As we explained in our report, "DMCA Triennial Rulemaking: Failing the Digital Consumer," the DMCA's triennial rulemaking process has been a conspicuous failure when it comes to addressing the legitimate concerns of American digital consumers. The rulemaking was created by Congress as a "safety valve" to craft exceptions to the DMCA to permit noninfringing uses of DRMd media. (The latest rulemaking is going on right now before the Copyright Office, with a final report due in October.)

In a highly-anticipated report, an Australian parliamentary committee criticizes many aspects of the U.S. rulemaking process, rejecting it as a blueprint for a similar Australian process. The report will be of interest to other countries seeking a sensible way to respond to the U.S. effort to export its unbalanced DMCA regime through recent free trade agreements (FTAs).

Thanks to a free trade agreement with the U.S. that came into force in January 2005, Australia is in the process of re-writing its own Technological Protection Measure law to "harmonize" with the U.S. DMCA. The AUS FTA allows Australia to enact its own "safety valve" procedure to approve 4 year exceptions to the general prohibition on circumventing DRM. The parliamentary committee report provides recommendations on how to draft the Australian legislation that will set up that procedure. It follows an extensive public consultation, where, not surprisingly, entertainment industry lobbyists urged the Australians to ape the U.S. rulemaking process, and Australian academics, librarians and public interest groups called for a more careful approach.

The Australian parliamentary committee identified the flaws in the U.S. procedure, opting to go its own way. In particular, the report criticizes the following aspects of the US rulemaking procedure:

• The report takes aim at a flaw in the foundation of the DMCA rulemaking enterprise: it authorizes exceptions for acts of infringement, but not for the necessary tools. The report goes so far as to say that this is "a lamentable and inexcusable flaw" that "verges on absurdity," transforming any exceptions that might be granted into "little more than empty promises."
• The U.S. Copyright Office requires that all proposed exceptions identify a "class of works" without reference to any characteristics of the users of the works. This puts noninfringing users (e.g., educators wanting to extract clips from DVDs) in the perverse position of having to argue for unnecessarily broad exceptions (e.g., all movies released on CSS-protected DVDs). The Australian report rejects this approach, explicitly recommending that use-based exceptions be permitted.
• The U.S. Copyright Office requires that those seeking DMCA exceptions demonstrate that the adverse impact of DRM on their noninfringing uses is "substantial". The Australian report rejects this view, concluding that "any adverse impact that can be credibly demonstrated to exist or have existed should be enough."
• According to the Australian report, if DRM has not yet had an adverse impact on a noninfringing use, proponents of an exception need only show that the adverse impact is "reasonably forseeable." The U.S. Copyright Office approach, in contrast, requires those seeking DMCA exceptions to show, by a preponderance of evidence, that adverse impact is likely. The Australians reject the "preponderance" standard, noting that "[s]uch a threshold virtually requires the proponent of the exception to prove the case beyond doubt before the relevant circumstances have arisen."
• The Australian report notes that even "individual or isolated incidents of alleged adverse impacts" should be considered, and explicitly contrasted its view with that of the U.S. Copyright Office. The report was particularly scathing of the Copyright Office's dismissive attitude toward consumer inconvenience, specifically deriding the notion that consumers should be expected to buy a different DVD player for every DVD region if they want to enjoy foreign DVDs they have legitimately acquired. It specifically notes that financial imposts that are incurred, or likely to be incurred, to make a non-infringing use of a work due to DRM are pertinent for the "credible demonstration of an adverse impact".

The entire report is required reading for any interested in how our trading partners should respond to the on-going U.S. effort to export the DMCA.

As Australian academic Kim Weatherall notes in her excellent summary, the report also makes thoughtful recommendations about how to avoid some of the problems experienced in the U.S. under the overbroad DMCA, including the need to retain a nexus between anti-circumvention sanctions and copyright infringement, and mechanisms for addressing anti-competitive and non-copyright-related uses of DRM such as region-coding on DVDs. Good news indeed.