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May 24, 2010 | by  | in Features | [ssba]

Home taping is killing music

The producers of the Academy Award winning film The Hurt Locker, Voltage Pictures, recently announced they intend to sue “tens of thousands” of file-sharers for unlawfully downloading the copyrighted film. To do this, Voltage Pictures have enlisted the help of the US Copyright Group; a company run by intellectual property lawyers aimed at “recovering reasonable cash settlements” from unlawful downloads. The US Copyright Group has already pursued a number of indie movies, and it was announced in March that they intended to target more than 20,000 BitTorrent users for the illegal distribution of films including Steam Experiment, Far Cry and Gray Man, among others. The Hurt Locker case will see the group working on a whole other level.

This action, on the part of the producers of the movie, comes in the wake of The Hurt Locker’s disappointing US$16 million takings in the United States, especially considering the film’s reported $15 million cost, and the fact the film won six Academy Awards, including Best Picture. The Hurt Locker is now relegated to the position of lowest-grossing Best Picture recipient of all time.

It is in the face of these attempts at punishing file-sharers in the US that New Zealand continues to review its digital copyright law with the Copyright (Infringing File Sharing) Amendment Bill, soon to go under review by Select Committee.

Section 92a: the original proposal

The original Section 92a amendment, scrapped by Prime Minister John Key in March this year, called for a three-strikes policy, which would see violators have their internet services disconnected in the case of continued infringements. This required the cooperation of Internet Service Providers (ISPs) in identifying and punishing offenders. As intellectual property expert John Katz QC explains in the May ’09 edition of Intellectual Property Journal, “Nobody who respects copyright and the creative inputs it protects could reasonably object to putting into place measures to prevent the avalanche of illegal downloads and the like, all of which impact heavily on creative industries.” However, he says “A solution such as s92A is a blunt instrument and shifts the policing from the owner of the copyright to the operator of the pipe through which the illegal activity is channeled—the (ISP) or similar utility.”

In addition to charging ISPs with policing their own customers, Katz explains that they would have also been forced to absorb any costs associated with the legislation: “The purpose of provisions such as s92A is to ensure that the problem can be laid off so that it becomes not the problem of the rights owner, but the problem of the ISP. This then means of course that the costs of compliance are those of the ISP and the costs of compliance will inevitably be passed on to ISP customers.”

This led TelstraClear, one of New Zealand’s largest ISPs, to refuse to back the disconnection of alleged file-sharers as outlined by that bill, which basically meant the law could not be effectively introduced as it required approval from all ISPs in order to see implementation, leading to its eventual retraction by the Prime Minister. Keith Davidson, then-chairman of InternetNZ, a non-profit organisation dedicated to protecting and promoting the internet in New Zealand, commented at the time: “Terminating an internet account was always a disproportionate response to copyright infringement, and to force ISPs and other organisations to be copyright judges and policemen was never an acceptable situation.”

Despite the failings of the original amendment, Matt Sumptor, a partner at the law firm Chapman Tripp and lecturer at the University of Auckland, also writing in the New Zealand Intellectual Property Journal, recognised that “The only way you can stop people ripping off works is for piracy to have predictable and unwelcome penalties for those on the wrong side of the law.

“If there is one unifying policy initiative in copyright law, it is the need to confront and address the piracy problem on the digital frontier.”

Cue Commerce Minister Simon Power and the 2010 Copyright (Infringing File Sharing) Amendment Bill.

Section 92a: revamped

While there are a number of similarities to the original proposed legislation, Power’s bill does differ significantly in the requirements imposed upon ISPs. The new bill would see a three-notice policy, similar to the original three strikes, which Power says is to “educate and warn file-sharers that unauthorised sharing of copyright works is illegal”. Rights holders have the ability to request ISPs to issue these infringement notices to offenders; the first informing the user that infringement has occurred, and the second and third acting as repeat warnings. If an offender continues to infringe, the rights holder can then seek a penalty at the Copyright Tribunal for up to NZ$15,000, relative to the damage caused.

The bill also includes a provision that would see the suspension of internet accounts for up to six months, but it outlines that suspension will be processed by the courts in order to ensure both parties are heard, and the action will only be taken in cases of serious infringement.

The crucial difference here is that ISPs are only required to issue infringement notices due to their holding access of account holders’ personal information, removing the burden of having to negotiate process and penalties with rights holders.

While InternetNZ has stated that they welcome the bill, seeing it as a step forward, they have still raised a number of concerns, especially with regard to the suspension of accounts.

