COPYRIGHT AMENDMENT (COMPUTER PROGRAMS) BILL 1999 Explanatory Memorandum

1999

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

SENATE

COPYRIGHT AMENDMENT (COMPUTER PROGRAMS) BILL 1999

EXPLANATORY MEMORANDUM

(Circulated by authority of the Attorney-General
the Honourable Daryl Williams AM QC MP)

GENERAL OUTLINE

The Bill will amend the Copyright Act 1968 to insert at the end of Part III a new Division 4A on exceptions to infringement of copyright in computer programs. The exceptions consist of several new ones and one existing one that is to be re-enacted with modifications. All the amendments except that concerning security testing of computer programs and systems result from the Government’s consideration of recommendations in the report of the Copyright Law Review Committee on Computer software protection.

The effect of the Bill is that copyright in a computer program is not infringed if a copy is made in the course of:
• running the program for normal use - but subject to the conditions of the licence accompanying the program when bought;
• studying the operation of and ideas behind the program while running it - ie, one form of reverse engineering;
• periodically backing up the data on a computer system or network for security;
• finding out how the program interoperates with (ie, connects to or works with) other programs so as to make a new program to interoperate with any or all of those programs (decompilation is a commonly used process to discover this information);
• correcting an error in the program (this would include the Y2K bug);
• security testing and correcting a security flaw in the program, or a network.

The exceptions allowing copying for the purposes of interoperability, error-correction and security testing are subject to qualifications, including the following:
• the amount of the program copied must be limited to what is needed to find out the required information, or to test security, or to correct the error or security flaw - whichever be the case;
• the information disclosed by copying for interoperability or security testing/ correcting must not have been readily available to the owner or licensee of the defective copy;
• in the case of error-correction, an error-free copy of the program must not have been reasonably available to the person who made the copy;
• the information, and the copy itself, must not be used or passed on to others for purposes other than those allowed by the exceptions, without the copyright owner’s consent.

The Bill provides that the exceptions for running the program to study how it works, back-up copying and copying for interoperability, error-correction and security testing/correction cannot be negated by contract.

The following is a brief outline of the substantive provisions of the Bill:

New s.47B - Reproduction for normal use or study of computer programs
New s.47B exempts from infringement incidental reproduction of a program in the course of running it for normal use and studying how it works.

New s.47C - Back-up copy of computer programs
New s.47C re-enacts, with amendments to make it more practical, the substance of s.43A which is being repealed by the Bill, and which exempts from infringement the making of back-up copies of computer programs as security against accidental loss.

New s.47D - Reproducing computer programs to make interoperable products
New s.47D exempts from infringement the reproduction of a program in the course of finding out how it interfaces with other programs, if done for the purpose of independently creating an interoperable software or other product and if the information is not already available.

New s.47E - Reproducing computer programs to correct errors
New s.47E exempts from infringement the reproduction of a program in the course of correcting an error in a copy of the program, if an error-free copy is not available.

New s.47F - Reproducing computer programs for security testing
New s.47F exempts from infringement the reproduction of a program in the course of testing a copy or a system of which it is part for security or correcting a security flaw, if the information resulting from the reproduction is not already available.

New s.47G - Unauthorised use of copies or information
New s.47G prevents the unauthorised use of reproductions made under new ss.47B, 47C, 47D, 47E and 47F, and information from those processes, for any purposes other than running a program for normal use or studying its operation, making a back-up copy, making original interoperable products, error-correction and security testing.

New s.47H - Agreements excluding operation of certain provisions
New s.47H nullifies agreements that purport to exclude the new exceptions regarding the making of back-up copies of computer programs and reproductions in the course of studying a program’s operation, making interoperable products, error-correction and security testing.

FINANCIAL IMPACT STATEMENT

The Bill is expected to have little impact on Commonwealth expenditure or revenue

The following information is provided in accordance with the Guidelines provided by the Office of Regulation Review, Industry Commission.

1. PROBLEM IDENTIFICATION

1.1 What is the problem being addressed?

Australian software developers are currently at a commercial disadvantage in the world market due to provisions in the Copyright Act 1968 (the Copyright Act) that enable owners of copyright in computer programs to refuse to allow decompilation for the purposes of making interoperable products. Computer programs are usually published and distributed commercially in electronic “machine-readable” form in computer discs. Typically, the electronic form is generated using a program called a compiler. This converts a program in human-readable form into a form that can be “read” by a computer. The reverse of this process, ie, the conversion of a program to a human-readable form from electronic machine-readable form, is called decompilation.

