Hon SIMON POWER (Minister of Justice) : I move, That the Copyright (Infringing File Sharing) Amendment Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Commerce Committee for consideration.

This bill repeals section 92A of the Copyright Act 1994 and amends Part 6 of the Act to provide a fair and effective regime for the enforcement of copyright against illegal file sharers. The Copyright Act facilitates the earning of revenue from creative works, in turn encouraging the investment of that revenue into the production of more creative content. Copyright owners are granted exclusive rights to exploit their creative works for a limited period of time. Ensuring strong legal frameworks for intellectual property rights contributes to achieving this Government’s goals of fostering economic growth and encouraging our creative industries to provide new and innovative products to New Zealand consumers and abroad. However, copyright owners currently lack an effective enforcement measure against illegal file-sharing.

File-sharing technologies link together Internet users who have access to copyright works, and they facilitate the quick and easy transfer of a copy of a work such as music, films, and software to many other users. A 2009 study commissioned by the Recording Industry Association of New Zealand identified an average of 5,000 potential infringements a day, using a limited list of sound recordings. The Copyright Act provides that the communication of a work and the copying of a work without the authorisation of the copyright owner is a breach of copyright. Many file sharers communicate or copy a work without seeking permission from or paying the copyright owner. This sort of activity can, therefore, constitute a breach of copyright under the Act.

As I am sure that everybody in the House this afternoon is aware, New Zealand’s creative industries are a significant part of our economy. The advice I have is that in the 2008 financial year the New Zealand screen industry recorded gross revenue of $2.7 billion. However, the creative industries have experienced significant declines in revenue, as file sharing has become more prevalent. This Government wants to ensure that our creative industries can derive maximum economic benefit from the investment they put into the production of new copyright works. Current enforcement measures in the Copyright Act are ineffective at remedying the problem, as the cost of legal proceedings outweighs the amount a copyright owner may be awarded by a court for file-sharing infringements. Court proceedings are further complicated by the requirement for copyright owners to obtain an order requiring the file sharer’s Internet service provider—or ISP—to release the file sharer’s contact details to the copyright owner before being able to take court action.

In 2008 the previous Government amended the Copyright Act to include measures to address repeat copyright infringement over the Internet. The Copyright (New Technologies) Amendment Act inserted section 92A into the principal Act. It required Internet service providers to adopt and reasonably implement a policy to terminate the accounts of repeat infringers. In March 2009 this Government ordered a review of section 92A, as it became clear that that section would not be workable. This bill proposes amending the Copyright Act to provide a fairer and more effective means for copyright owners to enforce their rights against file sharers.

The bill provides that Internet account holders who are matched with evidence of alleged copyright infringement must receive a detection notice from their Internet service provider. After a second alleged infringement, a warning notice is sent to the account holder. A third alleged infringement will result in an enforcement notice. It is only at that point that a copyright owner may take enforcement action by seeking a compensation award at the Copyright Tribunal, or by seeking the suspension of an infringer’s Internet account for up to 6 months in the District Court. The bill provides time frames between notices to allow Internet account holders a reasonable opportunity to stop the infringing activity. Account holders who ignore warnings and continue infringing between notices will be liable for those infringements if enforcement action is taken against them at the Copyright Tribunal. There will be opportunities at all stages of the notice regime for an account holder to dispute notices, and there will be an opportunity for a repeat infringer to request a hearing if enforcement action is taken against him or her at the Copyright Tribunal. Notices must also contain information to educate the recipient about illegal file-sharing to deter further infringing activity. The bill ensures that where a copyright owner seeks suspension of an Internet account for up to 6 months in the District Court, an account will be suspended only after the account holder has received a third notice and in appropriate circumstances. The factors a court must consider when determining whether to order an Internet account suspension include the account holder’s reliance on access to the Internet and the seriousness of the infringement.

The bill also includes a separate definition of “Internet service provider” specifically for the new regime. This definition covers only traditional Internet service providers—like Telecom—that are technically capable of performing the evidence-matching and notice-sending requirements in the bill. Universities, libraries, businesses, and providers of transient Internet access, such as Internet cafes, are not considered Internet service providers under the new definition. As account holders, however, they will still be required to address infringing activity occurring on their networks.

The proposals in this bill were formed by the Ministry of Economic Development in consultation with the Ministry of Justice, Treasury, the Ministry of Foreign Affairs and Trade, and the Privacy Commissioner. Stakeholders from the creative and telecommunications industries have also been consulted closely on the new regime, and the public were invited to comment on proposals.

It is fair to say that the impending commencement of the original version of section 92A just over a year ago aroused some very passionate responses, particularly from the Internet community. By taking the time to stop and listen to stakeholders and members of the public and then to act, I am of the view that the Government has arrived at a more broadly acceptable solution. I commend this bill to the House.

CLARE CURRAN (Labour—Dunedin South) : I congratulate Minister Simon Power on all the hard work that has gone into the Copyright (Infringing File Sharing) Amendment Bill. It has been quite a journey, and I acknowledge and recognise the genuine commitment that has taken place to get to this point.

Copyright in 2010 has become a brand or code. The prevalence of illegal downloading, both in New Zealand and globally, is a very real and important issue. The balancing act between protecting the rights of the creators of content and allowing and encouraging access to information and material is a delicate and increasingly tricky issue that is currently exercising the minds of parliaments across the world. Who owns intellectual property, who should have access to it, how they should have that access, and what should be the penalties for infringing the rules governing that access are all very live issues that are being hotly debated.

