Copyright (Infringing File Sharing) Amendment Bill

Justice Minister Simon Power had a day of two halves yesterday. The good: he announced a crackdown on the legal aid system (the Criminal Bar Association is “appalled” at the changes, so they must be good). The bad: he announces that Parliament was to rush through the Copyright (Infringing File Sharing) Amendment Bill under urgency.

While the Bill is being passed under urgency  – with the reason for the indecent haste unexplained and unjustified – it will have an easy ride through, with 111 of 122 MPs voting for it. Only the Greens, Chris Carter and Hone Harawira opposed passing the Bill under urgency. The move was supported by National, ACT, the Maori Party, United Future, Labour and Progressives.

So the substance of the Bill was uncontroversial for most MPs, despite some semantic gymnastics from Labour MPs attempting to explain why they originally supported it in harsher form than present, then opposed a more reasonable version, and are now supporting it again.

There is no question that the use of urgency for this Bill is an abuse of process. The file sharing reforms have kicked around for several years, since controversy erupted after first being introduced (in more draconian form) by the previous Labour Government. There is no explanation for the sudden need to race it through now.

It is also clear that some MPs still have a poor understanding of the issues. For example, in the House last night National MP Katrina Shanks made bizzare comments suggesting that any file sharing was illegal, and that people who choose to install file-sharing software on their computers must be doing so to infringe copyright. I just so happened to be downloading the latest version of LibreOffice using µTorrent when she said that…

On the substance of the bill, there is no question that it is a substantial improvement over the original proposal. In particular, the original draconian termination provision is now only available to a Court, and only if the judge considers:

“suspension of the account holder’s account is justified and appropriate in the circumstances, given the seriousness of the infringing”

This and other changes mitigate much of the “guilt on accusation” stance of the original Bill (and I do wonder whether many of the Twitterati realise this, given some of the incorrect and alarmist comments flying around), although it remains less than ideal.

A great day for albums

Pink Floyd has won a case, in the UK, preventing its record label EMI from distributing its songs individually, instead of as an entire album. The band objected to this practice, which it said undermined the integrity of their “seamless” albums. The judge said EMI was “not entitled to exploit recording by online distribution or by any other means other than the original album, without the consent of Pink Floyd”.

While this case turned on a contractual clause expressly prohibiting EMI from selling Pink Floyd’s songs “out of context”, New Zealand’s copyright law can give musicians (and other copyright holders) limited protection against “derogatory treatment” of their musical works outside of a contract (part of the “moral rights” of authors long recognised in civil law jurisdictions, but only since 1994 in New Zealand).

Under section 98 of the Copyright Act 1994, an author of music has the right (with various complex requirements and exceptions)  “not to have his or her work subjected to a derogatory treatment”. It is important to note that, where this section applies, it gives the right to the author, not the copyright owner who usually has all the rights under copyright law.

Derogatory treatment includes doing something “prejudicial to the honour or reputation of the author”.  What this actually means in practice is not always clear. In the case of a band, whose reputation might include concept albums portraying a high level of “interconnectedness” of songs, an argument could be made that breaking up the album, or rearranging it, or reducing a song to ring tone without permission, is a derogatory treatment. Similarly, using a musical work to accompany or promote a highly offensive movie could be derogatory treatment (one quirk is that moral rights extend to the “musical work” but not necessarily to an actual recording of it). In either case, the person using the work may be licensed to use it, but the author may still have a remedy for derogatory treatment. It would very much depend on the facts, taking into account the complex and incomplete coverage of moral rights.

One of the few New Zealand cases involving derogatory treatment is Radford v Hallensteins ([2009] DCR 907 and others). It involves a clothing chain that printed t-shirts showing an image of sculptor John Radford’s Western Park installation in Auckland. Radford has brought a claim against the clothing chain for copyright infringement, including derogatory treatment of his work. The case is yet to be heard, but the District Court refused to strike out the claim last year.

Cold server backups

A recent court case (see below) has clarified (likely for the first time) the law relating to making a backup of proprietary software. The case decided that copying software to create a cold server, and occasionally testing the cold server, did not infringe copyright. The case is Australian, though the relevant provisions of our Copyright Act are essentially the same.

Making a backup copy of software is expressly permitted under section 80 of the Copyright Act 1994. However, a backup copy can only be “used” if the original is lost or destroyed (or it can be used in lieu of the original copy). One of the issues the case clarified is that the occasional testing of a backup – which is of course sensible – does not breach that restriction.

However, if the purchaser was given an express direction that a backup cannot be made, then section 80 does not apply (i.e. a backup cannot be made). It is important to note that the direction not to make backups is only effective if given before or at the time the software was acquired. If the direction/prohibition was given in a click-through licence, but the software was “acquired” before that licence was accepted, section 80 will apply (i.e. a backup can be made). However, the licence agreement could still impose various other conditions about how the backup can be used/tested.

When the Copyright Act backup provisions were drafted, most backup scenarios would have involved physical media, not a failover system (hot/cold) backup. The court decision confirms that in the absence of any pre-purchase direction (which could be a simple notice on the package or on the website the software is downloaded from), a cold server backup can be made, and (subject to the licence terms) occasionally tested. A user could not, however, rely on section 80 to set up a hot server, as this would involve “use” of the copied software beyond the extent permitted.

It was good to see the court make a well-researched and practical judgment, following a hearing that involved a number of IT experts, including disaster recovery specialists. By the way, if this all sounds like much ado about not very much, it is worth noting the software in question was very expensive main-frame based software ($1m plus per licence) which, presumably, justified the cost of going to court. It is highly unlikely that Microsoft or Apple would have a major battle over a user making a simple backup of their software! Indeed, many software houses expressly permit it.

Read my full article here:

Computer program backups and the Copyright Act (Clendons Barristers & Solicitors)

The judgments:

Primary – Racing & Wagering Western Australia v Software AG (Australia) Pty Ltd [2008] FCA 1332
On appeal – Racing & Wagering Western Australia v Software AG (Australia) Pty Ltd [2008] FCA 1526

Section 92A: definite signs of improvement

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).

Aussie copyright decision increases scope for fair (dinkum) dealing

In a case that will possibly influence New Zealand law, the High Court of Australia (their highest court) last week handed down a major decision that makes it harder for companies to claim copyright over compilations and databases such as television schedule listings.

After a hearing involving no less than six QC’s (or Senior Counsels as they are now known in New Zealand and most Australian states), the High Court unanimously ruled in IceTV Pty Limited v Nine Network Australia Pty Limited that IceTV, which provides electronic programme guides, did not infringe the Nine Network’s copyright by partially reproducing its television schedule listings.

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