Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill

Part 1 contains the essential provisions that make a number of changes, some of which are less inflammatory than others. In particular, the National Party Opposition refers to clause 4 and the provisions that amend section 35 of the principal Act, and particularly new section 35(3), which states that if a person imports into New Zealand a copy of a film within 9 months of that film first being made available to the public in New Zealand, then that is a prohibition and a breach of the copyright. What that means, essentially, is that if a film is showing at a cinema in New Zealand, no DVD or video of that film can be brought in. That means, for example, that we will not be able to go and buy a DVD or a video of Finding Nemo—which was released in New Zealand by the Walt Disney Company—for our children for Christmas because it is within 9 months of the first release of that movie. As people who have young children will know, Finding Nemo is a big hit. They all want to get the DVD or the video for Christmas, and this bill, when it is passed, will prevent that from ever happening again. That is just plain outright protectionism for a very small group of people.

If members read the Cabinet paper that went through, it will be clear to them that the Cabinet has put in that 9-month prohibition in order to protect small provincial cinemas. They have accepted the argument that because people in Whakatane, Tokoroa, and Hawera can go to the video shop or import a DVD, that will stop them going to the cinema, there will be fewer people going to the movies, and movie theatres will close. I have news for the Government. Sky City Leisure, which owns a chain of cinemas throughout New Zealand, which are heavily weighted to the provinces, has recorded its biggest ever profit. What that tells us is that there is no problem with small rural cinemas needing protection, because they are all making money. Let me assure members that in provincial New Zealand we are getting the latest movies within a few weeks of them appearing in Auckland, and people being able to go down to video stores to get the video or the DVD is not having any effect. As the officials quite rightly told the Government, there are a lot of factors affecting the impact of cinema attendance, including the lower drinking age, live sport on television, the Internet, the cost of petrol, and ticket prices. Those are some of the things that might have an impact on cinemas—it is not just the importing of DVDs.

My view is that the Government realised that it could not meet the promise the Prime Minister made to the Greens, and in the Speech from the Throne, that the Government would put a 2-year ban on the importing of books, videos, CDs, and DVDs, so it has come up with the idea of a 9-month ban in order to stop DVDs and videos of the latest movie releases being available. Frankly, that will affect poor New Zealanders more than it will affect rich New Zealanders, because rich people from Remuera are still allowed to import DVDs and videos directly—they can bring them in from their overseas trips—whereas poor people in Hawera do not have that ability. Normally, they hire the DVD, because it is a heck of a lot cheaper than buying one. This Government says that it is all right to buy the DVD within a few days of the cinematic release but it is not all right to rent the DVD within a few days of its cinematic release, and that is a privilege that is afforded to rich people but not to poor people. The Minister in the chair, Judith Tizard, should take a call.

💬 Hon David Cunliffe: Like you care.

I do care, because poor people should be entitled to go and rent Finding Nemo. It is not fair that only rich people can go and buy the DVD.

I rise on behalf of United Future, the common-sense party that supports this legislation. The public out there listening can be a little bit more encouraged about this legislation—United Future will be backing it, so it is good legislation. The protection of intellectual property is an issue of considerable importance throughout the global marketplace we now live in. The bill before us today is a step towards correcting the abuse of copyrights and the increase in piracy within the film industry, and I am very surprised that ACT and National are not supporting it. The bill will have relevance both nationally and internationally. Technology and the sheer pace and extent of global trade are transforming our world almost faster than we can bear, let alone keep up with. One thing that I have against the human rights perspective is that we work in a global village. We really need to come away from human rights and begin to deal with human requirements as our global village begins to emerge, because that throws a whole different light on things.

Let me explain the reasons why this bill deserves passage and is receiving United Future’s support. The first reason is that the bill changes the onus of proof, which we have already heard some comment on. A defining aspect of this bill is the reversing of the onus of proving copyright infringement in relation to imported copyrighted goods. Under the existing law, a copyright holder who takes action against an importer will need to prove to the court that the imported goods are not genuine. As a result, it is the importers of pirated goods who at present hold the upper hand. At the moment, the bad guys normally win, and United Future does not agree with that principle.