I have three main points to make. Labour supports the referral of this bill to a select committee. It is pretty much a sensible bill that has achieved the difficult task, as the Minister of Justice has said, of gaining support across all of the major stakeholder groups. It does not have their full support, but it has support nevertheless. Labour does not support certain aspects of the bill. We question whether the bill will achieve what it sets out to do; there are bigger issues at stake. What lies at the heart of this debate and is the core reason for the bill is that thing called the Internet. The Internet, the most important social and technological development of the previous two decades, is a global resource linking thousands of millions of users to each other, all sharing information. It is the sharing of information that is the issue here.

Labour supports our local artists, musicians, and creative industries whose successes have shaped the very face of New Zealand internationally. There is a general consensus that repeated copyright infringement of creative works requires a penalty. It is the nature of this penalty that Labour wishes to address, amongst other things, at the select committee.

Estimating the cost for rights holders affected by copyright infringement is not straightforward. Technology is changing quickly, and consumers react to change in ways that some people in the creative industry are struggling to understand and cope with. When considering this bill, the regulatory impact analysis team considered that although there was a case for intervention, uncertainty about the scale of harm being done by illegal file-sharing meant that the impact analysis did not point to a preferred option. In other words, the case has not clearly been made that sales of music and movies via the Internet are decreasing due to illegal file-sharing.

Labour believes that the Government should be an enabler, not an inhibitor, of creativity and connectedness. The Internet has irreversibly changed our relationship to content; there is no going back. We cannot put that genie back in the bottle. Labour supports the general aim of the bill to enable creativity by placing responsibility on consumers to respect copyright, but without overly inhibiting the rights of citizens in a democratic society to access and participate in the Internet.

So what does this bill do and what will it achieve? It amends the Copyright Act 1994 to provide new enforcement measures against the unauthorised sharing of copyrighted material via the Internet. It repeals section 92A of the Act, which would have required Internet service providers to adopt a policy providing for the termination of a repeat infringer’s Internet account. Labour developed section 92A with the best of intentions, and notes that it was supported by National in this Parliament in 2008. However, it must be acknowledged that intense and widespread public reaction to the introduction of section 92A led Labour to conclude early last year that the issue needed to be readdressed. We moved quickly after the election to acknowledge problems with it, and consulted widely with stakeholders. We realised that, despite the good intention of the original Act, the requirement for stakeholders to develop a workable code of practice to terminate Internet accounts on the basis of copyright infringements had some serious flaws. We pressed the Government to address the issue, and supported its decision to take another look at section 92A.

The revised version, this bill, goes some way to addressing the issues of the sharing of copyrighted material via the Internet. This is because it provides for an education and enforcement regime. The bill contains many sensible provisions and we support it, but we are strongly opposed to the provision for suspension of an Internet service provider account, which is, firstly, in principle unacceptable, as it impinges on freedom of speech and freedom of assembly, and, secondly, in practice, is ineffectual as a deterrent and unworkable because the convicted person can just sign up with another Internet service provider.

In France, which has legislated to disconnect Internet accounts for copyright infringement, preliminary findings about the effects of the law have found that it has not been successful in deterring copyright infringement. Researchers at the University of Rennes found that the overall piracy by French Internet users has actually increased. There are a number of matters in this bill left to regulation—in particular, the costs payable per infringement and how those costs will be recovered. Public consultation needs to be undertaken on this. It must be a priority for this Government to clarify the relationship of the Anti-Counterfeiting Trade Agreement to New Zealand’s copyright laws. The digital copyright aspects of the agreement risk introducing enforcement practices and restrictions on content that otherwise balance existing copyright via the back door.

Finally, enacting this bill will not address the fundamental issue of copyright infringement and unauthorised file-sharing. The digital age has meant that corporations that have traditionally controlled and managed the distribution of creative content are losing control of that distribution. As I said, we cannot put that genie back in the bottle; it is widespread. I challenge any members of this House to say that they do not have a family member or friend who engages in illegal peer-to-peer file-sharing. Let me give members an example. The Academy Award best picture winner, The Hurt Locker, was released in United States theatres on 26 June last year, and on DVD on 12 January this year. It was nominated for an Oscar, and last month it won the Oscar for Best Picture. This all occurred before the movie was available legally in New Zealand. In fact, it took another month before it was released into cinemas in New Zealand, on 1 April. Surely an industry that claims to be adapting and satisfying consumer demand would have released the movie sooner. Just to illustrate this point, a copy of the movie was released on the underground pirate scene in January 2009. In this digital day and age, what does the industry expect people will do?

The conventional wisdom of traditional rights holders, such as the big distribution companies and the music and movie industries, holds that withdrawing Internet access for persistent copyright infringers will protect the revenue and livelihoods of musicians and artists. Yet the prevalence of illegal file-sharing across the world is the result of the market’s inability to control and distribute content, rather than the infringing behaviour of hundreds of thousands of New Zealanders and millions of people across the globe.

However, Labour believes that the ability of copyright holders to protect their rights in the digital age is a fundamental issue that needs to be addressed, given the transformations that have occurred in technology and the inability of the existing laws to respond adequately. The Government should invest in enabling New Zealand content creators to use new technologies to promote and distribute their work to national and international audiences in such a way that allows them to build profitable and sustainable businesses. That means supporting new business models instead of propping up old, outdated ones. One such online business using a different model is www.cdbaby.com, which is the largest indie music producer in the world. I have been advised that in a traditional record or distribution deal, musicians make only about $1 or $2 an album. When selling through www.cdbaby.com, musicians make $6 to $12 per album and get paid weekly. The people really losing out from these advances in technology are the large monopolistic corporations whose business models, based on outdated technology, are being disruptive. A more Draconian law risks locking in those obsolete business models, centralising control in a few corporations, and restricting artists’ ability to be entrepreneurial and innovative in how they promote themselves and profit from their work.