To decompile a program it is usually necessary for the program to be copied into the computer’s electronic memory. Unless the making of that copy is done with the permission of the copyright owner, the doing of that act will infringe copyright.

Decompilation may also have to be undertaken to correct an error in a computer program. An example is the unintended malfunction resulting from the advent of the year 2000 (“the Y2K bug”). The potential for disruption to business from the Y2K bug is serious, and it is possible that, as 1 January 2000 comes nearer, the owner of a copy of a program may not be able to trace or get the permission of the program copyright owner to decompile the program.

With the increasing dependence on computer programs and networks, it is highly desirable to test their security to protect them against abuse (or “hacking”) and viruses. As testing can involve decompilation or making a temporary copy, this too is an infringement without the copyright owner’s permission.

1.2 Why is Government action needed to correct the problem?

As copyright is codified by the Copyright Act, it would have to be amended to allow decompilation and copying of computer programs without the authorisation of the program copyright owners in the circumstances referred to. The Government proposes to allow for the decompilation of computer programs without such authorisation for the limited purposes of creating interoperable products and error correction, as recommended by the Copyright Law Review Committee (CLRC) in its Report on Computer Software Protection, released in 1995. It also proposes to allow decompilation and copying of computer programs for the purpose of testing their security and the security of networks of which they form part.

2. OBJECTIVES

2.1 What are the objectives of Government action?

The objectives of allowing decompilation are: a) for interoperability— to put Australian software developers on a competitive footing with their counterparts in Europe and the USA and increase the range of locally produced interoperable computer products available to the wider community; b) for error correction, including combating the potential disruption to business and the community by the Y2K bug in many computer programs; and c) for security testing— to combat the potential disruption to business and the community by computer hackers and viruses.

2.2 Is there a regulatory/policy currently in place? If so, who administers it?

The Copyright Act provides that the reproduction of a work, including a computer program, can only be done with the permission of the owner of copyright in the work. This means that the Act can be used by the owners of copyright in computer programs to stop decompilation for the development of interoperable products or error correction by others, and to stop security testing by others of their programs. The Copyright Act is administered by the Attorney-General’s Department.

3. OPTIONS

3.1 What regulatory and non-regulatory options (including quasi-regulation) for dealing with the problem are being considered?

Four options were considered in response to the CLRC’s recommendations on decompilation. These are as follows:

(a) Allow decompilation for interoperability with hardware and software and for error correction, ie, adopt the CLRC’s recommendation in full, and allow decompilation and copying for security testing; or

(b) Allow decompilation for interoperability with other software and for error-correction, ie, only so far as decompilation is allowed by the EC Directive on the Legal Protection of Computer Programs (“the EC Directive”); or

(c) Effectively allow decompilation for interoperability, error-correction and security testing, and copying for security testing, by an expansion of the fair dealing provisions of the Copyright Act applying to all copyright materials; or

As the issue is the modification of an existing regulatory regime, a non-regulatory approach is not an option; for example, industry self-regulation.

3.2 Identify broad constraints which may make some options not viable

The US Government and the Business Software Alliance (BSA), representing IBM and Microsoft, have supported option (d) and stated that there is no need for statutory sanctioning of decompilation as industry self-regulation could guarantee access to computer program interface information. Industry self-regulation is not seen as an adequate alternative to implementation of legislative changes recommended by the CLRC to permit decompilation. This is because it appears that in practice where large software companies have not already made computer program interface information available, they generally refuse requests for access to it. Furthermore, if a program copyright owner makes interface or other information about the program available on request, this will avoid the need - and deny the right under the Government’s preferred option - to resort to decompilation of the program.

Option (b) would limit the scope of permitted decompilation to the extent allowed under the EC Directive. Whereas the CLRC recommendation (ie, option (a)) would allow decompilation for both hardware and software interoperability, the EC Directive allows decompilation for interoperability of only software. It appears that it was decided not to allow decompilation for hardware interoperability in the EC Directive on the grounds that such a right could be confused with a right to “port” software to another hardware platform (ie, adapt software to run on a different computer). In its report the CLRC made it clear that, under its recommendation, porting without the agreement of the software copyright owner would remain a breach of the reproduction right in the software.

