Part Two: Background
A. Copyright Policy Considerations and the New Zealand Situation
12. Copyright is a bundle of rights granted by statute in relation to the expression of ideas and information in original works. Copyright law endeavours to strike a balance between competing interests: i.e. between the interests of creators and owners of copyright material on the one hand, and the interests of users of such material on the other.
13. Copyright creators and owners seek protection for their works so that they can control and obtain reasonable commercial returns from the use of that material. Copyright assists copyright creators and owners by providing a framework of rules that help to govern the marketplace for creative works. In granting rights over original creations, copyright law recognises that without legal protection, the creation and exploitation of works of copyright would be at a lower level than it would be if legal protection was not provided.
14. Copyright therefore functions as an incentive in two important ways, by encouraging:
- creators to create works of copyright and investors to invest in the creation of those works; and
- copyright owners to further develop those works and to disseminate them to society.
15. Copyright law must, however, also recognise the needs of the users of copyright works. It does so by ensuring that copyright protection does not unreasonably restrict the needs of specific users and the general public to have access to copyright works.
16. Although New Zealand has a small population, it produces persons with a wide range of creative skills and talent. An effective copyright regime is one factor that recognises the value of a creative work force to the economy and cultural development. It can provide incentives that encourage:
- the utilisation of and investment in New Zealand's creative skills and talent by both local and foreign investors;
- the further development of export markets involving the copyright-based industries; and
- the production of works that contribute to and reflect New Zealand's culture and national identity.
17. While New Zealand produces a wide range of persons with creative skills and talent, we are net importers of many products that are subject to copyright protection held in other countries. An effective copyright regime also serves to ensure that New Zealanders have access to foreign copyright works and, more importantly, information contained in copyright works. It is therefore important that New Zealand's copyright regime continues to provide a level of protection commensurate with that provided by our trading partners and our international obligations.
18. Any reform of New Zealand's copyright legislation should therefore be directed towards:
- continuing to encourage domestic innovation and the dissemination of copyright works to New Zealanders;
- facilitating the growth of export markets for copyright-based industries; and
- taking account of international obligations, existing and potential, in determining the shape of domestic legislation.
B. The Copyright Act 1994
19. In New Zealand, the provisions of the Copyright Act 1994 govern the scope of copyright protection. New Zealand copyright law has traditionally been modelled on United Kingdom legislation.4 The current New Zealand statute is largely based on the United Kingdom Copyright, Designs and Patents Act 1988.
20. New Zealand is party to various international treaties that impose obligations on member countries of those treaties. The impetus for the 1994 revision of New Zealand's copyright legislation was New Zealand's accession to the Agreement on Trade-Related Aspects of Intellectual Property Rights ("the TRIPS Agreement") (Annex 1C to the Agreement Establishing the World Trade Organisation ("WTO") 1994). As a WTO member, New Zealand was required to implement the obligations imposed under the TRIPS Agreement within one year of the umbrella WTO Agreement coming into force on 1 January 1995. New Zealand's legislation complies with its obligations under the TRIPS Agreement and under other copyright treaties to which it is a party.5
21. As suggested above, New Zealand's copyright legislation has two major objectives:
- to provide an incentive for authors and entrepreneurs to create, develop and disseminate copyright works; and
- to ensure a proper balance between the protection provided to authors and owners of copyright and the ability of users to access copyright material.
22. The Copyright Act shares an important characteristic with other intellectual property rights legislation, such as those rights granted under the Patents Act 1953, the Trade Marks Act 1953 and the Designs Act 1953. The common feature is that the economic rights that are accorded to rightholders are negative rights. That is, rightholders have the ability to stop other persons from undertaking certain acts that are restricted to the owners of the relevant intellectual property right. Under copyright, the basic principle is that rights are granted, in the first instance, to the persons who created the work.
23. The granting of exclusive economic rights allows copyright owners to do the following in respect of their works:
- derive income streams by commercially exploiting their works, authorising others to do certain acts in specific situations (through the granting of a licence) or selling their copyright to another person;
- control or restrict access to their works, and maintain the integrity of their works; and
- determine when it is economically viable to take action against those who infringe their rights.
