Mobile networks exempted from file sharing law indefinitely

Mobile networks have been indefinitely exempted from legislation covering online piracy – a development Lowndes Jordan partner Rick Shera sees as another nail in the coffin for the controversial law.

The Copyright (Infringing File Sharing) Amendment Act (aka the SkyNet law, three-strikes law or file sharing law) allows for a series of graduated warnings for people who illegally access copyrighted material over the internet, culminating in a hearing in front of the Copyright Tribunal and a fine of up to $15,000.

Mobile networks were temporarily excluded when the three-notice file sharing regime was introduced in 2011.

Mr Shera – an IP specialist – says that was a logical move at the time. With data caps low, mobile data expensive and no evidence of piracy on mobiles, it did not make sense to impose compliance costs on Spark, Vodafone and 2degrees.

With data caps still stingy, the exclusion was extended for two years in 2013.

“The exclusion was time-limited because it was anticipated that technological change would make infringing file sharing on mobile more likely in the future,” Commerce and consumer Affairs Minister Paul Goldsmith says.

But here’s the surprising bit. As the eagle-eyed Mr Shera spotted, on August 31 there was an Order in Council making the exclusion of mobile networks from the act indefinite.

Just as super-fast 4G is taking off, and mobile data caps finally becoming more generous, the law makers have decided mobile network operators will never be required to participate in the three-strikes regime.

Why?

Mr Goldsmith says the findings of a 2015 review were that:

• evidence suggests that peer-to-peer infringing file sharing across mobile networks remains low;
• compliance costs for providers of mobile networks remain very high and these costs would likely be passed on to consumers. These costs do not justify any additional benefits that might accrue; and
• it now appears that technological advancements have not resulted in the increase in peer-to-peer infringing file sharing over mobile networks that was anticipated.

“The legislation provides that the minister of commerce and consumer affairs can bring mobile networks under the regime if necessary at any point in the future by order in council, for example if a significant amount of peer to peer infringing file sharing begins to occur over mobile networks,” Mr Goldsmith says.

Mr Shera says the exclusion of mobile networks is “another nail in the coffin of this regime, alongside the fact that it has never been used by its more ardent original proponent; the movie industry.”

The NZ Screen Association, representing the major Hollywood studios, says the $25 infringement notice fee is too high (ISPs complained it was too low to cover their costs. In a 2012 review, the government decided it was about right, and left it at $25). It also wants ISPs to be required to implement systems that automatically screen for copyright-violating content. In the meantime, it hasn’t been moved to bring a single case, not even to make an example of someone.

Recorded Music NZ (formerly Rianz) took 17 cases to the Copyright Tribunal in 2013.

In 2014, it took just three cases to the Tribunal.

So far this year the music industry group has taken only one case to the tribunal, back in February.

Why the drop-off?

In part, the Copyright Tribunal has only awarded penalties of a few hundred dollars a case, far below the up to $15,000 sought by record companies for each offence.

Everybody-loses cases abounded. In one, for example, a man was brought before the Tribunal for downloading one song by Rihanna and one by Hot Chelle Ray. It seemed rough that the defendant – a soldier with the NZ Army who was in Afghanistan at the time of the alleged offending – was held to account for the actions of others in his household using his internet account. But, by the same token, the damages awarded against him – $255.97 – were unlikely to serve as any sort of deterrant, or inspire fear among the general public. 

Mr Shera notes that technology has also moved on. These days, copyright pirates are more likely to use a cyber-locker (cloud storage service) than share files via a peer-to-peer network (where people access files from one another’s PCs).

The music and movie industries are now also offering more carrots, with free and low-cost streaming services such as Spotify, Pandora, Netflix, Lightbox and Neon being launched in New Zealand over the past 12 to 24 months. At the same time, Recorded Music NZ has switched strategy, focusing more on education about new legal alternatives.

Mr Shera calls the file sharing law a "dead duck" and with the number of cases before the Copyright Tribunal having dwindled to zero, he's correct.

However, "Changing the file sharing law would require changes to the Copyright Act. The government has indicated that it will decide whether to amend the act after the TPP [Trans-Pacific Partnership] concludes," Mr Goldsmith says.

It is underclear when TPP talks will wrap up, if at all. If the TPP is imposed on New Zealand, the battleground will probably switch to so-called technological protection measures (TPM), Mr Shera says, and whether they can be used to block New Zealanders from accessing sites such as the US version of Netflix and the BBC's iPlayer. Mr Shera says the situation is complex but that the TPP could lock in the use of TPMs. If the TPP fails to come together, TPMs (already out of favour with Apple and Amazon) will probably continue to wilt away.

For the full story, read today’s National Business Review print edition.

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