The CLRC advised that limiting the scope of permitted decompilation to the development of interoperable software would not be realistic due to technological change. Furthermore, it would appear that decompilation for purposes of interoperability between software and hardware is permissible in the USA. Therefore, if decompilation for the purposes of interoperability between software and hardware was not permitted, Australian software producers might find themselves still at a disadvantage in the market compared to US producers.

Under option (c) the existing fair dealing provisions in the Copyright Act would be extended, or a “fair use” exception provision introduced into the Copyright Act, to allow for decompilation, as opposed to amending the Act to allow expressly for decompilation as proposed under option (a) or (b). Option (c) was proposed by the BSA, with an eye to the review of the fair dealing provisions then being conducted by the CLRC as part of its last reference – on simplification of the Copyright Act.

In Part 1 of its recent (1998) report on Simplification of the Copyright Act 1968, the CLRC has recommended the introduction of a revised, open-ended fair dealing exception for all copyright material, including software. That report has only recently been published, but the fair dealing recommendation has already attracted critical comment. It is expected that the recommendation, which is very wide-ranging, will draw many conflicting comments, and that it will be some time before the Government can review all comments and make a decision on the recommendation. A broader fair dealing provision as recommended by the CLRC would also leave Australian businesses uncertain about its scope until it was tested in the courts, and expose them to the potential burden of legal expenses of the court proceedings.

Computer programs are a specific and unique form of copyright material. There is a strong case for acting promptly to support the local software industry and the developing information economy and to help eliminate the Y2K bug as soon as possible. The Government should not delay doing so for the considerable time needed to make a decision on what is a major reform proposed for all categories of copyright material. Accordingly, option (c) is not an appropriate solution.

4. IMPACT ANALYSIS

4.1 Who is affected by the problem and who is likely to be affected by its proposed solutions?

The groups most likely to be affected by the problem and the various options connected with allowing decompilation, as well as copying for security testing, are:

• Creators of add-on products (ie, software and hardware to interoperate with computer programs)

• Small, medium and large businesses, particularly those directly contributing to the information economy

4.2 How will each proposed option affect existing regulations and the roles of existing regulatory authorities

4.3 Identify and categorise the expected impacts of the proposed options as likely benefits or likely costs; determine which groups are likely to experience these benefits and costs and what the extent of their impacts is likely to be; quantify these effects where possible

Option (a): allow decompilation for interoperability with hardware and software and for error correction, and allow decompilation and copying for security testing

Benefits
Benefit to the government would be: approval/support from the Australian software industry (except for some larger established software producers), business generally, the media and the community generally.

Benefit to majority market share computer program producers would be: their continued ability to prevent decompilation of their programs by making available the information necessary for making add-on products, for repairs, for elimination of the Y2K bug and other errors or for security testing.

Benefits to creators of add-on products for computer programs would be: their ability to determine interfaces of others’ computer programs without fear of infringing copyright, in order to make add-ons for those programs; expected increase in voluntary disclosure of interface information; consequent greater opportunities for the growth of local industry and the ability to compete more equally with counterparts in the USA and EU countries.

Benefits to software maintenance/repair technicians would be: their ability to repair others’ programs (including elimination of the Y2K bug) and to conduct computer network security testing without fear of infringing copyright; expected increase in voluntary disclosure of interface information.

Benefits to small, medium and large businesses, non-profit private sector organisations and consumers may be: a greater range of add-on products for more popular software with possible price moderation from greater competition; greater flexibility in having errors corrected in computer software and its security tested.

Benefit to the community generally (including all of the above) will be: the removal of possible legal restraint on technical processes necessary for the elimination of the Y2K bug and for the improvement of computer network security.

Costs
Costs to the government would be: the cost of amending the Copyright Act; possible criticism from the US Government including the possible entry of Australia in the lists made under “special” s.301 of the US Trade Act of countries alleged to be affording inadequate protection to US intellectual property; opposition from some major software producers.

