"Is it Time to Shift the Onus Toward Manufacturers?" Reflective Writing

INTRODUCING THE RIGHT TO REPAIR

A Introduction

The right to repair is a movement identifying that consumers should have the inalienable right to repair the products they own, either by themselves or by a third party other than the manufacturer. Consumers rightly expect that the secondary market is regulated fairly so that repairs may be conducted with a level of openness, transparency, efficiency, and at a reasonable cost.

The need for the right to repair may be attributed to rapid technological advancements. This has dramatically changed consumer goods by way of an ever-increasing level of sophistication. These advancements have transformed the interrelationship between intellectual property and physical goods. Concerning the right to repair, manufacturers deploy intellectual property rights as tools to forestall consumers from repairing their goods themselves or through third parties, thereby affecting the longevity of products for consumers.

Furthermore, this novel issue is beginning to gain recognition in multiple jurisdictions. In July 2021, the Biden administration issued an executive order aimed at the right to repair.2 This order targeted making it easier and more economical for consumers to undertake self or third party repairs.3 Similarly, the Australian Federal Treasury has ordered an inquiry to be conducted by the Productivity Commission into the right to repair.4 The inquiry focuses on consumer-centric issues such as the merit to the right to repair and the barriers that currently exist within the legal framework.5 Whilst also considering broader societal issues such as the environmental implications of e-waste.

The central argument that will be made in this thesis is: consumers should be afforded an inalienable right to repair. The idyllic mechanism to establish this right would be via agreement in an international forum, but in the interim, purpose-built legislation, common law doctrines, and the expansion of exception-based schemes will prove fruitful. The objectives of this research are:

1. To question classical rights of chattel ownership in light of the proposition, if you can’t fix it, do you really own it; and
2. To what extent is Australia’s current legal system sufficient to enable the right to repair.

This thesis discusses relevant intellectual property and consumer law issues in light of the right to repair. It adopts a doctrinal and comparative methodology and is divided into six chapters. Chapter one introduces the right to repair and discusses the relevant theoretical and methodological frameworks utilised. Chapter two addresses the research project through a literature review of the thesis. Chapter three considers the issue of technology and copyright broadly, and also more specifically with a focus on technological protection measures (TPM) (also known as digital rights management) and their impediment on the right to repair. Chapter four provides an analysis of the impact exhaustion rights have on the right to repair. Chapter five discusses the detrimental effect end user licence agreements (EULA) have on the right to repair. Arguments in these chapters are framed around the theoretical underpinning of Hegel’s personality theory. In the final chapter of this thesis, a clear message is sent regarding the inadequacies preventing Australia’s legal system from establishing the right to repair. Conclusions are then made by identifying scope for future research and putting forth reform recommendations. This thesis provides an original contribution to the literature by suggesting a bright-line test.

B Theoretical Framework

The right to repair may be justified under the personality theory developed by Georg Wilhelm Friedrich Hegel, as originally found in his 1821 text Elements of the Philosophy of Right.7 Hegel’s philosophical analysis of property forms integrated parts of a dense metaphysical system aimed at explaining the world and major phenomena.8 The premise of the personality theory is that personal property can be closely linked to developing one’s identity.9 Hegel believed that individuals contained an internal existence in their will and an external existence in their sphere of freedom.10 Thus, there is an emphasis upon an individual’s self-actualisation and the lack of dependence on others to realise their personality. 11 The realisation of personality is achieved by putting one’s will into external objects such as property.12 Therefore, property is central to this theory as an individual will not develop their self-identity until there is the opportunity to exercise their will upon external objects in an unhindered manner. At such point, an individual will establish their personality.

Thus, when a consumer is hindered from repairing their goods, it becomes highly problematic to reach a state of self-actualisation. By removing consumers autonomy, they may ultimately be unable to realise their self-identity through a lack of free will to control, use, dispose of, enjoy, and transfer their personal property.

C Methodological Framework

This thesis adopts a doctrinal and comparative methodological approach.

1 Doctrinal Methodology

Undertaking a doctrinal analysis of the current legislative frameworks, regimes, doctrines pertaining to intellectual property, and to an extent, consumer law, allows the thesis to accurately outline the deficiencies in Australia’s legal system that impede the right to repair.

This methodology is the classical approach that synthesises various legal principles, theories, interpretive guidelines, historical development and norms that can justify and make a coherent argument within the segment of law and more broadly to the system as a whole.15 On a fundamental level, a doctrinal approach comprises of a two-part process.16 Firstly, undertaking a systematic analysis to logically and rationally order legal propositions and authorities, and secondly interpreting and analysing in light of the research question.

2 Comparative Methodology

Lawyers have been described as professionally parochial as they are almost always trained to only their domestic jurisdiction.18 When undertaking reform centric research of a globalised issue such as this project, it is rather short-sighted to neglect the learnings and frameworks of other jurisdictions. The right to repair movement has only very recently gained a level of prominence in Australia. Thus, there is value in researching more developed foreign jurisdictions such as the United States and European Union. Through analysing these jurisdictions, a window is provided to the future as to what mechanisms, doctrines, and policy intervention may be fruitful for legal transplantation. Therefore, there is clear merit in undertaking an embedded comparative study throughout.

II LITERATURE REVIEW

This literature review adopts a three thematic approach. The first theme discusses copyright and technology broadly, and also more specifically with a focus on TPM. The second theme considers common law exhaustion issues concerning the right to repair. The third theme explores EULA as it relates to the right to repair. It must also be acknowledged that due to the novel and emerging nature of the right to repair, there is a dearth of published materials and this thesis has had to rely on the few available published sources and on online resources.

The Productivity Commission views the right to repair as the concept that consumers should have the ability to repair their faulty goods themselves or access repair services at a competitive price from third parties who are not the manufacturer.19 Grinvald and Tur-Sinai raise the proposition that the right to repair is a consumer-led social movement and that intellectual property law should not be a mechanism to prevent the implementation of this right.20 Moreover, Wiens and Gordon-Byrne justify the right to repair in light of ownership.21 That is, when a consumer purchases a device, ‘they own it, and they should have the right to repair it’.22 Contrastingly, MacAneney theorises from the manufacturers’ perspective, claiming the right to repair is unfair to manufacturers’ rights and poses risks to consumers such as product safety and security.

