Digital Content Delivery: “Star Trek: Discovery” and the Digital Paradigm

In the interests of transparency I should disclose that I enjoy reading and watching science fiction. I was lucky enough to be around when the first three seasons of “Star Trek” screened on TV. I enjoyed it then and I have enjoyed all the various developments that have taken place in the Star Trek Universe including the recent series on Prime Video featuring Patrick Stewart as Jean-Luc Picard from “Star Trek: The Next Generation. I don’t think Gene Rodenberry ever imagined ST would be as big as it has become.

I watched the first three series of “Star Trek: Discovery” on Netflix and was impressed with the way that the stories and the characters developed. It was a nice touch to link back to the pilot of the 1960’s series and allow the character of Captain Christopher Pike to develop. I was looking forward to see where Ðiscovery” would “boldly go” (the most famous split infinitive of the twentieth century) on Netflix this week. That was not to be and this post discusses some of the issues surrounding streaming content availability and the outdated delivery strategies that still persist in the minds of many content distributors.

And I am looking forward to seeing Denis Villeneuve’s interpretation of “Dune” – not on a small screen but on as large a screen as possible – one that is big enough to accommodate Shai-halud

Fans of Star Trek – Discovery waited with anticipation for the release of Season 4 scheduled for the second week in November on Netflix which had streamed the three earlier seasons.

In the United States Discovery had streamed exclusively on CBS All Access now known as Paramount +. In a move that surprised Discovery fans worldwide Paramount + removed the rights previously held by Netflix outside of the US. The season – along with the earlier Discovery seasons would show on Paramount + – presently available in the US and some other countries.

This disappointing incident is not the only one as content providers have begun to realise the significance and value of the streaming market. As Netflix propularity increased Disney recovered the streaming rights to its catalogue and launched Disney + in November 2019. Discovery +, HBO Max and Britbox have acted similarly.

This creates a problem for audiences – the consumers to whom content is directed. Rather than having a one stop shop, audiences now have to subscribe to a number of streaming platforms and, of course, pay a separate fee for each one. And in many cases these services are not available worldwide.

This scramble for the streaming content market is another example of the inability of the big content providers to understand that we are no longer in the exclusive market paradigm that was dominated by geographical and staged releases, but in the global digital paradigm.  And this lack of recognition goes back to the early days of the digital paradigm when games and DVD’s contained geoblocking mechanisms, making them unviewable in certain areas of the globe.

There was a way of circumventing the geoblocking code that was in DVDs and the content providers were quick to ensure that the circumvention of technological locks was equated with copyright infringement.

I should point out that what follows is a very simplistic discussion of a very complex and nuanced area of law and should not be taken as a full and authoritative discussion of all the issues and implications.  

Amendments to the New Zealand Copyright Act 1994 adopted a sensible approach to the issue of circumvention of blocking codes which are called technological protection measures (TPM). Unlike the approach in the US which makes any form of circumvention of a TPM unlawful, the New Zealand approach is to look at the purpose of the TPM circumvention. If it is for the purposes of copying the content it is unlawful and is associated with copyright infringement. If, however, it is for the purposes of accessing the content then the TPM can be circumvented.

Although DVDs are somewhat passe the following illustration may assist. DVD distributors would and still do market their products for certain regional zones. Zone 1 is the US, Zone 2 is the UK and Europe and Zone 4 is Australia and New Zealand. DVD players sold in those countries were engineered in such a way as to allow only DVDs for the particular zone to be used on them. That is why, if you purchase a DVD from Amazon you may receive a warning about Zone incompatibility.

Zoning or region coding was devised by the content distributors solely to assist in their market segmentation and distribution arrangements. In some cases DVDs could be released in one zone or region well before release in another. Region or zone coding which limits access and use of a DVD is a TPM.

I purchase a DVD from Amazon that is a Zone 1 DVD – that means it can only be played using a Zone 1 compatible player. I have a Zone 4 DVD player. I have paid for the DVD and should be able to enjoy my purchase. Putting to one side the contractual terms and conditions that may be on the DVD package advising that I can only play the DVD on a Zone 1 player, I am prevented by the TPM from playing the DVD and enjoying the content. No aspect of copyright infringement comes into play in this scenario.

I manage to secure a circumvention device for my player that makes it region free. That means I can play a DVD from any region on my player. The only purpose of the circumvention device is to allow me to do that – it enables me to access the content.

If, however, I obtained a circumvention device that allowed me to unscramble the content scrambling system that prevented copying the content on the DVD and used it to make multiple copies of the DVD then that would be copyright infringement.

The reality of the situation these days is that most DVD players are region free as are some Blu-Ray players. Region coding used to be used by Playstation but Playstation 5 games are not region locked. However, the discussion about region coding serves to illustrate how content distributors engage in market segmentation which is a hangover from the earlier pre-digital movie and TV show distribution models.

The Digital Paradigm has allowed for instantaneous world-wide access to content but the earlier geo-segmented model remains, even with streaming services. The Netflix content that is available in New Zealand is not identical to the content that is available in the US.

Amazon has an interesting streaming model. I subscribe to Prime Video (www.primevideo.com). That allows me to view a wide range of content for a reasonable fee, paid through my Amazon account.

If I access Amazon’s homepage I can get to another flavour of Amazon video content (also labelled as Prime Video). This Prime Video has some content that is not available via my account, even although I may be logged in. In a banner at the top of many of the pages is the message

“Based outside of the U.S.? Some titles might be unavailable in your current location. Go to PrimeVideo.com to see the video catalog available in New Zealand.”

The Prime Video site from the Amazon US webpage also offers a large number of subscription channels including Paramount + and the facility is available to subscribe. The problem is that I cannot do that. But the approach is even more subtle than one that is based on my IP (Internet Protocol) number. It is based on the type of credit card that I use for my Amazon account and that credit card is issued in New Zealand. A message advises me, when I try to subscribe, that

“To subscribe, a U.S. payment method and billing address are required.”

That means that I must have a US issued credit card with a payment address located in the US. And Amazon doesn’t use Paypal.

Now this may suggest that the colour of my money is important and in some respects it is, but if Amazon is happy to accept my New Zealand credit card for purchases and my Prime Video subscription, why aren’t they prepared to accept the same payment method for subscription to one of their channels? Should it matter that I am watching the content from New Zealand?

The ”colour of money” issue is important because it is offered as an answer by content providers to those who tried to circumvent streaming geoblocking by the use of Virtual Private Networks (VPNs) to access content. The VPN effectively disguises the location of the computer or device attempting to access the content and as long as the credit card was valid payment could be made. So the content providers used the payment method to maintain their geoblocking model  adding another layer of difficulty to the access of content.

Of course it is possible to set up a US address and apply for (and obtain) a US credit card but as I have said there are layers of difficulty to that proposition including managing ongoing payments to the credit card provider and the time arrives when it all becomes too complicated and it just isn’t worth the candle.

Maybe it is time to revisit the entire distribution model and recognize something that content providers have been slow to recognize and that is that the Digital Paradigm brings with it paradigmatically different expectations of information and content availability.

In the early days consumers resorted to piracy to obtain content to which they thought they were entitled and which they thought should be free. The file sharing platforms such as Napster, the Pirate Bay, Megaupload and Limewire were shut down over the first decades of the 21st Century. In New Zealand file sharing was addressed by special provisions of the Copyright Act (Sections 120 – 122U). The last complaint about file sharing was heard in 2015.

One of the reasons why file sharing has fallen off has been that content providers have adopted different business models and users are prepared to pay a reasonable figure for content rather than go through the hassle of Bit Torrent (and other forms of file sharing)  and the security risks to systems posed by unscrupulous copyright infringers. That is not to say that piracy doesn’t occur. It is just a little less obvious and a lot less acceptable than it used to be.

Copyright protection via digital rights management of CDs came to an end when EMI abandoned this form of TPM in 2007. Music in particular became available for very reasonable prices and “song by song” rather than as one song on a CD. Itunes and Spotify have adopted business models that are attractive to consumers including free streaming music from Spotify if one does not object to the occasional intrusive advertising announcement.

Yet video content distributors still do not seem to have adapted to a new model that could continue to maintain and maximise profits. One could complain that there are too many channels, some of them quite specialized.

For example the documentary channel Docplay (www.docplay.com ) had a two part series available entitled “Laurel Canyon: A Place in Time” depicting the Los Angeles music scene in the later 1960’s, an excellent and beautifully made documentary and which I recommend if you enjoy Sixties Californian music. With a little manipulation this series was freely available because Docplay offers 14 days for free. What that means is that a user can access the site for 14 days without paying, but on signing up one has to provide credit card details and the like and if the subscription is not cancelled the payments begin. So the onus is on the user to ensure that the account is cancelled before the 14 days expires. But one of the attractive features about Docplay is that it is not geoblocked – it doesn’t matter where you are or what device you are using to access content.

