In April 2011, after several controversial and widely-opposed attempts (here, here, and here), New Zealand lawmakers eventually enacted one of the first “graduated response” or “three strikes laws” to punish P2P file-sharing. Tacked onto a larger bill providing relief for the City of Christchurch, which had sustained a series of devastating earthquakes, the Copyright (Infringing File Sharing) Amendment Act [HTML, PDF] was rushed through Parliament under a fast-track legislative procedure called “urgency.”
The three strikes law went into force on 1 September 2011. Under the law, Internet account holders can be fined up to $15,000 NZD by the Copyright Tribunal after being caught file-sharing three times. If Section 122P of the law is brought into force, then account holders could be disconnected by their ISP for up to six months under order by the District Court.
That the three strikes law came to pass in New Zealand is particularly striking, given that the country was one of forty that endorsed a Cross-Regional Statement on Freedom of Expression on the Internet, delivered by Sweden at the United Nations’ Human Rights Council on 10 June 2011. That statement said that "cutting off users from access to the Internet is generally not a proportionate sanction."
New Zealand’s Telecommunication Carriers Forum, an ISP industry body, has published several useful flowcharts explaining the process. Prior to the enactment of the three strikes law, the TCF had sought unsuccessfully to broker an industry code with the film and music industries dealing with file sharing but, like what happens in many jurisdictions, the ISPs and the entertainment industry could not agree on terms for a “private” graduated response and legislation was subsequently drafted.
DisconnectionCreated by: law
Upon receiving information from a rights owner about alleged copyright infringement at a particular IP address, "Internet Protocol Address Providers" (IPAPs) are required to match that address to the name of an account holder and send them an infringement notice. Three notices - “strikes” - for infringement are issued over a certain time period. The notices are called detection, warning and enforcement notices. After the account holder receives the enforcement notice, he or she faces legal action by the rights owner as explained below.
The notices must contain certain information (e.g. identifying when the alleged infringement occurred or explaining how the account holder can challenge the notice) or else they are invalid. Warning Notices and Enforcement Notices must reference the preceding notice and explain the consequences if further alleged infringement occurs. Notices expire after 9 months, except for the Enforcement Notice, which expires 35 days after it was issued. If that happens, all other notices expire with it.
At the moment, the law does not require IPAPs to send notices to cellular mobile network service customers. This exemption automatically expires on 30 September 2013, unless Parliament decides to delay, repeal or modify the relevant provision.
Like the similar ISP notice-forwarding obligations under the UK Digital Economy Act, the costs of implementing New Zealand’s three strikes law are shared by ISPs and rights owners through a "notice fee" regime. Set by the regulations, ISPs can charge rights owners a $25 notice fee (at most) for identifying subscribers and sending them notices.
Disconnection Orders and Financial Penalties
As mentioned previously, disconnection orders are not currently available, but the three strikes law provides that they can be brought into force with relatively little procedural effort. In this case, the rights owner can seek a court order requiring an IPAP to suspend the account of the account holder for any period up to 6 months. To do so, the court must be satisfied that copyright infringement occurred at the account holder’s IP address, and that suspension is "justified and appropriate in the circumstances, given the seriousness of the infringing." (section 122P, should it come into force). The court is required to consider the following:
- the degree of the account holder’s reliance on access to the Internet;
- whether it would be manifestly unjust to suspend the account holder’s account; and
- any other matters specified in regulations (section 122P(4)).
Rights owners can at current apply to the Copyright Tribunal for a financial penalty of up to $15,000. When applying for a Tribunal order, rights owners have to pay a $200 application fee. To date there have been three Copyright Tribunal decisions, as explained below.read more...
Data DisclosureCreated by: law
The three strikes law requires both the Tribunal and the District Court to order IPAPs to disclose account holder information.
If a rights owner applies to the Tribunal for financial penalties then the Tribunal can order the IPAP to disclose the account holder’s information — to the Tribunal, not to the rights owner. The Tribunal need only be satisfied that the IPAP sent a valid Enforcement Notice (i.e. it contains the correct information, is not expired, etc).
If section 122P of the law comes into force, a rights owner can obtain the account holder's identity by applying to the District Court for an order terminating Internet access for up to 6 months. The Court will force the IPAP to disclose account holder information if, like the Tribunal, it is satisfied that the IPAP sent a valid Enforcement Notice and the rights owner promises it won’t use the account holder’s information for anything else except to have their Internet cut off.
IPAPs must retain data on the allocation of IP addresses to each of its account holders for a minimum of 40 days (no expiration date is specified).
IPAPs must also retain the following data for a minimum of 1 year (again, no expiration date is specified):
- infringement information received by copyright owners,
- infringement notices sent,
- challenges to infringement notices receieved from the account holder, and
- Internet disconnection orders.
Facts and Figures
The three strikes law requires IPAPs to publish annual reports about their compliance with their new obligations. Unfortunately, the law isn’t specific about what has to be reported, so some IPAPs have merely “confirmed” that they are compliant with the regime, while others have provided more detailed information. The yearly deadline for ISPs to report back is New Year’s Eve. To date, a number of ISPs still have not reported on their three strikes activity.
Several NZ ISPs reported reduced Internet traffic immediately after the law came into force, while other ISPs have reported no change to Internet traffic on their networks. Research from the University of Waikato shows that use of tunnelling has shot up, suggesting that people are taking steps to avoid being detected when file-sharing.
Copyright Tribunal Activity
As of March 2013, the Copyright Tribunal has issued three decisions since the three strikes law came into effect in September 2011. The recording industry is the only industry to participate in the regime and therefore the only industry to have brought account holders before the Tribunal. (The film industry refuses to participate in the regime, stating that the $25 fee it must pay to IPAPs for notice processing is too high.) In each case the account holder was punished for uploading songs, or ‘communicating them to the public’ — a “restricted act” under s 16(1)(f) of the Copyright Act 1994.
The substance of the Tribunal decisions can largely be divided into two parts: a finding of infringement and the calculation of damages. One of the most striking aspects of the law is that there is a presumption built in that the account holder has infringed. Not one account holder in each of the three decisions challenged this presumption in the form specified by the law. Without account holder rebuttal, the Tribunal must find that infringement occurred and accordingly award damages (unless doing so would be “manifestly unjust”).
There are four types of damages: the reasonable cost of the infringement, a contribution towards the fees paid to IPAPs ($25/notice), reimbursement of the $200 Tribunal application fee and, lastly, a deterrent amount.
In each of the cases, the Tribunal awarded the retail value of the songs as the reasonable cost of infringement ($6 to $7), $50 towards the IPAP fees, the full $200 application fee and a deterrent sum ranging $100 to $180 per song. The recording industry unsuccessfully sought to have the Tribunal speculate on the number of downloads inuring from each of the account holders’ illegal uploads. Citing a 2008 UK study commissioned by the International Federation of the Phonographic Industry, the rights holder alleged that on average 90 downloads results from one upload and asked for the retail value of the song x 90. Thankfully the Tribunal refused to enter into this guessing game. It did, however, chose the deterrent sums arbitrarily.
InternetNZ will continue to maintain a watch over Tribunal precedent as it evolves. For more information, visit www.3strikes.net.nz.