A Copyright and Technology:

The evolution of consumer products has exacerbated the importance of the interrelationship between copyright and technology with respect to the right to repair.24 Raymond argues that in a technology-driven world, the power of access to information cannot be underestimated.25 Technology has made consumers more dependent upon the ‘right people having the right information to service, support, and repair their products’.26 Various literature cites the lengths manufacturers will go to in restricting access to information.27 Notably, Hicks, an independent repairer, recounts the hostility he was met with by electronics manufacturer Toshiba when he uploaded repair information such as manuals to his website to assist other repairers.28 Wiens shares concerns of the predicament faced by repairers like Hicks from both a secondary market and a product obsolescence perspective.29 Questions are raised concerning the ethics of manufacturers seeking copyright protection over repair materials as a creative work.30 The proposition is then raised that manuals act ‘as the fuel for repair shops’ and that ‘killing the manuals kill these businesses’ as repair is put beyond an economically viable endeavour.31 Wiens claims this allows copyright to be a weapon of planned obsolescence as many consumers will decide to ‘simply throw the devices away’ rather than repair them.32 Shprinsten builds on the proposition that product obsolescence is actively encouraged by manufacturers.33 It has been noted that ‘Apple often overestimates the cost of repairs and threatens third-party shops who are willing to fix them for a fraction of the price’.34 Shprinsten uses this premise to justify the argument that manufacturers will go to extreme lengths in restricting viable repair by charging exorbitant fees to ensure consumers upgrade their devices rather than repair them.

It is also identified that embedded software technology, specifically TPM, is a significant obstacle for the right to repair.36 The Congressional Research Service articulates the proposition that software no longer exists in just personal computers, rather software is integrated into an array of consumer goods such as electronics and kitchen appliances.37 Moore frames the argument that the ubiquitous nature of embedded software in everyday consumer products is significant to the traditional ownership model.38 That is, consumers may believe they own their products, but the ‘manufacturers still have considerable amounts of ownership in the device’ by way of the embedded software.39 Preventing individuals from repairing the products they otherwise own derogates fundamental property rights.40 Austin shares the view that even with idyllic legislative carveouts, the dilemma remains that whilst it is theoretically possible to circumvent any software, the impediment is placed at a higher technical threshold ‘not shared by the average purchaser’.41 Furthermore, McSherry argues that ‘software locks’ act as mechanisms for manufacturers to rely upon in restricting access.42 Concerns are then raised regarding trafficking provisions that ‘ban the manufacture and sale of tools to circumvent’ digital locks.43 In addition, arguments are framed with respect to ‘copyright owners hav[ing] lots of control over non-infringing uses of technology, allowing them to lock out competition in repair and re-sale markets.44 Similarly, the Open Technology Alliance share the concern that copyright law may be ‘misused in the service of controlling access and use of legally-acquired content’.45 Contrastingly, Austin frames his argument in a broader view in which he questions the TPM regime.46 According to Austin, the key question is whether the ‘concept of a work includes the function performed by those programs’.47 It is hypothesised that copyright is not an enemy to the right to repair; instead, basic copyright principles that separate functionality from expressive content for legal circumvention creates greater scope for a right to repair.

B The Doctrine of Exhaustion as it Relates to the Right to Repair:

The common law doctrine of exhaustion is touted as significant to the right to repair moving forward.49 The crux of the issue identified within the field relates to the dichotomy between permissible repair and remaking.50 Domestic literature attempts to address this issue in light of the landmark case of Calidad Pty Ltd v Seiko Epson Corp.51 This case is significant due to the dramatic shift toward the doctrine of exhaustion from the implied licence doctrine that had previously been recognised for over a century.52 Williams and Farago-Diener put forth that this shift will have genuine practical implications on the right to repair.53 It is asserted that as the patentee’s rights exhaust after the first sale there will be a promotion of broader access to products and investments into secondary markets.

Further literature seeks to examine the doctrine of exhaustion and its interrelationship with the growing use of additive manufacturing, such as 3D printing.55 Burns raises the proposition that the use of 3D printing is logical with both commercial and non-commercial applications, such as decentralising manufacturing and removing the need for single-source dependencies.56 However, despite the alleged vast benefits, Burns is critical of how this technology fits within the intellectual property legal framework as it is still unclear when additive manufacturing parts will infringe.57 The dilemma is raised that despite the limited scope for additive manufacturing of a spare unpatented part, there is still uncertainty in instances where the part is patented.58 Burns contends that amendments should be made to establish ‘clear statutory exceptions for private, non-commercial use where parts are manufactured by the machine owner’.59 Similarly, Rimmer shares the concern that developments in 3D printing have uncovered the dire need for Michael Williams and Vanessa Farago-Diener, ‘Rewriting Judicial History or Just Refilling Ink? Patents and the Right to Repair in Australia Post-Calidad: ‘Logic, Simplicity and Coherence with Legal Principle’ Prevail over patent law to remain adaptive to technology in what he describes as the ‘fourth industrial revolution’.

Regarding the future scope of research, the literature raises an apparent inadequacy in the doctrine of exhaustion concerning the murkiness between repairing and remaking.61 It is argued that developing a clear distinction or bright-line test would provide clarity in applying the doctrine of exhaustion and accelerate consumers freedom.62 However, until this thesis, no present literature has attempted to do so.

