Dotcom decision continues to present an “object” of consternation

The Supreme Court of New Zealand has issued its decision in Ortmann, van der Kolk, Batato, Dotcom v USA and Anor [2020] NZSC 120. The case relates, among other things, to s 131 of the Copyright Act 1994, which sets out criminal offences in relation to copyright works.

To paraphrase, s 131(1) provides that “Every person commits an offence against this section who, other than pursuant to a copyright licence, [makes, imports, possesses, sells, distributes] an object that is, and that the person knows is, an infringing copy of a copyright work”.

The case turned on whether dealing with infringing copies in the form of digital files would be caught as criminal activity [1] despite the fact that parliament only included so-called “communication works” in the civil but not criminal provisions of the Act. The Supreme Court found that digital files and their dissemination are caught by s 131(1).

The Supreme Court’s decision has been eagerly awaited in the hope that it would clarify the ambit of s 131(1), and in particular the ambiguity arising from the word “object”. While the Supreme Court’s decision makes clear that s 131(1) captures digital works, somewhat disappointingly the Court did not focus on the word “object” specifically.

The decision is likely to be worrying for Internet Service Providers: the Supreme Court’s interpretation potentially brings them within the ambit of the criminal provisions in s 131(1).

The decisions of the High Court and Court of Appeal
In the lower Courts, much of the discussion was focused on the word “object” in s 131, and whether this is limited to tangible things or extends to intangible things also (notably online dissemination of digital files). The High Court considered it apparent that the “offences in s 131(1) of the Act relate to physical infringement in the sense that the breach involves tangible copies of infringing works (“an object”)” [2]  and hence that they “do not apply to online infringement”. [3]

The Court of Appeal took a conflicting view, stating “We do not construe “object” to mean anything other than the output or product of the act of copying a copyright protected work, the infringement of the most fundamental copyright. In many instances that product will be a tangible, physical article. But it need not be so in the increasingly digital age with which the 1994 Act is concerned” [4]  … “In our view, this is reinforced by the language of s 12(2) which provides that an “object” is an “infringing copy” if its “making” constitutes copyright infringement… That meaning of “infringing copy” is entirely neutral of whether the output from that “making” is tangible or not.” [5]

The two Courts also reached differing views on the implications of parliament’s failure to incorporate the “communication right” into s 131(1) in 2008, when the category of “communication work” was introduced into the Act. The High Court read into this an intention on parliament’s part to not criminalise infringement of the “communication right”. [6] The Court of Appeal, meanwhile, reasoned that the “communication right” was in fact being superposed on top of existing rights, and that its absence from s 131(1) did not mean the criminal acts in that provision were intended to exclude non-tangible forms of copying. “Copying” as defined in the Act had always included reproduction in a digital format. [7]

The Supreme Court decision
In the Supreme Court, the focus shifted away from the term “object” as such. The appellants focused instead on the restricted acts recited in s 131. [8] They argued that possession only makes sense in the context of tangible things [9], and likewise that the distribution-related acts in s 131(1) are confined to tangible things. [10] They contended that online dissemination could only amount to infringement of the “communication right”, which they argued s 131 does not cover.

The Supreme Court essentially agreed with the Court of Appeal that s 131(1) encompasses online dissemination of digital copies. However, the basis of the Court’s reasoning was unrelated to the term “object”, focusing rather on the legislative and broader context.

In the Court’s view, the 2008 amendments were designed to be “technology-neutral”, so it would be counterintuitive to presume that there was any intention to limit s 131 to a particular class of object. [11]  The Court’s position was ultimately that “[w]e do not consider the introduction of the communication right to be of significance in determining whether s 131 applies to digital files” [12] and that “[we] do not attach significance to the fact that there were amendments to other sections of the Copyright Act in 2008 but not to s 131(1)”. [13] The Court also refused to be swayed by the fact that the corresponding UK copyright legislation had been amended to include reference to the communication right in its criminal provisions. [14] The Court observed that “[e]xcluding digital infringing copies from the ambit of s 131 would mean that deterrence is lacking for one category of serious copyright infringement” [15], which is increasingly prevalent in this day and age.

The Court also touched on New Zealand’s obligations under the TRIPS Agreement to “criminalise wilful copyright piracy on a commercial scale” [16], opining that “it is inconceivable that [the 2008 overhaul] would be intended to put New Zealand in breach of its obligations under the TRIPS agreement” [17] by excluding digital dissemination from the ambit of s 131.

The Court also made the point that s 131 relates to “infringing copies” – that is to say, it ties back to the reproduction right in s 16(1)(a) (rather than the other rights in that section), and ultimately to the definition of copying in s 2(1), which includes reproduction in a digital format. [18]

So, while the Supreme Court’s decision provides clear guidance on the ambit of s 131, somewhat frustratingly the “object” conundrum has not been fully put to bed.

Opinion
Some IP specialists are concerned that the Supreme Court’s decision somewhat glosses over the importance of the term “object” in s 131.

