Ariadne’s Thread – The Labyrinth of the Dotcom Extradition Case

Now, before Daedalus left Crete, he had given Ariadne a magic ball of thread, and instructed her how to enter the Labyrinth. She must open the entrance door and tie the loose thread to the lintel; the ball would then roll along, diminishing as it went and making, with devious turns and twists, for the corners where the Minotaur was lodged.[1]

 

Introduction

This post considers the appeal against the findings by Judge Dawson in the District Court that Mr Dotcom and his co-appellants were eligible for extradition. The article attempts to explain in plain terms some of the legal issues surrounding the case. One of the main issues was whether or not the offences alleged were extraditable. But a word of caution – perhaps an apologia. This article is not a full academic treatment of the decision. It is an overview and an attempt to explain in straightforward terms a part of a somewhat complex decision.

It was necessary for the Court to consider the indictment that had been proferred in the United States and the charges which the accused appellants were to face in that country and determine whether or not they amounted to extraditable offences for the purposes of the Extradition Act 1999.

There were a number of “overlays’ in that not only did the Court have to consider the Act but also the provisions of an Extradition Treaty between New Zealand and the United States which came into force in December 1970. Article II of that Treaty set out sets of offences which were extraditable and which were particularly relevant in this case. Throughout the decision the question of whether or not the conduct was sufficient to engage Article II.

A further overlay was in the provisions of section 101B of the Extradition Act. That section was inserted by the Extradition Amendment Act 2002 in response to the United Nations Convention Against Transnational Organised Crime (UNTOC). That section has the effect of deeming various offences to be extradition offences under existing treaties with foreign countries that are parties to UNTOC. This applies to the 1970 US/NZ Treaty. The deemed offences include an offence involving participation in an organised criminal group.

What the Court Had to Do

The Court had to determine whether the offences contained in the United States indictment were extradition offences under section 24(2)(c) of the Extradition Act.[2]

First, the Court had to identify the factual allegations that underpinned each count. Then it had to consider whether the totality of those alleged acts of omissions came within the description of an extradition offence for the purposes of the Treaty.

In such an exercise Gilbert J reminded himself that he should not take a narrow view by concentrating on nomenclature or the constituent elements of the offence. He recognised that generically offences may be similar although they may be articulated using different language.

Instead he noted that the Treaty was to be interpreted in accordance with cl 31(1) of the Vienna Convention on the Law of Treaties. This provides:

(1) … a treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

Furthermore, he observed that it does not matter that the offence charged by the requesting State (in this case the United States) may contain additional elements beyond those implicit in an Article II offence so long as the additional elements do not substantively change the nature of the conduct alleged.

The Charges

The important counts in the indictment involved allegations of copyright infringement. Count 2 alleged conspiracy to commit copyright infringement. Counts 4 to 8 alleged specific instances of copyright infringement. These offences of criminal copyright infringement were the foundation for other charges. Without criminal copyright infringement these other charges could not be sustained. Thus in the decision the Judge considered these predicate criminal copyright allegations first.

The other counts were racketeering (count 1), money laundering (count 3), and the wire fraud charges (counts 9 to 13).

In the argument the United States contended that there were pathway offences in New Zealand law which could be followed to ascertain whether the acts or omissions constituting those offences amounted to an extradition offence. It is not necessary for the extradition offence to match the offence stated in the indictment of the requesting State. Rather there must be, as I have stated, generic similarity.

I shall now proceed to consider the counts in the indictment and how the Court determined whether or not there were qualifying extraditable offences or “pathways” to the Count in question[3].

COUNT 2 – Conspiracy to Commit Copyright Infringement[4]

Pathway Offences

The Court considered a number of different offences under New Zealand law which were pathways to the count in the indictment alleging conspiracy to commit copyright infringement. In doing so the Court considered the applicability of certain offences in the Crimes Act that did not directly address copyright infringement but where the behaviour might involve that include that activity.

Conspiracy to Defraud[5]

Conspiracy to defraud was an offence that was stated in Article II.16 of the Extradition Treaty.

The issue in considering this count was whether the crime of conspiracy to defraud could include behaviour that involved copyright infringement. The Court held that it could and cited considerable authority in support of its finding.[6] It was argued that the Copyright Act was a code but in light of the authority cited, the Court rejected that argument, although it should be noted that the authorities cited are quite nuanced on this point[7]. However, the issue becomes a contentious one when sections 228 and 249 of the Crimes Act come into play along with the foundation of Dixon v R[8] which is discussed below.

