NEW ZEALAND TO REDRAFT SECTION 92A OF NEW

UNCLAS SECTION 01 OF 03 WELLINGTON 000088 SENSITIVE SIPDIS STATE PASS TO USPTO, U.S COPYRIGHT OFFICE, USTR JARED RAGLAND, COMMERCE FOR ITA/MAC/OIPR, STATE FOR EAP/ANP, EEB/TPP/IPE E.O. 12958: N/A TAGS: ECON ETRD KIPR NZ SUBJECT: NEW ZEALAND TO REDRAFT SECTION 92A OF NEW COPYRIGHT LAW ¶1. (SBU) SUMMARY: On March 23, New Zealand's Minister of Commerce Simon Power announced that the GNZ would suspend section 92A of the new copyright law, which would have created new regulations for terminating internet accounts of repeat copyright infringers. Negotiators for both the intellectual property rights (IPR) industry and the Telecommunications Carrier Forum (TCF - the association of internet service providers (ISPs)) were surprised; they had felt they were close to finalizing a voluntary code of practice which would have served as the regulatory foundation for enforcing this section of the law. Minister Power decided that the proposed code might not be workable on a voluntary basis, and therefore reasserted the government's authority to redraft section 92A. In doing so he reaffirmed the GNZ's commitment to the importance of IPR protection to NZ's creative industries. It now will be crucial to monitor the progress of GNZ redrafting to ensure it succeeds in a timely manner. End Summary. Background -------------- ¶2. (SBU) The Copyright (New Technologies) Amendment Act 2008 was originally scheduled to go into full force on February 28, 2009 but in the weeks leading up to the deadline, public interest groups raised a chorus of concerns claiming that the law's requirement to terminate internet subscribers who allegedly "pirated" digital copyrighted materials over the internet would infringe on due process, freedom of speech and the public's right to access information. The negative publicity led to demonstrations staged in front of Parliament, organized by a group called the Creative Freedom Foundation. ¶3. (SBU) The publicity drew the attention of some minority party politicians who hoped to ride a new populist wave. The United Future Party's leader Peter Dunne wanted Parliament to strike section 92A entirely from the new copyright bill through an arcane legal maneuver which would have required the Governor General to quash the provision. ACT Party leader Rodney Hyde also joined in the chorus calling for repeal of the section while he castigated the previous Labour government for its "poor" drafting of the Bill. Both United and ACT are current members of the National led coalition �00A;government. ¶4. (SBU) In reaction, a core panel was formed within the Cabinet consisting of the Commerce Minister Simon Power, Communications/IT Minister Steven Joyce, Broadcasting Minister Jonathan Coleman and Attorney General Chris Finlayson to develop a game plan and dampen the negative publicity. Meanwhile, Dunne had been asked by Simon Power to consider reformulating the provision in language more acceptable to the ISPs instead of stripping the law entirely of its content. ¶5. (SBU) The response developed by the four ministers and announced by Simon Power as lead was to suspend section 92A for 30 days during which time the IP rights holders would hammer out a code of practice with the Telecommunication Carriers Forum (TCF - industry association representing NZ's major ISPs - Telecom, Telstra, Vodafone, Kordia and Callplus) which would serve as the regulatory foundation for section 92A. The law would then go into force at the end of March and after 90 days it would be reviewed as to its appropriate application. Original Text of Section 92A -------------- ¶6. (U) Section 92A reads as follows: Internet service providers (ISP) must have policy for terminating accounts of repeat infringers 1) An ISP must adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the account with that ISP of a repeat infringer. 2) In subsection (1),repeat infringer means a person who repeatedly infringes the copyright in a work by using one (1) or more of the Internet services of the ISP to do a restricted act without the consent of the copyright owner. WELLINGTON 00000088 002 OF 003 Telstra Pulls Out of Negotiations -------------- ¶7. (SBU) Telstra, one of the major New Zealand ISPs, signaled during the week of March 9 that it was no longer willing to participate in the negotiations between the copyright industry and the TCF on development of the code of practice that would have served as the regulatory foundation for enforcing section 92A. Press reported rumors that Telstra's decision to cease cooperation may have originated from the company's CEO Sol Trujillo who has been reported as an opponent of similar legislation in Australia. The TCF tried to continue working on the draft code with the remaining NZ ISPs (Telecom, Vodafone, Kordia and