So the question falls to be answered – if Docplay can do this why not everyone else. And why make some content available to some audiences and not to others. If consumers are prepared to pay the content should be available irrespective of borders. The Digital Paradigm enables this and enhances consumer expectations that this should be so. There seems to be no logic that demands the continuation of the geobased market segmentation model.

Chris Stokel-Walker points out in “Star Trek: Discovery Is Tearing the Streaming World Apart” that

“The average American household accesses eight streaming and video on demand services in a given week, according to data gathered by technology research company Omdia—though that includes free catch-up services and websites like YouTube. In the UK, the average is nearer six to seven, and in mainland Europe, five to six. “For the audience there’s no difference,” says Tony Gunnarsson, principal analyst of TV, video, and advertising at Omdia. “They dip in and out of everything that’s available.” But as major media companies like ViacomCBS, which are racing to catch up to Netflix, attempt to claim space in the streaming industry, it’s only going to get messier for consumers.”

One improvement could be made, and this I draw from the Itunes model. Rather than a subscription payment to a content provider why not introduce a pay per view model. I am not going to watch all of Netflix’ offering. I am going to watch a few programs from Disney+ or Prime Video. Why not fix a reasonable fee to watch a selected program without the necessity for a monthly drain on my credit card.

In the mean time – what has happened to Star Trek Discovery.

Stokel-Walker makes the point

“For Star Trek lovers, keeping up with the universe of content is difficult enough as it is, regardless of where you’re based. While ViacomCBS decided in October 2021 not to renew its streaming licenses for the classic series of the intergalactic show in the United States, international viewers like Leckie are currently still able to watch six separate shows tied to the brand on Netflix. Spin-off shows Picard and Lower Decks, an animated comedy, are available on Amazon Prime Video internationally and Paramount+ in the United States, while kids’ series Prodigy looks likely to land on Paramount+ too. “It’s bonkers,” says Gunnarsson. “A whole range of legacy rights are still active. Right now, this leads to a lot of confusion and frustration for customers, but in the long term these things will be ironed out and you’ll find all the IP for one series within their owner groups’ designated streaming platform.”

And what’s confusing for fans to understand is downright impossible for more casual viewers. Star Trek became such a totemic cultural touchstone because of its enormous viewership, built up at a time when there were far fewer options to choose from on television.”

A partial (and unsatisfactory) solution is available. It depends on the availability of Paramount + or the Pluto SciFi channel

Where Paramount+ is available in Australia, Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Denmark, Dominican Republic, Ecuador, El Salvador, Finland, Guatemala, Honduras, Mexico, Nicaragua, Norway, Panama, Paraguay, Peru, Sweden, Uruguay, and Venezuela, the first two episodes will be available Friday, November 26, with new episodes being released weekly. Star Trek fans in these markets are offered a new membership promotion on Paramount+ for 50% off for the first three months with code STARTREK.*

In Austria, France, Germany, Italy, Spain, Switzerland, and the United Kingdom, Pluto TV, the leading free streaming television service, will drop new episodes at 9pm local time on the Pluto TV Sci-Fi channel each Friday, Saturday and Sunday, with a simulcast running on the Star Trek channel in Austria, Switzerland, and Germany. This will begin with the first two episodes on Friday, November 26.

In the UK, Germany, France, Russia, South Korea and additional select countries, Season 4 is available for purchase on participating digital platforms beginning Friday, November 26.

In the meantime Paramount + is going to launch in Australia. The date set in this report was 11 August but as yet (November 2021) it isn’t available. It could all be so much easier if the content providers would catch up with the Digital Paradigm and its implications. It isn’t just about the simple delivery of content based on an outdated and anachronistic business model from another time. It is about matching consumer expectations and innovating delivery of content. The big entertainment industry has been traditionally slow to recognize that the Digital Paradigm provides fresh opportunities but also requires a willingness to recognize continuing disruptive change.

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The fault, dear Brutus, is not in social media/ But in ourselves


The title of this post is a paraphrase of a couple of lines from “Julius Caesar” Act 1 Scene iii Lines 140 – 141 – apologies to Will Shakespeare of Stratford.

This post is a companion piece to one that I wrote about misinformation and to which reference is made. Lest there be any doubt I am not advocating for misinformation or disinformation. I dislike both. I am concerned with objective fact and reasoned opinion in an effort to ascertain truth and have been all my life.

It is easy – perhaps a soft option – to lay the spread of misinformation at the feet of social media. After all, people post to social media and in a sense the information remains passive until someone else reads it. And therein lies the problem. In my last post I advocated a position based on the employment of common sense and critical faculties – qualities that we all possess.

In this piece I discuss the importance of understanding the medium as a prelude to considering the “responsibility” of social media for the dissemination of misinformation. Exponential dissemination, as I argue, is an essential characteristic of digital communications systems and impacts upon our information expectations

In an earlier post I observed that the target of the concerns about misinformation is “the Internet” – a generalized target that encompasses a world wide communications network. A more recent comment on disinformation attributes its spread to social media.

In a sense, both critiques are correct but they both focus on the content layer rather than upon the medium itself. And it is when we understand the nature of the medium we realise that in many respects it enables many behaviours, some of which are execrable. But the problem is that the cat is out of the bag, the djinni is out of the lamp – which ever metaphor you prefer.

What we are facing are paradigmatically different behaviours in the communications space from anything that has gone before. And because the paradigm is a different one from that to which we are accustomed, we yearn to push back, to return to things “the way they were”. And in saying this we hearken back to an earlier communications paradigm that was, as is the present paradigm, defined and underpinned by the media of communication.

When Marshall McLuhan cryptically said “The Medium is the Message” he was saying that in understanding the impact of the message we must first understand the impact of the medium or media of communication. And although we tend to focus upon what we see and hear – the content layer – the real game changer lies much deeper than that – within the medium itself. It is the medium that enables behaviours and in many respects and as a result of continued use impacts upon the values that validate those behaviours.

Every medium of communication possesses certain properties or affordances that are not immediately obvious. My starting point is the analytical framework developed by the historian Elizabeth Eisenstein in her seminal work The Printing Press as an Agent of Change.[1] In that work Eisenstein identified a number of qualities present in print technology that differentiated the communication of information in print from that communicated in manuscript. These qualities were not the obvious ones of machine based creation of content but focussed upon the way in which printed material was going to and did impact upon the intellectual activities of educated elites in Early-modern Europe. These qualities were beneath the content layer; not immediately apparent but vital in considering the way in which readers dealt with and related to information and ultimately had an impact upon their expectations of information and how, in turn, they themselves used print to communicate.

Using McLuhan’s suggestion and developing the way in which Eisenstein identified her underlying qualities of print technology, I have identified a number of different qualities[2], some of which overlap and some of which are complementary.

However, rather than merely identify these qualities I have developed a form of taxonomy or classes of qualities which are occupied by specific exemplars.[3]

For example, I have identified what I call Environmental Qualities. They arise from the context within which digital technologies develop and are descriptive of the nature of change within that context, and some of the underlying factors which drive that change. Because digital technologies primarily involve the development of software tools which operate on relatively standard computing equipment, the capital investment in hardware and manufacturing infrastructure is not present in the development of digital tools, although it certainly is in the development of the hardware that those tools require.

Thus the development of digital software can take place in any one of a number of informal locations where the only requirements are a power supply, a computer and a programmer or programmers. This lack of infrastructural requirements enables the development of software tools which can be deployed via the non-regulated environment of the Internet giving rise to the qualities of permissionless innovation and continuing disruptive change which are discussed in detail.

A second set of qualities I have identified as technical qualities. These are so classified because they underlie some of the technical aspects of the new digital technologies. Some of these qualities are present in a different form in the print paradigm. Eisenstein identified dissemination of content as a quality of print that was not present within the scribal paradigm. I have identified exponential dissemination as an example of a technical quality – the way in which the technology enables not only the spread of content as was enabled by print, but dissemination at a significantly accelerated rate with a greater reach than was enabled by physical dissemination.

Another of the qualities that I identify as a technical one is that of information persistence, summed up in the phrase “the document that does not die.” Once information has been released on to Internet platforms the author or original disseminator loses control of that content. Given the fact that as digital information travels through a multitude of servers, copies are made en route meaning that the information is potentially retrievable even although it may have been removed from its original source.

