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Part Four: Key Issues and Legislative Options


Digital Technology and the Copyright Act 1994: A Discussion Paper

Competition and Enterprise Branch
[ Last Updated 19 October 2007 ]


A. Introduction: The Basic Options

76. This part of the discussion paper explores in more detail the key issues that were identified above and suggests possible approaches and options for potential changes to the existing legislation.

77. There are three basic approaches to choose between:

  1. Make no changes to the Copyright Act at this time. This approach has the advantage that further developments in technology and international law can be monitored and more comprehensive and, where possible, technology-neutral amendments to the Act made when they become necessary. This might be done in the context of a more comprehensive review of the Act. This approach would be justified if it were to be concluded that the issues raised by digital technology could be addressed by a combination of existing copyright law, contractual arrangements and technological protection measures. Such an approach might not, however, be feasible if significant gaps are found to exist in the Act, which seriously affect the interests of copyright creators, owners and/or users in the digital age.
  2. Implement the provisions of the WIPO Internet Treaties only. This approach presupposes that implementation and accession to the WIPO Internet Treaties is in New Zealand's best interests. Implementation of those aspects of the WCT and WPPT that are not currently provided for copyright owners in the Act would ensure that New Zealand's copyright law is consistent with international standards. Implementation and subsequent accession to these treaties might also enhance the confidence of foreign copyright owners exporting to, transferring technology to and investing in New Zealand. The Treaties do not, however, provide a comprehensive model regime. Their purpose is to provide minimum international standards, leaving individual countries to determine the scope of their domestic law above those standards and whether they should be subject to limitations and exceptions. Straight implementation would not allow wider consideration of related copyright issues that arise but are not addressed in the Treaties. Such an approach could also preclude the adoption of solutions that best meet the needs of New Zealand stakeholders.
  3. Address particular concerns for New Zealand copyright stakeholders, taking into account the provisions of the WIPO Internet Treaties. Under this approach, any gaps identified in the current legislation would be addressed by implementing solutions best suited to the needs of New Zealand copyright stakeholders. The key consideration in recommending any legislative change would be to maintain a fair balance between the interests of copyright owners and users. The advantage of this option would be its direct focus on the interest of New Zealand copyright creators, owners and users. This does not mean that international standards provided in the WIPO Internet Treaties could not be considered, nor that New Zealand could not accede to the Treaties should it prove desirable to do so.

Question 3

In considering the adequacy of existing copyright legislation in relation to issues raised by digital technology, which of the following broad approaches should New Zealand take:

  1. make no changes at this time, but consider future legislative amendments when a pressing need is demonstrated or when a more comprehensive review of the Act is undertaken;
  2. directly implement the provisions of the WIPO Internet Treaties only; or
  3. address any particular concerns relating to digital technology through measures designed to meet the needs of New Zealand copyright stakeholders, bearing in mind the provisions of the WIPO Internet Treaties?

B. Copying

(i) Issues Relating to Copying and the Right of Reproduction

78. The application of digital technology to copying creates perhaps the greatest potential threat to the interests of copyright owners. As already discussed, digital technology can affect the right of copyright owners to control the reproduction of their works. In particular it can facilitate the production of low-cost, high-quality pirated copies. Unchecked, digital piracy has the potential to undermine the very incentives copyright seeks to provide to creators and investors to produce, invest in and distribute copyright works.

79. Copyright owners regard the right to control the copying of protected material as their most important weapon in taking action against piracy. In the digital age, they claim that this right needs to apply to transient copying, that is, temporary or incidental copies that are automatically made as a result of the technical process of transmission of material or the operation of computer systems and networks. Copies of this nature are usually not permanent and are not "stored" in the traditional sense. Users will usually not be aware of the creation or existence of temporary copies, in particular those that might be made as in the process of Internet transmissions in a computer cache.

80. Owners also claim that copyright material, particularly recorded music and motion pictures, will increasingly be enjoyed on-line involving temporary copies that disappear when the use ends. Many copyright owners therefore believe that they need the ability to restrict transient copying in order to control Internet piracy, and that the definition of "copying" in the Act needs expressly to extend to such activities.

81. As mentioned earlier, digital technology allows digital copies of copyright works to be made from print/analogue copies. It also allows the creation of works in digital formats ("digital-born" works), many of which may never exist in physical or print form. Copyright owners also have concerns about the application of the reproduction right granted under copyright to these activities.

82. Copying in the digital environment raises three inter-related questions:

  • What is covered by the current definition of "copying"?
  • What is the position regarding temporary or incidental acts of reproduction?
  • What limitations and exceptions should apply to the right to copy?

83. The question of what limitations and exceptions should apply to the right in the digital environment of copying is a complex one. Some possible exceptions are considered in paragraphs 195 to 211 as part of the section that discusses the limitations and exceptions.

(ii) The Current Legislation

84. The Copyright Act 1994 provides copyright owners with the exclusive right to copy a work. The copying of a work is a restricted act in relation to every description of a copyright work.17 In the Act, "copying" is defined as including reproducing or recording a work "in any material form" and, in relation to a literary, dramatic, musical, or artistic work, "storing the work in any medium by any means".18

85. While the current definition of "copying" is a broad and inclusive definition, it focuses on material reproduction. The question is whether the definition of copying is in fact broad enough to include digital copying (which is arguably not a "material form"): that is whether the exclusive copying right prohibits unauthorised copying of material in digital form. This includes the question of whether copyright owners currently have the exclusive right to convert works in print or analogue form into digital form (digitisation), for example through digital scanning technology.

86. It appears likely that the inclusion of the phrase "storing [a]... work in any medium by any means" in the definition of "copying" is sufficiently broad to cover conversion of literary, dramatic, musical, or artistic works into a digital form where the digital copy is stored on a computer disk or in any other means of storage. The definition may not, however, extend the concept of storage of other works, such as sound recordings, films or typographical arrangements of published editions19, although storage of these works in such a "non-material" way would still infringe copyright in any literary, dramatic, musical or artistic works that are embodied in a film or sound recording - for example the song lyrics or musical arrangement of the music recorded or the script of a film. This could mean that the digitisation of sound recordings and films are not restricted acts under the Act. It may, however, be less certain whether this could be a problem in relation to typographical arrangements.

87. The Act does not specifically address the question of whether temporary or incidental copies, which are made as a consequence of technology and are not stored in a "medium", infringe the right of copying. This question arises particularly in relation to digital copies that are made as a function of "browsing" and "caching" on the Internet - copies in a non-material form that are made to aid in the process of viewing or transmitting of works in digital form.

(iii) The WIPO Internet Treaties

88. At the international level, the issue of transient copying in the digital environment has proved contentious. Delegates at the Diplomatic Conference that concluded the WIPO Internet Treaties were unable to agree on whether the right of reproduction covered transient copying. A compromise was reached, in the form of Agreed Statements that apply to the relevant provisions of the WCT and the WPPT.

89. The first part of the WCT and WPPT Agreed Statements express a generally accepted understanding that the reproduction right and the permitted exceptions as set out in the Berne Convention fully apply in the digital environment. On this basis, the right to copy that appears in New Zealand's copyright legislation could be interpreted as complying with the general obligation under the WCT to provide a right of reproduction.

90. The second part of the Agreed Statements concerning the reproduction right state that "storage of a protected work in an electronic medium constitutes a reproduction" within the meaning of the Berne Convention. As there is uncertainty as to the meaning of "storage", it is open to countries that accede to the WIPO Internet Treaties to interpret "reproduction" or "copying" as either including transient, technical reproductions or to determine that it does not include such reproductions. New Zealand's current position therefore complies with those Treaties, as would any amendment clarifying the application of the Act to transient copying.

(iv) Possible Options

91. The right to copy is central to copyright. So far as digital and transient copying is concerned it is, therefore, important that the extent of the right in the digital environment is clear so that copyright owners and users can confidently deal with and utilise digital copies of works.

92. If the current definition of "copying" is considered inadequate in relation to the digitisation of copyright work, the following potential options could be explored:

  1. Expand the definition of "copying" in relation to storage in any medium by any means to include other works, for example sound recordings, films and/or typographical arrangements. This option assumes that the words "storing the work in any medium by any means" are sufficiently broad to cover conversion into digital form and digital copying.
  2. Expand the definition of "copying" to explicitly include conversion into digital form. The Act would therefore include an explicit statement that the act of converting a print or analogue copy of works into digital form constitutes copying and is a restricted act.

93. Both of these options would increase the ability of copyright owners to restrict and control the conversion of a wider range of copyright works into digital form. This increased ability would be particularly useful for record companies and film companies in relation to the conversion of analogue material into digital form, which enables the making available of unauthorised digital copies on the Internet.

94. Both options would, however, have implications for users. For example, the digitisation of legitimate sound recordings, or "format shifting", by individuals for personal use would constitute copyright infringement. Paragraphs 207 to 211 below discuss the possibility of an exception for format shifting of sound recordings in certain circumstances in relation to the right of copyright owners to restrict digital copying.

