Part One: Introduction
A. The Issues Raised in This Discussion Paper
1. This discussion paper considers two copyright issues. The first is the adequacy of section 21(3) of the Copyright Act 1994 ("the Act") relating to ownership of copyright in commissioned works ("the commissioning rule"). The paper also considers the more general question of the relationship between copyright law and contract law.
2. The general rule under copyright law is that the author is the first owner of copyright in a work and as such enjoys the exclusive right to do certain "restricted acts" in relation to the work. The Act makes some exceptions to this general principle, including an exception which applies to certain categories of commissioned works.1 Copyright in those commissioned works is owned by the commissioning person unless there is an agreement to the contrary.
3. In light of concerns raised by stakeholders in the photographic industry regarding the application of the commissioning rule to photographs, the government considers that the issue of first ownership in commissioned works merits further consideration. At this stage, it is not clear whether other industries, outside the photographic industry, have substantial concerns with the commissioning rule. However, this review covers the application of the commissioning rule to all works specified in the Act, as potential inequities could arise if the application of the rule to photographs was reviewed in isolation.
4. The second issue discussed in this paper relates to the interconnection between copyright law and contract law. Increasingly, copyright-protected works are put on the market subject to contractual terms of access and use. This has implications for the interface between copyright law and contracts. Digital technology has allowed the rapid growth of electronic commerce and development of new business models, and contracts are frequently used to set the terms and conditions on access to and use of copyright material. Often, these contractual arrangements seek to restrict activities that would otherwise be permitted under the statutory exceptions in copyright legislation.
5. A number of submissions made during the review of the implications of digital technology for the Act raised concerns about the implications of contract law for the operation of the copyright regime, particularly in regard to the permitted acts provided by the Act. For example, some user groups expressed concern that the development of click-wrap and shrink-wrap licences could erode the ability of users to access works for permitted purposes under the Act, and establish additional rights for copyright owners that do not exist under the Act.
B. The Purpose of This Discussion Paper
6. The purpose of this discussion paper is to inform interested parties about the issues concerning the commissioning provision and invite views on whether, and in what ways, the Copyright Act should be amended to address these issues. In particular, this paper identifies and discusses key issues relating to commissioned photographs. The paper also invites further information on the implications of the commissioning rule as it applies to works other than photographs and welcomes submissions that identify issues relating to the rule as it applies to these works.
7. It should be noted that this review is limited to reviewing the commissioning provision as an exception to the general rule of first ownership of copyright works. It is not the purpose of this review to comprehensively reassess the rules relating to first ownership. Particularly, the paper does not deal with issues relating to the definition of "author" in regard to certain categories of work or first ownership of works made in the course of employment.
8. This paper also seeks views on the impact of contract on copyright law in New Zealand. In particular, information is sought regarding the prevalence and effects of contracts that vary copyright provisions in the Act and the relevance of these provisions to commercial business models. On the basis of the information received, the Ministry will then provide advice to the government on whether further action is required.
9. Please note that this aspect of the review is limited to issues raised by the increased use of contract law and the implications on the operation of the copyright regime. It is not the purpose of this paper to discuss the underlying copyright provisions that may be the subject of contractual provisions, e.g. the statutory exceptions granted under the Copyright Act.
C. Copyright Policy Framework
10. Achieving overall copyright policy objectives is a key consideration for government when reviewing provisions of the Act. New Zealand's copyright policy framework is based on the principle that the purpose of providing copyright protection is to achieve outcomes that are in the overall public interest. Different aspects of the public interest are covered by the framework, including economic, legal, social and cultural objectives. Those objectives overlap in many respects and may conflict. An optimal balance within the copyright system is achieved by properly determining the definition of protectable subject matter, scope of rights, terms of protection and permissible limitations. This is a constantly changing dynamic, influenced by economic, technological and social developments. The Ministry has a key interest in maintaining a copyright policy that reflects a fair and balanced approach to the different aspects of its public interest objective. This includes a careful consideration of who should be the first owner of copyright in particular circumstances and also the interface between copyright and contract law.
11. One core objective of copyright protection is to advance the interest of the economy as a whole and in doing so, the wider public interest. Copyright seeks to achieve this objective in two broad ways:
11.1 On the one hand, copyright provides incentives for the creation and production of creative works that meet society's economic and social needs and demands. The economic rationale is that creation incurs costs and that production requires incentives in the form of appropriate returns to a producer to ensure that desired creativity and investment occurs. Copyright, in effect, creates an artificial scarcity in the market, to overcome problems of free-riding that would otherwise occur. The Act seeks to achieve this by conferring various exclusive rights on the owners of copyright works, allowing them to control certain activities relating to the use and dissemination of those works and, thus, to exploit their works economically. The primary principle of copyright law is that the person who creates a work enjoys a return on their investment by providing first ownership to him or her.
11.2 On the other hand, copyright seeks to encourage the dissemination and accessibility of copyright-protected material. Access to information by individuals, educational institutions, libraries and organisations that serve those with special needs is critical to providing and receiving quality education. It is also important for scientific, medical and social purposes and innovation. Providing statutory exceptions that modify and limit the exclusive rights of copyright owners and provisions that limit the term and scope of copyright protection are essential parts of achieving this.
12. A key legal objective is compliance with international obligations. New Zealand is a party to a number of international treaties and any policy responses are limited and guided by those obligations. Relevant treaties include the Berne Convention for the Protection of Literary and Artistic Works and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).2 In regard to the issue of copyright ownership, Article 2(6) of the 1971 Paris Act of the Berne Convention, which is also incorporated in TRIPS, provides that protection under the Convention is to operate for the benefit of the author and his successors in title. For some categories of works, however, such as cinematographic works (Article 14bis), ownership of copyright is a matter for legislation in the country where protection is claimed. Apart from these principal rules of ownership, there is, however, no international obligation relating to exceptions to these rules, including ownership rules relating to commissioned works.
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