24. Under the Copyright Act 1994, copyright owners have the exclusive right to do each of the following "restricted acts" in respect of their works:
- to copy the work;
- to issue copies of the work to the public;
- to perform the work in public;
- to play the work in public;
- to show the work in public;
- to broadcast the work or to include it in a cable programme service;
- to make an adaptation of the work;
- to do any of the acts in (i) to (vi) in relation to an adaptation of the work; and
- to authorise another person to do any of the acts.
25. Copyright protection is automatic - that is, there are no formalities such as registration. Copyright protection in New Zealand is also made available to the citizens and residents of other countries, as is required under the international agreements concerning copyright and related rights (discussed below) to which New Zealand is a party.
26. Limitations and exceptions to these rights are provided in the interests of the users of copyright material and the wider public. The rights have a limited, although substantial, duration - for the majority of works copyright lasts either fifty years from the end of the calendar year in which the work is created or fifty years from the end of the calendar year in which the author dies. Once the copyright in a work expires, the work falls into the "public domain" and can be freely used.
27. Apart from the limitation of duration, there is a long list of exceptions to the economic rights in the Copyright Act - called "permitted acts". These reflect instances where Parliament has determined that the wider public interest or the interests of particular groups makes it necessary to restrict or limit the rights granted to copyright owners.
28. Permitted acts include "fair dealing" for specific purposes, such as criticism or review, or reporting current events and for the purposes of research or private study. There are also exceptions that relate to specific institutions or situations in which it has been decided that the public interest requires that users' access to a work should override the owner's right to control that access. Examples of these permitted acts include copying or dealing with the work in other ways for educational purposes; certain copying by librarians or archivists; exceptions in respect of certain activities by the Crown; and copying in Braille.
29. Two of the most important additions to New Zealand's copyright regime resulting from the TRIPS Agreement were the introduction of performers' rights and moral rights for authors and directors. Performers' rights are the subject of a separate discussion paper (Performers Rights - A Discussion Paper)that has been issued by the Ministry in tandem with this discussion paper.
30. The traditional moral rights are rights provided to the creators of copyright works and are independent of the economic rights that arise in relation to a copyright work. The two principal moral rights are: the right to be identified as the author of a work (right of attribution); and the right to object to any distortion, mutilation or other modification of a work where that treatment is prejudicial to the honour or reputation of the author or creator (right of integrity). Moral rights are granted to authors and directors to protect their personal interests in relation to their creations. They are particularly important where a creator has sold the copyright in a work. Unlike the economic rights in relation to a work under copyright, moral rights cannot be assigned, although they can be waived.
C. Copyright and the Digital Environment
(i) The Benefits of Digital Technology - New Opportunities for Copyright Creators, Owners and Users
31. Digital technology, and particularly the Internet, has led to new opportunities for copyright creators and owners to exploit and disseminate copyright works and for users to enjoy copyright works. A few examples include:
- There is a growing market via the Internet for digital copies of works, often copied using compression software, that are capable of being downloaded on demand.
- Software and music titles are now increasingly available on the Internet at the same time as physical copies are released in traditional retail outlets.
- Artists in the music industries who have not been signed by major record companies are able to post copies of their recordings on the Internet for sale or for free distribution, bypassing traditional marketing and distribution channels and making a wider range of titles available to consumers.
- Artists in the visual and performing arts can hold on-line exhibitions or display multi-media installations of work.
- Digital technology enables the making of higher quality copies of works such as sound recordings and film products at lower unit cost.
- Sound recordings originally recorded in analogue format and old film prints are increasingly being digitally re-mastered and re-released.
- Many academic journals and periodicals are now supplied to libraries and educational institutions in digital form, either on CD-ROM or via Internet access subscription services.
- Digital technology has allowed the collation of large amounts of information and data into electronic databases. Access to these databases is also increasingly being provided using the Internet, rather than via CD-ROM or other media.
32. As Internet bandwidth and modem speed increases, digital copies of films are also likely to be available for purchase and viewing on demand via the Internet. Book publishers, record companies and film distributors are investigating methods of electronically distributing their products and the potential for tie-ins for traditionally distributed goods with services delivered via the Internet.
