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

I move, That the Copyright (Parallel Importation of Films and Onus of Proof) Amendment Bill be now read a third time. This bill amends the Copyright Act in five areas. First, it implements a ban on the parallel importing of motion picture films for 9 months after their first release. The Government did indeed state in the Speech from the Throne in 1999 that we would look at imposing a ban on the parallel importation of films, CDs, books, and software for a period of up to 2 years. However, after extensive consultation—in fact, two rounds of consultation—with users, producers, and distributors of copyright goods, this bill is the result. We have also put a great deal of support into the New Zealand creative industries concerned, and I think we are seeing the results of that.

The aim of the proposed bans in the Speech from the Throne was to ensure investment in New Zealand’s creative industries and a decent income for people who put their lives, energies, and creative talents into films, CDs, books, and software. The consultation showed that banning parallel importing would not necessarily affect the investment in all those areas. However, it was clear that there were problems in the area of films, and this legislation addresses that area. It also addresses the major issue of piracy, and covers many copyright goods and other creative industry goods. We have introduced these targeted measures because they are a good idea. However, because we do have a commitment to ensure that New Zealanders have access to the widest range of goods at the best price, within the rights of copyright holders and licensees, we have made a limited provision that will remain in place for 5 years, during which time we will review it.

This amendment is also partly about ensuring the continued viability of picture theatres and the services they provide to communities, particularly in rural and provincial areas. A comment was made in the Committee stage that because picture theatres and their owners are doing very well, this ban is not necessary. However, in the Government’s review of this issue, significant concern was raised by many people about the viability of picture theatres in rural and small communities. We recognise that this environment is a changing one. That is why we have put into the legislation a provision that after 5 years the ban will lapse, unless we decide to keep it going.

I also make a point relating to rental rights—again, another point that was raised during the Committee stage. Concern was expressed that people on lower incomes may not be able to rent videos and DVDs within days of a film’s theatre release. However, videos and DVDs of The Lord of the Rings, a New Zealand - produced product, were in video stores in New Zealand within days of the American premiere. They were pirated copies. It is absolutely unacceptable that people who have put their life’s work into those areas should have their income undercut in that way. It was never intended under the Copyright Act that films would be available for rental within days of their theatre release. In fact, the High Court of New Zealand confirmed, and now this bill confirms, that rental rights on films, software, and sound recordings do apply to parallel-imported goods. It has never been the intention to alter the rights of copyright owners in respect of the rental of those types of goods. The bill merely confirms existing rental rights, and clarifies that right. We should also point out that the reality is that the cost of CDs and movie tickets in New Zealand is very low, internationally. I believe that New Zealanders are getting very good value for money.

Coming to the piracy issue, this bill reverses the onus of proof. It makes changes to the onus of proof in civil proceedings relating to the importation of infringing films, sound recordings, and computer programs. The onus will be on the defendant to rebut the presumption that the imported works are an infringing copy. Some copyright owners have sought more extensive changes to the onus of proof, to cover circumstances other than the act of importation. I want to keep that under review. However, we believe that it is appropriate to limit the amendment now to importation.

Changing the onus of proof involves a change to a fundamental legal principle, and requires a measured approach. This bill focuses on importation as importers, rather than copyright owners, are more likely to have access to information that demonstrates the goods’ authenticity. We give warning that where people are importing copyright goods, they will need to be able to demonstrate that those goods are not pirated. Reputable importers would keep such records, as a matter of good business practice. In the Committee stage there were suggestions that that was a major problem, but we do reiterate that the provision applies only to importers. It applies to films, sound recordings, and software. It is not onerous, as importers will have to have that necessary information in order to defend their right to import. I also note that if the owners of copyright are also business people, they have a legitimate right to be able to enforce their copyright in goods that they have invested in.

I also point out to the ACT speaker that the bill does not impose any new responsibilities on the New Zealand Customs Service. The idea that customs officers would sit and watch every video or listen to every CD is just ludicrous. It is a matter of being able to demonstrate that those goods are not pirated. That is a moderate and reasonable test.

The bill introduces an objective knowledge requirement in relation to importation cases. Under the current Act the defendant must not know, or have reason to believe, that the work is an infringing copy. The new test will be that the defendant knows, or has reason to know, that the work is an infringing copy. That change applies only to films, sound recordings, and computer programs. The current test continues to apply to all other copyright works. Those changes in the onus of proof and knowledge requirement apply to products that are particularly susceptible to piracy. The changes will assist copyright owners to take effective action against piracy, which is destroying the incomes of many New Zealand creative producers, and the people they license to sell those goods.