The Court considered whether the elements of conspiracy to defraud were present in this case[9] and stated that  wilful infringement of copyright can properly be characterised as a dishonest act. Such infringement deprives the copyright holder of something to which it might be entitled. The money obtained through participation in the alleged conspiracy to defraud any person – that is to cause the copyright holders economic loss by depriving them of something to which they might be entitled – by fraudulent means (intentional infringement of copyright) is the allegation in Count 2 which is sustained.

It was argued that the safe harbour provided by section 92B and 902C of the Copyright Act provided relief. Although the Court held that the safe harbour was not engaged in this case the discussion of the distinction between the scope of 92B and 92C and the general observations on the availability of the safe harbour provides a useful guide for the scope of these sections.

That would have been enough to dispose of the matter in that by using the conspiracy to defraud pathway it was found to be an extradition offence within Article II.16.

However, it was necessary to consider other pathways given the fact that the matter would go on appeal.

Dishonestly Taking or Using a Document – s. 228 Crimes Act[10]

In his discussion of Article II.16 and the state of the Crimes Act at the time of the Extradition Treaty, Gilbert J considered the applicability of the former section 257 of that Act. Section 257 has been replaced by section 228 which involves dishonestly taking or using a document with intent to obtain property, a service, pecuniary advantage or any other benefit.

The first consideration was whether a digital file can be a document. That is in fact the case and is clear from the definition in s. 217 Crimes Act and affirmed in Dixon[11]. This is not a contentious proposition.

The Court then restated the proposition that wilful infringement of copyright can amount to an act of dishonesty – that is an act done without a belief that there was express or implied consent to, or authority for, the act from a person entitled to give such consent or authority (the copyright owner).

It was argued that s.228 of the Crimes Act did not mention copyright but for the reasons given in the extensive discussion of the availability of the Crimes Act to encompass infringing behaviour in certain circumstances in support of the conspiracy argument it mattered[12]  not that copyright in a document (a digital file) is not singled out in the section.

The Court observed that although Megaupload was a cyberlocker it still made use of copyright infringing material in storing the files and making them available to generate advertising and subscription revenue. Use was not an essential element of the offence but obtaining a document for pecuniary advantage was, and the definition of “obtain” includes retaining. Therefore it was enough for Megaupload to retain the files on its servers the fulfil the requirement of “obtaining”

The particular conduct was undertaken for the purposes of pecuniary gain and thus the conduct in Count 2 is covered by s. 228 and is deemed to be included in the Treaty and the requirements of s. 101B(1)(c) are made out. In that section 228 is an offence punishable by a term of imprisonment of seven years.  Finally, it was noted in the interests of completeness that the appellants were in New Zealand.

The next associated issue was whether or not there was an organised criminal group.[13] This involved a consideration of the provisions of section 101B(1)(c)(ii) of the Extradition Act. The elements that are required – combining the UNTOC definitions of an “organised criminal group” and “serious crime” are as follows:

 

(a) a structured group;

(b) of three or more persons;

(c) existing for a period of time;

(d) acting in concert;

(e) with the aim of committing;

(i) offences established in accordance with UNTOC; or

(ii) a serious crime, being conduct constituting an offence punishable by imprisonment of four years or more;

(f) in order to obtain financial or material benefit directly or indirectly.[14]

The Court was satisfied that all these elements were fulfilled and there was sufficient evidence to support all the allegations together with the fact that copyright infringement in the US carried a maximum penalty of 5 years thus fulfilling that requirement and on that basis s. 228 provided an extradition pathway.[15]

Accessing a Computer for a Dishonest Purpose – s. 249[16]

Section 249 of the Crimes Act makes it an offence to access a computer and dishonestly or by deception and without colour of right obtain any property, privilege, service, pecuniary advantage, benefit, or valuable consideration or cause loss to any person. This section was considered as a pathway offence to Count 2 in the following way.

For the same reasons as those given in respect of s. 228, the allegation of dishonesty as an element of s. 249 was satisfied by wilful infringement of copyright.