33. Digital technology also allows copyright works to be created entirely in digital form. Some "digital-born" works might not have been copied or converted into a print or other physical form. The absence of any reference to the word "digital" in the Act does not, however, mean that these works will not be protected by copyright.6
Under the Act, copyright in literary, dramatic, artistic and musical works comes into existence when a work is recorded in "writing or otherwise".7
The word "otherwise" is probably broad enough to cover any form of recording using digital technology. Copyright is, therefore, likely to attach to original digital works when they are stored on a computer disk, whether that storage is in a computer's random access memory (RAM) or in a more permanent form on a hard or floppy disk.8
(ii) New Threats to the Interests of Copyright Creators Owners and Users
34. Digital technology has facilitated new uses of copyright works and new opportunities for copyright owners unforeseen when the current copyright laws were drafted. Copyright owners have concerns that this has led to a lessening of protection.
35. Many, if not all, of a copyright owner's restricted acts are likely to be affected by digital technology in some way. The potential effects on the reproduction right are perhaps the most obvious. Digital technology is seen as a serious threat to owners' interests and revenues by facilitating piracy; that is, the unauthorised copying and distribution of works of copyright. Piracy threatens the revenue streams of copyright owners and creators and, left unchecked, can detrimentally affect decisions to create, invest in and distribute copyright works. Once a copyright work is converted to digital form, digital and optical disk technology allows the making of unlimited copies of a work at a comparatively low cost and without the loss of quality associated with earlier copying technologies. This enables the production of unauthorised or pirate copies that are often indistinguishable from the original.
36. Copies of a work can also be easily issued or made available to the public through the Internet. Making a copyright work available on the Internet therefore not only makes the work available to potential customers; it also exposes the work to potential pirates.
37. The advent of digitisation, optical disk technology and the Internet has also had the effect of changing the problem of piracy from one largely confined to local areas to a sophisticated illicit international trade in which unauthorised use is difficult to trace.
38. Apart from owners' economic rights, the moral rights of authors and directors might also be threatened by the use of digital technology. Digital technology allows copyright works to be more easily dealt with in ways that authors may consider infringe their existing moral rights. For example, the conversion of copyright material from analogue format into digital format necessarily involves some manipulation of the material, which could result in the removal of an author's or director's name from the work and infringing their right of integrity.
39. Once the material has been transformed into a digital format and made available to the public on the Internet, anyone who can access the Internet is in a position to resize, re-colour or manipulate copies of a work in many other ways. Authors and directors are likely to have difficulties exercising their moral right to object to derogatory treatment of their works that they consider harmful to their honour or reputation where copies are widely distributed over the Internet. (Moral rights are not considered further in this paper.)
(iii) Strategies for Protecting Copyright in the Digital Age
40. Copyright owners have recognised that copyright law alone might not be sufficient to protect their interests in the digital environment. One response to the threats of digital piracy has been to develop technological means of restricting access to copyright works and of preventing unauthorised copying.
41. Digital technology has made it easier for copyright owners to put access restriction measures and anti-copying measures in place. The ability of these measures to prevent unauthorised copying and other unauthorised dealing with works can provide copyright owners with the confidence to distribute digital copies of their works and can assist in realising the potential of the Internet as a distribution channel.
42. Contract is another mechanism used by copyright owners to restrict access to copyright works and remind users what activities in relation to a copy of a work are allowed or are unauthorised. Agreement to conditions of use through "click-wrap" and "shrink-wrap" contracts are now common procedures in buying and installing consumer software.
43. Owners may legitimately restrict access to their works by a combination of contractual obligations and technological protection measures. A problem that arises for users is that those technological protection measures can have a very broad range. They might unreasonably restrict access to material, whether the material is protected by copyright or not; or whether the activity is an infringing or permitted act.
44. Linked to the threat of piracy, and the accompanying demand from copyright owners for greater levels of protection, including technological protection measures, is the importance of managing information concerning copyright owners or the holders of related rights. Information about the copyright owner and other rightholders (including the creators), and the terms and conditions under which a copy is sold, are supplied with many copyright works to inform consumers and users. This information can also assist copyright owners in tracking the distribution and copying of their works and identifying pirated copies of their works.