The bill also clarifies the scope of the rental right granted under section 9 of the Copyright Act. I have talked about the fact that it confirms the High Court’s interpretation of section 9 of the Act in the case of Video Ezy International (NZ) Ltd v Roadshow Entertainment (NZ) Ltd. It also makes consequential amendments to the Trade Marks Act 2002, so the trademarks and copyright legislation are consistent on the issue of parallel importing.

In conclusion, I thank the members of the Commerce Committee and the officials, particularly the officials from the Ministry of Economic Development, for their work on this bill. These changes form part of the Government’s overall commitment to encourage and facilitate the growth of New Zealand’s creative industries and New Zealand’s opportunities to get employment and income from those industries. They will also ensure that our intellectual property regime is robust and balanced. I commend this bill to the House.

In reporting back to you, Mr Speaker, on the Committee stage of this bill, I draw to your attention the lengthy comparison members made between what the Prime Minister promised and what the Government is delivering. In her Speech from the Throne, which followed only a few days after she gave $89 million of taxpayers’ money to the arts, the Prime Minister promised to deliver to the arts community a prohibition for 2 years on the parallel importing of CDs, videos, films, books, and software. It has to be asked where any of that is. Helen Clark promised a 2-year import ban on software in this bill. Is it there? No. She also promised a 2-year ban on importing books and films in this bill. Is it there? No. Helen Clark promised, in the Speech from the Throne, a ban on the parallel importing of CDs and DVDs for 2 years. Is it there? No.

The Government was told by its officials, and by many submissioners in its consultation process on this issue, that Helen Clark did not know what she was talking about. That was a promise made on the hoof, to try to curry favour with a small group that the Prime Minister likes to be fêted by. It never stacked up, it was always a joke, and the Prime Minister was told that by the public servants and by those people who made submissions during two rounds of consultation. The papers showed the ridiculous situation of Paul Swain saying that we would have a 2-year ban on books being imported into New Zealand after their release, but libraries would not be banned from doing that, nor would the Government. That was quite ridiculous. That is how bad it was. It is no wonder he was dumped as the Minister of Commerce, with that sort of woolly, stupid thinking.

The National Party in Opposition opposes strongly the Government’s silly 9-month ban on the importation of DVDs and videos. We oppose it because it is stupid, anti-competitive, and anti-choice. It will deny choice to a whole lot of New Zealanders. On the other hand it may be nothing but puffery, because we have been told in the Committee stage that the 9 months applies from the international release of the video, DVD, or film. That means that if a film is released in the summer in Europe—I am sure, Mr Speaker, you have been in Europe in summer, and you will know that a lot of films are released at that time—it may be another 6 months before it comes here. So this ban may apply for only 3 months.

We also know that there is no ban on the owner of the copyright importing a DVD into New Zealand, even before the international release of the film. There is no ban on the owner of the copyright to the video or DVD importing it, and putting it on the shelves of video shops around New Zealand on the very day of the international release. That is not caught, nor is the personal importation of DVDs or videos. While we are not allowed to go down to the video shop in Hawera or Eketahuna to get a video, we can get on the Internet, order it, and have it within 2 days. So if people can afford to buy a DVD or video, this bill will not apply to them. There are so many problems with this bill and with the Government’s programme to try to ban the importation of videos and DVDs within 9 months of the international release of films.

The National Party asks why the Prime Minister did not just admit she was, yet again, foolish, and spoke before she thought about it. She made a silly election promise, trying to pander to the favourite little group that she likes to pander to, and nothing has come of it. The official papers, which we managed to prise out of the Government under the Official Information Act, show that the Government spent 2 years trying to find something that it could window dress to look like the Prime Minister’s promise in the Speech from the Throne. The fact is that the Prime Minister has delivered zip. She promised a 2-year ban on videos, DVDs, books, and software, and what has she delivered? She has delivered a 9-month ban on that.

What does this legislation actually do? It tries to affect a few people who the Government thinks are somehow people who have their hands in the till. Those are the people whom the Government wants to target: people who may have their hands in the till. The Government is trying to say to them that they should not be allowed to act in a way that satisfies the demands of ordinary New Zealanders. It is the ordinary New Zealanders who will miss out—the ordinary New Zealanders who are hard-working, stay in their jobs, and obey the law. They are the people who will miss out under this ban, because they will be denied the right to go down to the local video shop and hire a DVD or a video within 9 months of the public release of the film. Frankly, I think that is outrageous. It is outrageous because it is a denial of the choice that New Zealanders have become used to.

