NZ's copyright proposal: Guilty until you prove you're innocent (updated)

POSTED BY Rick Shera
05 November 2010

posted in | Intellectual Property | Copyright



It's like Groundhog day.

Back in 2008, after the Parliamentary Select Committee had removed section 92A from the Copyright (New Technologies) Amendment Bill, it was reintroduced unannounced on April Fools Day in an SOP just a week before the Bill was passed into law. The problem with section 92A was an ISP was almost certain to treat an internet account holder as guilty as soon as the ISP received an accusation from a rights owner.  

Spawned in a Foocamp school room in Warkworth, Creative Freedom Foundation's catch cry of Guilt upon Accusation spread like wildfire across blacked out social networks and websites. That and the failure of ISPs and rights owner bodies to agree on issues like who was to bear notice processing costs ultimately resulted in newly elected Prime Minister John Key announcing that the draconian law would be shelved.  

Almost two years later and despite numerous consultations and another round of Select Committee hearings, I have this odd feeling that we have come full circle.

Why do I say that?

Well, despite the many improvements proposed in the Copyright (Infringing File Sharing) Amendment Bill (section 92A's replacement), at almost the last gasp the Select Committee has reported back with a completely new provision - a provision that creates a presumption heavily favouring the rights owner. Section 122MA -  without any warning, no public consultation and out of kilter with the balanced approach that has gradually developed. Groundhog day - the scales are being unfairly tipped again.  For reasons that are not immediately apparent.

Before I look at the specific problems, I think it's important to put all this in context. What we are talking about here is an allegation by one private party (the rights owner as the Bill now describes it) that another private party (the internet account holder) has infringed copyright. The allegation is that the account holder (or someone using the account holder's internet connection) has infringed copyright in the works that are the subject of at least 3 infringement notices.  Maximum damage award of $15,000 to go to the rights owner if ordered by the Copyright Tribunal, a specialist quasi judicial body whose jurisdiction has been expanded to cater for this new regime. No lawyers unless it would be unfair on a party and a strong drive to have the cases decided on the papers rather than having to have formal hearings. If that sounds familiar, it's because it is. It's modeled closely on two regimes; InternetNZ's domain name dispute resolution service (domain name ownership disputes heard completely on the papers with no actual hearings) and the Disputes Tribunal which hears small civil claims in New Zealand up to a basic $15,000 limit.  Efficiency is key for disputes at these levels as it is for this copyright regime.  But, under both regimes, that has not meant the usual principles of natural justice are sacrificed - and nor should they be. After all, these are all disputes between private parties who should rank equally as they come before an independent adjudicator.  Even in the face of the most blatant cybersquatter, a trademark holder has to prove their legitimate interest in the domain name.

Section 122MA interacts with section 122N, so let's look at them both as the Select Committee proposes they be passed into law.

122MA Infringement notice as evidence of copyright infringement

(1) In proceedings before the Tribunal, an infringement notice is conclusive evidence of the following:

(a) that each incidence of file sharing identified in the notice constituted an infringement of the right owner's copyright in the work identified:

(b) that the information recorded in the infringement notice is correct:

(c) that the infringement notice was issued in accordance with this Act.

(2) An account holder may submit evidence, or give reasons, that show that any 1 or more of the presumptions in subsection (1) do not apply with respect to any particular infringement identified in an infringement notice.

 (3) If an account holder submits evidence or gives reasons as referred to in subsection (2), the rights owner must satisfy the Tribunal that the particular presumption or presumptions are correct.

122N Tribunal order requiring payment to rights owner

(1) The Tribunal must order an account holder to pay a rights owner a sum if the Tribunal is satisfied that

 (a) each of the 3 alleged infringements that triggered the infringement notices issued to the account holder—

was an infringement of the rights owner's copyright; and

 occurred at an IP address of the account holder; and

(b) the 3 notices were issued in accordance with this Act.

(4A) Despite subsection (1), the Tribunal may decline to make the order required by that subsection if, in the circumstances of the case, the Tribunal is satisfied that making the order would be manifestly unjust to the account holder.

The form of an infringement notice is to be prescribed by regulation.  However, the fact that the form is correctly completed is not relevant to the issue of whether or not there has been copyright infringement.  So that does not explain why the mere filing of a notice should be conclusive evidence.

It must be that the Select Committee considers notices issued by rights owners will be of such quality and veracity that they are deserving of an easier ride. Conversely, it is hard to escape the conclusion that Select Committee members consider that anyone who gets to the stage of a Tribunal hearing must almost certainly be a repeat infringer and therefore deserving of less protection.

We know of course, and the Select Committee should know because it was told, that we cannot make such generalisations.

In it's submission to the Telecommunication Carriers' Forum on the original section 92A draft code, repeated to the Committee, Google indicated that of notices sent to it under the US Digital Millennium Copyright Act (DMCA):

  • 57% were from businesses targeting competitors; and
  • 37% were not valid copyright claims.

