptations of computer programs

The exemptions afforded by proposed sections 47B-47F will not apply to unauthorised copies or adaptations of computer programs, or any information derived from such copies or adaptations, which are used, sold, or supplied to a person for purposes other than those specified in proposed sections 47B-47F [proposed section 47G].

Endnotes

1. 'Copyright changes to help Australian software industry', Sen the Hon Richard Alston & Hon Daryl Williams MP, Press release (Minister for Communications, Information Technology and the Arts), 19/99, 23 February 1999.
2. Australia. Copyright Law Review Committee, Computer software protection (Chairman: Justice I.F. Sheppard), Canberra, 1995.
3. ibid., p. 10-12.
4. Copyright Act 1968 s.31.
5. Copyright Act 1968 s.31(1)(a).
6. Copyright Act 1968 s.31(1)(e).
7. Copyright Act 1968 s.40.
8. Berne Convention for the Protection of Literary and Artistic Works, Australian Treaty Series, 1978 No. 5, Canberra, 1978.
9. Universal Copyright Convention, Australian Treaty Series, 1978 No. 2, Canberra, 1978.
10. Copyright law in Australia: a short guide, Attorney-General's Department, Canberra, 1996, p. 14.
11. Copyright (World Trade Organization Amendments) Act 1994.
12. Copyright law in Australia: a short guide, op cit, p. 15.
13. Gordon Hughes, 'Electric blues: unresolved issues with copyright and computer software', Background papers (Law and Public Administration Group), 11/1994, 23 June 1994, footnote 24, p. 13.
14. EC Directive on the Legal Protection of Computer Programs, 14 May 1991, 91/250/EEC.
15. Laurence J Cohen, 'Copyright, multi-media, interoperability and related technologies: a review', Computer Law and Practice, vol. 9, no. 1, 1993, p. 29.
16. ibid., footnote 12, p. 35.
17. Copyright Amendment (Computer Programs) Bill 1999, Explanatory Memorandum, p. 8.
18. ibid., p. 8.
19. Digital Millenium Copyright Act (US), Public Law 105-304.
    A summary is provided on the Library of Congress Internet site at http://thomas.loc.gov/cgi-bin/bdquery/D?d105:1./temp/~bdgkEQ:@@@L|/bss/d105query.html|#summary:@@@L|/bss/d105query.html|#summary (29 April 1999)
20. 'Third of firms' computer software pirated: study', Canberra Times, 30 January 1999, p. C5; 'Pirates sink 7300 jobs, report says', Australian, 2 February 1999. The report is available on the Internet at the Business Software Association of Australia site at www.bsaa.com.au (29 April 1999).
21. 'Copyright changes to help Australian software industry', op cit, p. 1.
22. 'Piracy inquiry outcome "comes first"', Australian Financial Review, 6 April 1999, p. 38.
23. Australia, Copyright Law Review Committee, Simplification of the Copyright Act 1968, Part 1, 'Exceptions to the exclusive rights of copyright owners', Canberra, 1998, p. 7.
24. For example, 'What could be fairer than fair use?', Jamie Wodetzki, Communications Update, November 1998, p.17 and 'Fair dealing recommendations welcome but worrying', Libby Baulch, Communications Update, November 1998, p. 14-15.
25. Copyright Amendment (Computer Programs) Bill 1999, Explanatory Memorandum, p. 8.
26. Jamie Wodetzki, 'What could be fairer than fair use?', Communications Update, November 1998, p.17.

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