In order to comply with the Australia-US Free Trade Agreement, the US requires Australia to implement, by the end of this year, a legislative scheme known as “anti-circumvention”. Draft legislation has been reviewed by a Senate Committee. The report, released on Monday, makes constructive recommendations to improve the draft. The legislation as a whole is too Byzantine to explain. This article is a window on only one issue, albeit an important one.

“Anti-circumvention” schemes have an underlying theme – that a vendor of content may condition that content in such a way that access to the content after its purchase must only occur in a manner dictated by the vendor (they might more accurately be called “anti-access” schemes).

For example, if it applied to books (it doesn’t – probably) it would be illegal to read a book without the bookseller’s permission even though you bought it – and even then you could only read it in the manner dictated by the bookseller. A direct and necessary effect of these schemes is to undermine your property in the things you buy. Under this new regime, ownership will not be sufficient. Access without permission will be illegal.

If the only thing lost to the world as a result were some slick overproduced music videos it would be no great shame. Unfortunately, the rest of the economy can become collateral damage. If it is possible to embed a microchip on an item (everything has one these days – cars, washing machines, printers), a manufacturer of that item can contrive a way of taking the benefit of the scheme. Equally, the vendor of any software application can intermix their own data with yours when you save a file, thereby tying access to your own data to use of the application.

It is this ability to tie data to an application which presents a clear threat to competition in the software market, particularly for vendors of open source software. Earlier this year a unanimous report of a Parliamentary Committee recommended there be interoperability exceptions between a program and customer data. The recent Senate Committee report endorsed this recommendation.

In short, it should always be legal to use third party products to access your own data. The absence (to date) of a clear customer data exception may mean that in the future open source vendors, even if they do not copy a line of code and infringe no copyright, will not be legally able to read a potential customer’s existing data. If they can’t do that it’s all over Red Rover.

The practical outcome of these schemes is to permit the control of aftermarkets for associated goods and services. These schemes raise the spectre that any participant with a sufficient degree of power in a market can effectively make it illegal to engage in competition with them. Both courts and lawmakers have recognised this as a potential consequence. To their credit, the drafters and the Australian Government are taking care to avoid this, with two parliamentary reports now acknowledging the issue and making constructive recommendations on it. However, the terms have already been largely dictated by the US. It remains to be seen how well their hands have been tied.

Exactly why the US is forcing these schemes onto other countries around the world is difficult to fathom. They do nothing to make the businesses using them more efficient, nor otherwise to increase productivity – in fact, by reducing competition in ancillary markets they threaten precisely the opposite. Their best known implementations (such as region coding on DVDs) are a textbook exercise in trade protectionism.

Sound economic policy can’t provide the answer. It may be that, much like Ned Ludd’s Army in the early 1800s, there are forces at work trying to preserve an unsustainable way of life in the face of technological change. In the 19th century, though, lawmakers chose not to sacrifice the future to the past.

Peter Fray

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Peter Fray
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