Costs to majority market share computer program producers may be: the loss of control over licensing of add-on products and thus the capacity to bundle related products; a weakening of legal sanctions to enforce effective trade secret protection of source code information about their products, some of which have resulted from substantial investment in R&D.

Cost to creators of add-on products for computer programs will be: in relation to their software products, the costs to major software producers referred to in the last paragraph.

Option (b): allow decompilation for interoperability with only software and for error-correction as in the EC Directive

Benefits
Benefit to the government would be: qualified approval/support from the Australian software industry (except for some larger established software producers), business generally, the media and the community generally.

Benefit to majority market share computer program producers would be: their continued ability to prevent decompilation of their programs by making available the interface information necessary for making “add-on” products.

Benefits to creators of add-on products for computer programs would be: their ability to determine interfaces of others’ computer programs without fear of infringing copyright, in order to make add-ons for those programs; consequent greater opportunities for the growth of local industry and the ability to compete more equally with counterparts in the USA and EU countries; expected increase in voluntary disclosure of interface information.

Benefit to software maintenance/repair technicians would be: their ability to repair others’ programs (including elimination of the Y2K bug) without fear of infringing copyright; expected increase in voluntary disclosure of interface information.

Benefit to the community generally (including all of the above) would be: removal of possible legal restraint on technical processes necessary for elimination of the Y2K bug.
Costs
Costs to the government would be: the cost of amending the Copyright Act; possible criticism by the US Government including the possible entry of Australia in the lists under “special” s.301 of the US Trade Act of countries alleged to be affording inadequate protection to US intellectual property; opposition from some major software producers.

Costs to creators of add-on products for computer programs would be: the continued denial of a right to decompile others’ computer programs to make add-on hardware products; in relation to software products made by those creators, the costs to major software producers referred to in the last paragraph.

Cost to software maintenance/repair technicians would be: the continued threat of possible legal restraint on decompilation and copying software in the course of testing its security.

Costs to small, medium and large businesses, non-profit private sector organisations and consumers may be: a continued limit on the range and competitive prices of add-on hardware products for computer software; lack of options for ensuring the security of computer systems.

Cost to the community generally (including all of the above) will be: the continued threat of possible legal restraint on technical processes necessary for improvement of computer network security.

Option (c): expansion of fair dealing provisions of the Copyright Act applicable to all materials

Benefits
Benefit to the government would be: qualified approval/support from some larger established software producers and the US Government.

Benefits to majority market share computer program producers would be: inevitable delay in introducing the new fair dealing provision - because the status quo suits them; and after the new provision is enacted, their continued ability to prevent/deter decompilation of their programs by smaller producers of add-on products, by threatening/launching legal actions to test the limits of the new provision.

Benefits to creators of add-on products for computer programs would be: the possibility of being able to determine interfaces of others’ computer programs without infringing copyright, in order to make add-ons for those programs; consequent greater opportunities for the growth of local industry and the ability to compete more equally with counterparts in the USA and EU countries.

Benefits to software maintenance/repair technicians would be: the possibility of being able to repair others’ programs (including elimination of the Y2K bug) and conduct security testing without infringing copyright.

Benefits to small, medium and large businesses, non-profit private sector organisations and consumers may be: the possibility of a greater range of add-on products for more popular software with possible price moderation from greater competition.

Benefit to the community generally (including all of the above) would be: the potential removal of possible legal restraint on technical processes necessary for elimination of the Y2K bug and for the improvement of computer network security.

Costs to the government would be: the cost of amending the Copyright Act; criticism for delay in remedying the present problem, particularly in relation to addressing the Y2K bug, and for not giving more support to open systems.

Costs to creators of add-on products for computer programs would be: uncertainty as to how far the new fair dealing provision will protect them against infringement actions for decompilation of others’ computer programs to make add-on products, until tested in litigation; delay and expense of such litigation; in relation to software products made by those creators, the costs to major software producers referred to in the last paragraph.

Cost to software maintenance/repair technicians would be: uncertainty as to how far the new fair dealing provision will protect them against possible legal restraint on decompilation for error correction and security testing and on copying software in the course of security testing.

Costs to small, medium and large businesses, non-profit private sector organisations and consumers may be: a continued limit on the range and competitive prices of add-on products for computer software, and on the extent of permitted error-correction and security testing – at least until the extent of decompilation allowed under fair dealing is established by judicial decision.

