The Government is now accepting submissions on its reform of the Consumer Guarantees Act, which will extend standard consumer protections to online auction sites such as TradeMe. The proposed text is as follows:

Supply by auction or competitive tender under subsection (3) does not include supply of goods and services by a supplier through a competitive bidding process using an online trading facility.

This will be a welcome change for consumers, and one I expect will be supported by many retailers.

Jailbreaking iPhones deemed legal

The US Copyright Office has ruled that jailbreaking (or unlocking) iPhones or other devices does not infringe copyright law. This clears the way (for now at least) for consumers in the US to legally use third-party tools to install  “unsanctioned” apps on their devices. To date, Apple has kept a very tight grip on which apps can – and cannot – be installed on iPhones (all via its official AppStore). Jailbreaking involves removing or bypassing Apple’s built-in restrictions that prevent unauthorised apps from being installed. Apple (and others) have argued that this breaches copyright law, by bypassing DRM restrictions and unlawfully modifying their code (similar in some ways to the “technological protection measure” provisions in New Zealand’s Copyright Act 1994). Proponents claim that jailbreaking is fair use.

The matter will not end here. Given the revenue involved it is likely to be a contentious issue for years to come. The US Copyright Office is not a Court, so its ruling is susceptible to legal challenge. Also, jailbreaking is still a breach of the iPhone’s EULA:

“You may not and you agree not to, or to enable others to, … modify … the iPhone Software or any services provided by the iPhone Software …”

However the enforceability of such a provision is greatly limited, and in practice largely useless if jailbreaking software and service providers become mainstream.

s92A rolls on

IT lawyer Rick Shera blogs on the New Zealand Law Society’s submission on s92A of the Copyright (Infringing File Sharing) Amendment Bill. He notes the Society’s recommendation that the Bill “should be amended to provide the Court with the power to order that the account holder may not open an account with another ISP during the period of any suspension”. That the existing Bill does allow someone to simply get another account could be seen as a loophole – but part of the reason why I have always thought disconnection was a red herring. In any case, the Law Society’s proposed change is simply draconian.

Internet use has become so woven into everyday life that some technology experts say online access should be legally protected, even to the point of considering it a human right. “It’s a social inclusion question,” said Cyberspace Law and Policy Centre executive director David Vaile

Much of the debate premises that internet access is already a human right, or soon will be. That view has popular support – a recent survey showed “almost four in five people around the world believe that access to the internet is a fundamental right” (FWIW, New Zealand’s previous Culture Minister also thought so). That result should not be surprising though: the right to do non-proscribed things can usually be considered a human right in some form.

[ Update: current ICT minister Steven Joyce says "declaring that the internet is a human right is not a priority for the government". ]

The real question is whether internet access – which in the absence of any restriction already is a right – should be elevated to a “legally protected human right”, and what would that mean in practice? Internet access is already legally enshrined in some countries. But should it be? Do we need it to be? We all happily rely on access to water, electricity, sanitation, and food without the need to see these rights written into law. So why internet access?

The fact is, New Zealand already has strong free speech and anti-discrimination laws providing a very high level of protection:

• Under section 44 of the Human Rights Act, it is illegal for any person or company to refuse to provide service to any person on a wide range of discriminatory grounds, including sex, race, political & religious opinions, etc.
• Freedom of expression, including the rights to “seek, receive and impart information and opinions of any kind”, is enshrined in the Bill of Rights Act 1990.

In any case, there is no shortage of ISPs happy to provide access to anyone who’s willing to pay. Why would any ISP not want to provide service to a paying customer, unless they themselves were being harmed in some way?

If the right to internet access were “enshrined”, what would the practical result be?

• If a customer didn’t pay their bill, would the ISP be prevented from stopping their service?
• Would ISPs be unable to enforce terms of use?
• Would prisoners be able to surf the net all day?
• Would parents and schools be unable to prevent children from accessing certain sites?

