WIPO Regional Symposium on Copyright in Educational Institutions and Libraries in the Digital Era

Hong Kong, March 15-16, 2004

Applying the three step test in the digital environment

Sam Ricketson

University of Melbourne

Exceptions to exclusive rights Part of national laws and international

agreements from the very start

“…limits to absolute protection are rightly set by the public interest”

Numa Droz, closing speech to the 1884 Berne Conference

Early exceptions and limitations under Berne News reporting Quotation Educational and teaching uses “Minor implied reservations” – performing

rights, etc No general exception – indeed, no

exclusive reproduction right until Stockholm 1967

What is the three step test? Article 9(2) Berne Convention:

“It shall be a matter for legislation in the countries of the Union to permit the reproduction of such works in certain special cases, provided that such reproduction does not conflict with a normal exploitation of the work and does not unreasonably prejudice the legitimate interests of the author.”

Applies here to exclusive reproduction right Now applies more generally under:

art 13, TRIPS Agreement Art 10, WCT; art 16, WPPT

Importance of the three step test Now provides the template for many of the

exceptions applied in national law, at least so far as foreign claimants are concerned

Question of compliance therefore arises Interpretation of international obligation Comparison of national provision

Interpretation of international treaty provisions Strictly rules of customary international

law apply here Codified under Vienna Convention on Law

of Treaties: articles 1-32 Similar but not identical to statutory

interpretation or contractual construction in the domestic context – more fluid and open-ended

Vienna Convention rules – art 31(1) 1) A treaty shall be interpreted in

good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

“Ordinary meaning”: use of dictionaries (WTO panel homestyle

decision) different treaty languages – art 37(1) Berne

“Context” – art 31(2)

(2) The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:

(a) any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty;

(b) any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

Additional “context” – art 31(3) (3) There shall be taken into account

together with the context: (a) any subsequent agreement between

the parties regarding the interpretation of the treaty or the application of its provisions;

(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;

(c) any relevant rules of international law applicable in the relations between the parties.

“Special meanings” – art 31(4)(4) A special meaning shall be

given to a term if it is established that the parties so intended.

Supplementary/extrinsic aids to interpretation – art 3232 Recourse may be had to supplementary

means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:

(a) leads the meaning ambiguous or obscure; or (b) leads to a result which is manifestly absurd or unreasonable.

Applying these rules to art 9(2) Search is for “ordinary meaning”

but Still necessary to understand background to

provision

Origins of the three step test No right of reproduction in Berne prior to 1967 No need to define exceptions at this point – only

necessary once the exclusive right was recognised Problem for Stockholm program drafters

Need to accommodate existing national exceptions Need to avoid compromising new right To list exceptions or adopt a general formula?

The problem stated – 1964 Study Group

“ This prerogative was of fundamental importance in the legislation of member countries of the Union; the fact that it is not recognised in the Convention would therefore appear to be an anomaly. However, if a provision on the subject is to be incorporated in the text of the Convention, a satisfactory formula will have to be found for the inevitable exceptions to this right.

The problem stated (cont)On the one hand, it is obvious that all forms of exploiting a work which have, or are likely to acquire, considerable economic or practical importance must in principle be reserved to the authors. Exceptions that might restrict the possibilities open to the authors in these respects are unacceptable. On the other hand, it must not be forgotten that national legislations already contain a series of exceptions in favour of various public and cultural interests and that it would be vain to suppose that States would be ready at this stage to do away with these exceptions to any appreciable extent."

Existing exceptions under national laws -1964

(a) public speeches; (b) quotations; (c)  school, books and chrestomathies; (d) newspaper articles; (e) reporting current events; (f)  ephemeral recordings; (g) private use; (h) reproduction by photocopying in

libraries;

Existing exceptions (cont) (i) reproduction in special characters for the

use of the blind; (j) sound recordings of literary works for the

use of the blind; (k) texts of songs; (l) sculptures on permanent display in public

places, etc; (m) artistic works used as a background in

films and television programmes; (n) reproduction in the interests of public

safety.

Result – art 9(2), Stockholm 1967 Three steps/requirements to be satisfied before

exceptions to reproduction can be justified: “certain special cases” should “not conflict with a normal exploitation of the

work” should “not unreasonably prejudice the legitimate

interests of the author”

Cumulative not independent requirements

“Certain special cases” “Certain” – “known and particularised…fixed,

determined, not variable” (dictionary meanings) “Special” – “having an individual or limited

application or purpose” “Case” – “occurrence, circumstance, event” Does “special” require some kind of special

purpose or justification? See WTO homestyle panel

“Certain special cases” (cont) Suggested interpretation:

“Any exception that is made under this provision should be clearly defined and should be narrow in its scope and reach. There is no further requirement at this stage of the analysis to point to some specific public policy or exceptional circumstance justifying the exception.”

“No conflict with normal exploitation of work” “Exploitation” –

“making use of”, “utilising for one’s own ends”, “extracting economic value from”

“Normal” – “conforming to a type or standard” emprical and normative aspects

The meaning of “normal” Empricial – “what is”

what the author presently earns remuneration from, and

what she may reasonably expect to earn in the future, eg with technological change

“Normative” – “what should be” What markets should the author be able to control? Non-economic aspects relevant here Eg market for criticism, review, research

Suggested interpretation In determining what is the "normal

exploitation" of a work, regard must be had not only existing, but to potential, uses of a work from which the copyright owner can extract economic benefit.