Cost to the community generally (including all of the above) would be: the continued threat of possible legal restraint on technical processes necessary for elimination of the Y2K bug and for the improvement of computer network security.

Option (d): take no action

Benefits
Benefit to the government would be: approval/support from some larger established software producers and the US Government.

Benefit to majority market share computer program producers will be: their continued ability to prevent decompilation of their programs without having to make available the interface information necessary for making add-on products.

Cost to the government would be: criticism from makers of add-on products for software, computer software/hardware repair technicians and some businesses, non-profit organisations and consumers and from the press for failing to address a perceived need to allow Australian companies to enjoy the same rights as overseas software and hardware developers and to facilitate the elimination of the Y2K bug.

Cost to creators of add-on products for computer programs would be: the continued denial of a right to decompile others’ computer programs to make add-on hardware or software products.

Costs to software maintenance/repair technicians will be: the continued denial of a right to decompile others’ computer programs to correct errors, including the Y2K bug, and for security testing; the continued threat of possible legal restraint on copying software in the course of testing its security.

Cost to small, medium and large businesses, non-profit private sector organisations and consumers may be: a continued limit on the range and competitive prices of add-on hardware and software products for computer software and the lack of options for having software errors corrected and its security tested.

Cost to the community generally (including all of the above) would be: the continued denial of a right to decompile others’ computer programs to eliminate software errors including the Y2K bug; the continued threat of possible legal restraint on technical processes necessary for improvement of computer network security.

4.4 Summarise outcome for each option examined and state why particular option is preferred

Objectives: To put Australian computer software and hardware developers on a competitive footing with their counterparts in the USA and EU countries; to facilitate prompt and effective elimination of the Y2K bug and security testing of computer networks

IMPACT ON	OPTION (A)	OPTION (B)	OPTION (C)	OPTION (D)	LIKELY BENEFIT/ COMMENT
Government	Approval of local industry; opposition from the US Govt and major software producers	Approval of local industry; opposition from the US Govt and major software producers	Approval of major software producers and the US Govt; possible criticism by local industry	Approval of major software producers and the US Govt; likely criticism by local industry	Option (a) offers the most comprehens-ive and timely benefits for local industry and the community
Major software producers	Will lose control over access to interface information; but, by providing it, can still control decompilation	Will lose control over access to interface information; but, by providing it, can still control decompilation	Will be able to delay right of others to decompile their software, and thus will retain control over access to interface information, for time being	Will retain control over access to interface information for their software	While they will argue strongly for option (d), it affords them more control over add-on products for their software than in the USA and in EU countries
Makers of add-on products	Will gain access to information to make add-on products for software	Will gain access to information to make only add-on software for other software	May eventually gain access to information to make add-on products for software	Will be able to make add-on products for software only if copyright owners release interface information	Option (a) will give them the clearest and most timely right to make add-on software and hardware
Software maintenance/ repair technicians	Will be able to correct Y2K and other errors, and carry out security testing free of legal restraint	Will be able to correct Y2K and other errors, but will not be able to carry out security testing, free of legal restraint	May eventually be able to correct Y2K and other errors, as well as carry out security testing, free of legal restraint	Will continue to face possible legal restraint in correcting Y2K and other errors and in carrying out security testing	Option (a) gives the clearest and most timely right to correct Y2K and other errors, and to test for security, free of legal restraint



IMPACT ON	OPTION (A)	OPTION (B)	OPTION (C)	OPTION (D)	LIKELY BENEFIT/ COMMENT
Business, non-profit private organisations and consumers	Greater range, and control over prices, of add-on products for software; more options for security testing and error correction of systems.	Greater range, and control over prices, of add-on software, but not add-on hardware, for other software; continued restrictions on security testing of systems	Eventual possibility of greater range, and control over prices, of add-on products for software	Continued limit on range and price compet-itiveness of add-on products for software	Option (a) offers the best and most expeditious possibility of a greater range of, and cheaper prices for, add-ons for software, and will best promote open systems.
Community	Removal of restraint on elimination of Y2K bug and on security testing	Removal of restraint on elimination of Y2K bug, but not on security testing	Removal of restraint on elimination of Y2K bug and on security testing - but subject to likely delay	Continued legal restraint on elimination of Y2K bug, and on security testing	Option (a) would be quickest in allowing work to eliminate the Y2K bug, and to test security, without risk of copyright infringement

