Outdated copyright law stymies investment: Deloitte

New Zealand's current copyright laws are outdated and are likely to hamper digital innovation and experimentation, Deloitte says in a report commissioned by global search engine Google.

The use of a prescriptive 'fair dealing' test in the current regime, which seeks to define when original content can be reused without breaching copyright, has "failed to keep pace with changing technology", the report says. "This makes New Zealand a comparatively less attractive place to innovate."

"Growth areas of the digital economy, such as text and data mining and cloud computing, are in a precarious position of legality under current copyright law," it says.

Instead, Deloitte proposes moving to a more generic "fair use" test to create a "more flexible and adaptive copyright framework that accommodates digital innovation and experiementation because it is neutral - both with respect to the technological form the creative output takes and with respect to the specific nature of its content".

"Fair use can be applied to any use of material as long as the proposed use is consistent with the principles of fair use", which include that the reuse of original copyrighted material should be "transformative" of the original, rather than an unaltered reuse.

A 'fair use' test would create a more flexible and adaptive copyright framework that accommodates digital innovation and experimentation. 

"These principles ... ensure that the value of second-generation innovations is appropriately balanced against the need to promote incentives for first-generation innovators, particularly as the market for new technologies emerge."

Particularly exposed may be text and data mining services, and emerging machine learning technologies that use original content to produce insights, but risk copyright infringement because of the way the current fair dealing rules are framed.

Cloud computing and data analytics firms are already less free to use publicly available information in New Zealand than if they operated in the US, where a fair use regime has been in place since the mid-19th century.

"Koordinates, a cloud-based data platform, is able to freely collate publicly available data in the US by relying on fair use," the Deloitte report says. "Under fair dealing in New Zealand, Koordinates must negotiate individual agreements for the use of data with local councils, even if the data is publicly available elsewhere."

Fair use would also give artists more certainty about their right to "remix other materials in their work across a range of mediums", students would have greater scope to include extracts from third-party materials in films and documentaries that are aired publicly, and software developers and start-ups would have "greater scope to use part of a copyright software interface to develop compatible programmes to commercial software".

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