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Cablegate: 2008 Special 301 Review - New Zealand

VZCZCXRO4335
RR RUEHNZ
DE RUEHWL #0064/01 0530316
ZNR UUUUU ZZH
R 220316Z FEB 08
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 5089
INFO RUEHBY/AMEMBASSY CANBERRA 5113
RUEHNZ/AMCONSUL AUCKLAND 1630
RUEHDN/AMCONSUL SYDNEY 0647
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0213

UNCLAS SECTION 01 OF 03 WELLINGTON 000064

SIPDIS

SIPDIS

SENSITIVE

STATE FOR EAP/ANP, EEB/TPP/IPE JBOGER, STATE PASS TO USTR JENNIFER
GROVES AND COMMERCE FOR CASSIE PETERS ITA/MAC/OIPR

E.O. 12958: N/A
TAGS: ECON ETRD KIPR NZ
SUBJECT: 2008 SPECIAL 301 REVIEW - NEW ZEALAND

REF: STATE 9475

1. (SBU) Summary: Post recommends that New Zealand (GNZ) not/not be
placed on the Special 301 List in 2008. The country's overall
commitment to the protection of intellectual property (IPR) is
relatively high as compared to most countries cited in the Special
301 review. Despite the slower than anticipated pace of legislative
progress, the government remains committed to updating its
intellectual property laws to ensure compliance with international
standards, with planned revisions of the Patents Bill and the
Copyright Amendments Bill ("New Technologies and Performers' Rights
Bill") progressing through the legislative queue. Some momentum has
been lost over the past year due to slowdown in the legislative
agenda as the Government shifts its attention to upcoming elections
in 2008. Though New Zealand generally provides adequate and
effective protection of intellectual property rights (IP) under
current law, Post will continue to engage Members of Parliament, the
Ministry of Economic Development and local IP industry in order to
press our concerns that pending legislation reflects international
IP standards and passage occurs in a timely fashion. To date issues
raised about the draft Copyright Bill by IP industry are being
considered by the government and will be monitored by Post. It's
reasonable to anticipate a renewed commitment to the passage of IP
legislation by the GNZ post election cycle. Placing New Zealand on
the Special 301 list at this stage may prove to be
counter-productive as it likely will result in a defensive rather
than consultative exchange. End summary.

International Intellectual Property Alliance (IIPA)'s Special
Mention of New Zealand's IP Regime
--------------------------------------------- -------

2. (U) As IIPA noted in its Special 301 submission, that the
Commerce Committee of the New Zealand Parliament issued its
long-awaited report on the Copyright (New Technologies and
Performer's Rights) Amendment Bill in July 2007. This extensive
proposed amendment to New Zealand's copyright law contains many
valuable improvements but some provisions remain problematic for
industry. Post agrees with IIPA's recommendation that an effective
course of action would be to continue to engage the government in
order to ensure that the draft legislation provides more useful
tools for dealing with piracy. Post has presented the list of noted
shortfalls in the draft legislation to Minister Tizard (Consumer
Affairs), Minister Goff (Trade) and to officials within the Ministry
of Economic Development, the agency primarily responsible for
drafting legislation and monitoring IP enforcement. Post remains
engaged with Bronwyn Turley, Senior MED Policy Advisor for IP issues
to maintain a dialogue to address the needed technical corrections.

GNZ Response to IIPA Submission
-------------------------------

3. (U) The Copyright Bill is currently part way through its second
reading in the New Zealand Parliament. The concerns raised by IIPA
regarding the Bill's shortcomings are currently being considered by
the government. Paragraphs 4 to 15 below summarize legislation
intent and language in highlighted provisions of the draft Copyright
Bill that have been brought to GNZ's attention by the IIPA.
Detailed drafts of legal texts and proposed revisions to the
Copyright Bill can be forwarded separately from MED if required.

Anticipated Treatment of TPMs under Proposed Bill
--------------------------------------------- ----

4. (U) Per MED, development and employment of TPMs have raised
issues beyond the realm of copyright law for GNZ. They often relate
to disclosure issues, such as insufficient or incorrect information
to consumers concerning technological protected materials and their
usability restrictions, and could often be addressed by contract
law, privacy laws or consumer protection laws. The issuer of a TPM
would still need to comply with those other existing laws as the TPM
provisions do not 'trump' any other laws. Copyright owners can
continue using TPMs that control access, however, without assistance
from the Act. Owners could, for example, continue to rely on other
legal measures, such as the law of contract, where an access
protection measure is circumvented.

5. (U) GNZ notes that the WIPO Copyright Treaty 1994, to which New
Zealand is not a party yet, not only calls for nations to "provide
adequate legal protection and effective legal remedies against the
circumvention of effective technological measures" but also
recognizes "the need to maintain a balance between the rights of
authors and the large public interest, particularly education,
research and access to information" in updating international

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copyright norms to respond to challenges arising new technologies.
GNZ feels that the translation of this balance into domestic laws is
a matter of national circumstances and domestic policies, and
parties to this treaty have implemented the TPM provision in
different ways.

ISP liability limitation
------------------------

6. (U) Per MED, the Bill contains provisions which limit ISP
liability for copyright infringement by third parties. Copying is a
central function of the internet and the services provided by ISPs.
Material may be reproduced at many stages during the course of a
transmission and it can be virtually impossible to identify when and
where many of these copies are made. When the material being copied
is subject to copyright protection, an ISP could face liability for
both primary and secondary infringement of copyright. There is a
public interest in ensuring cost-effective access to the internet,
which may be affected by uncertain or increased liability for ISPs.

