Tuesday, October 23, 2012

Three strikes and not out

Close-up of painted musical note on woodThe Citizens Advice Bureau has been providing access to legal information, assistance and advice to New Zealanders for many years. I expect that a few of these New Zealanders are students.

Speaking from experience, there are many opportunities for disputes to arise between students living in shared accommodation. There is the person who signs the tenancy agreement. The one who is responsible for the shared bank account. The person who has to pay those unclaimed long distance phone calls because they are the account holder. All of these scenarios rely on the other flatmates keeping up their end of the bargain. Sometimes that is too much to ask.

The Citizens Advice Bureau has now encountered (probably for the first time) a student who is in the gun for unlawful downloading carried out by one or more of her flatmates. I guess it was only a matter of time.

The background

According to TechLiberty post RIANZ withdraw one of first cases to Copyright Tribunal, a student was flatting with a few others. She was the account holder for the flat's shared internet account. She claims that she has never used file sharing software. The unlawful downloading must have been carried out by one of her flatmates.

This is the second most common excuse identified by RIANZ. I cover this in my earlier post No change to copyright notice fee. I cover the main features of the system in an earlier post The show goes on.

The Recording Industry Association of New Zealand (RIANZ) claims to have sent a detection notice under New Zealand's three notice regime. The flatmates claim not to have received the detection notice. Then the warning notice arrived. The defendant showed it her flatmates who denied any wrongdoing. She checked the password  on the wireless network to make sure that others outside the flat were not using it. Then came the enforcement notice and the prospect of a Copyright Tribunal Hearing.

The outcome

RIANZ appears to have withdrawn the case and did not proceed to the Copyright Tribunal. This is a great result for the defendant. She would have been the first defendant to appear before the Copyright Tribunal under the new law.  Publication of her name would have assured her a kind of notoriety. This would probably have affected her job prospects, at least in the private sector.

There are some lessons for us here. And some questions still left hanging.


RIANZ claims that 5 songs were unlawfully downloaded and that an award of $2669.25 is appropriate. So how was this amount calculated? Here's how they worked out the amount:
  • $1075.50 in lost sales of the music
  • $373.75 to reimburse RIANZ for cost of the notices and tribunal fee
  • $1250 as a deterrent

The lost sales component is interesting. The cost of each track on the iTunes store is NZ$2.39. Ordinarily the damages would be the lost sales of those five tracks. If the defendant (or her flatmates) had not downloaded the music unlawfully then they would have paid $11.95 for the music. So the rights owner missed out on $11.95.

However, peer-to-peer file sharing networks being what they are, the music was shared with others during and after the downloading process. So the rights owner missed out on more than just one sale of each track. RIANZ apparently produced evidence suggesting that each track had probably been downloaded 90 times and therefore the cost should be multiplied by 90. Hence the total of $1075.50 rather than $11.95.

The case didn't make it to the Copyright Tribunal so this calculation of damages was never tested.


So what can we learn out of all this?

The obvious one is don't be the account holder. If you are a student living in shared accommodation - don't provide a wireless network for your flatmates. Let them organise their own internet access with an internet service provider.

This case also serves as a further reminder that the account holder is liable for unlawful downloading carried out on the network they signed up for. It's not an excuse to say it was someone else's fault. A landlord, bank or telco wouldn't buy that one. Why would a rights holder be any different?

Photo courtesy of author The-Lane-Team under Creative Commons licence.

Friday, October 19, 2012

Megabox: an opportunity or a risk for New Zealand artists?

Kim Dotcom, painted portrait by Cart'1 DDC_7614Earlier this year police swooped on Megaupload founder Kim Dotcom and his buddies in a sleepy suburb north of Auckland. The high profile raid elevated Dotcom from obscurity to a celebrity status within New Zealand normally reserved for professional athletes, teleprompted news readers and reality television personalities.

