Copyright (New Technololgies and Performers' Rights) Amendment Bill - Part One: Background and Context

Copyright

Finally we have some movement on the revision of New Zealand's copyright laws with the arrival in the house of the "Copyright (New Technololgies and Performers' Rights) Amendment Bill."

The time taken to revise laws means we're not going to get another chance to improve our copyright law here in New Zealand any time soon so its important that any changes position New Zealanders strongly.

If anything is certain, it is that new technologies are going to continue to challenge our understanding of content and the existing distribution channels are going to fight to retain the status quo as much as possible, so we, as consumers and voters need to be ready to fight back.

This is going to be a long post as its going to take a fairly detailed look at what is proposed, in order to manage the length, I'll post it in several sections focusing on the key aspects of the Bill.

Background and Context

In July 2001 the Ministry of Economic Development released Digital Technology and the Copyright Act 1994: A Discussion Paper. The intention was to canvas opinions on three questions:

• Is there a need to amend the Copyright Act 1994 in light of developments in digital technology and the Internet? If so, what are the key issues that should be addressed?
• What changes should be made (if any) to ensure that copyright regime continues to provide an appropriate balance between the interests of copyright owners and users?
• Should New Zealand implement the requirements of the WIPO Copyright Treaty 1996 and those aspects of the WIPO Performances and Phonograms Treaty 1996 that relate to the rights of phonogram producers, and ultimately accede to those treaties? If so, what changes need to be made to the Copyright Act 1994 over and above those required by the Treaties?

The need to consider the impact of technology was explicit in both the title of the paper and the focus in its contents on specific issues. These included the rights to communicate copyright works over the internet, liability of Internet Service Providers (ISPs), the use of Technologial Prevention Measures (TPMs), protection of databases, and, most relevant to the average consumer, whether new exceptions or permitted uses were appropriate as a consequence of technolgical innovation.

Five and half years later we finally have a bill before Parliament getting its first reading. The time take is an issue when you think about the range of new issues that have arisen - projects like Google books, new services like Flickr and YouTube, but it also gives us a valuable set of international experiences as the US grapples with the DMCA, Australia with the consequences of dealing with the devil (AKA the Free Trade Agreement with the US) and the UK struggles with the interface between the English and European copyright traditions.

Its interesting that the Bill starts with this statement: "Copyright is a property right that exists in original works." This is a key part of the Copyright Act 1994 and is required if copyright is to draw upon the legal traditions of property law. Don't make the mistake of thinking that the key word is "original", even more so than ever under a digital world this term is legally almost meaningless. Despite phrases in the Bill's reamble like "The key principle that guides copyright reform in New Zealand is the enhancement of the public interest" copyright law is an economic law primarily and in our English tradition the presumption that the public interest is best served by promoting financial growth is both explicit and implicit.

As with all law, you need to read all of the clauses and statements like "the Act seeks to provide incentives to ensure the creation, production, and distribution of new creative works in a manner that meets society's needs" are placed in a context that protects the economic status quo: "It is not intended to change the balance between protection and access already established in the Act." This is absolutely not an attempt to create a legal system reflecting the political movements for free and open information.

In the Bill's Regulatory impact statement the motives of the Government are expressed directly.

"With the development of digital technology, 3 problems arise:

• there is increased risk of the production and distribution of high quality infringing copies of copyright works;
• there is a significant degree of uncertainty regaring the application of provisions of the Act to digital works;
• the Act is not consistent in all areas with our major trading partners and with emerging international standards."

For "major trading partners" I assume we are meant to read the US. Given the way they use trade laws to protect their own internal markets from NZ goods and services I fail to understand why we should help them make money from their dominance of the information economy in New Zealand in any way not actually required by our treaty obligations. Australia is now discovering the hooks within the free trade agreement they signed with the US and consequently their consumers are suffering while their legislators passively offer the treaty as an excuse for inaction.

Its interesting to see the Regulatory impact statement focuses in some detail on the economic imapct of infringement.