Because pirated goods are increasingly difficult to distinguish from genuine goods, the process of ascertaining guilt is often tedious. For example, a lot of goods made in Third World countries look identical to the genuine article. They have the same labels and so on, and the ones that look identical are very difficult to distinguish. At the moment, copyright owners must track the goods to their country of origin. Then they need to prove that the goods were actually made there. Then they need to prove that they were made without the permission of the rights holder in that country and, therefore, infringe copyright in that country. This bill will shift the responsibility on to the importer, for whom it will be markedly easier to prove that the goods are indeed genuine. When this bill is passed, it will be up to the importer to prove that the imported goods are genuine.

This change of onus of proof for the importer is both fair and practical, even though, as we have heard, it does move us away from the “innocent until proven guilty” scenario—which I personally agree with—but let me give the reasons for this. Given that the evidence importers will need to prove the legitimacy of the goods will be no more than an importer would reasonably be expected to maintain as a matter of good business practice, this change in civil procedure is pragmatic and based firmly on reason.

This bill offers benefits for importers and copyright owners alike. From the importers’ point of view, this bill affords them protection. Built into the bill is the provision that the court will not require a person to disclose any information about his or her sources of supply if it appears to the court that it would be reasonable to do so. That ensures that copyright owners do not use infringement procedures to force parallel importers to reveal their trade sources. From the copyright owner’s point of view, this bill also makes it easy for a copyright owner to prove that the importer knew that the goods were pirated copies—something the owner must establish to be entitled to a remedy. Under the bill, the importer must know, or reasonably ought to have known, that the goods were pirated goods. That points to an elevated, more objective test than presently applies. It is a vast improvement.

It was interesting to hear the United Future member supporting the onus of proof required by this bill. I wish that party had also supported the rules we tried to put in place to prevent the clocking of used cars brought into this country, but, no, United Future members wanted that thrown out because they did not believe that it was the ideal thing to do.

I will pick up on a point that Tony Ryall made about small cinemas. The Minister in the chair, Judith Tizard, believes that this bill will protect small cinemas. I suggest that small cinemas are not protected by this bill at all, because the 9-month ban dates from the time of international release. If the local distributor does not allow the film to be distributed in this country until the 9 months have elapsed, then DVDs and other parallel imports will overtake it. Therefore, local cinemas will be protected only if there is a simultaneous release with the international date. For small cinemas, that is not a protection. The Government announced in the Speech from the Throne that it would put in a 2-year protection for operators of small cinemas in this country, but this bill is a complete cop-out and a backtrack.

Authorised distributors have control over what is distributed in this country. They decide whether catalogues that are available overseas are to be distributed. This bill blocks distribution of those back catalogues. There is a huge back catalogue of, particularly, region 1 films. Most of the films are not distributed in this country, because the authorised distributors have not allowed their distribution. Therefore, parallel imports of those films are the only way to allow them to come in. If this bill, as it tries to do, prevents the parallel import of films until they have been released and distributed here, then those operators are missing out on a very large catalogue.

Piracy has been going on for many, many years, probably for as long as the recording industry has been in existence. Piracy has accelerated in recent years with technology, with the means of the Internet. But that is not the major difficulty with films, because those files are of such large volume that it would take many, many hours to download a complete film on the Internet, and most people do not want to waste their time doing that. I know that a lot of young kids do it, but they would never be able to afford to buy the film in the first place. Some of those kids might download music, but they turn round in later years and buy back catalogues of the music they downloaded, because it becomes a nostalgia thing and they enjoy the music. So I do not see that the problems with piracy affect the industry as much as we are led to believe. I do not believe that the bill really addresses the problems that it is aiming to address, and protects the local industry. The local industry distributes locally. If the local industry is lucky enough to have a film captured by the overseas market, that is wonderful, but we are not likely to parallel import it back into this country when it is available here at probably much the same price as the industry can get it under a parallel importation.

We have heard Tony Ryall talk about the cost of films and music overseas, in Australia particularly, where it is only slightly below the cost in America. Why are New Zealand prices so much higher? That is one of the areas that this bill should have addressed and put at a more realistic level. The cost of films and music that can be bought in this country is so much higher, and that encourages people to parallel import.

I would like to respond to the accusations from the member of United Future who accused the ACT party of—

💬 Brent Catchpole: Who?