Kim Dotcom and his cohorts were operating what they called a "cyberlocker" site, a private data storage provider. What they were actually doing is a little unclear. His legal team would say he's operating some sort of safety deposit box. Prosecutors would say he's operating a digital crack house. The truth is probably somewhere in between.

A Grand Jury indictment filed in February claims that the Megaupload site had 66.6 million registered users as of January 2012. Just under ten percent of these users had ever uploaded a single file. This suggests that most people used the site only to download material.

Current media headlines on this case appear to be dominated by an inquiry into unlawful surveillance by the Government Communications Security Bureau (GCSB) and the legal twists and turns inherent in extraditing Dotcom to the United States to face the music there.

Mega rumour

There are rumours of yet another file sharing site that will allow content owners to monetise digital content. In an article on weblog TorrentFreak last year, Kim Dotcom referred to his new music venture “Megabox.com, a site that will soon allow artists to sell their creations direct to consumers and allowing artists to keep 90 percent of earnings”.

Details of the new service are still a little sketchy. Will it provide the benefits to New Zealand artists that the hype would suggest? Will it face the same legal challenges as Megaupload? There are a few issues artists need to consider before signing up for the service.

Putting the dinosaurs out of business

This model claims to take a different approach to major record labels like Universal Music Group (UMG), Sony Music Entertainment, Warner Music Group and EMI Group.

According to Dotcom associate Swizz Beatz, the “[music] labels wouldn’t be taking the lion’s share of the revenue as they do now – Megabox would take ten percent and the remaining 90 percent would go to the artists. That leaves zero percent for the suited middle men and as the theory goes, they were very unhappy about that.”

The plan is to give consumers free access to music, financed through the use of an advertising browser plug-in. Dotcom spoke of a “Megakey that will allow artists to earn income from users who download music for free. Yes that’s right, we will pay artists even for free downloads.”

Revenue will come from the Megakey application that users have to install. The Megakey will work like an advertisement blocker. Instead of blocking ads it will replace some of these ads with advertising content selected by Megabox. Some users will not want to download the Megakey application. It is anticipated that those users will have the option to buy the music instead.

This year we have seen many announcements about Dotcom and his associates. Megabox appears to have taken a backseat. Its would-be founder has had almost all his assets frozen while he defends extradition to the United States to face copyright infringement, racketeering and money laundering charges.

Despite all the events that have occurred this year, there still seems to be a plan to bring Megabox to life. Earlier this year, Megaupload founder Kim Dotcom announced that "The major Record Labels thought Megabox is dead. Artists rejoice. It is coming and it will unchain you".

Back to basics

The property rights involved in these transactions are fairly straightforward. Copyright is a property right that exists in original works. A typical music file in a WAV, AIFF or MP3 file format will include not one but three different copyright works. The New Zealand Copyright Act 1994 recognises the music as a musical work, the lyrics as a literary work and the recording itself as a sound recording.

It is generally up to the copyright owner (the artist or the record label) to take action against unauthorised copying, issuing of works to the public or performance in public.

Learning from others

It is good to learn from your own mistakes. It is perhaps even better to learn from the mistakes of others. There are many file sharing sites that allow content owners to monetise digital content. These include SoundCloud, Spotify, Rhapsody and Pandora. Without exception they come with terms of use. With few exceptions, these terms of use are not read by their users.

Artists signing up for a file sharing site like MegaBox should look carefully at the rights they are giving up. For example, the Terms of Use for SoundCloud have the artist granting a worldwide, non-exclusive and royalty free licence to SoundCloud and other users of SoundCloud. The licence also extends to users of any other websites, apps and/or platforms to which the artist’s content has been shared or embedded.

There is a risk that it is the owners of the file sharing site themselves that are carrying out unauthorised acts. In the case of Megaupload for example, a Grand Jury Indictment filed Jan 5, 2012, alleges that members of the "Mega Conspiracy" themselves wilfully reproduced and distributed infringing copies of copyrighted works using computer servers controlled by the Conspiracy. Artists should be aware of this before authorising such activity.

