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First Reading of the Copyright Amendment Bill

Judith Tizard Speech To The House: First Reading of the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill

Introduction

Mr Speaker,

I move that the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill now be read for the first time.

I will give notice that I intend that this Bill should be sent to the Commerce Select Committee.

This Bill will:

- introduce a ban on the parallel importation of films; and

- make changes to the onus of proof in civil proceedings concerning the importation of specified copyright works (namely films, sound recordings and computer programs).

Mr Speaker, this Bill amends the Copyright Act 1994. It gives effect to the government's commitment, signalled in the Speech from the Throne in 1999, to strongly support our professional, performing artists, and to nurture much stronger music, publishing and film industries.

The Labour-Progressive Government has a special interest in the promotion of arts and culture. We believe that New Zealand, as a small country in a globalising world, has to work hard to maintain and develop its own cultural identity.

We also believe that our creative industries have much to contribute to our economy, to job growth, and to the promotion of our country.

World wide, the cultural and heritage sectors are amongst the key growth areas for the 21st century. Creativity is at the heart of innovation, and creative industries input into many other sectors. This is why we have made Creative Industries a target sector of our Growth and Innovation Framework, along with Biotechnology and Information and Communications Technology. Within the Creative Industries, screen production, design and music are key sectors with the potential to generate a great deal of further growth.

Our commitment to nurture our creative industries has been realised through the Cultural Recovery Package of May 2000 and many other measures - this is one of them. We established the Film Production Fund to fund the "next-level" New Zealand films. The benefits of this investment are already proven with the first Film Fund film, Whale Rider, currently sitting at Number One in the NZ Box Office, and second only in box office sales for a New Zealand film to Once Were Warriors.

We established the New Zealand Music Industry Commission, increased funding to New Zealand On Air, and many other programmes. Our concern is to have vibrant and active creative industries where New Zealanders can tell, hear and see their own stories and make a living from jobs doing that. We must have an environment in which New Zealanders can express themselves and pursue satisfying careers in the creative sector.

Parallel Importation of Films

Mr Speaker, this Bill follows a very extensive review and consultation process which considered the impact of parallel importing on the creative industries.

WE were very disappointed when the the National-led Government in 1997 removed the ban on parallel importing under Urgency with no Select Committee process. And after a NZIER report that stated there would be "no effect on the creative industries". They were wrong.

As part of its creative industries strategy, this Labour-led government undertook an extensive review of the impact of parallel importing on the creative industries, and the objective of this review was to determine whether parallel importing was having an adverse effect on investment in New Zealand's music, film, book publishing and software industries.

We carried out two rounds of consultation with the music, film, software and book publishing and retailing sectors.

Some industry representatives made it clear that they did not like parallel importing. But there was no substantive evidence that parallel importing was actually affecting investment in the creative industries.

It was also clear that there were some benefits to consumers, in the form of lower prices.

Our consultations did, however, show up a specific problem in relation to films. It appeared that parallel importing might be harming the orderly and cost-effective distribution of motion picture films. And not only do the people who put a huge investment of money and time into the release of films have the right to decide when to release them, they are entitled because it's their property.

Parallel importing meant that copies of major film titles were becoming available for rental in advance of the film's theatrical release. Cinema owners were concerned that this was contributing to a decline in cinema audiences. This in turn could threaten the viability of picture theatres, particularly in small and rural communities.

The government believes that it is important that these communities continue to enjoy access and services to film facilities.

We therefore agreed to introduce a ban on parallel imports of films for a period of nine months from a title's first release.

The nine-month ban will provide the necessary window of opportunity for theatrical release in New Zealand, before copies become available for rental.

The ban is specifically targeted at films made primarily for showing in public. This is consistent with the government's policy objective of ensuring that the widespread cinematic release of films is able to continue.

The ban will apply regardless of the format of such films (thus including videos and DVDs).

The ban is intended to prevent the parallel importation of films for commercial purposes - that is, importation for the purposes of showing to the public, or sale or rental. It does not prohibit importation for a person's private or domestic use. Private individuals who wish to import a copy of a film for their own use, ahead of the New Zealand theatrical release, will still be able to do so. Of course, given that they get it from a legal source overseas.

The Bill provides for the ban to remain in place for a period of five years. This will enable the effects of the ban to be assessed in a changing environment.

The government has also announced that it intends to keep the effects of parallel importing on the creative industries under review in the near future.

This will enable us to determine whether our policies are working as intended, whether they need to be expanded or changed.

