it.gen.nz

Submission on Copyright (Infringing File Sharing) Amendment Bill – June 2010
1. This submission is provided to the Commerce Select Committee in response to its call for submissions on the Copyright (Infringing File Sharing) Amendment Bill which had its first reading on 22 April 2010.
2. I would like to appear before the Committee to discuss some of these points and to answer any questions the Committee might have.
3. I am an independent technology consultant and commentator. I have wide experience as an IT practitioner and IT policy specialist. I am a founder and a past president of InternetNZ, the public-good not-for-profit body that runs the core of the Internet in New Zealand. I am a member of the New Zealand Computer Society and an Information Technology Certified Professional. The views expressed in this submission are my own.
4. This submission starts with a context section that explores the issue of copyright infringement via the Internet. The following section addresses whether we need the Bill at all, then comments on the various points in the Bill. The concluding section summarises the points made in the rest of the submission.
Context
5. The context for this Bill needs some explanation. The film and music industries have presented the measures in the Bill as they presented the previous measures they promoted – the ones which were deemed as “draconian” by the Prime Minister when he prevented them from coming into force – as necessary to prevent people from stealing artists’ work.
Why does Copyright Exist?
6. Copyright laws are enacted by governments because there are cultural and societal benefits to providing a way for creative people to be paid. Governments seek a balance between allowing universal access to ideas and providing an incentive for people to create and develop those ideas.
7. The motivation for reducing copyright infringement is presented by copyright holders as a moral one – “don’t let them steal my music”. However, the exact protections afforded by copyright are the subject of different law in different countries, and of law that has changed over time, generally to the advantage of copyright holders. When first introduced, copyright had a term of 16 years. Its most recent extension in the US took it to 70 years after the death of the author, or 99 years for a corporation. Lobbying to extend copyright in length and scope can be a high-return activity for corporations that hold copyrights. Disney, for instance, was part of the lobbying for the most recent extension of US copyright, which was eventually enacted shortly before some its early works such as Mickey Mouse would have come out of copyright.
8. Unlike the law of ownership of physical property, there is no “natural” extent of copyright in time or scope – it varies from time to time and place to place. Copyright cannot therefore be seen as a moral issue.
9. The original stated motivation for copyright was to provide incentives to artists to create works by allowing them a saleable right that they could use to provide themselves with an income. This is perfectly valid, but it is a financial motivation for copyright, not a moral one.
10. The existence of copyright has a social and economic cost. Copyright can prevent people from expressing themselves in terms of common cultural norms, or from manufacturing new works that have even a tenuous basis on older ones. Recent examples are the suit successfully brought against the Australian writer of the song Land Down Under, and the suit brought against the writer of the Verve’s Bittersweet Symphony by the Rolling Stones on the grounds the song had the same chord sequence as This Could be the Last Time. The settlement in that case led to the then unknown Verve losing all song writing credit for what has become their most famous work, now credited to Jagger and Richards as owners of the $1billion corporation which runs the Rolling Stones. In an older and more just example, Shakespeare’s Romeo and Juliet borrowed very heavily from a work by William Painter published a decade beforehand in 1582 (itself heavily based on a work from twenty years earlier), but the absence of copyright at that time meant that Shakespeare was not prevented from publishing what is now recognised as one of the greatest works in the English language.
11. Copyright, then, is a pragmatic financial tool that provides benefits for a few artists (or, more usually, the large companies to which their copyrights have been transferred) at a cost to schools, libraries and the general public of restricting their ability to incorporate, copy or imitate works. There is no “morally right” way for a government to implement copyright, i.e. an obviously correct term and scope, rather governments choose a course which they believe will maximise the common good, as they do in other policy areas such as health and education.
Reaction to Changing Technology
12. Before the printing press there was no need for copyright since the copying of a work was an intensely labour-intensive process, ridden with error. Even copies of the Holy Bible could not be guaranteed free of scriptorial errors that might change the meaning of a verse, to the extent of omitting the word “not” from a commandment. Improving technology has improved the ability to copy works. This has always led to challenge from those felt threatened by widespread dissemination of artistic works.