45. In the analogue and print environments, this rights management information can be readily separated from the products embodying works of copyright. Digital technology enables information about the copyright owner, and associated information related to the terms and conditions governing the use of works of copyright, to be embedded in the work. Digital "water-marking" technology also allows copyright owners to authenticate digital copies and to trace the source of unauthorised copies.
46. Digital technology may also soon allow for tracing of on-line behaviour, including tracking the distribution of copies of works. It is envisaged that it will eventually allow automatic rights clearance for licensing for specific uses and the collection of royalties for the use of the works.
47. Mechanisms such as technological protection measures and electronic rights management information systems are inherently vulnerable. Both are themselves subject to attack by dedicated hackers applying digital technology to undermine, circumvent or remove them.
48. There will always be a threat to legitimate technologies from the applications of digital technology for circumvention purposes by dedicated hackers and pirates. The greatest threat in this area is the possibility of a market for devices or software intended to circumvent or remove technological protection measures and electronic rights management information. Such devices would allow a wider group of people to undermine these technologies, and consequently the interests of copyright owners.
(iv) Maintaining the Balance between the Interests of Copyright Owners and Users in the Digital Age
49. Copyright sustains a dual relationship between owners of rights and users and there can be tensions between the interests of the two groups. As already noted, owners wish to ensure that any use that is made of works in which they hold the copyright is authorised and that the financial returns that can be derived from that use are maximised. Users wish to be able to access and use copyright works unhindered, either at a reasonable and affordable cost or, in certain circumstances, at no cost.
50. The Copyright Act aims to balance these interests. Copyright owners have concerns that new technology has tipped the existing balance in the Act in favour of users. They tend to argue, therefore, that the balance needs to be redressed by updating the existing legislation to take account of digital technology.
51. Users are concerned that copyright owners are not granted additional rights that would undermine the existing permitted uses provided by the Copyright Act. In particular, they are likely to consider that any new rights should be subject to appropriate limits and (where necessary) new exceptions to protect the interests of users and the wider public.
52. There would appear to be no reason to suggest that the balance between owners and users that is provided in the current legislation should be not be maintained. Legislative provisions should apply consistently across the digital and analogue/print environments. Where the current legislation does not provide copyright owners with sufficient protection or certainty to allow them to control the exploitation of their works in the digital environment, it may be necessary to introduce new rights or to strengthen existing rights. It also appears reasonable that any new rights should be subject to the same limitations and exceptions that currently apply to existing economic rights, unless there is a good reason to take a different approach for specific rights. It might also be necessary to expand the existing permitted uses to maintain an appropriate balance between the interests of creators, owners and users.
D. Key Copyright Issues in the Digital Age
53. The key copyright issues that arise from digital technology are:
- the right to copy copyright works;
- the right to communicate copyright works to the public, including the transmission of works to audiences over the Internet (including "webcasting" - using the Internet to transmit sound or audio material in real time to an audience), the making available of works on the Internet and the retransmission of free-to-air broadcasts using digital technology;
- whether, and in what circumstances, Internet service providers (ISPs) should be liable for copyright infringement relating to the activities of their subscribers;
- the legal protection of technological protection measures and electronic rights management information;
- the legal protection of electronic databases; and
- whether any new exceptions or permitted uses are required to protect the interests of the users of copyright works and the wider public interest in the digital age.
54. These issues are briefly outlined below. They are considered in more detail in Part Four of the paper. This list of issues is by no means exhaustive, and submitters are invited to bring other copyright issues raised specifically by the implications of digital technology to the Ministry's attention.
(i) The Reproduction Right
55. The owner's exclusive right to make copies of his or her works of copyright is at the heart of copyright. In the digital environment, a particular issue is to identify the acts that are covered by the right to copy. While it is generally accepted that storing a work in a permanent form constitutes a restricted act, the existing legislation does not explicitly consider the digitisation of works and whether the unauthorised digitisation of works infringes copyright. There are also differing views on whether temporary or incidental acts of copying (sometimes called "transient copying") are similarly restricted.
56. This issue is particularly relevant to the operation of the Internet and computer networks. It is not clear whether the transient copying of works that occurs when a user accesses copyright material on the Internet constitutes "copying" for the purposes of the current legislation. It is also debatable as to whether such temporary copying that takes place automatically as part of a technical process in a computer system should be considered "copying" for the purposes of copyright law.