United Future—the one whose leader will be the Prime Minister in a couple of years! That member accused ACT of not protecting intellectual copyright. This bill is not about protecting intellectual copyright. I accept that “intellectual” is a word that probably does not pass into that member’s focus very often. This bill is about protecting the licence rights of overseas distributors, and the right of big theatre chains in New Zealand to have an exclusive, statutorily legalised monopoly for 9 months on the showing of films.

Nobody is supporting the importation of pirated videos and CDs. If that member had read the bill, he would know that it says one cannot import anything, even if it is legally obtained and does not breach copyright. The bill is about parallel importing. Is that member suggesting that the Warehouse breaches copyright every time it sells books that are parallel imported, because they are half the price of Whitcoulls’ books? I would be interested to know if that is what he is suggesting. If he were consistent, he would be accusing the Warehouse of breaching copyright by selling books published outside the copyright—which is parallel importing. Parallel importing is not the same as breaching copyright. The banning of parallel importing protects exclusive licence rights.

The Hon Tony Ryall was absolutely correct when he said that this bill would be a bonus for big business and wealthy people. It will be bad for people who cannot afford, for whatever reason, to take six kids to the movies in the first 9 months that a movie comes out, and who want to buy a video or a DVD—

💬 Hon Tony Ryall: Even rent a video.

—or even rent a video, of Finding Nemo, The Lion King, or any of those movies that come out and which we used to be able to get. The Warehouse is a classic example of a place where families on low incomes could do their Christmas shopping at an affordable rate, but this bill will stop that.

This bill will not do anything to protect copyright at all. That member is confused. I think he should read the bill again, because it will encourage the breaching of copyright. When the parallel importing of popular products is banned for 9 months, people who want them will find other, illegal ways to get them. The ACT party does not support that. It does not support the burning of CDs on the Internet. It does not support the selling of them. We know that it already goes on. Young people do it a lot. They seem to have some sort of unwritten code—which is nice—that they do not do it to local artists such as Bic Runga, Stellar, and all those groups. Some young people have a sort of code that they do not burn the works of New Zealand artists. Nevertheless, $33 to buy a CD is a lot of money, so the temptation is already there to burn CDs and pirate their use. I can guarantee that, when this bill is passed, burning, piracy, and breaching of copyright will go up. I think we should make it very clear that this bill is not about protecting copyright at all; it is about protecting the licence rights of, especially, American big business.

Why was this bill brought in in the first place? It was to do with, in the Government’s own words, the US 301 Watch List. It had nothing to do with the fact that our copyright laws are poor. There is nothing wrong with our copyright laws. If there was, why is the Minister not amending the Copyright Act? She is not amending that Act; she is amending this Act. This bill was not brought in because our copyright laws are poor; it was brought in because, by our allowing parallel importing, overseas copyright owners and local exclusive licensees were placed in the same position as the New Zealand originators of unique or branded material—that is, they had to enforce their rights themselves. They could not get protection from the Government.

The Greens support this bill. It does not give all the protection we might like to small bookstores and small record stores around our community, but it does give protection to local cinemas. New Zealanders go to the movies in large numbers. Cinemas have worked hard to combat, first, television, then DVDs, and they have done it fairly successfully. Many have suggested that viewers should be able to decide for themselves whether they watch a movie at home or on the screen in a theatre. They can do both, but they may have to wait a little longer to watch it at home.

We would contend that the movie experience and that of watching a DVD at home are different experiences. We can do one activity in the privacy of our own homes, which just cements in alienation from the community. The other activity takes us out into the community. Protecting cinemas is about protecting the community. Going to the movies is an affordable social outing—an opportunity to mix with other human beings. It is more than just watching a film on a big screen. Being with other people is an important part of belonging. Sharing experiences is the stuff of communities. Many cinemas have bars and restaurants attached so that movie going is an even more interesting experience. Cinemas are meeting places. This bill protects interesting experiences. It protects the ability to go to the movies. In some urban shopping centres cinemas are another excuse for patronising the local shops. They are an important element in local economies, at a time when malls, shopping chains, and big block stores have made the survival of neighbourhood shopping centres tenuous at best. The bill protects that important area of neighbourhood.