New Zealanders have become used to the fact that they can go to the video shop and rent a recent release. That is why that stand at the video shop is called “Recent Releases”; they are quite recent in terms of the release date of the film. This Government has now proposed that ordinary people should not be able to rent a video within 9 months of the release of the film. That is the consequence of this bill.

💬 Larry Baldock: No! Absolute rubbish! Get back on to the subject.

I tell Mr Baldock that this legislation is a denial of a right of ordinary New Zealanders to go to their video shop. The United Future party endorsed the Care of Children Bill, endorsed lesbian fathers, and endorsed 12-year-olds having abortions without informing their parents, because United Future members had not read the bill. I say to Mr Baldock that he has not read this bill. If he reads this bill, as he should have read that bill, the Care of Children Bill, which the United Future party endorsed—

💬 Mr SPEAKER: The member will come back to the bill.

The point I am making is that the member has not read the bill. If he had read the bill, then he would not have made the interjection he just did that this measure will not restrict people’s choice at the video shop. I can table the press release of United Future supporting the Care of Children Bill—endorsing it in this House—because United Future members had not read it. If they had read it, their position would now be to oppose it.

💬 Larry Baldock: Table it!

I will table it later—the press release showing United Future supported the Care of Children Bill.

💬 Jill Pettis: What’s that got to do with this?

It has to do with the fact that they have not read the bill. If they had read the bill, they would know that it denies ordinary New Zealanders the choice of going to the video shop.

The Government was told this legislation would not work. This will not save one provincial theatre in New Zealand. It will not save a picture theatre in Temuka from closing. It will not have any effect whatsoever on that, and the Government was told that it would have no effect. On the very day after we heard about a record performance by Sky City Leisure, which owns a chain of theatres up and down New Zealand, including provincial New Zealand, the Government is trying to say provincial theatres need protection. The fact is that they do not.

Ordinary New Zealanders need choice. That is what we in the National Party Opposition stand for. We stand for choice. Parallel importing has delivered huge amounts of choice to ordinary New Zealanders. It has reduced the cost of books, videos, CDs, and software, but it was opposed by the Labour Party. The Labour Party has to realise that this proposal to stop people buying Finding Nemo for their kids for Christmas is a joke. It is a denial of choice, and it says to New Zealanders that they have no right to get those cheap products. That is quite wrong.

I am pleased to take a call and speak in support of this bill. First of all, I would like to thank the chairman of the Commerce Committee, Mark Peck, for all the work he put into this bill, the officials for the tremendous amount of support they gave the select committee, and for the work they put into the bill, as well.

Generally, New Zealand First is supportive of this bill as it updates the Copyright Act to bring it into line with rapidly changing technology and film formats. Since the introduction of the Copyright Act in 1994, we have seen an expansion of VHS videos, video CDs, and the introduction of DVDs. We have seen the development of the Internet to levels that were not imagined in 1994. We have seen the introduction of electronic books, and the expansion of parallel imports. Parallel imports have grown beyond all expectations, particularly the parallel importation of films for distribution and rental prior to cinematic release in New Zealand, helped by the development of the Internet. That has resulted in a decline in cinema patronage and in the New Zealand film industry.

This bill provides a ban on parallel imports of films, including DVDs, VHS videos, and video CDs, for a period of 9 months from the time the title is released internationally. It is important that we realise that it is from the time the film is released internationally. We are lucky that The Return of the King, the final in the triology of The Lord of the Rings, is to be released internationally here at the end of next month. Genuine authorised licence-holders are allowed to distribute DVDs and videos of that film from the date it is released internationally. If they choose to release them on the day the film is presented internationally, then they are entitled to do so. The 9-month ban does not restrict the distribution of DVDs through the authorised licence-holder.

In its submission, the New Zealand Motion Picture Exhibitors Association expressed concern about the unrestricted parallel importation of films, DVDs, and videos, and supported the 9-month ban on the parallel importation of film. The bill’s original intention was to protect cinematic distribution from the release of the DVD and other formats. However, in its present form the bill allows the authorised distributor the right to determine those protections and when the release will take place.

This ban—and it was not mentioned during the Committee stage, which I was quite surprised about—lapses after 5 years. The assumption is that technologies and the means of distribution will have changed dramatically in that 5-year period. But a lot of the equipment still around today for the general distribution of film is many years old. I suggest that any projection equipment that has been purchased in the last 5 years will have another 10, 15, or 20 years of life left in it, and therefore the 5-year lapse period is a bit optimistic.