"... industry figures suggest significant annual losses (music industry: US$4.3 billion worldwide; NZ$114 million in New Zealand; computer industry: US$11 billion worldwide; motion picture industry: US$3 billion for the US, US$4 million for New Zealand)"

This repeats the time-worn whines of the existing media companies despite there being significant criticism of the accuracy of these figures and the considerable debate over impact of copying on music sales as opposed to an industry slump in the publishing of popular music for purchase. The information also appears to be significantly out of date as the music figure appears to come from 2002 and the movie figure appears to date from 2004.

Much of the economic damage from music and movie piracy also appears to arise from the production and sale of counterfeit CDs and DVDs, something that is already easy prosecuted under the existing laws and of no relevance to digital copyright whatsoever. Its worrying to see the Government serve up industry propaganda as fact in this way and it suggests a passive acceptance of the position stated by commercial interests rather than a deeper analysis of the facts.

In the next posts I'm going to pick up on some key sections of the proposed Bill:

• Copying Music
• Copying for Educational Purposes
• Technological Protection Measures
• ISPs and Transient Reproductions
• Librarys and Achives
• Software

Format Shifting

This was always going to be the section of most interest to the media and therefore the change most commented upon by the public. A new section (81A) proposed by the Bill allows for copying of sound recordings but only under the strictest of conditions:

• the copy is made from a sound recording that is not an infringing copy; and the sound recording is not borrowed or hired; and the copy is made by the owner of the sound recording; and the owner acquired the sound recording legitimately; and the copy is used only for that owner's private and domestic use; and no more than 1 copy is made for each type of device for playing sound recordings that is owned by the owner of the sound recording; and the owner of the sound recording retains the ownership of any copy that is made under this section.

Clause (e) is the condition that I can see causing the most confusion and potential grief. Its not at all clear that you can play your music on a work computer, and if you do you probably are required to do so in a private office or with headphones. No listening to your co-workers music allowed! This very limited interpretation is supported by clause (f) which suggests that you have to own any computer you play music on, i.e. no using one provided by your employer. Why do I think we've just changed one stupid, unenforceable law for another that will see some workplaces continue to ban digital music...

The other clauses are a mix of reasonable and predictably unhelpul. No borrowing CDs from the library (or your friends) to rip to your iPod as was described in a recent Dominion Post article. Incidently I bet the libraries are already being hit with claims for larger audio licensing fees on the basis of that "evidence."

More of a pain is the clause prohibiting the copying of CDs if you have the LP or tape, the music industry license is a license for the music at a particular quality level, shame on you for thinking you actually bought anything more than a lump of plastic. And no, it appears that this doesn't allow you to copy a friends CD when your's gets scratched either. More than anything the attempt to have things both ways like this is what irritates me about the music industry - how hard can it be to find new music worth selling?

Interestingly, there may be a problem with this entire section as most people are not "owners" of sound recordings. When you buy a CD you purchase a license to play the music, you don't get ownership of the recording. Combined with the new section 81A(2) which states that:

"[the exception enabling the ability to copy sound recordings for personal use] does not apply if the owner of the sound recording is bound by a contract that specifies the circumstances in which the sound recording may be copied"

Thus, in summary, we have some very weak provisions that can easily be challenged in the courts or rendered useless by the addition of a single item to the license on CDs that prohibited format shifting. My guess is that this will all be rendered moot soon by the arrival of new high capacity disks combining aspects of audio CDs and DVDs and with the music locked down using aggressive copy protection, the traditional audio CD is just too good for consumers.

The Government's confidence in these measures appears low as they need to be renewed by the Governor-General every two years to stay in effect. Or perhaps this is a back hander to friends in industry, they only have to endure comsumer freedom until after the next election?

The other type of format shifting allowed under the bill is time shifting. This is the provision that makes VCRs legal while simultaneously making that collection of carefully recorded video cassettes on your shelf illegal. Yes, you can record "solely for the purpose of viewing or listening to the recording at a more convenient time" but only if you can't access it from an on-demand service (and yes that might require a payment). However, you only get to keep that copy for as long as is "reasonably necessary for viewing or listening to the recording at a more convenient time."

