The Trans-Pacific Partnership Agreement (“TPPA”) is one step closer to being implemented in New Zealand, following the first reading of the TPPA Amendment Bill in Parliament on 12 May 2016. This week, Baldwins will be publishing a summary of the changes proposed to New Zealand’s intellectual property laws to comply with the TPPA Amendment Bill, and consider the practical implications of these changes for New Zealand businesses.

The final text of the TPPA was signed on 4 February 2016.[1] However, in order for the TPPA to come into force, it must be ratified by at least six of the signatory countries representing at least 85% of their combined GNP[2]. Ratifying states must also align their domestic laws with the terms of the agreement. That is the purpose of the New Zealand TPPA Amendment Bill (the “Bill”) which will only come into effect if and when the TPPA comes into force.

The changes proposed in the Bill will affect New Zealand intellectual property laws by amending existing copyright, patents, trade marks, and border control laws. In this article, we examine the proposed amendments to the Copyright Act, in particular the extension of copyright term.

COPYRIGHT ACT AMENDMENTS

Extension of copyright term

One of the most talked about aspects of the TPPA in relation to copyright is the extension of the term of copyright protection.

In New Zealand, copyright subsists automatically in any original expression that qualifies for protection. No official copyright registration is needed. The term of copyright protection depends on the type of work that has been created. For example:

  • For literary, dramatic, musical and artistic works, the term of copyright protection expires 50 years from the end of the calendar year in which the author dies;
  • For sound recordings and films, the term of copyright protection expires 50 years from the end of the calendar year in which the work is made (or 50 years from the end of the calendar year in which the work was made available to the public).

The Bill proposes to extend copyright term (in most cases) by an additional 20 years. In other words, copyright in literary, dramatic, musical, and artistic works will be extended from life of the author plus 50 years to life of the author plus 70 years.[3] Copyright in sound recordings and films will be extended from 50 years to 70 years.[4]

This proposed amendment will harmonise New Zealand’s copyright term with that of several other major territories, including the United States, the United Kingdom, Australia, most of Europe, and most of South America.

Interestingly, the amendment bill also provides a midpoint for copyright works that would (except for the extension) have expired within the next 8 years. For these works, the term is proposed to be increased from 50 years to 60 years.[5]

The proposed extension of term will allow owners to maintain control over use and publication of their copyright works, continue to seek royalties or license arrangements, and/or pursue infringers, for an additional two decades.

While this is a welcome change for copyright owners, it also means that those who pay royalties for the use of specific copyright works will continue to do so for an additional 20 years. For example, Warner/Chappell Music sought royalty payments for any commercial use of the song “Happy Birthday to You”, which was written in the late 1890s or early 1900s. Under the life plus 70 year term Warner/Chappell Music could have continued to seek royalties until the end of 2016.[6]

The cost of increasing term

One of the main complaints about the extension of copyright term is that a lengthier term will cost New Zealanders more money for the use of works in which copyright would otherwise have expired. In 2009, the New Zealand government commissioned a report on the likely effects of copyright term extension, which has been regularly cited in the past few months.[7] The report was led by Mr Henry Ergas of Concept Economics. It concluded that, because New Zealand is a net importer of copyright-protected works, the costs of extending copyright for New Zealand consumers will outweigh the benefits by approximately $55 million per year.

However, the report has been challenged. New Zealand economist Dr George Barker was recently commissioned to prepare a report for Recorded Music New Zealand.[8] In that report, Dr Barker says that the numbers used in the Ergas report are incorrect, and that the report contains significant mathematical errors. In particular, Dr Barker argues that a term extension will encourage or incentivise investment in new works, and that the increase in revenues generated by term extension will be used to finance new works. Dr Barker and Recorded Music New Zealand therefore conclude that there is likely a net benefit of term extension to the New Zealand economy.

The Ergas estimated cost of NZ$55 million per year has also been compared to the Australian estimated cost of AU$88 million per year (approximately NZ$95 million).[9] On a per capita basis, the New Zealand estimate is roughly three times that of the Australian estimate..

Another practical factor not often considered in the “extension of term” debate is that many New Zealand creators and publishers are already familiar with the “life plus 70 years” standard. Given the global nature of digital publication, it is already safer and easier to apply the longer copyright term.

For example, when an existing copyright work is re-used, most creators will ensure that they either obtain a license to re-use the work, or do not use the work at all, until the longer copyright term of “life plus 70 years” has expired. If creators adopt the shorter copyright term of “life plus 50 years”, they must be satisfied with only publishing the re-used work locally, or otherwise risk infringing copyright in other territories applying the longer copyright term.

Impact for New Zealand businesses

It may be unclear what economic impact (if any) the extension of copyright term will have in New Zealand. However, to ensure businesses best leverage their own copyright works, and avoid infringement of others’ copyright, it is important that businesses are aware of the new term, together with any transitional periods for how and when that extension of term applies.

THE TRANS-PACIFIC PARTNERSHIP AGREEMENT (‘TPPA’) AMENDMENT BILL

The TPPA is a free trade agreement reached between 12 countries in the Pacific: New Zealand, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, the United States and Vietnam.

It is one of the most ambitious free trade agreements, aiming to harmonise and liberalise trade and investment, thereby bringing future economic growth for the countries involved. Trade Minister Todd McLay has said that the TPPA will, “support New Zealand’s global connectedness, maximise opportunities for exporters, and in turn grow the prosperity of the economy for the benefit of New Zealanders”.[10]

Following the first reading in Parliament, the TPPA Amendment Bill has now been referred to the Foreign Affairs, Defence and Trade Committee for its review. The Committee will hear submissions from the public and report back to Parliament in November 2016.

From here, the bill goes into a second reading, a further committee, and then a third reading before it goes to the Governor-General for Royal Assent. Omnibus bills such as this one, where various bills are consolidated into one piece of legislation, are often split up during the committee stages into several bills which would each require a separate parliamentary vote. A general timeline of the legislative process can be found here.

Further afield, support for ratification of the TPPA has stalled in the US, threatening the viability of the agreement as a whole. The TPPA provisions cannot enter into force unless at least the US and Japan ratify the agreement. It is thought that a ratification vote may be sought in the US in the “lame duck” period after the US election in November and before the new President is appointed to office.