Tải bản đầy đủ
[3.1] Measuring the Harm Caused to Copyright Owners

[3.1] Measuring the Harm Caused to Copyright Owners

Tải bản đầy đủ

Chapter 8
[3.1.1] Unexploited works
The Copyright Act 1968 (Cth) grants a copyright term of the life of the author plus 70 years for Part III
works, and 70 years from first publication for Part IV subject matter. However, the actual length of
time that a copyright work can be successfully exploited varies considerably. Many copyright works
go out of print after their first print run, while some can be successfully exploited for the entire
length of the copyright term. It is unlikely that any infringement would cause substantial harm to the
interests of a copyright owner if they are no longer exploiting the work.
Some forms of copyright work fall into obsolescence even if they remain popular. The source codes
of computer programs are literary works under the Copyright Act 1968 (Cth) and are granted the
same copyright term. Video game software provides example. It is possible for powerful modern
computers to run programs that emulate the operation of older video game consoles with such
accuracy that the operation of this “virtual console” is indistinguishable from the original console.
This allows video games that ran on the original hardware to be played on personal computers
running the emulation software without having to program the game; 1022 the source code is simply
copied from its original format to a standard computer file. Both the games files and the software
used to emulate the video consoles have been available online to download at no cost through a
number of websites. 1023 The majority of these emulators mimic video game consoles that are
considered obsolete, and neither the video game consoles nor the original games are available for
sale by the manufacturers. It would be difficult to conclude that the interests of the copyright
owners are substantially harmed by this activity, despite statements to the contrary. 1024
[3.1.2] Older Works
The length of time remaining in the copyright term may also be a variable of the harm caused to
copyright owners, although if the work is still being successfully exploited then substantial harm
could still be caused. However, the monopoly to exploit the work is not the only privilege that the
exclusive rights in copyright enable. They also allow copyright owners to exclude other people from
exploiting the work even if they are not exploiting the work themselves. This can be illustrated by
the controversial actions of the copyright owner of the book Ullyses by James Joyce who died in
1941. The events in Ulysses occur in Dublin on 16 June 1904. Each year an event called the
Bloomsday Festival is held on that date, which celebrates the life and work of Joyce. For many years
one of Joyce’s descendents, who inherited the copyright in Ullyses, prevented public readings of the

1022

See http://en.wikipedia.org/wiki/Video_game_console_emulator (Accessed 3 May 2012)
See for example: www.romsite.net/ (Accessed 3 May 2012); www.romhustler.net/ (Accessed 3 May 2012)
1024
http://www.nintendo.com/corp/legal.jsp (Accessed 3 May 2012)
1023

223

Offences in the Copyright Act 1968(Cth): Will They Be Effective?
book at the Festival 1025 even for non-commercial purposes. This continued until the copyright term
had expired. It is unlikely that the harm caused to the copyright owner by these performances would
be substantial enough to justify criminal liability.
[3.1.3] Scale of Infringement
Another variable which can measure the degree of harm is the scale of the infringement. This
consists of the value or volume of the infringing copies, or a combination of both. The greater the
scale of the infringement, the more likely it is that substantial harm has been caused. Many of the
largest copyright infringers have been individuals or corporations that produce their own copyright
works. In Bright Tunes Music Corp v Harrisongs Music, Ltd 1026 a US court held that the George
Harrison song “My Sweet Lord” had infringed copyright in the song “He’s So Fine” composed by
Ronald Mack and owned by Bright Tunes Music Corporation. The court found that Harrison had
“unconsciously” infringed the copyright by plagiarising the melody to the song. The damages to
Bright Tunes Music were assessed at $1,599,987 in 1981. 1027 In 1990, the American rapper Vanilla Ice
“sampled” the baseline of song “Under Pressure” by Queen and David Bowie for his hit recording
“Ice Ice Baby” without the licence of the copyright owners. No lawsuit was ever filed against Vanilla
Ice, but it is believed he settled the dispute for an undisclosed amount. 1028 In the Australian case
of EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd, 1029 the Federal Court of Appeal
affirmed an earlier decision that the iconic Australian song “Down Under” had infringed copyright in
the equally well known Australian nursery rhyme “Kookaburra Sits in the Old Gum Tree”. EMI were
ordered to pay Larrikin 5% of the royalties earned since 2002. Perhaps the one of the largest awards
in a copyright infringement case was when a United States jury awarded $1.3 billion in damages to
the plaintiff in Oracle USA, Inc. v. SAP AG. 1030 This award was reduced on appeal to a mere $272
million by Hamilton J who described the initial award as “grossly excessive”. Despite the obvious and
substantial harm that these infringements caused to the interests of the copyright owners, none of
these cases resulted in a criminal prosecution. One explanation for why this never happened is that
the harm caused was mitigated by the awards of damages or the financial settlement.
Commercial infringement on the scale discussed in the examples above tends to produce levels of
profit that can be readily recovered from easily identified parties. The potential for recovering a
1025