I expect these changes to be very innacurately described in the mass media as giving the consumers significant new rights that bring us into line with the US, sadly Americans still have a much greater freedom to copy and share music under the Audio Home Recording Act and the Fair Use provisions easily allow for retention of personal recordings of video and television. By all means lets bring ourselves in line with out trading partners, lets start with the freedoms they get first please.

Copying for Educational Purposes

The Bill adds a couple of amendments to Section 44 of the Act, the first (clause 24) allows for digital copies to be provided to students rather than paper copies, the second (clause 25) allows for the storage of digitally sourced materials for provision to students after the original has been removed. The problem with this latter clause is that its not clear whether it is permissible to provide copies of material that is evolving or changing in subtle (or not so subtle) ways. The exact clause (44A, 1d) states:

"the material is not available ... until it has been removed from the website or other electronic retrieval system on which it has been made available"

Enough ambiguity to drive a truckload of expensive lawyers through...

The fundamental problem with these amendements however is that Section 44, even after the changes, is completely useless to educational institutions. The Copyright Licensing Ltd v University of Auckland decision in 2002 has made it abundantly clear that the exception must be interpreted as narrowly as possible. In practical terms it is very hard to supply materials to students while remaining within the bounds of the exact requirement to copy no more than 3% of a work and to only copy artistic works as incidental to a larger whole (i.e. no copying images by themselves!). New Zealand institutions have discovered this to their cost, and in effect every institution must use licenses to manage the risk.

This requirement is obliquely acknowledged in the Bill's Regulatory impact statement:

"... it may be ... that some libraries and educational establishments will be prevented from making particular uses of copyright material without a licence from the copyright owner. This involves both financial and adminsitrative costs. However, as libraries and educational institutions are already significant users of copyright licenses, many of these uses may already be covered by the licensing agreements."

This rosy view of the world of licensing ignores the experience in Australia - often an accurate predictor of New Zealand in this area as one of the licensor companies (Screenrights) operates in both jurisdictions. Licensing for digital provision of materials is substantially more expensive than paper based (up to ten times the fees for the same content). Onerous tracking and notice provisions are a requirement of the licenses resulting in the need to invest in expensive (millions of dollars per institution) content management systems just to maintain compliance and to be able to meet the reporting obligations.

For example, the Australian license requires that the copyright notice be displayed every time content is accessed - potentially a student could see the same notice dozens of times during a single session with an online course. The licences also restrict the use of materials so that the same content cannot be used in more than one course at the same time - requiring the use of sophisticated content management. In neither case is the benefit to society apparent.

The situation is made still worse in New Zealand by the absence of any license covering material obtained from digital sources such as the web. The existing licenses specifically exclude digital materials and require institutions to scan material from paper originals - even when the digital copyies available are identical to paper copies. This is particularly an issue now that many academic materials are only being published electronically, paper is fast becoming irrelavant. In essence we have to tell academics not to use digital resources in their courses as there is no safe way to copy them. The changes in the Bill proposed for section 44A which appear to address this are deceptive, the effect of other provisions makes them meaningless in practice.

What really annoys me however is that the US makes no similar demands on its educational institutions - the Teach Act gives US educational institutions for free the rights that New Zealand institutions have to pay large amounts of money for. So despite the goal of the Bill in bringing "consistency" with our trading partners what is really meant is worst case - for New Zealand institutions, teachers and students.

Technological Protection Measures (TPMs)

Do not be fooled. This Bill seeks to impose significant and onerous controls on you and your use of information in the future. The TPM provisions are everything publishers and distributors could want, with a fake sugar coating to fool the gullible.

The Bill defines a TPM as "any process, treatment, mechanism, device, or system that is designed in the normal course of its operation to prevent or inhibit the unauthorised exercise of any of the rights conferred by this Act." This is a very broad description obviously intended to ensure that control of information access and use is well supported by our legal system. In effect, clause 89 of the Bill provides a strong legal framework supporting the use of TPMs and criminalising any interference with them.