Another trap for the unwary is to place too much reliance on a file sharing site keeping content safe. There are legitimate users who have lost content that did not infringe copyright. There is the case of the high school sports reporter and Megaupload customer who is taking court action to get his content back. Honest users are sometimes penalised for the actions of other users.

While court action is always available, it is more prudent for artists to keep backups of their content. It is certainly more cost-effective, particularly when a New Zealand artist is faced with the prospect of litigation in the United States to retrieve content.

File sharing sites are best treated as file sharing sites rather than archives. SoundCloud in its Terms and Conditions warns that the content of users whose account has been terminated or cancelled will be deleted. In fact, SoundCloud reserves the right to block, remove or delete content at any time for any reason and without liability.

Watch this space

New Zealand artists may welcome another platform on which to promote their work. Let’s hope that those signing up for the service are better off for the experience. Time will tell. Or rather, as Swizz Beatz puts it: “But my thing is like, time will tell everything, you know what I’m saying? People will see what’s what, who’s who.”

Photo courtesy of author Abode of Chaos under Creative Commons licence.

Tuesday, October 16, 2012

An early Christmas for Samsung

Galaxy Nexus_013It looks like Samsung's Christmas elves will be delivering Galaxy Nexus smartphones after all. It was looking a bit 'iffy' there for a while. Earlier this year Apple filed a motion for a preliminary injunction in a United States district court. The court granted the request based on infringement of US Patent 8,086,604 (the '604 patent).

Last week the United States Court of Appeals for the Federal Circuit overturned that decision.

Unified search

So what did the '604 patent cover exactly?

Claim 6 of the patent covered an apparatus for a unified search that uses heuristic modules to search multiple data storage locations. When we talk about a unified search, we mean the ability to access information on more than one data storage through a single interface. A device equipped with unified search allows a user to search the local memory of the device as well as the Internet by entering a single search query.

Apple reckoned that the Quick Search Box (QSB) on Samsung's Galaxy Nexus infringed claim 6.

Getting a preliminary injunction

A preliminary injunction is a pretty serious matter with pretty serious consequences. A plaintiff must establish that:
  • he is likely to succeed on the merits,
  • he is likely to suffer irreparable harm in the absence of preliminary relief,
  • the balance of equities tips in his favour, and
  • an injunction is in the public interest.
The district court found all four of these factors satisfied. It granted an injunction that prevented Samsung selling Galaxy Nexus smartphones in the United States.

In the appeal the parties argued over the district court's analysis of two of those factors.

Irreparable Harm

This was a case, according to the Federal Circuit, where the accused product includes many features of which only one (or a small minority) infringe. It's not enough for the patentee to show irreparable harm. The patentee also has to show a 'sufficiently strong causal nexus relates the alleged harm to the alleged infringement'.

Putting this another way, the patentee must show that the infringing feature drives consumer demand for the accused product. The Federal Circuit was not convinced that the Quick Search Box (QSB) feature drove consumer demand.

Even if there was the potential for harm, Apple couldn't show that the harm flows from Samsung's alleged infringement.

Likelihood of Success

Given its finding above, there was no need for the Court to go on and consider the likelihood of success factor. But they did anyway. And found another reason to chuck out the injunction.

Claim 6 required "a plurality of modules ... wherein ... each heuristic module corresponds to a respective area of search and employs a different, predetermined heuristic algorithm". The district court found that the term "plurality" means "at least two," or "simply the state of being plural."

So what does "each" of "a plurality of heuristic modules" mean? Does it mean "each of at least two modules"? Or does it mean "each of every module"? It's quite an important distinction.

Apple argued that the claim limitation is satisfied as long as the Quick Search Box (QSB) contains at least two modules that use different heuristic algorithms. Apple pointed to three heuristic modules within the QSB that use different heuristic algorithms. These are Google which searches the internet, Browser which searches the Internet browsing history, and People which searches the user's contacts list.