See http://www.irishtimes.com/newspaper/ireland/2011/0608/1224298573383.html (Accessed 2
November 2011)
1026
Bright Tunes Music Corp v Harrisongs Music, Ltd 420 F.Supp. 177 (1976)
1027
ABKCO Music, Inc. v Harrisongs Music, Ltd 508 F.Supp. 798 (1981)
1028
See http://www.legalit.com.au/content/105.html (Accessed 10 November 2011)
1029
EMI Songs Australia Pty Ltd v Larrikin Music Publishing Pty Ltd [2011] FCAFC 47
1030
Oracle USA, Inc. v. SAP AG, Copy. L. Rep. (CCH) P30,123 (N.D. Cal. Sept. 1, 2011)

224

Chapter 8
significant monetary remedy for an infringement, despite the usual risks of litigation, means dealing
with an infringement through the civil courts is the preferred option if the infringement can be
attributed to a competitor or another commercial entity. It makes more commercial sense to
recover or divide the spoils of the infringement, than to attempt to deter future infringement
through criminal sanctions.
However, where the infringement is committed by a small or medium sized party, the potential for
the harm to be mitigated is much lower. Even if the usual risk of litigation is discounted, the cost of
recovering damages, and the decreased ability of the infringing party to meet the cost of a
judgement, makes a civil suit a less commercially attractive outcome. 1031 Where the party concerned
is an individual, who is not profiting from the infringement, the likelihood of mitigating the harm
caused is perhaps at its lowest. This has not prevented rights holders from pursuing such individuals
in the United States, 1032 but it is more likely that the motivation for these actions is more to deter
infringement by third parties rather than to mitigate any harm caused by the actual infringement.
[3.1.4] Purpose of the Infringement
The final variable concerns the purpose for which the infringement occurs. Unlike the other variables
discussed above which vary by degree, this variable is divided into two categories: infringement for
commercial purposes and infringement for non-commercial purposes. The harm caused to copyright
owners in terms of lost revenue is unclear due to the difficulties of establishing the actual loss of a
legitimate sale. However, this is far easier to quantify where an infringing product has been sold
since it can be assumed that demand for the product has been satisfied at a particular price. 1033
Where the unit price is close to zero, as it is for distribution by free file sharing, it is difficult or
impossible to assess the price at which demand would have otherwise been satisfied, legitimately or
otherwise. 1034

1031

27

Luttrell, S., ‘Copyright Enforcement in Australia’ (2008) 11 International Trade and Business Law Review 3,

1032

Sony BMG Music Entertainment v Tenenbaum, 672 F.Supp.2d 217 (2009); Capitol Records, Inc. v. Thomas,
579 F.Supp.2d 1210 (D. Minn. 2008); Moseley, W.. ‘A New (Old) Solution for Online Copyright Enforcement
After Thomas and Tenenbaum’ (2010) 25 (1) Berkeley Technology Law Journal 311; DeBriyn, J., ‘Shedding Light
on Copyright Trolls: An Analysis of Mass Copyright Litigation in the Age of Statutory Damages’ (2012) 19(1)
UCLA Entertainment Law Review 79
1033
Moohr, G.S., ‘The Crime of Copyright Infringement: An Inquiry Based on Morality, Harm and Criminal
Theory’(2003) 83 Boston University Law Review 731, 755
1034
Moohr, G.S., ‘The Crime of Copyright Infringement: An Inquiry Based on Morality, Harm and Criminal
Theory’(2003) 83 Boston University Law Review 731, 755; Goldman, E., ‘A Road to No Warez: The No Electronic
Theft Act and Criminal Copyright Infringement’ (2003) 82 Oregon Law Review 369, 396 (“Piracy rates cannot
realistically be measured accurately. For example, to measure the [No Electronic Theft Act’s] effect on piracy,