In the new age of the DMCA and the US panic over piracy its hardly surprising to see an intention to tighten up the use of TPMs but a worrying trend is the extensive criminalisation of almost every aspect of the process. Penalties for providing or assisting with the provision of a means of circumventing a TPM or information about it include fines up to $150,000 and 5 years in jail for providing a means of circumventing TPMs or distributing content in which the TPMs have been removed. The Government is nicely smug about this:

"The proposed offence provisions may place small additional demands on already stretched police resources. It is possible, however, for copyright owners to bring private prosecutions."

So not only do the Government not appreciate the substantial chilling effect on consumers and researchers caused by draconian IP laws, they want to encourage further use of the threat of criminal prosecution by (predominantly foreign) businesses with a vested interest in the status quo. AJ Park must be wetting themselves with anticipation of the increased fees they'll generate through the production of form letter threats to ISPs and consumers. I wonder how long it will be before we start seeing children in our courts?

Again, as with other sections of the Bill, the actual language is deceptive. The Bill allows for circumvention of TPMs in order to engage in a permitted act (for example format or time shifting) but the actual circumvention must be done by a "qualified person" and then only after a bureaucratic procedure is followed. Qualified people are:

• a prescribed library; or
• a prescribed archive; or
• an educational establishment.

In addition, there are clauses such as 226E (a) which require users "apply to the copyright owner or the exclusive licensee for assistance enabling the user to exercise the permitted act." The hidden gotcha here is that the owner can charge like a wounded bull for the privledge and attach any conditions they feel like to the assistance process, in essence a form of copyright "filibuster" that makes this whole provision as illusionary as every other consumer "freedom" provided in this Bill.

So despite the language used in the preamble to the bill:

"Technological protection measures (TPMs) offer a means to combat the ease of reproduction and distribution that digital technology provides. There are, however, concerns about "digital lockup" as such measures, by preventing access, cannot distinguish between infringing activities and permitted acts."

"New provisions are introduced to enable actual exercise of permitted acts where TPMs have been applied."

The actual law as proposed would make it unlawful to use a DVD player to play out of zone DVDs or games for consoles, selling multi-zone players would be a crime, sharing information on playing DVDs on Linux will be a crime. The ability to format or time shift is also revealed as fundamentally meaningless as the only people who will be able to do it in practice will be librarians and teachers, and every time they do it they'll have to wait a month for the paperwork to be processed.

What this law is saying is that you can only use information in ways that commercial publishers approve of and then only with their permission. Welcome to the DMCA-NZ, please leave your freedom at the door...

ISPs and Transient Reproductions

So what is an ISP exactly anyway? You should definitely read this part if you provide an email server for your employees.

One of the areas where the age of New Zealands copyright law has been most apparent is in its inability to cope with the shift from a broadcasting model with centralised control and infrastructure to the modern Internet. The Bill contains a large number of clauses aimed at tidying up this problem and talking in general terms about "a technology-neutral right of communication to the public." You can't avoid technology completely however, and the need for communication systems to make copies as part of their normal function (through temporary files, caches, holding a copy in memory etc.) has been a well-known problem for some time.

In practice this has meant that Internet Service Providers and content owners have continued in their merry way while pretending not to notice the elephant in the corner of the fridge. As with format shifting of music, this has been generally regarded as non-infringing and impractical to prosecute. However, unlike format shifting, the Bill does appear to address this issue in a sensible manner (unless you're an employer running an email system of course).

"In terms of primary liability, the Bill provides that an ISP is not liable where it is merely providing the physical facilities to enable a communication to take place. With regard to secondary liability, the Bill limits liability in respect of caching and storing of infringing material where the ISP does not know or have reason to beive that the material is infringing, and acts within a reasonable time to delete it or prevent access to it upon obtaining such knowledge."

The new section 92B(3) does include this constraint "[The ISP] limitations of liability will not exclude the possibility of copyright owners obtaining injunctive relief in respect of ISPs." Injunctions are issued by judges and they tend (in New Zealand at least) to be sceptical about such requests, we'll have to wait and see but I don't anticipate a flood of genericised injunctions hitting ISPs anytime soon.