It was argued that there was no access of a computer system – rather merely providing a computer facility for others which could be used lawfully or unlawfully. The issue of access was dealt with in this way. The data (the copyright infringing file) was received from the uploader onto Megaupload’s computer system, stored in that system and made available to others to access using the link provided by Megaupload using the computer system[17]. All of this involved making use of the resources of the Megaupload computer system. This fulfilled some of the elements of the definition in section 248 of the Crimes Act to which reference was made – “access, in relation to any computer system, means instruct, communicate with, store data in, receive data from, or otherwise make use of any of the resources of the computer system.”

It was also held that the purpose of such access was to obtain pecuniary advantage or financial gain, thus fulfilling that element of s. 249 and the penalties brought the offence within the 4 year definition of serious crime for the purposes of s. 101(B(1)(c).

It is important to note that the discussion of section 249 at this stage is very narrow indeed and suggests that the sectioncan be used as an alternative to commercial copyright infringement. There was no discussion of the nature of “property” and whether a computer file amounted to property as held in Dixon. Further use of section 249 and Dixon in the context of other sections of the Crimes Act is considered in the context of the wire fraud charges.

Section 131 Copyright Act[18]

Section 131 of the Copyright Act creates criminal liability for certain types of copyright infringement that have a commercial quality. The question was whether or not the appellants were involved in the exhibition in public or distribution of infringing copies.

At first glance it would seem that distribution would encompass the activities of Megaupload. The difficulty was that there was another specific form of infringement that covered digital material and that was what is known as the communication right.

The communication right and the distribution right are differentiated in the World Intellectual Property Organisation (WIPO) Copyright Treaty 1996. The Treaty recognises the important distinction between dissemination by the transfer of possession of a physical embodiment of a protected work (distribution) and dissemination through electronic transmission (communication). Fundamental to the distribution right is the necessity for a tangible object.

In New Zealand the communication right was incorporated into Statute by the Copyright (New Technologies) Amendment Act 2008. But the provisions of section 131 were not amended to include a breach of the communication right as a form of commercial criminal copyright infringement.

This was not accidental. There were submissions to Parliament that the communication right be incorporated into section 131 from Microsoft and the Motion Picture Association. Indeed the legislation in the United Kingdom incorporated such a provision but New Zealand chose not to follow.

In addition as a further indication that Parliament did not intend to criminalise the commercial infringement of the communication right, section 198 created a criminal offence of dealing in illicit recordings of performances rather than objects which were infringing copies of a copyright work.

The Copyright Act was again reviewed in 2011 when Parliament enacted the Copyright (File Sharing Infringing) Amendment Act 2011. It did not at that time take the opportunity to include a breach of the communication right in section 131.

Thus section 131 relates to tangible objects rather than communication of intangibles such as digital files and was thus not available as a pathway to Count 2 of the indictment.

This was not an unexpected outcome, at least to this commentator, but creates a contradiction. When the search and provisional search warrants were issued the offence alleged was against section 131 of the Copyright Act. Now it transpires that offence was not available. In a case that has not been without its legal controversies, this is one more.

However, the absence of section131 as a pathway does not end the matter. There were, as has been discussed,  other pathways to Count 2 and there were other counts which will be considered, all of which have their own pathways.

 

Count 4 – Copyright Infringement of the Movie “Taken”[19]

This count alleges that the appellants infringed copyright by distributing a work – the movie Taken) being prepared for commercial distribution in the US.

The Court concluded that neither this nor any of the specific infringement allegation contained in Counts 4 – 8 contained any other elements described in Article II.16 of the Treaty. They were not charged with obtaining property or money and the offending did not match the offending set out in Article II.16

However, the offence did correlate with sections 228 and 249 of the Crimes Act. The requirement of both sections that there be an element of commercial advantage or financial gain were both satisfied. They obtained and used a document – a digital file – dishonestly and without claim of right and this involved accessing a computer which is an element of section 249. In addition the Court considered that the appellants were acting as part of an organised criminal group and on that basis section 101B(1)(c)(ii) was satisfied

 

Counts 5 – 8 – Other Copyright Infringement[20]

In these counts the nature of the infringement alleged was different. Wilful reproduction and distribution of copyright protected works with a total retail value of more than $US2500 was alleged.

Once again section 131 was not available as a pathway and nor was Article II.16. However, the Judge held, for reasons already articulated, that sections 228 and 249 of the Crimes Act are available to fix the conduct alleged with the necessary criminality.