We received submissions expressing concern that a large proportion of region 1 catalogue films have not been released in New Zealand, and are being restricted by the local distributor. That means that local distributors control the release of those products, and therefore they are managing to restrict the distribution of those films and sound recordings because they are not allowing those catalogues to be distributed in New Zealand. Parallel importers can, if they wish, get a licence to import those catalogues, but many of them do not have the opportunity because of the restrictions put on them by the authorised distributor.

In their submissions, learning institutions expressed concern that although they are able to parallel-import electronic books, journals, and other films and DVDs, they run into the problem of a sound clip or movie clip embedded within electronic books that has not been officially released in New Zealand and is within the 9-month period of international release. Under this bill, they are not allowed to distribute that film within their learning institute as freely as they would like. As a result of that restriction, they are then forced to rely on importation through the authorised licensee, who might well restrict the time period in which they are allowed to show it, and that would certainly add considerable cost to the importation of that sound bite. It might be only a portion within a particular e-book or e-magazine imported by the institution, but it was a major concern.

The bill changes the onus of proof to the importer of the films, DVDs, videos, CDs, and sound recordings, compelling him or her to prove that those items were not infringing copies. In other words, those people are assumed to be guilty until they prove that they have received those items from a legitimate source. The concern here was that those importers are running a legitimate business, importing from legitimate parallel-importers, and have done so for many years. I suggest that the likes of the Warehouse could be in that position. It could quite easily be stopped from importing some of its goods, simply by an authorised licensee stating—without any proof or evidence, just the suggestion—that he or she believed that some of those goods were pirated. That would make the Warehouse guilty until it proved it was innocent. Yet it would have been parallel-importing from legitimate sources for a long time, and have had no intention of importing pirated goods. But this bill puts that inference there, and it could make the Warehouse guilty.

In winding up, I want to say that New Zealand First supports this bill, simply because it updates the old bill with the new technologies and brings it into line with modern technology.

The ACT party opposes this bill. It is just a pay-off to the Prime Minister’s supporters in the arts, and it is also a feeble attempt to appease American interests. In 1999 in the Speech from the Throne the Prime Minister included a statement that parallel importing of CDs, videos, films, books, and software was to be prohibited for 2 years after the first release. As we have already heard, the Ministry of Economic Development conducted a review because of this. It was claimed that this review was announced because plans to ban parallel importation had secured New Zealand’s removal from the United States Special 301 Watch List for nations with, as the US said, inadequate copyright protection laws.

As I have already said, this bill is not about protecting copyright. Copyright is an intellectual property right, and the ACT party protects property rights probably more than any other party in this House, and intellectual property is no different. But this is about protecting the licensing rights of certain distribution companies, and it is about protecting the market for theatre companies throughout New Zealand. This legislation will do more to promote the breaching of copyright than if there were no law protecting copyright at all.

As the bill states, the ban on parallel importing was this Government’s warped attempt to try to promote New Zealand’s creative industries. The Minister stood up before and said that it heard submissions from rural and provincial theatre companies that were not doing well in the market, and that needed protection from the Government, and she said that they were struggling to survive. So this Government has brought in legislation to protect rural and provincial theatres. What is this Government doing to protect rural and provincial schools that are being closed down in an unprecedented way around this country?

💬 Mr SPEAKER: Would the member please come to the bill.

Yes, I will return to the bill, but I just ask the Government to think about this. Does this Government consider only the friends of Judith Tizard in the film distribution business when it thinks of creative industries? Is the knowledge wave economy not something to do with creative industries? This bill is ostensibly to protect creative industries.

I would also ask that the Minister stop and think what this legislation will do to the local New Zealand music industry, which I would argue is one of the best in the world. We have in this country some of the best songwriters and musicians in the world, and when I was in Cambridge earlier this year I was proud to take New Zealand CDs with me. But this bill will create monopolies and protect those who have lobbied hardest at Government level to ban parallel importing. Where will this drive consumers who do not want to pay inflated prices for their CDs? It will drive them to the Internet. It will promote the piracy and the burning. Worldwide music sales are down, and the major reason is CD piracy. Modern computer technology makes it very easy to copy music, and young people think it is normal to get free music downloads off the Internet. They are actually growing up now to think it is normal to breach the copyright of music and to burn CDs. They do not even think of it as pirating. Many of these people copy for personal gain, which is a breach of copyright, and then they go further and sell pirated CDs at school, gigs, markets, and universities.