C The Impact of End User Licence Agreements (EULA) on the Right to Repair:

When accounting for the two earlier themes, it is prudent to consider the effect private contract, specifically, the widespread use of EULA has on the right to repair. The Congressional Research service raises the proposition that the infiltration of software-enabled smart goods into everyday consumer products poses a fundamental question to the ideologies of traditional property ownership.63 Similarly, to the sentiment of discussion relating to TPM, it is highlighted as significant when consumers purchase ‘software-enabled products’ as they become the ‘owner of the hardware components’, but may only ‘acquire a licence to use the embedded software during the time of their product ownership’.64 It is argued that consumers often consent in a unilateral negotiation process to matters such as ‘restrictions on copying, usage, distributions, modification, and legal remedies’.65 Moreover, Montello identifies that EULA has been used to thwart repair; infamously, John Deere’s EULA for agricultural equipment contained provisions purporting to restrict access to repair diagnostic software.66 The dilemma was compounded through provisions ‘forbidding the use of unauthorised hardware or software’.67 Therefore, limiting a consumer’s choice of repair, other than by illegal means such as hacking.68 Similarly, Mirr shares concerns with John Deere’s EULA provisions that ‘forbids nearly all repair and modification’.69 Mirr theorises that manufacturers favour EULA because it provides a mechanism to ‘prescribe what consumers may and may not do with their product’.70

Having surveyed the views of the authors in the field, the thesis will now continue into an analysis of copyright and technology. More specifically, the next chapter will consider how the right to repair is impacted by copyright and technology-related issues.

III ISSUES ARISING FROM COPYRIGHT AND THE USE OF TECHNOLOGY CONCERNING THE RIGHT TO REPAIR

The power that copyright confers to rights holders is significant because of the effect access to information has on repair viability. The importance of accessing information has been exacerbated further in light of rapid technological advancement in the ‘internet of things’ era. This shift has resulted in more complex goods, where initiative alone is unlikely to suffice for successful repair. With more technologically complex products, access to information will prove to be an invaluable asset. It has been aptly put, ‘If there is no knowledge, there is no development; if there is no access, there is no knowledge’.71

Manufacturers who are conscious of this dynamic shift may strategically and legally utilise their exclusive rights to suffocate the right to repair. Put simply, as the rights holder enjoys exclusive rights, they are not obliged or obligated in any capacity to disseminate their protected works. For instance, these works may include repair service manuals, computer-aided design, diagnostic software and schematics, all of which can be critical in facilitating repair. However, when manufacturers purposefully withhold information from third parties, consumers are stripped of their autonomy and potentially funnelled into manufacturers repair schemes and their affiliate ‘authorised repairer’ network. The ‘authorised repairers’ enter contractual arrangements with the manufactuers for the privilege of accessing the necessary repair information, tools, and parts directly.72 A catalyst for the establishment of ‘authorised repairers’ is to allow manufacturers to retain control over secondary markets and maximise profits.73 When information is too difficult to access directly or via deep links, it may be unviable for consumers to facilitate repair. In addition, independent repairers may become reliant on third parties such as iFixit, an organisation that develops open access manuals for a wide range of electronics.74 Ultimately, where no access to credible independent repair exists, product obsolescence may be expedited as consumers may elect to replace instead of repair their products.

This chapter will discuss the issues between copyright and technology with respect to the right to repair. An overarching issue is access to information and how withholding information can hinder repair. In answering this question, this chapter considers the merit of expanding the purposed based ‘fair dealing’ or establishing purpose based ‘fair use’ exceptions as seen in the United States. Following this analysis, the discussion will centre around the use of TPM in light of these technologies effect on repair activities and possible avenues of reform. Finally, the merit of a statutory based repair scheme to close the information gap between manufacturers and independent repairers is considered.

A Can ‘Fair Dealing’ or ‘Fair Use’ Enable the Right to Repair?

When contemplating reform to the copyright regime, further permissible statutory exemptions that are conducive to enabling the right to repair should be considered. Two possible avenues of reform are to expand the narrow-scoped purpose-based exception of ‘fair dealing’ or establish the principle-based ‘fair use’ approach as utilised in the United States.76 Notably, the Australian Law Reform Commission (ALRC) have previously made recommendations in favour of ‘fair use’ in 2013 but was not subsequently adopted.77 More recently, the Productivity Commission has identified in their draft right to repair inquiry report that there is merit to erecting either a repair specific fair dealing exception or fair use doctrine to expand the scope of copyright infringement exceptions that assist repair.

1 Fair Dealing

Fair dealing refers to statutory provisions that provide a set of prescribed purposes within the Copyright Act that will not constitute copyright infringement.79 Currently, these exceptions allow for research or study, criticism or review, parody or satire, reporting news, and reproduction for the purposes of advice and judicial proceedings.80 Clearly, none of these categories are akin to enabling repair. If this principle is sought as a solution, a new repair specific purpose would need to be established. A significant benefit of the narrower scope is that it allows for greater certainty to those relying upon it.

However, a likely limitation is that with a level of certainty comes rigidity and an inability to adapt without future legislative intervention; thus, any amendment may be outgrown quickly. The Federal Court has historically been relatively narrow in their approach when applying fair dealing exemptions.81 Kirby J identified that the fair dealing defence contained within the Copyright Act is unduly narrow, but the question of correcting any remaining defect is one to be addressed to Parliament.82 Thus, whilst there is a degree of merit to fair dealing, one should not envisage it as an all-encompassing fix to the issues copyright presents to repair.

2 Fair Use

As previously mentioned, fair use has been favoured by the ALRC as it does not confine the exceptions to specific types of use. Instead, a principle-based approach is taken where each case will fall on its facts.83 In the United States, ‘fairness’ is tested upon a non-exhaustive list with a degree of similarity to the fair dealing research or study exemption.84 This includes criteria such as the purpose; character and nature of the work; the portion used; and the effect allowing use of the copyrighted work would have on the market.85

The benefit of such an approach is the high level of flexibility it provides, as the narrow scope of prescribed purposes is removed and replaced with a standard requiring the assessment and consideration of fairness. Hence, why fair use should be favoured over fair dealing due to its highly flexible nature. Under a fair use model, consumer protections can be highly adaptive to changing technological and commercial practices. By replacing a rule with a standard, use can be tested upon its merits on a case-by-case basis.86 Therefore, as opposed to fair dealing, fair use can remain at the forefront of law in light of changing environments. Through allowing consumers to interact with their products in an unhindered way, consumers shall be better poised to attain self-actualisation pursuant to the personality theory of Hegel: where consumers have the confidence to repair on a legal basis they may genuinely exert their free will.

However, a key limitation of the ‘fair use’ approach is that it can lack predictability. Under this doctrine, there is always the uncertainty and expense of litigation in mounting any form of robust defence against alleged copyright infringement.87 Thus, an independent statutory repair-based scheme may be superior in this respect as it may provide greater certainty and confidence to consumers and independent repairers that they are acting within the parameters of the law.

