Copyright chilling effects: NZ geounblocking edition

By Eric Crampton 09/04/2015

A few things puzzle me in the rights-holders’ cease and desist letter to New Zealand ISPs offering “Global Mode” services. That’s likely because I am not a lawyer.

These services make geomasking easy for broadband customers rather than requiring them to install Hola! or use Unblock-us (or any of the other alternatives).

People in New Zealand using geomasking to subscribe to US or UK-based content providers are in breach of the foreign provider’s terms and conditions, which require that you be based in the US or UK. But being in breach of a foreign provider’s terms and conditions is not, as I understand things, illegal. It just means that they can cease your service if they choose to catch you.

Netflix’s Terms & Conditions prohibit the viewing of content anywhere other than within the country or location authorised by Netflix. When you sign up with Netflix and geomask to pretend to be in the US, you are in breach. The sole remedy provided in the T&C is in Section 8: Termination. If you are in violation of the terms, they can kick you out of the system.

So the first thing that puzzled me in Buddle Findlay’s notice to the ISP was 6.c’s suggestion that a breach of foreign terms and condition makes Global Mode service unlawful:

Is it really illegal to breach terms of service? Maybe you could get civil action by the firm whose terms you breached, but by a foreign third party? 
Section 35 of the 1994 Copyright Act lists how you can infringe copyright by importing a work
Part 1 explains that, as I read it, if you buy a bootleg DVD overseas, know or reasonably ought to know that it’s bootleg, and bring it home without getting a licence, and intend to use it other than for private and domestic use, that’s infringing. But you need all the “ands”: other than for private and domestic use seems applicable. Further, if it were a legal DVD abroad, it wouldn’t be infringing here. 
Part 2 deals with default presumptions in civil proceedings.
Part 3 says that importation of copies of films within the licensing window for other than private and domestic use is forbidden: they basically want the movie theatres to have a decent shot at airing a film here first. The only person importing Netflix from New Zealand is the end-user, not the ISP or somebody providing a geomasking service to a New Zealander. 
I just can’t see how a consumer streaming Netflix into New Zealand in breach of Netflix Terms & Conditions is in breach of NZ law, nor do I see anything here saying that an ISP is liable if a customer does this. 
The only reference I can find to geographic restrictions are in terms of an exclusion to the forbidding of circumventing technological protection measures (DRM, basically). In short, it’s illegal to break digital rights management. But there’s a huge exclusion there carved in: 

For the avoidance of doubt, does not include a process, treatment, mechanism, device, or system to the extent that, in the normal course of operation, it only controls any access to a work for non-infringing purposes (for example, it does not include a process, treatment, mechanism, device, or system to the extent that it controls geographic market segmentation by preventing the playback in New Zealand of a non-infringing copy of a work)

It is hard to read this other than as Parliament very clearly wanting Kiwi consumers to be able to use region-free DVD players for viewing of parallel-imported DVDs, whether or not foreign DVDs come with shrink-wrap licence conditions requiring only watching the discs within the zone of purchase.

It is also awfully hard to tell just what provision of the Copyright Act Buddle Findlay thinks Global Mode is breaching. They don’t cite any specific provisions of the Copyright Act; they just kinda point at it. Again, IANAL: maybe it’s common for lawyers to be really vague about things to avoid foreclosing options later on, but I would have thought that they’d have pointed to some bits of the law that actually make it illegal for New Zealanders to use geounblocking to watch Netflix – if Global Mode is really misrepresenting things by telling customers it’s legal, wouldn’t there be some part of the law they could point to saying why?

Chris Keall, whose reporting at The NBR on this file is second to none, notes that the geomasking company can’t afford to fight the heavyweights in court and so will have to pull its service, but that they’re going to the Commerce Commission.

If the rights holders are mad about all this, wouldn’t the more logical approach be for them to talk with the folks who sold them the rights in the first place and who also sold rights to Netflix (and others) without as much geographical segmentation as the rights holders expected?