Although Labour supports sending this bill to select committee, we do so with some qualifications. We believe that the Government should be an enabler of creativity in this country, not just an inhibitor. We look forward to the debate on these issues.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : I rise to support the first reading of the Copyright (Infringing File Sharing) Amendment Bill. I acknowledge the Minister of Justice for bringing the bill to the House, and for taking the time and consideration to consult stakeholders in the industry who are affected. I believe he is bringing in the right type of solution for the issues involved.

As has been stated, the Copyright (Infringing File Sharing) Amendment Bill amends the Copyright Act 1994 to provide new enforcement measures against the unauthorised sharing of copyright material via the Internet. Infringement of copyright, as has already been stated in the House, is facilitated by digital technologies. It is cheap to produce multiple copies that are indistinguishable from the original, and the Internet speeds up distribution. The magnitude of the problem makes it too difficult for some rights-holders to eliminate it, and the phenomenon is increasing despite existing regimes dealing with copyright infringement.

As an example, an average of 200,000 movie and television files are shared each month in this country, according to the New Zealand Federation Against Copyright Theft (NZFACT). A NZFACT survey found that two in five young people have downloaded illegal copies of movies for free, and young men and those aged 15 to 17 are more likely to be the offenders. Another survey, commissioned by TelstraClear of more than 1,000 New Zealand Internet users aged 18 to 70, found that every respondent—every respondent—had downloaded copyrighted material at least once in the year to June 2009.

Many people consider that sharing and downloading is harmless, but my contention is that it impacts on creative industries, the New Zealand economy, and the reputation of our country in foreign countries. The recording industry in New Zealand is obviously one of the creative industries most affected by illegal downloading. It is expected that similar large-scale effects will also damage the screen sector as broadband availability increases due to the Government’s programme around broadband.

This bill will repeal section 92A of the principal Act and replaces it with a three-notice regime, which is intended to deter illegal file-sharing. This amendment puts in place a fair and balanced process to deal with online copyright infringements occurring via file sharing. The major feature is the three-notice process, which educates the public about illegal file-sharing and provides effective methods for copyright owners to enforce their copyright. The bill also ensures that file sharers are given adequate warnings that unauthorised sharing of copyright works is illegal. I repeat that unauthorised sharing of copyright works is illegal. The bill also extends the jurisdiction of the Copyright Tribunal, enabling it to hear complaints and award penalties of up to $15,000, based on the amount of damage sustained by the copyright owner.

I look forward to discussing this bill with my colleagues on the Commerce Committee and I support this bill in its first reading. Thank you.

CHARLES CHAUVEL (Labour) : The Copyright (Infringing File Sharing) Amendment Bill will repeal section 92A of the Copyright Act, which was introduced in the Copyright (New Technologies) Amendment Act 2008. In so doing, it aims to deter illegal file-sharing, holding individual account holders liable for their actions rather than Internet service providers, and compensating copyright holders for damages caused by illegal file-sharing. At the same time, it aims to educate the public about the problems caused by such copyright infringements.

Labour holds in high regard the right of individuals to have their innovative creations, whether they are in the form of music, films, or other entertainments, protected. Because of the importance that we place on protecting intellectual property, we will do our bit to curb illegal file-sharing by supporting the referral of the bill to the Commerce Committee. But our support for the bill does come with several reservations, particularly around the issue of the suspension of Internet users’ access, the amount of detail in the bill that is left to regulation, and the bill’s general lack of clarity in certain circumstances.

When Labour was last in Government, we recognised the seriousness of the issue of Internet piracy by implementing section 92A of the current Act, which requires Internet service providers to suspend the accounts of repeat file-sharing offenders. This was done, as I think has been recognised across the House, with the best of intentions, just as I believe that it was supported by the National Party on the same basis. Clearly, after widespread public discussion, the House has come to the realisation that that section is particularly problematic. It was referred to on the Net as the “guilt upon accusation”, law because it gave the potential for Internet users to have their access suspended without due process.

This bill seeks to remedy this unjust situation by implementing a “three strikes” system, whereby three notices will be given before an account is suspended.

David Garrett: Very sound!

CHARLES CHAUVEL: Perhaps this is one occasion where “three strikes” might make a tiny iota of sense, although not in any other public policy area, I say to Mr Garrett. Although this process, hopefully, will give fair time in which to change the behaviour, along with the opportunity for offenders to learn about the damage caused by illegal file-sharing, we still have the issue of suspension, which is problematic. In our view the regime is generally more equitable, and we do look forward to hearing what the public have to say on the provisions at the Commerce Committee.

GARETH HUGHES (Green) : Kia ora, Mr Deputy Speaker. I am happy to take a call in the first reading of the Copyright (Infringing File Sharing) Amendment Bill. File sharing is a fact of modern life. Internet service providers say that sometimes at night 90 percent of Internet traffic is illegal file-sharing. The Internet has built connections and increased global communications as significantly, if not more, than the telegraph. It has contributed to more collaborative ways of working. The Internet has revolutionised business and the global economy. The Internet has unleashed fantastic creativity, from the arts to academia and business.