Other examples of “technical qualities” such as the way in which linear progress through information challenged by navigation via hypertext link in what I call the delinearisation of information; the dynamic nature of information and its malleability in digital format; the way in which seemingly limitless capacity allows for storage of a greater amount of information than was previously considered possible; the apparent non-coherence of digital information and the need for the intermediation of hardware and software to render it intelligible and the problem of obsolescence of information caused by loss arising not from deterioration of the medium but as a result of the unwillingness of software companies to support earlier iterations of software which enabled the creation of an earlier and now inaccessible version of the content. All are aspects of technical qualities that underpin the content of digital information.

The third category of qualities are what I call user associated qualities – qualities that arise in the behaviour of users in response to digital information technologies. Among these user associated qualities is the searchability of digital information and its associated availability and retrievability arising from the development of ever more sophisticated search algorithms and platforms, and the ability of users to participate in the creation of and use of content as a result of the interactive nature of digital technologies, in particular social media.

In some respects aspects of these qualities overlap – they do not stand alone. Indeed the searchability of information presents its own special difficulties. Trying to locate information on the Network has been a problem even before the Internet went commercial. There were search tools such as Gopher in the early days but the advent of sophisticated algorithm driven search tools such as Google have changed the landscape entirely.

Algorithms also select and promote posts and information on social media and associated platforms and frequently select information that is “high engagement”. The algorithms that curate content do so to drive increased engagement. Thus we have a merging of searchability and user participation. The problem is that this imperative of increased engagement seems to attract users who are confused and often gullible and who seek information that confirms their worst fears. For them, social media becomes an echo chamber. But although it is the content that they seek, the availability of the content arises from the inherent qualities of the medium

Thus, all these qualities, cumulatively, have an impact upon our “relationship” with and expectations of information and which have an influence on behaviour.  One form of behaviour is what may be called the online disinhibition effect. This inevitably leads to a consideration of the contentious issue of the effect that new technologies have upon the way that we think. It is suggested that the issue is not so much one of neuroplasticity advanced by Susan Greenfield[4] or “dumbing down” of attention spans as suggested by Nicholas Carr[5] but a slightly more nuanced view of the way that the medium and the various delivery systems redefine the use of information which informs the decisions that we make.[6]

Paradigmatically different ways of information communication and acquisition are going to change the way in which we use and respond to information. And we must recognise that change has happened, that some of our preconceived notions about information and its reliability must change, and that we must adapt our approaches. It is no good trying to hold on to past standards regarding information. They have morphed as a result of the new communications paradigm. It will be interesting to see how the proposed Content Regulatory System Review develops. The target is content, described by McLuhan as akin to  “the juicy piece of meat carried by the burglar to distract the watchdog of the mind” whereas the true target of the review should be the medium and the way that it is changing attitudes to content.

This rather lengthy discussion of the underlying nature of communications systems in the Digital Paradigm is really an introductory to a comment on a piece by Dr Jarrod Gilbert which appeared in the NZ Herald on 23 August.

The article deals with some of the more bizarre manifestations of behaviour and information that seem to beset us. Dr Gilbert acknowledges that this sort of thing is not new but that what is new is the ability for such views to spread quickly and widely – like a contagion as he put it, phraseology that would seem to be apt in these plague-ridden times – but he then lays the responsibility for this at the feet of social media. Social media, he says, provides the oxygen and then proceeds to look for the spark which, if I read him correctly, he attributes to disinformation.

We have to be careful with this word because it can get confused with its close cousin “misinformation”. Just to recap, I have discussed misinformation in an earlier post but it has been defined by the Infodemic Report discussed in that post as  “false information that people didn’t create with the intention to hurt others”. Disinformation, in the same report, has an element of malevolence to it – it is defined as false information created with the intention of harming a person, group, or organisation, or even a country.

The definition in the Oxford English Dictionary is less threatening that that appearing in the report but the dissemination of deliberately false information is common to both. The OED defines disinformation as:

“The dissemination of deliberately false information, esp. when supplied by a government or its agent to a foreign power or to the media, with the intention of influencing the policies or opinions of those who receive it; false information so supplied.”

Dr Gilbert then goes on to consider how bizarre ideas disseminated on social media spread so easily. One aspect is the authoritarian explainer personality whose commentary has an aspect of credibility even although there may be no basis for it. Another is the personality drawn to paranormal thinking or conspiracy theories. Once one conspiracy is believed it becomes easy to believe others.

Having considered the human element and the gullibility of audiences, Dr Gilbert turns his attention to social media and there is no doubt that the use of algorithms, as I have discussed above, enhances engagement which is an essential aspect of the business model of many social media platforms. The association of disinformation and social media is well known and deserves to be highlighted although, as I later suggest in this post, there is a sinister aspect to this within the context of an “authorized truth.” Another feature of social media is that it is not generally viewed as a trusted source of information. In a recent survey two thirds of those questioned expressed low trust in social media. So those about whom Dr Gilbert complains are in a minority and probably prefer the echo chamber that social media affords.

But are social media platforms the problem. I suggest that to say so is to look for the low hanging fruit. The problem is far more nuanced and complex than that. If we look at the underlying properties of the medium we find user participation and exponential dissemination enable the spread of ideas rather than heaping the blame on “social media.” These inherent qualities of digital communications systems would exist despite social media. It is just that social media have managed to “piggy-back” on these characteristics in developing business models.

As the title of this post suggests, with appropriate paraphrasing, the real fault is not with social media but with ourselves. The problems of misinformation and disinformation are not technical issues but are human issues – behavioural issues. It may well be, as I suggest, that behaviours have been modified by the properties of digital communications systems. But in many respects those systems are passive purveyors rather than active influencers. People are influencers, utilizing the enhanced communications opportunities provided by digital systems.


[1] Elizabeth Eisenstein The Printing Press as an Agent of Change  (Cambridge University Press, Cambridge, 1979) 2 Vols. Reference will be made to the 1 volume 1980 edition; Elizabeth Eisenstein, The Printing Revolution in Early Modern Europe (Cambridge University Press (Canto), Cambridge, 1993).

[2] Eisenstein identified six for print.

[3] I have discussed the qualities or affordances of digital technologies in more detail in my book Collisions in the Digital Paradigm: Law and Rulemaking in the Internet Age (Hart Publishing, Oxford, 2017). The qualities that I identify (and which are summarized above) are:

Environmental Qualities:

                Continuing disruptive change

                Permissionless Innovation

Technical Qualities

                Delinearisation of information

                Information persistence or Endurance

                Dynamic Information

                Volume and capacity

                Exponential dissemination

                The non-coherence of digital information

                Format obsolescence

User Associated Qualities

                Availability, Searchability and Retrievability of Information

                Participation and interactivity

[4] Susan Greenfield “Modern Technology is Changing the Way our Brains Work, Says Neuroscientist” Mail Online, Science and Technology 15 May 2010 http://www.dailymail.co.uk/sciencetech/article-565207/Modern-technology-changing-way-brains-work-says-neuroscientist.html (last accessed 25 July 2016)

[5] Nicholas Carr The Shallows: How the Internet is changing the way we think, read and remember (Atlantic Books, London 2010); Nicholas Carr “Is Google Making Us Stupid: What the Internet is doing to our brains” Atlantic July/August 2008 On line edition http://www.theatlantic.com/magazine/archive/2008/07/is-google-making-us-stupid/306868/ (last accessed 25 July 2016)

[6] For a counter argument to that advanced by Greenfield and Carr see Aleks Krotoski Untangling the Web: What the Internet is doing to you (Faber, London, 2013) especially at pp.35 – 36. For a deeper discussion see Chapter 2 under the heading “The Internet and How we Think.”

[7] New Zealand Bill of Rights Act 1990 section 14.

Dangerous Speech – Some Legislative Proposals

This post was first written in April 2019 and I withheld publication of it for some time. It was finally made available on the Social Science Research Network https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3496363 and has attracted some interest. I understand that the paper has been used as a teaching tool in some law schools, in the context of a discussion on Terminiello v City of Chicago 337 US 1 (1949)

This paper considers steps that can be taken to legislate against hate speech. There is a companion paper – “Challenging Speech” – which considers some of the issues raised in this paper in a different content.

The first issue is the term “hate speech” itself and, in light of the proposals advanced, this emotive and largely meaningless term should be replaced with that of “dangerous speech” which more adequately encapsulates the nature of the harm that the law should address.

The existing criminal provisions relating to what I call communications offences are outlined. Proposals are advanced for an addition to the Crimes Act to fill what appears to be a gap in the communications offences and which should be available to both individuals and groups. A brief discussion then follows about section 61 of the Human Rights Act and section 22 of the Harmful Digital Communications Act. It is suggested that major changes to these pieces of legislation is unnecessary.

Communications offences inevitably involve a tension with the freedom of expression under the New Zealand Bill of Rights Act and the discussion demonstrates that the proposal advanced are a justifiable limitation on freedom of expression, but also emphasises that a diverse society must inevitably contain a diversity of opinion which should be freely expressed.  