B How Can TPM ‘Digital Locks’ be Strategically Used by Manufacturers to Add Barriers to Repair?

Whilst the aforementioned solutions would provide benefit, they unfortunately would not solve the issue in its entirety. Another critical issue the right to repair faces is TPM that act as a ‘digital lock’ on software embedded within goods. Historically, the motivation for introducing these instruments was to curb fears of widespread piracy of films and music in the 1990s.88 Whilst the elementary function of the ‘digital lock’ has not changed, how these restrictions and intangible barriers intersect with physical goods have. Therefore, there is an argument that the TPM regime in its current state has inadequacies. These mechanisms were intended to prohibit illegitimate access, but in practice, they may also be a tool that stifles legitimate access for repair.

The Function of Work Anti-Circumvention Exception

Currently, with respect to TPM, the Copyright Act provides anti-circumvention provisions. The function of work anti-circumvention exception is highly relevant to the right to repair movement.89 Pursuant to this anti-circumvention exception, a device, product, technology or component will not be considered a TPM where the protected work is a computer program embodied within a machine or where the device restricts the use or services of the machine or device.90 Therefore, instruments that satisfy this exception will not be recognised as an access control technological measure and will not have grounds to the circumvention protections provided. This exemption appears reasonable in light of the ubiquitous nature of technologically driven consumer goods. All that circumventing a TPM achieves is allowing a product to function upon the terms of a consumer rather than the manufacturer.91 The functioning of a product will not be considered a work, nor will it be considered a protectable part of a work, even where the function is produced via a copyright protected computer program.92 Moreover, former US Supreme Court Justice Jane Ginsburg has put forth that focusing on exceptions overlooks a key question: what has the functioning of a product that is reliant on embedded copyright protected software have to do with copyright?93 Put simply, the underlying copyrighted work should not be able to become a vehicle to adversely impact the use of physical goods. If the function of work is adversely impacted, the proposition may be raised that the instruments would go beyond the realm of copyright.

2 How TPM Prevents the Diagnosis of Repair

Issues may still arise whereby the TPM prevents access to diagnostic data, a crucial aspect of the troubleshooting process required for repair. In such circumstances, a technical barrier is imposed, which may not necessarily be insurmountable for an experienced independent professional repairer. However, this provides little respite to those in regional communities with less access to professional repairers. For example, it would be a great inconvenience for an individual farmer during harvest to move machinery from their regional property for the purposes of diagnostic testing and repair. Currently, in line with similar provisions in the United States and United Kingdom, the Copyright Act imposes criminal and civil penalties for manufacturing and providing circumvention devices.94 This creates significant practical hurdles for consumers to undertake repairs and poses significant risks for any independent repairers that seek to develop such tools.95 The Productivity Commission has made recommendations that repairers should be permitted to legally procure tools to access information held behind these ‘digital locks’.96 However, any reform will need to be conscious of current standing international agreements. Specifically, the Australian United States Free Trade Agreement (AUSFTA) chapter 17, article 17.4.7, provides inter alia that adequate legal protections and effective remedies shall be provided against the circumvention of effective technological measures. It is suggested that any reform to the TPM framework would result in the expenditure of significant resources and costs to amend AUFSTA.97 Concerning independent repairers and manufacturers, for the procurement of circumvention devices and information to be equitable and in line with international obligations, it is theorised that a mandatory sharing scheme would be more equitable due to it better accounting for the interests of both parties.

C Can Purpose-Built Statutory Repair Schemes Bridge the Gap Between Manufacturers and Independent Repairers?

The most apparent and holistic solution to the dilemma of information access for independent repairers could be addressed by analysing the Competition and Consumer Amendment (Motor Vehicle Service and Repair Information Sharing Scheme) Act 2021. This legislation may be regarded as the first species of right to repair legislation in Australia. Thus, there is merit in seeing this scheme as the springboard in launching other industry-specific right to repair legislative frameworks. For instance, in the domain of consumer electronics or heavy agricultural equipment.98 Pursuant to the legislation, access to repair information that can currently be legally withheld behind the shield of copyright can be mandated to be shared among third parties, such as independent repair shops that are not affiliated with the manufacturer. The benefit relayed to consumers is more choice and price competitiveness for repair. Whilst also allowing for a balancing act between independent repairers and intellectual property rights holders. Without genuine recognition of rights holders’ investment into product development, innovation would likely stagnate as the incentive is removed. The legislation addresses this by stipulating sharing must occur on commercial but fair and reasonable terms.99 Although, it will be prudent to ensure that the commercial value is commensurate to the value of the asset for the purposes of repair.

These technological issues also have a tangent in the longevity of these rights in relation to the principles of exhaustion. In the next chapter, the common law doctrine of exhaustion will be considered in light of its impact on the right to repair.

IV PRINCIPLES OF EXHAUSTION AND THE RIGHT TO REPAIR

The recent common law preference toward the doctrine of exhaustion has been identified as highly significant to the right to repair.100 The catalyst for this dramatic shift in the common law is attributable to the High Court case of Calidad Pty Ltd v Seiko Epson Corp.101 This case sets precedent by reverting to the endorsement of the doctrine of exhaustion over the implied licence doctrine and has brought Australian jurisprudence in line with the United States and European Union after a 112 year hiatus.102

Despite the change being significant, ambiguities remain regarding the application of the doctrine of exhaustion in reference to repair moving forward. The critical dilemma is drawing the line between permissible repair of a patented product and remaking a patented product.103 This leads one to grapple with the proposition as to whether the right to repair can strike a balance between pro-consumer endeavours and avoiding overreaching encroachment on a patent owner’s legitimate interests.

This chapter will discuss the impact the principle of exhaustion has on establishing the right to repair. In addressing this issue, it is prudent to consider the landmark case of Calidad. An analysis is undertaken as to the functioning of the doctrine of exhaustion and its predecessor, the implied licence. Recommendations are then made to bring clarity in the form of a bright-line test. It is then considered whether there is merit and or compatibility for the doctrine of exhaustion to be applied in other areas of intellectual property. Following these recommendations, the discussion centres around additive manufacturing and how its use fits within the doctrine of exhaustion.