However, in many cases making a business out of creativity is not a viable proposition, because of illegal file-sharing. The Green Party supports this bill at its first reading because although it might not solve the problem, it will play a part in the solution and send a good message that what is happening is illegal and is damaging New Zealand creatives and Internet entrepreneurs. This bill is an affirmation of New Zealand creativity. At the moment, essentially, the only sector making money out of Kiwi musicians’ and Kiwi film makers’ hard work is Internet service providers. If we want a growing, viable, and exciting Kiwi music and movie industry, we have to protect musicians’ and film makers’ rights to make a living off their work. A whole generation has grown up not paying for film or music, but this is not sustainable.

The Internet has created a new digital economy. This bill will help entrepreneurs to maximise the Internet as a means of making their living. Other countries that have implemented file-sharing protection along these lines, such as Sweden, have seen legal music services increase dramatically. Companies that once were not viable now are. New technologies like the Internet mean we need laws that allow new business models to develop and flourish. This bill is a first step in that direction and it will not be the last before this House.

This bill amends the Copyright Act 1994 to provide new enforcement measures against the unauthorised sharing of copyright material via the Internet. It repeals section 92A of the Act, which was not brought into force but would have required Internet service providers to adopt a policy providing for the termination of repeat infringers’ Internet accounts. In summary, it cleans up the mess that was made by the previous Government regarding section 92A. This bill goes incredibly far towards the demands set by the Creative Freedom Foundation and others in response to the Draconian section 92A, which was put forward during the last parliamentary term. It repeals the existing section 92A and replaces it with a notice system that copyright holders can then use to go to a tribunal and ask for penalties for repeated copyright infringement. The Green Party was the only party to oppose section 92A at every stage in the House and to offer genuine amendments to fix it. This bill removes the onerous definition of “Internet service provider” and the awkward way they were being made into police, jury, judge, and executioner, and all at their own cost. On balance, our concerns have been conscientiously addressed and the Minister of Justice, Simon Power, is to be congratulated.

We still have some niggles with some of the definitions and with the service cut-off provision, which many think is pointless. There are also issues about how open wireless points can be handled, and the kinds and level of fines to be issued within the statutory limit. We were also interested in looking at the termination issue. Even if infringers have their connection terminated, they can still switch providers. I believe questions can be rightfully asked, such as those asked by Bronwyn Holloway-Smith of the Creative Freedom Foundation, about whether the Internet is a core, vital public service. We would not terminate someone’s right to post a letter. We look forward to looking at this bill in detail at the select committee and the Greens will be supporting it.

This bill is an essential part of protecting Kiwi creatives and it strikes a sensible balance between Internet service providers, copyright holders, and file sharers. We still have some way to go to change the culture of file sharing in New Zealand. A survey on movie file-sharing amongst young New Zealanders commissioned by the New Zealand Federation Against Copyright Theft found that a notice from their Internet service providers would be enough to stop 71 percent of young people from further accessing illegal copies of movies. Along with the notices and potential financial penalties outlined in this bill, education is important. My generation has grown up with a culture of file sharing. I probably have watched illegally downloaded material and shared files that breach copyright. In many cases, people simply are not aware that what they are doing is wrong or that the material they are accessing has been provided through illegal means.

Unlike the previous amendment bill, this bill has widespread public support from the Creative Freedom Foundation, InternetNZ, the Library and Information Association of New Zealand, and the Australasian Performing Right Association. The Australasian Performing Right Association speaks for our Kiwi creatives. It says that it is not its intention to cut people off from the Internet; rather, it is to continue to allow creatives to make a living from their skills, knowledge, and energy. Sure, musicians can make money from performing live on the street, as they always have and always will, but they cannot be reduced to this as their only source of income, like some 19th century street musician. Screen Directors Guild executive director Anna Cahill has said: “New Zealand artists and audiences stand to lose unless the government strengthens the proposal to build a framework for stopping online copyright infringement.”

Digital copyright protection is crucial for new digital business models to be successful. The bottom line is that the creators should be paid if they want, but Internet users also need protection and balance. The fact is that file sharing and downloading copyright files is now a social norm. Previously, the copyright enforcement agency required a court order to obtain the identity of the infringer from that infringer’s Internet service provider. The costs of doing so often outweighed the possible damage or did not justify the effort.

Over the course of the Internet’s existence in New Zealand we have missed a great opportunity to protect digital copyright and establish different social norms in this country. This has to be taken into account. It cannot be assumed that all infringers are brazen criminals trying to steal creatives’ work for financial gain. Often it is one’s brother, cousin, or boss. There are genuine repeat offenders who are doing significant damage to our creatives, and in many cases arguably deserve the potential $15,000 fine. These people know exactly what they are doing, they are aware of the illegality of it, and they are motivated by a sense of currently being able to get away with it.

We need some clarity around the fines schedule because it is unclear what level the fines will be. For example, the $15,000 maximum fine is modelled on the same limit as the disputes tribunal, and at present we all know that the amount will be based on damage to the copyright owner. But in practice how much will the fine be for a movie or an album? The public must be given some real figures. If the purpose of parading a maximum $15,000 fine is to scare the public into compliance then the education incentive of this bill will be lost.

In summary, the Green Party looks forward to submissions at the select committee. We will be voting for this bill at its first reading. Kia ora.

RAHUI KATENE (Māori Party—Te Tai Tonga) : There is something about the “three strikes” approach that this Government cannot seem to get enough of. In this bill the “three strikes” rule is applied to illegal file-sharing. In the Māori Party all of us have children or mokopuna in our lives who would think nothing of sharing music, video, and game files over computer networks such as the Internet. In my day we might have borrowed cassettes or LPs—for those members who are too young to know, they are long-playing records.