225

Offences in the Copyright Act 1968(Cth): Will They Be Effective?
Under some circumstances it has been shown that a degree of infringement may actually stimulate
the market for legitimate copies, which may mitigate the harm caused to copyright owners: the
“sampling effect”. 1035 The market for associated goods and services may also be stimulated, such as
branded merchandise or live performance sales. However, the strength of this sampling effect is
dependent on the nature of both the copyrighted work and the market for the work. For example,
what might work to some extent for recorded music for the home market, may not work for the DVD
rental market.
As demonstrated in Part II of this thesis, the threshold for the application of criminal liability in many
of the offences consists of a commercial purpose for the infringement: either for purposes of making
a profit or gaining a commercial advantage, or in the course of trade. This infers that an infringement
for commercial purposes can always be anticipated to cause sufficient harm to justify criminal
sanctions. However, this is clearly at odds with the requirement to prove damages in civil copyright
infringement actions. Bowen CJ in Interfirm Comparison (Australia) Pty Ltd v Law Society of New
South Wales 1036 stated that the purpose of damages is to compensate the plaintiff for the loss which
he has suffered, 1037 in other words to mitigate the harm caused. Applicants for awards of damages
bear the onus of proving loss or depreciation, 1038 and if this evidentiary burden is not discharged
only nominal damages can be awarded. This was vividly illustrated in Aristocrat Technologies
Australia Pty Ltd v Dap Services (Kempsey) Pty Ltd (in liq) 1039 where an order for damages under
s 115(2) of the Copyright Act 1968 (Cth) for the commercial infringement in the artwork of 400
gaming machines was limited to just $1.
Even where substantial harm has been proven, s 115(3) of the Copyright Act 1968 (Cth) prevents an
award of damages if the infringing party was not aware, and had no reasonable grounds for

the proper analysis would compare current piracy rates against what the rate would be without the Act, an
obviously impossible inquiry”)
1035
See generally: Leibowitz, S.J., ‘Copying and Indirect Appropriability: Photocopying of Journals’ (1985) 93
Journal of Political Economy 945; Croxon, K. “Promotional Piracy” (2007) 2 Oxonomics 13; Bakos, Y. et al
‘Shared Information Goods’ (1999) 42 Journal of Law & Economics 117; Schultz, M. F., ‘Live Performance,
Copyright, and the Future of the Music Business’ (2009) 43 University of Richmond Law Review 685; Peitz, M.,
‘Why the Music Industry May Gain from Free Downloading — The Role of Sampling’ (2006) 24 (5) International
Journal of Industrial Organization 907
1036
Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445
1037
Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales (1975) 6 ALR 445, 446. See also
Bailey v Namol Pty Ltd (1994) 53 FCR 102; Norm Engineering Pty Ltd v Digga Australia Pty Ltd (2007) 162 FCR 1;
Sutherland Publishing Co Ltd v Caxton Publishing Co Ltd [1936] Ch 323
1038
Elwood Clothing Pty Ltd v Cotton On Clothing Pty Ltd (2009) 81 IPR 378, 380
1039
Aristocrat Technologies Australia Pty Ltd v Dap Services (Kempsey) Pty Ltd (in liq) (2007) 239 ALR 702

