POSTED BY:
Ian Finch
ON:
28 Jun 2010Written submissions on the Copyright (Infringing File Sharing) Amendment Bill closed this month. Claire Tompkins and Ian Finch of James & Wells Intellectual Property take a look at some of the issues that will be under discussion.
The Copyright (Infringing File Sharing) Amendment Bill (Bill)
introduced to the New Zealand Parliament in February of this year
amends the Copyright Act 1994 (Act) to provide new enforcement
measures against the unauthorised sharing of copyright material via
the Internet. Remedies available include fines of up to $15,000 and
temporary suspension of Internet accounts. The latter remedy, in
particular, continues to generate controversy.
The Bill repeals section 92A of the Act (enacted by section 53
of the Copyright (New Technologies and Performers Rights) Amendment
Act 2008), which would have required Internet service providers
(ISPs) to adopt a policy providing for the termination of a repeat
infringer's Internet account. Various civil liberty groups
protested against section 92A - the section also raised
considerable debate among academics and lawyers (as have similar
provisions around the world - for example, in France, with the
enactment of the HADOPI regime, and in the UK with the approval of
the Digital Economy Bill 2010). As a result, section 92A was never
brought into force.
Even the more hard-line rights holder supporters conceded that
there were elements to section 92A that were not ideal, including
the fact that there was no independent entity to review notices
sent to infringers, and the potential for many more entities to be
caught under the ISP definition and potentially face Internet
termination than was originally intended due to the breadth of the
definition of ISP.
New section 122 of the Bill (which replaces section 92A) has
also been the subject of similar discussion and protest, but this
is more subdued - probably because changes have been made in an
attempt to address many of the concerns regarding section 92A. For
example, copyright owners must now seek orders for suspension of an
Internet account at the District Court, rather than the ISP itself
being required to assess the evidence against an account holder
itself. Another change is a new definition for Internet service
provider for the purposes of section 122, which is intended to
exclude universities, libraries, and businesses that provide
Internet access to their members or employees, but are not in the
nature of a traditional ISP such as Telecom (although whether or
not it achieves this aim is also being debated).
Why amend the Act?
The Act currently provides civil and criminal sanctions for
infringement of copyright. However, in practice (as is the case in
other jurisdictions), current enforcement measures are ineffective
in countering infringing file sharing. A survey of more than 1,000
New Zealanders carried out by TelstraClear in 2009 found that all households
surveyed claimed to have copied some form of content in the
previous 12 months and 46% of households interviewed had peer to
peer file sharing programs installed on their home computer. Music
(82%), software (49%), movies (35%) and games (31%) were the most
widely copied. Another recent survey (Synovate Ltd Survey 2009 - "Young New Zealanders
& Movie Downloading" commissioned by NZFACT found that two
in five people aged 15-35 in this country have downloaded illegal
copies of movies free of charge.
Most Internet users are publicly identifiable by their IP
address only (and for most users, this address is dynamic and
therefore changes each time they access the Internet). Therefore,
for each infringement, a copyright owner must seek a court order to
obtain the identity of the infringer from that infringer's ISP
(ISPs are able to reconcile an IP address with an individual
user/account). The cost of seeking such an order, and then taking
infringement proceedings, is generally much higher than the likely
award of damages for the infringement (most of which is by
individuals in a non-commercial context).
Successive New Zealand Governments have recognised both the
extent of the problem and deficiencies in the Act, and attempted to
remedy these deficiencies first with the amendments made to the Act
in 2008 and now with the Bill.
The Bill's stated aims, as set out in the explanatory note on
page 2, are to provide a regime that will:
- deter file sharing that infringes copyright;
- educate the public about the problem;
- compensate copyright owners for damage sustained from copyright
infringement by file sharing;
- provide sanctions for serious copyright infringers; and
- limit ISP liability that may result from account holders'
infringing file sharing.
The proposed notice and takedown regime
Under the proposed scheme, account holders will receive
infringement notices from rights holders via their ISP, warning
that they are infringing copyright and that continued infringement
may result in enforcement action. The scheme provides timeframes in
which subsequent notices can be sent with 'quarantine periods'
aimed at allowing account holders a reasonable time to stop their
infringing activity.
The first notice (called a 'detection notice') will have an
educational focus and advise the account holder that further
evidence of infringement will be recorded by their ISP. It will
also outline that enforcement action may be taken if the account
holder receives a third notice. Second and third notices ('warning
notices' and 'enforcement notices', respectively) will contain a
list of the alleged infringements pertaining to that account holder
since the detection notice, and will caution that the Copyright
Tribunal (Tribunal) may award compensation based on that list.
If an account holder receives three notices from one copyright
owner, that owner may apply to the Tribunal for a compensation
award. Copyright owners may also make an application to the
District Court for an order requiring the ISP to suspend the
account holder's Internet access for a limited period.
The Bill also provides a mechanism by which account holders can
challenge infringement allegations.
