New Zealand’s Ongoing Copyright Review: What Does the Change in Objectives Signal?

by Hugh Stephens

New Zealand’s Copyright Act review, a long time in coming, has been underway now for more than a year. I commented on the review when it was first launched, noting the heavy emphasis on evidence-based economic impact in the request for submissions. The process started with an Issues Paper released by the Ministry of Business, Industry and Employment (MBIE) in November of 2018, outlining the issues and objectives as interpreted by the Ministry. It was a very comprehensive document that posed 97 questions related to copyright. (Couldn’t they have added three more to round it out at an even one hundred?). Public consultations were also held.

The Process

The Issues Paper, after public input, was to be followed by an Options Paper that would set out options and recommendations and be subject to the same type of public consultation. Then, after Cabinet consultation, a draft Bill would be presented that would be reviewed by a Parliamentary Committee and finally, legislation would be enacted. This process laid out in November of 2018 is the standard path to legislation. Then, rather unexpectedly, late last year a new step was introduced and a revised Objectives Paper, “MBIE’s Approach to Policy Development,” was released.

Why revise the objectives of the review halfway through the process? MBIE had sought input on the objectives published in the original Issues Paper a year earlier (as well as on the issues themselves), so this new document was apparently a response to feedback received. However, despite submissions being submitted on a wide range of topics, only the objectives of the review were changed. In the new paper, the two main objectives are combined, some additional words are added and a new objective is formulated. The paper also elaborates at some length on the thinking behind MBIE’s approach to copyright and “explains” the rationale for the changes.

On the one hand, MBIE can be congratulated for a high degree of transparency; on the other significantly modifying the objectives before any policy options have been brought forward is strange and, from a copyright perspective, worrisome. Moreover there are elements of MBIE’s thinking revealed by the document that are cause for concern. The objectives have been changed in significant ways (with no option for further public input), risking an a priori tilting of the playing field when it comes to developing policy recommendations.

Let’s try to unpack all this and find out what is going on.

Original Objectives

The original objectives, which were the core of the review’s terms of reference, stated that the purpose of the review was to;

1. Provide incentives for the creation and dissemination of works, where copyright is the most efficient mechanism to do so, (and)
2. Permit reasonable access to works for use, adaption and consumption, where exceptions to exclusive rights are likely to have net benefits for New Zealand

There were others such as providing clarity, facilitating competition, maintaining respect for the law, meeting New Zealand’s international obligations and being consistent with the Treaty of Waitangi. These have now been dropped as copyright objectives as they are correctly considered to be part of normal “government expectations” for any policy review, and not specific to copyright.

Revised Objectives

The revised objectives state that the purpose of copyright policy should be to (with changes in bold);

1. Promote the supply of copyright works that serve the cultural, economic and social interests of New Zealand by:
2. providing incentives for the creation and dissemination of works, where copyright is the most effective mechanism to do so,
3. permitting reasonable access to works for use, modification, self-expression, adaptation and consumption, where exceptions to exclusive rights are likely to have a net benefit for New Zealand.

 

1. Support creators to obtain fair recognition for their creative effort, exercise a reasonable degree of control over the integrity of their work, and obtain a fair proportion of any revenue attributable to their creative effort.”

Impact of the Changes

Where are the major differences and do these revised objectives shift the focus of the review? Although the words are few, it seems to me that they do, quite significantly.

First, instead of incentives for creation of works being a key, indeed the primary, objective, this is now subsumed under the issue of “supply” of copyright works (“that serve the cultural, economic and social interests of New Zealand”—are there copyright works that don’t do this?). Under “supply” there are two equal components, namely creation of works and access to works that have been created.

Access is all about non-compensated use through exceptions to copyright (there is no mention of licensing as one component of access). A variety of purposes on which exceptions should be based are put forward; to use the work, to modify and adapt it, to consume it and for self-expression. The addition of further purposes to justify exceptions is a widening of the original objectives and another cause for concern. Indeed, this is all about exceptions, which the paper refers to as “circuit-breakers” (breaking the so-called exclusive rights “monopoly” of copyright). This is a false argument. Copyright only protects the expression of an idea, not the idea itself, and the monopoly argument holds no water. For example, while a Director may choose not to licence a particular piece of music for a movie that he or she is making, there are literally thousands of alternatives. Where is the monopoly?

Human Rights

The paper goes into a long discussion of human rights instruments as the basis for allowing access principles to override copyright in a number of situation. However, it is hard to understand how the existence of copyright impedes any of the rights mentioned. On the contrary, copyright enables and expands access to cultural life, education and the arts.

Incentivizing Creativity

There is more. MBIE claims that copyright is not necessarily the best means to incentivize and promote the creation and dissemination of works. This is allegedly because copyright is applied on a national treatment basis, and thus does not allow preferential treatment for New Zealand works. Universality is precisely the point of copyright, to treat all authors/creators on an equal basis so as to promote greater creativity and equity globally. It is wrong to think that protecting copyright universally does not benefit New Zealand consumers. It sounds almost like MBIE regrets that it cannot go back to pre-Berne Convention days when governments protected only their own nationals, leading to widespread international piracy. Government subsidies and grants are advanced as an alternate solution by MBIE, but most creators don’t want government hand-outs. They want their rights respected and their work protected.