 

 Count 3 – Conspiracy to Commit Money Laundering[21]

Critical to this count was the necessity of a finding that there were pathways to the copyright allegations. Those pathways having been found the way was open to consider this count since it was predicated on the availability of copyright offences.

The Court analysed the elements, pointing out that money laundering was not an offence in New Zealand when the Treaty was signed in 1970. However, the Treaty did contain in Article II.19 the inclusion of any offence in addition to the listed offences that “transporting” or “transportation” was an element.

The Court observed that there were transfers of money – the proceeds of copyright infringement – by electronic funds transfer. This was in effect a wire transfer and the Court held that the conveying of funds electronically amounted to a transfer and thus Article 11.19 was engaged and thus the offence was an extradition offence.

Counts 9 – 13 – Wire Fraud[22]

There were a number of allegations made by the United States that supported an allegation that the appellants devised a scheme to defraud copyright owners and obtain money by means of false and fraudulent representations and promises. Some of these included misleading copyright owners that access to a file would be disable when in fact only the link was disabled; falsely representing that repeat  infringers had access terminated when in fact they were allowed to continue infringement and were rewarded for it and misrepresenting the Megaupload abuse tool and their notice and takedown procedure.

The US argued that Article II.16 and sections 228, 240 and 249 provided pathway offences for these counts.

 

Pathway Offences for Wire Fraud

Article II.16

The Judge found that the conduct alleged in these counts corresponded to Article II.16 of the Treaty. It was alleged that the appellants obtained money as a result of false representations. That is another way of saying they received money by false pretences . This allegation satisfied the causal nexus between obtaining money and false pretences.

In addition the counts alleged the money was obtained by a conspiracy to defraud the copyright holders, the essence being that they devised a scheme to defraud copyright holders. That is tantamount to an allegation of conspiracy to defraud and thus article II.16 provided an extradition pathway.[23]

Section 228 – Crimes Act[24]

It was conceded that the emails that were sent to copyright owners in furtherance of the allegedly fraudulent scheme were documents.  Although it was argued that it was necessary to establish that the document had to be used to obtain property or money and that the files were already on the Megaupload system – thus no obtaining. The Judge observed that the definition of obtain meant to obtain or retain. In addition the Judge found that the requirements of s. 101B(1)(c) were satisfied in that the offence was punishable by imprisonment of 4 years or more and involved an organised criminal group. Thus section 228 provided an extradition pathway.[25]

Section 240 Crimes Act[26]

Section 240 of the Crimes Act creates the offence of obtaining or causing loss by deception. There are four circumstances in which the offence may occur, all of them requiring elements of deception on the part of the perpetrator together with an absence of claim of right.

It was conceded that the element of deception could be made out by virtue of false representations that were contained in emails. The element of obtaining was satisfied by the extended definition of obtaining which included retaining, as discussed above.

For the offence to be complete, property had to be obtained. Gilbert J held that the copyright protected films in digital file format were property and cited as authority the case of Dixon v R[27] – a decision of the Supreme Court.

In this commentator’s respectful view Gilbert J read Dixon more widely than was available to him. Dixon was a case that centred around whether or not a digital file was property for the purposes of section 249 of the Crimes Act. The Supreme Court held that it was, and in doing so has introduced a level of uncertainty in the law surrounding the issue of whether or not there is a property right in information. It is my contention – and I have argued it in detail elsewhere – that Dixon was wrongly decided and is both legally and technologically unsound. Nevertheless, until the Supreme Court reconsiders its decision it must stand. However, the scope of the holding, on a strict reading of the decision, is that a digital file is property is limited to the provisions of section 249 of the Crimes Act.[28] The Supreme Court held thus, and to expand the scope of the finding to include digital files as property for offences other than under s. 249 is, in my respectful view, a misinterpretation of Dixon.

But the Court found that s. 240 of the Crimes Act provided an available pathway for the wire fraud counts.

Section 249 Crimes Act[29]

Section 249 of the Crimes Act provided an available pathway for some of the other counts. As far as counts 9 – 13 are concerned it was argued that the purpose of the section was to address computer hacking rather than to cover dishonest acts associated with copyright infringement.

The judge answered this by observing that the definition of a computer system was very broad and included using any of the resources of a computer system. Email plainly fell within that broad scope.

The Judge could also have observed that computer hacking was not the target of section 249 because it did not include unauthorised access to the system as an element of the offence. The important element associated with accessing the computer system is a dishonest or deceptive state of mind associated with certain activities such as obtaining property, a privilege, a service, a pecuniary advantage, a benefit or an advantage.

