Organisations representing copyright holders are pitted against digital businesses and online service providers in Australia’s latest clash over intellectual property rules.

Late last year the federal government tabled a billthat, if passed, will expand Australia’s safe harbour rules. The proposed legislation will extend theCopyright Act’s safe harbour provisions to the disability, education, library, archive and cultural sectors.

Australia’s existing safe harbour provisions were introduced into theCopyright Act 1968by theUS Free Trade Agreement Implementation Act 2004.

At the moment only telcos (“carriage service providers”) are covered. The scheme essentially protects Australian telcos from being sued for copyright infringement carried out by customers utilising their services; for example if an Internet service they provide is used by one of their customers to download an unauthorised copy of a movie.

The safe harbour scheme covers four categories of activity mdash; “transmitting, routing or providing connections”, automatic caching, storing copyright material “at the direction of a user”, and “referring users to an online location using information location tools or technology” (e.g. providing a search engine service).

The protections require that telcos abide by certain conditions, depending on the category of activity. Those conditions include a policy of terminating the accounts of repeat copyright infringers; abiding by relevant industry codes; removing or disabling access to cached material when they receive a notification from the relevant rights holder; removing access to copyright material on their system or network upon being notified that the material has been found to be infringing by a court; and removing or disabling access to copyright material if they become aware “that the material is infringing” or become aware “of facts or circumstances that make it apparent that the material is likely to be infringing”.

(Full details of the current scheme areoutlined in the act.)

The amendments contained in theCopyright Amendment (Service Providers) Bill 2017will mean that organisations such as universities, schools, public libraries, the National Archives of Australia and organisations that assist people with disabilities also benefit from the safe harbour protections.

“This bill, through the extension of the existing safe harbour scheme, will ensure that a greater range of service providers can work with copyright owners to effectively protect copyright material, without recourse to litigation,” Senator James McGrath said when he introduced the bill on 6 December on behalf of the government.

“Where these additional service providers comply with the requirements of the safe harbour scheme, including the operation of a ‘notice and take down system’, their liability for monetary remedies will be limited,” McGrath said.

The government has previously envisaged asignificantly broaderexpansion of the safe harbour scheme. In late 2015 it released an exposure draft of a bill that would expandsafe harbour protections to online service providers.

However McGrath told the Senate that the government had decided on an “incremental expansion of the safe harbour scheme” and that it would “continue to consult on how best to reform the scheme to apply to other online service providers in the future”.

The senator noted that a Productivity Commission inquiry had called for thescheme to be expanded.

But he added that a “blanket extension of safe harbour remains a highly contested reform”.

“This is why we chose to undertake further consultation this year,” McGrath said. “The consultation demonstrated the full spectrum of views from complete support to strident opposition. Both sides are worthy of a full examination. The government has appreciated the open and frank dialogue that we have had with representatives from both sides.”

The limited expansion of the safe harbour rules outlined in theCopyright Amendment (Service Providers) Billhas drawn support from Village Roadshow (one of the keenest users ofAustralia’s website-blocking scheme), the Australian Copyright Council, Music Rights Australia (and other music industry organisations), and the Australian Society of Authors.

The bill is a “a good, policy-based compromise”, Music Rights Australia general manager Vanessa Hutley earlier this week told the first public hearing of an inquiry being held by the Senate’s Environment and Communications Legislation Committee.

The bill addresses concerns that the music industry had with the 2015 exposure draft, Hutley said.

“Of central importance to any approach to addressing the safe harbour scheme is to approach [it] with the underlying principle that limited protection of safe harbour schemes should only be afforded to those entities which do not control the content which third parties have placed on their services,” she told the hearing.

“It is also a central principle that the services should not derive commercial benefit or advantage from the content.”

She argued that “the misapplication of safe harbour schemes has undermined the commercial environment for online music services and has meant that creators, including songwriters, independent recording artists and labels, are not being paid for their creative output at market rates, or sometimes not at all.”

Companies that benefit from “creative content on their services” should strike commercial agreements with copyright owners, Hutley told the inquiry.

Music industry organisations argue that takedown notices can be ineffective when it comes to removing copyright material from online services that accept user uploaded content and place an unfair burden on rights holders.

In addition, the US safe harbourexperienceshows that those services that are covered and subject only to a notice-and-takedown regime tend to pay lower licensing fees compared to those services that are not covered, the head of legal, corporate and policy at music licensing organisation APRA AMCOS, Jonathan Coates, told the hearing.

The Australian Digital Alliance, in contrast, told the hearing that although it welcomes the expansion of the scheme outlined in the bill, the ADA’s members “do not believe it presents a working safe harbour system for Australia”.

“Essentially, we’re moving from a system that is very undersupplied and very restricted to a slightly less restricted system, but a system that still does not cover the field,” ADA executive officer Jessica Coates said.

“Until we extend the safe harbours to cover all entities who are providing the same services and undertaking the same functions for the Australian community, then a safe harbour system just won't work in an effective manner.”

Australia’s limited safe harbour provisions mean that service providers not covered by the scheme can be liable for copyright infringement undertaken by their customers even if they take steps to remove infringing content from their services, the ADA’s written submission to the inquiry states.

The ADA argues that that the proposed amendments to the scheme “only go part of the way to fixing the problems with Australia’s copyright safe harbour.”

“Australia will not have a truly effective safe harbour system until we extend the scheme to include all groups providing the services it purports to cover, including start ups and technology platforms,” the group said.

Covering all online service providers “would create a universally applicable, localised Australian anti-piracy system that benefits Australian creators, internet users and local technology companies and startups.”

Like the ADA, the Digital Industry Group Incorporate (DIGI) mdash; which counts as members Facebook, Google, Microsoft, Oath and Twitter mdash; argues that expanding the scheme to cover all online service providers would offer a boost to innovative activity by local businesses.

“In particular, it would reduce Australia’s high-risk legal environment for hosting content as compared with overseas counterparts such as the US, the EU, Canada, Singapore, Korea and New Zealand, that already have safe harbour schemes,” the group argued in its submission to the inquiry.

“If the government moves ahead with a safe harbour scheme that excludes domestic online service providers, Australian startups and service providers will be in a significantly disadvantaged and high-risk position operating without the basic legal safe harbour protections that global startups in all the regions above rely on to ensure certainty about their collaborative work with rights holders to remove allegedly infringing third-party content.”

The inquiry is due to report by 19 March.