Introduction

The Context

In the early afternoon of 15 March 2019 a gunman armed with semi-automatic military style weapons attacked two mosques in Christchurch where people had gathered to pray. There were 50 deaths. The alleged gunman was apprehended within about 30 minutes of the attacks. It was found that he had live streamed his actions via Facebook. The stream was viewed by a large number of Facebook members and was shared across Internet platforms.

It also transpired that the alleged gunman had sent a copy of his manifesto entitled “The Great Replacement: Towards a New Society” to a number of recipients using Internet based platforms. Copies of both the live stream and the manifesto have been deemed objectionable by the Chief Censor.[1]

In addition it appears that the alleged gunman participated in discussions on Internet platforms such as 4Chan and 8Chan which are known for some of their discussion threads advocating White Supremacy and Islamophobic tropes

The Reaction

There can be no doubt that what was perpetrated in Christchurch amounted to a hate crime. What has followed has been an outpouring of concern primarily at the fact that the stream of the killings was distributed via Facebook and more widely via the Internet.

The response by Facebook has been less than satisfactory although it would appear that in developing their Livestream facility they then were unable to monitor and control the traffic across it – a digital social media equivalent of Frankenstein’s creature.

However, the killings have focused attention on the wider issue of hate speech and the adequacy of the law to deal with this problem.

Whither “Hate” Speech

The problem with the term “hate speech” is that it is difficult, if not impossible, to define.

Any speech that advocates, incites and intends physical harm to another person must attract legal sanction. It is part of the duty of government to protect its citizens from physical harm.

In such a situation, it matters not that the person against whom the speech is directed is a member of a group or not. All citizens, regardless of any specific identifying characteristics are entitled to be protected from physical harm or from those who would advocate or incite it.

Certain speech may cause harm that is not physical. Such harm may be reputational, economic or psychological. The law provides a civil remedy for such harms.

At the other end of the spectrum – ignoring speech that is anodyne – is the speech that prompts the response “I am offended” – what has been described as the veto statement.[2] From an individual perspective this amounts to a perfectly valid statement of opinion. It may not address the particular argument or engage in any meaningful debate. If anything it is a statement of disengagement akin to “I don’t like what I am hearing.”

Veto Statements

The difficulty arises when such a veto statement claims offence to a group identity. Such groups could include the offended woman, the offended homosexual, the offended person of colour or some other categorization based on the characteristics of a particular group. The difficulty with such veto statements – characterizing a comment as “racist” is another form of veto of the argument – is that they legitimize the purely subjective act of taking offence, generally with negative consequences for others.

Should speech be limited, purely because it causes offence? There are many arguments against this proposition. That which protects people’s rights to say things I find objectionable or offensive is precisely what protects my right to object.  Do we want to live in a society that is so lacking in robustness that we are habitually ready to take offence? Do we want our children to be educated or socialized in this way? Do we desire our children to be treated as adults, or our adults to be treated as children? Should our role model be the thin-skinned individual who cries “I am offended” or those such as Mandela, Baldwin or Gandhi who share the theme that although something may be grossly offensive, it is beneath my dignity to take offence? Those who abuse me demean themselves.

It may well be that yet another veto statement is applied to the mix. What right does a white, privileged, middle-class old male – a member of a secure group – have to say this. It is my opinion that the marginalization of the “I’m offended” veto statement is at least to open the door to proper debate and disagreement.

Furthermore, the subjective taking of offence based on group identity ignores the fact that we live in a diverse and cosmopolitan society. The “I’m offended” veto statement discourages diversity and, in particular, diversity of opinion. One of the strengths of our society is its diversity and multi-cultural nature. Within this societal structure are a large number of different opinions. For members of one group to shut down the opinions of another on the basis of mere offence is counter to the diverse society that we celebrate.

The term “hate speech” is itself a veto statement and often an opposing view is labelled as “hate speech”. The problem with this approach seems to be that the listener hates what has been said and therefore considers the proposition must be “hate speech”. This is arrant nonsense. The fact that we may find a proposition hateful to our moral or philosophical sense merely allows us to choose not to listen further. But it does not mean that because I find a point of view hateful that it should be shut down. As Justice Holmes said in US v Schwimmer[3] “if there is any principle of the Constitution that more imperatively calls for attachment than any other, it is the principle of free thought—not free thought for those who agree with us but freedom for the thought that we hate.”

Our commitment to freedom of expression lies not in allowing others the freedom to say things with which we agree, but in allowing them the right to say things with which we absolutely disagree.

Finally, in considering the nature of the veto statement “I’m offended” or categorizing a comment as “hate speech” where lies the harm. Is anybody hurt? The harm in fact comes in trying to shut down the debate with the use of the veto statement.

Aspects of “Harm”

However, recent thinking has had a tendency to extend the concept of harm suffered by individuals. It is accepted that the law should target physical harm, but should it protect an individual from any sort of harm. Catherine MacKinnon has formulated a view, based on the work of J.L. Austin, that many words or sentiments are essentially indistinguishable from deeds and therefore, sexist or misogynistic language should be regarded as a form of violence.[4] This form of assaultive speech can be extended to be available to any group based of distinguishing characteristics or identity.

The emphasis is upon the subjectivity of the person offended. What offence there may be is in the sphere of feelings. It may follow from this that if I do not feel I have been offended then I have not been offended. If we reverse the proposition only the individual may judge whether or not they have been offended. I would suggest that this element of subjectivity is not the interest of the law.

The problem is that such an extension of potentially harmful speech becomes equated with “hate speech” and virtually encompasses any form of critical dialogue. To conflate offence with actual harm means that any sort of dialogue may be impossible.

To commit an offence of violence is to perform an action with objective, observable detrimental physical consequences, the seriousness of which requires the intervention of the law. To give offence is to perform an action – the making of a statement – the seriousness of which is in part dependant upon another person’s interpretation of it.

An example may be given by looking at Holocaust denial. Those who deny the Holocaust may insult the Jewish people. That may compound the injury that was caused by the event itself. But the insult is not identical to the injury. To suggest otherwise is to invite censorship. The denial of the Holocaust is patently absurd. But it needs to be debated as it was when Deborah Lipstadt challenged the assertions of David Irving. In an action brought by Irving for defamation his claims of Holocaust denial were examined and ultimately ridiculed.[5]

Jeremy Waldron is an advocate for limits on speech. He argues that since the aim of “hate speech” is to compromise the dignity of those at whom it is targeted it should be subject to restrictions.[6] Waldron argues that public order means more than an absence of violence but includes the peaceful order of civil society and a dignitary order of ordinary people interacting with one another in ordinary ways based upon an arms-length respect.

So what does Waldron mean by dignity. He relies upon the case of Beauharnais v Illinois[7] where the US Supreme Court upheld the constitutionality of a law prohibiting any material that portrayed “depravity, criminality, unchastity or lack of virtue of a class of citizens, of any race, colour, creed or religion.” On this basis Waldron suggests that those who attack the basic social standing and reputation of a group should be deemed to have trespassed upon that group’s dignity and be subject to prosecution. “Hate speech”, he argues, should be aimed at preventing attacks on dignity and not merely offensive viewpoints. Using this approach I could say that Christianity is an evil religion but I could not say Christians are evil people.

The problem with Waldron’s “identity” approach is that is that the dignity of the collective is put before the dignity of its individual members. This raises the difficulty of what may be called “groupthink”. If I think of myself primarily as a member of a group I have defined my identity by my affiliation rather than by myself. This group affiliation suggests a certain fatalism, that possibilities are exhausted, perhaps from birth, and that one cannot be changed. This runs directly against Martin Luther King’s famous statement where he rejected identity based on race but preferred an individual assessment.

“I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.”

The problem with the proposition that the state should protect its citizens against what Waldron calls “group defamation” is that it runs the risk of its citizens becoming infantalised, that in fact such an approach undermines their individual dignity by assuming that they cannot answer for themselves.

Rather than encouraging people to be thin-skinned, what is required in a world of increasingly intimate diversity is to learn how to be more thick-skinned and to recognize and celebrate the difference that lies in diversity. As Ronald Dworkin put it, no one has a right not to be offended and in fact we should not take offence too readily. In a free society I may be free to feel offended but should not use that offence to interfere with the freedoms of another.

Dangerous Speech

It will be by now apparent that my view is that “hate speech” is a term that should be avoided, although I accept that it is part of the lexicon, whether we like it or not. Perhaps it might be proper to focus upon the type of speech that society should consider to be unacceptable and that warrants the interference of law.