5. CONSULTATION

5.1 Who are the main affected parties?

The main affected parties are the major market share computer software producers, the producers of hardware and software products that interoperate with computer software and software maintenance/repair businesses. The major market share producers include IBM, Microsoft, Lotus, Autodesk and Apple, supported by Digital, Intel and Compaq, amongst others, and the US Government. These producers have been represented by the Business Software Alliance (BSA). The producers of interoperable products include Sun Microsystems, Fujitsu, Bull HN, Oracle and Unisys, supported by a number of companies, including Amdahl, NCR, NRMA and Telstra. The producers of interoperable products have been represented by Supporters of Interoperable Systems Australia (SISA).

5.2 What are the views of those parties?

The BSA and its stakeholders regard allowing decompilation for interoperability as unnecessary on the ground that software interface information required for making interoperable products is routinely made available by the software producers. They also argue that it will facilitate disguised piracy by enabling unscrupulous competitors and pirates to develop competing products based on the decompiled object code of their original programs, which are the fruit of substantial investment in R&D. The BSA and the US Government have argued that if Australia were to legislate to allow decompilation, this would undermine strong protection of intellectual property in not only Australia but also the Asia-Pacific region.

SISA and its stakeholders support allowing decompilation for interoperability, on the basis that it would be entirely consistent with the law in EU countries, the USA and Japan, and that it is necessary if Australian industry is to design competitive software and participate in providing access to the global information infrastructure. Decompilation would not facilitate piracy; if it were used to produce software that was a copy of the decompiled program then that software would infringe copyright, as at present.

5.3 What consultations were undertaken with those parties?

Extensive consultations have been undertaken with interested parties since the publication in 1995 of the CLRC report on Computer Software Protection containing the decompilation recommendation. These have included:

• structured equal-time presentations by representatives of BSA-IBM and of SISA lasting half a day to an interdepartmental committee advising relevant Ministers;

• presentations at public seminars where officials from relevant departments were present; and

• separate written and oral briefings by members of BSA and SISA and by US Government representatives respectively for relevant Ministers, their advisers and officials of relevant departments;

• invitation to representatives of BSA, SISA and other affected interests to comment on a draft of the Bill prior to introduction into Parliament.

6. CONCLUSION AND RECOMMENDED OPTION

Option (a) is the preferred option. It would allow decompilation of a computer program for the purposes of making interoperable hardware and software and correcting errors, and would allow decompilation and copying of the program in the course of testing its security or the security of a computer network. It is substantially in line with the law in EU countries and the USA. Permitting decompilation for interoperability will therefore enable Australian software developers to compete internationally in the production of programs that are interoperable with other software or hardware.

The safeguards proposed by the CLRC would prevent permitted decompilation from undermining software protection. Permitting decompilation as proposed will not legitimise the making of pirate copies of software and thus will not weaken copyright protection. Decompilation is an expensive process and is unlikely to be resorted to by pirates, who usually simply make direct copies. By limiting decompilation to facilitating interoperability, it will not be able to used to make clones of existing software products.

Moreover, option (a) would allow Australian producers to develop both software and hardware products to connect with existing programs. Decompilation for the purpose of interoperability would be allowed only under very restricted circumstances, ie, where the information necessary for achieving interoperability was not readily available. The decompilation of a program for any other reason would remain an infringement of copyright. That is, the proposal to permit decompilation in limited circumstances to make interoperable products does not extend to permitting unauthorised (ie, pirate) copying of computer programs.

Option (b) would allow decompilation of a computer program for making interoperable software, but not hardware, and possibly for error correction, but would not change the present law on decompilation and copying for security testing. While option (b) would help Australian industry to some extent to compete internationally, it would be a second-best to option (a) and fails to respond adequately to the new digital environment.

Option (c) would expand the fair dealing exception to copyright in all materials so that it effectively, but not expressly, permitted decompilation for interoperability and error correction and decompilation and copying during security testing. It has the potential to do all that would be achieved by option (a) but suffers the problem of delayed effect. This is because amending the fair dealing exception would require extensive consultation as it applies to all categories of copyright materials. After the amending legislation was enacted, software copyright owners could be expected to take court proceedings to test its applicability to any act of decompilation that may be performed in reliance on it, thus further prolonging uncertainty about the legality of decompilation and subjecting smaller companies to burdensome legal expenses.