The behaviour of the appellants that brought them within the scope of section 249 was as follows:

  1. They caused knowingly false responses to be sent to copyright holders in response to takedown notices
  2. To do this they accessed the Megaupload computer system
  3. As a result of accessing the system in this way they thereby dishonestly and by deception and without claim of right obtained a benefit. The benefit was that it enabled Megaupload to retain copyright infringing files on its system. This met the causal connection of accessing the computer system and obtaining a benefit.

 

It is of interest that Gilbert J preferred to focus on the benefit aspect of section 249 rather than that of property, this invoking Dixon within the context of the Supreme Court finding of the fact that a digital file is property. His focus on the benefit aspect accords with the holding of the Court of Appeal in Dixon.

Count 1 – Conspiracy to Commit Racketeering[30]

Racketeering involves an enterprise – that is a group of individuals and entities associated in fact – engaged in interstate and foreign commerce where the members of the enterprise conspired to conduct its affairs for the purposes of enriching themselves through racketeering activity – in this case criminal copyright infringement, money laundering and wire fraud.

Pursuant to the decision of the Court of Appeal in US v Cullinane[31] racketeering was held not to be an offence under Article II of the Treaty. Racketeering was described as an “umbrella” crime and the Court warned against the use of allowing extradition for umbrella crimes where the offences, if charged separately, would not amount to extradition offences.

However, Cullinane was decided before the enactment of s. 98A of the Crimes Act which creates the crime of participating in an organised criminal group as well as s. 101B(1)(a) of the Extradition Act. This allowed the Court to reconsider whether or not racketeering could fall within the scope of an extraditable offence.

In essence the allegation was that the appellants were associated in fact and this amounted to an enterprise under US law. It was alleged that they continued as a functioning unit for the common purpose of achieving the objectives of the enterprise which was to enrich its members through criminal copyright infringement, money laundering and wire fraud. Furthermore they all actively participated in the enterprise.

The Judge found that the constituent offences – criminal copyright infringement and wire fraud – correlated to New Zealand offences punishable by at least 4 years imprisonment. The common purpose in the US indictment correlated with the requirements of section 98A of the Crimes Act which, if it had occurred in NZ, would be an extradition offence.

 

Extradition Offences – Conclusion

The result of the Judge’s analysis was that all the counts in the indictment were held to qualify as extradition offences.

One of the very significant aspects of the decision is the way in which provisions of the Crimes Act have been used to provide pathways to copyright infringement. This doesn’t mean that these offences are pathways to only extradition offences, although that it the way that they have been used in this case. The generalised holding means that there are alternatives means of criminalising copyright infringement apart from the provisions of section 131 of the Copyright Act 1994.

The citation of authority by Gilbert J to suggest that for some time criminal offences have been available to address copyright infringement cannot be displaced. In some cases these comments were speculative[32] –in others they were more direct.[33] The decision of Gilbert J now cements these comments into the structure of the law.

This means that copyright owners have different avenues by which they may pursue infringers in the criminal courts where section 131 is not available. Furthermore, while Dixon is still good law, copyright owners may use the provisions of the Crimes Act (given Gilbert J’s wide interpretation of that case) or at least section 249 to pursue infringers for what is effectively “on-line theft” of copyright material. I commented that when it was decided potentially the holding in Dixon could give truth to the mantra “copyright infringement is theft”. That potential has been realised.

Other Aspects of the Extradition Decision

The principle focus of this examination has been upon the identification of the extraditable offences. Given the focus upon the availability of criminal copyright infringement this analysis, although a summary of the decision without reference to the authorities cited, has been undertaken to understand the process by which the identification of extraditable offences was undertaken. However, as far as the case was concerned there were other issues which I shall tough upon briefly.

Evidence to Justify Trial on Each Count[34]

Because of the provision of the Extradition Treaty the United States was entitled to submit a record of the case (ROC) for the purposes of determining eligibility for surrender. There was considerable criticism of the ROC by the appellants. It was suggested, for example, that the ROC contained commentary that was opinion or hyperbole which the Court should ignore in determining sufficiency of evidence.