One gotcha is section 92C(2b) which removes the ISP protection when "the user of the service is acting under the authority and control of the Internet service provider." For example, an employee of an organisation that acts as an ISP in effect, such as universities and large corporations. I would expect to see any such organisation still doing so divesting itself of the ISP functions as fast as possible.

It would also appear that providing email for your employees through your own email server leaves you wide open to contributory liability. This is a major issue for most businesses I would have thought, but its also one that applies currently, so its hard to grumble too loudly.

The Bill also includes provisions intended to legalise inevitable consequences of the New Zealand Internet infrastructure including the requirement that content be transparently cached so as to reduce demand on the international links - a problem the US has never had to acknowledge due to the widely held misconception in the US that Internet traffic is free.

While the changes proposed seem sensible there are a couple of wrinkles. Who exactly is an ISP is undefined so I imagine this will exercise the courts if this amendment makes it into the law books. I can appreciate the challenge in coming up with an effective definition but the absence of one means that lawyers are going to be earning money for a while. There is also the need for ISPs to have policies in place banning repeat offenders in order to gain protection but no definition of what that actually means provided. There is a risk that simply being hit with a few injunctions could result in loss of Internet service even if they were ultimately shown to be unproveable in court.

Librarys and Archives

Or how to write law so as to ensure that digital libraries are stillborn and the thought police able to scrutinise your reading.

Librarys and archives have substantial priviledges under the existing Copyright Act given in sections 50 through 58. This continues in the amended version created by the Bill. As well as their annointed role as guardians of TPMs, librarians gain the ability to substitute digital copies for works that are not able to be made available to be public otherwise and the ability to provide public access to resources obtained in digital format.

This is all very well but experience with digital materials in the educational context suggests that much of this will be meaningless. The vast preponderance of digital materials supplied to libraries comes from database vendors who lock down their materials with extensive contracts. Contract law almost always trumps copyright law (for a notable exception see the Moral Rights provisions enacted in French law) and so the new clauses proposed in the Bill are, as with the Educational clause, merely window dressing that tries to delude ordinary New Zealanders into thinking there is a balance present in the copyright laws.

As well as being of little practical use, the suggested clauses in section 56B turn librarians into a combination of thought police and filing clerk:

"56B Additional conditions for supply of copy of work in digital format by librarian or archivist under section 51, or 52, or 56 A copy of a work to which section 51, 52, or 56 applies must not be supplied in a digital format, by the librarian of a prescribed library or the archivist of an archive, to a person(A) unless the following conditions are also complied with:

• A must make a written request to the librarian or archivist for a digital copy identifying the work and stating the purpose for which the material will be used; and
• the librarian or archivist must declare in writing that the provisions of the Act governing the supply of the digital copy have been complied with; and
• the librarian or archivist must supply th ecopy in question to A only, and not to any other person; and
• the librarian or atchivist must give A, when the copy is supplied, a written notice that sets out the terms of use of the copy; and
• the librarian or archivist must, as soon as is reasonably practicable, destry any additional copy made in the process of making the copy that is supplied to A."

As well as being completely offensive (the correct answer to (a) being "none of your damn business") this is also totally unworkable if you assume that digital provision is inevitably the future of information use for the majority of non-recreational users. We need systems that are practical in everyday use, not predicated on the concept that digital delivery is special or unusual. I cannot understand what legitimate goverenance process results in librarians being required to collect information on what people are reading and why.

Clause (e) is also flawed as it imposes upon libraries and archivists the task of re-digitising originals every time they are supplied in digital form (for example as interloans), something that is impractical, unnecessary and fundamentally pointless. As an example of how this is broken, consider the normal situation of a library with paper based content and an online catalogue. Ideally, as a user I would like to be able to browse the catalogue and if I find an item of use, I would like to be able to get a digital copy immediately. As framed, the only way this is possible is if the library prevents anyone from accessing the paper copy (and then only if the paper copy is not widely available), or if they redigitise from scratch the item every time a request is made.