And, if you think Google was exaggerating that competition issue, check out this case that just arrived in my inbox on 10 November - Court Orders Company to Stop Sending Bogus Notices to eBay.

Judge David Harvey, New Zealand's most tech savvy jurist, in his submission on the same draft code (also referred to the Committee), stated:

It is critical that the copyright owner prove at the outset;  
(a) that it holds copyright, and  
(b) that such copyright is governed by New Zealand law.   

Some 30% of copyright litigation fails because of failure to prove this essential 

There is no reason to expect any different under this regime. In fact, because the same April Fools SOP removed any penalty for submission of false or misleading notices and there is no penalty included in the Bill, New Zealand's regime is more susceptible to abuse than those of Australia or the US, which do carry such penalties.

I can think of three situations where that sort of abuse (whether intentional or not) could arise and there are no doubt many more:
  1. An overseas supplier wrongly terminates its New Zealand exclusive distributor's distribution agreement for gaming software.  A dispute ensues but the NZ distributor continues to sell the gaming software via it's traditional p2p channels.  Over a period of months infringement notices continue to be sent by the overseas supplier to the NZ distributor's ISP.
  2. An environmental organisation conducts an aggressive online campaign via various channels, including p2p, against a major New Zealand company it alleges to have engaged in environmentally unsound practices. The target company files a series of infringement notices.
  3. A recording company accuses a musician of selling tracks via p2p that it says infringe copyright because they sample or sound similar to music by the musician which is in the recording company's catalogue. The musician disputes the recording company's ownership anyway but also considers that the new songs do not infringe because they are not substantially similar.  Despite that, the recording company files infringement notices with the musician's ISP.
In any of these scenarios copyright infringement may or may not have taken place but there can be no presumption either way.  It is grossly unfair on the account holder for it to be presumed guilty before it even starts.

There are other problems:
  • There is no indication what level of proof is required to rebut the presumption.  What is meant by "giving a reason that shows" a presumption should not apply in section 122MA(2)?  Balance of probabilities?  A lesser standard?  Higher?
  • It is difficult to see what if any discretion the Tribunal will have under section 122N. As I read it, the rights owner can just stay silent and unless the account holder can successfully rebut all presumptions, the Tribunal will automatically have to be "satisfied" that infringement has taken place.  It then has a discretion under section 122N(4A) but how can it decide it is "manifestly unjust" to award anything if section 122MA dictates that an account holder is a repeat infringer.  The two provisions are inconsistent.
Since writing this I have also heard it argued there will be a very low burden of proof and all an account holder will need to do is put up it's hand and say "it wasn't me".  The burden will then shift to the rights owner. I can't see how that can be the case, for two reasons:
  1. The words "show" and "do not apply" in section 122MA(2) indicate that the account holder must present an argument that convinces the Tribunal the presumptions are incorrect - that, as a matter of fact or law, they "do not apply".  Simply saying "it ain't so" is not "showing" the Tribunal anything. So, something more than just a spurious defence is required.  The only conclusion the Tribunal will be able to draw, surely, is that it is intended that the rebuttal be provided on at least the balance of probabilities.
  2. But, assume for the moment that all an account holder has to do is raise it's hand for the burden to shift.  That is nonsensical since it renders the presumption no presumption at all, let alone a conclusive one.  No Tribunal is going to conclude that was Parliament's intention. To give meaning to the presumption, the Tribunal will require the account holder to convince it on at least the balance of probabilities.

A possibility where a presumption might work is where the account holder does not respond at all, in which case, in a fast track procedure like this, one could perhaps argue that the rights owner should not have to bother proving its case.  But, Courts and Tribunals cater for this already - it's called judgement by default and no specific presumption is needed. In any case, that is not what section 122MA says.

The provision is not needed for more general reasons.

First, the whole point of having the Copyright Tribunal involved is that it is the expert body that is best placed to decide all issues.  One of those issues, as Judge Harvey says, must always be whether in fact there is a case to answer. That must be for the rights owner to show first.

Secondly, if there are rights owners whose evidence is well nigh perfect, that will be recognised by the Tribunal and the onus will almost immediately shift to the account holder anyway. Tribunals and Courts are used to assessing the standard and weight of evidence they need in order to give rise to a prima facie case that the defendant then needs to answer.  In other words, rights owners whose evidence is conclusive will have no problem shifting the onus on to the account holder, so they do not need section 122MA.  Conversely, the rights owners it benefits are those whose evidence does not reach the standard of a prima facie case.

Section 122MA should be deleted. A statutory presumption of guilt is out of place, is unnecessary and has the potential to unfairly prejudice innocent account holders.

(Underlined text updated 9 and 10 November 2010)

POSTED BY Rick Shera
05 November 2010

posted in l@w.geek.nzIntellectual PropertyCopyright



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