Transformative Use of Copyright Material Nicolas Suzor BinfTech LLB LLM Thesis, QUT School of Law Preface i Table of Contents Chapter I. Introduction.................................1 1.Executive summary................................................................. 1 2.Outline of thesis...................................................................... 2 3.Methodology........................................................................... 4 4.Terminology........................................................................... 5 Chapter II. Desirability of transformative use .......................................................................7 1.Autonomy.............................................................................. 9 2.Diversity............................................................................... 14 3.Simulacra............................................................................. 16 4.Allowing transformative speech as a normative principle............. 24 Chapter III. Legal restrictions on transformative use....................................... 25 1.Remixing and sampling of music.............................................. 25 (a)Remixing......................................................................... 25 (i)A prominent example – mashups..................................... 28 (b)Sampling......................................................................... 29 (c)Remixing and sampling of other media................................ 33 (d)Fan-created music videos.................................................. 35 (e)Moral rights..................................................................... 35 2.The Panel............................................................................. 37 (a)The definition of 'broadcast'............................................... 37 (b)What is a 'substantial part' of a broadcast?.......................... 40 (c)How do the fair dealing exceptions apply?............................ 44 (d)The ramifications of The Panel for transformative use............ 48 3.Marvel v NCSoft.................................................................... 49 (a)Primary liability in Australia............................................... 51 (b)Secondary liability in Australia............................................52 4.Machinima............................................................................ 56 ii Preface Chapter IV. The theoretical justification for copyright in transformative works................60 1.The reification of copyright...................................................... 60 2. The utilitarian economic justification of copyright...................... 64 (a)Limits of the economic justification..................................... 66 (i)Deadweight loss............................................................ 67 (ii)Administration and transaction costs in inputs.................. 70 (iii)Inputs into non-market or public goods........................... 71 (iv)Rent-seeking............................................................... 73 (v)Over-investment in the creation of intellectual property..... 74 (vi)Difference in value....................................................... 77 (b)Commons critique............................................................ 79 (i)The comedy of the commons...........................................80 (ii)The tragedy of the anticommons.....................................83 (iii)The commons of transformative use and the information semicommons.................................................................. 86 (c)The economic justification in relation to transformative works.88 3.Hegelian personality............................................................... 89 (i)Separation of economic and moral rights.......................... 91 (ii)Distinction between personal and fungible property........... 93 (iii)Personality theory and transformative use of creative works ...................................................................................... 94 4.Lockean labour / desert.......................................................... 96 (a)'Labour' .......................................................................... 96 (b)The 'no harm' proviso....................................................... 98 (c)The 'no waste' proviso..................................................... 101 (d)Labour theory and transformative uses.............................. 105 5. Social planning theory......................................................... 108 (a)Social planning theory and transformative use.................... 110 6.Reconciling the theories – the interests served by copyright.......114 Chapter V. How should the law reflect the theory?.......................................................116 1.'Substantial Part'..................................................................116 (a)Defining the contours of a substitutability test.................... 126 (b)Substitutability and market harm caused by lost licensing potential............................................................................ 128 (c)Application of a substitutability test................................... 135 2.Fair dealing......................................................................... 137 (a)Fair dealing for the purposes of criticism or review.............. 138 (b)Fair dealing for the purposes of parody, pastiche, and caricature?......................................................................... 145 (c)A distinction between parody and other uses...................... 146 (d)The fallacy that fair dealing provides certainty at the expense of flexibility........................................................................... 149 (e)The inflexibility of fair dealing........................................... 150 3.Fair use.............................................................................. 151 (a)Fair use and transformative works vs the extended substantiality tests.............................................................. 153 Preface iii (i)Fair Use in Australia..................................................... 