A new approach to copyright can help drive innovation

A new approach to copyright can help drive innovation and growth

12 March 2018, Wellington: The introduction of more flexible copyright laws could drive greater economic growth and enable New Zealand to capitalise on the shift to a digital economy, according to a new report released at InternetNZ’s NetHui on Copyright today.

Copyright in the Digital Age, a report by Deloitte Access Economics and commissioned by Google, finds that a more flexible approach to copyright exceptions, such as “fair use”, could encourage more digital activity and innovation – from text and data mining to machine learning and cloud computing – and help grow the country’s $16.2 billion digital economy.

New Zealand copyright law currently specifies a number of “fair dealing” exceptions when use of copyright material are permissible. This system can be made more flexible by adding or broadening exceptions to cover new technologies, and in particular, allowing uses that are socially beneficial, transform the work and do not adversely affect the market for the original material.

Deloitte Access Economics Partner Linda Meade says that the system as it stands doesn’t support innovation as much as it could.

“New Zealand will find it harder achieve the full productivity dividend of the digital age without a more flexible approach to copyright exceptions,” says Ms Meade.

“Adopting a fair use system would bring New Zealand into line with leading innovator nations. The United States, Israel, South Korea and Singapore are leaders when it comes to digital innovation, and therefore major beneficiaries. The United Kingdom and Canada have also recently increased flexibility in their copyright exceptions,” she says.

Key findings of the report include:

• Because of the narrow scope of fair dealing provisions, major new and innovative uses of copyright material are occurring outside of any clear, supportive legal framework.

• The allowed scope of transformative uses of creative materials, such as digital remixing, remains shrouded in uncertainty and hindered by unnecessarily high transaction costs, leaving smaller, individual creators and public institutions such as universities vulnerable to litigation that seeks, or inadvertently seeks, to stymie innovation and creativity.

• A move to a more flexible approach would cut through these problems and make it more likely that any contentious issues would be resolved in a manner that promotes creativity, innovation and growth.

New Zealand’s current copyright system wasn’t designed with digital in mind and rules-based exceptions have failed to keep pace with technology.

A more flexible approach to copyright exceptions will provide real benefits to people wanting to make innovative and productive use of so-called “orphan works”, works with no identifiable author, and reduce the transaction costs of negotiating licences for uses that would be judged fair. Two examples of innovations that depended on a flexible copyright system were the search engine analysis of copyright material on webpages, and using digital music players to copy songs from CDs to computers.

The report acknowledges concerns of a more flexible copyright system regarding impacts on the incomes of copyright holders but finds, however, that alongside protections built into the fair use principles, there are greater opportunities for rights holders to themselves rely on more flexible exceptions as part of remix and other transformative works. Potential uncertainty during any transition can be minimised based on international experience and the right policy guidance.

Copyright expert Professor Henry Ergas, who contributed to the report, says "with technological change becoming ever more rapid, the flexibility a principles-based fair use system offers has become increasingly important, because it avoids the need to pile specific exception on specific exception and allows more timely adaptation to market realities."

The Deloitte Access Economics report provides input into the New Zealand Government’s review of the Copyright Act, which aims to assess how well the Act is performing against its objectives.

Copyright in the Digital Age can be read at www.deloitte.com/nz/copyright-digital-age.

ENDS

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