Intellectual Property

12 May 2011

Download this as a pdf

Caught in the Outfield: Three Strikes and You’re Out – New Zealand’s Copyright (Infringing File Sharing) Amendment Act 2011

On Your Marks readers will recall the articles we have published over the past three years discussing the progress of the Copyright (New Technologies) Amendment Act 2008 (2008 Act) and the subsequent Copyright (Infringing File Sharing) Amendment Bill (Amendment Bill). The Amendment Bill was designed to amend the file sharing aspects of the 2008 Act (that were never brought into force) and in particular section 92A.

A pre-match refresher - background details

Section 92A of the 2008 Act imposed a general obligation on internet service providers (ISPs) to have a policy for suspension of account holders' Internet access for repeat copyright infringement. This section was largely misunderstood, and was unpopular with industry groups and in particular ISPs. Subsequently the New Zealand Government suspended the introduction of section 92A into law.

The Amendment Bill in turn proposed to repeal section 92A and put in its place an alternative "three strikes" infringing file sharing regime.

The Amendment Bill provided a regime where the copyright owner (or "rights owner") would have to inform the (newly classified) Internet Protocol Address Provider (IPAP) if it believed its rights had been infringed and the IPAP would, in turn, be required to forward up to three infringement notices to the account holder. Once an account holder received a third infringement notice relating to any content owned by the same rights owner (within applicable timeframes), the rights owner could then pursue the account holder in the Copyright Tribunal or the Courts, in accordance with procedure set out in the Amendment Bill.

"Three Strikes" Regime in Force: New Zealand's Copyright (Infringing File Sharing) Amendment Act 2011

The New Zealand Government has recently enacted the Copyright (Infringing File Sharing) Amendment Act 2011 (2011 Act). The regime put in place by the 2011 Act has become known as the "Three Strikes" regime in intellectual property circles.

In summary, the 2011 Act:

• Repeals section 92A of the 2008 Act.
• Creates the new IPAP classification, upon which obligations are placed for administration of the "three strikes" notification regime. Under the Act an IPAP is defined as:

"...a person that operates a business that, other than as an incidental feature of its main business activities, -

(a) offers the transmission, routing, and providing of connections for digital online communications, between or among points specified by a user, of material of the user's choosing; and

(b) allocates IP addresses to its account holders for its services; and

(c) charges its account holders for its services; and

(d) is not primarily operated to cater for transient users."

• Creates the new "rights owner" definition which provides that a rights owner can be a copyright owner or a person acting as agent for one or more copyright owners.
• Clarifies that "file sharing" covers material being uploaded via, or downloaded from, the Internet using an application or network that enables the simultaneous sharing of material between multiple users.
• Sets up the "three strikes" regime, by which rights owners can require IPAPs to send infringement notices to account holders who have been identified by the rights owner as infringing their copyright through file sharing systems. IPAPs are also permitted to charge the rights owners for this administration service at prescribed rates.
• Sets up the three tier infringement notice structure of Detection Notices (1st infringement), Warning Notices (2nd infringement) and Enforcement Notices (3rd infringement) and the timeframe within which each notice is able to be sent once infringement has been identified by the copyright owner.
• Provides the account holder with the ability to challenge the infringement notice, within certain timeframes and for cancellation of the notice if appropriate.
• Provides that once an account holder has received a third infringement notice relating to the same rights owner, the rights owner can file proceedings with the Copyright Tribunal or the Courts in accordance with the procedure under the Act. Remedies available to the rights owner include an order from the Copyright Tribunal for a sum of up to NZ$15,000 or an order from a District Court requiring the IPAP to suspend the account holders Internet access for up to 6 months. (Note: the provision relating to suspension of an account holder's Internet access is not in force under the Act, and will be reviewed.)
• Provides that the existence of a third infringement notice (Enforcement Notice) creates a presumption of copyright infringement where the rights owner files proceedings with the Copyright Tribunal or the Court. This can be rebutted by the account holder.
• Places specific obligations on IPAPs for administration of the three strikes regime, including, responding to the rights owner, applying and following specific timeframes and rules for sending the infringement notices, retention of account holder identification information for a minimum period of 40 days, and retention of rights owner and infringement information for 12 months.
• Provides that the IPAP may not release details of the account holder to the rights owner unless authorised by the account holder themselves or required by the Copyright Tribunal or Court. (Note: this provision is not yet in force under the 2011 Act and under the 2011 Act an Order in Council must be made to bring this provision into force.)
• Provides that the "three strikes" regime set up by the 2011 Act will not apply to cellular mobile internet services for two years after commencement of the Act (unless this suspension is removed by Order in Council prior to that time).

Discussion - will this give NZ the home-run advantage?

A "three strikes" regime is not unique, although New Zealand is one of the first countries to enact such a regime for combating infringement of copyright through file sharing systems.

The 2011 Act provisions are limited to infringement through networks or applications that allow material to be shared between users. The 2011 Act also places much of the burden for monitoring and enforcement of copyright on the rights owner themselves. Copyright owners will need to be vigilant to monitor infringement of their rights by account holders and to identify the relevant IPAP through whom the "three strikes" regime will be administered.

While there is a reduction in the pressures which were perceived to be placed on ISPs under the 2008 Act, the 2011 Act places restrictive obligations on those providers that fall within the new definition of an "IPAP" under the 2011 Act.

Providers will need to consider carefully whether the new IPAP definition applies to them. If they do fall within the definition, they will need to ensure that the relevant policies and procedures are put in place to ensure that, as an IPAP, they are able to comply with the administrative provisions placed on them under the 2011 Act. The fact that an IPAP is entitled to charge a rights owner for administering the infringement notice regime perhaps gives some incentive toward compliance.

At first blush, the process appears cumbersome, with limited effective remedies for rights holders and opportunities for account holders to make the process expensive for rights holders. Even if the provision for suspension of account holders' accounts is brought into force, there appear to be practical options for the users to easily use a replacement account with another IPAP. Except perhaps for those who deal with a lot of infringements. Rights holders will need to consider whether other available remedies provide more effective enforcement options.

Will the "three strikes and you are out" approach to copyright infringement mean that the rights of copyright owners can be more effectively enforced in New Zealand against account holders who are infringing copyright using file sharing systems? There are considerable doubts; the ball game is still wide open.

Authors

Earl Gray

Partner - Intellectual Property

DDI: +64 9 977 5002

Mobile: +64 29 977 5002

Email:

View Profile

Richard Watts

Partner - Intellectual Property

DDI: +64 9 977 5182

Mobile: +64 21 895 931

Email:

View Profile

Claire Foggo

Senior Associate - Intellectual Property

DDI: +64 9 977 5314

Mobile: +64 21 582 674

Email:

View Profile

Sonya Hill

Senior Associate - Corporate & Commercial

DDI: +64 9 977 5305

Mobile: +64 21 403 596

Email:

View Profile