The New Zealand parliament has amended the Copyright Act 1994 (NZ) to introduce a ‘three strikes’ policy towards infringing file sharing that will see repeat infringers fined NZ$15,000 or disconnected from the internet for up to six months.

The Copyright (Infringing File Sharing) Amendment Act 2011 (NZ) establishes a tiered system of infringement notifications by which copyright owners or their agents can notify New Zealand ‘Internet Protocol Address Providers’, or IPAPs—essentially internet service providers that charge account holders for internet access—of infringing activity occurring on their networks.

Three strikes and you’re out

Under the new regime, which comes into force on 1 September of this year, once an IPAP receives notification of infringing activity on its network, it is required to identify the account holder in question and issue an infringement notice that falls into one of three tiers:

  1. Detection Notices are issued the first time an allegedly infringing account holder is identified by an IPAP. The notice details the rights owner as well as the date of infringement and the copyright work infringed.
  2. Warning Notices are issued if another infringement of the same rights owner’s copyright is identified between 28 days and 9 months after the first Detection Notice is issued.
  3. Enforcement Notices are issued if another infringement of the same rights owner’s copyright is identified between 28 days and 9 months after a Warning Notice has been issued. Once an Enforcement Notice is issued a rights owner can seek further remedies against the account holder.

Remedies available: damages of up to $15,000 or account suspension

Once an Enforcement Notice has been issued, a copyright owner may seek either or both of two remedies:

  1. An order from the Copyright Tribunal for damages of up to NZ $15,000.1

Unless such an order would be ‘manifestly unjust’2, the Tribunal must order financial compensation to the copyright owner if it is satisfied that the infringement notices have been issued in compliance with the Act and that the owner’s rights were infringed from the account holder’s network location. The Tribunal may also order the account holder to contribute towards the copyright owner’s costs in brining the action.

  1. An order from a District Court, suspending the account holder’s internet access for up to six months.3

The Court may only order an IPAP to suspend an account holder’s internet access if the infringement occurred through file sharing and that suspension is ‘justified and appropriate in the circumstances’, given the seriousness of the infringement. The Court may also consider the degree of the account holder's reliance on access to the Internet, the identity of the infringing user and whether the suspension would be ‘manifestly unjust’.

The account suspension provisions of the Act will not come into force until the relevant sections are activated by the NZ Government. Justice Minister Simon Power has indicated that this will not occur until the infringement notice process and remedies available before the Copyright Tribunal are first shown to be ineffective.4

Presumption of infringement and other operational provisions

Infringement notices may be challenged by the account holder within 14 days, although it is at the rights owner’s discretion whether to accept or reject the challenge.

For the purposes of damages claims before the New Zealand Copyright Tribunal, infringement notices issued under the Act create a presumption that the incidence of file sharing identified in the notice was an infringement of the issuer’s rights, although this presumption may be rebutted by the account holder.

IPAPs may recover the costs of passing on and administering the infringement notice scheme from rights owners.

Given the rapid growth of mobile broadband services across the world, it is interesting that the three strikes policy will not apply to mobile internet services until July 2013.

Australia next?

The NZ amendments come in the wake of the pivotal decision of the Australian Full Federal Court in Roadshow Films Pty Limited v iiNet Limited,5 which found that internet service provider iiNet had not authorised the infringement by its users of copyright in films owned by 34 Hollywood movie studios. However the judgment did not deal iiNet an unequivocal victory, instead suggesting that any future immunity for ISPs from copyright claims may hinge upon the adoption of a warning and disconnection system that mirrors many features of the NZ three strikes policy.

Whether Australia adopts such a similar scheme as a result of either parliamentary or judicial action remains to be seen, as does the outcome of the film industry’s application to the High Court for special leave to appeal the iiNet decision.

In any event, Australian rights owners will no doubt be watching the New Zealand experience with great interest and Davies Collison Cave will keep you updated with any new developments.