The first decisions on any new area provide a platform from which the public can assess how the relevant law will be applied in future. The first New Zealand Copyright Tribunal decisions on the infringing file sharing provisions of the Copyright Act 1994 (Act) are no exception.

The Tribunal's decisions have resulted in wins for copyright owners (via their agent), a loss for the internet account holder, and potentially a lot of concern for other internet account holders.

Background

The infringing file sharing (or "three strikes") regime was introduced into the Act in 2011 in an attempt to curb illegal downloading via file sharing systems. The regime uses a graduated response scheme in which three notices (detection, warning and enforcement notices) are issued sequentially by an internet service provider (known as an "internet protocol address provider" (IPAP)) to its customers following alleged copyright infringement.

The facts

The Applicant in each of the five cases was the Recording Industry Association of New Zealand (RIANZ). RIANZ filed its applications to the Tribunal in its capacity as agent for the relevant copyright owners. The Respondents, in each case, were individual internet account holders.

Each case followed the prescribed course of events, namely the issuing of each of the three notices leading to the Tribunal hearing. The cases before the Tribunal therefore essentially required a finding of infringement and, if so, determination of appropriate penalties.

Infringement was found in each case and the respective Respondents were ordered to pay between NZ$255.97 and $797.17.

The resulting penalties will no doubt seem harsh to the two Respondents who filed submissions with the Tribunal asserting that they did not download some / all of the songs to which the infringement notices related.

Given that these two Respondents claimed a lack of knowledge in relation to infringement, we discuss below the issue of knowledge and how this has so far been treated by the Tribunal and, specifically, how this relates to the award of penalties.

Knowledge of infringement

Under the Act, no evidence of infringing file sharing is required to be presented before the Tribunal. The regime presumes that if a notice was issued then infringement has occurred. The onus is then placed on the account holder to try to present evidence that there was no infringement.

This results in the obvious question of what evidence would be sufficient to disprove infringement? None of the decisions so far have provided guidance on this question.

Without evidence disproving infringement the decisions act as warnings to the average internet account holder that lack of knowledge will not be enough to avoid a finding of infringement. Some of the submissions raised in the cases so far are:

"I didn't do it..."

A simple "I didn't do it" will not, without further evidence, rebut the presumption of infringement.

Some commentators have stated that the three strikes law is flawed because an account holder can be held liable without any knowledge of infringement. However, including a knowledge element would make the infringement subjective and would add time, cost and uncertainty to the decision making process. It would also be inconsistent with the legislative intention of providing a relatively quick, simple and inexpensive method of dealing with alleged infringement.

"Other internet account users didn't do it... or if they did, they did so inadvertently..."

The Respondent in one case admitted downloading one song (for which she received the detection notice) but denied knowledge of the second and third alleged infringements. She also did not believe anyone in her house had infringed either. In another case, the Respondent submitted that the infringements occurred inadvertently while his sons played on the computer. Neither submission was enough to avoid infringement.

It is important to remember that it does not necessarily matter whether it is the actual internet account holder who downloads or uploads the infringing material. All that matters is that an infringement took place via an account holder's internet account. The Respondent is unlikely to avoid penalty unless the Respondent can provide evidence that the infringements did not actually occur.

This should sound a warning to account holders to ensure that they know who has access to their accounts. It also reinforces the need to ensure internet connections are secure. Nobody wants to be summoned before the Tribunal for something one of their flatmates or neighbours have downloaded or uploaded.

"I didn't know file sharing systems did that..."

Two of the decisions also demonstrate that users may not understand file sharing systems, in particular that using the system to download may correspond with simultaneous uploading as well. Further, with certain settings in place, once the file sharing system is open (which could be automatic upon starting the computer), uploading can occur automatically.

File sharers will need to be vigilant about the settings on their file sharing systems. Although downloading one infringing copy of a work may often only result in a detection notice being issued, having the wrong settings could lead to that work being repeatedly uploaded to other users of the same file sharing system. As a result, the account holder could be issued with a second and a third notice, and face a Tribunal hearing.

Therefore, it does not matter what a user intends to do or admits responsibility for. What matters is the fact that, on three separate occasions, infringing works are uploaded from or downloaded to an internet holder's IP address.

Although lack of knowledge is not a complete defence, it appears to be a factor that the Tribunal takes into consideration when assessing the appropriate deterrent penalties.

Penalties

The penalties under the information file sharing regime are split into four areas:

  • The reasonable cost of purchasing the works legally;
  • A contribution towards the fees paid by the rights owner to the IPAP;
  • Reimbursement of the application fee paid by the rights owner to the Tribunal; and
  • An additional sum that may be awarded as a deterrent against further infringing.

The Tribunal has, so far, been relatively consistent in the application of the first three elements.

These first element relates to the cost of legally purchasing the three works - in all five cases, three songs. The Tribunal has generally interpreted this as being three times the cost to legally purchase each work. Therefore, for songs at least, this penalty has been in the NZ$5 to $8 range.

The second and third aspects of the penalty assessment include a reimbursement of the Applicant's Tribunal application fee ($200) and a contribution towards the IPAP fees (calculated to be $50).

The total penalty for these three aspects is likely to remain relatively consistent in most cases involving the infringement of sound recordings. Where there may be some variation is in the assessment of the deterrent penalty.

So far the fourth element of the penalty assessment has ranged from NZ$0 to $540. In one case, RIANZ asked that a deterrent element not be included. Although it is difficult to assess how the other numbers have been arrived at, factors that have appeared to favour a lower deterrent penalty include:

  • the Respondent being actively engaged in the Tribunal process rather than ignoring it;
  • the Respondent accepting a measure of responsibility and apologising;
  • the Respondent lacking knowledge that file sharing software would upload as well as download; and
  • the Tribunal accepting that the Respondent was not the one who actually engaged in the infringing file sharing.

Alternatively, factors the Tribunal appears to consider contribute toward an increased deterrent penalty include:

  • that the infringement took place over a long period of time (eg six to eight months);
  • the large number of overall downloads;
  • the large number of tracks made available for uploading at the address of the account holder;
  • if the infringing works are uploaded, it is likely that at least some potential third party downloaders would otherwise have purchased the work; and
  • no explanations or excuses were provided for the infringements.

Conclusion

We await further decisions to see how different factual situations are treated by the Tribunal. In light of the Tribunal decisions to date, one of the keys aspects will be if/how account holders challenge infringement notices with evidence that there was no infringement. Time will also tell how large the penalties will be for other, more flagrant, cases of infringement and for audio-visual works. That is of course unless the "big players" in the online copyright infringement world find (or already have found) a way to get around this regime, leaving it to catch only those with limited knowledge of file sharing systems - like some of the Respondents.