The status quo (option (d)) would leave Australian software producers at a disadvantage compared to producers in the USA and EU countries and some South-East Asian countries. It would also be - and be seen as - a seriously inadequate response to those who say that there is a need to decompile some programs in order to eliminate the Y2K bug. Not allowing decompilation and copying for the purpose of security testing would be seen as a failure to recognise the growing importance of protection of computer networks.

Option (d) is therefore inferior to the other 3 options if it is accepted that the Australian software industry, and indirectly Australian industry, non-profit organisations, governments and the community, are disadvantaged by the software industry’s uncompetitive position compared to that of its counterparts in the USA and EU countries.

E. IMPLEMENTATION AND REVIEW

As copyright is a form of private property, copyright infringement is a civil remedy actionable at the suit of the owner of copyright or exclusive licensee. Copyright in a work arises automatically on its creation and there is no registration or other administrative procedure (such as there is for, eg, patents). It would be up to a would-be creator of products for interoperating with software to determine, with expert advice as necessary, whether and how far they could decompile software to determine its interface specifications. It would be up to the software copyright owner to take action in the event that decompilation or copying exceeded that proposed to be permitted by option (a).
It is recommended that the legislation implementing the decision to amend the Copyright Act to permit decompilation for limited interoperability purposes would be reviewed by the CLRC, for example, within three years of the commencement of the legislation. The review would assess whether the decision to permit decompilation had led to an increase in piracy and also any other effects worthy of note.

NOTES ON CLAUSES

When enacted, the legislation will be called the Copyright Amendment (Computer Programs) Act 1999.

2. The Bill is to commence on Proclamation or after 6 months from Assent if none is made in that time.

4. S.43A of the Act is repealed, because it is re-enacted, with amendments, as part of new s.47C in new Division 4A inserted by item 2 (see para 9 below).

5. The item inserts a new Division 4A in Part III of the Act to bring together the exceptions - both existing and those proposed in this Bill - to infringement of copyright in computer programs.

New Division 4A - Acts not constituting infringements of copyright in computer programs

7. Because the act of running a computer program on a computer usually involves the generation of a temporary copy of the program, new s.47B(1) provides that the reproduction right in a copyright computer program is not infringed by the making of a reproduction in the course of running of a copy of the program for its intended purpose or use by or on behalf of the owner or licensee of the copy used. Under new s.47B(2), this exception does not apply to the running of an infringing copy of a program or contrary to the terms of any direction or licence subject to which the copy was bought.

8. New s.47B(3) provides for an exception to the reproduction right in a computer program in the case of a temporary copy generated during the running of a copy of the program, by or on behalf of the owner or licensee of the copy used, for the purpose of studying its ideas and the way in which it functions. New s.47B(4) limits the exception in s.47B(3) to the running of copies that are not infringing copies.

9. New s.47C(1) re-enacts, with amendments, s.43A of the Act, which is being repealed by item 1 of the Schedule (see para 4 above). New s.47C(1) allows the making of a copy of a computer program by or on behalf of the owner or licensee of the original copy from which it is made, if it is made for the use by or on behalf of the owner or licensee and is made for any of the purposes of:

• use of the new copy as a working copy so that the original copy can be stored;

• retention of the new copy as a back-up copy while the original is continued in use as the working copy; and

• replacing either the original or the previously-made other copy in the event that either of those copies is lost, destroyed or rendered unusable.

10. New s.47C(3) allows the making of a replacement copy each time the original or a previously made back-up copy is lost, destroyed or rendered unusable.

11. New s.47C(2) allows the making of a temporary copy of a computer program as part of the backing-up of data on a computer or computer system that is commonly done for security against the possibility of damage to or destruction of the computer or system.

12. New s.47C(4) limits the making of back-up copies permitted by the new section to copies made from authorised copies. New s.47C(4) also allows computer program copyright owners to block the making of back-up copies allowed by the section by effective “locks” or other technological devices built into the program to prevent the making of copies. If the licence governing the use of the original copy given to the owner at the time of purchase has expired or been terminated, back-up copies will no longer be able to be made.

