Copyright (Infringing File Sharing) Amendment Bill

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Explanatory note

General policy statement

This Bill amends the Copyright Act 1994 (the Act) to provide new enforcement measures against the unauthorised sharing of copyright material via the Internet (infringing file sharing). It repeals section 92A of the Act (enacted by section 53 of the Copyright (New Technologies) Amendment Act 2008, but not brought into force), which would have required ISPs to adopt a policy providing for the termination of a repeat infringer's Internet account.

File sharing involves the direct or indirect transfer of material via the Internet between 2 points. The transfer may be between users, or between a user and a place where that material is stored. Sharing of copyright works or parts of those works often occurs without the authorisation of the copyright owner, constituting an infringement.

The Act currently provides civil enforcement measures that are considered to be ineffective in remedying infringing file sharing. For each infringement a copyright owner must seek a court order to obtain the identity of the infringer from that infringer’s Internet service provider (ISP). The cost of seeking an order and the cost of taking infringement proceedings in court is generally much higher than a possible award of damages for that particular infringement, acting as a barrier to the effective enforcement of copyright.

While the damage sustained by a copyright owner from a single file sharing infringement is generally small, the prevalence of infringing file sharing in the current digital environment is having a negative cumulative effect on New Zealand’s music, film, and software industries. Internationally, this problem is also recognised, and other jurisdictions such as the US and UK have legislated or are legislating to provide for the effective enforcement of copyright against file sharers.

This Bill provides a regime that aims to—

  • 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:

  • limit ISP liability that may result from account holders' infringing file sharing.

Public education and deterrence

Lack of public knowledge that file sharing may infringe copyright contributes to the prevalence of this activity in the digital environment. The Bill provides for account holders to receive infringement notices that warn that file sharing may infringe copyright, and that continued infringement may result in enforcement action. The Bill also provides time frames in which subsequent notices cannot be sent, to give account holders reasonable time to curb infringing activity.

The Bill intends to deter the majority of infringers through a first notice. However, provision is also made for more effective enforcement of copyright against repeat infringers.

A first notice (a detection notice) will include education information and inform the account holder that any further evidence of infringement will be logged 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) will contain a list of alleged infringements for that account holder since the detection notice and a warning that the Copyright Tribunal (the Tribunal) may award compensation based on that list. The visibility of an account holder’s infringing activity in each notice and a warning that those infringements may be subject to an award is intended to deter infringers, especially those who are already aware their actions breach copyright but persist in infringing file sharing.

Upon receiving notification from an ISP that an account holder has received 3 notices, copyright owners may apply to the Tribunal for a compensation award up to $15,000. Copyright owners may also make an application to a District Court for an order requiring the ISP to suspend the account holder’s Internet access for up to 6 months.

Account holders may challenge infringement allegations by copyright owners. The Bill allows an account holder to contest a notice or its contents within prescribed time frames and provides a mechanism for copyright owners to accept or reject any challenge.

Compensation for copyright infringement by file sharing

This Bill extends the jurisdiction of the Tribunal so that it can make awards that compensate copyright owners in cases of repeat copyright infringement by file sharing. The Bill provides that claims will generally be heard on the papers; however, account holders may request a hearing or the Tribunal may order one.

If the Tribunal holds a hearing, parties may not be represented by a lawyer. This is so that Tribunal hearings are inexpensive for the parties, which improves access to the Tribunal. However, the Tribunal may give leave for a lawyer to be present.

Sanctions for serious infringers

Copyright owners will be able to seek a court order suspending a repeat infringer’s Internet account for up to 6 months after a third notice has been sent to the account holder. A court is better equipped to consider whether suspension is appropriate in the circumstances of each case. The Bill gives examples of things the court must consider, including the seriousness of the infringing.

ISP liability

The Act currently provides “safe harbours” (exclusions from liability) for ISPs where they are acting as a mere conduit for copyright infringement over the ISPs’ network. This Bill gives a safe harbour to ISPs from liability for file sharing infringements occurring over their networks, provided they comply with their obligations under the Bill.

ISP definition

The Bill inserts a separate definition of Internet service provider into the Act for the purpose of the regime. The definition 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. Only traditional ISPs are in a position to perform evidence matching and notice functions.

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 provides that the Bill comes into force on 1 October 2010.

Clause 3 provides that the Bill amends the Copyright Act 1994 (the Act).