Michael Woodhouse: It’s a round vinyl thing, Gareth.

RAHUI KATENE: Yes. We could borrow those from our mates, but today’s kids are accessing the latest hits online.

The amendment we are voting on today puts in place a fair and balanced process to deal with online copyright infringements, which are occurring via the process of file sharing. The process described is fair precisely because of this “three strikes” rule. The three-notice process is to give sufficient warning to file sharers that unauthorised sharing of copyright works is illegal. But the bill does not restrict itself just to warnings; it also puts in place—as we have been seeing more and more of, with the standard Government approach—an almost predictable series of sanctions and punishments.

The Copyright Tribunal will have an extended jurisdiction to enable it to hear complaints and award penalties of up to $15,000. The amount will be based on the amount of damage sustained by the copyright owner. The bill also enables copyright owners to seek the suspension of Internet accounts through the District Court for up to 6 months. Lest I give the impression of unreasonableness, I hasten to suggest that there is some leniency around time frames. In essence, account holders will have an opportunity to address illegal file-sharing activity occurring on their Internet connection before enforcement action is taken. The timing is also extended to challenge notices and may request hearings at the Copyright Tribunal to contest infringement claims.

We believe that this bill will be welcomed by the music industry as a weapon in the battle against online piracy. There are huge issues associated with the lack of intellectual property rights, not to mention the significant declines in revenue that the copyright owner would otherwise be entitled to. The extent of downloading by individuals is so severe that copyright owners claim that it is having a substantial economic impact on their businesses.

The interesting thing for the Māori Party will be to see how the range of measures introduced in this bill will be received. It is, of course, well known that the previous consultation on section 92A of the Act was widely condemned. One of those criticisms was that the legislation had no process allowing challenged Internet users to rebut a copyright owner’s allegations. Under the new law, file downloaders who feel they have been wrongly penalised will be able to take their case to the Copyright Tribunal for free.

At the end of the day, the real key to the success of this bill will be in the way in which it is received by the people. We are told the bill is the result of extensive consultation with stakeholders. Time will tell whether that consultation has produced the positive results sought. To this end we will support this bill at the first reading, to enable the kōrero to be heard.

KATRINA SHANKS (National) : It is my pleasure to take a call on the Copyright (Infringing File Sharing) Amendment Bill today. I acknowledge the work that the Minister has put into amending section 92A of the copyright legislation, and the solutions he has found. It is interesting that we are in a society now where digital technology is the norm, where information technology growth is the norm, where many houses have computers, and where our youth, from as young as 3, 4, and 5, can go on to computers and work them. They have access to the Internet. They actually go on to the Internet and on to Facebook. There are these amazingly interactive games on Facebook—

Grant Robertson: FarmVille?

KATRINA SHANKS: —even FarmVille, which is a fantastic game. I have to say that all my children are FarmVille people, as well, and there is nothing like virtual farming to really get in touch with one’s constituents. We are in an era now where the Internet is the norm.

Michael Woodhouse: You are not in a rural constituency.

KATRINA SHANKS: No, I am not, but I do have some rural constituents in Ōhāriu.

Grant Robertson: Virtual or real?

KATRINA SHANKS: Virtual and real. We are in a society now where it is easy for people to talk to each and to share information online, and unfortunately part of that is peer-to-peer file sharing. Many people, especially those of the younger generation, think it is normal to share this information. They do not realise that there is a value on what they are sharing. They just share it very freely between each other as if it is the norm and there is nothing wrong with it. In fact, we know that over 2 million movie and TV files are shared every single year because the practice is considered normal and harmless.

But it is not harmless—in fact, there is great harm to those in the creative industries, not just globally but, more important, in New Zealand. New Zealand has a very small market in which producers can sell their local home-grown produce. The problem hits both our music and screen sectors. We have an incredibly, amazingly talented screen sector. We have incredibly talented producers; Ainslie Gardiner is an example. She is one of New Zealand’s most successful producers. She produced Boy, which is the No. 1 movie at the moment after 4 weeks. It is only fair that such people get recognition for the work they do, that they get financial recognition for that, as well, and that their work is not taken and shared for free. Production does cost money, and people do make a living off these sectors. It was interesting that in New Zealand a few years ago we had a movie called Sione’s Wedding. It was leaked out, shared, and copied, and the producers estimated that that cost them $1 million in revenue. That is a lot of money for producers in New Zealand. So it is important that when we look at these problems, we look at them so that we find solutions that are fair for those who are producing, and for those who are users as well.

There was an outcry last year when section 92A, inserted by the Copyright (New Technologies) Amendment Act 2008 from the previous Government, was to be put in place. The outcry was basically over the termination of Internet accounts without evidence of misuse or users’ opportunity to provide a defence. The outcry was “How can you take my IP address off me? How can you do that without me being able to defend myself, and without you proving that it was actually me who was downloading, copying, and passing on?”. So last year our Government took a breath, stepped back, and did a review of section 92A. We put it out to public consultation. We looked at the key concern, the concern of the proposal to terminate Internet accounts.

It is interesting that two other countries have something in place already in terms of this matter. One is France, which terminates an IP address and has Internet suspension or a fine on the third offence, and there is Britain, which is going through the process now. It is consulting with its people and its Internet users as to what they think is fair and, on the other side, with its producers on what they think is fair, as well.