A Calidad Pty Ltd v Seiko Epson Corp and the Right to Repair

The dispute in question inter alia centred around Calidad’s aftermarket printer ink cartridges, whereby they would import and sell original Epson Seiko cartridges that had been refilled by Ninestar. The modification process included creating a cavity within the cartridge to inject new ink, which was then sealed with heat. It was also necessary to reprogram the microchip on the cartridge so that the printer would recognise the cartridge as full again, rather than its previous state of depletion.104 As the cartridges were protected by two patents, Seiko Epson alleged infringement had occurred on the part of Calidad and Ninestar by way of conduct they alleged constituted remaking of their product.105 Ultimately, the High Court held that the modifications made to the Epson Seiko cartridges did not amount to the remaking, instead, the modifications were made to prolong the life of the products and therefore could be deemed as permissible repair.106

Prior to the case of Calidad, the Privy Council applied the implied licence doctrine in the case of Menck.107 Under this doctrine, purchasers of a patented product were seen to have obtained an implied licence permitting the exploitation of a patentee’s rights to the extent necessary to use and sell the product.108 The patentee could only impose conditions upon the use or sale of patented goods under the proviso that notice was provided to the owner and thereafter to any subsequent owner. Thus, the conditions would ‘run with the goods’ provided the notice requirements were met. Lord Shaw did not shy away from the proposition that the imposition of conditions could be contrary to the fundamental principles of property ownership, such as the use and dispose of chattels, which, if altered, would be contrary to the public interest and security of trade.109 To avoid this undesirable outcome, upon the vesting of ownership, the owner would receive full rights.110 That is, unless it could be proven that the owner knew of the conditions sought by the patentee concerning the first sale.111 In such circumstances, the subsequent purchaser would have their rights limited by the patentee insofar as they received notice from the product’s vendor.112 However, the practical flaws of the implied licence are well documented, such as in the sale of second-hand vehicles.113 Under the doctrine of exhaustion, there is an assurance that a smooth flow of commerce shall follow so long as the vehicles are sold to them by the true owners.114 Whereas under the implied licence, a practical implication of vehicles constituted of thousands of parts, many perhaps patented, would be infringed upon sale if they were to run with the product following the first sale.

In their rationale toward preferencing the doctrine of exhaustion, the High Court in Calidad cited that the implied licence raises a more uncertain proposition and lacks the certainty that is demanded within trade and commerce and is misaligned with consumer expectations.116 For certainty to exist, there must be the maintenance of fundamental principles of property ownership, such as recognising an individual’s full rights to use and dispose of a chattel at their will. Simply stated, the implied licence can circumvent the fundamental principles of property ownership by allowing restrictions to run with products. Moreover, from the theoretical perspective of Hegel, allowing restrictions to run with products would be contrary to the endeavours of a consumer exerting their internal existence into their property. Contrastingly, the now favoured doctrine of exhaustion enjoys a lack of dependence on others, such as the patentee following the sale. Consumers can therefore put their own will into their external property. It is only at this point will they establish their own personality.

The doctrine of exhaustion is formulated upon the general premise that a patentee’s right derived from a particular patented product shall survive only its first sale. Thus, the rights afforded to the patentee pursuant to statute still have effect but are exhausted when the reward of which the object has special rights are achieved by the patentee.117 In other words, once the patented product is sold, it is placed beyond the scope of the patentee’s monopoly. The patentee will have no claim following the first sale by virtue of the patent, such as the rights provided under statute to ‘make, use, exercise, and vend the invention’.118 Thus, the fundamental principle of property ownership rights of use and disposal are preserved.

1 The Murky Dichotomy Between Permissible Repair and Remaking

Proponents of the right to repair movement should welcome the shift toward the doctrine of exhaustion in filling an erstwhile gap in jurisprudence.119 That is, the majority position in the High Court to endorse the doctrine of exhaustion may be interpreted as far more conducive in supporting a strong culture of repair and secondary markets than its predecessor.120 This case serves as genuine recognition for the scope of a right to repair patented goods. The likely implications of this litigation may be far-reaching, and optimistically one would hope to the benefit of consumers in strengthening secondary market confidence. However, critics have raised that the doctrine of exhaustion has ambiguities, such as the dichotomy between ‘permissible repair’ and ‘remaking’ not being entirely clear.121 Applicability of the doctrine may be uncertain as each case is likely to fall upon its facts before the court in the absence of a bright-line test.122 This scenario is less than idyllic as it is imperative to foster high levels of certainty to build strong secondary markets. Alike with consumers, independent repairers need confidence that the repairs they conduct are permissible and do not put them at risk of infringement. In an attempt to alleviate ambiguities that may be to the peril of confidence in the right to repair movement, please find below my suggested bright-line test:

For the purposes of the Patents Act activities shall constitute permissible repair and shall not be considered infringing conduct where:

1. The activities undertaken are in relation to consumer products; and
2. The consumer product is faulty, malfunctioning, depleted, or otherwise physically damaged; and
3. Upon the reasonable person standard the activities undertaken allow the consumer product:
   • To be restored to a functioning state; or
   • Made more useful; or
   • Prolong its ordinary life; or
   • Any combination of these outcomes

The proposed bright-line test limits itself explicitly to consumer products as this logically correlates to the target of the right to repair. Despite the High Court having applied the repair favourable doctrine of exhaustion to a corporation it may still be justified in light of consumer benefit. It can be extrapolated broadly that permitting the actions of Calidad is consistent with a broader ethos of the right to repair movement, such as maximising the use of resources for environmental purposes. That is, being able to reuse and recycle goods without fear of patent infringement.123 Thus, it appears appropriate to have provisions that encourage prolonging the life of products in light of the worldwide proliferation of e-waste and the establishment of a ‘throw away culture’.124 It is prudent for the legislature to take positive steps to promote sustainable development in line with shared international objectives, such as the United Nations Sustainable Development Goals.