In the case of Dotcom v US (Disclosure)[35] the nature of the ROC was considered. Glazebrook J agreed that there were conclusory statements in the ROC but that the evidence that was relied upon was set out and that evidence supported the conclusions and inferences that the United States wanted to draw to support the existence of a prima facie case. There was a recognised risk in this process in that if insufficient material was provided, the extradition judge not be satisfied that a prima facie case had been made out.

The mere fact that the ROC and its supplements may contain material that cannot be relied on as evidence does not render the document inadmissible in its entirety. The Judge conducting the eligibility hearing  would have to ensure that there is sufficient summarised evidence to justify each appellant being committed for trial on each extradition offence. In carrying out this function, the Judge will differentiate between what qualifies as a summary of evidence and what does not. Gilbert J observed that The Court is required to determine whether the evidence that is summarised in the record of the case is sufficient to establish a prima facie case. The Court is not excused from this responsibility merely because some of the material in the record of the case does not qualify as summarised evidence[36].

Preservation of Evidence[37]

There was concern that the evidence that had been gathered and its availability might be in question. There was an additional concern about the possible deterioration of the electronic evidence. The Judge noted

“It is for the requesting State to decide what evidence it will rely on to support its request for extradition. The extradition Court is only concerned with whether this evidence is sufficient to justify a trial if the conduct constituting the offence had occurred within the jurisdiction of New Zealand. This will be the case if the Court is satisfied the summarised evidence is sufficient to establish a prima facie case and this evidence has been preserved for use at trial. “The evidence” in s 25(3)(a) plainly refers to the evidence summarised in the record of the case and not to every piece of evidence that has been reviewed in the course of the investigation or which could be relevant at trial. If the appellants’ argument was right, it would mean that if any of Megaupload’s data was lost, no matter how inconsequential for the purposes of a

committal hearing, the entire record of the case would become inadmissible. That

cannot have been what Parliament intended when enacting s 25(3).”[38]

 

No challenge had been made to the statements that the evidence summarised in the ROC had been preserved for use at trial. It was not a matter of concern for the extradition court to enquire as to whether other evidence had been preserved. That was something that would be evaluated in the context of fair trial issues in the requesting state and it would be contrary to the principle of comity upon which extradition is based for an extradition court to trespass into this domain.

Other Matters

There were a number of other matters of a somewhat technical nature that were raised on behalf of the Appellants. One involved the certification of the ROC by a representative of the US Attorney General’s office a Mr Prabhu.

The purpose of the ROC procedure was to summarise the evidence. Detail was not required. The ROC process is based on the Treaty and the comity and trust between the Treaty partners. In that regard the ROC need not contain briefs, “will say” statements or other documentary proof.

Because the ROC is received the Court requires an appropriate assurance that it discloses the existence of evidence sufficient to justify a trial in the exempted country and the evidence relied on for extradition purposes has been preserved for trial.  The Court observed:

“The purpose of the record of the case is to enable the extradition Court to

determine whether the evidence establishes a prima facie case if the conduct

constituting the offence had occurred within the jurisdiction of New Zealand. This

determination is made according to New Zealand law. The extradition Court in

New Zealand is not concerned with whether the evidence is sufficient to justify a

trial in the exempted country and it would be wholly inappropriate for it to enquire

into this. Parliament intended that the extradition Court would rely on a certificate in proper form from a person qualified to give it. Absent cogent evidence showing that such a certificate is a forgery or has been given in bad faith, the extradition Court cannot look behind it.”[39]

 

There was also concern expressed about the weight and sufficiency of evidence and the fact that there were a number of conclusory statements in the ROC. Although this matter had been earlier adverted to, it was conceded that such statements did not assist the Court in carrying out its fundamental obligation of weighing the evidence to determine whether the appropriate threshold had been reached. It was for the extradition court to carry out the evaluative process.[40]

Another argument arose about the question of transposition.[41] Transposition arises in extradition cases because the extradition Court is required to proceed on the basis of the fiction that the relevant conduct constituting the offence had occurred within its jurisdiction. But the focus of the extradition Court under the Act is on the conduct constituting the alleged offence, not the offence itself.[42]

Once the Court is satisfied that the request relates to an actual extradition offence there is no need to consider whether the conduct constituting the offence in the requesting state would be an offence under the law of New Zealand if the conduct had occurred here.[43] Thus the extradition Court should not have to determine whether or not conduct constituting the offence would have been an offence under New Zealand law if it had occurred in New Zealand at the relevant time. To do so would be to import a double criminality requirement and that was held not apply in Cullinane.