226

Chapter 8
suspecting, that the act constituting the infringement was an infringement of the copyright. 1040 Only
an order for an account of profits may be awarded, mitigating the harm caused to the copyright
owner. Section 115(3) applies to all claims for infringement, including cases of commercial
infringement. In Kiama Constructions v MC Casella Building Co Pty Ltd 1041 a firm of builders left
architectural plans with a prospective customer who made a pencil sketch of one of the house plans.
This pencil sketch was shown to another building firm who agreed to build the house and engaged a
draftsman to provide a more detailed plan. It was held that although the defendant building firm
had infringed copyright in the house plans, the plaintiffs could not recover damages because they
had no reasonable grounds for suspecting that they had infringed copyright.
The criminal provisions in the Copyright Act 1968 (Cth) previously precluded the prosecution of
infringing parties by requiring a corresponding fault element. Since the Copyright Amendment Act
2006 (Cth) created the strict liability offences, the only threshold for these offences to apply is a
commercial purpose. It would be possible therefore, that under similar circumstances to Kiama
Constructions v MC Casella Building Co Pty Ltd, a defendant could avoid an award of damages under
s 115(3), but could be found guilty of one of the offence provisions and be liable to pay the
Commonwealth a fine not exceeding 60 penalty points. 1042
Although infringement on a commercial scale might indicate that any harm caused is sufficient to
warrant criminal punishment, not all commercial infringements of copyright are equally harmful. If
damages cannot be proved or the infringement is innocent, it is arguably unreasonable to impose
criminal liability where civil damages would not be available for the same conduct. Where damages
can be proven, and harm has been suffered by the copyright owner, there would still need to be
substantial harm for the offence to be consistent with the Feinberg harm principle.
[3.1.5] Application to the Current Offences
From this analysis, it can be concluded that there are parameters that can indicate with certainty if
an infringement has caused substantial harm to a copyright owner. An infringement will be certain
to have caused substantial harm to the copyright owner if:
(1) it is a large scale infringement; and
(2) of a work being exploited by the copyright owner; and

1040

Copyright Act 1968 (Cth), s115(3)
Kiama Constructions v MC Casella Building Co Pty Ltd (1980) 10 IPR 345
1042
The offence provision most likely to be applicable to the circumstances in Kiama Constructions v MC
Casella Building Co Pty Ltd would be s132AD(5), although 132AJ(5) would probably also be available.
1041

227

Offences in the Copyright Act 1968(Cth): Will They Be Effective?
(3) which has resulted in a measurable loss; and
(4) that cannot be mitigated
These requirements would be enacted as a Commonwealth offence section as follows:
A person commits an offence if:
(a) the person engages in conduct; and
(b) the conduct results in one or more infringements of the copyright in a work or other
subject matter; and
(c) one or more of the rights in the work or other subject matter was being exercised by
the copyright owner at the time of the infringement; and
(d) the infringement or infringements result in a measurable loss which cannot be
mitigated by the person; and
(e) the infringement or infringements occur on a large scale
Conversely, an infringement will not have caused substantial harm to the copyright owner if:
(1) it is a small scale infringement; and
(2) of a work not being exploited by the copyright owner; which
(3) does not result in a measurable loss
Between these parameters, there is a large area of uncertainty. Offences that can be directed at
infringements that meet the definitions of the lower parameter cannot be legitimately justified in all
circumstances that they can be applied. These offences would need to alter the threshold at which
criminal liability attaches, to exclude the possibility of infringements that cause non-substantial
harm from being prosecuted.
Of the offences in Division V of the Copyright Act 1968 (Cth), only one offence section comes close to
meeting the requirements of the upper parameter. Section 132AC requires the infringement to
occur on a commercial scale, which is to be measured by take into account the volume and value of
the infringing copies. 1043 The infringement must also result in substantial prejudicial impact on the
copyright owner. 1044 This would approximate the requirements for the infringement resulting in an
unmitigated and measurable loss. To prove a substantial prejudicial impact, the prosecution would
have to prove that some loss had occurred. If this had already been mitigated by a civil action it is

1043
1044

Copyright Act 1968 (Cth) s 132AC(5)
Copyright Act 1968 (Cth) s 132AC(1)(c) and (2)(c)

