National Blog of New Zealand

Granting creators of content a temporary monopoly over their content in order to derive financial return is part of fostering a creative New Zealand and upholding our international intellectual property agreements. Development of content takes considerable effort and if we value the fruits of professional commercial creativity (questions of legitimacy aside) then we need to safeguard the property rights of creators.

As we’ve seen with the recent pullback on Digital Rights Management (DRM) the non-rival nature of ‘intellectual’ property combined with emerging technologies has made it increasingly difficult to enforce copyright. The largest conduit used for the dissemination of copyright infringing material is the Internet, an international technologicaly and legally complex system making rights management all that more arduous.

In an attempt to improve the balance the Copyright (New Technologies) Amendment Act 2008 was passed into law on 11th April 2008. It’s primary role was to update our Copyright Act 1994 to deal with new modes of content use and sharing. Some of the amendments made are most welcome, such as allowing for time-shifting, format shifting and expanding fair use.  However, the most contentious aspect of this new law is the lumbering of enforcement responsibility upon Internet service providers. The Telecommunications Carriers’ Forum has described it as ”deeply flawed”.

Notice & Takedown

Section 92B provides that ISPs are not liable for any copyright infringement by content stored on their services, or by their own automated caching activities where they are unaware of the infringement. They do however become liable for copyright infringement where  they fail to, “as soon as possible after becoming aware of the infringing material, delete the material or prevent access to it”. Following any takedown the ISP must also as soon as possible notify the, “user that the material has been deleted or access to it prevented.” This is known as ‘notice and takedown’ roughly the same procedure in place under the Digital Millenium Copyright Act in the USA; except under the DMCA you can issue a ‘put back’ notice and have your content resinstated within 10 to 14 days if the matter is not pressed by the copyright holder to Court.

What this means is that as a ‘copyright holder’ if you provide the ISP with the required information at the risk of becoming liable for infringement themselves the ISPs are going to pull the content. Matthew Bolland of TelstraClear says that, “We don’t check or verify. We take it down.”  This validates the Consumer’s Institute concern that “the procedure is open to malicious abuse by parties who wish to close-down websites or disrupt in some way another person’s business or enjoyment of the use of the internet.”  The proposed offence of filing recklessly erroneous or misleading infringement notices was removed from Act as Christopher Findlayson described it as, “heavy-handed“. Malicious issuance of take down notices can have major financial repercussions for website owners, a stifling effect on creativity and a chilling effect upon freedoms of speech. If anything it is the notice and take-down procedure that is heavy handed. It seems absurd to have no explicit disincentive to use them in this fashion, and no provision requiring users content to be reinstated where they contest the notice - allowing content to be deleted is likely to hinder any further inquiry of the matter.

Section 92B means you are guilty until proven innocent, in an bias forum no less. This contravenes basic principles of natural justice.

A fairer procedure would be a variation on the ’notice and notice’ system as employed in Canada and advocated for by the Consumer’s Institute to prevent non-infringing material from being taken down under the guise of copyright infringement. A notice is passed via the ISP to the user notifying them that they are infringing copyright in some way. The user can then decide to voluntarily pull the content within a reasonable time period or the ISP can block access to it, or alternatively contest the notice and the matter may be adjudicated in court from there. 

Reasonable policy for termination

From 29th February 2009 s 92A of the Copyright Act 1994 will require that, “Internet service provider[s] must adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the account… of a repeat [copyright] infringer.” The Commerce Select Committee report recommended that new section 92A be deleted as, “the standard terms and conditions of agreements between an Internet service provider and its customers usually allow for the termination of accounts of people using the services for illegal activity.”

 The Telecommunications Carriers Forum are at present coming up with policy on how to comply with the law, although they are unsure whether it will be ready by the 29th February deadline, good luck to them. The requirement of a reasonable termination in appropriate circumstances for repeat infringers  (helpfully defined as;  “a person who repeatedly infringes”) is incredibly imprecise and ambiguous and will no doubt be the subject of future litigation.

How this law was ever passed in it’s current form is a testament to the adage hard cases make bad law.

The imposition of an average 10-15% holiday surcharge began with the passing of the Holidays Act 2003. ‘The Act’ entitled workers to time and a half and a day in lieu, meaning payroll costs are increased some 150% where merchants choose to open on a public holiday. A worker previously on minimum wage at $12 now effectively earns $30 for working on a public holiday.

Cafes started the trend, and given hospitality’s high labour component most businesses in the industry soon followed.

Judge Thoburn’s ruling in Commerce Commission v Air New Zealand (2005) concluded that not including operating expenses in the ‘headline’ price, “seems wrong in principle and unfair to the consumer, because it could open the door to self serving and indulgent practices”. I wholeheartedly agree with this assessment, and on point here His Honour notes, “an increase in wages by a general wage order of the Government could be separated out”

His Honour suggested that where “headline” advertised prices do not include internal expense, as was the case with Air NZ’s fuel surcharges then its likely to be considered a false price, having regard to how a business must work out its basic pricing structure. Seperating out the cost of wages is, “in principle [unfair] in the marketplace of fair trading practice”, it cannot be remedied by the drawing attention to additional information.

While the average NZ shopper isn’t going to be misled where a sign informing them of a surchage is clearly displayed, employing a surcharge to cover what is clearly an operating expense seems offensive. The test to consider is whether the charge is an integral essential and non-negotiable part of what is required in the operation of the business. A business makes a choice whether to operate on a public holiday, and meeting payroll on this day, as on any other, is quite clearly an internal cost of the business - should they wish to remain open they should spread their overhead costs as they do for all other fixed costs through the year.

As the Holidays Act 2003 does not call for the collection of an additional charge it cannot be invoked by merchants claiming a, “government surchage tax” regardless of their view. This is simply untrue and in breach of the Fair Trading Act 1986.

The extra business transacted on a public holiday should go some way towards meeting the increased costs if they do choose to trade.

Yes it is possible we will see more doors shut these coming public holidays, perhaps those businesses who choose to eschew the surcharge may do a roaring trade as consumers become wary of where every penny is spent.