Similarly, improving the usefulness of a product has been accepted by the High Court and more broadly internationally as within an owner’s right of a patented product.126 A comparison to this sentiment can also be seen in the distinct realm of remaking, where the spare parts defence has been held to also extend to enhancements.127 Making patented products more useful should always be at the discretion of the legal owners in exerting their fundamental rights of ownership.128

Although, it is prudent to raise that addressing the right to repair at a domestic jurisdiction alone is unlikely to be successful as the movement is not a localised issue. It is suggested that it would be most appropriate for international action to occur in international forums such as some of the United Nations specialist agencies, including the World Intellectual Property Organisation (WIPO) and World Trade Organisation (WTO).

B Can the Doctrine of Exhaustion be Applied to Copyright?

Whilst the case of Calidad provided the High Court with the opportunity to apply the doctrine of exhaustion to the subject matter of patent, there is scope for further research as to whether this doctrine could be applied to other areas of intellectual property. The approach of the United States often applies the ‘first sale’ doctrine (otherwise known as the doctrine of exhaustion) to copyright. Copyright owners exclusive rights to distribute their work ends once the copy is sold, without limiting their rights to reproduce and communicate. The purchaser will be entitled to on-sell, display, and dispose of their particular copy without obtaining permission from the rights holder.129 Therefore, the question can be hypothesised that without current precedent, whether the High Court would apply the doctrine of exhaustion to copyright should an appropriate case come before them, and the theoretical implications and compatibility under the current Australian copyright framework. The Productivity Commission has identified that the doctrine of exhaustion would likely be incompatible with the widespread use of copyright protected embedded software and other various repair inputs that are supplied upon a licence basis. 130 Some state that the doctrine of exhaustion is unlikely to apply if there has been no true sale.131 That is, where the consumer acquires only a mere licence permitting use it can be argued it would not be sufficient to trigger the doctrine of exhaustion.132 Similarly, case law in the United States suggests the first sale doctrine would not be a valid defence to an enforceable licence agreement.133 On the contrary, jurisprudence from the European Union raises that the doctrine of exhaustion cannot be overridden by freedom of contract, albeit in these circumstances it concerned used software rather than embedded software in physical goods.134 Therefore, even if the licence agreement prohibits transfer rights, the rights holder would have no grounds to oppose the resale provided the seller rendered their copy unusable.135 Put simply, a perpetual licence could potentially be inferred as a ‘sale’ for the purposes of the doctrine of exhaustion. Moving forward in the Australian context, it will be imperative for a clear distinction as to what constitutes a genuine sale when considering exhaustion.

C The New Age of Manufacturing and the Doctrine of Exhaustion

In light of the endorsement of the doctrine of exhaustion, it can be hypothesised that additive manufacturing, such as 3D printing, will impact secondary market activity and investments in these technologies.136 3D printing can provide a quick, scalable, and cost-effective mechanism for the manufacturing of spare parts whilst also reducing risks of single-source dependencies within supply chains as exposed by the COVID-19 pandemic.137 A notable example of the immediate impact of on-demand 3D printing can be identified from the case study of Chiari hospital located in Brescia, Italy. The hospital was facing a supply crisis of venturi valves, a vital single-use part required to deliver oxygen from the ventilator through a face mask at a fixed concentration.138 The hospital was unable to source the valves from their manufacturer due to unprecedented demand.139 Quite remarkably, engineering startup company Isinnova successfully used 3D printing to scan and reverse engineer the valve design and provided over one hundred functioning valves in a matter of days at a comparably lower cost than previously attained from the manufacturer.140 The reverse engineering process could have been avoided, but the rights holder who was unable to supply the valves refused to share the design files citing their intellectual property rights.

However, to be clear, it should be distinguished that the aforementioned scenario is an example of reproducing where insufficient materials were available, rather than repair. Nonetheless, it provides insight into the potential future applicability of 3D printing for the right to repair movement. For instance, if the machines had instead been faulty, they would most likely have been able to fix it with a similar application of 3D printing. When a right to repair exists, it enables access to materials that benefit not only consumer goods but also have the potential to be life-changing and saving on a broader societal perspective.

Regardless of the exhaustion of these rights, manufacturers have found methods to scuttle, shorten, and debar people from accessing these rights through licencing. The prominence and use of EULA and their effect on the right to repair will be considered in the next chapter.

V END USER LICENCE AGREEMENTS (EULA) AND THE RIGHT TO REPAIR

Contract and more specifically EULA are a true impediment in the quest for a right to repair. By virtue of the intellectual property embedded within products, private contract can be utilised to impose further restrictions on consumer products, limit remedies where something goes wrong, and create a greater inability for consumers to repair their goods.143 A prominent feature of EULA is that they often take the form of a ‘click wrap’ or ‘shrink wrap’ method of delivery.144 Under these methods, consumers agree or acquiesce to conditions through clicking a box or removing product packaging, and in some circumstances, even ‘activating or otherwise using’ the device may be purported as a positive action of acceptance.145 In addition, these agreements are drafted upon a non-negotiable basis and incorporate complex legalese that is unlikely to be understood by the average or even well-informed consumer. The consequences of breaching EULA can lead to the termination of the licence to use the software.146 This may include immediate effects on the functionality of the physical product, such as the ‘bricking’ of devices. That is, the manufacturer may remotely disable the software of a contravening consumer’s device, turning the product into an expensive paperweight.147 In addition, manufacturers at their option may elect to pursue more traditional remedies such as suing for breach of contract.

To facilitate the insatiable thirst of manufacturer’s control, one may argue there has been a purposive shift in business models to favour licencing schemes over the traditional ownership model. This preference can likely be attributed to EULA providing a mechanism for manufacturers to dictate owners’ rights concerning the use of the product. Whilst consumers may ordinarily think they own the goods they purchase this is often an inaccurate description.148 The reality with modern goods is that consumers often own the physical hardware component of the good but acquire only a mere licence for the software embedded within.149 Licencing schemes are far less preferable than an outright title to goods with regard to consumer rights.150 Under the traditional model of ownership of chattels, consumers may enjoy, use, and dispose of the goods at their sole discretion. Contrastingly, under a licencing scheme, the consumer must grapple with any restrictions imposed by the EULA and thus will not enjoy unrestrictive ownership or reach a state of self-actualisation with only a mere licence.