95. Potential options for addressing the issue of transient copying include:

  1. Providing that the making of temporary or incidental copies constitutes "copying" for the purposes of the Copyright Act. This would address copyright owners' concerns about the potential use of temporary or incidental copies in making pirated copies and the unauthorised modification of material that could be extracted from temporary (or cache) copies on a computer system. It could also prevent organisations operating Intranet and local area networks (LANS) from configuring their systems to cache frequently accessed works to increase the efficiency of their systems. It would, however, mean that copyright infringement would occur every time a copy of a work is made to communicate it over a computer system or the Internet, even where the making of those temporary copies are automatic and unknown to the user. Under this option it would probably be necessary to provide that certain types of transient copying do not give rise to liability for infringement, in order to protect the user's interest. It is difficult to see how incidental copying that occurs purely as a consequence of the technical processes of a computer system would damage owners' interests, particularly where the copies made are temporary and automatically made without the user's knowledge. Such a broad right would clearly also affect the operation of ISPs and other telecommunications providers engaged in providing legitimate communications services. The question of whether ISPs should be liable for copyright infringement in respect of such activities is discussed at paragraphs 143 and 148 to 151.
  2. Providing that the making of temporary or incidental copies does not constitute "copying" for the purposes of the Copyright Act. An alternative response to this issue might be to provide that the definition of "copying" excludes copying that is automatically undertaken as part of a technical process, such as the copying that takes place in a computer's cache memory and copying undertaken in computer networks. This option may be appropriate where the copying is unlikely to damage owners' interests. It would also acknowledge the difficulties involved in policing copying that occurs automatically as part of a technical requirement or process in a computer system.

Question 4

  1. Does the definition of "copying" in the Copyright Act give copyright owners sufficient control in relation to the digitisation of their works?
  2. If not, should the definition of "copying" in the Act be amended by:
    • expanding the definition in relation to "storage in any medium by any means" to include other works, for example sound recordings, films and/or typographical arrangements; or
    • specifically providing that "copying" a work includes its conversion into a digital form?

Question 5

  1. Is there a need to amend the definition of "copying" in the Act to take account of incidental and temporary copies that are automatically made by computers and computer networks as part of technical processes?
  2. If so, should the definition of "copying" be amended to:
    • include the making of temporary or incidental copies in all circumstances;
    • include the making of temporary or incidental copies, but excuse liability for infringement where the copying is automatically undertaken as part of a technical process in a computer system; or
    • exclude copying that is automatically undertaken as part of a technical process in a computer system?

C. Communication to the Public and the "Making Available" of Copyright Works

(i) Issues Relating to the Communication of Works to the Public

96. The concept of " communication to the public" of copyright works refers to the transmission of works to the public through broadcasting or by inclusion in a cable programme service. It can also be used to refer to the transmission of works via the Internet through "webcasting" - means of using the Internet to simulcast or transmit in real time audio or audiovisual material to the public, usually using "streaming" technology.

97. A closely related concept is the "making available" of a work on the Internet for on-demand access, whereby copies of works are stored on computer networks that can be accessed by persons from a place and at a time of their choosing.

98. Digital technology also has implications for those provisions of the Act that allow the retransmission of terrestrial broadcasts by cable programme service providers.20

(ii) Broadcasting, Inclusion in a Cable Programme Service and "Webcasting" - Definitional Issues

99. For the purposes of copyright law, the distinction between a broadcast and a cable programme service is made on the basis of the means of transmission of the sounds and images for public reception. Broadcasting is transmission by wireless communication; transmission by means of a cable programme service is transmission other thanby wireless communication (i.e. by "wired" means)21. The definition of cable programme service, which refers to is therefore wide enough to cover transmission through new mediums such as fibre optic cable.22

100. Digital technology has the potential to improve the signal quality of traditional forms of broadcasting and cable transmission. t is also likely to increase the number of channels and (therefore) programmes available, and will allow new complementary services to be offered, to consumers. The benefits of digital technology are already available to satellite pay-TV subscribers, and it is only a matter of time before terrestrial television broadcasts are made in digital format.

101. Digital technology has also enabled the development of webcasting. Many traditional broadcasting organisations (particularly radio broadcasters) now offer Internet access to simulcasts of their programming. This enables them to reach a much wider audience at a lower cost than would be possible using traditional broadcasting technology. It can also allow access to television services from any country that has Internet services. The use of the Internet for these purposes is likely to increase with improvements in bandwidth and computer technologies.

102. It is not clear whether webcasting falls within the definitions of broadcasting or cable programme transmission, whether it is a combination of both or whether it is not capable of being categorised at all under the existing legislation. This is a definitional problem for copyright owners, broadcasters and cable programme service providers alike, which could mean that webcasts are not covered by the existing restricted acts and therefore fall outside the copyright control of the content owners and television organisations.

103. Another definitional problem is raised by the "interactive" nature of the Internet. Internet transmissions involve the two-way exchange of data between web page and user. For example, Internet users are required to access a site where they are required to select and "click on" the content they want to have transmitted to them, whereas broadcasts and cable transmissions typically involve only one-way transmissions made at advertised times, where reception equipment will be pre-set. The same interactivity also applies to other types of Internet transmissions, such as data exchanges, email communications and Internet conferencing and on-line chat rooms. These types of Internet transmissions are currently expressly excluded from the definition of cable programme service.23

(iii) Broadcasting, Inclusion in a Cable Programme Service and "Webcasting" - The Current Legislation

104. Copyright owners have the exclusive right to broadcast their works or to include them in a cable programme service. The definitions in the Copyright Act follow the usual wireless/wired distinction between broadcasting and cable programme transmission. Neither of these definitions explicitly covers the transmission of works via the Internet.

105. The definition of "broadcast" in the Act is restricted to wireless communications to the public. It might, however, be arguable that the definition of cable programme service could in some circumstances cover Internet transmission supplied to users' homes wholly or mainly via cable lines.24 The exclusion of "interactive" transmissions from the definition provided in the Act could mean, however, that the existing cable transmission right does not extend to many Internet activities. This could include "webcasts" of copyright works, including sound recordings and films, and retransmissions of broadcasts or cable programme services. It is therefore uncertain whether copyright owners have the ability under copyright to control the communication of their works to the public via the Internet.

106. A related observation is that the list of original works in which separate copyright can exist under the Act includes broadcasts and cable programme services, but does not include Internet services such as webcasts. If a webcast is not covered by the definitions of broadcast or cable programme, this means that while separate copyright will arise for broadcasters and cable programme service providers in respect of their transmissions, copyright independent of the content does not arise in relation to webcasting services, whether they are original transmissions to a public audience or retransmissions.

(iv) Broadcasting, Inclusion in a Cable Programme Service and "Webcasting" - The WIPO Internet Treaties

107. The relevant provision of the WCT provides, in part, that authors are to have the exclusive right to authorise any communication to the public of their works by wired or wireless means. It supplements the existing Berne Convention provision, which did not extend the communication right to wired or cable transmissions. It is unclear, however, whether the WCT provision requires the right to apply to transmission that utilises a combination of both wired and wireless means. As discussed above, New Zealand provides authors with the exclusive right to broadcast their works and to include them in a cable programme service. The current legislation therefore complies to this extent with the provisions of the WCT. The Act does not, however, explicitly contemplate the communication of works to the public that involve both wired and wireless technologies. It is, however, likely that where such a communication constitutes a transmission service and uses a "telecommunications system" it would be covered under the definition of cable programme service.25

108. The WPPT also refers to wired or wireless means. The WPPT does not, however, require that phonogram producers be granted an exclusive right of communication to the public. Instead it requires the provision of a right to a single equitable remuneration - a right to fair compensation only - for the use of phonograms in broadcasting or cable programme services. The New Zealand legislation treats phonogram producers as authors. Accordingly, it provides them with an exclusive right to broadcast their phonograms and to include them in cable programme services. It therefore goes further than the requirements of the WPPT.

(v) Broadcasting, Inclusion in a Cable Programme Service and "Webcasting" - Possible Options

109. It might be argued that the Copyright Act does not meet the needs of copyright owners and creators in the digital age as it does not include an explicit right in the Act to control the communication to the public of works over the Internet. Assuming that there are compelling reasons for such a right to be granted, this gap could be addressed in one of three ways, by either:

  1. providing a new exclusive right to copyright owners to transmit a work to the public via the Internet (webcast a work);
  2. amending the definition of "cable programme service" to include webcasting and a combination of both broadcasting and cable transmission to the public; or
  3. replacing the exclusive right to broadcast a work or include a work in a programme cable service with a "technology-neutral" public transmission or "communication right" that would cover broadcasting, inclusion in a cable programme service, webcasting and any combination of these.

110. If the communication right in the WCT, and the right to equitable remuneration in the WPPT, are narrowly interpreted to mean communication by either wired or wireless means, it might not be necessary to amend the Copyright Act in order to comply with the provisions of that Treaty. If, however, the relevant provisions in the WCT and WPPT were interpreted to cover communication by a combination of wired and wireless means, which would include webcasting, the current legislation might need to be amended to expressly cover this alternative. If this were necessary, this could be achieved through any of options (i) to (iii) above.