Sanctions
The Bill extends the jurisdiction of the Tribunal to the making
of awards of compensation of up to $15,000. It is intended that
claims will generally be heard on the papers but account holders
may request a hearing or the Tribunal may order one. In a hearing,
neither party may be legally represented without leave of the
Tribunal. Copyright owners are also able to seek a court order
suspending a repeat infringer's Internet account for up to six
months. These orders are in addition to the usual remedies
available under the Act.
ISPs and their liability
The Act currently provides 'safe harbours' (exclusions from
liability) for ISPs in certain limited circumstances for copyright
infringement occurring over the ISPs' networks. Further to that,
the Bill extends the safe harbour to ISPs where they have knowledge
of file sharing infringements occurring over their networks,
provided they comply with their obligations under the Bill.
Practical workings
Copyright owners send ISPs information about infringements
detected at certain IP addresses. ISPs must then match each IP
address with the relevant account holder's details and issue an
infringement notice to the account holder. Sections 122D to 122H
set out in detail the workings of the Bill and are summarised in
the explanatory section of the Bill. Various timeframes apply as to
when the different forms of notice can be sent.
The detection notice is issued the first time an infringement
against a particular copyright owner is matched to an account
holder. No further infringement notices can be sent for three weeks
after the date of the detection notice, but a record is kept of all
infringements by the account holder against the same copyright
owner from that date. The account holder has one week in which to
challenge the detection notice. If the challenge is not rejected
within three weeks after the date of the detection notice, the
detection notice is cancelled.
A detection notice expires nine months after it is issued, or
four weeks after an enforcement notice is issued. If a further
infringement occurs at least three weeks after a detection notice
is issued, a warning notice is issued. This lists all infringements
since the date of the detection notice. The same time limits and
provisions about challenges apply as with a detection notice. If,
at least three weeks after a warning notice, a further infringement
occurs against the same copyright owner, an enforcement notice is
issued. The same provisions apply as with a warning notice, but
after an enforcement notice is sent the copyright owner has four
weeks in which to take enforcement action against the account
holder.
Likely points of contention
Suspension of an Internet account
Those who oppose suspension of accounts as a remedy argue it is
a restriction on a basic human right to access the Internet
(reference NZLawyer article from Webb Henderson). However, under
the Bill, if an ISP is ordered to suspend the account of an account
holder as provided for under the Bill, such termination does not
mean that a subscriber will be denied access to the Internet or
will lose major services. What is lost is the ability to access the
Internet via a specific account for a specific (short) period of
time.
ISPs maintain the right to restrict or terminate a subscriber's
service at any time. This discretion is typically available to them
under their existing contractual terms with their customers.
Therefore, the Bill does not create an environment for termination
that does not already exist.
Another reason put forward for not introducing suspension as a
remedy is that "it won't work anyway" because determined infringers
who have their account suspended with one ISP will simply shift to
another ISP (as there is no all-encompassing block like the one
provided under the recently enacted French legislation).
The suggestion that users may obtain services from another ISP
upon suspension of their existing account belies the argument that
suspension deprives infringers of rights of access to the Internet.
The "won't work anyway" argument also overlooks that the primary
effect of the Bill is to inconvenience and deter casual infringers.
It is reasonably common ground that recidivist or organised
infringers are unlikely to be deterred by even the most draconian
remedies.
There have been a number of surveys around the world which show
that users are likely to respond positively to a graduated response
program. For example, the '2008 Digital Music Survey' by
Entertainment Media Research (at www.entertainmentmediaresearch.com) showed that
70 per cent of users would cease infringing activities after one
notice from their ISPs. The 2009 Synovate Ltd survey referred to
above found that over 60 per cent of respondents in New Zealand
would cease infringing activities if their Internet connection
could be suspended or terminated by an ISP.
These surveys make it clear that an initial notice, where it
leads to an ultimate sanction (such as suspension of an Internet
account), is likely to get results and that in most instances,
there will be no need to rely on further consequences.
Copyright owners are likely to support the inclusion of the
suspension of an Internet account as an ultimate sanction for
repeat copyright infringement and consider the threat of this
sanction alone will be instrumental in deterring casual/repeat
infringers.
Fees payable
The current proposal permits ISPs to charge copyright owners for
costs incurred in relation to the graduated response program.
However, the Bill makes no provision for the level of such charges
nor the proportionality. Conceivably, an ISP could charge for all
costs associated with the program - which could include general
running costs of their businesses and salaries of those employees
involved in the system.
They could also charge a single rights holder for the cost of
running the entire system (which would include acting on the
notices of other rights holders). Clearly, there should be a
reasonableness requirement for the fees. Any fees charged would
also need to be proportional and based on volume of notices and
parties involved. There is likely to be contention over whether
fees are paid and how much.
At the end of the day, the process must be workable. If the fees
charged to copyright owners are more than minimal, copyright owners
are unlikely to use the process set out in the Bill to deal with
infringing file sharers. Instead, they will be forced to resort to
traditional methods to protect their works, including litigation,
of which joinder of ISPs as a party to the infringement remains a
possibility.
