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S 92A, property rights and compensation

  • March 10th, 2009

After months of procrastination I’ve had a close look at section 92A, and the industry code that the government hopes will blunt its teeth.

The new law upholds copyright holders’ property rights. It is fair enough, as far as it goes.

But it does only half the job. It can be cured simply. I’m sure the cure must have been publicly identified because it is so orthodox. But so far I have not seen reference to the cure in any commentary.

The industry code is not the cure. It looks useful, but no lawyer with respect for the rule of law would suggest that a private code of procedure is the cure for a law that is incomplete and licenses abuse. As drafted it may be suitable for the ISP professionals, but it is too cumbersome for customers to master.

The code would probably be unnecessary if the section 92A regime was completed.

Completion of the regime requires only an equivalent and balancing protection for the ISP and the customer’s property rights. That is straightforward – compensate the customer whose ISP is obliged to interfere without adequate reason, and compensate the ISP for any reasonable costs of investigating copyright claims that prove to be unjustified. The compensation rules can be clear enough and tough enough to discourage most if not all abuses of the new copyrightholders’ rights.

The unjustified copyright claimant should have to pay both the ISP and the customer .  The compensation should include a deemed cost of time, any reasonable legal or other costs of deciding who was in the right, the costs of reinstatement of deleted material, and a deterrent award if needed to deter unjustified attacks on material that may have little commercial value (and accordingly low compensation value).

Because the normal court system has become hopeless at enforcing remedies (other than in huge commercial disputes) the system may need a copyright claimant to post a bond for a pre-estimated cost of compensation, and perhaps a quick and dirty simplified adjudication system.

The copyright claimant should have parallel rights to recover its full costs where a customer or ISP have unreasonably resisted a justified claim.

These are not novel or radical ideas. They were the basic principles of British freedom for centuries. Leave people free to do what they wish, but if they wrongly harm others they’ll have to pay. Deterrent damages can even up the incentives where necessary to deter coldblooded deliberate harm.

Freedom plus liability is specially valuable for evolving circumstances where the lawmaker can’t predict how a prescription might warp future conduct. For example, the strict liability of the law of nuisance allowed freedom to change land uses, as long as it did not harm your neighbours. Unfortunately the RMA has ‘bonsai-ed’ our law of nuisance.

The fact that I could not find any proposal for such an orthodox fix to section 92A may indicate insufficient search patience. But it could be another symptom of our legal establishment’s willing ignorance of the procedural principles that balanced our inherited freedom with responsibility.

Too often reforming lawyers and politicians would much rather draft detailed prohibitions than balance the incentives, then leave discretions with the people involved, weighing the costs and benefits of their actions.




Can we simplify this and save everyone a lot of time and trouble.

Don’t pass the law. Section 92a is not only patently unlawful but also serves no purpose other than the vested interests of the music industry (which should not be confuded with the interests of the composers and performers).

Don’t pass a stupid law then add a layer of remedial processes that will serve no purpose other than to occupy already stretched resources.

You don’t need an ambulance at the bottom of the cliff if you don’t build a road into the void.


[…] Stephen Franks offers a solution to s92A – “compensate the customer whose ISP is obliged to interfere without adequate reason, and compensate the ISP for any reasonable costs of investigating copyright claims that prove to be unjustified” […]

  • Juha
  • March 13th, 2009
  • 8:54 am

When it’s time to talk compensation, it’s too late. Someone will have been wrongly accused, and had his/her “contract interfered with”. It could mean anything from nothing of consequence to a small business owner going under (or a library being cut off).

Why even raise this spectre?
[The point of compensation rules instead of prohibitions, or leaving no remedy, is that people take into account in advance the risks of having to pay compensation. Rights plus consequences is the fundamental equilibrium that makes freedom endurable. “Its too late” (often expressed as “fences at the top of the cliff, not ambulances at the bottom”) is the slogan that justifies the “precautionary principle” the justification for most of the last three decades erosion of freedom. SLF]


“perhaps a quick and dirty simplified adjudication system.”

Yes, this is a very good idea. We’ve suggested that it could perhaps be as an extension in jurisdiction and powers to the Copyright Tribunal.

Then we could move the takedown provision from ISPs to the Tribunal so that they have that available as a sanction in addition to fines. This also works around the problem that S92A just talks about copyright infringement as if it were a black and white issue. S92A doesn’t allow distinguishing between the copyright infringement of a 13-year olds self-written Harry Potter story (which if considered a derivative work could be infringement) Vs. someone distributing thousands of movies and songs. A Copyright Tribunal could have appropriate punishment, measured sanctions.

Then, I think, we need to decrease the scope of ISPs to those capable of corroborating evidence. This is necessary as you’ll see from this site Mr Franks, as anyone can be framed for copyright infringement so corroborating evidence is required.

If we didn’t reduce scope of this laws definition of an “ISP” (which includes businesses, schools, hospitals, practically any shared connection) then the business compliance costs of corroborating evidence will be in the thousands. Just like how most phones don’t store who is using them, most network devices don’t store this. Our view is that upgrading network devices will be necessary or businesses face risk in at least two ways,

1. For many organisations disconnecting a staff member’s internet may be like removing their phone line, effectively firing the employee. While genuinely inappropriate use of company services should result in dismissal there are obvious problems if the employer is unsure of the evidence, and associated risks in employment law.

2. Organisations themselves are considered secondary copyright infringers under S92A as they allow or facilitate copyright infringement. Retaining an internet account when a staff member is accused of copyright infringement may result in legal action against the organisation for not being “appropriate”.

So I’m from this group called the Creative Freedom Foundation who are trying to suggest better alternatives to S92A.

I’m a Wellingtonian so if you’d like to talk about this sometime soon let me know Mr Franks.

[Well said. I hope your group is drawn into the reform process. Let me know if I can help, but this area of law is not my specialty. I watch such developments as another area where some respect for legal history and our heritage could have forestalled stupid law. SLF]

  • Brenda
  • March 13th, 2009
  • 3:17 pm

This was discussed in depth during select committee time.

It does leave the problem of who decides the proof is adequate to declare the accusation is false.
[It is interesting that the Select Committee discussed it, but then recommended deleting the provision instead of balancing it. Do you know why? SLF]

  • Paul King
  • March 15th, 2009
  • 12:20 pm

Hi Stephen

I had a client once that had a few tonne of raw fish sitting on the docks and urgently needed access to his email in order to know where and when to deliver it before it was spoiled. I was able to help him get access and everything turned out ok. If section 92 went through an ISP could be forced to cut a small business off and in a situation like I have described it would cost thousands of dollars and maybe bankrupt the business. Who pays for the losses? The media companies? How could one afford to sue them for these losses? Creating work for more lawyers is not a good reason for any new law.

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