Samsung argued that claim 6 requires every heuristic module within the accused device use a unique heuristic algorithm. The QSB, said Samsung, contains other search modules besides the three picked out by Apple. Some of those other search modules might share the same heuristic algorithm.

The district court agreed with Apple that the claim wording means "each of at least two modules". It didn't agree on the Google module, but agreed that the modules Browser and People each use different heuristic algorithms.

The Federal Circuit didn't like that construction. The district court, said the Federal Circuit, has construed "plurality" to mean "at least two" without any indication that the term refers to a hand-picked selection of a larger set.

The plain language of the claim, the patent specification, and the prosecution history all point to a claim construction where each of every module within the claimed apparatus must use a different heuristic algorithm.

Apple couldn't show that it was likely to succeed in its infringement claim, therefore providing another reason for the Federal Circuit to chuck out the injunction.

What now?

A preliminary injunction would have presented Apple with an easy win over Samsung. It would have been a bit hard for Samsung to compete with Apple if Samsung could not sell its Galaxy Nexus at all. Apple has some hard graft ahead of it if it still wants to challenge Samsung's use of the Quick Search Box.

Photo courtesy of author TAKA@P.P.R.S under Creative Commons licence.

Thursday, October 11, 2012

Alice and the Abstract Idea

Looking Glass When is a computer-implemented invention a mere "abstract idea”? Does the presence of a computer in a claim make an unpatentable "abstract idea" a patentable invention? Should it matter that a computer-implemented invention is claimed as a method, system, or storage medium? Is there any real difference between these types of claims?

These are the questions that the United States Court of Appeals for the Federal Circuit is going to be considering over the next 12 months.

CLS meets Alice

On 9 October 2012 the Federal Circuit granted en banc review of CLS Bank International v. Alice Corp., Fed. Cir., No. 11-1301, 10/9/2012.

The patents under consideration involve a computerised trading platform for exchanging obligations in which a trusted third party settles obligations between a first and second party so as to eliminate “settlement risk.” The district court thought the claims were not patentable because they are directed to an abstract idea. On appeal the Federal Circuit panel reversed, concluding that the system, method, and media claims are directed to practical applications of patent eligible subject matter.

The Federal Circuit has asked the parties to file new briefs addressing my opening questions. The court has asked for the United States Patent and Trademark Office (USPTO) to file a brief as amicus curiae. Other briefs of amici curiae may be filed without consent of the parties or leave of the court. All the court asks is that the briefs comply with Federal Rules of Appellate Procedure and Federal Circuit Rules.

I guess it's time to study Alice Through the Looking-Glass. I wonder what we will find there?

Legislative intervention

Back in New Zealand we await the next chapter of our own fairy tale. Parliament resumes its Sitting Programme next week after a two week recess. The Patents Bill has passed its Second Reading on 12 September amidst much parliamentary debate. I cover the Second Reading in an earlier post Patent party in the House.

The Bill contains an exclusion for computer programs, added in response to submissions received from the open source movement. There doesn't appear to be a problem in New Zealand with the current Patents Act and the jurisprudence around it. The exclusion seems to be a preemptive strike against a harm that might eventuate. It is possible that there may be a patent troll under every bridge unless our lawmakers intervene. Just ask Alice. She found that anything is possible in Wonderland.

The exclusion, as set out in a Government Supplementary Order Paper, reads as follows:
10A Computer programs
(1) A computer program is not an invention for the purposes of this Act.
(2) Subsection (1) prevents anything from being an invention for the purposes of this Act only to the extent that a patent or an application relates to a computer program as such.
There is still the Committee of the whole House stage and the Third Reading ahead of us. We are getting there slowly. But at least we are getting there.

Photo courtesy of author Elena Kalis under Creative Commons licence.

Wednesday, October 10, 2012

ATI - the new kid on the science block

Block Party 2007It's funny how some people will always find something to argue about even when they agree with each other. The subject of the argument this time was the new kid on the block, the Advanced Technology Institute. The forum for the argument was the First Reading of the Advanced Technology Institute Bill.