If the aim is to prevent Government censorship or disconnection of user accounts (such as s92A of the Copyright Act), new legislation is not needed to achieve that. Instead, the repeal of the offending legislation is the answer. New Zealand does not have a constitution capable of striking down laws, so any specific legislation expressly providing the right could be limited by another law. Similarly, all rights protected by the Bill of Rights Act are subject to “reasonable limits“. Whether this is an acceptable state of affairs is another question – especially in our unicameral MMP system with a history (in the prior government at least) of ramming through constitutional changes, without a mandate, on a simple majority.

As regards the disconnection sanction of s92A, this is not about being “banned from the internet” any more than it is about banning free speech. Free speech itself has some limitations (even in the US), and certainly consequences in many cases (e.g. defamation). Does internet access need to be elevated above free speech? Besides, internet disconnection as a preferred strategy of some rights-holder groups is not likely to last long. It is more smoke than fire, and is easily avoidable. When the internet becomes the only means of distributing music, movies and other IP, disconnecting – rather than “reforming” – potential customers will make little sense.

In the end, the internet is simply a (very important) technological invention. It should no more need enshrinement in law as a “fundamental right” than the right to use a telephone. Besides breaking the desirable “technology neutrality” of law, this would also seem to be a case of  “rights inflation“:

Deciding which norms should be counted as human rights is a matter of some difficulty. And there is continuing pressure to expand lists of human rights to include new areas. Many political movements would like to see their main concerns categorized as matters of human rights, since this would publicize, promote, and legitimate their concerns at the international level. A possible result of this is “human rights inflation,” the devaluation of human rights caused by producing too much bad human rights currency (Cranston 1973, Orend 2002, Wellman 1999, Griffin 2001b).

Effort is better spent on protecting existing rights, and limiting the power of government. Upper house anyone?

ACTA negotiators have issued a statement that the agreement will not require participant countries to implement 3-strike internet disconnection laws. As it happens, the Government’s revised s92A bill (currently before parliament) still provides for disconnection in limited circumstances, but only as a Court-sanctioned remedy.

ICT finance regulation

Computerworld has an article on the upcoming financial services reform and its possible impact on ICT finance providers:

It is not clear which financial providers in the IT industry will be affected. The MED says that, in general, if an organisation is providing credit under a credit contract, then they are offering a financial service and the registration requirement will apply, meaning they have to join a dispute resolution service.

Consumer finance customers (i.e. those obtaining finance for personal or domestic purposes) already receive a good measure of protection under the Credit Contracts and Consumer Finance Act 2003. The new reforms are still being refined; the extent to which they will affect finance operators remains to be seen.

Government indemnities

The Government recently amended clause 4 of the Public Finance (Departmental Guarantees and Indemnities) Regulations 2007 to permit Government departments to agree to:

any guarantee or indemnity contained in the standard terms and conditions for the purchase, licence, or use by the Crown of—

(i) an Internet site;
(ii) software;
(iii) information technology tools, products, or services.

Many websites include indemnities in their standard terms (for example, by even reading the New Zealand Herald you agree to an indemnity). This change makes it more practicable for the Government to use common online and software applications, without having to obtain internal sign-offs.

The “Immortal Soul” clause

On the subject of website terms, a website recently added an “immortal soul” clause to its terms and conditions:

By placing an order via this Web site on the first day of the fourth month of the year 2010 Anno Domini, you agree to grant Us a non transferable option to claim, for now and for ever more, your immortal soul.

While this was an April Fool’s Day prank, it’s purpose was to highlight the fact that very few people actually read website terms. In any case, something tells me this would not be an enforceable website term!

The proposed reformulation of s 92A of the Copyright Act, which gives the Copyright Tribunal the responsibility for deciding if users should have their internet access terminated, is a much improved proposal over the original. The key problem with the original, poorly drafted and poorly thought-out proposal was that it put the responsibility of whether or not to terminate, on the ISP. This would have been unfair to every ISP caught in the middle of a dispute between their customer and any number of third parties (who, in the case of international copyright holders, would most likely be legally represented).