228

Chapter 8
likely that the prejudicial impact would have been lowered or eliminated, and the result element
would not be satisfied. Also, if the work or other subject matter was out of print or not being
exploited in any manner, it is unlikely that any prejudicial impact could be found.
The remaining offences in Division 5 are not as clear cut. With the exception of ss 132AJ, 132AL and
132AM, all of the offences in Subdivisions C and D consist of infringements in the copyright of works
or other subject matter: making an infringing copy, 1045 selling or letting for hire an infringing
copy, 1046 offering an infringing copy for sale or hire, 1047 exhibiting an infringing copy, 1048 importing an
infringing copy, 1049 distributing an infringing copy, 1050 causing a work to be performed in public 1051
and causing a sound recording or cinematographic film to be heard or seen in public. 1052
Consequently, all of the conduct elements in these offences would constitute conduct that results in
one or more infringements of copyright for the purposes of s 132AC. The difference between
s 132AC and these offences is that they do not require the infringements to have a substantial
prejudicial impact on the copyright owner.
Sections 132AI(2) and (5) require the distribution to affect the owner of the copyright prejudicially,
but this may still not amount to the threshold of substantial harm. Sub-sections 132AH(1)(a)(vii),
(3)(a)(vii) and (5)(a)(vii) have the same requirement as the fault element for importing an infringing
article. In the remaining offences, the thresholds are either:
(1) that infringing copies are dealt with commercially; or
(2) that performances, sound recordings and cinematographic films are performed, seen or
heard in a place of public entertainment.
These thresholds are lower than the upper parameter for substantial harm, and are quite capable at
being directed at conduct which meets the lower parameter. These offences cannot be legitimately
justified for causing substantial harm to copyright owners as they are capable of being used in
circumstances that results in lower levels of harm.

1045

Copyright Act 1968 (Cth) s 132AD
Copyright Act 1968 (Cth) s 132AE
1047
Copyright Act 1968 (Cth) s 132AF
1048
Copyright Act 1968 (Cth) s 132AG
1049
Copyright Act 1968 (Cth) s 132AH
1050
Copyright Act 1968 (Cth) s 132AI
1051
Copyright Act 1968 (Cth) s 132AN
1052
Copyright Act 1968 (Cth) s 132AO
1046

229

Offences in the Copyright Act 1968(Cth): Will They Be Effective?
Sections 132AJ, 132AL and 132AM prohibit activities that have not yet caused harm, but create a risk
of harm occurring in the future. The level of harm that can potentially occur from this conduct is no
different from the offence sections discussed above. The offences for possessing an infringing copy
in s 132AJ state that the possession has to be with the intention of, or in preparation for, one of the
Sub-division C offences. This precludes s 132AC and means that the offences are for creating a risk
that harm will occur. Since the harm caused by violations of the Sub-division C offences cannot be
legitimately justified, it follows that creating a risk of this harm occurring cannot be legitimately
justified either. The same is true of the offences in ss 132AL and 132AM.
The various offences for conduct related to technological protection measures in sub-division E are
similar in that they prohibit activities that create a risk of infringement, however in this case the
threshold of harm is even lower. Technological protection measures can prevent the acts of
infringement that cause substantial harm to copyright owners, but they can also prevent activities
that do not constitute infringements of copyright at all. In other words, they criminalise the creation
of a risk of harm to copyright owners that can vary in degree from none to substantial. This
obviously does not meet the threshold criteria discussed above.
The electronic rights management information offences have similarly low thresholds of harm at
which criminal liability is attached. Removing or altering electronic rights management information
does not in itself cause harm, it only creates a risk of harm that caused by an infringement. An
infringement alone does not meet the threshold criteria. Distributing or importing a copy that has
had its electronic rights management information removed causes no more harm than the
importation or distribution of an infringing copy and neither of these meets the threshold criteria.
Importing electronic rights management information is probably not harmful in itself, again only
creating a risk of further infringement.
The offences in Part VAA Division 3 concern conduct that indirectly harms copyright owners, but
causes direct harm to broadcasters. In applying the harm principle here, the interests of the
broadcasters will be the subject of the harm. These offences are slightly different as the harm
caused does not have as many variables that can be measured by degree. There can be a degree of
scale, i.e. how many decoders have been sold, imported, etc., but there is no question of the
broadcast not being exploited. The market for encoded broadcasts is much narrower, so there is
both a greater chance that an unauthorised decoder will substitute for an authorised subscription
and there is really little chance of the sampling effect having any impact. Once access to the encoded
broadcast has been achieved, it is unlikely that an individual will subscribe to the service, unless the