This chapter will discuss the impact licencing schemes has on the right to repair. In answering this question, context is given to the evolution of the now ubiquitous nature of EULA within consumer products. Following this background, discussion centres around competition issues consumers face in light of licencing and, more broadly private contract. This includes an analysis of the contracting out provisions that may thwart reform and the unfair terms regime. Recommendations are then made for avenues of reform that may address competition issues and the power dynamic imbalance between manufacturers and consumers.

A The Ascendency of EULA in the Global Business Space

EULA are a species of contract that in effect attempts to legally bind consumers to the imposition of conditions as to how they may use and interact with their goods.151 These types of agreements have become progressively more commonplace within the modern economy, especially in consumer electronics. 152 Ultimately, the ascendency of and ubiquity of EULA in the consumer marketplace creates a fundamental shift in the product offering from outright ownership to the mere acquisition of a licence. This leads consumers to the crucial dilemma that it is inherently more difficult to repair something inhibited by restriction than an unrestricted outright owned product.

B The Effect of Contracting Out on Repair

It is prudent to realise that any EULA provision that attempts to circumvent consumer guarantees for the repair, replacement, or refund for faulty and defective goods will have no effect at law.153 As an aside, consumer guarantees do not by any means extend far enough to provide any broad right to repair other than for faulty products.

The dilemma as raised in earlier chapters remains, where manufacturers attempt to contract out of exceptions and doctrines that provide benefit to consumers and independent repairers with repair activities. The ALRC has made recommendations that prohibitions of contracting out should be made concerning the Copyright Act.154 For example, there is currently no provisions that would prevent the contracting out of TPM anti-circumvention exemptions. It is proposed that this could take a similar operation to the contracting out prohibitions implemented under the Australian Consumer Law (ACL).155 Prohibiting contracting out would be an inroad to ensure any pro-repair amendments or exceptions made to areas such as the patent and copyright law regimes would have greater effectiveness.

However, it is still acknowledged that exemption based excepts are not idyllic, but under the current legal framework, they remain relied upon by consumers and third-party repairers alike. This is likely to be the case until holistic right to repair centric reform is achieved on an international level and or via a purpose-built statutory model. Thus, until holistic reform is reached it shall remain important to prevent manufacturers from contracting out of pro repair conducive protections.

C The Unfair Terms Regime and the Right to Repair

Alike with other types of contracts, EULA may succumb to the scrutiny of the unfair terms regime provisions of the ACL. Applying to the sphere of the right to repair, this regime is relevant in the supply of goods and services whereby standard form contracts apply.156 In other words, contracts that have been prepared by one party usually the manufacturer, and the other party usually the consumer who has had little to no opportunity to negotiate the provisions.157 Thus, the ACL seeks to offer increased protection in recognition of the consumers limited opportunity for negotiation.158 For instance, provisions that seek to modify the agreement without consent unilaterally would likely be considered unfair.159

Moreover, regarding repair, there has been the identification of anti-repair provisions that if tested may have the capacity to be considered unfair terms. For instance, the popular Samsung Galaxy smartphone terms and conditions purported to restrict independent repairs.160 Assertations were made that changes or modifications to devices made without the express approval of Samsung could result in voiding the warranty and the user’s authority to use the equipment.161 Similarly, agricultural machinery manufacture John Deere have included provisions with their EULA that attempt to restrict users into having their machinery repaired only through an exclusive ‘authorised repairer’ network determined by the manufacturer.162 At the heart of this issue lies a scenario of power imbalance.

The relationship between the consumer and manufacturer rests on unequal footing at arguably all stages of the transaction, including after the sale. In circumstances where there is a clear power imbalance, it is prudent to protect vulnerable parties.163 In most transactions, it can be argued that the consumer is the vulnerable party by way of business acumen, resources, and size. Thus, the imposition of restrictions upon consumers by a more powerful party is a worrisome prospect to grapple with. The Australian Competition & Consumer Commission (ACCC) has previously made recommendations and acknowledged that significant information asymmetries and bargaining power positions between consumers and large corporations exist.164 Ultimately, this results in an imbalance that can be conducive to potentially unfair contract terms.165 With respect to EULA, and as previously raised, this power imbalance is compounded with the sheer length, complexity, and lack of negotiation that exists in the exchange of EULA between parties. Consumers are often propelled when using a myriad of modern consumer products into what can be described as highly undesirable agreements from a pro-consumer perspective. Whilst it is acknowledged, these types of agreements are still subject to the potential scrutiny of the unfair terms regime. In practice, this protection is less than idyllic, by virtue of the onus to justify a claim of unfair terms being imposed upon the consumer. 166 Thus, there is scope to ascertain greater clarity regarding the operation of the unfair terms regime and reform to better protect consumers interactions with manufacturers.

1 Is it Time to Shift the Onus Toward Manufacturers?

In circumstances where the ACCC does not take action directly, the onus is placed on consumers to justify, seek recourse, and remedy through the courts. This onus grossly neglects the inequality and power dynamic between parties. It is fundamental to recognise the power imbalance and inequity that exists within the relationship between consumers and manufacturers. It has been proposed that the ACCC should be empowered to have a more proactive role in placing positive obligations on manufacturers developing commercial dealings in a more transparent and equitable fashion.167

However, a significant issue remains that a manufacturer who willingly develops a EULA with unfair terms faces little repercussions or deterrence. As the laws currently apply, it is not a contravention of the ACL to include unfair contract terms.168 Thus, there can be no imposition of a civil penalty on the manufacturer. There is currently an exposure draft bill prepared by the Treasury that seeks to reform these deficiencies in the law, such as providing courts with the power to impose civil penalties and award remedies.169 Although until such reform is enacted, if at all, the ultimate consequence would be a court declaration rendering a provision unfair, thus making it null and void.170 The ACCC has raised the need for this reform to no avail on multiple occasions now.171 The lack of legal impediment and financial consequences on manufacturers incentivises the drafting of unfair contract terms.172 It is proposed that the combined action of shifting the onus onto the manufacturer to prove provisions are not unfair and implementing significant civil penalties would be an inroad to balancing the power imbalance between consumers and manufacturers.173 By imposing substantial penalties, manufacturers would have a genuine deterrence from drafting unfair terms in their dealings with consumers. However, this would not adequately address the dilemma of the complexity of agreements, such as the consistent use of legalese.