13. The composer John Philip Sousa – he of the Liberty Bell march (better known today as the Monty Python theme) – strongly resented the way technology threatened the music industry as he saw it. Sousa told Congress in 1906 that the player piano would ruin the artistic of development music, and that it would lead to the elimination of human vocal chords by a process of evolution. Later that century, Jack Valenti, who was president of the Motion Picture Association of America for nearly forty years, told Congress: “the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone”. Nonetheless, Congress wisely decided that VCRs would be made legal in the US. Ironically, the Hollywood studios that Valenti represented went on to make a substantial proportion of their revenues from pre-recorded videocassettes and their digital successors, DVDs.
14. Ridiculous statements by copyright holders are not limited to the US. In July 2009 New Zealander Ant Healy, who is director of the Australasian Performing Right Association (APRA), an administrator of music royalties, told the Dominion Post “without the content industries the Internet would be empty”. It is hard to overstate the wrong-headedness of this assertion. It implies that the entire World Wide Web, email and Twitter consists of copyrighted material supplied by his members. (It clearly isn’t: Wikipedia, for instance, is entirely written by people out on the Internet and is not derived from commercial encyclopedias. Wikipedia represents a globally useful resource that has been put together without the financial incentive of being able to charge royalties.) I will leave the Committee to form its own view as to what statements like these say about the credibility of those making them.
15. The current push to extend copyright enforcement is focussed on the Internet. The Internet is the best copying machine that world has hitherto produced. As is well known, the Internet allows an unlimited number of perfect copies of any digital file to be made and distributed for zero marginal cost. The holders of copyrights see the Internet as a challenge, just as they did player pianos, cassette decks and home video recorders.
16. To summarise: copyright needs to evolve to deal with technological realities, not attempt to mire the world in a pre-Internet centrally-controlled media distribution model.
The Value of the Internet
17. The Internet has had – and continues to have – a deep and broad effect on New Zealand society and our economy. New Zealanders are brought closer to the world and to each other by social media. Businesses such as Air New Zealand have transformed themselves to use the Internet as their primary sales medium. The New Zealand Government provides services and requires compliance activities over the Internet, in some cases exclusively. Politicians are using the Internet to help develop policy and to track electors.
18. There has been a huge economic boost world wide due to the Internet. Six large high tech companies Google, Apple, Microsoft, IBM, HP and Cisco together have a market value of over US$1 trillion. Most of this value is due to the Internet. The Internet also adds value to savvy non-Internet companies. Banks, power suppliers and car rental operators are using the Internet to improve service and cut costs. By contrast, the size of the music and film industries can be measured in single-figure billions of dollars.
19. The economic value of the Internet and everything it enables is vastly greater than the industries protesting about its impact of copyright. Internet engineers have repeatedly made it clear that the Internet cannot be modified to filter copyrighted material without destroying the innovation which has made it successful. It is unconscionable that the film and music industry should get to tell the Internet industry how it should operate.
International Implications
20. The Internet heightens the international dimension to copyright. (International and even national differences in copyright and enforcement have always existed. The US film industry is based in California because it wished to evade paying to use Thomas Edison’s movie camera patents. California was far enough from Edison’s base in New Jersey to make it difficult for him to enforce his patents there.) Today the Internet allows people in one country easily to infringe a copyright held in another country.
21. The international dimension of copyright leads national governments to have an interest in how other national governments legislate and enforce copyright. It is clear that New Zealand is not immune to pressure to “harmonise” its copyright legislation and enforcement practice with other countries, particularly the US which is driving the until recently secret ACTA treaty and the Trans-Pacific Partnership trade agreement. However, there is diverse opinion among nations as to what copyright should say. India, for instance, has a copyright law that is far more liberal than the US. The Indian government opposes the ACTA treaty and is trying to raise international support for that position.