230

Chapter 8
unauthorised decoder no longer works. All of the offences in Part VAA therefore meet the threshold
for causing substantial harm to the broadcaster.
All of the direct recording offences in Part XIA fail to meet the threshold criteria. The reason for this
is that the definition of performance is so broad that if can encapsulate performances that are not
by professional performers in place of public entertainment. While it is arguable that substantial
harm could be caused to a professional performer by recording their show in a venue for commercial
purposes, recording an activity such as a juggling act performed by an amateur on a street is highly
unlikely to cause any discernable harm to the juggler. None of the recording offences require a
commercial purpose for the infringement of the performance right, nor do they require substantial
prejudicial impact to be a result of the recording or other activity. The indirect recording offences do
not include indirect recordings for personal and domestic use, but there is still no requirement for
the offences to be committed on a large scale resulting in an unmitigated, measurable loss to the
performer. This is true of all of the offences in Part XIA. While they unquestionably can be applied to
situations where substantial harm is caused, the threshold for the application of criminal liability is
so that completely harmless activities are subject to criminal sanction. There are a number of
offences in Part XIA concerning the commercial exploitation of unauthorised recordings, but none of
these meet the upper parameter of harm and are equally applicable to the lower parameter.
However, some sections warrant further analysis. Sub-sections 248PJ(2) and (5), and 248QE(2) and
(5) require the distribution of the unauthorised recording to prejudicially affect the financial
interests of the performer. Sub-sections 248PK(1)(iv) and (3)(iv), and 248QF(1)(iv) and (3)(iv) contain
a fault element with the same requirement for possession of an unauthorised performance. While
this is a higher threshold than the lower parameter of harm, nonetheless it falls short of causing
substantial harm.
[3.1.6] Conclusion
The offences in the Copyright Act 1968 (Cth) can be legitimately justified for causing substantial
harm to the interests of copyright owners, broadcasters and performers only where the threshold
for the offence is consistent with the upper parameters posited above at paragraph [3.1.5]. The
majority of offences, while capable of being directed at conduct that causes substantial harm, create
criminal liability for less harmful or entirely harmless activities. Unless these offences can be
legitimately justified for addressing conduct that causes substantial harm to the public welfare, they
will not be supported by the harm principle. This could potentially cause these offences to be
perceived as illegitimate by the general public, and consequently dislodge the overarching
obedience to law norm identified by norms theory, discussed in Chapter 3 at paragraph [4.2].

231

Offences in the Copyright Act 1968(Cth): Will They Be Effective?

[3.2] Assessing the Harm Caused to the Public Welfare
Assessing the harm caused to the public welfare by copyright infringement requires different
variables to be considered from the harm caused to copyright owners. This is particularly important
where the interests of copyright owners and the public welfare diverge. The Standing Committee on
Legal and Constitutional Affairs report Cracking Down on Copycats: Enforcement of Copyright in
Australia 1053 discussed the harm caused to the public interest in 2000. It divided the cost of copyright
infringement into direct costs 1054 and indirect costs. 1055 The report identified direct costs as the
losses to the copyright industries, including the contraction of the industry, and cited a submission
from Music Industry Piracy Investigations estimating the losses to the music industry in 1998 to be in
excess of $67 million. 1056 Quite how this estimation was arrived at is unclear, since the original
submission contains no citation to any research or any calculation methodology. 1057 While the
providence of these losses is dubious, the measurement of indirect costs caused by infringement
was even less rigorous, relying again on speculative figures proffered by industry representatives.
The report categorised indirect costs as losses of tax revenue to government, loss of income to
distributors, retailers and other service providers, and lost opportunities for employment. These
costs could all potentially be considered harmful to the public welfare. However, much of the
economic harm will be depend on where any revenue that would have been spent on copyrighted
works is diverted. Money that is not spent on copyrighted works by consumers does not simply
disappear.
[3.2.1] Harm Caused by Commercial Infringement
Where an individual obtains an infringing copy of a work for free, it is difficult to establish whether
they would have never bought a legitimate copy, or whether they would have bought a legitimate
copy but chose instead to take the free infringing copy. 1058 Under either circumstance, the money

