Digital Rights and Copyright in New Zealand: s 92A of the Copyright Act and the Institutional Roles of ISPs and the Copyright Tribunal

On April 15 2008 the New Zealand Parliament passed the third reading of the Copyright (New Technologies) Amendment Bill ("the Bill") amending the Copyright Act 1994. As part of its provisions the Bill proposed the insertion of new s 92A in the Act requiring the new commercial transmission intermediaries that have emerged to facilitate the distribution of digital material much of which is copyright (Internet Service Providers or ISPs) to become part of the institutional framework engaged in monitoring and enforcing copyright holders' rights. The proposed s 92A proved extremely controversial as it required ISPs to terminate the internet access of repeat copyright infringers. Whilst the rest of the Act came into force on 31 October 2008 the introduction of s 92A was delayed to enable rights-holders and ISPs to work together to ensure its effective operation". A revised proposal released on July 1 2009 proposed an enhanced role for the Copyright Tribunal as the primary body overseeing enforcement of copyright infringements involving digital material. Using a transaction cost and economic incentive approach to the costs of monitoring and enforcing copyright this paper analyses the economic and legal implications of the regime proposed in the review of s 92A and the role that ISPs should play in this regime. It concludes that the fundamental provisions of copyright law are sufficient to handle the transition from physical to digital transmission media without the need to include ISPs or any other party other than the courts in monitoring and enforcement. The amended s 92A proposal fails to demonstrate that the proposed institutional changes are likely to result in an overall efficiency gain that will leave all the affected parties (ISPs the users of ISP services and copyright owners) better off than under a counterfactual of no change. Rather institutional arrangements are already emerging endogenously to address the monitoring and enforcement of copyright in a digital economy. As these endogenous arrangements are aligned with the incentives of rights-holders to protect their interests and rights-users to engage in legitimate use of the works in question they will be more effective in encouraging efficient levels of investment in creative endeavour and trade in copyright works than alternative proposals requiring parties unrelated to the exchange of rights to become engaged in the monitoring and enforcement of those exchanges.