Any interference must be based on reasonableness and demonstrable justification, given that the right of freedom of expression under the Bill of Rights Act is the subject of interference. To warrant such interference I suggest that rather than use the term “hate speech” the threshold for the interference of the law could be termed “dangerous speech” – speech that presents a danger to an individual or group of individuals.

The intentional advocacy or inciting of physical harm may be classified as “dangerous speech” and justifies the intervention of the law. It is non-specific and available both to individuals and the groups identified in the Human Rights Act. In certain circumstances – where there is incitement to or advocacy of actual physical harm, the intervention of the criminal law is justified.

The law also deals with psychological harm of a special type – serious emotional distress. That is a test in the Harmful Digital Communications Act (HDCA). That legislation applies only to online speech. That may be a lesser form of “dangerous speech” but within the context of the provisions of section 22 HDCA such interference is justified. The elements of intention, actual serious emotional distress and the mixed subjective objective test provide safeguards that could be considered to be a proportionate interference with the freedom of expression and would harmonise the remedies presently available for online speech with that in the physical world.

There are a number of other provisions in the law that deal with forms of speech or communication harms. Some of these warrant discussion because they demonstrate the proper themes that the law should address.

Existing Communications Offences – a summary

The law has been ambivalent towards what could be called speech crimes. Earlier this year the crime of blasphemous libel was removed from the statute book. Sedition and offences similar to it were removed in 2008. Criminal libel was removed as long ago as 1993.

The Crimes Act 1961

At the same time the law has recognized that it must turn its face against those who would threaten to commit offences. Thus section 306 criminalises the actions of threatening to kill or do grievous bodily harm to any person or sends or causes to be received a letter or writing threatening to kill of cause grievous bodily harm. The offence requires knowledge of the contents of the communication.

A letter or writing threatening to destroy or damage any property or injure any animal where there is knowledge of the contents of the communication and it is done without lawful justification or excuse and without claim or right is criminalized by section 307.

It will be noted that the type of communication in section 306 may be oral or written but for a threat to damage property the threat must be in writing.

Section 307A is a complicated section.[8] It was added to the Act in 2003 and was part of a number of measures enacted to deal with terrorism after the September 11 2001 tragedy. It has received attention in one case since its enactment – that of Police v Joseph.[9]

Joseph was charged with a breach of s 307A(1)(b) of the Crimes Act 1961 in that he, without lawful justification or reasonable excuse and intending to cause a significant disruption to something that forms part of an infrastructure facility in New Zealand namely New Zealand Government buildings, did communicate information that he believed to be about an act namely causing explosions likely to cause major property damage.

Mr. Joseph, a secondary school student at the time, created a video clip that lasted a little over three minutes. He used his laptop and sent messages of threats to the New Zealand Government accompanied by some images that linked the language with terrorism, such as pictures of the aerial attack on the World Trade Centre and images of Osama Bin Laden. The message:[10]

•        threatened a terror attack on the New Zealand Government and New Zealand Government buildings.

•        claimed that large amounts of explosives had been placed in hidden locations on all buildings.

•        warned that New Zealand Government websites would be taken down.

•        threatened the hacking of New Zealand’s media websites.

•        threatened to disclose all Government secrets that have not been released to Wikileaks nor the public.

•        warned that obstruction would lead to harm.

The clip demanded that the New Zealand Government repeal or refrain from passing an amendment to the Copyright Act 1994. It was posted on 6 September 2010 and a deadline was set for 11 September 2010. The clip was attributed to the hacktavist group known as Anonymous.

The clip was posted to YouTube. It was not available to the public by means of a search. It was unlisted and could only be located by a person who was aware of the link to the particular clip.

The clip came to the attention of the Government Communications Security Bureau (GCSB) on 7 September 2010 who passed the information on to the Police Cybercrime Unit to commence an investigation. An initial communication from the GCSB on the morning of 7 September postulated that the clip could be a “crackpot random threat” and confirmed that its communication was “completely outside the Anonymous MO”.[11]

The site was quickly disabled and Mr. Joseph was spoken to by the Police. He made full admissions of his involvement.

The real issue at the trial was one of intent. The intention had to be a specific one. The Judge found that the intention of the defendant was to have his message seen and observed on the Internet and, although his behaviour in uploading the clip to YouTube in an Internet café and using an alias could be seen as pointing to an awareness of unlawful conduct it did not, however, point to proof of the intention to cause disruption of the level anticipated by the statute. It transpired that the defendant was aware that the clip would probably be seen by the authorities and also that he expected that it would be “taken down”.

The offence prescribed in section 308 does involve communication as well as active behavior. It criminalises the breaking or damaging or the threatening to break or damage any dwelling with a specific intention – to intimidate or to annoy. Annoyance is a relatively low level reaction to the behavior. A specific behavior – the discharging of firearms that alarms or intends to alarm a person in a dwelling house – again with the intention to intimidate or annoy – is provided for in section 308(2).

The Summary Offences Act

The Summary Offences Act contains the offence of intimidation in section 21. Intimidation may be by words or behavior. The “communication” aspect of intimidation is provided in section 21(1) which states:

Every person commits an offence who, with intent to frighten or intimidate any other person, or knowing that his or her conduct is likely to cause that other person reasonably to be frightened or intimidated,—

  •  threatens to injure that other person or any member of his or her family, or to damage any of that person’s property;

Thus, there must be a specific intention – to frighten or intimidate – together with a communicative element – the threat to injure the target or a member of his or her family, or damage property.

In some respects section 21 represents a conflation of elements of section 307 and 308 of the Crimes Act together with a lesser harm threatened – that of injury – than appears in section 306 of that Act.

However, there is an additional offence which cannot be overlooked in this discussion and it is that of offensive behavior or language provided in section 4 of the Summary Offences Act.

The language of the section is as follows:

  •  Every person is liable to a fine not exceeding $1,000 who,—
  •  in or within view of any public place, behaves in an offensive or disorderly manner; or
  •  in any public place, addresses any words to any person intending to threaten, alarm, insult, or offend that person; or
  •  in or within hearing of a public place,—

(i)  uses any threatening or insulting words and is reckless whether any person is alarmed or insulted by those words; or

(ii) addresses any indecent or obscene words to any person.

  •  Every person is liable to a fine not exceeding $500 who, in or within hearing of any public place, uses any indecent or obscene words.
  •  In determining for the purposes of a prosecution under this section whether any words were indecent or obscene, the court shall have regard to all the circumstances pertaining at the material time, including whether the defendant had reasonable grounds for believing that the person to whom the words were addressed, or any person by whom they might be overheard, would not be offended.
  •  It is a defence in a prosecution under subsection (2) if the defendant proves that he had reasonable grounds for believing that his words would not be overheard.

In some respects the consequences of the speech suffered by the auditor (for the essence of the offence relies upon oral communication) resemble those provided in section 61 of the Human Rights Act.

Section 4 was considered by the Supreme Court in the case of Morse v Police.[12] Valerie Morse was convicted in the District Court of behaving in an offensive manner in a public place, after setting fire to the New Zealand flag at the Anzac Day dawn service in Wellington in 2007.

In the District Court, High Court and Court of Appeal offensive behavior was held to mean behaviour capable of wounding feelings or arousing real anger, resentment, disgust or outrage in the mind of a reasonable person of the kind actually subjected to it in the circumstances. A tendency to disrupt public order was not required to constitute behaviour that was offensive. Notwithstanding the freedom of expression guaranteed by NZBORA, the behavior was held to be offensive within the context of the ANZAC observance.

The Supreme Court held that offensive behavior must be behaviour which gives rise to a disturbance of public order. Although agreed that disturbance of public order is a necessary element of offensive behaviour under s 4(1)(a), the Judges differed as to the meaning of “offensive” behaviour. The majority considered that offensive behaviour must be capable of wounding feelings or arousing real anger, resentment, disgust or outrage, objectively assessed, provided that it is to an extent which impacts on public order and is more than those subjected to it should have to tolerate. Furthermore it will be seen that a mixed subjective\objective test is present in that the anger, resentment, disgust or outrage must be measured objectively – how would a reasonable person in this situation respond.

It is important to note that in addition to the orality or behavioural quality of the communication – Anderson J referred to it as behavioural expression[13] –  it must take place in or within view of a public place. It falls within that part of the Summary Offences Act that is concerned with public order and conduct in public places. Finally, offensive behavior is behavior that does more than merely create offence.

Observations on Communications Offences

In some respects these various offences occupy points on a spectrum. Interestingly, the offence of offensive behavior has the greatest implications for freedom of expression or expressive behavior, in that the test incorporates a subjective one in the part of the observer. But it also carries the lightest penalty, and as a summary offence can be seen to be the least serious on the spectrum. The section could be applied in the case of oral or behavioural expression against individuals or groups based on colour, race, national or ethnic origin, religion, gender, disability or sexual orientation as long as the tests in Morse are met.

