Copyright (Infringing File Sharing) Amendment Act commences

Posted by Christina Ilinkovski

The New Zealand Copyright (Infringing File Sharing) Amendment Act (Act) commenced operation on 1 September 2011 (except that it will not apply to services provided by a cellular mobile network until 1 October 2013). The Act introduces a new 'three notice' regime to deal with online copyright infringements, in particular illegal file sharing (both uploading and downloading infringing materials). It also extends the jurisdiction of the New Zealand Copyright Tribunal to provide a low-cost means of resolving disputes where an alleged infringer ignores the three notices. This remains an unsettled area of law in Australia – with the 2:1 split decision of the Federal Court in the iiNet case (discussed below) currently on appeal to the High Court of Australia.

The Act amends the New Zealand Copyright Act 1994 in response to widespread concerns as to which internet service providers (ISPs) would be covered by the requirements. The Act introduces new requirements for a specific type of ISP, namely Internet protocol address providers (IPAPs). An IPAP is defined under the Act as:
'a person that operates a business that, other than as an incidental feature of its main business activities:
(i) offers the transmission, routing, and providing of connections for digital online communications, between or among points specified by a user, of material of the user's choosing;
(ii) allocates IP addresses to its account holders;
(iii) charges its account holders for its services; and
(iv) is not primarily operated to cater for transient users'.

The Act sets out a process by which illegal file sharing by users of IPAPs can be detected, brought to the attention of the user and subsequently handled if the user ignores that notification. Copyright owners may notify an IPAP of an IP address where they suspect an alleged infringement of copyright has occurred by file sharing. File sharing is defined in the Act as being where 'material is uploaded via, or downloaded from, the Internet using an application or network that enables the simultaneous sharing of material between multiple users' (uploading and downloading may, but need not, occur at the same time).

Once an IPAP receives a notification, it is required to co-operate with the rights holder by:
1. matching the IP address with the related account holder; and
2. within seven days of receiving the notification, issuing a detection notice (see below) to inform the account holder of the alleged infringement.

Three Notice Regime

Three types of notice can be issued successively to account holders:
1. Detection notice: (current for nine months) issued the first time the IPAP matches the account holder with an IP address at which an alleged infringement has occurred.
2. Warning notice: (current for nine months) issued when an IPAP matches the account holder with an IP address at which an alleged infringement has occurred and the infringement occurred 28 days after the date of a detection notice and that detection notice is still current.
3. Enforcement notice: (current for 35 days) issued when an IPAP matches the account holder with an IP address at which an alleged infringement has occurred and the infringement occurred 28 days after the date of a warning notice and that warning notice is still current.

Notices may be challenged by Account Holders

It is possible for an account holder to challenge a notice by notifying the IPAP of the challenge within 14 days of the issue of the notice. The IPAP is then required to send the challenge to the copyright owner who can either reject or accept the challenge as follows:

(i) If the rights owner rejects the challenge, it must send a response to the IPAP setting out its reasons for doing so within 28 days of the date of the infringement notice. The IPAP is required to send this to the account holder. If a challenge is rejected, it may be raised again by the account holder if the copyright owner commences enforcement proceedings.

(ii) If the rights owner accepts the challenge, or does not respond within the required 28 days, the notice is cancelled and treated as if it had not been issued. For warning and enforcement notices, if the challenge relates only to an infringement that was not an infringement that triggered a notice, the notice is not cancelled but the infringement is treated as if it were not included in the notice.

Enforcement and Remedies

If an enforcement notice has been issued (that is, three notices have been given) and the account holder continues to infringe, the copyright owner is entitled to take an enforcement action to the New Zealand Copyright Tribunal. The Tribunal has the power to award up to NZ$15,000 in damages. Account holders can make submissions to the Tribunal and the Tribunal can decline to make an order for damages if satisfied this would be 'manifestly unjust' to an account holder.

At this stage, proposed provisions to allow a District Court to suspend an internet account for up to six months have not been brought into force. This provision will be reconsidered in 2013 and only brought into force if the three notice process and remedies available from the Copyright Tribunal prove to be ineffective.

The Act has been the subject of both positive appraisal and criticism in New Zealand. Rights holders will welcome the ability to challenge infringement and it is expected that there will be prompt action taken. As stated by New Zealand Commerce Minister Simon Power, 'this legislation will discourage illegal file sharing and provide more effective measures to help our creative industries enforce their copyright'.

However, there has also been continued opposition to the Act. One of the disputed aspects of the Act has centred on which party should be responsible to pay for the costs of sending the infringement notices to account holders: copyright owners or internet users. The Act provides that an IPAP may charge a copyright owner for performing the functions required of the IPAP.

The liability of ISPs for the actions of their subscribers remains a live issue in Australia. In a spilt decision, the Federal Court of Australia in Roadshow Films v iiNet Limited [2001] FCAFC 23 recently found in favour of rights holders – ie. ISPs can be obliged to take action against their customers. At the date of writing this article, this decision is on appeal to the High Court of Australia. Therefore the success of the new New Zealand regime in dealing with illegal file sharing, particularly the three notice process, will be closely watched in Australia.


Partner: Charles Alexander