111. Consideration would also need to be given to whether "webcasts" should be capable of being separate copyright works in the same way as broadcasts and cable programmes are. Assuming that this is necessary, the Act could be amended by either:

  1. adding webcasts to the list of copyright works as a separate category of copyright works, in the same way as broadcasts and cable programmes are currently protected; or
  2. creating a new category of works of communication, which would include expressly all means of transmitting works to the public. This option would have the flexibility to include future methods of transmitting works.

Question 6

  1. Is there a need to amend the Copyright Act to include an explicit right to control the communication to the public of works over the Internet (webcasting)?
  2. If so, should this be done either by either:
    • providing a new exclusive right to copyright owners to transmit a work to the public via the Internet (webcast a work);
    • amending the definition of "cable programme service" to include webcasting and a combination of both broadcasting and cable transmission to the public; or
    • replacing the exclusive right to broadcast a work or include a work in a programme cable service with a technology-neutral communication right that would cover broadcasting, inclusion in a cable programme service, webcasting and any combination of these?

Question 7

  1. Should webcasts or Internet transmissions to the public be protected as copyright works in the same way as broadcasts and cable programmes currently are?
  2. If so, should this be done by either:
    • adding webcasts to the list of copyright works as a separate category in the same way as broadcasts and cable programmes are currently protected; or
    • creating a new category of technology-neutral communication works, which would include all types of transmitting works to the public?

(vi) Making a Work Available - The Issue

112. Copyright works are now increasingly accessible "on-demand" via the Internet. Works and other subject matter can be stored in a digital format on a computer system and made available for individuals to browse or copy when and where they decide to do so. In contrast, traditional broadcasting and cable transmissions and webcasts, which are transmitted in "real time", for the most part carry pre-determined programmes transmitted to the public at a pre-determined or scheduled time.

113. Making works available in an interactive, on-demand fashion is an important development for distributors of sound recordings and other entertainment material, for libraries and their users and for electronic commerce generally. It also provides an additional or alternative distribution channel for copyright owners and distributors of other types of copyright works to publish or issue copies of works to the public. The added convenience for users increases the value of copyright works that can be exploited in this way. This development, however, also represents a threat to the interests of copyright creators and owners.

114. Where the person making the work available to the public makes unauthorised copies in the process, a copyright owner will be able to take action against that person for copyright infringement in relation to activity that amounts to unauthorised copying. As noted earlier, however, the digitisation of sound recordings, films and typographical arrangements might not infringe the reproduction right currently provided under the Act in respect of those works. Copyright owners could therefore face difficulties in taking legal action in New Zealand in relation to unauthorised copies of sound recordings or films that have been made available on the Internet.

115. Another problem for copyright owners relates to the making available of legitimate copies of their works where they have not given permission for them to be made available. This could arise where a person purchases a digital copy of a work (such as a software programme or a digital copy of a sound recording) either on a disk or on-line, which would usually be subject to an implied condition that they do not copy or distribute the work. By making a computer server with a legitimate copy of the work available to Internet browsers, a user would be making a copy available for others to make copies without the authorisation of the copyright owner. Making a work available in such a manner could lead to numerous pirated digital copies being made and distributed without the copyright owner's permission, potentially affecting the owner's ability to exploit the work in question. Because the copy being made available is a legitimate copy, only copying by browsers would constitute infringement. The copyright owner might not have a copyright remedy against the person making the copy available for others to copy via the Internet, unless they could be said to have authorised the reproduction of infringing copies. In some circumstances, this might mean that a copyright owner could only take action against individuals who download unauthorised copies.26

116. The reproduction right provided under the Copyright Act will therefore have a narrow application to situations where legitimate copies of a work are made available to the public. Even if it does apply, it is likely to be almost impossible, and too late, for copyright owners to rely on the reproduction right to prevent unauthorised copying of their works as a result of their being available on the Internet. Problems of jurisdiction and conflict of laws also arise where a work can be accessed over the Internet from computers all over the world. The unauthorised act of making a work available for others to copy would therefore be of prime concern to copyright owners and the most effective act to target in stopping further unauthorised copying or obtaining a remedy against such activity.

117. Connecting a server containing a copy of work to a computer network such as the Internet is all that is required to make a work available for transmission. A key issue is therefore whether the existing copyright legislation adequately allows copyright owners to control the making available of their works in the digital environment. If it does not, there may be a need for the Act to be amended by providing copyright owners with such a right.

(vii) Making a Work Available - The Current Legislation

118. Copyright owners have the exclusive right to issue copies of a work to the public whether by sale or otherwise. The Copyright Act provides that issuing copies of a work to the public means putting into circulation copies that have not previously been put into circulation. It does not include subsequent distribution or sale of these copies, whether copies are first put into circulation overseas or in New Zealand.

119. The concept of issuing copies of a work to the public has traditionally been associated with publishing a tangible work and the subsequent distribution of copies, for example in the form of books or sound recordings. The current definition in the Copyright Act is, however, somewhat wider. It provides not only that "publication" means the issue of works to the public; but that it also includes making literary, dramatic, musical or artistic works available to the public by means of an electronic retrieval system.27 It is possible, therefore, to interpret the right to issue copies to the public as including making those copies available in an electronic retrieval system, which would include a computer disk or a computer system or server. This would mean that the existing legislation already provides a limited right to make available in respect of literary, artistic, musical and dramatic works; but not sound recordings, films or typographical arrangements.

120. The transmission of films and sound recordings on-demand may, however, also to some extent be covered by the existing rights granted to copyright owners. This is analogous to a hotel on-demand pay-per-view video or music service, which might, for example, qualify as rental of the works. Rental is a restricted act, as a subset of the distribution right in respect of films and sound recordings. Infringement of rental rights would, however, arguably require the payment of a fee, which would mean that rental rights could only apply to the making available of films or sound recordings for a fee. This analogy cannot perhaps be taken too far as rental traditionally involves the transfer of possession of a copy for a limited period of time.

121. Notwithstanding these interpretations of existing provisions, it is not explicitly clear whether the existing exclusive rights sufficiently allow copyright owners to control the making available of their works in electronic forms through interactive on-demand systems.

(viii) Making a Work Available - The WIPO Internet Treaties

122. The WCT provides for a new exclusive right to authors to authorise the making available of works to the public as part of the "right of communication". The WPPT provides an equivalent right to producers of phonograms but labels it the "right of making available". In both Treaties, the new right is intended to cover interactive, on-demand systems like the Internet. It gives authors and producers of phonograms the exclusive right to make their works available to the public "in such a way that members of the public may access those works from a place and at a time individually chosen by them".28

123. The relevant act is the act of authorising the making available of the works to the public. The actual number of people who may access the works and the circumstances from which they access the works is irrelevant: it is sufficient that there is a possibility of the works being accessed. For the reasons discussed above, the New Zealand Act is unlikely to comply with the requirements of the WIPO Internet Treaties concerning the making available of works.

(ix) Making a Work Available - Possible Options

124. The following are possible options in relation to the ability of copyright owners to restrict the making available of their works on the Internet:

  1. Make no changes at present. If the existing provisions in the Copyright Act are considered sufficient to allow copyright owners to control the making available of their works on the Internet. In this case, it may not be necessary to provide a new right of making works available through interactive systems.
  2. Provide an explicit right of making works available. Although the current legislation might provide right owners with the ability to control the making available of their works through interactive systems, an explicit right could enhance the ability of right owners to control the unauthorised exploitation of their works over the Internet. Such a right would, for example, apply in situations that could not be considered "publication" (for example in relation to films and sound recordings) and where film or sound recording rental could not be said to be involved. This would, for example, expressly apply to situations where databases of films or sound recordings, whether consisting of legitimate or pirated recordings, were made available to the public without the authorisation of the copyright owners. A separate right of making available has the further advantage that it can be expressed in legislation in a technology-neutral manner that would cover making works available on-demand by any means and for access using any technology or method of transmission. If the current structure of the exclusive rights were to be retained, one way of providing an explicit right of making works available would be to provide that the right to issue copies of a work expressly includes making those works available on an interactive, on-demand system. An alternative would be to expand the definition of "publication" that applies to storage of some literary, artistic, musical and dramatic works in an electronic retrieval system to cover sound recordings and films.
  3. Provide a right of making available in conjunction with, or as part of, either a separate right of communication over the Internet or a technology-neutral right of communication. This approach would be consistent with the WCT, which includes the right of making available as part of the communication right. It would not, however, be consistent with the existing structure of the Act, which separates rights of distribution from rights of communication to the public (such as broadcasting and inclusion in a cable programme service).

125. Whichever approach is ultimately preferred, it is important to recognise that making available can occur in either a wired or a wireless medium or in a combination of both media.