22. Pressure on New Zealand from, say, the US, to tighten its copyright law – which would come at a cost to ordinary New Zealanders – needs to be balanced against the pressure from other countries not to do so. New Zealand is currently pursuing trade agreements with both the US and India. Why should it favour the policy of one of these two countries – again, at a cost to the rights of its own citizens – when the far larger country of the two holds the opposite view? Furthermore, other countries have declined to bow to pressure and implement legislation to allow for Internet disconnections. The governments of the UK and Canada have recently explicitly rejected Internet disconnections.
Copyright Infringement is not Ruining the Industry
23. The film and music industry bodies say that increased enforcement of copyright is necessary for the survival of the artists they claim to represent. This claim would not appear to be borne out by the facts. The largest film industries in the world are, apparently, in Nigeria, India and China, none of which are known for aggressive enforcement of copyright.
24. The music and film industries are doing well despite the economic downturn. In 2009 global box office takings are up, as were music sales in New Zealand. In Australia and New Zealand, local music artists received 10% more royalties than in the previous year.
25. Increasingly, musicians in New Zealand and overseas are doing without record companies. This is not only an option for wealthy and globally famous rock stars like Radiohead. Successful Wellington band Fat Freddy’s Drop is doing the same thing, for example. It is clear that large record labels are under threat from bands going it alone.
26. These points provide an alternative narrative for film and music companies’ protestations that “piracy is ruining their business”. Despite rhetoric to the contrary, there is no lack of creativity on the Internet.
Summary of Context
27. Copyright is an economic and legal construct designed to provide an incentive to innovate, at a cost to our entire culture. The length and extent of copyright is the subject of balancing the copyright holder’s rights against everyone else’s, and it is typically only the copyright holders who lobby governments on the issue, because the interests of everyone else are diffuse by comparison. There is therefore a real risk of moral hazard in copyright lawmaking, evident in the pattern of increasing legislated copyright terms over the last century.
28. Copyright only exists because of technology and has had to evolve as technology changes. Currently, we are seeing the markets that have evolved around the distribution of copyrighted material on physical media facing the world of the Internet where distribution is free. The next evolution of copyright will reflect the changed balance between access and creativity.
Comment on the Bill
29. The Regulatory Impact Statement for this Bill does not contain any economic analysis showing that New Zealand will be better off if the Bill is passed. It contains material from the music industry, most of which has been redacted from the public version and so cannot be challenged or verified.
30. The RIS does not, however, contain material representing the public who stand to lose Internet access if the Bill is enacted as it stands. No account has been taken of the cost to New Zealanders and New Zealand businesses of Internet disconnections. It is not just the household or workplace concerned which stands to lose if the Internet is disconnected: it is all the businesses, friends and government itself which loses since they can no longer deal online with those who have been cut off.
31. Since no valid domestic justification has been made for this Bill, it must have been introduced in response to pressure from elsewhere. We are seeking to tighten our copyright regime at a cost to ordinary New Zealanders for the benefit of other countries. The US, for instance, makes no secret that it regards the copyright policies and laws of many countries as inadequate and continually presses for their revision.
32. While international cooperation is desirable in many areas, it is hard to understand why governments would devote so much effort to protecting the exploitation of an infinite resource – people’s creativity – when they seem incapable of agreeing to manage finite resources like tuna, fossil fuels and atmospheric carbon.
Specific Provisions of the Bill
33. This Bill represents a considerable improvement on the lamentable provisions of Section 92A inserted by the last amendment act. The Government is to be congratulated for recognising the serious deficiencies of S92A and preventing it from coming into force. However, there is still serious injustice in the new Bill, in particular the presence of Internet disconnection as a potential penalty.
Notices and Fees
34. The regime of notices set out in the Bill is laudable. This is similar to the Canadian system, and is what Internet lobbyists such as InternetNZ have been arguing for since before the last amendment of the Act.
35. There is some complexity in keeping track of the notices that will involve administration costs for ISPs. These costs need to be covered by a complaint fee payable by the copyright holder. There also needs to be care taken in the system to ensure that accusations are provable to a computer forensic standard, especially if the currently high level of financial penalties in the Bill is to be retained.