According to the Explanatory note, the Bill:
'establishes a new statutory Crown entity, the Advanced Technology Institute (ATI), with the purpose of supporting businesses, primarily in the manufacturing sector and services sector, to improve their competitiveness and growth through science and technology-based innovation and its commercialisation'.
First Reading

The Hansard record of the First reading last month sees Hon Steven Joyce introducing a legislative framework for establishing a new high-tech HQ for innovative New Zealand businesses. The intention is to help get New Zealand's best ideas out of the lab and into the marketplace more quickly. Kiwis are apparently great at coming up with smart ideas but we need to get better at translating those ideas into commercially successful products.

The Advanced Technology Institute (ATI) will focus on industries with high growth potential. These include food and beverage manufacturing, agritechnologies, digital technologies, health technologies, therapeutics and high-value wood products.

Despite mainly cross-party support for setting up the Advanced Technology Institute, the opposition parties still found something to complain about. The proposed Board members are not scientists. The funding model is wrong. The brief is too wide. The implementation timeframe is too short. And so on and so forth.

The Bill was eventually read a first time following a party vote. It was referred to the Education and Science Committee for public submissions.

Select Committee submissions

Last week stakeholders put forward written submissions to the Education and Science Committee. Submitters were generally supportive of the establishment of the ATI as a Crown Entity.

BusinessNZ noted that businesses tend to do lots of development but not so much research. The ATI has the potential to plug a gap in the innovative sector. In written submissions BusinessNZ supported the focus of the ATI as being directed by business needs rather than science led. There is a need to solve R&D problems, challenges and/or opportunities identified by business rather than finding a market for "good ideas". It will be important to get good business talent on the stakeholder advisory group from the various sectors to ensure the continuing relevance of effort and direction.

Clause 14 of the Bill says that the ATI must 'aim to ensure that any activities it undertakes are for the net benefit of New Zealand'. The University of Waikato in written submissions said that the ATI will not achieve a 'net benefit' for New Zealand unless the Board includes representatives from the Waikato and Bay of Plenty regions. Clause 8 should be amended so that Board member appointments 'reflect geographical representation from across New Zealand where centres of economic growth and potential exist'.

The ATI must concentrate on facilitating creative partnerships, according to the University of Auckland's written submissions. The University's experience over the last 20 years is that the majority of its research and innovation for business is driven by the unmet needs of the market. However, their long-standing commercial research partners always want more than that. The best research and innovation partnerships are multi-directional - market pull and science push. The University sees the ATI as an 'honest broker', introducing interested parties to each other and then leaving them to it.

Crown Research Entity Scion submits that New Zealand needs to broaden its innovation base, protect its current economic base and increase the extent to which value is added. Increasing both volume and value are critical. While Scion supports the objective of supporting science and technology based innovation, the organisation suggests that the ATI adopts a Statement of Core Purpose to achieve "additionality and complementarity" and avoid duplication.

The Institute of Professional Engineers of New Zealand (IPENZ) says that the ATI must be focused on building capacity within New Zealand, not doing research itself. Their expectation is that the ATI will develop and foster innovation within industry, be driven by industry R&D needs, and be an ongoing source of commercially-focussed research personnel.

The Economic Development Agencies of New Zealand Inc (EDANZ) recommends that the existing network of Economic Development Agencies (EDAs) and the relationships they have established are not duplicated. The organisation also wants to ensure that the complementary role of the EDA network is recognised and utilised.

Kiwi Innovation Network Limited (KiwiNet) supports the establishment of the ATI as long as it promotes greater collaboration and does not duplicate existing services. In written submissions the company is concerned that the Bill does not acknowledge that there are other organisations that are already doing good work in the areas in which the ATI will be focussed. The ATI must be built on a core culture of collaboration.