Question 8

  1. Should the Copyright Act be amended to provide owners with an exclusive right that expressly controls the making available of their works in an interactive, on-demand system, such as the Internet?
  2. If so, should such a right either:
    • form part of the right to issue copies to the public;
    • be provided as a separately stated exclusive right; or
    • form part of any new technology-neutral right of communication that would apply to Internet transmissions?

(x) Retransmission - the Issue, the Current Legislation

126. In specified circumstances, section 88 of the Copyright Act permits the reception and immediate retransmission of a free-to-air broadcast by a cable programme service without infringing either the copyright in the broadcast or the copyright in any work contained in it.29 This provision does not, however, apply where a licence could have been obtained from the broadcaster, and the cable programme service provider knew that fact.30 In other circumstances, copyright owners in the original broadcast and the copyright owners in the content of the transmission have the ability to prevent retransmission of broadcasts.

127. As a result of an expanding market for digital satellite televisions services, digital satellite pay-TV broadcasters argue that the free-to-air retransmission provision should be extended to allow them the same ability as cable programme service providers to retransmit terrestrial free-to-air broadcasts.

128. There are also consequences for Internet transmissions. If webcasting is a form of cable programme service, broadcast material could arguably be retransmitted by that means without infringing copyright in the broadcast or any underlying work. (It would not, however, permit the retransmission by webcasting of material that had been received by the webcaster through a cable programme service that is not provided free-to-air or is encrypted.)

129. The special provisions for cable programme services enacted in 1994 had two objectives:

  • To encourage greater competition and investment in the cable network and service industry by allowing cable service providers to bundle free-to-air television with telecommunications services. With increased competition and technological advances in the telecommunications industry, the question arises as to whether retention of the retransmission provision for this purpose is justified.
  • To improve the quality of television reception in areas where signal quality was inadequate. This could still be of particular assistance to the inhabitants of isolated areas that do not receive terrestrial broadcasts. It is also likely that satellite services or the Internet will be a viable alternative means for improving the television services that are available to geographically isolated areas, particularly, in the case of the Internet, as the bandwidth of telecommunications services are increased. Webcasts would, however, potentially be available to Internet users anywhere in the world, a potential audience far wider than that envisaged by the original terrestrial broadcast.

130. Two questions therefore arise in respect of the second reason:

  • whether this rationale is still valid, and justifies providing cable programme service providers with the ability to re-transmit free-to-air broadcasts without the permission of the broadcaster; and
  • if so, whether the provision should be extended to give the same ability to satellite subscription broadcasters and webcasters?

(xi) Retransmission - the International Context

131. Under TRIPS, New Zealand is required to provide broadcasting organisations with the right to control retransmission of their broadcasts.31 Exceptions can, however, be made to this right in certain circumstances.32 New Zealand is not therefore a party to any international obligation that requires any particular approach to retransmission of broadcasts by wired means.

132. The WCT and WPPT do not include provisions concerning this issue, although the issues concerning copyright and the rights of broadcasting organisations are currently on the work programme of the WIPO Standing Committee on Copyright and Related Rights in anticipation of new international standards concerning copyright in relation to broadcasting and related transmission issues.

(xii) Retransmission - the Possible Options

133. There are three options in respect of section 88 of the Act:

  1. The status quo. Under this option, no change would be made to section 88 of the Copyright Act. This would continue to allow cable programme service providers to retransmit free-to-air broadcasts where they cannot negotiate a license with the broadcaster, but would not give the same ability to competitors that provide pay-TV services via means other than cable. The validity of this approach would therefore seem to rest on the need to provide cable programme service providers with a competitive advantage, which would now seem difficult to justify.
  2. Abolish section 88 altogether. There is a strong counter-argument that the television service providers should rely on commercial arrangements to carry each other's signals, to meet their commercial needs and the needs of the viewing public.It could also be argued that the retransmission provision reduces the revenues of broadcasters and television programme producers and may therefore reduce the broadcasters' ability to invest in programming. This could potentially affect investment in locally produced programmes and reduce viewer choice.
  3. Expanding the existing retransmission provision to cover satellite broadcasting and/or webcasting. This option would allow a level playing field, and could improve reception quality for consumers in isolated areas or in urban areas with reception difficulties, if this was considered a problem. The consequences of webcast retransmission potentially being available to Internet users anywhere in the world would, however, have to be carefully considered before expanding the retransmission provisions to webcasting. Copyright owners of television content would, for example, have serious concerns as television content rights are usually licensed on a country-by-country basis and retransmission over the Internet to other countries could affect the value of those rights in overseas markets. In respect of satellite retransmissions (that would only be receivable in New Zealand), this option could also raise concerns about equal access to original retransmissions of free-to-air broadcasts if retransmissions were encoded or a further subscription fee is required. The addition of encryption or conditional access coding to retransmissions by terrestrial or satellite broadcasts would require consumers that could benefit from improved reception of free-to-air broadcasts to pay the retransmitter for the service, with no return to the free-to-air broadcaster. A response to this would be to require any retransmission of free-to-air broadcasts to be made available without encryption, and with appropriate shared service information that would allow reception, without charge, to any consumer with the appropriate reception equipment.

Question 9

Should the current retransmission provision be:

  1. retained in its current form;
  2. removed altogether; or
  3. extended to allow the retransmission of free-to-air broadcasts by other means such as satellite and/or webcasting, in additional to inclusion in a cable programme service?

Question 10

If the retransmission provision was expanded to include satellite pay-TV service providers, should there be a requirement that any retransmissions of free-to-air broadcasts be made with shared service information and without encryption so that anyone with the appropriate reception equipment can receive these free-to-air retransmissions without charge?

D. Liability of Internet Service Providers for Copyright Infringement

(i) The Issue

134. A further issue related to the copying and communication of works via the Internet issues is the potential liability of ISPs for any copyright infringement that might arise as a result of their services being used to infringe copyright.

135. Copyright owners often face difficulties in identifying and pursuing legal action against infringers and persons who deliberately facilitate access to pirated copies of copyright works on the Internet. Of particular concern are the actions of website proprietors who may have placed unauthorised copies of copyright material on their sites, or provided unauthorised links to other websites.

136. Website proprietors can move their operations between jurisdictions and arrange for their sites to be "mirrored" or copied onto servers in multiple jurisdictions. A practical problem for New Zealand copyright owners arises where the unauthorised activity involves a website outside New Zealand. In these cases it may be difficult for copyright owners to take effective action to protect their interests, unless they can obtain an injunction against the New Zealand ISP to prevent the ISP facilitating the downloading or transmission of copyright material.

137. Where an infringing copy has been, or is likely to be, widely accessed, it would undoubtedly be more efficient for copyright owners to seek to have that material removed by the ISP, particularly where they are not able to determine the identity of the website proprietor or person who made it available. Copyright owners are also more likely to be able to obtain damages from ISPs, should their activities constitute copyright infringement, rather than from individual infringers or the website proprietor.

138. Copyright owners may therefore look to ISPs and providers of services such as bulletin boards and even telecommunications services for redress, on the basis that those providers enable users to access material placed on the Internet.

139. The possibility of ISP liability for copyright infringement may affect investment in Internet support services. Alternatively, it may lead providers to impose unduly restrictive requirements on their customers or to seek legal indemnities from them. The desire to avoid liability may also lead ISPs to remove material from websites even where there is no conclusive proof that the material in question infringes copyright, thereby acting as de facto censors and potentially restricting freedom of expression.

(ii) The Current Legislation

140. Under the current legislation, ISPs and the providers of telecommunications services and other services could potentially be liable for copyright infringement for:

  • engaging in an infringing activity themselves (primary infringement); or
  • dealing with infringing copies or providing the means to engage in infringing activities (secondary infringement).

141. Potential liability for primary infringement could arise where ISPs duplicate a web page on their computer or server to make it available for the client on the Internet. If that web page contains copyright material this activity would constitute an infringing act where it is undertaken without the copyright owner's permission, regardless of whether of not the ISP knew that it would amount to copyright infringement. This is because acts of primary infringement do not require the person carrying out the restricted act to have knowledge.

142. In situations where ISPs could be said to have authorised further copies being made by users, it is also possible that they could be liable for copyright infringement authorising infringement by persons using their services.

143. Potential ISP liability for primary infringement could also arise in relation to the issue of transient copying. In situations in which an ISP is providing a client with services, temporary or incidental copies are made on the ISP's servers to facilitate the making available of material on websites and the subsequent transmission of that material.

144. An example of the potential liability of ISPs for secondary infringement involves situations that could be said to constitute possessing or dealing with infringing copies in the course of business, or by providing means for making infringing copies. Secondary infringement requires actual or constructive knowledge of the nature of the activity. For example, ISPs would need to know that a web page that they hosted contained infringing material. This means that ISPs would not be liable for such activities unless they had knowledge of the activity. Knowledge would not arise in relation to mere conduit services unless the infringing material was brought to the ISP's attention. Constructive knowledge could, however, be attributable to ISPs who provide monitored bulletin board services, where infringing material is made available using those services.