Jordan Carter, InternetNZ’s policy director, says “InternetNZ opposes account suspension as a remedy. It is both disproportionate, in that the penalty is too severe given the activity, and futile given that the public won’t put up with no net but will instead get a new account with their ISP or another.”

Carter has said that InternetNZ will argue against the account suspension provision in the select committee process, as well as suggesting “the notice system should simply be about notices going to alleged infringers, and giving them the right to reply back to the alleging rights holder”.

Furthermore, Carter believes some “technical changes” need to be made before implementation. “The definition of ‘ISP’ needs to be clarified; there are some details about how the notices process will work that could be clarified. There is also the need to clearly set out what it means to ‘suspend’ an internet account. The legislation should not create a ‘strict liability offences’ for account holders.”

The Creative Freedom Foundation has also raised concerns over the proposed punitive measures. Bronwyn Holloway-Smith, Director of the Foundation explains, “We’re strongly against internet termination as a penalty, and the lack of detail defining the scale of fines, among other things. We’ve always been opposed to the inclusion of internet termination as punishment. Due to New Zealand’s geographical isolation, the internet is a vital tool for artists to connect to the rest of the world—to organise international exhibitions, plan tours, or send movie files overseas for time-critical post-production work.”

Furthermore, Holloway-Smith questions the enormity of the proposed $15,000 fines. “We initially suggested a $1000 limit on fines but they’ve gone for $15,000 to match the Disputes Tribunal and, really, we think that’s excessive. We have no information on whether that limit will be reached for one movie or 1000 movies, so we don’t know if the fines will be reasonable.”

So… can file sharing actually be stopped?

Carter believes that “The educative side of sending notices will have an effect, and it should reduce file sharing. Many people just don’t know that it is illegal, or if they do, they assume nobody knows they are doing it. Receiving a notice will make it clear that their assumption is wrong on both counts. Overseas experience points to considerable reductions when notices begin.”

The scope of the effectiveness has to be questioned, however. In an interview with Salient earlier this year, Katz said, “Quite frankly, whatever steps are ultimately enacted I cannot see that it will bring an end to the problem of illegal file sharing. It may well help but I think the problem is too wide-spread and too enormous for there to be a truly effective 100% catch-all solution.”

Google trends appear to back this up, illustrating that while some file-sharing sites have experienced significant drops in usage, for the most part there has been a steady increase in usage trends worldwide despite the introduction of laws designed to deter users, and legal actions such as those being taken in The Hurt Locker case.

While we will have to wait and see whether legislation in New Zealand, be it the current bill or some future incarnation, will have any effect on deterring Kiwi offenders, Carter speculates that “The better response is to develop new models for the commercialisation of audio and AV content. Rights holders should be focused on making stuff available to the public in a fast, user-friendly and affordable way.”

Holloway-Smith agrees. “Many studies have shown that the primary cause of illicit file sharing is unsatisfied customers, so ultimately the business models need to change. The Hurt Locker was released in US theatres on 26 June 2009, and on DVD on 12 January 2010. However, the movie wasn’t available in New Zealand when it was nominated for the Oscars, or even when it won the Oscar. In fact, it took another month to be released to cinemas in New Zealand and we’re still waiting for the legal download.”

She adds, “Movie companies are behaving like it’s 1995, with staggered international and regional cinema releases followed by DVD/Blu-Ray releases, and months or years later legal downloads are offered, if at all. For a globally connected world that makes no sense, and so—when it comes to the hysterical claims of millions of dollars of lost sales from piracy—we’ve got to ask whether these supposed lost sales have actually occurred when these businesses fail to fulfill consumer demand.”

InternetNZ will be hosting seminars at the end of the month aimed at assisting submissions to the Select Committee. These seminars will “provide for sharing of information and enable critical analysis of the Bill”, and will be held at the Intercontinental Hotel in Wellington on 25 May, and at the Aotea Centre in Auckland on the 26 May, both running from 9am-1pm. The Creative Freedom Foundation’s website will also offer a full analysis of the proposal in the coming weeks. Select Committee submissions are due on 17 June.


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  1. Paul Comrie-Thomson says:

    A couple of slight tweaks:

    – the original s92A was scrapped in March last year (2009) not this year.

    – the original simply called for ISPs to “reasonably implement” a policy for dealing with repeat infringement, so there was no three-strikes policy explicitly called for by the law, but this was one way that the ISPs were looking at implementing the law. This ISP policy could have seen those that were simply accused violators (as opposed to proven violators) disconnected.

  2. Paul Comrie-Thomson says:

    Libraries and universities to be held liable for infringement they couldn’t prevent:

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