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ISPs: New copyright law puts business in the gun; scrap it

21 January 2009

 This article appeared in the NBR on Wednesday 21 January 2009.

The Internet Service Providers Association of New Zealand (ISPANZ) has called on the government not to enact a controversial new copyright provision, due to come into force on February 28. It says section 92A of the Copyright Amendment Act could see businesses lose their internet connections thanks to the actions of a single rogue employee.

'Third-rate legislation'

But despite the controversial legislation being widely regarded as the unfinest hour in a series of heroically unfine hours put in by outgoing Labour minister Judith Tizard, a spokesman for Attorney-General Christopher Finlayson's office says "a last minute stall won't happen". The government has no plans to overhaul the legislation. Instead, Mr Finlayson will focus on trying to make the legislation work.

While National supported the act's passage while in opposition, during an April 2008 parliamentary debate Mr Finlayson said his party's support was reluctant, saying  "I think this bill is very much a patch-up job and very much what I would call third-rate law reform legislation."

ISPANZ also notes that the select committee considering the original bill, which was chaired by Gerry Brownlee, rejected the section 92A approach but “the previous government reinserted the clauses in a last minute action, making New Zealand a guinea pig for experimental cyberlaw.

“If section 92A is allowed to come in, ISPs will have to disconnect organisations such as businesses, public libraries, government agencies etc as a result of accusations that an employee has used their computers for illegal downloading,” says ISPANZ president Jamie Baddeley. “Section 92A is poorly constructed law designed to force ISPs to cut off the internet access of those accused of repeat infringement of copyright.”

The new government still has a chance to take corrective action, and re-draw a bill more in line with the select committee’s original version.

Mr Finlayson's office says the minister is "not adverse to amending the legislation if people's fears do come true", but for now it is concentrating on how the act will work once up and running.

Warning first

Chapman Tripp senior solicitor Justin Graham confirms that the act fails to differentiate between individual accounts (home users) and internet accounts with multiple users (such as businesses).

But this flaw does not necessarily mean a business would necessarily lose its internet connection if an employee is accused of downloading illegal music or movies onto a company server.

The act calls on ISPs to create a termination policy. Mr Graham envisions that typically such a policy would involve an ISP sending a letter of warning to a company with a rogue employee who pirated copyrighted material.

If the company in question addressed the employee’s piracy, then the ISP could decide that appropriate action had been taken and drop the matter.

But that might not be the end of things: Mr Graham says the act still allows a copyright holder – such as a record or movie industry organisation – to take out an injunction against the company housing the rogue employee, and the company's ISP.

Test cases needed

However, it’s impossible to predict just how events could unfold once an accusation is made against a business. Mr Graham emphasises that the act’s extremely vague wording means a series of test cases would be needed to resolve the exact definition of “repeat infringing” and many other elements of the upcoming legislation – including what exactly constitutes an “internet service provider” (ISP). Mr Graham says under the act as it now stands, TradeMe could be considered as ISP.

Mr Graham also cautions that while large ISPs like Telecom Broadband (formerly Xtra), TelstraClear and Vodafone could be expected to formulate comprehensive termination policies, many smaller ISPs would be ill-equipped to deal with the new legislation.

ISPANZ agrees, noting that in Australia, where similar – and similarly controversial – legislation has already gone into force, smaller ISPs are bearing the brunt of complaints from copyright holders.

A further complication has been introduced in Australia with ISP iinet choosing to not terminate an accused pirate’s account but rather turn over details of his case to police. It is unclear whether the move is valid under the legislation, or whether police will take any action.

A bob each way

The act’s vague nature reflects the way it tries to reflect the contradictory interests of two camps, says Mr Graham: the freedom of information lobby, which believes all copyright material should be free of charge for fair use, and rights holders who see the digital world as an extension of the real-world copyright environment.

“The legislation puts a bob each way, with a nod to the rights holders, and a nod people who imbue the hacker ethic, ” Mr Graham says. Section 92A’s termination clauses are an example of the former, while the act’s liberal attitude to DVD zoning and password encryption – which can be bypassed for educational or research reasons – reflects the latter.

The resulting law, says ISPANZ’s Mr Baddeley, puts ISPs in a terrible position: “Under Section 92A We’ll be damned if we do and damned if we don't.

"We'll be faced with dealing with an accusation, not proven, of a copyright infringement and making a very difficult judgment call. If we decide in favour of our customers, we risk being sued by global media powerhouses. If we decide in favour of the rightsholder and disconnect a customer from the Internet, we risk being sued by customers for breach of contract. Disconnecting customers goes against everything we do."

Mr Baddeley notes support on this issue from every major ICT group in the country, including the Telecommunication Carriers’ Forum, The NZ Computer Society, The Telecommunications Users Association of New Zealand, InternetNZ, and others.

By contrast, the Recording Industry Association of New Zealand (RIANZ) and the Motion Picture Association’s NZFact lobby group have welcomed section 92A.

For more information, contact our Web Editorwebeditor@chapmantripp.com+64 9 357 9622

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