Section 92A – the latest instalment

In July, the Ministry of Economic Development released a discussion document setting out its proposal for a reworked version of the controversial section 92A of the Copyright Act. The re-worked version attempts to address many of the criticisms of the first proposal and is a marked improvement on its predecessor. However, as senior associate Hayley Miller and law clerk Liz Blythe outline in this article on the new proposal, there are still some areas of uncertainty which need to be addressed.

The new proposal – a three phrase process

Phase One: Where a copyright owner considers, on reasonable grounds, that there has been online copyright infringement of its work(s) it may send a first infringement notice (in a prescribed form) to the internet service provider (ISP) involved. The ISP must forward this notice to the internet subscriber who has 30 days to respond.

If the subscriber does respond, the copyright owner must accept or reject such response and advise the subscriber of its decision.

First infringement notices remain valid for 9 months, during which time if the copyright owner detects further infringement by that subscriber the copyright owner may send a cease and desist notice through the ISP (although it is proposed that there be at least a 30 day gap between a first infringement notice and a cease and desist notice). Again, there is a 30 day response period and any response must be accepted or rejected by the copyright owner.

If no cease and desist notice is sent during the 9 month period then the ISP can destroy the record of infringement and any further action by the copyright owner must commence again with a new first infringement notice.

Phase Two: Where both a notice of infringement and a cease and desist notice have been issued by the copyright owner and a further infringement is detected, the copyright owner may (provided the second 30 day response period has expired) apply to the Copyright Tribunal (Tribunal) to obtain an order requiring the ISP to disclose the subscriber's name, contact details and other relevant information. The copyright owner must supply evidence of repeated infringement by the subscriber to the Tribunal. The information obtained must only be used by the copyright owner in relation to taking action against the subscriber.

Phase Three: The copyright owner can elect to register an infringement complaint with the Tribunal. The copyright owner must agree to be bound by the Tribunal's decision (subject to appeal to the High Court), pay a filing fee and provide evidence of (a) their entitlement to copyright, (b) repeat infringement by the subscriber, and (c) compliance with phase one. The subscriber will then be notified and given the opportunity to respond. The Tribunal will be convened unless the parties agree to undertake mediation. Where mediation is undertaken and is unsuccessful the Tribunal will then convene at that stage.

The improvements

The original section 92A required an ISP to adopt and reasonably implement a policy providing for termination, in appropriate circumstances, of accounts that the ISP held with repeatedly infringing internet subscribers. The new proposal improves on this by addressing a large number of the criticisms that were voiced, through:

• providing greater certainty to the ISP, copyright owner and internet subscribers as to what the process is;

• introducing an independent third party (the Tribunal) so that it is not left for an ISP to pass judgment, which should reduce the compliance costs for ISPs and improve due process;

• requiring proof of the entitlement to copyright and the alleged infringement before sanctions are imposed;

• ensuring the internet subscriber has an opportunity to put forward their objections; and

• reducing the likelihood of fraudulent claims being brought, through the more formal process and payment of filing fees.

The original section 92A provided only for account termination (criticised as a potentially disproportionate response) whereas the latest proposal includes a range of remedies that can be awarded to a successful claimant (damages, injunctions, account of profits and fines, as well as the power to order an ISP to terminate the subscriber's internet account).

The remaining areas of uncertainty

While most would agree that the recent discussion proposal is a marked improvement, the uncertainties of the first s92A which don't appear to have been addressed as yet, are the calls for:

• a specific provision addressing false accusations under this section;

• clarity around what organisations are considered an ISP for the purpose of this section. The term ISP has been given a broad definition and potentially includes organisations offering access to the internet such as internet cafes, businesses who provide internet access to employees, and those who host material on websites (such as online auction sites and social networking sites); and

• clarity as to who is considered a subscriber. No distinction is made between single home users and large business multi-users, both of which could be caught by the phrase ISP accounts.

Additionally it would be useful to address:

• what constitutes "reasonable grounds" and "reasonable evidence" for a copyright owner to be able to lay a successful complaint;

• additional funding and manpower for the Tribunal if it is to effectively execute its proposed role in the scheme, given the likelihood of a large number of complaints to it;

• the severity of offending required to warrant account termination, so that its use is not disproportionate to the actions of the subscriber; and

• whether infringers would be prevented from reconnecting where the Tribunal makes an order for termination and if so, how this would be enforced in practice.

ISPs will still have additional costs to meet as they must perform record keeping, information providing and correspondence obligations. The risk therefore remains that these costs may be passed onto its subscribers. It has also been suggested by some commentators that ISPs will unfairly have to bear the brunt of media criticism for carrying out the terminations ordered by the Tribunal and that the process may be abused by subscribers wishing to exit their broadband plans without incurring exit fees.

Finally, the workability of the legislation has been questioned as a result of most New Zealand ISPs using dynamic IP addresses which modify the addresses used by infringers regularly. "Repeat infringement" could therefore prove very difficult to prove against a subscriber whose ISP address is constantly changing.

The next instalment

Notwithstanding these outstanding issues, the recent proposal is a marked improvement and, as the deadline for submissions has now closed, we will just have to wait to see whether the Minister of Commerce Simon Power's confidence that " at the end of this process we will have a law that is clear, sensible, and fair to everyone" holds true. We will keep you updated on further developments.

Enquiries and information

For more information on any of the cases, articles and features in Commercial Quarterly, please email Diane Graham or call her on 64 9 916 8849.