Within the context of the allegations relating to the movie Taken Gilbert J held that the extradition Court was solely concerned with the alleged conduct constituting the offence, namely that the appellants wilfully infringed those rights by making the film available to members of the public on a computer network.[44]

Thus for the purposes of its determination under s. 24(2)(d)(i) of the Extradition Act the Court had to concentrate on the acts or omissions of the requested person, being those acts or omissions identified for the purposes of s 24(2)(c) as constituting the extradition offence.

In a case involving alleged copyright infringement by making a copyright protected work available to members of the public without licence, the question of whether or not copyright subsisted in the relevant work in the United States at the relevant time is not an act or omission of the requested person and falls outside the scope of the enquiry. The extradition Court is not required to determine this issue, which would necessitate consideration of foreign law, a task it is ill-suited to undertake. The existence of copyright in the works at the time is a circumstance or “state of things” that is transposed to New Zealand as part of the relevant legal environment against which the evidence of the requested person’s conduct must be assessed.[45]

The Judge went on to consider in some detail the evidence as it related to each of the offences[46] and concluded that the evidence contained in the ROC disclosed a prima face case on each count. This effectively disposed of the extradition issue. It should be noted that there were a number of other technical arguments that were raised and which I will not discuss in this context. In addition there were applications that were made by the appellants for a stay of proceedings on the grounds of unfairness arising from lack of funds to properly mount an opposition to the application and for judicial review of the approach by the Judge in the District Court to the conduct of the proceedings. Those matters, although tied in with the original proceedings do not take the issue of extradition any further.

Conclusion

This case is a helpful one for those involved in extradition law. The Judge carefully articulated the principles and outlines and defined the processes by which extradition cases should be approached and considered. Although the Law Commission has released a paper on Extradition and recommends possible changes that can be made to the law, it may well be some time before those recommendations, or any of them, find their way to the statute book. The methodical approach undertaken by Gilbert J provides Ariadne’s thread for judges who will have to consider extradition in the future.

The case is particularly significant for the way in which Gilbert J considers the conduct that is criminalised by the counts in the US indictment and then looks for various pathway offences in New Zealand law which mirror that conduct.

The problem was that the United States case was grounded primarily upon copyright infringement. It tried to invoke section 131 of the Copyright Act as a corresponding offence at New Zealand law. But for the reason that a particular type of infringement was not specified in s. 131 – the communication right – that section was not available. So the judge went looking for other pathways which could incorporate the behaviour or conduct that reflected the count in the indictment. In so doing he held that the provisions of sections 228, 240 and 249 of the Crimes Act could, in cases involving certain types of behaviour, provide alternative pathways to what is effectively copyright offending.

This is somewhat curious because notwithstanding the invocation by the Judge of a number of authorities that supported the extension of the criminal law to include certain types of infringing behaviour, the issue is by no means uncontroversial and there are those who argue that the Copyright Act is a code, dealing with interference with a statutorily created property right, and one should not go beyond that legislation to seek a remedy.

Indeed, in his consideration of the applicability of section 131 the Judge gave a detailed analysis of the history of the legislation to demonstrate that the omission from section 131 of the communication right was deliberate and not an accidental oversight. Thus it was clearly a policy decision made by the Legislature.

Yet this case judicially extends the scope of the Crimes Act to include behaviour that would otherwise be caught by the civil infringement provisions and which is not caught by section 131. With respect, this seems to fly in the face of his careful analysis of Legislative intent in terms of criminal copyright infringement.

In Stevens v Kabushiki Kaisha Sony Computer Entertainment Ltd[47]  at issue was the question of the interpretation of a provision of Australian copyright legislation. The High Court cautioned against Courts getting involved in making policy decisions about legislation which was properly the bailiwick of Parliament. The Court observed

“The Parliament having chosen such an elaborate and specific definition for the key provision of the legislative scheme, a court should pause before stretching the highly specific language in order to overcome a supposed practical problem.”[48]

 

Although that comment is directed towards a particular provision of legislation and the scope thereof, it is suggested that the argument can be extended to address the criminalisation of infringing behaviour that does not fall within the scope of the Copyright Act. Using the Judge’s own reasoning path, if Parliament had intended such behaviour to be criminalised, it would have said so, and indeed had ample opportunity to do so from 1998 onwards.