The new proposal removes that responsibility from ISPs. It gives the responsibility to the Copyright Tribunal, which has (or will have) the necessary expertise and resources to deal with complaints. As a state agency, it is bound by the Bill of Rights Act 1990, which guarantees natural justice (s 27(1)). Its decisions are subject to judicial review (s 27(2)). The proposal to allow the Tribunal impose fines (quite different from “damages” that a Court could award) means that a person who is fined (even for a modest amount) could not be sued in Court for the same infringement (in addition the proposal is that the Tribunal have exclusive jurisdiction of s 92A matters) . Tribunal members are, to some extent at least, accountable to the democratically elected Government. It has statutory reporting obligations.

This not only solves the primary complaint about the original proposal, it should (subject to some changes – see below) also provide strong procedural safeguards for the web-surfing public.

So why is there still fuss about the new proposal?

A central complaint of the original proposal – the unfair burden it put on ISPs, and the real potential for “guilt by accusation” that followed – has now been resolved. The focus of critics has now shifted to the purportedly “disproportionate punishment” of terminating an internet account and the assault on “human rights” that entails.

The Creative Freedom Foundation’s position remains that termination is “disproportionate punishment“. Similarly, Keith Davidson of InternetNZ is reported as saying of the new proposal: “the termination of a household or business internet account is simply out of proportion to the alleged offence”.

How can termination be “out of proportion” to an offence that hasn’t happened yet? How can termination be “out of proportion” given the 3 stage, 3 month process, the first step of which requires notification and a right of reply and the right to mediation? How can termination be “out of proportion” when an ISP would be within its contractual rights to terminate a user’s account without notice for any number of reasons, which may or may not be less serious than copyright infringement?

The “human rights” line of argument also misses the point. Internet access through a particular ISP is not a human right. Every ISP in New Zealand provides their service subject to terms and conditions, including prohibiting copyright infringement. If you breach those terms and conditions (or your ISP believes you have), they may terminate your account. ISPs can impose whatever (lawful) terms and conditions they like. Most ISPs even reserve the right to change those terms and conditions at any time without your knowledge.

The revised proposal does not stop a terminated user from immediately signing up with another ISP. In fact it does not even stop a terminated user from opening a new account with the same ISP. It does not ban a person from the internet. The human rights argument falls flat.

Don’t get me wrong – there is a global war being fought by the major IP rights holders over the future of intellectual property and human rights are certainly one of the many factors at stake. The issue of software patents in this country (which should be banned) is one small battlefront in that war.

The difficulty, as I see it, is that some critics of s 92A (and critics of copyright/IP in general) only see the issue in terms of the big, wealthy, multinational companies suing mothers of young children for millions of dollars for sharing US$24 worth of music. Through my work as a lawyer, I have recently witnessed a situation where a semi-retired New Zealand man had spent many years painstakingly creating certain written works. For the past couple of years he had managed to make a reasonable amount of money selling these works to hobbyists in his particular field – not enough to live on, but enough to pay for his hobby and help him in his pending retirement. All that changed when one particular individual – lets call him Mr X – publicly (and illegally) republished all of those works online for free. Mr X admitted doing so, but refused to take the works down, claiming that in his view authors didn’t deserve copyright in these sorts of works, and they should be freely shared with everyone. Obviously, this was devastating to the New Zealand man. While in this particular situation Mr X’s website was hosted overseas, a s 92A-style notice-and-takedown procedure would have provided a reasonably efficient first-step remedy against this blatant theft and destruction of one man’s years of hard work and creative effort by someone ideologically opposed to the idea of copyright.

There is no doubt that heavy-handed, excessive enforcement has backfired and been a PR disaster for major rights holders. It is precisely that “overkill” that the ISP account termination approach seeks to alleviate, and that the revised s 92A proposal provides a reasonable balance against. Whether this is the “thin end of the wedge” remains to be seen – no doubt for some it is the first step in a larger strategy – but misrepresenting the current situation as a human rights issue is (at best) jumping at shadows.