13. New s.47C(5), which substantially re-enacts s.43A(3)(b) in the Act, confirms that “a copy of a computer program” as used in s.47C includes the carrier, such as a disc, on which the program is stored.

14. New s.47D allows reproduction or adaptation of a computer program, without infringing copyright, to the extent reasonably necessary to find out how the program interoperates with other programs, so that the person reproducing or adapting the program can make a new program, or other computer product, to connect with it or with those other programs. The processes used in which a reproduction or adaptation is generated include decompilation and disassembly, and the information which s.47D allows such processes to be used to discover is often called interface specifications. The use of the term “interoperability” has a precedent in the European Communities Directive on the Legal Protection of Computer Programs.

15. To come within this exception to infringement, the process resulting in the reproduction or adaptation of the program must be carried out by or on behalf of the owner or licensee of the copy of the program used in the process (new s.47D(1)(a)). The exception will not apply if the new program for the making of which the interface specifications have been sought is essentially a copy of the original program. That is, it must be an independently created program (new s.47D(1)(b)) and it must not reproduce the original program beyond the extent of its interfaces with other programs (new s.47D(1)(d)). Nor can the exception be relied on if the interface specifications of the program were readily available to the owner or licensee when carrying out the process resulting in the reproduction or adaptation of the program (new s.47D(1)(e)). Finally, the copy used in the process must not be an infringing copy (new s.47D(2)).

16. New s.47E allows reproduction or adaptation of a computer program, without infringing copyright, to the extent reasonably necessary to correct an error in the copy reproduced or adapted. The processes used in which a reproduction or adaptation is generated include decompilation and disassembly.

17. To come within this exception to infringement, the process resulting in the reproduction or adaptation of the program must be carried out by or on behalf of the owner or licensee of the copy being repaired (new s.47E(1)(a)). The error which the process is employed to correct must be one that prevents the copy from operating as intended by the producer of the program or in accordance with any specifications supplied with the copy (new s.47E(1)(b)). Thus, for example, the exception would not cover adapting the copy to run on a computer for which it was not designed. Nor can the exception be relied on if, when the error-correction process resulting in the reproduction or adaptation is undertaken, an error-free copy of the program is available to the owner or licensee of the copy within a reasonable time at an ordinary commercial price (new s.47E(1)(d)). Finally, the copy being corrected must not be an infringing copy (new s.47E(2)).

18. New s.47E is to apply to activities on or after 23 February 1999, which was when the Government announced its approval of the making of this and other amendments in this Bill.

19. New s.47F allows reproduction or adaptation of a computer program, without infringing copyright, to the extent reasonably necessary to test the security of the copy reproduced or adapted or of a computer system or network of which the copy is a part. The exception to infringement also covers such reproduction or adaptation for the purpose of investigating or correcting a security flaw in, or the vulnerability to unauthorised access of, the copy or system or network. The processes used in which a reproduction or adaptation is generated include decompilation and disassembly.

20. To come within this exception to infringement, the process resulting in the reproduction or adaptation of the program must be carried out by or on behalf of the owner or licensee of the copy being tested, investigated or corrected (new s.47F(1)(a)). The exception cannot be relied on if the information resulting from undertaking the process was readily available to the owner or licensee when carrying it out (new s.47F(1)(d)). Finally, the copy being tested must not be an infringing copy (new s.47F(2)).

21. New s.47G prevents the unauthorised use or disposal of reproductions or adaptations made under the exceptions in new ss. 47B, 47C, 47D, 47E and 47F, and information gained from those processes, for any purposes other than those allowed by the five provisions, ie, running programs, making back-up copies, making original interoperable products, error-correction and security testing. Use of the reproductions or adaptations or the information derived from them for extraneous purposes, if done without the copyright owners’ consent, will have the effect of removing the making of the reproductions or adaptations from the protection of those sections.

22. New s.47H nullifies agreements that purport to exclude the operation of the exceptions in new ss. 47B(3), 47C, 47D, 47E and 47F allowing the reproducing or adapting of a computer program for studying how it works, back-up purposes, making interoperable products, error-correction and security testing.

Commonwealth of Australia Explanatory Memoranda