Onus of Proof

Mr Speaker, I also wish to describe the provisions in the Bill which deal with the Onus of Proof.

The theft of intellectual property is a matter of increasing international concern. The government has, on many occasions, stressed the importance of measures to combat the theft of intellectual property.

We have already introduced a number of measures to deal more effectively with this issue.

For example, under the Trade Marks Act 2002, new offences and increased penalties were introduced to deter the counterfeiting of trade marks and pirating of copyright works.

The Bill that I am introducing today contains further measures to constrain copyright infringement.

It is targeted at those works that are most vulnerable to piracy, namely films, computer programs and sound recordings.

Digital technology is making it easier to produce perfect copies of these works cheaply, simply and in large quantities. The measures in the Bill are intended to make it easier for copyright owners to uphold their rights through civil proceedings.

The Copyright Act currently requires copyright owners taking civil proceedings for infringement to:

- prove that the goods in question were pirated; and

- prove that the defendant "knew or had reason to believe" that the goods were pirated.

Our consultations indicated that copyright owners felt that it was difficult to establish this level of proof. They indicated that it can be expensive and time-consuming to do so. And as a result, there is a risk that civil enforcement action will not be taken.

The Bill therefore shifts some of the burden of proof to the defendant.

It establishes a presumption that specified imported copyright works (films, sound recordings and computer programs) are infringing copies. The defendant will be required to rebut this presumption.

It is not usual practice to require the defendant to bear part of the onus of proof. The onus usually falls on the plaintiff.

We considered this measure very carefully, and agreed on the changes to the onus of proof, as we believe that importers, rather than right holders, are more likely to have access to information about the goods that establishes whether or not they are pirated or "legitimate" copies. This information generally relates to such things as the origin of the goods, and lines of supply. Because importers are more likely to have this information as a matter of good business practice, we believe the Bill should not impose undue additional costs on defendants nor require onerous changes to current parallel importing practices.

We also considered other risks. For example, the risk that copyright owners might take legal action against legitimate parallel importers in order to identify, and then cut off, lines of supply.

The Bill aims to prevent this type of harassing action. It provides that the Court must not require any person to disclose any information concerning sources of supply, if it appears to the Court that it would be unreasonable to do so. This provision will protect the commercial confidentiality of information required to prove that the defendant's goods are not infringing copies.

The Bill also changes the knowledge requirement in civil proceedings concerning the act of importation from "knows or has reason to believe" to "knows or ought reasonably to know". Copyright owners considered that the current test can be difficult to prove. An importer may simply declare that he or she thought that the goods in question were not infringing copies.

The amendment provides for an objective knowledge test which aims to help address the problem of piracy.

As I indicated earlier, the changes to the onus of proof focus on specific copyright works - films, sound recordings and computer programs. The measures have been carefully targeted to address the risk that piracy poses, particularly in relation to these works.

Converging technology, however, means that many products now have embedded software or sound recordings. To take a couple of examples, sound recordings may come preloaded on new computers. A washing machine may have an embedded computer program.

The Bill is not intended to apply to such products. To avoid inadvertently capturing such products, the Bill provides new definitions of the terms "sound recording", "film" and "computer program". These definitions apply only for the purposes of the new section 35 of the Copyright Act created by this Bill.

Rental Rights

Sir, I will turn now turn briefly to the issue of rental rights.

Under section 9 of the Copyright Act 1994, a copyright owner has the right to "issue to the public" copies of sound recordings and films. This includes the rental of copies of those works to the public.

The wording of section 9 is, however, ambiguous. The High Court's interpretation of section 9 in the case of Video Ezy (New Zealand) Ltd v Roadshow Entertainment confirmed that the rental rights of copyright owners did apply to parallel imported copies.

This was very helpful. We have decided to amend the Act in order to make the intent of section 9, as confirmed by the High Court, explicit. The amendment will mean greater certainty for all parties over the question of rental rights, both for films and sound recordings.

Trade Marks

Finally, the Bill makes some consequential amendments to the Trade Marks Act 2002. The amendments are intended to ensure that our trade mark and copyright legislation is consistent in the way it deals with parallel importing.

With the exception of films, as provided under this Bill, copyright law will continue to permit copyright products to be parallel imported. The proposed amendments to trade marks law are intended to ensure that trade marks cannot be used to frustrate legitimate parallel importing of copyright goods which are also trade marked.

Conclusion

Mr Speaker, the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill gives effect to the government's decisions to:

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