Part 1
Infringing file sharing

Clause 4 repeals the definition of Internet service provider in section 2(1). This is because the term Internet service provider, or ISP, is defined in the Bill to mean different things for different purposes. The term Internet service provider is used for the purpose of the safe haven provisions in sections 92A to 92E, while the abbreviation ISP is used in the infringing file sharing provisions in new sections 122A to 122R.

Clause 5 substitutes a new section 92A. New section 92A contains the definitions of Internet services and Internet service provider for the purposes of sections 92A to 92E.

Clause 6 amends section 92B by inserting a further safe haven provision relating to Internet service providers that may know of infringing activity as a result of their involvement in the infringing file sharing regime. An Internet service provider does not infringe copyright, despite possible knowledge of an infringement, as long as it complies with its obligations under new sections 122A to 122R and associated regulations. Clause 6 also omits the definition of Internet services, because this is moved into new section 92A.

Clause 7 inserts new sections 122A to 122R into Part 6 (remedies for infringement).

New section 122A sets out definitions for the purpose of the infringing file sharing regime. Key terms are account holder, file sharing, infringement, IP address, and ISP.

New section 122B gives an overview of the regime.

New sections 122C to 122H set out the system for sending notices to people who are alleged to have infringed copyright by file sharing. The system works as follows:

New section 122C

  • copyright owners send ISPs information about infringements detected at Internet protocol addresses (IP address):

  • ISPs are obliged to match each IP address with the relevant account holder's details and to issue an infringement notice to the account holder:

New sections 122D to 122H

  • the first notice sent is a detection notice. It 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 3 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 1 week in which to challenge the detection notice. If the challenge is not rejected within 3 weeks after the date of the detection notice, the detection notice is cancelled. A detection notice expires 9 months after it is issued, or 4 weeks after an enforcement notice is issued:

  • if a further infringement occurs at least 3 weeks after a detection notice is issued, a second notice (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 3 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 4 weeks in which to take enforcement action against the account holder.

New section 122I sets out the 2 special enforcement mechanisms available under the infringing file sharing regime, which are—

  • an order from the Tribunal for a sum of up to $15,000; and

  • an order from a District Court requiring the ISP to suspend the account holder's account.

Both these orders are in addition to, and do not displace, any other remedies under the Act.

New sections 122J to 122N are about the process of getting an order from the Tribunal. The amount of the order is determined in accordance with regulations. It is based on the number of infringements identified in the enforcement notice that the Tribunal is satisfied occurred at an address of the account holder against the copyright owner. The order may include a sum to compensate the copyright owner for the fees it has to pay to the ISP under new section 122R, and reimbursement of the application fee to the Tribunal.

New section 122O is about the order that a District Court may make requiring an ISP to suspend the account of an infringer to whom an enforcement order has been sent. A copyright owner may bring whatever evidence it likes to the court (such as evidence that 1 or more Tribunal orders have been made against the account holder), but the court must consider various matters when deciding whether to make the order, such as the degree of the account holder's reliance on access to the Internet.

New section 122P provides a mechanism by which a copyright owner can find out the contact details of an account holder for the purpose of seeking an order under new section 122O. The copyright owner may apply to a District Court for an order requiring the ISP to disclose that information, but must undertake not to disclose the information for any purpose other than one associated with an order under new section 122O.

New section 122Q sets out the obligations of ISPs with respect to maintaining records, reporting, and keeping account holders' names and contact details confidential.

New section 122R allows ISPs to charge copyright owners for the work they are obliged to do under the infringing file sharing regime, and provides that regulations may prescribe the rates charged or methods for calculating the rates charged.

Clause 8 consequentially amends section 123 by including references to the new sections.

Part 2
Related amendments to Parts 10 and 11

Clause 9 increases the number of members of the Tribunal from 2 to 5.

Clause 10 amends section 234, the regulation-making section, to provide for regulations to be made dealing with various aspects of the infringing file sharing regime, such as prescribing the forms of the infringement notices and setting the amounts that the Tribunal can award.

Regulatory impact statement

The regulatory impact statement for this Bill was prepared on 9 December 2009. It is available on—

  • the Ministry of Economic Development's website at http://www.med.govt.nz/templates/MultipageDocumentTOC____42521.aspx; and

  • Treasury's website at http://www.treasury.govt.nz/publications/informationreleases/ris/pdfs/ris-med-cifs-feb10.pdf.