Callplus). However, in accordance with the TCF's by laws, unless there is unanimous agreement among all members of the telecommunications forum then the code of practice would not be binding but merely voluntary. After Telstra's opting-out, the remaining stakeholders were unable to come to full agreement on a useable code of practice. They remained deadlocked on two "minor" items: how to deal with fees (costs imposed on rights holder for submitting termination requests) and the length of time before termination (time between notice of infraction and cancellation of internet service - one versus two month lead-time). GNZ Decides to Rewrite Section 92A -------------- ¶8. (SBU) Minister Power, realizing that the proposed code of practice could only be voluntary and not applicable to the second largest ISP in NZ (Telstra) along with the end of March deadline rapidly approaching, suspended the negotiations and reasserted the government's authority to redraft section 92A. In his announcement, Power stressed that section 92A traverses an important issue in copyright law reform and reaffirmed the GNZ's stance that internet piracy is very costly to NZ's creative industries and needs to be addressed. ¶9. (SBU) On March 23, Minister Power, issued a press release after the weekly Cabinet meeting announcing that the GNZ would suspend section 92A as of March 31. (Note: all other provisions of the new copyright law are in force as of March 31 except but for section 92A. End note). The Government's action came as a surprise because up to the time of the Minister's announcement negotiators for both the IPR industry and the Telecommunications Carrier Forum had said they were close to finalizing a "voluntary" code of practice. IPR Industry Expresses Disappointment -------------- ¶10. (SBU) On March 26, Charge' met with Frank Rittman, Vice President and General Counsel for Asia Pacific Division of the Motion Picture Association (MPA) and Tony Eaton, Director of New Zealand Federation Against Copyright Theft (NZFACT) to ascertain the IPR industry's reaction to suspension of section 92A of the NZ Copyright (New Technologies) Amendment Act 2008 and possible next steps by government, copyright holders and internet service providers. ¶11. (SBU) Rittman and Eaton had met earlier with the IP division of Ministry of Economic Development (MED) charged with the redraft of Section 92A. MED officials' chief concern was that MED did not yet have clear instructions from its political leadership, primarily from the Minister of Commerce, as to timeline and process. Rittman felt that the sense of urgency among the IP lawyers in MED was relatively low and believed that a redraft was unlikely any time sooner than late December 2009. As to the redrafting process, he felt that the public's input would be sought - most likely to diffuse the earlier criticism of lack of transparency in the original formulation of 92A. Rittman said that the drafters would need to satisfactorily address four main points: - Resolve satisfactorily the question of indemnification (i.e., who bears costs of improper termination). - Agree to definition of what constitutes an ISP. WELLINGTON 00000088 003 OF 003 - Ensure that process for notification and termination be "timely" (IP industry asking for one month between final warning and termination of internet service while ISPs seeking two month lead-time). - Determine who bears processing costs (there is the cost of processing the notifications to customers for alleged misuse estimated at approx NZ$100 per notification - will it be shared or carried by ISPs). Next Steps -------------- ¶12. (SBU) Throughout the final stages of the law's (near) implementation, the Embassy continued to met with IPR stakeholders and GNZ officials to ascertain progress and encourage resolution. To determine how a "workable" section 92A provision can be secured, Econoff met with Rory McLeod, Director at Ministry of Economic Development (MED) with responsibility for IPR within GNZ along with Paula Wilson, Deputy Director for Trade Negotiations at MFAT, and was given assurance that the government remains committed to redrafting Section 92A. ¶13. (SBU) Embassy will continue to stress with GNZ officials the need for a shorter rather than protracted timeline for the redraft and will ascertain the details of a notice and comment period for public submissions once released by GNZ. During this hiatus we've proposed holding DVC(s) between NZ and U.S. interlocutors to possibly help with drafting and as a public diplomacy tool to dispel public misperceptions about proper role of IPR protection. U.S. agencies have the benefit of 10 years worth of experience in enforcing the U.S. Digital Millennium Copyright Act that may serve useful to New Zealand officials in their effort to implement section 92A. KEEGAN