At the other end of the spectrum is section 307 dealing with threats to kill or cause grievous bodily harm which carries with it a maximum sentence of 7 years imprisonment. This section is applicable to all persons irrespective of colour, race, national or ethnic origin, religion, gender, disability or sexual orientation as are sections 307, 308, section 21 of the Summary Offences Act and section 22 of the Harmful Digital Communications Act which could all occupy intermediate points on the spectrum based on the elements of the offence and the consequences that may attend upon a conviction.

There are some common themes to sections 306, 307, 308 of the Crimes Act and section 21 of the Summary Offences Act.

First, there is the element of fear that may be caused by the behavior. Even although the issue of intimidation is not specifically an element of the offences under sections 306 and 307, there is a fear that the threat may be carried out.

Secondly there is a specific consequence prescribed – grievous bodily harm or damage to or destruction of property.

Thirdly there is the element of communication or communicative behavior that has the effect of “sending a message”.

These themes assist in the formulation of a speech-based offence that is a justifiable limitation on free speech, that recognizes that there should be some objectively measurable and identifiable harm that flows from the speech, but that does not stifle robust debate in a free and democratic society.

A Possible Solution

There is a change that could be made to the law which would address what appears to be something of a gulf between the type of harm contemplated by section 306 and lesser, yet just as significant harms.

I propose that the following language could cover the advocacy or intentional incitement of actual physical injury against individuals or groups. Injury is a lesser physical harm than grievous bodily harm and fills a gap between serious emotional distress present in the HDCA and the harm contemplated by section 306.

The language of the proposal is technology neutral. It could cover the use of words or communication either orally, in writing, electronically or otherwise. Although I dislike the use of the words “for the avoidance of doubt” in legislation for they imply a deficiency of clarity of language in the first place, there could be a definition of words or communication to include the use of electronic media.

The language of the proposal is as follows:

It is an offence to use words or communication that advocates or intends to incite actual physical injury against an individual or group of individuals based upon, in the case of a group, identifiable particular characteristics of that group

This proposal would achieve a number of objectives. It would capture speech or communications that cause or threaten to cause harm of a lesser nature than grievous bodily harm stated in section 306.

The proposal is based upon ascertaining an identifiable harm caused by the speech or communicative act. This enables the nature of the speech to be crystallised in an objective manner rather than the unclear, imprecise and potentially inconsistent use of the umbrella term “hate speech.”

The proposal would cover speech, words or communication across all media. It would establish a common threshold for words or communication below which an offence would be committed.

The proposal would cover any form of communicative act which was the term used by Anderson J in Morse and which the word “expression” used in section 14 of NZBORA encompasses.

The tension between freedom of expression and the limitations that may be imposed by law is acknowledged. It would probably need to be stated, although it should not be necessary, that in applying the provisions of the section the Court would have to have regard to the provisions of the New Zealand Bill of Rights Act 1990.

Other Legislative Initiatives

The Human Rights Act

There has been consideration of expanding other legislative avenues to address the problem of “dangerous” speech. The first avenue lies in the Human Rights Act which prohibits the incitement of disharmony on the basis of race, ethnicity, colour or national origins. One of the recent criticisms of the legislation is that it does not apply to incitement for reasons of religion, gender, disability or sexual orientation.[14]

Before considering whether such changes need to be made – a different consideration to whether they should be made – it is important to understand how the Human Rights Act works in practice. The Act prohibits a number of discriminatory practices in relation to various activities and services.[15] It also prohibits indirect discrimination which is an effects based form of activity.[16] Victimisation or less favourable treatment based on making certain disclosures is prohibited.[17] Discrimination in advertising along with provisions dealing with sexual or racial harassment are the subject of provisions.[18]

The existing provisions relating to racial disharmony as a form of discrimination and racial harassment are contained in section 61 and 63 of the Act.[19]

There are two tests under section 61. One is an examination of the content of the communication. Is it threatening, abusive or insulting? If that has been established the next test is to consider whether it is:

  1. Likely to excite hostility against or
  2. Bring into contempt

Any group of persons either in or coming to New Zealand on the ground of colour, race or ethnic or national origins.

These provisions could well apply to “dangerous speech”. Is it necessary, therefore, to extend the existing categories in section 61 to include religion, gender, disability or sexual orientation.

Religion

Clearly if one were to add religion, threatening, abusive or insulting language about adherents of the Islamic faith would fall within the first limb of the section 61(1) test. But is it necessary that religion be added? And should this be simply because a religious group was targeted?

The difficulty with including threatening, abusive or insulting language against groups based upon religion means that not only would Islamaphobic “hate speech” be caught, but so too would the anti-Christian, anti-West, anti “Crusader” rhetoric of radical Islamic jihadi groups be caught. Would the recent remarks by Winston Peters condemning the implementation of strict sharia law in Brunei that would allow the stoning of homosexuals and adulterers be considered speech that insults members of a religion?[20]

A further difficulty with religious-based speech is that often there are doctrinal differences that can lead to strong differences of opinion that are strongly voiced. Often the consequences for doctrinal heresy will be identified as having certain consequences in the afterlife. Doctrinal disputes, often expressed in strong terms, have been characteristics of religious discourse for centuries. Indeed the history of the development of the freedom of expression and the freedom of the press was often in the context of religious debate and dissent.

It may well be that to add a category of religion or religious groups will have unintended consequences and have the effect of stifling or chilling debate about religious belief.

An example of the difficulty that may arise with restrictions on religious speech may be demonstrated by the statement “God is dead.” This relatively innocuous statement may be insulting or abusive to members of theist groups who would find a fundamental aspect of their belief system challenged. For some groups such a statement may be an invitation to violence against the speaker. Yet the same statement could be insulting or abusive to atheists as well simply for the reason that for God to be dead presupposes the existence of God which challenges a fundamental aspect of atheist belief.

This example illustrates the danger of placing religious discourse into the unlawful categories of discrimination.

If it were to be determined that religious groups would be added to those covered by section 61, stronger wording relating to the consequences of speech should be applicable to such groups. Instead of merely “exciting hostility against” or “bring into contempt” based upon religious differences perhaps the wording should be “advocating and encouraging physical violence against..” .

This would have the effect of being a much stronger test than exists at present under section 61 and recognizes the importance of religious speech and doctrinal dispute.

Gender, Disability or Sexual Orientation

The Human Rights Act already has provisions relating to services-based discrimination on these additional grounds. The question is whether or not there is any demonstrated need to extend the categories protected under section 61 to these groups.

Under the current section 61 test, any threatening, abusive or insulting language directed towards or based upon gender, disability or sexual orientation could qualify as “hate speech” if the speech was likely to excite hostility against or bring into contempt a group of persons. The difficulty lies not so much with threatening language, which is generally clear and easy to determine, but with language which may be abusive or insulting.

Given the sensitivities that many have and the ease with which many are “offended” it could well be that a softer and less robust approach may be taken to what constitutes abusive or insulting language.

For this reason the test surrounding the effect of such speech needs to be abundantly clear. If the categories protected by section 61 are to be extended there must be a clear causative nexus between the speech and the exciting of hostility or the bringing into contempt. Alternatively the test could be strengthened as suggested above to replace the test of exciting hostility or bringing into contempt with “advocating and encouraging physical violence against..”

It should be observed that section 61 covers groups that fall within the protected categories. Individuals within those groups have remedies available to them under the provisions of the Harmful Digital Communications Act 2015.

The Harmful Digital Communications Act 2015

The first observation that must be made is that the Harmful Digital Communications Act 2015 (HDCA) is an example of Internet Exceptionalism in that it deals only with speech communicated via electronic means. It does not cover speech that may take place in a physical public place, by a paper pamphlet or other form of non-electronic communication.

The justification for such exceptionalism was considered by the Law Commission in the Ministerial Briefing Paper.[21] It was premised upon the fact that digital information is pervasive, its communication is not time limited and can take place at any time – thus extending the reach of the cyber-bully – and it is often shared among groups with consequent impact upon relationships. These are some of the properties of digital communications systems to which I have made reference elsewhere.[22]

A second important feature of the HDCA is that the remedies set out in the legislation are not available to groups. They are available only to individuals. Individuals are defined as “natural persons” and applications for civil remedies can only be made by an “affected individual” who alleges that he or she has suffered or will suffer harm as a result of a digital communication.[23] Under section 22 – the offence section – the victim of an offence is the individual who is the target of a posted digital communication.[24]

The HDCA provides remedies for harmful digital communications. A harmful digital communication is one which

  1. Is a digital communication communicated electronically and includes any text message, writing, photograph, picture, recording, or other matter[25]
  2. Causes harm – that is serious emotional distress

In addition there are ten communications principles[26]. Section 6(2) of the Act requires the Court to take these principles into account in performing functions or exercising powers under the Act.