145. Given the risk that ISPs could be exposed to liability for copyright infringement on many levels, the question arises as to whether they should be expressly exempted from liability for copyright infringement in certain circumstances. It is arguable that, unless some express exemptions are provided, ISPs' operations could run the risk of litigation for copyright infringement. This could discourage further investment in developing structures that support electronic commerce and other Internet services in New Zealand. The question therefore arises whether, and in what circumstances, ISPs should be potentially liable for copyright infringement in relation to the operation of Internet services.

(iii) The WIPO Internet Treaties

146. The Diplomatic Conference that drafted and adopted the WIPO Internet Treaties considered the liability of ISPs in the context of the right of making available. The question of ISP liability was highly contentious and the Treaties do not include an international standard for such liability. Concern was expressed that liability might be imposed on ISPs in circumstances in which they could not be expected to monitor the material that was made available.

147. In order to provide some comfort for ISPs, the Agreed Statements that accompanied the WCT and the WPPT stated that the mere provision of physical facilities for enabling or making a communication should not attract liability for copyright infringement. The WIPO Internet Treaties do not therefore require the imposition of strict liability for ISPs and other providers for the unauthorised copyright activities of their subscribers.

(iv) Possible Approaches

148. It may be unreasonable for ISPs to be liable for copyright infringement occurring through the unauthorised placement of copyright material on the Internet because of:

  • the difficulties ISPs face in verifying that a work is an infringing work, which would itself raise privacy concerns;
  • the potential exposure to liability for any consequent economic loss suffered by the website proprietor as a result of an ISP removing material in the mistaken belief that it is infringing; and
  • the likelihood that the wide exposure of ISPs to liability for copyright infringement could lead to higher costs for consumers.

149. The contrary view, mentioned earlier, is that ISPs should be strictly liable for copyright infringement occurring over the Internet because of the difficulty copyright owners face in pursuing infringing Internet users and the fact that ISPs could rarely be said to have direct knowledge of infringing activity undertaken by subscribers.

150. As with other questions of copyright raised by digital technology, the issue of ISP liability for copyright infringement involves a matter of balancing the interests of owners against users. There are three possible approaches to the issue of ISP liability for copyright infringement:

  1. Impose strict liability on ISPs for infringing acts that relate to the activities of their subscribers. This would mean that ISPs could be liable for all infringing activity and any infringing activity undertaken by their subscribers, regardless of whether they had knowledge of the relevant activity having occurred. In the absence of specific exemptions relating to certain types of copying (such as transient copying) they could also be liable for unauthorised copies made in the process of providing Internet services. While this approach would give copyright owners the ability to take action against ISPs to stop specific instances of infringing activity on the Internet, it would be likely to have a serious effect on the viability of ISP operations.
  2. State that ISPs will not be liable in any circumstances for the infringing acts that relate to the activities of their subscribers. This approach would provide that ISPs could not be liable for any infringement undertaken by subscribers or by ISPs in providing those services. This would allow ISPs to operate without fear of action for copyright infringement being taken against them. It could, however, provide a disincentive for ISPs to prevent the distribution of infringing material, where they might have knowledge of that activity or the power to prevent it occurring at reasonable cost or little effort. In some instances, this could mean that copyright owners would not be able to prevent the distribution of infringing copies of their works over the Internet from New Zealand websites, particularly where the identity of the website proprietor was unknown or where the website proprietor was a foreign national.
  3. A middle path, under which ISPs would be liable in some circumstances for the infringing acts relating to the activities of their subscribers. The Copyright Act could provide that ISPs are liable for infringement in certain defined circumstances. This would provide a middle ground that would provide certainty under which ISPs could operate while allowing copyright owners to take action against ISPs where unreasonable business practices had contributed to infringing activity. Relevant considerations under this approach could include inquiring whether ISPs had made any effort to regulate the content of material; the ability of ISPs to monitor material; and the nature of the relationship between the provider and the subscriber. An approach of this kind could excuse ISPs from liability where they had undertaken certain measures such as restricting access to websites that contain (or "taking down") infringing material where this is brought to their attention. This would be consistent with the approach to liability taken elsewhere in the Copyright Act and it might not impose too onerous a burden on ISPs. It would also be consistent with the approaches taken in the United States and Australia in response to this issue.

151. Liability would, under each of these options, still attach to the person who determines the content of the material that is made available. Persons who use the Internet to make or distribute unauthorised copies, or make available or communicate to the public legitimate copies of works without the copyright owner's permission would, for example, still be separately liable for any copyright infringement that may arise from their activities.

Question 11

  1. Should ISPs be liable for copyright infringement in relation to the operation of Internet services?
  2. If so, should they be liable for copyright infringement in relation to:
    • temporary or incidental copies that are made without the permission of copyright owners in the provision of Internet services to subscribers; and/or
    • infringing copies made by subscribers that are distributed using an ISP's services in all circumstances; or
    • only for infringing copies made by subscribers that are distributed using the ISP's services in some circumstances?
  3. If ISPs should only be liable for copyright infringement in relation to the activities of their subscribers in some circumstances:
    • What should those circumstances be; and
    • Should liability be excused where ISPs have undertaken certain measures, for example to guard against the use of their services for activities that amount to copyright infringement or to restrict (or "take down") access to websites that contain infringing material where this comes to their attention?

E. The Protection of Technological Protection Measures and Rights Management Information

(i) The Issue

152. Difficulties experienced in policing their interests have led copyright owners to seek protection by means other than copyright law. These means have typically included:

  • Licences: which are governed by the law of contract (and are therefore outside the scope of this paper), including "shrink -wrap" and "click-wrap" licenses that provide strict conditions of use for products such as software.
  • Utilising technological protection measures: for example, encryption technology including software, hardware and access codes, to prevent or track unauthorised copying and use of or access to copyright material.
  • The inclusion in copyright works of electronic rights management information that identifies content protected by copyright and the terms and conditions of use. Rights management information can be likened to the information that is found on the packaging of a product that enables copyright owners to track and prove copyright infringement. Electronic information, in the form of digital water-marks, for example, can provide purchasers with confidence as to the authenticity of the work.

153. Digital technology has greatly increased the viability of technological protection measures and electronic rights management information systems as a means of protecting and identifying electronic copies of works. Despite the advances of digital technology, technological protection measures and rights management information share common limitations, as discussed earlier in this paper.

154. It is generally agreed that technological protection measures and electronic rights management information systems are not sufficient by themselves because they are inherently vulnerable to circumvention by hackers and dedicated pirates. The main concern of copyright owners and hardware developers therefore relates to the downstream effects of this activity, in particular the distribution of, and development of a market for, means of circumventing or removing technological protection measures and electronic rights management information. Such developments would provide the means of circumvention to a wider group of pirates and ordinary users who might utilise them in their own homes. This would undermine the considerable effort and investment being made to develop these technologies as a means of protecting the interests of copyright creators and owners. Unauthorised manipulation of such electronic rights management information can also mislead consumers.

155. The question therefore arises as to whether new legal provisions should be introduced to prohibit activities aimed at circumventing or tampering with technological protection measures and electronic rights management information. Owners argue that the absence of legal protection makes it more difficult for piracy to be controlled. The prospect of legal protection for such measures also raises issues for copyright users about the effects of that protection on their legitimate access to copyright works.

(ii) The Current Legislation

156. The Copyright Act currently includes specific provisions directed against devices designed to circumvent electronic copy-protection.33 This provides certain rights to copyright owners and other persons who issue electronic34 "copy-protected" works to the public. Those rights are directed against other persons who have possession, custody or control of devices or "means" intended to circumvent copy-protection mechanisms and to make infringing copies of copyright works. Separate provisions exist in relation to encrypted transmission signals.35

157. Under the existing provisions, providing the means of circumvention is prohibited rather than the act of circumvention itself. The legislation prohibits an individual:

  • making, importing, selling, or offering or advertising for sale or hire devices or "means" (which would appear to include software) intended to be used to defeat copy-protection mechanisms used on electronic copies of copyright works; and
  • publishing information intending to enable or assist persons in circumventing copy-protection.

158. The existing copy-protection provisions would therefore seem to apply to devices designed to circumvent copy-protection in relation to digital copies of copyright works. Although publication of information intended to enable or assist the circumvention of copy-protection is clearly prohibited, posting copy-protection circumvention software on the Internet might not fall within the scope of the existing prohibitions. Despite this, it likely that the circumvention software would be accompanied by information intended to enable or assist persons to make use of the software and the posting of that information would infringe the existing copy-protection right provided under the Copyright Act.

159. A limitation of the existing legislation in legal proceedings is that a copyright owner or distributor is required to establish that the person who supplied the circumvention means or published related information knew or had reason to believe that it was going to be used to circumvent copy-protection. This might be difficult to establish in situations where the device, means or information have other uses.

160. Another limitation is that the legislation only applies to the circumvention of a specific form of copy-protection. It does not cover devices, means or information designed either to circumvent access-protection (such as DVD zone formats), or restrict the use that can be made of copies. In addition, it is uncertain whether the current provisions apply to mechanisms that limit the number of times a copy can be used.