36. The existence of a complaint fee will also deter willy-nilly accusations of infringement as have occurred overseas (such as accusing a laser printer of downloads).
Privacy
37. The provision in the Bill to maintain the privacy of those accused of unlawful download is necessary and should not be weakened. Without this, rights holder organisations or their proxies can simply approach Internet users and demand an amount of money less than the amount required for the defence of a law suit, as is commonplace in the UK by legal firms claiming to act for copyright holders. Because people generally pay rather face a court case there is no proof that unlawful downloads have even taken place.
Financial Penalties
38. It is appropriate that people who can be shown to have persistently and knowingly infringed copyrighted material suffer a penalty of some sort. The Bill provides for this. However, the fines in the Bill appear very high compared with, say, speeding or drunk driving, offences which have a far more deleterious impact on New Zealand.
39. I propose that the quantum of the penalty should reflect the magnitude of the offence. A small multiple of the price of a legal download on, say, iTunes, should be imposed, perhaps along with recovery of the complaint fee. An infringing download of a music album, which would cost perhaps $20 on iTunes, might attract a penalty of $60-80. Someone who habitually unlawfully downloaded and shared a large amount of music or films would therefore face penalties of hundreds or thousands of dollars. This would provide a serious incentive to download legally, to the advantage of the artists involved.
40. This proposal would also provide an incentive to copyright holders to make legal downloads available in order that they could fine unlawful downloaders. This would go some way to solve the problem that New Zealanders sometimes see the latest films and TV programmes months or years after the rest of the world.
Disconnections
41. Disconnections are unjust and should be removed from the Bill. It can never be appropriate to disconnect someone’s Internet. Disconnection would be analogous to blocking the road to someone’s house. Not only would that grossly inconvenience everyone in the house, it would affect anyone who visited them or delivered mail to them. Disconnection is not used as a penalty for serious crimes, so why on earth should copyright infringement be treated as so special an offence?
Section 92C
42. Section 92C of the Copyright Act, also inserted by the 2008 amendment Act, is as unjust as the original S92A. It effectively requires Internet Service Providers and hosts to remove material from customers’ websites on accusation of infringement or face legal consequences. ISP comments on this point have shown that they react to accusations by immediately removing any material that is complained about, while admitting that they have no way of judging the correctness of any complaint. There is no way under this law for website owners to object or appeal.
43. S92C as it currently stands is more extreme even than the US law on this point – a law which is regarded elsewhere as draconian – and it has no place in an open society like New Zealand. This section should be modified in keeping with the proposals for S92A, to provide an opportunity for website owners to object or appeal a complaint of copyright infringement. A copyright holder requiring immediate relief would still have the option of seeking a court injunction.
Conclusion
44. Previous attempts at this legislation appear to have been all about appeasing a powerful overseas lobby driven by a relatively small but glamorous industry, at the cost of the rights of ordinary New Zealanders. It is important that we do not fall into that trap again.
45. No clear economic justification has been advanced to support these or other changes to copyright and its enforcement. While there is an international dimension, our trading partners have diverse views on copyright. Yet, we persist in a course which has the potential to affect many New Zealanders and damage the Internet.
46. In summary, this Bill is unnecessary and unwelcome. I am surprised to see it progress so far with such an inadequate level of justification. However, if it is to be implemented, I make the following points:
a. The notice and notice regime proposed in this Bill is reasonably fair and should be retained in its current form.
b. It is important to maintain the privacy of accused parties until unlawful downloading is proven.
c. There should be a complaints fee to fund the system and to discourage reckless accusations.
d. The financial penalties in the Bill should bear some relation to the magnitude of the offence.
e. Internet disconnections are unjust and inappropriate and should not appear in the Bill under any circumstance.
f. The Bill should be expanded to include S92C of the Copyright Act, which should provide a mechanism for challenging an assertion of infringement.
47. Thank you for the opportunity to write this submission. I look forward to presenting orally.
Colin Jackson
Independent Technology Consultant