(ii) Communication to the Public and Making Available Copyright Works
57. The communication of works to the public covers acts that are essentially non-copy related. That is, it covers activities by which works are transmitted to the public for immediate rather than deferred use, although copies or recordings may be made either as a result of, or to facilitate this.
58. The communication of works to the public encompasses a wide range of activities including: the broadcast of a work or its inclusion in a cable programme service, and the rebroadcast of the work. Technological advances have made it possible for works to be communicated to the public in new ways. For example, the Internet allows works to be transmitted by "webcasting". The Internet also allows works to be made accessible to the public in an interactive "on-demand" manner, which is related to the concept of communication to the public.
59. The current Copyright Act does not grant copyright owners explicit rights to control the communication or making available of works in this manner. Consequently, the existing broadcast, cable programme service and distribution rights are unlikely to be sufficient to control the dissemination of copyright material on-line.
(iii) Internet Service Provider Liability
60. Issues arise in respect of the potential liability of Internet service providers (ISPs) for copyright infringement on a number of levels. ISPs may, for example, be liable for any infringement that might arise as a result of their services being used by others to infringe copyright (including unauthorised copying and distribution of copyright works). Copyright owners may wish to seek redress from ISPs, given that there can be difficulties in taking action directly against infringers. Potential ISP liability also arises in relation to transient copying. ISPs may, however, not be in a position to determine whether material infringes copyright. Concerns over potential liability could affect the availability of Internet services and could lead to other undesirable outcomes, such as ISPs acting as de facto censors of material. The issue therefore arises as to the degree (if any) that liability in respect of copyright infringement should attach to the operations of ISPs.
(iv) Technological Protection Measures and Electronic Rights Management Information
61. As noted earlier, copyright owners are increasingly supplementing statutory rights by using technological means of protecting copyright works and by including electronic rights management information in the works themselves. The development of technological means of protecting works and attaching copyright information requires significant investment by copyright owners, service providers and hardware manufacturers.
62. Technological protection measures and electronic rights management information are vulnerable to tampering and circumvention. This raises the question as to whether comprehensive legal protection prohibiting tampering, circumvention and removal should be provided through copyright legislation.
(v) Electronic Databases
63. Digital technology has allowed the development of electronic databases that have dramatically changed the way information is created, stored and distributed. The Internet itself largely depends on a myriad of databases. Digital technology and the Internet have greatly increased the value of collections of information for scientists, researchers and education in general.
64. Databases can be expensive to compile and, like all digital material, are vulnerable to unauthorised duplication and transmission across the globe at the touch of a button. The threat of piracy could affect investment in databases that are easily copied, to the disadvantage of the honest user. The question is whether there is sufficient legal protection for databases under existing copyright legislation and, if not, whether additional protection is required.
(vi) New Exceptions or Permitted Uses
65. Each of the issues that has been briefly described above concern matters that might require the introduction of new rights for copyright owners. To ensure that a balance of interests is maintained, exceptions, in the form of new permitted uses, to any new rights also need to be considered to ensure that users have reasonable access to works and are not deprived of the opportunity to make legitimate use of copyright material.
Question 1 Are there any significant copyright issues, other than those identified above, that are raised by digital technology? |
4 The Act preceding the Copyright Act 1994, the Copyright Act 1962, drew heavily on the United Kingdom Copyright Act 1956.
5 New Zealand is a party to the Berne Convention for the Protection of Literary and Artistic Works ((1928) Rome Act revision) and the Universal Copyright Convention 1952.
6 The word "electronic", which is sometimes used interchangeably with "digital", is referred to and defined in the Act (see Copyright Act 1994, section 2 - definition of "electronic"). "Electronic" can, however, be used in relation to some forms of storage in analogue form.
7 Copyright Act 1994, section 15(1).
8The definition of a "literary work" includes a computer program. It is not, therefore entirely clear whether artistic, musical or dramatic works that exist only in digital form and are stored on computer disks will be protected as works of these categories or whether they will be protected as literary works. See Copyright Act 1994, section 2(1) - definition of "copying".
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