Not all possible potential uses of the work are to be regarded as within the scope of "normal exploitation", rather it is those that can be regarded as being of "considerable or practical" importance.

Suggested interpretation (cont) Neither existing nor future

exceptions will be in conflict with a normal exploitation of a work simply because they involve uses that would otherwise be of a commercial benefit to the author: the test is whether they enter into or will enter into economic competition with the author.

Suggested interpretation (cont) As a corollary to the above, an

exception does not necessarily remain within the scope of the second condition for all time. "Normal exploitation" is a dynamic concept, and it is possible that an exception may come into conflict with a normal exploitation as technology and circumstance of use change.

Suggested interpretation (cont) Economic issues are not only relevant,

but “‘normative” issues of a non-economic kind also need to be taken into account, that is, it must be determined whether the use in question is one that the copyright owner should control, or whether there is some other countervailing interest that would justify this not being so.

“Unreasonably prejudice legitimate interests of author” Only relevant where steps 1 and 2 are satisfied “Interests” – both economic and personal (moral)

interest of author “Legitimate” – lawful, justifiable – normative

aspect here “Prejudice” – harms, injury, damage “Unreasonably” – within limits, proportionate

May allow for compulsory licence

The three step test in TRIPS Article 13 “Members shall confine limitations and

exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.”

Application of art 13 Specifically to rights required to be

protected under TRIPS Indirect application to Berne – all members

of TRIPS to apply arts 1-21 Berne – art 9(1) TRIPS Incipient conflict if Berne allows wider

exceptions May fill the gap in Berne, eg implied minor

exceptions, WTO Panel case

Three step test in WCT Article 10:

(1) Contracting Parties may, in their national legislation, provide for limitations of or exceptions to the rights granted to authors of literary and artistic works under this Treaty in certain special cases that do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.

applies to rights under WCT

Article 10 (cont) (2) Contracting Parties shall,

when applying the Berne Convention, confine any limitations of or exceptions to rights provided therein to certain special cases that do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.

Applies to Berne, like art 13 , TRIPS

“Agreed statements” to art 1O “ It is understood that the provisions of

Article 10 permit Contracting Parties to carry forward and appropriately extend into the digital environment limitations and exceptions in their national laws which have been considered acceptable under the Berne Convention. Similarly, these provisions should be understood to permit Contracting Parties to devise new exceptions and limitations that are “appropriate in the digital environment”.

Allows for digital environment

Agreed statement to art 10(2) It is also understood that Article

10(2) neither reduces nor extends the scope of applicability of the limitations and exceptions permitted by the Berne Convention.

Effect on existing Berne requirements

Agreed statements (cont) Status unclear Part of context of WCT?

Agreements made at time of conclusion of treaty

Subsequent agreements re Berne members?

Conclusions Three step test now a general template for

exceptions Is it appropriate for either non-digital or

digital environment? How is it to be applied?

Example: research and study See, for example, s 40(1) of the Copyright

Act 1968 (Australia): “a fair dealing with a literary, dramatic,

musical or artistic work, or with an adaptation of a literary, dramatic or musical work, for the purpose of research or study does not constitute an infringement of copyright in that work.”

Applying the three step test Certain special case?

Is it clearly defined? How specific is research or study?

Limited in scope and application? How much can be done? – “fair”? Works covered Rights covered

Section 40(1) - cont Conflict with a normal exploitation?

Does author exploit the work in this area? May she do so in the future? Non-economic considerations? Ie the value of

research and study

Unreasonable prejudice? Any effect on author’s econmic/moral interests? If so, are any limits set? Eg conditions on use,

requirement for payment

Section 40(2) Same purposes, but confined to to

reproductions (formerly copying) Sets guidelines for determining fairness:

Nature and purpose of use Affect on the market Availability Quantum

Again, apply three step test

Section 40(3) Sets deemed maxima as fair dealings for

research or study Articles in periodical publications Reasonable portions of other published works

Defined s 10(2) – hard copy (10% or a sihglw chapter)

Defined s 10(2A) – electronic/digital versions (10%)

Section 40(3) - Applying the three step test? Defined cases?

Open-ended terms – eg “articles” Limited in scope and application?

May cover more than allowed by s 40(2) or even s 40(1) – intention is to reduce transaction costs

Normal exploitation? A market that the author might wish to exploit? Could

exploit? A market that author should exploit – countervailing

normative considerations? Unreasonable prejudice?

No limits, conditions, requirement to pay

Statutory licences for educational copying

Part VB of the Australian Act Based on s 40 criteria (first and second

steps) Requirement for remuneration (does this

meet third step?)

Other examples in the digital age Private copying - format shifting Time shifting Transient copies (in RAM) Peer to peer

Concluding remarks Is three step test appropriate in all these

cases? Is it meaningful? Do they adequately reflect the “copyright

balance”? What are the alternatives?