We have gone out and consulted with the public, and now we have this bill before the House. The big part of this bill is the three-notice regime intended to deter illegal file sharing. The bill is doing that by saying that Internet users will be given the opportunity to make that mistake once, twice, or three times, but after that stage we will take some action on it. There will be a reasonable time period before the enforcement takes place. The time frames will be prescribed, so that account holders will have an opportunity to address illegal file-sharing activity. A great deal of work has gone into finding a fair, effective, and credible process for the enforcement of copyright against illegal peer-to-peer file sharing. I support this bill in the House.

GRANT ROBERTSON (Labour—Wellington Central) : It is a pleasure to rise and speak on this bill, the Copyright (Infringing File Sharing) Amendment Bill, and I will join in the love fest when it comes to Simon Power and his role in bringing this bill to the House. I think that the Minister deserves credit for having drawn together the work that has gone into bringing this bill forward.

As other speakers have noted, this bill has widespread support among those who are interested in this issue. That says quite something, because it was clear during the debate on section 92A of the Copyright Act that there was a great diversity of opinion, and some of it was very strongly expressed. I will briefly go back to section 92A. Although that section became extremely controversial, it was based on the belief that the issue of addressing copyright infringement and copyright abuse is important and that there needed to be serious consequences for those who infringe copyright. The section was also based on the view that we could come to a negotiated solution on this issue.

On that note, I credit the role of the Telecommunication Carriers Forum and Ralph Chivers from that group. He is no longer with it; he works for another large telecommunications organisation now. Mr Chivers and his group attempted to bring together some consensus on this issue.

A lot of people were involved in that process—the rights holders, the Internet service providers, and the consumer representatives—and significant progress was made towards a negotiated solution. What happened, however, was that people became very concerned, obviously, about the issue of the termination of accounts, and in the end it was not possible to come to an agreement. Taken away from the pressure of that negotiation, taken out and put into a different process—which, as I said, Mr Power has led—a process has now been agreed on, and that is a good thing.

But I think the goal of section 92A is the goal that people have been speaking about today. People right across New Zealand want to make sure that our artists and musicians have the ability to make money from their craft, and to know that a regime is in place whereby people who abuse that will be brought to account. On the other side of the coin, those who use the Internet—which is, as many people have said today, a brave new world that we cannot control in the way that we may have been able to control other platforms in the past—need to be able to know that their rights will be protected, as well. I think credit is due to all of the stakeholders who have been involved in this process up until now.

A number of people have already spoken about what the bill does. I think it is important to note that there is a “three strikes”, or three warnings, process, which includes a detection notice followed by a warning notice, should the Internet subscriber be accused of infringing copyright again. I think that those two notices are very important, because one of the most important parts of this bill is the notion of educating people who are involved in illegal file-sharing. It is quite clear—Mr Gareth Hughes and others have spoken about it—that a whole generation of people who do this are not even aware that what they are doing is illegal. There is a generation of people for whom, if something is on the Internet, it is theirs. They think that if it is there, then they can use it. We need to work very hard to build up the education of, particularly, people of a younger age about the fact that that material belongs to somebody. It ensures the livelihood of our musicians and artists. When those Internet subscribers are going after and trying to find the work of the people whose work they appreciate so much, it is important that they understand that point. I think that a three-stage process is a useful way of doing that.

The third stage of the process is the enforcement notice, which, as others have said, could see people being fined up to $15,000 or having their Internet account disconnected for up to 6 months. The process now also includes the ability for those who have been accused and who feel that that charge is unjust to go to the Copyright Tribunal at no cost. That is important as well. That is the second set of rights I was talking about earlier. We need to protect the rights of not only those who hold the copyright but also those who perhaps feel that they have been unfairly targeted. I think that is a good balance.

As previous Labour speakers have said, our point of view is that we have concerns about the disconnection provisions. I will not go back into all the details of those concerns, but I think that there will be a number of submissions on that matter at the select committee. People are particularly concerned about what it would mean. My particular concern about it is that it will not work, in terms of discouraging people from illegal file-sharing, because, as a number of other speakers have noted, people will simply go and sign up to another account. Many people have multiple accounts already. That is simply the nature of how people use and access the Internet.

I think we want to work towards mechanisms that will actually work in terms of discouraging people from illegal file-sharing. I think that education notices, and a process where people will see the consequences coming towards them, will stop people at different stages of that process. The reality is that some people, and perhaps some organisations, will not stop, because this sort of file sharing is what they do. It is illegal, it is criminal activity, and we will have to continue to look for and follow up those people in other ways.

What I want to make clear and to lay down on the record is Labour’s support for the music and creative industries in New Zealand. I think that anyone looking back on the record of the fifth Labour Government would have to acknowledge that Labour did a great deal to enhance the ability of musicians and artists in New Zealand to make a living. Last night we had the 21st birthday function for New Zealand On Air in the Banquet Hall of the Beehive, and the graph went up on the screen of the amount of New Zealand music being played on commercial radio. That amount is 20 percent, and it has been around the 20 percent figure consistently for the last few years. That is a direct result of the code of practice that was brought in between commercial radio and the Government under the fifth Labour Government. That was an important part of ensuring that that music is heard.

Also important was the creation of the New Zealand Music Industry Commission, which has helped to promote New Zealand musicians overseas. It has given New Zealand musicians the ability to break into new markets and to make sure that their product is heard across the world. The ongoing work of the cultural recovery package that Helen Clark oversaw when it came in has also been important. Those initiatives have all contributed to New Zealand musicians and artists being able to make their way in the world.