The new proposal is obviously not yet complete. Whether or not the final proposal does turn out to be “fair, efficient and workable” as Policy Proposal Document promises remains to be seen. Some specific areas that need to be addressed are:

1. Protection against the making of frivolous, vexatious or bad-faith (e.g. abuse of process) complaints (this sort of protection is a good way of dealing with the false complaint issue).
2. Onus and standards of proof (the Policy Proposal Document talks about the balance of probability – which is usual for civil actions – but more detail on the types of permissible evidence will be important).
3. Clarification over who a “subscriber” is in a shared-access environment.
4. Requiring the Tribunal to take into account the rights of other users of the particular internet account in question.
5. Clarification over the status of non-ISP organisations caught by the Copyright Act’s very wide definition of “ISP” under the new proposal.
6. Clarification of jurisdiction (territorial limits, maximum fines, matters that may be taken into account, etc).

If you operate a website, ISP or other online service in New Zealand, a recent law change provides you with a limited, but useful, protection against some types of copyright liability.

The new section 92B (no, not 92A) of the Copyright Act 1994 came into force last year. While the attention was on its “guilt by accusation” neighbour, section 92B has quietly provided all website operators, ISPs, and businesses who have a LAN with what is known in the US as a “safe harbour” provision.

Section 92B states (allowing some rewording for clarity) that merely because a person uses a website/ISP/online service/LAN to infringe copyright, then that by itself means that the system/ISP operator:

1. Does not infringe the copyright;
2. Must not be taken to have authorised the infringement of copyright; and
3. Unless a Court order is breached, is safe from any criminal or civil action.

[The words in bold are important, discussed below.]

This is a fair recognition of the role of website operators and ISPs – that they provide an online facility, venue or set functions and in reality have very little say over how users actually use their systems.

Importantly, the protection of this benefit does not only apply to ISPs. Due to the very wide definition of Internet Service Provider in the Copyright Act (see my post about this here), section 92B protects all websites and other online services, including bricks-and-mortar businesses with LANs.

For example, section 92B should protect you from any threat of civil or criminal liability in the following cases:

• If you run a business and one of your employees is using your office file server to store copyright-infringing material, without your knowledge.
• If you run a web application, and a user uploads copyright-infringing material, without your knowledge.
• If you run a website, and a user uses it to send emails that infringe copyright, without your knowledge.

There are many other examples where section 92B will provide some comfort to operators – perhaps not so much from actual liability, but at least from the threat of liability (e.g. an intimidating letter from a law firm).

However, the common element of the examples above is that the infringement must be “without your knowledge”. As noted in earlier, if a person uses your system to infringe copyright, then that by itself does not make you liable, but if there is “something more” then section 92B may not protect you. The Act does not define what “more” is required to remove the protection of section 92B, and it is therefore up to Courts to decide this over time. It is possible that this section will become the subject of much judicial interpretation.

It is safe to say, though, that if a website or ISP had actual knowledge of specific, repeated instances of copyright infringement by an identified user which continued over a long period, and took no action despite being requested to, then it is unlikely that the website or ISP could rely on section 92B to avoid civil or criminal action.

In other words, section 92B does not remove all responsibility from websites and ISPs. But it does at least provide a substantial and fairer level of protection, above that of many other countries, that better reflects the realities of providing networked services.

So much attention has been on the infamous (now indefinitely suspended) section 92A of the Copyright Act 1994, that another quirk introduced by the same batch of amendments has largely gone unnoticed.

According to section 2(1) of the recently-amended Copyright Act 1994, an Internet Service Provider is defined as including anyone who “hosts material on websites or other electronic retrieval systems that can be accessed by a user“.

This is a very broad definition. It is unclear what the final words “accessed by a user” add, as it is very difficult to conceive of any computer system that cannot be “accessed by a user”. Assuming that every website will accessible by a user, either on an intranet or publicly, the definition of Internet Service Provider is therefore anyone who hosts material on a website.

Clearly, this will include all website operators – “hosting material” is not exactly a novel use for a website.

While it does seem somewhat strange that Parliament chose to give a commonly understood term such a different meaning, this particular definition of ISP applies only to the provisions of the Copyright Act 1994. As a later post will cover, this is actually of benefit to NZ website operators.