158 4.Moral rights......................................................................... 161 (a)Attribution and the right to not be falsely attributed............ 162 (b)The right of integrity....................................................... 164 (i)When will a use be derogatory?..................................... 164 (A)The Carmina Burana case........................................ 164 (B)Foreign moral rights authorities................................ 167 (ii)The 'reasonableness' defence........................................170 (iii)Moral protection from commodification.......................... 176 (A)Extending the moral right of integrity to protect against commodification..........................................................179 (iv)'substantial part' and the moral right of integrity............ 184 (c)The right of withdrawal.................................................... 186 5.Constitutional limits..............................................................187 (a)Section 51(xviii)............................................................. 187 (b)Implied guarantee of free political speech.......................... 189 (i)An implied defence based on freedom of speech...............189 (ii)Reading copyright law by the light of free speech............ 191 6.Compulsory licensing ........................................................... 193 7.Voluntary open access licensing............................................. 195 Chapter VI. Conclusion............................. 200 1.Recommendations................................................................ 200 (a)The definition of 'substantial part' in the economic rights......201 (b)Fair dealing.................................................................... 201 (c)Fair use......................................................................... 201 (d)Moral rights................................................................... 202 (e)Constitutional limits........................................................ 203 (f)Compulsory licensing....................................................... 203 (g)Voluntary licensing .........................................................204 2.Substantiality illustrated - which uses should be allowable?........204 (a)Examples...................................................................... 205 3.Conclusion.......................................................................... 207 Chapter VII. Bibliography.........................208 1.Articles........................................................................... 208 2.Cases............................................................................. 215 3.Books............................................................................. 218 4.Submissions.................................................................... 219 5.Reports ..........................................................................220 6.International conventions.................................................. 220 7.Statutory materials.......................................................... 221 iv Preface The work contained in this thesis has not been previously submitted to meet requirements of an award at this or any other higher education institution. To the best of my knowledge and belief, the thesis contains no material previously published or written by another person except where due reference is made. Nicolas Suzor 13/01/06 Introduction 1 Chapter I. Introduction 1. Executive summary This thesis concerns the ability of individuals to engage in transformative use of copyright expression without the permission of the copyright owner. Transformative use refers to the use of existing expression as an input into the creative process, resulting in the creation of new expression that, while still embodying elements of the original work, is original in its own right. This type of creativity is beneficial for society and should be encouraged. Individuals should have the ability to express themselves, and participate in the interpretation of their culture. My enquiry has shown that Australian law does not facilitate transformative use. Many forms of transformative expression are not currently permissible without the express permission of the copyright owner. Copyright theory, however, is not in accordance with such a prohibition on transformative use. I will suggest some legislative and judicial reforms to Australian copyright law that can have the effect of encouraging transformative expression, while at the same time providing an economic incentive to invest in creative expression and protecting the legitimate interests of creators in their works. The primary modification I suggest is that the definition of 'substantial part' in the Coypright Act 1968 (Cth) should be read, in accordance with the interests served by copyright, to allow a consideration of the context in which copyright material is taken. The seeds of such an approach are present in modern judicial interpretations; the discussion that follows attempts to show how such an approach accords with copyright theory, and why it should be preferred by the judiciary. Firstly, with respect to the economic rights, transformative uses of copyright material which are not substitutable for the original expression should not be found to reproduce a substantial part of the original. Secondly, questions of substantiality in the moral rights should be interpreted to protect authors from unreasonable commodification of their works. To 2 Introduction the extent to which it is unclear how the right of integrity applies to the context in which a work is used, as opposed to the modification of the work itself, I submit that it should be interpreted such that authors have a right to object to the commercial association of their work with a position, product, or service against their will. Alternatively, I submit that legislative reform to include an open ended defence to copyright infringement could provide much needed flexibility in the Australian system. Such a defence could draw primarily on the US 'fair use' defence, but certain limitations of the US defence could be overcome in an Australian context. Again, as the theory shows, the primary consideration for infringement of the economic rights in transformative uses should be the degree to which the transformative use is substitutable for the original. Finally, I submit that the reasonableness defence to infringement of the moral right of integrity should be read in such a way as to ensure that the personal interests of authors does not interfere with the legitimate self-expression of future authors. I will show that the theory does not support moral rights to the exclusion of either the ability of future authors to self-actualise. The operation of the reasonableness defence should be clarified to ensure that the legitimate interests of both past and future creators are recognised. 