Labour stands beside New Zealand musicians and artists. In terms of copyright, we stand beside them in acknowledging that copyright is the means by which creators such as composers and songwriters make a living from their work. We will stand up and protect that right and the enforcement of that right. The legislation that is in front of us today will help with that. We certainly have concerns about the legislation, but it will help with that. What we have to do is to provide a mechanism that works—a mechanism that will discourage people from file sharing. We need to ensure that we work on the measures in this bill that will work, and, as I say, we have concerns about whether the disconnection process will actually work.

I will not delay the House much more. I note that we have a couple of other concerns about the bill. In particular, we are concerned about the fact that many of the details within this bill are left to regulations. I draw members’ attention to Part 2, particularly the provisions of clause 10, “Regulations”. There is a lot of confusion about what the fee that will be payable by copyright owners for applications to the tribunal will be, and we need to ensure that we get a lot more specificity on that part of the bill during the select committee process. We want to make sure that there is clarity.

I think that a good job has been done by the Minister to ensure that we have a bill we can discuss. The select committee process is now the chance for all those involved—rights holders, Internet service providers, and consumers—to put down any further concerns they have, and to ensure that we have a law that is workable for everyone, but one that, in particular, protects the ability of our musicians and artists to make a living from their work. That is the issue that I personally have the most interest in, and those are the people whom I will be standing up for as this bill goes through the House.

MELISSA LEE (National) : I rise in support of this first reading of the Copyright (Infringing File Sharing) Amendment Bill. It is lovely to see that there is multiparty support for this bill.

Advancement in technology has made breaking the law easy. I mean that online copyright infringement is a problem for everyone. But I take this opportunity to speak for the creative industry, which I came from prior to entering Parliament. Without wanting to repeat some of the things that previous speakers have said, I tell the House that the creative industry has experienced a significant decline in revenue as file sharing has become prevalent. It is cheap to produce multiple copies of programmes or movies, copies that are indistinguishable from the original. Of course, the Internet speeds up the process and distribution. It was said previously by my colleague Peseta Sam Lotu-Iiga that 200,000 movies and television files are shared each month in this country—and I believe that that amounts to more than 2 million in a year—according to the New Zealand Federation Against Copyright Theft. I have heard stories of people who have travelled overseas and returned home with dozens of pirated DVDs. I have heard stories of people downloading movies, yet to be released in New Zealand, from overseas websites, as the previous speaker from the Opposition has also said.

I am appalled by this behaviour, but with the advent of faster broadband I fear the problem may just continue to grow unless we do something about it. As a screenwriter in my previous life, knowing how long it takes to develop a script and to screen it, and the time and effort it takes for a film to be made, I know that this kind of theft is something that we need to stop. I fear for the cultural industries.

The recording industry is another industry that has been affected by illegal downloading. As an example of how prevalent and blasé people have become about this illegal downloading, let me share a story that I heard last night. I seem to have been at the same event that Grant Robertson was at, in the Banquet Hall last night, at which one of my favourite bands, Opshop, played. During a conversation with the Opshop boys I admitted that I had at least three copies of their CDs, which I had bought because I liked them so much. They then told me that they have had people come up to them and tell them, to their face, that they had burnt copies of their CDs. Opshop could only say to them that if they so much liked the CDs that had been burnt, they could actually just go and buy them. People are so blasé that they will actually admit to the people who own the copyright that they have burnt or illegal copies of their work. Illegal copying of content happens everywhere, and we can expect the problem to be an epidemic in this country. I am sure that everyone in this Parliament will have heard a piece of music or seen a movie—inadvertently, mind you—that has been illegally copied or downloaded.

The previous Labour Government tried to fix this problem, but section 92A of the copyright legislation caused a public outcry. It resulted in Internet users launching the Internet Blackout week between 16-23 February last year. The campaign also drew support from famous actors from around the world, including Stephen Fry, whose tweet read: “I’m blacked out: Stand up against ‘Guilt Upon Accusation’ for New Zealand”. This came about because Labour’s section 92A of the legislation would have led to the termination of an Internet account without evidence or opportunity for a user to provide a defence. As a result, the National-led Government did not bring section 92A into force, and ordered a review; this bill is the result of that process. The bill puts the mistake of the original section 92A, passed by the previous Labour Government, behind us, and allows for a workable regime that will reduce copyright infringement in New Zealand.

I take this opportunity to acknowledge the Minister, the Hon Simon Power, for bringing this bill to the House for consideration, and for taking the time to consult with stakeholders. I look forward to the submissions through the select committee process. Thank you.

RAYMOND HUO (Labour) : Winston Churchill once said that out of intense complexities intense simplicities emerge. Unfortunately, what that wise man said does not apply to the Copyright (Infringing File Sharing) Amendment Bill. The more I read the bill, the more questions I have. My colleagues said earlier that Labour supports the bill being referred to the Commerce Committee but that we have several reservations. In particular, the definition of “Internet service provider”—ISP—needs to be clarified. We disagree with suspending infringers’ access to the Internet, for two reasons: firstly, it does not work, because infringers can simply sign up with a different Internet service provider if they are suspended; and, secondly, as many experts in this area have argued, it seriously and unjustifiably impinges on freedom of expression and freedom of assembly. Many of the details are left to regulation—for example, the amount of the costs payable per infringement. Will it be the market value of a song on iTunes, for example, or will punitive damages be available? Further, it is unclear what impact the Anti-Counterfeiting Trade Agreement will have on the bill.