So what has all of that to do with the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill? Why could we not just have both? Some folk, given the choice, are likely to rent a video and sit at home with a friend and watch it on the box, and, as large-screen televisions take on, the numbers who stay at home are likely to make the survival of cinemas—particularly the smaller, suburban and rural variety—even more uncertain. The bill gives some certainty to cinemas.

When movies first come out, the new prints are expensive. The large chains can afford to buy those expensive prints. They have larger auditoriums, larger audiences, and larger runs. The rural cinemas and smaller, suburban cinemas are not able to afford them, and this bill gives a window so that those small, threatened rural and suburban cinemas can survive. Why should we not let the market decide? I ask why we should run the risk. The market has a place, but if there is a chance that stripping away the rules might also strip away choice and undermine important community assets and experiences, we ask again why we should run the risk. This bill helps to lessen that risk.

The bill makes liability for infringement dependent on the defendant knowing that the goods in question were not infringing copies. That, to me, sounds like good business sense. Why would we not take that precaution? When we take on a product to sell, why would we not make sure that it was legitimate? That sounds to me like a reasonable thing to do and a much simpler option. I imagine that it is what most prudent business people do.

I have been aware for some time of the problems with cinemas. I have a friend who has built and run cinemas, and I know that the threat of DVDs to cinemas is real. The marketplace is appropriate for making some decisions, but this is a situation in which the community has a right to expect us to make decisions that give it another measure of protection. Tony Ryall says he wants to buy a DVD for his kids for Christmas. I say he should take his kids to the cinema and buy the DVD next Christmas, or for a birthday present—he will get the chance. He also says rich people can import DVDs. I tell him that that is a little patronising. The rules apply to everybody. Anybody can import DVDs directly for himself or herself.

💬 Hon Tony Ryall: But can you afford them? That’s the point.

Well, if someone cannot afford a DVD, it is not the end of a child’s childhood. As one who brought up his children without DVDs, I say that their lives have not been horribly blighted. This bill does not undermine childhood—

💬 Hon Tony Ryall: That’s what you say.

I can promise the member that. Deborah Coddington has said that American big business is protected by this bill. I tell members that American big business will do well with or without the bill. This is important legislation. It is a protection of community assets.

I move, That the question be now put.

I would like to pick up on a point made by the United Future party, which together with the Greens and the Progressives will be supporting the left-wing Labour Party on this bill. I draw to the attention of members in the Chamber that I think the United Future members are in danger of making the same mistake they did with the Care of Children Bill. Members will recall that when the Care of Children Bill was tabled, Judy Turner, Paul Adams, and Marc Alexander came out and said they supported it. Then they found out that there would be lesbian fathers, and abortions for 10-year-olds without the parents being advised. They changed their minds, and they are now against that bill. I think they need to listen to the debate on this bill instead of just following the notes the Government gave them. It was clear, in relation to the Care of Children Bill, which United Future members are on record as supporting, that they did not know what was in it, and I do not think they know what is in this bill.

The CHAIRPERSON (H V Ross Robertson): The member will come to the point.

Let us just go through some of the facts in respect of this bill and why it is about denying choice for New Zealanders. We heard a speech stating that it is all about protecting small cinemas. We know that the 9-month provision applies from the first international release of the film. If the film is released in summer in Europe, and is going to be released in summer in New Zealand, that is 6 months of the 9 months gone already. We also know that the DVD can be imported by the owner of the copyright, without any fetter by this bill. That means that Disney can import Finding Nemo as a DVD to be sold at Disney shops, but parallel importers such as the Warehouse—Mr Tindall is a good supporter of the Labour Party—will not be allowed to parallel import DVDs into the country. Disney can do it, but the Warehouse cannot; so there is another anomaly there.

I also say to United Future that significant numbers of New Zealanders like the choice of being able to rent a DVD or video of a film currently being screened. This bill will prevent them from having the opportunity to rent the DVD or video, but it does not stop them from getting on the Internet and ordering and buying the DVD or video from Australia. The issue here is that only some people can afford to buy the DVD or video. They are quite expensive. As Mrs Coddington said, if people have four, five, or six kids, they are probably looking at paying between $36 and $45—

💬 Deborah Coddington: It’s $78.