2. Outline of thesis This thesis begins with the assumption that transformative use of existing expression is beneficial for society. The second chapter briefly considers the basis for that assumption, canvassing benefits to autonomy, democratisation of speech, and the importance of allowing individuals to interact with their environment, even if that environment is heavily constructed from copyright expression. This chapter argues that enlarging the number and range of speakers and increasing the flexibility of meaning provides benefits for democratic social discourse. This argument is then extended further, to the principle that social discourse can only legitimise the exercise of power in a democracy if the dominant expression is able to be deconstructed; and, that one of the most effective ways to deconstruct the hegemony of expression is to Introduction 3 permit individuals to engage in the modification of meaning through transformative use of that expression. Finally, this chapter concludes with the argument that if society is largely constructed through copyright expression, but copyright material is removed from the realm of available inputs into creative expression, individuals can become alienated through the loss of the ability to interact with and represent their environment. The third chapter considers some recent examples of transformative uses which have been restrained through the effect of copyright law, drawing attention to the fact that the ability to engage in transformative re-expression is virtually non-existent in Australia. The examples cover areas of remixing and sampling of music, appropriation of television 1 broadcasts as seen in The Panel, questions of copyright liability for roleplaying with characters from popular culture in Massively Multiplayer Online Role-Playing Games (MMORPGs), and the use of computer games as an engine for creativity in the animation genre called 'Machinima'. This chapter also introduces the current state of Australian copyright law, as a platform from which advances can be proposed in Chapter Five. Chapter Four considers the theoretical basis upon which copyright law rests, in order to determine the proper extent of the power of authors and copyright owners to prevent transformative use of their expression. The first theory considers the utilitarian justification of copyright, that copyright law provides the necessary economic incentives required for creativity. The second theory is derived from Hegelian personality theory, that an author has a personal moral interest in the work that he or she creates, as an extension of the author's self. The third theory considered is the Lockean labour/desert justification of intellectual property, that a person who exerts themselves to create original expression from the commons deserves a property interest in that expression. Finally, these theories are reconciled, as far as they are able, to provide some guiding principles for the application of copyright law to transformative works. In cases of conflict, the approach that 1 Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273; TCN Channel Nine Pty Ltd v Network Ten Pty Ltd (No 2) (2005) 145 FCR 35. 4 Introduction maximises social and democratic interests prevails. Chapter Five takes the principles enunciated in Chapter Four, and attempts to apply them to copyright law in Australia. This chapter argues for change to specific areas of copyright law to better accommodate the theory on transformative use. Firstly, this chapter argues that the definition of 'substantial part' should be broadened to take into consideration the context within which copyright material is reused before it is deemed infringing. This approach is preferred on the basis that it both accords with common law principles and allows Australian copyright law to evolve without necessitating legislative intervention. This chapter also argues that the fair dealing defences should provide a broader interpretation of 'criticism', 'review', and 'news', in order to better accommodate transformative use, or, alternatively, that an express legislative exception for parody, caricature, and pastiche, is introduced. In the event that modifying the definition of 'substantial part' is not acceptable, this chapter argues in the alternative that a broad, open-ended fair-use style defence to copyright infringement be introduced. Finally, the extent of the moral right of integrity is considered, with a view to both limiting the ability of authors to object to the expression of new authors, and also increasing the protection that authors receive from commodification of their work. The final chapter provides a summary of the principles and recommendations discussed in this thesis. It is hoped that this thesis can provide a useful guide to courts and policy makers in understanding the theoretical basis upon which copyright law exists, and the extent to which the theory requires greater accommodation for transformative use of existing expression. The legislative and judicial advances presented are intended to provide a sound balance between necessary protection of the interests of authors and publishers on the one hand, and those of future authors on the other. 3. Methodology This research has been carried out from a number of primary legislative and judicial materials, and a large range of academic writings. Extensive use has been made of online reference tools and legal databases, and