I reiterate that Labour strongly believes that those people who create music, films, and other entertainment should have their work protected from piracy. It is crucial that we attempt to curtail illegal peer-to-peer file-sharing. This bill will send a powerful message to our creative industries that we value what they do, that we legislators want to protect what they do, and that we do not believe in censoring the Internet, but we are responding to genuine concerns. While in Government, Labour tried to address the growing problem of Internet piracy by requiring Internet service providers to police illegal downloading and to have a policy for terminating the accounts of repeat offenders, hence the well-debated section 92A of the current Copyright Act. We have considered that section 92A was problematic, and we have addressed the issues by meeting with stakeholders and pressing the Government to take another look at the legislation.

Businesses that represent artists have lost control of the distribution of creative content. The market has failed, and legislation is needed to block the flow of peer-to-peer file-sharing that is undermining the entertainment industry. Labour acknowledges that the requirement for stakeholders to develop a code of practice detailing when Internet accounts ought to be terminated was unworkable.

Two important cases are very helpful here. The first one is iiNet v Australian Federation against Copyright Theft, where the Australian High Court ruled in favour of the defendant, the Internet service provider. The issue in that case was whether the fact that the Internet service provider’s customers were sharing unlicensed copies of films and TV shows using the Internet service provider’s Internet connections meant that the Internet service provider had responsibility to stop them from doing so. The plaintiff said that if the Internet service provider failed to do so, it effectively condoned that infringement and was liable itself. The judge found against the plaintiff on most counts. The judge also found reasonable the Internet service provider’s policy of not terminating its customers’ Internet connections just because it had received complaints from copyright owners. The second case relates to the YouTube website, where users can upload copyright-infringing material without the knowledge of the site’s owners. The video-sharing site, which is owned by Google and is subject to a US$1 billion lawsuit by the US media giant Viacom, argues that it cannot screen every video that is uploaded to the site to check whether it infringes copyright. Given the large amount of material hosted on that site, however, the whole thing could potentially be blocked by the High Court.

My former partner from Brookfields Lawyers, Mr John Ferner, stated: “For many accommodation and other tourism service providers, facilities which give their customers private and direct access to the net are simply part of the service. Up until now these businesses have not needed to concern themselves too much about what their customers may be up to when using these services but this is about to change.”

The bill intends to put in place a fair and balanced process to deal with online copyright infringement by unauthorised file-sharing. It replaces a scheme that was delayed thanks to a barrage of criticism fearful that it could have resulted in many unwarranted disconnections from the Net. To conclude, Labour will support this bill going to the select committee. I look forward to the submissions and to robust debates at the select committee. Thank you.

MICHAEL WOODHOUSE (National) : Like the member Grant Robertson, I was in attendance at the 21st birthday of NZ On Air last night. It was indeed a celebration of New Zealand music, video, and other media.

As Mr Robertson rightly pointed out, the amount of New Zealand music played on commercial radio has increased from about 2 percent 21 years ago to over 20 percent now, which is a huge success. But he did not mention that the chief executive last night referred to the fact that NZ On Air and the products that are produced are very much online. The member Ms Katene referred to the illegal copying of vinyl on to cassettes as being the way that our generation copied music. I suggest that that was a hand grenade thrown at copyright law, whereas the Internet provides a nuclear explosion—such is the difference in scale and opportunity for illegally copying. So the question is whether section 92A of the Copyright (New Technologies) Amendment Act was the nuclear deterrent.

One of the features of this House is the fact that Labour has fiercely defended almost all of the legislation it passed in the 9 years it was in office, with a couple of glaring exceptions. I think that the Electoral Finance Act was an example of some mea culpa, and in particular David Parker acknowledged that it was not the previous Labour’s Government’s finest moment. I think that Labour’s copyright legislation is another example.

Credit is due to Clare Curran for bringing this matter to the attention of the House on behalf of her party. Every member of this House was aware of the wave of opposition to the provision. That opposition did not start just at the election; it was very clear that section 92A was not going to work in the way that it was intended. It is a shame that when members opposite were in Government they did not listen a little more carefully to submitters on that point. In fact, the architect of this bill, Judith Tizard, is on record as saying that section 92A was “deliberately vague”. Well, I suggest that vague law makes bad law. In fact, it was not vague. Those people who were going to be affected by the legislation knew exactly how it would affect them.

Ms Curran also mentioned something in her first reading call today that I must pick up on. She continued the Labour Party’s longstanding habit of kicking the victim by implying that because large media organisations are large, the harm done to them is somehow mitigated. She accused those organisations of working to outdated business models. Well, I simply reject that. Hang on, if this business model is so outdated, why is the legislation affecting those large media organisations more than anybody else?

I will touch on what Mr Hughes said about the education benefit being lost because of the punitive nature of the $15,000 fine. I respectfully disagree with that, and Mr Robertson has commented on it, as well. There are three reasons why I disagree. Firstly, there is a plethora of information out there about video and DVD piracy and Internet piracy. I do not think that it is acceptable now for Internet users to say they did not know that what they were doing was wrong. Secondly, in the absence of some form of sanction, Internet and DVD piracy messages will simply fall on deaf ears. And, thirdly, the “three strikes” process that Ms Katene referred to disparagingly does not actually consist of three strikes; it consists of three notices. The process is designed to educate the public about illegal file-sharing, and provides effective methods for copyright owners to enforce their copyright. Users are given adequate warnings. If, in the face of that, the people who participate in illegal file-sharing ignore those warnings, then the punishments need to be severe.

Such people are certainly hurting our entertainment industry and the fantastic young artists who are developing their product with the assistance of the Government through NZ On Air. For that reason, I strongly support the bill going to the Commerce Committee. I realise that some questions have been raised, and the select committee is an appropriate place within which they should be heard. Thank you.

• Bill read a first time.

• Bill referred to the Commerce Committee.