The paper also argues that it is not the role of copyright law to “guarantee any income in return for the creation of copyright works or ownership of copyright”. I am not aware of a single creator or rights-holder who has ever argued that copyright will guarantee them an income. Just as with any business, if they produce a product that creates or meets a demand, they will be successful and suitably rewarded. If they don’t, they won’t. There is no expectation of income just because a work has been created, nor should there be. However, when a successful work is created, what rights-holders want is the ability to be able to protect themselves from rampant piracy and to have a fighting chance to earn an income for their work without it being hijacked by free-riders who destroy rather than create value.

Economic Impact and Moral Rights

The new objective (b) focusses in part on protecting moral rights, and is designed to recognize the importance of non-monetary incentives for creativity. That’s good. First, however, let’s look at where the Ministry is coming from with regard to monetary incentives. From an incentives-based perspective, MBIE has taken a very narrow position, namely that creators should derive no more income than is necessary to incentivize further creativity (para 55). To underpin this argument, the Ministry commissioned a study from the consulting firm Sapere, tasking them to quantify “to what degree is the supply of copyright works affected by the amount of revenue able to be recovered through copyright?” This is like asking someone to prove a negative. If there were no copyright, would any works be produced? Most likely there would be some creative output (after all, Shakespeare wrote in pre-copyright days—although he did not have to face the threat of digital piracy), but since copyright is not going to be eliminated, it is impossible to quantify the amount of new works that is incentivized by copyright except to say that without copyright protection, it would be commercially impossible to get books published, music released and films made.

Without copyright protection, no doubt works would still be produced—but what kind of works? Would they be best-sellers, Oscar-winning movies or chart-toppers, or would they be lowest-common-denominator efforts? Moreover, can copyright be isolated as the sole economic factor that leads to increased production of content? Of course not, as many factors are considered in whether to greenlight a film, record an album or publish a book.

To take the position, as MBIE seems to do, that the primary purpose of copyright is solely to incentivize production of new content is to ignore the role of copyright in protecting and enabling copyright industries, the jobs it creates and sustains, and the economic and cultural contribution that it makes to the welfare of the nation. This contribution was well documented in MBIE’s pre-review study Copyright and the Creative Sector, released in 2016.

Contrast this dismissal of the contribution of copyright industries to the local economy with the unsupported and unrealistic claim that foreign technology companies might choose not to service the New Zealand market “if the law significantly increases compliance costs or requires them to adapt their infrastructure or business models”. I suppose this is an indirect way of saying that if New Zealand’s copyright laws are not to the satisfaction of the US tech industry, they will pull out. Wow, Google would have to lay off the less than half dozen employees that it has in New Zealand! Although Google is already very good at thumbing its nose at the New Zealand courts, it draws plenty of revenue from local businesses and is well used to working within a variety of copyright settings. Surely no-one really believes that the outcome of New Zealand’s copyright review will be so out of step with international standards as to drive away very profitable tech businesses.

Interference with Contractual Arrangements

Part of the new objective (b) is to; “Support creators to obtain.…a fair proportion of any revenue attributable to their creative effort.” What is a “fair proportion”, and why should MBIE be seeking to intervene in contractual arrangements between authors and publishers, musicians and record labels, scriptwriters and studios? The paper talks about an “imbalance of power” between creators and those who help them commercialize their work, “weak bargaining power” of authors and “protecting authors from unfair bargains”. Really? This is a sweeping generalization of the relationship between creators (some of whom could hardly be characterized as having weak bargaining power) and the businesses with whom they work and on whom they rely, and is an unwarranted intrusion of copyright policy into freely-negotiated contractual arrangements. There are laws that govern contracts, to be sure, but what other industry has its contract terms specifically scrutinized by, and subject to, government policy outcomes? Surely if there was ever a case of mission creep, this is it.

What’s Left Out

And then there are the topics not mentioned. Like piracy, the scourge of the copyright industries and an issue that government is in a position to do something about. The only vague reference to piracy that I could find is a statement that “The ubiquitous nature of digital copies also tends to make it harder for sellers to detect infringement and enforce copyright.” No kidding. That’s an understatement. But even this is offset by other statements that technological protection measures available to creators to protect access to copyrighted content “potentially afford…sellers more control over the use of works than copyright has ever promised”.

Why the Tinkering?

What is the sum total of all this tinkering with the objectives of the Copyright review? Why go through such a lengthy process to issue a new 30 page paper (full of dubious premises) prior to producing the Options? Is it to lay the foundation for a series of recommendations that will end up gutting the traditional copyright system and greatly widen exceptions? The tone of the paper and the shifts in emphasis suggests that this may be the case. One hopes not but perhaps MBIE’s attempt at transparency has revealed more about the mindset of the drafters of the document than was intended.

In its conclusion, the MBIE paper states that “Objectives will be used later in the review to assess options for addressing problems with the status quo” . That is why it is very important to get the objectives right before the the Options Paper is published. If the foundation for building policy recommendations is not level, then the structure that emerges will likewise be tilted and unstable. Further consultation on the objective before the Options Paper is produced would seem to be highly advisable. If this is not done, it seems to me that New Zealand creators and rights-holders have good reason to be concerned that this could all turn out badly. I sincerely hope that I am wrong.

© Hugh Stephens, 2020. All Rights Reserved.