For the purposes of a discussion about “dangerous speech” principles 2, 3, 8 and 10 are relevant. Principle 10 extends the categories present in section 61 of the Human Rights Act to include those discussed above.

The reason for the difference is that the consequences of a harmful digital communication are more of an individual and personal nature. Harm or serious emotional distress must be caused. This may warrant an application for an order pursuant to section 19 of the Act – what may be described as a civil enforcement order. A precondition to an application for any of the orders pursuant to section 19 is that the matter must be considered by the Approved Agency – presently Netsafe.[27] If Netsafe is unable to resolve the matter, then it is open to the affected individual to apply to the District Court.

The orders that are available are not punitive but remedial in nature. They include an order that the communication be taken down or access to it be disabled; that there be an opportunity for a reply or for an apology; that there be a form of restraining order so that the defendant is prohibited from re-posting the material or encouraging others to do so.

In addition orders may be made against online content hosts requiring them to take material down along with the disclosure of the details and particulars of a subscriber who may have posted a harmful digital communication. Internet Service Providers (described in the legislation as IPAPs) may be required to provide details of an anonymous subscriber to the Court.

It should be noted that the element of intending harm need not be present on the part of the person posting the electronic communication. In such a situation the material is measured against the communications principles along with evidence that the communication has caused serious emotional distress.

Section 22 – Causing harm by posting a digital communication

The issue of intentional causation of harm is covered by section 22 of the Act. A mixed subjective-objective test that is required for an assessment of content. The elements necessary for an offence under section 22 HDCA are as follows:

A person must post a digital communication with a specific intention – that it cause harm to a victim;

It must be proven that the posting of the communication would cause harm to an ordinary reasonable person in the position of the victim;

Finally, the communication must cause harm to the victim.

Harm is defined as serious emotional distress. In addition the Court may take a number of factors into account in determining whether a post may cause harm

  1.  the extremity of the language used:
  2.  the age and characteristics of the victim:
  3.  whether the digital communication was anonymous:
  4.  whether the digital communication was repeated:
  5.  the extent of circulation of the digital communication:
  6.  whether the digital communication is true or false:
  7.  the context in which the digital communication appeared.

The requirement that harm be intended as well as caused has been the subject of some criticism. If there has been an intention to cause harm, is it necessary that there be proof that harm was caused? Similarly, surely it is enough that harm was caused even if it were not intended?

As to the first proposition it must be remembered that section 22 criminalises a form of expression. The Law Commission was particularly concerned that the bar should be set high, given the New Zealand Bill of Rights Act 1990 provisions in section 14 regarding freedom of expression. If expression is to be criminalized the consequences of that expression must warrant the involvement of the criminal law and must be accompanied by the requisite mens rea or intention.

As to the second proposition, the unintended causation of harm is covered by the civil enforcement provisions of the legislation. To eliminate the element of intention would make the offence one of strict liability – an outcome reserved primarily for regulatory or public interest types of offence.

The Harmful Digital Communications Act and “Dangerous Speech”

Could the HDCA in its current form be deployed to deal with “dangerous speech”. The first thing to be remembered is that the remedies in the legislation are available to individuals. Thus if there were a post directed towards members of a group, an individual member of that group could consider proceedings.

Would that person be “a victim” within the meaning of section 22? It is important to note that the indefinite article is used rather than the definite one. Conceivably if a post were made about members of a group the collective would be the target of the communication and thus every individual member of that collective could make a complaint and claim to be a target of the communication under section 22(4).

To substantiate the complaint it would be necessary to prove that the communication caused serious emotional distress[28] which may arise from a cumulation of a number of factors.[29] Whether the communication fulfilled the subjective\objective test in section 22(1)(b) would, it is suggested, be clear if the communication amounted to “hate speech”, taking into account the communications principles, along with the factors that should be taken into account in section 22(2)((a) – (g). The issue of intention to cause harm could be discerned either directly or by inference from the nature of the language used in the communication.

In addition it is suggested that the civil remedies would also be available to a member of a group to whom “dangerous speech” was directed. Even although a group may be targeted, an individual member of the group would qualify as an affected individual if serious emotional distress were suffered. A consideration of the communications principles and whether or not the communication was in breach of those principles would be a relatively straightforward matter of interpretation.

The Harmful Digital Communications Act in Action

Although the principal target of the legislation was directed towards cyber-bullying by young people, most of the prosecutions under the Act have been within the context of relationship failures or breakdowns and often have involved the transmission of intimate images or videos – a form of what the English refer to as “revenge porn”. There have been a relatively large number of prosecutions under section 22 – something that was not anticipated by the Law Commission in its Briefing Paper.[30]

Information about the civil enforcement process is difficult to obtain. Although the Act is clear that decisions, including reasons, in proceedings must be published.[31] There are no decisions available on any website to my knowledge.

From my experience there are two issues that arise regarding the civil enforcement process. The first is the way the cases come before the Court. When the legislation was enacted the then Minister of Justice, Judith Collins, considered that the Law Commission recommendation that there be a Communications Tribunal to deal with civil enforcement applications was not necessary and that the jurisdiction under the legislation would form part of the normal civil work of the District Court.

Because of pressures on the District Court, civil work does not receive the highest priority and Harmful Digital Communications applications take their place as part of the ordinary business of the Court. This means that the purpose of the Act in providing a quick and efficient means of redress for victims is not being fulfilled. [32]  One case involving communications via Facebook in January of 2017 has been the subject of several part-heard hearings and has yet to be concluded. Even if the Harmful Digital Communications Act is not to be deployed to deal with “dangerous speech”, it is suggested that consideration be given to the establishment of a Communications Tribunal as suggested by the Law Communication so that hearings of applications can be fast-tracked.

The second issue surrounding the civil enforcement regime involves that of jurisdiction over off-shore online content hosts such as Facebook, Twitter, Instagram and the like. Although Facebook and Google have been cited as parties and have been served in New Zealand, they do not acknowledge the jurisdiction of the Court but nevertheless indicate a willingness to co-operate with requests made by the Court without submitting to the jurisdiction of the Court.

In my view the provisions of Subpart 3 of Part 6 of the District Court Rules would be applicable. These provisions allow service outside New Zealand as a means of establishing the jurisdiction of the New Zealand Courts. The provisions of Rule 6.23 relating to service without leave are not applicable and, as the law stands, the leave of the Court would have to be sought to serve an offshore online content host. This is a complex process that requires a number of matters to be addressed about a case before leave may be granted. Once leave has been granted there may be a protest to the jurisdiction by the online content host before the issue of jurisdiction could be established.

One possible change to the law might be an amendment to Rule 6.23 allowing service of proceedings under the HDCA without the leave of the Court. There would still be the possibility that there would be a protest to the jurisdiction but if that could be answered it would mean that the Courts would be able to properly make orders against offshore online content hosts.

Are Legislative Changes Necessary?

It will be clear by now that the law relating to “dangerous speech” in New Zealand does not require major widespread change or reform. What changes may be needed are relatively minor and maintain the important balance contained in the existing law between protecting citizens or groups from speech that is truly harmful and ensuring that the democratic right to freedom of expression is preserved.

The Importance of Freedom of Expression

The New Zealand Bill of Rights Act 1990

The New Zealand Bill of Rights Act 1990 (NZBORA) provides at section 14

“Everyone has the right to freedom of expression, including the freedom to seek, receive, and impart information and opinions of any kind in any form.”

This right is not absolute. It is subject to section 5 which provides “the rights and freedoms contained in this Bill of Rights may be subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.”

Section 4 reinforces the concept of Parliamentary supremacy. If a specific piece of legislation conflicts or is inconsistent with NZBORA, the specific piece of legislation prevails. Thus, specific pieces of legislation which impose restrictions or limitations upon freedom of expression – such as the Human Rights Act 1993 and the Harmful Digital Communications Act 2015 – prevail although if an enactment can be given a meaning that is consistent with the rights and freedoms contained in NZBORA, that meaning shall be preferred to any other meaning.[33]

This then provides a test for considering limitations or restrictions on the rights under NZBORA. Limitations must be reasonable and must be demonstrably justified within the context of a free and democratic society.

Thus, when we consider legislation that may impinge upon or limit the freedom of expression the limitation must be

  1. Reasonable
  2. Demonstrably justified
  3. Yet recognizing that we live in a free and democratic society.

The justified limitations test contains within it a very real tension. On the one hand there is a limitation on a freedom. On the other there is a recognition of freedom in that we live in a free and democratic society. I would suggest that although NZBORA does not use this language, the emphasis upon a free and democratic society, and the requirement of reasonableness and demonstrable justification imports an element of necessity. Is the limitation of the freedom necessary?