Further steps

The Education and Science Committee is due to report back to the House on 6 November 2012. I don't expect there to be too many changes proposed to the Advanced Technology Institute Bill. Most stakeholders are in favour of the new organisation.

Of course the ATI's main objective, functions and operating principles will be under the microscope for a while. You would expect that with any new kid on the block. The key to its success will be attracting an effective board and a good stakeholder advisory group. They will be saddled with redundant staff from MBIE and NZTE as well as a 'special advisor' tasked with aligning ATI's strategies and objectives with government policy.

Photo courtesy of author kpwerker under Creative Commons licence.

Sunday, October 7, 2012

Bumble bees and business growth

Bumble BeePoliticians are like bumble bees, going from flower to flower. These were the opening comments from Hon Steven Joyce in his speech at the recent Software Summit 2012 organised by the Canterbury Software Cluster. He was speaking in his roles as Minister for Economic Development and Minister of Science and Innovation. He is also acting Minister of Finance although he joked that there was no money left to play with.

The event was a half day conference and networking event with the theme "from Startup to Global". It promised something for everyone - from innovators and entrepreneurs to managers and developers. It certainly delivered that. There were three concurrent streams of top quality presentations. I didn't have a Time-Turner so could not attend all the sessions. I'll let others comment on the content.

There were no surprises in Joyce's speech. It's a tough world economic environment right now. Europe and the United States are in financial trouble. The Asian market presents a huge opportunity. Having a presence in Silicon Valley is good for marketing, but it is better to do your development here in New Zealand. The EPIC initiative to cluster businesses together in Christchurch is a good one.

Joyce outlined the Government's Business Growth Agenda, focussed on access to markets, capital, innovation, skilled people and infrastructure. He took us through a progress report released in August by the Ministry of Business, Innovation and Employment (MBIE).

The report outlines the Government's approach to building innovation. There are seven key areas:
  • encouraging business innovation
  • strengthening research institutions
  • boosting public science investment
  • developing innovation infrastructure
  • improving intellectual property settings
  • growing the innovation workforce
  • building international linkages

The steps to improve intellectual property settings are known to most of us. The report notes that
'[i]ntellectual property rights are essential in incentivising and enabling firms to innovate. Intellectual property rights grant innovators a monopoly on their innovation for a limited period. New Zealand is among the upper tier of OECD countries on the strength of its intellectual property protection and the effectiveness of this, but scores very low on the number of patents registered relative to our population. The Government is committed to further improving how intellectual property is created, managed, and utilised in New Zealand'.
The actions underway and proposed include:
  • completing the passage of the Patents Bill to more closely align New Zealand's patent settings with its trading partners;
  • creating a single trans-Tasman patents examination regime with Australia to simplify patent applications;
  • reviewing trade mark regulations and implementation of the Madrid protocol
  • investigating whether the intellectual property settings of public institutions are optimal for technology transfer; and
  • exploring opportunities for Government to improve the environment for firms' use of intellectual property.

The Minister answered a few questions from the audience. One dissident asked whether the Minister was going to fix the mess his colleague Hon Craig Foss was making of patent law reform. I cover patent law reform in my earlier post Patent party in the House.

Minister Joyce was crystal clear. Minister Foss is not making a mess of patent law reform. The Government's preference is to follow international precedent. Joyce has seen the 'evidence' referred to by the questioner. And no, a possible takeover of New Zealand company Fisher & Paykel Appliances by Chinese company Haier does not affect New Zealand patent policy. I mean really, why should it?

Photo courtesy of author Tobyotter under Creative Commons licence.

Wednesday, October 3, 2012

No change to copyright notice fee

Money"Not too big - not too small - just right". That was the message last month from lawmakers. They were considering the level of fee payable under New Zealand's three notice regime that came into force September 2011. The regime is aimed at deterring file sharing that infringes copyright.

Under the new regime rights owners send prescribed notices to Internet Protocol Address Providers (IPAPs). Each IPAP is then required to validate the notice and send up to three infringement notices to the infringing account holder. An IPAP is allowed to charge a rights owner up to NZ$25 for processing a rights owner notice.

