Summary

• In its apparent current form, ACTA replaces a “Made in New Zealand” balance between copyright holders and copyright users, to one based on a foreign model that favours holders

• ACTA Shifts the Burden of Enforcing Copyrights From Copyright Holders to Third Parties like Internet Service Providers and Users  

Discussion

Laws that sanction monopolies are usually considered bad laws. This is because monopolies are bad: they deter competition, drive up costs, and distort the usual course of business. When someone has a monopoly over a product or service, it usually means people will have to pay too much for that product or service.  This is bad for citizens, business, and government.

This is why copyright law is so unique— it confers a monopoly, albeit a limited one, to copyright holders, giving them control over content which would otherwise be freely used by others as a part of the public domain.  As a financial incentive to create, copyright law gives copyright holders the right to control how their copyrighted content is copied, reproduced, and distributed.

But because copyright law creates these legally enforced monopolies, it involves a delicate balancing among competing rights and interests.  The most important balance is the one struck between the rights of copyright owners and copyright users.  In the words of the New Zealand Copyright Tribunal, the law must:

…recognize the balance between the legislatively created monopoly in the hands of the copyright owner on the one hand and the interests of users on the other…

This balance is essential to copyright law; though copyright creates monopolies for copyright owners as a financial incentive to create, it must also promote further innovation and creativity by respecting the rights of people to build on, and experiment with, the copyrighted works of others.  

It is also a balance that must be tailored to the unique circumstances of a given country. In New Zealand, an essential part of the balance struck is found in the proposed draft of section 92A of the Copyright Act, 1994.  To protect the interests of copyright users, that provision gives the Copyright Tribunal a central role in adjudicating allegations made by copyright holders that an Internet user has impermissibly copied, reproduced or distributed copyrighted material.  Key to the balance is that the Tribunal will ensure there is sufficient evidence to support claims of copyright infringement before the disputed content in removed by an Internet Service Provider, or the Internet user is penalized.

Though we do not know exactly what ACTA will require, as no draft of its text has been released, leaked documents suggest the treaty envisions something quite different from the balance struck by section 92A. ACTA’s provisions on copyright law on the Internet are based largely on those of United States’ Digital Millenium Copyright Act or DMCA. The DMCA mandates a notice and takedown system. That is, copyright holders send a notice to an Internet Service Provider, and essentially, the ISP must remove the disputed content immediately or risk being liable.  

This has led, among other problems, to thousands of notices being sent out by industry and corporate copyright holders a day; often resulting in content that is legal or would be considered a fair use of copyrighted material is removed.  ACTA contemplates no role for an entity like the NZ Copyright Tribunal— as section 92A does— to ensure fairness and equity in this process for copyright users.

ACTA also shifts New Zealand’s balance in favor of copyright owners in another central way: expanding greatly both the scope of liability for copyright infringement, as well as its criminal and civil penalties. First, ACTA will expand secondary liability for third parties like Internet and other online service providers. According to the latest leaks concerning its contents, ACTA would introduce, under the guise of “harmonization” of third party liability, a new kind of secondary liability based on “inducement”, a standard recently recognized in American law but foreign to New Zealand and other countries.  Second, rather giving signatory states discretion (like WIPO), ACTA would introduce mandatory civil and criminal penalties for anti-circumvention rules (ie: digital protection for copyright), while erecting barriers against inter-operability between jurisdictions.  

ACTA Shifts the Burden of Enforcing Copyrights From Copyright Holders to Third Parties like Internet Service Providers and Users  

Another key balance in copyright law is enforcement. Unlike New Zealand’s new copyright reforms— as well as the proposed section 94A which is a key part of the scheme— ISPs are, generally speaking, protected from such secondary liability claims so long as they are mere conduits of copyrighted material, and do not do things like knowingly contribute or facilitate copyright abuse by users.  

ACTA, again, envisions something different. Rather than ISP immunity from suit, leaks suggest ACTA would have signatories countries legislate DMCA “safe harbors”, which would essentially shift the primary costs and burden for policing and enforcing copyright infringement onto third parties like ISPs.  For example, unlike section 92A where the rights holder must take several steps, including sending notices or bringing the matter before the Copyright Tribunal, ACTA would require ISPS to implement policies and mechanisms for monitoring, policing, and removal of material alleged to be in violation of copyright; including special policies to deal with repeat infringers, like the “graduated response”, where someone may lose their Internet service if caught infringing copyrights more than once.

In Sum

Again, it is not clear what ACTA will require— no official draft or text has been released for proper public scrutiny. However, based on information leaked so far, this seems to be the direction the treaty is going.  And that is not a good thing for New Zealand copyright law.