Will the 3 strikes law fail? Part 2: assessment

In a previous post I looked at the aims of the 3 strikes law to start assessing Dr Rebecca Giblin’s recent paper On the (New) New Zealand Graduated Response Law (and Why It’s Unlikely to Achieve Its Aims) which “outlines a number of technical and practical reasons why it’s unlikely to achieve its aims.” In this post, that assessment is completed to conclude that the law will have “limited success” as the paper suggests. In the third and final post on this topic to follow, I will look at the aims of the 3 strikes law that the paper did not cover as well as provide my own conclusions about the law.

As Rebecca points out, the material for the paper is over a year old. Much has changed since then and predicting how any new, novel law plays out in the early stages is hard. My goal therefore is not to evaluate the paper as such, which would be very unfair, but to use the paper as a starting point for my own assessment of the 3 strikes law’s future.

The paper lists the following three reasons why the law is unlikely to achieve its aims:

1. Accumulating 3 strikes against an account holder is hard. This is “from a combination of two independent factors: the costs to right holders of enforcing their rights under the scheme [$25 for each notice plus $200 for the Tribunal], and the way in which IP addresses are typically allocated to users.”

Comment: One of the primary aims of the law is to provide a low-cost additional channel for copyright owners to enforce their rights. NZFACT, which represents Hollywood (films and TV shows), has refused to initiate notices under the law as it believes the cost is too high. NZSA, representing New Zealand authors,  also feels the costs are too high, saying “The cost of enforcing the law will send publishers broke.” On the other hand, RIANZ, which represents the music industry and wants the notice fee to be reduced to $2 or less, nevertheless is the only rights owner sending out notices to alleged infringers.

The Government has acknowledged that the $25 notice fee only reimburses a part of the costs incurred by ISPs in processing notices. The $25 notice fee therefore has everyone unhappy. Which means it possibly represents the best balance of interests for the future and is unlikely to be changed.

Regarding IP addresses, the paper notes “right holders have no way of targeting specific accounts, such as those which have been previously detected infringing. They can only take a scattergun approach, and hope to hit the same account holder three times in order for the enforcement provisions to kick in.” The paper notes that increased use of static IP addresses or [the now unlikely] introduction of a centralised notice system will allow rights owners to better target heavy infringers.

In practice, it doesn’t look like this has been a major issue for copyright owners. I think this is at least partly because of section 122A(1) which defines “rights owner” to include “a person acting as agent for 1 or more copyright owners.” This allows alleged copyright infringements against all members of an agent organisation to be clubbed together for the purposes of counting strikes. For example, illegal file sharing of any Hollywood film or TV show is counted as infringing against a single rights owner as NZFACT represents them all. Further, for TV shows, each episode can count as a separate infringement. All of this means the 3 strikes become easily achievable for the rights owner over the 9 month validity.

There are two other angles for evaluating costs to rights owners. First, whether it provides an additional channel at a lower cost. In that the law succeeds. For a $275 + GST cost a copyright owner has a much cheaper way of enforcing their rights than using the regular court channels. Second, from a return on investment angle. A copyright owner can get a ‘return’ of up to $15,000 for an ‘investment’ of $275 which should be very attractive to them. There is no doubt that rights owners will try and maximise their returns, for example RIANZ has asked for $2,669.25 damages for 5 songs that retail for $11.95 in total on iTunes.

2. It is relatively easy for people to continue infringing by using methods other than peer-to-peer file sharing (thereby going outside the scope of the law); infringe outside New Zealand and transfer the files back; or wait for expiry of the first/second notices.

Comment: I agree with the paper on all of these points.

The fact that the law is limited to illegal peer-to-peer file sharing is not, however, a ‘loophole’. The narrow focus of the 3 strikes law is a specific aim in that it only sought to replace the original, controversial provisions of section 92A. Other forms of infringing, for example using cyber-lockers or directly downloading an infringing work using a browser, are covered by other parts of the Copyright Act, including sections 92B to E. Anecdotally, while the tech savvy, determined downloader has shifted to VPNs, the average peer-to-peer file downloader at home has shifted to streaming or downloading direct from overseas websites and is therefore outside the ambit of the 3 strikes law.

The easiest way to evade the 3 strikes law is to change ISPs on getting a second notice. Even that isn’t a loophole as such but more of an acceptable limitation. Several submissions pointed this out to the Select Committee. In response, government officials were happy to go along with the view that the inconvenience of changing ISPs was a deterrent. To this one can add the cost of any early termination fee typical of ISP contracts. Changing ISPs on getting a second notice is an easy, effective and perfectly legal way of getting around the 3 strikes law.

The reality is that only the ignorant, lazy or the naive are being captured under the law.

3. The definition of an IPAP (which is the term used in the 3 strikes law rather than the wider term ISP) allows organisations to get a direct allocation of a block of IP addresses from APNIC and evade the legal provisions entirely. There is a cost and overhead for getting IP addresses from APNIC but it is relatively simple for a large organisation to do so. In fact, for different and entirely legitimate reasons, many organisations already have such direct allocation including private companies, government departments, ISPs, and universities. The full list is on the APNIC website.

Comment: I agree with the paper on this point. There is however no evidence that organisations have in fact gone down this path so far. In any case, this path is not practical for the average individual.

To conclude, the paper notes the lack of availability in getting access to legal content. While there has been significant improvement in online music services (but not films or TV shows) since the law has come into force, there is no evidence to show a causal linkage with the 3 strikes law.

In summary, “This paper has argued that the NZ graduated response law is unlikely to provide much of a deterrent, or to achieve its other aims. The NZ government has indicated that, if the law does fail to ‘sufficiently’ deter infringement, that will trigger activation of the regime’s disconnection provisions. However, in the event that this paper’s prognostications come to pass, it should think carefully before implementing that strategy.” The last point is worth emphasising- disconnection of people’s Internet connections should not be brought into force as it will only add more societal costs without really increasing the law’s likelihood of succeeding.

“Instead of simply bowing to pressure to introduce more onerous penalties, legislatures around the world should acknowledge the root of the problem. If graduated response laws are to exist at all, they should be in a form that encourages the timely and reasonably priced availability of content.”

In the third and final post on this topic, I will look at the aims of the 3 strikes law that the paper did not cover as well as provide my own conclusions about the law.

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2 thoughts on “Will the 3 strikes law fail? Part 2: assessment

  1. Pingback: Will the 3 strikes law fail? Part 1: aims | Internet Ganesha

  2. Pingback: Will the 3 strikes law fail? Part 3: conclusions | Internet Ganesha

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