The final details and technical requirements for the implementation of the new Internet copyright infringement regime which comes into force on 1 September 2011 have now been completed and are set out in the Copyright (Infringing File Sharing) Regulations 2011 gazetted last week.

The Copyright (Infringing File Sharing) Amendment Act 2011 (the IFS Act) and the regulations introduce a graduated three notice process for specified ISPs to implement on being notified by a rights owner that an account holder of the ISP has infringed his or her copyright online.

After a few false starts, the Act represents the first step by a New Zealand government towards establishing a legal framework which, if it works, will go some way towards helping stop illegal file sharing over the Internet.

What was the previous position?

The new notice regime has been enacted in place of the less prescriptive section 92A of the Copyright Act 1994, which was introduced in 2008 but was never brought into force following stiff opposition and a political decision to redraft the section.

Section 92A required an ISP to adopt and reasonably implement a policy providing for termination, in appropriate circumstances, of the account with that ISP of a person who repeatedly infringed copyright using the ISP's services. Some of the main criticisms of section 92A included the level of uncertainty as to what actions would need to be taken to comply with this legislative requirement and the extent of its application to organisations considered to be ISPs.

Which ISPs will be subject to the new notice regime?

The notice regime created by the IFS Act applies to ISPs which fall within the definition of Internet protocol address providers (IPAPs) only. An IPAP is a party operating a business that, other than as an incidental feature of its main business activities:

  • offers the transmission, routing, and providing of connections for digital online communications, between or among points specified by a user, of material of the user's choosing;
  • allocates IP addresses to its account holders;
  • charges its account holders for its services; and
  • is not primarily operated to cater for transient users.

This has provided clarity for ISPs and removed concerns that organisations offering access to the Internet such as internet cafes, libraries and businesses providing Internet access to employees, would need to follow the specific procedures for issuing infringement notices under the new regime.

Until 30 September 2013, the notice regime does not apply to an IPAP in respect of the services it provides via a cellular mobile network.

How will the notification process work?

The notice regime is generally as follows:

  1. Detection: Copyright owners or a person acting as agent for one or more copyright owners (in each case a rights owner) will be able to notify IPAPs when they have reason to believe that one of the IPAP's account holders is infringing their copyright by illegal file sharing (being the uploading and downloading of material via the Internet using an application or network that enables the simultaneous sharing of material between multiple users). This must be done so that the IPAP receives the information (or, rights owner notice) within 21 days of the alleged infringement. The content of this notice is set out in the regulations, which includes very specific detail about the copyright work and timing of the infringement.
  2. Matching: The IPAP is then (provided certain requirements are met) required to match the IP address information with the account holder to whom it related at the time of the infringement and issue the appropriate infringement notice to the accused account holder (informing them that infringement has been detected) within 7 days after receiving the information from the rights owner.

An IPAP may charge the rights owner a fee for performing its functions under the IFS Act of up to $25 for each rights owner notice sent to the IPAP.

  1. First notice – the Detection Notice: The first notice is a "Detection Notice", which informs the account holder of the details of the alleged infringement which has triggered the notice, identifies the rights holder and explains the consequences of the notice and the right to challenge it. This notice expires on the earlier of the date of expiry of a later related Enforcement Notice and 9 months.

There is no prescribed form for this notice, or the other infringement notices, but the detailed content requirements for the infringement notices set out in the IFS Act and the regulations are intended to ensure that the account holder is provided with sufficient information to understand the full extent of the allegation and is given details to respond to the notices. The notices are also required to include reference to educational information prepared by the Ministry of Economic Development.

  1. Second notice – the Warning Notice: If the infringing conduct does not cease (after an on-notice period of 28 days from the Detection Notice but before the expiry of the Detection Notice) and the rights owner informs the IPAP that the account holder is continuing to engage in illegal file sharing, the IPAP is required to send a "Warning Notice". This notice is similar to the Detection Notice but also identifies the most recent Detection Notice and identifies any other alleged infringements since that notice. This notice expires on the earlier of the date of expiry of a later related Enforcement Notice and 9 months.
  2. Third notice – the Enforcement Notice: If the account holder continues to engage in illegal file sharing (after an on-notice period of 28 days from the Warning Notice but before the expiry of the Warning Notice) and the rights owner informs the IPAP of this, the IPAP is required to send an "Enforcement Notice". This notice is similar to the Warning Notice except that it identifies instead the most recent Warning Notice and explains that enforcement action may now be taken against the account holder. This notice expires after 35 days (beginning on the date of the notice).
  3. Enforcement: Once an Enforcement Notice has been sent, the rights owner is then able, within a short window of time, to take their case to the Copyright Tribunal, which is able to order the account holder to pay compensation to the rights owner (up to a maximum of $15,000). The method by which the Copyright Tribunal may calculate awards for copyright infringement, both compensatory and deterrent is set out in the regulations (and includes determination of the flagrancy of the infringement and the possible effect of the infringing activity on the market for the work). The form of the application to the Tribunal is set out in the regulations and the fee is $200.
  4. Challenges: The account holder is entitled to challenge each of the notices and, if enforcement action is taken against an account holder, make submissions before the Copyright Tribunal. The regulations require that the prescribed challenge notice form (or a link to the challenge notice form) is included with each infringement notice and any challenge by an account holder must be made in that prescribed form. If a challenge is received by the IPAP from the account holder within 14 days of the date of the relevant notice and the IPAP does not receive a rejection to that challenge from the rights owner within 28 days of the date of the notice, the challenge is deemed to be accepted.

An overview of the notice regime is set out diagrammatically in the attached flowchart.

Is termination of repeat infringers' Internet accounts a possibility?

The debate continues as to whether or not suspension of Internet access should be implemented as one of the enforcement actions. Under the IFS Act a provision has been included which entitles the rights owner after an Enforcement Notice has been issued to take their case to the District Court for an order requiring the IPAP to suspend the account holder's Internet account for up to 6 months, in appropriate circumstances. However, the Government has stated that this element of the legislation will not be brought into force unless the notice process and the remedies by the Copyright Tribunal prove to be ineffective. It is expected that this issue will be reviewed in two years time.  

Next steps

As September 1 approaches, ISPs should be gearing up for what has the potential to be a full-time job for an employee or, in the case of some ISPs, a team of employees. If you are an Internet account holder for a service that you share with others, be it teenage sons and daughters or employees, you should be ensuring that they are aware of the potential implications if they upload or download music, video or other material in which a third party has copyright.