161. There are currently no provisions in the copyright legislation that apply specifically to the removal of rights management information. It is possible that some causes of action under legal principles other than copyright might be applicable, for example, if the removal of information led to an actionable misrepresentation under the Fair Trading Act 1986 or under the tort of passing off, or if removal breached a term of the contract under which a copy was sold. The possible application of these principles is, however, unlikely to be sufficient to meet concerns copyright owners might have about interference with rights management information.

(iii) The WIPO Internet Treaties

162. The WCT and the WPPT both include provisions that oblige member countries to provide "adequate legal protection and effective legal remedies" against the circumvention of effective technological measures that are used by copyright authors and owners, in connection with the exercise of their rights under those Treaties or under the Berne Convention.36

163. It might be argued that the existing New Zealand legislation relating to devices designed to circumvent copy-protection suffices to meet the requirements of the WIPO Internet Treaties. This argument could, however, be disputed on the basis that the current legislation does not extend to access-protection mechanisms, or means of restricting the uses that that can be made of copies.

164. The Treaties also include provisions that oblige member countries to provide adequate and effective legal remedies against the unauthorised removal or alteration of rights management information; or, the unauthorised distribution, importation for distribution, broadcast or communication to the public of copyright works (or copies of such works), knowing that such information has been removed or altered without authority.37 Under these provisions, the person performing the unlawful activity must have actual or constructive knowledge that the activity will induce, enable, facilitate or conceal the infringement of a copyright owner's rights. These provisions apply to electronic rights information only, and not rights management information contained in printed material.

165. It is unlikely that the level of protection for electronic rights management information required by the WIPO Internet Treaties is met by New Zealand law as it currently stands. To comply with the WIPO Internet Treaties, national legislation would arguably have to include specific provisions prohibiting alteration, removal or manipulation of electronic rights management information. Both civil remedies and criminal sanctions could be required to provide effective protection for rights management information.

(iv) Possible Options

166. Technological protection measures and electronic rights management information mechanisms are designed to deter attempts to make unauthorised use of copyright works. In this way they encourage owners to utilise digital technology and use new distribution media like the Internet and provide a wider range of copyright products to the public. Ensuring that there is adequate protection under the law to prevent circumvention of such measures will therefore benefit users as well as creators and copyright owners.

167. In determining how best to meet the needs of copyright owners in respect of technological protection measures and rights management information, the following questions arise:

  • whether there is a need to strengthen or expand the existing copy-protection provisions in the Act;
  • whether there is a need to add new provisions to the Act in relation to the removal or tampering with electronic rights management information; and
  • if any new provisions are to be added to the Act in relation to technological protection measures or electronic rights management information, what (if any) exemptions or permitted uses should these rights be subject to?

168. If the existing protections provided in the Copyright Act are considered inadequate, the following approaches could be explored, either separately or in combination:

  1. Expand the existing copy-protection provisions to also prohibit the supply of devices, means or information that are intended to circumvent other types of technological protection measures. These could include measures that protect access to works, restrict the use that can be made of copies, and measures that limit the number of times a copy can be used.
  2. Introduce new provisions in the Copyright Act in relation to electronic rights management information that provide copyright owners and distributors with rights against persons supplying devices, means or information intended to remove or interfere with electronic rights management information. It would seem sensible to ensure that any new protections for electronic rights management information are broadly comparable to those provided in respect of technological protection measures.
  3. Make changes to the knowledge element of the existing requirement that the person who supplied the circumvention means or published related information had reason to believe that it was going to be used to circumvent copy-protection. While it would probably be unreasonable to provide that suppliers would be strictly liable for supplying means of circumvention, the existing requirement could be broadened to cover situations where the supplier ought reasonably to have known that the means would be used for circumvention purposes - that is, replace the existing knowledge requirement with a more objective test.
  4. Introduce criminal sanctions for any prohibited activities relating to technological protection measures and electronic rights management information on the same basis as those that apply to activities involving commercial dealing in infringing copies. The potential for criminal liability could further discourage activities relating to the circumvention or tampering with these mechanisms. The effectiveness of additional offences relating to copyright infringement would, however, depend on the likelihood of subsequent enforcement action being taken.
  5. Prohibit the actual circumvention of technological protection measures and/or removal of, or interference with, electronic rights management information. This could also prohibit the inclusion of false information about the copyright work. This approach would give copyright owners a broad right to take action against individuals that circumvent or tamper with these measures in relation to individual copies of works. The disadvantage of such an approach would be that copyright users could be liable for activities that result in the circumvention of protection measures or the removal of electronic rights management information without their knowledge unless specific exemptions were provided. New provisions protecting rights management information might also be infringed by some authorised uses of works, such as broadcasting, which have the incidental effect of stripping rights management information from the works. Liability could also arise in situations where users seek to use copyright works under permitted uses provided in the Act (discussed below).

169. Users are likely to have general concerns about the application of any new protections that apply to technological protection measures or rights management information. It is possible that, in certain situations, both technological protection measures and electronic rights management systems might infringe individuals' rights to privacy by tracking consumption patterns by individuals and recording on-line behaviour.

170. Technological protection measures could potentially be used unreasonably to prevent all access to and dealing with copyright works without the permission of the copyright owner, even contrary to a permitted act provided under the Copyright Act. There is therefore a strong argument that the provision of means to circumvent, and/or the actual circumvention of protection measures for the purposes of acts permitted under the Copyright Act, such as the current fair dealing purposes, should be specifically allowed in order to maintain the balance between owners and users.

171. Allowance might also need to be made for the circumvention of technological protection measures for new purposes. A number of exemptions to anti-circumvention provisions might be required to allow for such things as the correction of errors, achieving interoperability with other programmes and format shifting. The provision of new exceptions for these means would be particularly important if the acts of circumvention or interference themselves were to be prohibited. The difficulty, however, in deciding on all the situations in which activities should be permitted is an argument against prohibiting the act of using a device, and an argument in favour of only limiting the prohibition to the making, importing, sale, hire or offering for sale or hire of a device.

Question 12

  1. Are existing legal provisions sufficient to protect the interests of copyright creators and owners concerning the use of technological protection mechanisms and electronic rights management information in relation to copyright works?
  2. If existing legal provisions are not considered adequate, what changes or additions should be made? In particular, which of the following non-exclusive approaches should be examined in more detail:
    • expanding the existing copy-protection provisions in the Act;
    • introducing new provisions in relation to electronic rights management information;
    • providing that suppliers of circumvention devices, means or information be liable for infringement where they ought reasonably to have known that the device, means or information would be used for circumvention purposes;
    • introducing criminal sanctions in relation to prohibited activities relating to technological protection measures and/or electronic rights management information; and/or
    • prohibiting the actual circumvention of technological protection measures and/or interference with electronic rights management information.

F. Databases and Digital Technology

(i) The Issue

172. Advances in digital and computer network technologies have had major effects on the manner in which information is gathered, compiled, and stored in electronic databases. Databases have become essential tools for specialists such as scientists, researchers and information specialists and have, accordingly, become valuable commodities in their own right. Digital technology has greatly reduced the effort required to compile, compress and arrange large amounts of information contained in traditional media into databases. The Internet, which comprises a network of readily accessible databases, has accelerated the growth of databases by making them more readily accessible to an increasing number of potential users.

173. Substantial database industries are now in existence in many countries, exploiting the commercial possibilities of ready access to information. Significant costs can be involved in compiling databases, in both time and money. On the other hand, many databases are essentially the by-product of commercial or government activities and have become valuable as a result of advances in computer technology and the demand that has resulted from the potential for wider access.

174. At the same time that the value of databases has increased, the digital on-line environment has arguably increased the difficulties database producers face in controlling access to their products and preventing unauthorised copying, utilisation and information extraction. Like all digital material, databases are vulnerable to unauthorised duplication and, with the advent of the Internet, can be transmitted across the globe at the touch of a button. Although contracts and technological protection measures of the type discussed in the previous section of this paper can provide some measure of security where database proprietors wish to restrict access, allowing on-demand access to electronic databases via the Internet increases the risk of unauthorised access and duplication.

175. The threat of database piracy and unauthorised access could potentially affect investment in databases that are easily copied, to the disadvantage of the honest user for whom it is likely to increase the cost of legitimate access. Unchecked database piracy could also affect incentives to compile and market databases, particularly those that are not by-products of other activities.

176. Users of information also have concerns relating to the compilation of electronic databases, primarily that the compilation and control of large amounts of information gives database owners the potential to control and ultimately withhold access to that information. There might also be some concern about the provision of access to databases in place of print periodicals and the potential this has to restrict access to information where subscription fees are unaffordable for New Zealand users.