If one needs any further proof of what a parallel importing ban will do to the music industry, look no further than the well-publicised trial in America where Napster was taken to court by Metallica—the hard-rock music band—which, along with the rest of the music industry, was screaming blue murder over copyright infringement. Napster argued that it was only providing a forum for music swaps and thus not infringing copyright. How will this bill protect this dubious practice from happening? It will not. The Internet drills holes through international boundaries, and this legislation is a 1950s solution forced on to New Zealanders who are no longer locked up behind the Government’s patrolled fences.

New Zealand is not on the US Special 301 Watch List because its copyright laws are poor, but because overseas copyright owners and the local exclusive licensees were placed by the parallel importing allowances in the same position as New Zealand originators of unique or branded material. That is, they had to enforce their rights themselves. In other words, the US copyright holders lost their free New Zealand - supplied enforcement service at the borders of this country—the New Zealand Customs Service. The Minister argued that customs would not be involved in this at all, and argued that there would be no onus on customs officers to view what is coming in, to see whether it will breach this legislation when it is passed.

If that is the case, why are we passing the legislation, and who will enforce it? I see that the Minister cannot address that question any more, but what is the point of going through the farce of passing this legislation if it will not be enforced? All it will do is raise the uncertainty and doubt in the minds of people who are not breaking the law, and then when they find that they have to try to defend themselves, the onus of proof is reversed so that they are guilty until proven innocent.

So this Government will give our American friends free protection of their licensed rights, their exclusive licensees free protection. It will protect their copyright, because they will not be required to do it any more—not for 9 months, anyway. It will also give a guaranteed protected monopoly market until a film, DVD, or piece of music is no longer in high demand. I have already said that the people who will be worst affected by this legislation are the people the Labour Party used to count on as its supporters. It will be the people who cannot afford to take six children to the movies to see Finding Nemo when it is first released, who would have been able to rent it from the local Video Ezy, but will no longer be able to do that.

How far behind this bill will the print publishing industry be? Will the Government now move to ban the parallel importing of books? How will it control that industry as the print-on-demand book technology develops? The Warehouse has benefited thousands of New Zealanders by being able to offer books at a fraction of the price the big book chains demand. The Government has said that it has backed off books, including books in this bill, “for the time being”. I would say to the people out there who enjoy reading books, to be very afraid. There is some weird belief that this bill will encourage an increase in international investment in, and overseas promotion of, New Zealand creative talent. The biggest barrier to investment in New Zealand creative talent in this country is the fact that the Government, especially in the film industry and the New Zealand Film Commission, scares away investment by behaving like some sort of commissar of culture in a studio.

I finish by saying that parallel importing has benefited all consumers at the expense of a few monopoly-licence holders. Consumers will suffer as a result of this bill, and we do not support it.

The Green Party is pleased to support the protection and the check on unscrupulous and powerful interests that this bill provides. We would not have been unhappy with a greater level of protection to small, local, specialist book and record stores. In an earlier speech the Hon Tony Ryall lauded the availability of cheaper products that resulted from the introduction of parallel imports by a Government of which he was part. Cheaper products have been won at the expense of local businesses and local manufacturers frequently. That provision has made small specialist stores in smaller provincial and rural communities largely extinct. Even in the cities it has threatened the species.

Those are the stores that provide the real choice of which the Hon Tony Ryall spoke. They are the ones that will give people the specialist products such as blues records, and those specialist things that one does not get, and are not the bulk-purchased products. They have been put at risk by earlier parallel importing provisions.

The bill is modest legislation that we hope ensures that the provincial cinemas do not become similarly threatened and extinct, because they provide another level of choice in those small communities. It is not a choice between cheap, cheaper, or cheapest version of the DVD, but a choice between the right to go to a movie and the right to watch it in one’s own home.

It probably is not possible to protect, or give absolute protection, in the age of the Internet. That perhaps relies on the integrity of ordinary New Zealanders to have some respect for the rights of people who have put the energy and creativity into producing the kinds of movies that we all enjoy.

The “onus of proof” provisions may ring alarm bells, but they are really a common-sense measure at a time when technology makes pirated copying a simple process. In fact, as I said earlier, businesses would be wise to make sure that the products they are dealing in have not come from illegitimate sources. As I said earlier, film makers who have provided us with creativity and the energy have a right to the protection that the bill provides, and we are pleased to support it.