1053

Standing Committee on Legal and Constitutional Affairs, House of Representatives, Cracking Down on
Copycats: Enforcement of Copyright in Australia (2000)
1054
Standing Committee on Legal and Constitutional Affairs, House of Representatives, Cracking Down on
Copycats: Enforcement of Copyright in Australia (2000) 11
1055
Standing Committee on Legal and Constitutional Affairs, House of Representatives, Cracking Down on
Copycats: Enforcement of Copyright in Australia (2000) 12
1056
Standing Committee on Legal and Constitutional Affairs, House of Representatives, Cracking Down on
Copycats: Enforcement of Copyright in Australia (2000) 11
1057
Submission to Standing Committee on Legal and Constitutional Affairs, House of Representatives, Inquiry
into Enforcement of Copyright in Australia, June 1999 (Music Industry Piracy Investigations) (Available at:
(http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=/l
aca/copyrightenforcement/sub26mipi.pdf (Accessed 18 July 2012))
1058
See generally: Leibowitz, S.J. ‘File Sharing: Creative Destruction or Just Plain Destruction?’ (2006) 47
Journal of Law and Economics 1; Oberholzer-Gee F. and Strumpf K., ‘The Effect of File-Sharing on Record Sales:
An Empirical Analysis’ (2007) 115(1) Journal of Political Economy 1; Peitz, M. and Waelbroeck, ‘Why the Music

232

Chapter 8
not spent on the legitimate copy will be diverted into other sectors of the economy, which will
equally provide employment opportunities and taxation revenue. However, if a consumer buys an
infringing copy, some of the money that would have been spent on a legitimate copy is saved, and
yet again may flow into other legitimate sectors of the economy, but some will be diverted to those
engaged in black market reproduction, even criminal groups. 1059 This money is unlikely to produce
any tax revenue for the state, 1060 and the money from the sale of the infringing copy can be used to
finance and support further criminal activity. This would certainly amount to substantial harm
caused to the public welfare.
[3.2.2] Harm Caused to Policy Aims of Copyright Law
As discussed in Chapter 3 at paragraph [2], copyright law exists as a compromise between competing
policy aims. One of these policy aims to incentivise the industrial production of new copyright works.
If the incentive to produce of work is damaged by an infringement, then this would cause harm to
the public welfare. The competing primary aim is to ensure access to copyright works. Far from
harming this objective, infringement actually promotes it because it gives a greater number of
people access to works than there would have been without the infringement. The relative weight
given to these policy aims determines the balance to be struck through the utilisation of copyright
law to give them effect. Following the reasoning of Landes and Posner 1061 to its ultimate conclusion,
an ideal economic outcome for the public welfare would be:
(1) unlimited and free access to copyright works for the public;
(2) sufficient financial incentive for artists to engage in the production of copyright works; and
(3) sufficient financial incentive to invest in the production of copyright works.

Industry May Gain from Free Downloading - The Role of Sampling’ (2006) 24(5) International Journal of
Industrial Organization 907; Peitz, M. and Waelbroeck, P., ‘The Effect of Internet Piracy on Music Sales: CrossSection Evidence’ (2004) 1(2) Review of Economic Research on Copyright Issues 71
1059
In 1999 the Australian Federal Police stated it could not establish any significant evidence of the
involvement of Australian organised crime groups in copyright infringement, but that the prospect of
organised criminal activity needs to be taken into account. See Submission to Standing Committee on Legal
and Constitutional Affairs, House of Representatives, Inquiry into Enforcement of Copyright in Australia, June
1999, 4 (Australian Federal Police) (Available at:
http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=/la
ca/copyrightenforcement/sub35.pdf (Accessed 18 July 2012)
1060
Submission to Standing Committee on Legal and Constitutional Affairs, House of Representatives, Inquiry
into Enforcement of Copyright in Australia, June 1999, 4 (Australian Federal Police) (Available at:
http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Committees?url=/la
ca/copyrightenforcement/sub35.pdf (Accessed 18 July 2012)
1061
Landes, W.M and Posner, R.A. ‘An Economic Analysis of Copyright Law’ (1989) 18 Journal of Legal Studies
325

233