Back in March this year the Ministry of Economic Development (now Ministry of Business, Innovation and Employment) issued a Fee Review discussion document. MED was particularly seeking submissions from Internet Protocol Address Providers (IPAPs) and rights holders. The list of submissions is now public. There are some good quality submissions from IPAPs and rights holders.

The case for status quo

The decision to keep the fee the same came as no surprise. The majority of IPAPs submitted that the maximum fee they are allowed to charge be raised. Rights holders submitted that the maximum fee they have to pay be lowered.

The reasoning set out in the Cabinet Economic Growth and Infrastructure Committee paper is interesting. IPAPs say that they are processing notices from rights owners manually due to "low and varying volumes of rights owner notices". They could reduce the per notice cost to their businesses by automating the process. However, with current volumes they say it is unreasonable to invest in any level of automation.

Rights owners on the other hand say they would send more notices if the fee was lower. Lowering the fee would result in a higher volume of notices being processed under the regime. This in turn would mean that IPAPs would invest in automation. But then IPAPs would be paying the bulk of costs of operating the regime.

The Committee felt that rights owners bear the majority of the responsibility for enforcement of their rights, so they should bear a good proportion of the cost.

The submissions also highlighted some interesting aspects of the new regime.

It wasn't me

As of 26 April 2012 the Recording Industry Association of New Zealand (RIANZ) had sent 2,766 rights holder notices, which is 395 per month. Sixty of those notices had been challenged within the prescribed timeframes. Out of those 60 challenges filed in time, RIANZ accepted two of them and declined 58.

The most common reasons set out in the 60 challenges by account holders were (in order):
  1. it was not me
  2. it was not me, but probably was another household member/flatmate/guest
  3. it was not me, it was likely someone else as my wireless internet connection did not have a password
  4. it was not me, it was likely someone else as we provide internet access to the public as part of a business
RIANZ points out in its submission that none of these excuses hold water. The responsibility lies with the account holder to ensure that his/her internet connection is properly served and not used for unauthorised purposes.

The two successful challenges involved an account holder or account holders that had been proactive in indentifying where the infringement came from and had taken measures to stop future infringement.

Changing behaviours

There appears to have been a reduction in the amount of illegal file sharing that has occurred in New Zealand since implementation of the new regime.

The New Zealand Federation Against Copyright Theft (NZFACT) refers in its submission to a study of the volume of traffic measured from within the core network of an unidentified New Zealand ISP from residential DSL users. The study found a reduction in levels of P2P, Newsgroups and Encrypted traffic. The study also found an increase in levels of Remote, Tunnelling (eg VPN) and Files traffic. Both findings coincided with the September 2011 commencement date of the new notice regime.

RIANZ points to a noticeable decline in P2P usage in September 2011, when the media coverage of the new law was at its highest. This effect has been maintained. RIANZ sees a risk that the initial gains will be eroded as the organisation is unable to send enough notices to maintain a long-term effect.

NZFACT estimates that there were about 110,000 infringing downloads of major US movies in August 2011. From September 2011 the number of infringing downloads dropped to between 40,000 and 60,000 per month.

What now

From here it is anticipated that MBIE officials will continue to monitor the operation of the regime. If notice volumes rise significantly (ie if NZFACT starts sending notices) then IPAPs may be able to implement more efficient systems and therefore there may be scope to review the fee again.

Furthermore if we see a rise in infringing activity there may also be scope for review. We have yet to see the new Copyright Tribunal issue a decision. It will be interesting to see if that would set a deterrent precedent.

Also on the horizon is the implementation of New Zealand's Ultra-Fast Broadband Initiative. Will it increase the level of infringing activity? Or will it expand the offering of legal digital content which may in turn contribute to a decline in illegal file sharing?

Photo courtesy of author 401K under Creative Commons licence.
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