It seems ironic that as the government rolls out ultra-fast broadband for businesses, its proposed redraft of S.92A of the Copyright Act 1994 still contains the threat of termination of businesses’ internet accounts.
In July, the Ministry of Economic Development (“MED”) released a draft three phase process by which intellectual property rights holders will be able to pursue repeat copyright infringers in the digital environment.
Under phase 1, where a rights holder (“RH”) considers on reasonable grounds that there has been online copyright infringement of one or more of its works, it may send a first infringement notice and subsequently a cease and desist notice in prescribed form to the subscriber’s internet service provider (“ISP”).
Under phase 2, if there has been repeat copyright infringement via that subscriber’s internet account, the RH may apply to the Copyright Tribunal (“CT”) to obtain an order requiring the ISP to supply the subscriber’s name and contact details.
Under phase 3, the task of policing the complaint will fall to the CT (instead of the ISP as under first draft proposals by the previous Labour government). Penalties which the CT can impose will include damages, injunction, an account of profits, fines, and the ultimate sanction of termination of the subscriber’s internet account.
Due to vocal opposition to earlier S.92A proposals, the public were wisely given the opportunity to make advance submissions on the proposed legislation, and in particular to respond to specific questions posed by MED.
113 interested parties made submissions, including the EMA and Business NZ on behalf of businesses, but regrettably there were few from small to medium enterprises (“SMEs”) themselves, although they seem to have the most to lose under the regime.
Commerce Minister Simon Power has previously stated that he wanted the legislation to better meet the concerns and interests of ISPs, RHs, and internet users. It seems however, that the interests and concerns of business internet users are somewhat less than top priority.
New Zealand businesses are rapidly increasing their reliance on the internet for consumption and supply of goods and services, but this also means greater exposure to loss if their digital pipeline gets ruptured. The ultimate threat of termination of a business’s internet account as a remedy for copyright infringement (most likely carried out by employees) seems unduly harsh and counterproductive.
The government was given a strong message from a wide range of submitters across the business and digital spectrum that this level of penalty was excessive. There appeared to be broad support for much of the rest of the proposals however, and some excellent suggestions to fine-tune the legislation.
The EMA submitted that the regime could increase business overheads by forcing businesses to:
• update employment contracts to cover copyright infringement;
• develop policies and processes to deal with potential breaches and identify what staff can legitimately download online;
• establish processes to deal with infringement notices;
• purchase and configure software to block or filter out access to file-sharing websites;
• identify offenders; and
• meet legal costs incurred.
Realistically, modern businesses do need to address these issues, although many SMEs will find doing so onerous and costly, and a more likely scenario is that S.92A risks will be ignored until problems come home to roost.
The proposal and summary of submissions are available at http://www.med.govt.nz/templates/MultipageDocumentTOC____41847.aspx. There will be a further opportunity for public submissions at select committee stage, anticipated to be in the New Year.