(ii) The Current Legislation

177. The Copyright Act provides protection for databases that can be said to be "compilations" within the definition of a literary work. To attract copyright protection, however, works must be sufficiently original. A compilation could be considered original for the purposes of copyright where a database producer has contributed sufficient time, skill and effort in selecting and arranging the data or information. Copyright would not, however, attach to the information itself; it would only apply to any sufficiently original selection, layout or arrangement of the data and information.

178. The originality requirement under New Zealand copyright law is less onerous than that in many other countries. Databases are therefore more likely to be considered original and therefore capable of protection under copyright law in New Zealand than in many other countries. The relevant aspects of databases that have a minimal human contribution, when they are created by using a computer, may also be protected in this country because of the protection given to computer-generated copyright works, so long as the selection, layout and/or arrangement of the work satisfies the level of originality required. The degree of originality that is required for a database to attract copyright protection is, however, currently uncertain.

179. As some database producers may struggle to demonstrate that their products have the essential element of originality to qualify for copyright protection, it is arguable that these "non-original" databases are not protected under New Zealand law. The question therefore arises whether there is either a need to clarify the level of protection currently provided to databases under copyright, or to provide a higher level of protection.

(iii) Relevant WIPO Work

180. There is, as yet, no international treaty concerning the provision of additional protection to electronic databases. The preparatory documents for the 1996 Diplomatic Conference that concluded the WIPO Internet Treaties included a draft databases treaty. This was not, however, discussed at the Conference. The WCT simply re-affirms the protection afforded to compilations of data under TRIPS and as currently provided under the Act.

181. The issue of additional protection for databases is on the workplan of the WIPO Standing Committee on Copyright and Related Rights. Progress on that workplan item is waiting on the commissioning of a report on the likely effects of additional protection for databases on developing countries and emerging economies.

(iv) Possible Options

182. At present, there does not appear to be any need to extend protection to databases above the level of protection currently provided by copyright. There do not appear to have been any problems in New Zealand resulting from the lack of specific protection for databases. It could also be argued that requiring database producers to ensure that their products meet the originality threshold to attract copyright protection encourages innovation in relation to the arrangement and presentation of information.

183. If, however, a need is demonstrated to provide a higher level of protection to electronic databases, the following approaches could be considered:

  1. Extending copyright protection to "non-original" electronic databases as works under the Act. This option gives rise to questions concerning the extent of protection (including, in turn, issues relating to the ownership of information contained in databases) and its duration. To give protection to databases that currently would not be protected under copyright law might, however, undermine the unifying concept of originality in the Act. A more worrying consequence for users would be that more extensive copyright protection could attach to information collected in databases. If this approach were favoured, considerable thought would have to be given to the scope of protection and what specific exemptions might be required to meet the interests of users of information.
  2. Enacting some form of sui generis or custom-made legislation that would take the protection of databases outside copyright law. This approach could allow greater flexibility in designing the substantive rights that would attach to investment in databases and the qualifying conditions for protection to arise, as well as any free public interest uses that could be made of information held in databases. The lack of an international agreement on additional protection for databases would require New Zealand to enter into reciprocal protection arrangements with countries (such as members of the European Union, where sui generis database protection already exists) that also provide special protection for databases. If sui generis protection were warranted, careful consideration would have to be given to the scope of the protection, the appropriate term and the exceptions which might be required to protect the interests of the users of compiled information and data. The relationship with any copyright protection that would attach to aspects of databases (such as layout, presentation or design) would also need to be considered to avoid overlapping protection.

Question 13

  1. Is there any need to provide additional protection for databases above what is already available under the Copyright Act?
  2. If there is a need to provide additional protection for databases, should that protection be provided through:
    • the Copyright Act;
    • some form of sui generis or custom-made legislation; or
    • under a combination of both?

Question 14

If increased protection were provided, what is the best way to balance the demands of database producers and the interests of users of information?

G. Limitations and Exceptions for Copyright Users - Permitted Acts

(i) The Issue

184. The rights granted under copyright law are, like other intellectual property rights, granted subject to reasonable bounds and exceptions that are designed to protect the interests of users and the wider public. It is as important in the digital environment as it is in the print/analogue environment that the rights accorded to owners should not extend beyond what is required to give effect to the objectives of providing copyright protection. The effects of digital technology, and any legislative response to the issues that it raises, therefore need to be considered from a users' perspective as well as a creators' and owners' perspective.

185. New Zealand's small population and geographical isolation make it vital that, as far as possible, educational institutions, libraries and archives are able to use digital and Internet technologies to access copyright material for public benefit. New Zealand consumers also have an interest generally in having reasonable and convenient access to copies of copyright works. These interests have to be balanced against the interests of copyright creators and owners to ensure that commercial markets for copyright work are not unreasonably affected.

186. The granting of any new rights to copyright creators or owners to address issues raised by digital technology would therefore require careful consideration of the effects on consumers, users and the wider interests of the New Zealand public, particularly in determining the bounds of those rights. If it is determined that new rights are required, user interests need to be reconsidered at two further levels.

187. The first concerns the application of existing permitted uses and exceptions and whether the current range of permitted acts should apply to any new rights that might be granted to copyright creators or owners. Unless there is a demonstrable reason for not doing so, comparable existing permitted uses should be extended to any new rights so that users are not deprived of the opportunity to make legitimate use of copyright material.

188. It is also necessary to consider the effects on users that arise from new protection measures employed by copyright owners. An example of this is the increasing reliance many owners are putting on licensing and technological protection mechanisms to restrict access to or copying of their works. As mentioned earlier, the potential ability of these devices to limit access to copyright works that are permitted under the Copyright Act would need to be considered.

189. At the second level, consideration also needs to be given as to whether there is a need for new exceptions or permitted uses to meet the needs of users that arise from digital technology in specific cases.

190. There is no doubt that by making copying and dissemination easier than ever before, digital technology provides new benefits for the users of copyright material, including libraries and educational institutions as well as the general public. Internet users expect to be able to use the material in a way that suits their needs. For example, many users wish to download and print out text-based materials from the Internet in order to read them at their leisure and e-mail users frequently reproduce e-mail pages received from other users. Copying is also an essential part of many value-added services, such as scanning pens and the use of devises marketed for the purposes of "format shifting" of sound recordings to new formats such as "MiniDisc", or digitisation to allow MP3 compression and playback on computer systems.

191. Setting the limits of any new permitted uses might be difficult. For example, it is not clear whether any new permitted use relating to Internet browsing activities should only apply in cases where a work exists solely in digital form or whether it should extend to the downloading and printing the material.

(ii) WIPO Internet Treaties

192. The WCT permits Contracting States to provide limitations to authors' rights that do not conflict with the normal exploitation of the work and do not unreasonably prejudice authors' legitimate interests.38 The WPPT provides for similar limitations to be made in respect of the rights of producers of phonograms.39 In the relevant Agreed Statements, concluded by the 1996 Diplomatic Conference, countries acceding to the Treaties would be permitted to carry over into the digital environment those limitations and exceptions that had been considered acceptable in the non-digital environment. This avoids the need for member countries to revisit existing limitations and exceptions in order to comply with the Treaties.

193. When considering new exceptions or permitted uses in domestic legislation, countries that accede to the WCT and WPPT are required to comply with the Berne Convention "three-step test". The three steps are cumulative and all raise problems of interpretation. The steps are that an exception:

  • must be confined to certain special cases;
  • should not conflict with a normal exploitation of the work; and
  • should not unreasonably prejudice the legitimate interests of the author.

194. If New Zealand decided to implement and accede to the WIPO Internet Treaties, any new exceptions to the rights of copyright owners or creators that might be considered necessary to maintain the balance between owners and users would need to conform to this test.

(iii) Some Aspects of the Current Legislation and the Possible Need for New Exceptions

195. As previously discussed, in considering new rights for copyright owners or users, the basic assumption is that the existing exceptions and permitted uses should apply in the digital environment, unless there are good reasons not to apply particular provisions. This is not as straightforward as it might seem at first glance.

196. Many of the existing exceptions may need to be redrafted specifically to take into account the implications of digital technology. For example, it undoubtedly would not be reasonable to interpret the library exception as permitting a library to make a work available to anyone who accessed a library webpage via the Internet without imposing strict conditions on the circumstances in which libraries could do so.

197. It would, however, be premature to undertake a full examination of how all existing permitted uses and exceptions should apply to the digital environment in this paper. The brief discussion that follows therefore focuses on the importance of maintaining the public's access to works in the digital environment in relation to a limited number of permitted acts: fair dealing, copying by libraries and archives and recording for the purposes of time-shifting. The possibility of creating a new exception to copyright infringement in relation to the "format shifting" of sound recordings for personal use is also briefly discussed. Transient copying and the liability of ISPs have been discussed earlier in this paper.

198. Persons making submissions are invited to provide information on the possible need for any additional limitations and exceptions to existing rights or potential new rights that are related to the implications of digital technology.