The difficulty is this. It appears that the law of unintended consequences has resulted in the criminalisation of certain types of infringing behaviour. Factor in the use of a computer and s. 249 of the Crimes Act comes in to play. I doubt it was intended that this section would be used to criminalise copyright infringement. Nor is it my view that the Supreme Court in its expedient decision in Dixon expected that its definition of “property” as a digital file could have criminal copyright infringement consequences. This is what I have called else where a Collision in the Digital paradigm.

The collision assumes  greater proportions when one realises that, although Gilbert J’s findings were within the context of developing pathways for the purposes of identifying an extraditable offence, his interpretation applies with equal force to domestic law. The question now becomes one of whether copyright owners will pick their way through the collision and seek Police assistance in prosecuting individual acts of copyright infringement that fall outside s. 131. The matter requires legislative consideration.

Gilbert J’s decision will not be the final word on the subject – indeed he acknowledges this and it explains why the decision is so detailed, complex and voluminous. He is writing for the appeal court as well as for the parties. But the appeal pathways are not that straightforward. A strict approach to the appellate process means that not all these cases will automatically end up in the Supreme Court. As matters stand the Court of Appeal is the final court for the extradition matter. However, the judicial review proceedings do still have an appeal pathway to the Supreme Court. Whether or not the Supreme Court, for the sake of convenience, decides to grant special leave to appeal the extradition side of the case, remains to be seen.

But wait – do I hear you say? Aren’t you assuming something here and that is that there WILL be appeals. Given the past conduct of the parties, I suggest that it is inevitable that the appeal process will go as far as it possibly can. Although the US effectively “won” before Gilbert J there remains the issue of the applicability of section 131. My view is that path was never available but I have no doubt that the US will cross-appeal that aspect of the decision. The Dotcom case has further contributions to make to the development of legal principle in the Digital Paradigm.

 

[1] Robert Graves The Greek Myths “Theseus in Crete”

[2] Ortmann & Ors v US [2017] NZHC 189 at paras [37] – [45].

[3] The “Ariadne’s Thread” of the title.

[4] Ortmann above n. 2 at paras [57] – [192].

[5] Ibid. at paras [77] – [133].

[6] Ibid. at paras [87] – [112].

[7] See for example World TV Ltd v Best TV Ltd (2005) 11 TCLR 247.

[8] [2015] NZSC 147; [2016] 1 NZLR 678.

[9] Ortmann above n 2 at para [132].

[10] Ibid. at paras [134] – [160].

[11] Above n. 8.

[12] Ortmann above n.3 at para [143].

[13] Extradition Act s. 101B(1)(c)(ii) as defined in the Transnational Organised Crime Convention (TOC).

[14] Ortmann above n. 3 para [150].

[15] Ibid. para [160]. The full analysis is contained in paras [147] – [160].

[16] Ibid. paras [161] – [168].

[17] Ibid. at para [166].

[18] Ibid para [169] – [192].

[19] Ibid. para [193] – [199].

[20] Ibid. para [200] – [201].

[21] Ibid. para [202] – [212].

[22] Ibid. paras [213] – [230]

[23] Ibid. para [217] – [219].

[24] Ibid. para [220] – [222].

[25] Ibid. para [220] – [222].

[26] Ibid. para [223] – [225].

[27] Above n. 8.

[28] Dixon above n. 8 para [50] – [51].

[29] Ortmann above n. 3 para [226] – [230].

[30] Ibid. para [231] – [238].

[31] [2003] 2 NZLR 1 (CA).

[32] See Cooke P in Busby v Thorn EMI Video Programmes Ltd [1984] 1 NZLR 461

[33] See Scott v Metropolitan Police Commissioner [1975] AC 819 (HL)

[34] Ortmann above n. 3 at paras [239] – [245]

[35] Dotcom v US (Disclosure) [2014] NZSC 24; [2014] 2 NZLR 629.

[36] Ortmann above n 3 at para [253].

[37] Ibid. para [254] – [259].

[38] Ibid at para [258].

[39] Ibid. at para [263].

[40] Ibid at para [273].

[41] Ibid at paras [274] – [294].

[42] Ibid at para [277].

[43] Ibid at para [279].

[44] Ibid at para [291].

[45] Ibid at para [294].

[46] Ibid at paras [302] – [386].

[47] [2005] HCA 58.

[48] Stevens v Sony at para [204].

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