7. (U) The Select Committee made some changes to the ISP provisions.
It removed the provision that limits ISP liability only when the
ISP had adopted and reasonably implemented a policy relating to
termination of the accounts of repeat infringers. A number of
submitters raised concerns about this provision, including that it
was unnecessary (because standard ISP terms and conditions generally
already allow for this) and that its scope and application were
quite unclear.

8. (U) Drafting changes were made to the provisions in new sections
92B and 92C which preserve the ability for a copyright owner to seek
injunctive relief. These changes were suggested by the specialist
advisers to the Committee and arose out of concern that the
provisions were not drafted in a way that would effectively preserve
the ability for a copyright holder to seek an injunction against an
ISP.

9. (U) Changes were made to section 92C (2) at Select Committee and
new sections 92CA and 92CB were added. These changes arose out of
recommendations by the specialist advisers to the Committee.
Section 92C previously specified that an ISP is not infringing
unless they know or have reason to believe that the material is
infringing, and do not delete or prevent access to the material as
soon as possible after they become aware. Concern was raised by the
advisers that this test did not provide sufficient certainty for
ISPs about when they would be required to take material down, and
that it diverged from the tests used in other jurisdictions. In
response to these concerns, the following changes were made:

-- The test was altered to clarify that the ISP must either know or
have received a notice that the material was infringing;

-- There is a new requirement that notices must be properly
completed, signed and in the prescribed form;

-- There is a new offence for knowingly or recklessly providing a
notice that is materially false or misleading.

Access to Pharmaceuticals and Patent Protection
--------------------------------------------- --

10. (SBU) While the U.S. pharmaceutical industry (PhRMA) urges that
New Zealand be placed on the priority watch list (PWL) in 2008, post
continues to believe that the industry's restricted access to New
Zealand's market stems primarily from the cost containment
strategies for subsidized drugs that are a part of the National
Medicines Strategy (NMS). The government affiliated Pharmaceutical
Management Agency (PHARMAC) is mandated to spend less than its
budget allows, and the pharmaceutical industry has a number of
legitimate complaints about its treatment in the purchasing process.
However, these industry concerns are not IP problems per se. While
Post will continue to work to improve access for U.S.
pharmaceuticals in the New Zealand market, we believe this should be
dealt with as a market-access barrier and not as a failure to
protect intellectual property. Even the pharmaceutical industry
trade association here, Researched Medicines Industry Association of
New Zealand (RMI - affiliated with PhRMA), assesses that the
government's practices do not violate its TRIPS commitments. Post
will continue to engage appropriate Ministers and MED to find ways
to improve market access.

11. (SBU) While the new draft Patent Bill unfortunately has remained
on the parliamentary docket for some time now, sources at the
Ministry of Economic Development claim the Bill will meet

WELLINGTON 00000064 003 OF 003


international IP legislative standards. Modeled largely after
current British patent law, the GNZ drafters had hoped to capture
the UK's experience in structuring its revised patent regime to EU
standards. An unofficial preliminary draft version of the bill,
called an "exposure draft," was initially released in 2005 and
received only technical comments as to the form of the bill. These
have been reviewed and applied as appropriate. Despite the bill's
long gestation period, MED attorneys responsible for drafting feel
that the bill is likely to pass with little additional modification.
Under current law, the level of IP protection for pharmaceuticals
remains adequate. Post does agree that it is in New Zealand's and
our best interests to complete work on the draft Patents Bill
promptly in order to ensure that New Zealand's patent regime
reflects international standards. Post believes the better course
of action is to continue to work/consult with the GNZ to ensure
industry's concerns are reflected in pending legislation.

Enforcement
-----------

12. (U) GNZ remains committed to enforcing its IP laws adequately
and effectively. In most instances, the government responds to
complaints raised by rights holders against IP infringers. The
government set up a new office within New Zealand Customs in 2007
that is exclusively dedicated to IP enforcement issues. Currently,
New Zealand Customs can confiscate and destroy pirated products if
the holder of the trademark or copyright has requested that Customs
detain the goods. That request is valid for five years and can be
renewed. Almost all the infringing goods imported into New Zealand
originated in Asia, particularly China, and most of the intercepted
and investigated goods were clothing, footwear and headwear. The
number of pirated CDs and DVDs intercepted by Customs has declined
sharply, after peaking in 2006. While it appears that CDs and DVDs
are increasingly being copied to order within New Zealand, making
detection of local production increasingly difficult, industry as an
ongoing cooperative dialogue with local authorities to better police
IPR as new forms of piracy are detected.

13. (U) Conclusion: Post maintains that, despite certain technical
deficiencies and delays in the pending intellectual property laws,
there remains a strong commitment on the part of the GNZ to continue
to improve its IP regime and bring it into conformance with
international standards. GNZ's enforcement of current IP laws also
reflects the government's proactive stance as they learn and adapt
to help stem new forms of piracy. While there is additional work to
be done to strengthen the law and enhance enforcement, Post
recommends the better course of action is to continue engagement
with the GNZ and monitor the progress of IP legislation rather than
place New Zealand on this year's watch list. End conclusion.

MCCORMICK

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