Timeframes
Under the Bill as it currently stands, some timeframes appear
unreasonably short while others are unduly long. There also appears
to be some ambiguity around the 'quarantine period' and when it
applies. The timeframes need to be sufficient so as to provide time
for the relevant action to be taken by ISPs, account holders and
copyright owners, but not so long as to render the program
practically useless as a real enforcement tool.
What constitutes an infringement?
Movie studio owners are expected to be among the most
significant users of the graduated response system. Due to the
nature of file sharing, these owners will not usually obtain
evidence of reproduction of the whole, or arguably a substantial
part, of a film. For example, investigators will generally only be
obtaining 30 seconds of film in order to evidence an indisputable
match.
BitTorrent has become the preferred way to distribute movies and
TV shows, and works by downloading bits and pieces of the requested
file from multiple computers, and then reassembling them into one
file after it receives all the pieces. The established methodology
for verification of a film (involving the conversion of large
amounts of data into smaller, 'hash' values, which identify the
original content) would be to obtain 30 seconds of footage from a
film in order to evidence an indisputable match.
As a result, an interpretation of part of a copyright work that
requires a 'substantial' part of that work be captured as evidence
of the infringing file sharing activity may be problematic for file
sharing infringement. This has been recognised with a new
definition of 'infringement' for the relevant sections of the Bill
where 'infringement' is defined as meaning "an incidence of file
sharing that involves the infringement of copyright in a work, or
part of a work, by a user".
However, arguably, "part of a work" will be interpreted in light
of the common law on the subject which holds that, in order for
reproduction of a part of a work to be an infringement of the
whole, it must be a "substantial" part of the whole. Although this
test is not quantitative (but rather qualitative), it is not
certain that 30 seconds of footage of film downloaded from a
BitTorrent swarm would necessarily constitute a "substantial"
part.
Therefore, it remains unclear whether it will still be necessary
to show evidence of copying (via uploading or downloading) of a
"substantial" part of the film, and if so whether the 30 seconds
would amount to such a substantial part. Ideally, the Bill should
explicitly exclude a requirement that any such "part" be a
substantial part in order for its downloading (without the consent
of the copyright owner) to constitute an illegal activity.
Infringement against the "same copyright owner"
Under the sections dealing with 'warning' and 'enforcement'
notices, it is a condition for the progression to either of these
types of notices that the subsequent notices be in respect of
infringements against 'the same copyright owner'.
This requirement will render the scheme less effective as an ISP
can have logged many infringements by a single account holder
before meaningful consequences ensue. In addition, the scheme is
likely to be more complex and expensive for the ISPs to manage.
For example, when copyright owners A, B, C, and D all detect
infringement by subscriber X on a single day, or even in a single
online session, each complaint must be handled completely
separately (ie if none of the other complaints existed). Each will
generate the sending of a separate detection notice to the
subscriber, start a separate clock ticking before a challenge is
due, open a separate 21-day calendar before another infringement of
a work by the same copyright owner can lead to a warning
notice.
The major film studios and music companies are expected to be
the primary users of the graduated response process. These entities
generally operate country to country via representative bodies.
Thus in New Zealand the major film studios are represented by
NZFACT and the major music labels by the Recording Industry
Association of New Zealand. It would be appropriate that all
infringements for the same representative body count towards the
escalation in process.
It is possible that copyright owners could provide third parties
with an exclusive licence to enforce the notices (as provided for
under the relevant sections of the Bill)- in which case, a licensee
would then be entitled to take action against any notice that
infringes an exclusive licence, and each such notice on behalf of
any rights holder from whom the third party has an excusive license
(allowing for quarantine periods) would count to escalating the
process.
However, in practice, copyright owners are unlikely to wish to
grant such licences. An alternative is to include in the Bill a new
definition of 'copyright owner' which includes designated persons.
The use of such agents will make the process easier to manage for
copyright owners and ISPs.
Other issues
Other likely points of debate include the appropriate
definitions for "Internet service provider", "file sharing" and
"infringement", the content, methods and frequency of reporting
between ISPs and copyright owners, and what records will be
required to be kept by ISPs and owners and for how long.
Conclusion
Overall, the Bill is a step in the right direction toward a
solution to the problem of illegal file sharing in New Zealand. It
provides the basis for a new framework for dealing with copyright
infringing behaviour, and has real potential to provide a
cost-effective, credible regime to deter individuals from
infringing via peer-to-peer file sharing, whilst ensuring to a
great extent that privacy of individuals is respected and that the
measures are proportionate to the infringing actions.
However, there are a number of issues yet to be resolved. These
will have a significant impact on whether or not the system is
workable in practice. Submissions closed on 17 June 2010. There
will now be the opportunity to provide oral submissions to the
Select Committee. The Commerce Committee is then due to report back
to Government on the Bill by 17 October 2010 after the hearing of
oral submissions.
By Ian Finch,
Partner, and Claire
Tompkins, Senior Associate
An edited version of this article was published in NZ Lawyer Magazine, June 2010.
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