It would cost $78 in Auckland to take the kids to see Finding Nemo, as well as cost $12 to $15 for the supervising parent. People could be looking at paying $50 to $60 to take their family of four to six kids to the movies. That is really expensive, and it is why a lot of people like to have the choice of whipping down to a video source and renting a DVD or video for the kids. It is all about choice, and I can tell United Future that this bill denies choice to a whole lot of people. It denies them the choice of an alternative form of entertainment.

As a form of protectionism for small cinemas, it will not work. We know that people can import DVDs and videos directly off the Internet. We know that the copyright owners can import directly into New Zealand and sell through their own shops, but that the Warehouse and other parallel importers cannot. We know that the provision applies 9 months after the international release, which in New Zealand may be only 2 or 3 months. So the bill will just not work as a form of protectionism.

I ask United Future to please consider the amendment that I have put forward, which would allow everything else in the bill—some of the good stuff about defining copyright title and rental rights—to be left in it, but would remove that foolish prohibition of 9 months. I know that the notes from the Government will not cover this matter, but I am happy to give them a copy of the final Cabinet legislation committee paper on it, which basically says the ban is not going to work. I bet Labour did not give that to United Future. I say that United Future should learn from the Care of Children Bill and read the stuff that the Government does not give its members, because material from the Government’s own official documents shows that nothing about this prohibition is going to work. People who want to obtain Finding Nemo on DVD will be able to do that, but they will have to be people who are prosperous enough to afford it.

I raise a point of order, Mr Chairperson. I believe that the Hon Tony Ryall has mischievously misled the Committee about United Future’s position on the Care of Children Bill.

The CHAIRPERSON (H V Ross Robertson): That is a debating point.

I move, That the question be now put.

I would like to pick up on a point that I made in an earlier speech, with regard to parallel importation and the 9-month ban. As Mr Ryall pointed out, the ban is only on parallel importation, and is not on genuine, authorised, licensee-distributed goods. So Disney can distribute them. Closer to home, the distribution of the third The Lord of the Rings film on DVD and video can commence on the day it is premiered in Wellington. Distribution can occur from the first day a work is published or opened for viewing by the public anywhere in the world—the bill clearly refers in section 35(3A), in clause 4, to a work first being made available “in New Zealand or elsewhere”. Generally, it refers to international release, but in the case of the The Lord of the Rings film the premiere will be here in New Zealand, and genuine, authorised licensees can commence distribution of videos and DVDs on the day the film is released.

There is no protection for small cinemas in that case. Small cinemas will no doubt have a huge influx of customers when the film comes out, but the bill will not protect them by delaying the release of DVDs until a date 9 months afterwards, in the way that the Minister is suggesting, because those restrictions are on distribution through parallel importation.

The other thing I would like to point out is something that the learning institutes raised with the select committee. They are concerned that the bill now forbids them from parallel importing e-books that have clips of movies within them. If the 9-month period has not been passed, those e-books cannot be imported and shown within learning institutes. The learning institutes expressed that problem to us. Beyond that, there is the problem of the licensing of the software required to run those movies and e-books. If learning institutions have to rely on distribution by the local distributor, then that creates a long delay before they can use the learning material in the manner they wish. They will have to reprogramme their timetables, and either wait the 9 months or pay a huge cost to buy the licence themselves. That was a major concern for the learning institutes.

In summary, the 9-month delay in parallel importing is not going to help small cinemas, because it is up to local distributors to decide when they want to distribute DVDs. It will stop only parallel importation. If a DVD is released on the day a work is released internationally, then the small cinemas are not going to be protected or assisted in any way. Learning institutes will have to wait for a much longer period before they can start showing imported e-books; the inclusion of film clips in them means that learning institutes will not be able to show e-books unless they buy the licence separately, or buy directly from local distributors. That may not suit local distributors, because they may not want to bring in the e-books as well; so it is not necessarily going to help anybody, and will only delay the whole process. This bill will not help local cinemas, as was claimed, but it does bring a lot of the high technology into line.

I move, That the question be now put.

Motion agreed to.

The question was put that the following amendment in the name of the Hon Tony Ryall to clause 4 be agreed to:

to amend new section 35 of the principal Act by omitting subsection (3).