The bureaucratic provisions of the TPM clauses are similarly repeated in the Bill in section 57A which requires that the librarian or archivist maintain records of all requests for three years and facilitate the audit of these records on demand by copyright owners. In effect, this allows the copyright owners access to the reasons why "their" content was requested by the users of the library - a gross and completely unnecessary invasion of privacy.

The only plausible explanation of the Bill as framed is that the framers of this Bill want digital provision by librarys to be costly and onerous, thus forstalling its use. This is hardly surprising as traditional publishers have long regarded librarys as a form of theft (along with second hand bookshops) and the vested interests appear to be succeeding rather well in this case.

Software

One of the characteristics of software is that the Network Effect drives dominance in the market. The classic example of this is the Microsoft Office suite. The ubiquity of Word, Excel and Powerpoint ensures that they remain dominant and, in part, they maintain this position because of the proprietary nature of their file formats.

Most users of the Office suite have a substantial investment of time and other resources embedded into files that require the use of the Office software to access. When information is shared, particularly in the commercial world, the format used is commonly that of the Office files and the ability to use the information contained within those files in a consistent and reliable manner is vital to many people.

Microsoft well understands the power that the control over the file formats gives them. Each major update of the Office package has seen the file formats revised significantly. This is often claimed to be an inevitable consequence of the programming process, but in most cases that is hard to swallow. If Microsoft genuinely wanted to maintain a common format they could. Changing the formats regularly acts as a strong incentive to users to upgrade, generating the majority of Microsoft's revenues, and also has the bonus of making it much harder for others to maintain compatibility.

This "lock-in" is great for Microsoft, but prevents competition and ultimately means that much of the information generated and used by society is held in a form that cannot be easily reused and shared. in the long term, there is a risk that proprietary formats will see information on our history lost forever.

The Bill addresses exactly these issues with the new sections 80A through 80C which make the decompilation of software for the purpose of obtaining "information necessary for the objective of creating an independent program that can be operated with the program decomiled or with another program." This means that, at least in theory, software can be decompiled in order to use files created by it or to work with the software as part of a larger system.

This is all good news, and there is even a new section proposed in the Bill (80C) aimed at ensuring the software licenses and contracts cannot prevent people exercising these rights:

"80C Certain contractual terms relating to use of computer programs have no effect
A term or condition in an agreement for the use of a computer program has no effect in do far as it prohibits or restricts -

• any activity undertaken in compliance with the conditions set out in section 80A or section 80B; or
• use of any device or means to observe, study, or test the functioning of the program in order to understand the ideas and principles that underlie any element of the program."

This does of course beg the question why this right is so well protected unlike any other exemption potentially offered by the Bill. A similarly unambigous right of format shifting any lawfully purchased media as necessary to access it for personal use would be a significant benefit to New Zealanders.

A cynic might conclude that the reason section 80C exists is because the rights conferred in sections 80A and B have no real value. Section 80A (3d) is the hidden gotcha here, prohibiting decompilation when:

"the lawful user uses the information obtained from decompiling the computer program to create a program that is substantially similar in its expression to the program that has been decompiled"

So you can decompile a program to work with it, but you cannot use the information in the creation of a similar program - so for example it would be unlawful to decompile Word in order to extract file format information for a product like OpenOffice - completely daft! This also rather nicely prohibits the decompilation of DVD playback software and drivers in order to facilitate the playback of DVDs on platforms that lack such support - for example Linux.

Once again, we have a positive intention expressed in the preamble to the Bill that in practice is negated in the detailed clauses. At this rate the only material change arising from the Bill will be the establishment of the New Zealand version of the DMCA, rather than a positioning of New Zealand's copyright law to ensure we all benefit from new technologies in the future - not just the US-owned companies selling us the content.

A Caution...

Please note: I am not a lawyer and this is not a "legal blog." These are merely my own personal notes and analysis intended to get my thoughts organised for a formal submission (which others are invited to support or assist in the preparation of). As with all information on the Internet I strongly advise you to think for yourself and always consult a lawyer when in doubt.