In May 2019, Jim Piper, a Patent Attorney with over 40 years’ experience in the profession, applied unsuccessfully to the Supreme Court for leave to intervene in the proceedings with regard to the term “object” in s 131. A number of the points he sought to raise arguably remain unresolved or not fully examined.

There is, first of all, the plain meaning of the word “object” – “a material thing that can be seen and touched” [19]. The term “object” features some 90 times in the Copyright Act 1994, consistently in a manner that connotes tangibility. The same was true of its predecessor, the Copyright Act 1962.

Then there is the fact that s 131(1) deals, inter alia, with importation of objects that are infringing copies (as indeed does s 12(3)). Importation would seem to necessitate that the object be a tangible thing. While it may be true, as the Court of Appeal noted, that reference to “making” an object (as in s 12(2)) is neutral, it’s a different story when referring to “importing” an object. This is bolstered by the Part 7 provisions, which relate to border protection measures and importation. For instance, s 144(1) states that:

A Customs officer may seize any imported goods that are in the control of the Customs if the officer has reasonable cause to believe that they are evidence of, or of significant relevance to the investigation of, an offence against section 131(1)(b), 198(1)(b), or 226C(1).” [emphasis added]

So s 144(1) contemplates the seizure of “imported goods” which may breach s 131(1)(b), which relates to importation of an object that is an infringing copy. This crossover in the Act between “goods” (which again on their plain meaning are tangible things [20], particularly if being “seized”) and “object” is telling as to the proper interpretation of the latter term.

Mr. Piper also submitted in his application to intervene that “if the legislature intended to capture digital works in s 131, they had the option of importing into that section the specifically-defined term “communication work” to reflect this, rather than using the word “object” whose ordinary meaning is a tangible object.” [21]

It is notable that reference to “communication work” was inserted in one place in s 131, namely s 131(4), which links back to subsection 3 (relating to the performance or showing in public of certain types of copyright work) and states:

Nothing in subsection (3) applies in respect of infringement of copyright by the reception of a communication work.

The fact that a similar amendment – exempting the reception of a communication work – was not inserted after s 131(1) is a further indicator that the term “object” in s 131(1) connotes tangibility and therefore excludes from its ambit communication works in the first place.

Finally, there is the public interest side of things. In his 2019 application to intervene, Mr. Piper submitted that “The unintended consequence of the Court of Appeal’s interpretation of “object” in s 131 is that Internet Service Providers are now potentially exposed to criminal sanctions in carrying out their day to day business… It should be for Parliament to consider whether to criminalise the activities of Internet Service Providers in s 131. If that is its intention, then it needs to express this clearly and unambiguously in the light of public debate.” [22] With the Supreme Court’s decision, this is likely to be a renewed concern among Internet Service Providers who will probably have to push for legislative change.

Author: Anna Klepacki

Footnotes:
[1] For completeness, we note that the appellants’ infringing conduct had occurred overseas (in the form of the much-publicized Megaupload saga). However, the United States of America (the respondent) was petitioning for extradition of the appellants. As such, under s 24(2)(c) of the Extradition Act 1999, the Court had to consider whether said conduct, if it had occurred in New Zealand, would have constituted an offence under the criminal provisions of New Zealand’s Copyright Act.
[2] Ortmann v The United States of America [2017] NZHC 189 (Gilbert J), at [191]
[3] Ortmann v The United States of America [2017] NZHC 189 (Gilbert J), at [192]
[4] Ortmann v United States of America [2018] NZCA 233, [2018] 3 NZLR 475 (Kós P, French and Miller JJ), at [148]
[5] Ortmann v United States of America [2018] NZCA 233, [2018] 3 NZLR 475 (Kós P, French and Miller JJ), at [150]
[6] Ortmann v The United States of America [2017] NZHC 189 (Gilbert J), at [185] – [187]
[7] Ortmann v United States of America [2018] NZCA 233, [2018] 3 NZLR 475 (Kós P, French and Miller JJ), at [150]
[8] [2020] NZSC 120, at [275]
[9] [2020] NZSC 120, at [279]
[10] [2020] NZSC 120, at [276]
[11] [2020] NZSC 120, at [294]
[12] [2020] NZSC 120, at [302]
[13] [2020] NZSC 120, at [308]
[14] [2020] NZSC 120, at [309] – [310]
[15] [2020] NZSC 120, at [296]
[16] [2020] NZSC 120, at [311]
[17] [2020] NZSC 120, at [313]
[18] [2020] NZSC 120, at [303] – [304]
[19] https://en.oxforddictionaries.com/definition/object
[20] https://www.lexico.com/definition/goods
[21] Submissions in support of application for leave to intervene by James William Piper trading as Pipers Intellectual Property, 2 May 2019, at [19]
[22] Submissions in support of application for leave to intervene by James William Piper trading as Pipers Intellectual Property, 2 May 2019, at [42] – [43]

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