2 Why Complexity of EULA Act as a Barrier to Consumers

Currently, the ACL addresses the complexity of terms by way of what constitutes a transparent term. A term will be considered transparent if expressed in reasonably plain language, legible, presented clearly, and readily available to any party affected by the term.174 However, a term deemed a transparent term will not automatically be precluded from being an unfair term.

As previously raised, EULA are often drafted in voluminous and complex legalese. Consumer advocates CHOICE has suggested that it would take approximately nine hours to read the staggering circa seventy-three thousand word EULA for Amazon's Kindle e-reader.175 Research suggests that it would take the average consumer approximately two hundred hours a year to thoroughly read only the privacy provisions of every EULA before them.176 Thus, it seems an insurmountable task for the average consumer. Currently, some consumers are turning to artificial intelligence software that assists in analysing EULA and flagging potentially notable words and phrases.

Proactive action should be taken to impose further regulations on manufacturers surrounding their commercial dealings with consumers. It is proposed that obligations could be imposed to allow EULA to take a standard form in plain language that the end user would more easily understand. Shifting away from complex legalese would assist consumers with interpreting restrictions manufacturers purport to impose over the goods they sell. That is, there should be an emphasis on manufacturers using plain language written in a style that the target end user would ordinarily be able to understand and interpret.

3 Why There Should be a Prohibition of Anti-Repair EULA Provisions

Further reform should consider placing express prohibitions on anti-repair EULA provisions. It is proposed that legislative change could seek to prohibit terms that are of an anti-repair nature. Commonly, EULA provisions may attempt to restrict the disassembly or opening of products, upgrading, downgrading, or making personal improvements to the product, making the product interoperable with other systems and competitor products, and reverse engineering.179 Whilst an argument can be made that provisions such as those described above may be deemed unfair pursuant to the ACL unfair terms regime, the ambiguity remains that only a court can make such a declaration. Thus, there is the need for greater certainty through express protections to encourage and foster repair.

It seems appropriate for any such amendment to be within the ACL, as it is important from a consumer perspective to regulate repair markets. Discouragement or restriction of repair-related activities can dramatically affect the competition within the secondary market. That is, the confidence of secondary market dealers must be uninhibited to genuinely compete with manufacturers post-sale.

Monopolistic and Anti-Competitive Behaviour

Anti-competitive and monopolistic behaviour lay at the heart of why the right to repair is desperately sought after. Anti-competitive markets eliminate consumers freedom of choice and remove any incentive for manufacturers to price their products in an enticing or competitive fashion. EULA and more broadly contract are instruments that manufacturers may utilise to monopolise the secondary market.180 It can be asserted that creating a monopoly on a secondary repair market is relatively easy for a manufacturer. Generally, there are five key requirements for fixing a product embedded with software on a computer chip: repair documentation, diagnostics, tools, firmware and spare parts.181 Thus, if a manufacturer elects to exclude, dominate, or restrict access to any of the identified key elements of repair, the consumers options would be heavily restricted.182 The practical effect may lead to manufacturers dominating secondary markets for repair. For instance, they may funnel consumers directly to their aftermarket services and authorised repairers to retain maximum profits.183 This may compel consumers to act in a less environmentally conscious manner if repair costs are excessive when compared to replacing.

1 Why Labelling Initiatives are a Powerful Tool to Empower Consumer Repair

Perhaps, an interim fix for consumers is to boycott manufacturers who produce goods that have poor repair prospects. To determine the repairability of a product, one must look to the realm of design. Currently, in Australia, should a consumer seek to determine the prospects of repairing a product, they may need to undertake personal research via the internet on product review websites such as CHOICE, Canstar, or repair specific sites like iFixit.184 However, it can be proposed that a government led standardised initiative may provide more accessible and easily understandable information for consumers.185 An example of such implementation can be seen in the approach of France’s repairability index. The French Government labelling initiative mandates the display of simple information for consumers as to the repairability of electronic equipment in the form of an index score out of 10.00.186 However, the index is currently limited to five categories of products: smartphones, laptops, washing machines, televisions, and electric lawnmowers (electric cable, battery, and robot).187 Five criteria are used to determine the index with plans to introduce further criteria such as durability in the future.1

Criterion one concerns the availability of technical documentation that assists repair.189 For instance, schematics and maintenance instructions that are freely distributed on the volition of the producer in physical or dematerialised documents.190 In addition, ongoing documentation such as technical bulletins addressing product faults, software bugs, and information regarding supply distribution of parts.191 Furthermore, points are awarded in reference to where consumers can attain professional repairs, particularly whereby the repairers are independent of the manufacturer.

Criterion two accounts for the ease of disassembly, accessibility, tools, and fasteners.193 That is, how easy is the product to disassemble by way of how many steps are required to successfully do so.194 Regarding tools and fasteners, the index considers whether the product uses or requires proprietary fasteners and or tools to disassemble the product.195 Fasteners may also include manufacturing methods such as welding, gluing, or soldering parts to permanent fixings, as this can have a significant effect on facilitating repair.196 For instance, it is detrimental to repair where hardware such as random-access memory (RAM) and solid-state drives (SSD) are soldered onto the motherboard.197 This reduces the ability to repair a single faulty part as the entire soldered piece may have to be replaced.198 It can be raised that manufacturers may make conscious design choices to thwart repair, such as opting for Pentalobe screws over standard screws.199 It is favourable where standardised tools and fasters are used from an independent repair perspective, as these are far more accessible.

Criterion three relates to the availability of spare parts, delivery times, and considers whether the manufacturer has committed to the availability of said parts through after-sales service and support.200 The repairability index provides a list of spare parts that are to be made available. For instance, a laptop manufacturer should make available: internal and external power supply, connectors for external equipment, capacitors, batteries, DVD modules, SSD modules, and remote controls.201 It is also noteworthy that, similarly to the ACL, European Union regulations impose mandates on manufacturers to keep spare parts available for a specified period (product dependant).

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