(a) Fair Dealing and Educational Purposes

199. The fair dealing provisions in the Copyright Act enable users to make reasonable use of a work for specific purposes.40 Fair dealing is permitted for the purposes of reporting current events by means of a sound recording, film, television or radio broadcast or cable programme.41 The fair dealing provisions also permit copying for the purposes of research or private study,42 and are closely related to the provisions that permit copying for educational purposes and other activities that are related to education.43

200. The importance of the permitted acts is that they ensure that the public has reasonable access to copyright material for purposes that benefit the public as a whole, namely news reporting, research and educational purposes (in the widest sense). In the digital environment it will be no less important for copyright law to provide for reasonable access for these purposes. Some of these provisions are, however, technology specific. Accordingly, there might be a need to consider whether they should apply to digital technology and the Internet.

(b) Access by Libraries

201. Librarians in prescribed libraries are currently permitted to copy a reasonable proportion of a published edition (other than a published edition that is an article in a periodical) and an article in a periodical, provided that no individual is supplied with more than one copy on each occasion; any charge made only covers expenses; the copy is used for research or private study, and the copy made is not itself copied or sold.44 Copying of more than one periodical article is not permitted unless both articles relate to the same topic. Librarians may also make copies of works (other than computer programmes) for users and collections of other libraries and to replace copies of works that have been lost, damaged or destroyed.45

202. Libraries are repositories of information for the general public and the policy of these exceptions is to facilitate the work of libraries for the benefit of the public. The fact that information is stored in digital format should not restrict the public's access to information through libraries, nor the ability of libraries to provide this access without the permission of copyright owners in certain situations as libraries utilise the benefits of digital technology. The existing exceptions in the Copyright Act do not, however, specifically extend to copying materials in the digital and Internet environment and there are practical and conceptual difficulties in applying them in that context. For example, what is a reasonable proportion of a work made available only on-line? Can a library use e-mail to transmit copies of on-line material?

203. A particular issue in relation to making digital copies of print copies of works also arises in relation to the ability of libraries to deal with copies of copyright works that they have in their collections. Under the existing legislation, libraries do not have the ability to make digital copies of works they hold in their collections, including copies they might have on microfilm or microfiche. Digital technology allows libraries to make non-degradable copies of their collections for archival purposes that take up less storage space. The ability to use digital technology is in this manner is particularly relevant to the role of the National Library in its role as a central repository of material published in New Zealand. Digital technology also allows greater access to library resources through computer terminals.

204. Under the Act as it currently stands, the making of digital copies of most types of works for the purposes of archiving, or to allow on-demand computer access within libraries, would constitute copyright infringement, as would each act of browsing or printing material viewed on screen, where the express permission of the copyright owner has not been obtained. The question therefore arises as to whether new permitted uses should be provided to allow libraries to make digital of copies for either or both of these purposes.

(c) Time Shifting

205. There is a specific exception in the Copyright Act that permits recordings of broadcasts or cable programmes to be made for private and domestic use and solely for the purpose of viewing or listening to the recording at a more convenient time. As discussed above, it is not clear whether webcasting falls into the existing cable programme service or broadcast categories. If webcasting does currently fall into one of those categories, or the Act is amended to provide that it does, the impact of a broad time shifting exception will need to be considered in relation to its application to webcasting.

206. An argument against providing a broad time shifting exception is that the interactive nature of the Internet will increasingly allow users to select the time at which a work is viewed or listened to. It might in the future, therefore, be unnecessary for users to record a television programme for later viewing. On the other hand, there might be a need for such a right in relation to simulcast or instant webcasts that are not accessible on demand.

(d) Format Shifting

207. Digital technology has increased the ability of the home users of sound recordings to enjoy music in new formats. Specifically, digital technology has made it easier for home users to copy the whole or part of sound recordings purchased in one format to more convenient formats for enjoyment through other technologies - "format shifting" - for example, MP3 and related computer software applications and other digital technology such as MiniDisc. MiniDisc is now marketed as a format shifting music platform.

208. Under New Zealand copyright law copying for format shifting purposes of copyright sound recordings amounts to copyright infringement if that copying is in a "material form", even where it might be for the personal use of the owner of the original copies. As discussed earlier, however, it might not amount to infringement of the copyright in a sound recording if it involved the making of a digital copy that was stored on a computer disk. Any underlying copyright in lyrics or musical arrangement would nonetheless be infringed through format shifting, and copyright liability would therefore arise. Furthermore, if the owners of copyright in sound recordings were to be given a right to restrict digital copying, format shifting activities would also infringe this right.

209. Given the potential for format shifting of sound recordings to give rise to liability for copyright infringement, it might be timely to introduce a narrow format shifting permitted use. This would allow private individuals to format shift their own copies of copyright music for their own personal use and convenience without infringing copyright. This would reflect a change made in the United States in 1992 and would protect the interests of music consumers by adding certainty to the law in New Zealand.46

210. If a format shifting exception were introduced in New Zealand, it would have to be subject to strict limitations to ensure that the interests of copyright owners are not detrimentally affected. It would seem sensible to restrict the number of copies that can be made to one per format, to be made from a legitimately purchased copy of a recording and to require that any copies made be for the personal use of the owner of that copy.

211. There might also be a need to explore the imposition of some kind of low-level levies payment on digital audio recording devices and/or blank recording media to compensate any potential revenue losses to copyright owners, which might include artists, record companies, music publishers and songwriters. A scheme of this nature operates in the United States, and similar levy schemes have been introduced in Germany and Belgium.

Question 15

  1. Should the existing list of permitted acts apply in its entirety (including fair dealing and time shifting) to owners' rights in the digital environment?
  2. What changes might be needed to be made to the scope of those exceptions to ensure that the balance provided between the rights of copyright owners and users in the print/analogue world is mirrored in the digital world?

Question 16

Are any additional permitted use provisions required to ensure reasonable access to copyright works for news reporting, research and or educational purposes in the digital environment?

Question 17

  1. Is the current list of permitted acts adequate to ensure that users have reasonable access through libraries to works of copyright in the digital environment? If not, how should the existing provisions be amended?
  2. Is there a need to provide new permitted uses in the Act to allow libraries to make digital copies of their collections without the permission of copyright owners for archival purposes and/or to facilitate on-demand access to digital copies from on-site computer terminals?
  3. Should any permitted use in relation to digitising for archival purposes be restricted to the National Library, or should it apply to all prescribed libraries and archives under the Act?

Question 18

Should the current time-shifting exception that applies to broadcast and cable television programmes apply to webcasts?

Question 19

  1. Given the potential for liability for copyright infringement to arise out of the common practice of format shifting of sound recordings for personal use and convenience, should an exception be introduced in limited circumstances?
  2. If so, what limitations should be placed on private individuals in relation to format shift sound recordings?

Question 20

What other changes to the existing permitted uses provisions in the Copyright Act, if any, should be examined?

17Copyright Act 1994, sections 16(1)(a) and 30.

18Copyright Act 1994, section 2(1) - definition of "copying".

19Copyright can exist in an original typographical arrangement of a published edition (sometimes called "publishers' copyright"). "Typographical arrangement" refers to the typeset or image of the published edition of the whole or part of a literary, dramatic, or published work (that may or may not itself be protected by copyright).

20See Copyright Act 1994, section 88.

21Copyright Act 1994, section 2(1) - definition of "broadcast" - and section 4. "Wireless communication" is defined in section 2(1) as the sending of electro-magnetic energy over paths not provided by a material substance constructed or arranged for that purpose.

22Fibre optic transmission involves the sending of light signals through cables made of glass fibres.

23See Copyright Act 1994, section 4(2).

24For a discussion of whether the equivalent definition of "cable programme service" in the United Kingdom Patents, Designs and Copyright Act 1988 might include Internet transmissions, see Shetland Times v Wills (1997) 37 IPR 71.

25See Copyright Act 1994, section 4(1) and section 2(1) - definition of "telecommunications system".

26The copyright owner would, however, often be able to take a breach of contract action against the person making the copy of their work available to others, although the terms of the contract might, in some circumstances, be difficult to prove.

27Copyright Act 1994, section 10.

28WCT, Article 8; WPPT, Article 14.

29Copyright Act 1994, section 88(1).

30Copyright Act 1994, section 88(2).

31TRIPS Agreement, Article 14(3).

32TRIPS Agreement, Article 14(6).

33Copyright Act 1994, section 226.

34Under the Act, "electronic" includes digital and analogue copies of works, for example: sound recordings, motion picture products and software products. See Copyright Act 1994, section 2(1) - definition of "electronic".

35Copyright Act 1994, sections 227 and 228.36WCT Article 11; WPPT Article 18.

37WCT Article 12; WPPT Article 19.

38WCT, Article 10.

39WPPT, Article 16.

40The term "fair dealing" is not itself defined in the Act.

41Copyright Act 1994, sections 42.

42Copyright Act 1994, sections 43.

43Copyright Act 1994, sections 44 - 49.

44Copyright Act 1994, sections 51 and 52.

45Copyright Act 1994, sections 53 - 55.

46Audio Home Recording Act 1992 (Amendment to the United States Copyright Act 1976). Canada also provides an exemption for users to make copies of audio and video recordings for personal use.


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