The problem with freedom of expression is that it is elusive. What sort of limitations on the freedom of expression may be justified?

Freedom of Expression in Practice

The reality with freedom of expression is that it is most tested when we hear things with which we disagree. It is not limited to the comfortable space of agreeable ideas.

Salman Rushdie said that without the freedom to offend the freedom of expression is nothing. Many critics of current debates seem to conflate the freedom to express those ideas with the validity of those ideas, and their judgement on the latter means that they deny the freedom to express them.

The case of Redmond-Bate v DPP[34]  [1999] EWHC Admin 733 was about two women who were arrested for preaching on the steps of a church. Sedley LJ made the following comments:[35]

“I am unable to see any lawful basis for the arrest or therefore the conviction. PC Tennant had done precisely the right thing with the three youths and sent them on their way. There was no suggestion of highway obstruction. Nobody had to stop and listen. If they did so, they were as free to express the view that the preachers should be locked up or silenced as the appellant and her companions were to preach. Mr. Kealy for the prosecutor submitted that if there are two alternative sources of trouble, a constable can properly take steps against either. This is right, but only if both are threatening violence or behaving in a manner that might provoke violence. Mr. Kealy was prepared to accept that blame could not attach for a breach of the peace to a speaker so long as what she said was inoffensive. This will not do. Free speech includes not only the inoffensive but the irritating, the contentious, the eccentric, the heretical, the unwelcome and the provocative provided it does not tend to provoke violence. Freedom only to speak inoffensively is not worth having. What Speakers’ Corner (where the law applies as fully as anywhere else) demonstrates is the tolerance which is both extended by the law to opinion of every kind and expected by the law in the conduct of those who disagree, even strongly, with what they hear. From the condemnation of Socrates to the persecution of modern writers and journalists, our world has seen too many examples of state control of unofficial ideas. A central purpose of the European Convention on Human Rights has been to set close limits to any such assumed power. We in this country continue to owe a debt to the jury which in 1670 refused to convict the Quakers William Penn and William Mead for preaching ideas which offended against state orthodoxy.”

One way of shutting down debate and the freedom of expression is to deny a venue, as we have seen in the unwise decision of Massey University Vice Chancellor Jan Thomas to deny Mr Don Brash a chance to speak on campus. The Auckland City did the same with the recent visit by speakers Lauren Southern and Stefan Molyneux.

Lord Justice Sir Stephen Sedley (who wrote the judgement in Redmond-Bate v DPP above) writing privately, commented on platform denial in this way:

” A great deal of potentially offensive speech takes place in controlled or controllable forums – schools, universities, newspapers, broadcast media – which are able to make and enforce their own rules. For these reasons it may be legitimate to criticise a periodical such as Charlie Hebdo for giving unjustified offence – for incivility, in other words – without for a moment wanting to see it or any similarly pungent periodical penalised or banned. Correspondingly, the “no platform” policies adopted by many tertiary institutions and supported in general by the National Union of Students are intended to protect minorities in the student body from insult or isolation. But the price of this, the stifling of unpopular or abrasive voices, is a high one, and it is arguable that it is healthier for these voices to be heard and challenged. Challenge of course brings its own problems: is it legitimate to shout a speaker down? But these are exactly the margins of civility which institutions need to think about and manage. They are not a justification for taking sides by denying unpopular or abrasive speakers a platform.”[36]

So the upshot of all this is that we should be careful in overreacting in efforts to control, monitor, stifle or censor speech with which we disagree but which may not cross the high threshold of “dangerous speech”. And certainly be careful in trying to hobble the Internet platforms and the ISPs. Because of the global distributed nature of the Internet it would be wrong for anyone to impose their local values upon a world wide communications network. The only justifiable solution would be one that involved international consensus and a recognition of the importance of freedom of expression.

Conclusion

The function of government is to protect its citizens from harm and to hold those who cause harm accountable. By the same token a free exchange of ideas is essential in a healthy and diverse democracy. In such a way diversity of opinion is as essential as the diversity of those who make up the community.

I have posited a solution that recognizes and upholds freedom of expression and yet recognizes that there is a threshold below which untrammeled freedom of expression can cause harm. It is when expression falls below that threshold that the interference of the law is justified,

I have based my proposal upon a term based upon an identifiable and objective consequence – speech which is dangerous – rather than the term “hate speech”. Indeed there are some who suggest that mature democracies should move beyond “hate speech” laws.[37] Ash suggests that it is impossible to reach a conclusive verdict upon the efficacy of “hate speech” laws and suggests that there is scant evidence that mature democracies with extensive hate speech laws manifest any less racism, sexism or other kinds of prejudice than those with few or no such laws.[38] Indeed, it has been suggested that the application of “hate speech” laws has been unpredictable and disproportionate. A further problem with “hate speech” is that they tend to encourage people to take offence rather than learn to live with the fact that there is a diversity of opinions, or ignore it or deal with it by speaking back – preferably with reasoned argument rather than veto statements.

It is for this reason that I have approached the problem from the perspective of objective, identifiable harm rather than wrestling with the very fluid concept of “hate speech.” For that I may be criticized for ducking the issue. The legal solution proposed is a suggested way of confronting the issue rather than ducking it. It preserves freedom of expression as an essential element of a healthy and functioning democracy yet recognizes that there are occasions when individuals and members of groups may be subjected to physical danger arising from forms of expression.

What is essential is that the debate should be conducted in a measured, objective and unemotive manner. Any interference with freedom of expression must be approached with a considerable degree of care. An approach based upon an objectively identifiable danger rather than an emotive concept such as “hate” provides a solution.


[1] Presumably on the grounds that they depict, promote or encourage crime or terrorism or that the publication is injurious to the public good. See the definition of objectionable in the Films Videos and Publications Classification Act 1993

[2] Timothy Garton Ash Free Speech: Ten Principles for a Connected World (Atlantic Books, London 2016) p. 211

[3] US v Schwimmer 279 US 644 (1929)

[4] Daphne Patai Heterophobia: sexual harassment and the future of feminism (Rowman and Littlefield, Lanham 1998).

[5] See Irving v Penguin Books Ltd [2000] EWHC  QB 115.

[6] Jeremy Waldron The Harm in Hate Speech (Harvard University Press, Cambridge 2012 p. 120.

[7] Beauharnais v Illinois 343 US 250 (1952).

[8] Section 307A reads as follows:

307A Threats of harm to people or property

(1)           Every one is liable to imprisonment for a term not exceeding 7 years if, without lawful justification or reasonable excuse, and intending to achieve the effect stated in subsection (2), he or she—

(a)           threatens to do an act likely to have 1 or more of the results described in subsection (3); or

(b)           communicates information—

(i)            that purports to be about an act likely to have 1 or more of the results described in subsection (3); and

(ii)           that he or she believes to be false.

(2)           The effect is causing a significant disruption of 1 or more of the following things:

(a)           the activities of the civilian population of New Zealand:

(b)           something that is or forms part of an infrastructure facility in New Zealand:

(c)           civil administration in New Zealand (whether administration undertaken by the Government of New Zealand or by institutions such as local authorities, District Health Boards, or boards of trustees of schools):

(d)           commercial activity in New Zealand (whether commercial activity in general or commercial activity of a particular kind).

(3)           The results are—

(a)           creating a risk to the health of 1 or more people:

(b)           causing major property damage:

(c)           causing major economic loss to 1 or more persons:

(d)           causing major damage to the national economy of New Zealand.

(4)           To avoid doubt, the fact that a person engages in any protest, advocacy, or dissent, or engages in any strike, lockout, or other industrial action, is not, by itself, a sufficient basis for inferring that a person has committed an offence against subsection (1).

[9] [2013] DCR 482. For a full discussion of this case see David Harvey Collisions in the Digital Paradigm: Law and rulemaking in the Internet Age (Hart Publishing, Oxford, 2017) at p. 268 and following.

[10] Police v Joseph above at [2].

[11] Ibid at [7].

[12] [2011] NZSC 45.

[13] Ibid at para [123].

[14] See Human Rights Commission chief legal advisor Janet Bidois quoted in Michelle Duff “Hate crime law review fast-tracked following Christchurch mosque shootings” Stuff 30 March 2019. https://www.stuff.co.nz/national/christchurch-shooting/111661809/hate-crime-law-review-fasttracked-following-christchurch-mosque-shooting

[15] Human Rights Act 1993 sections 21 – 63.

[16] Ibid section 65.

[17] Ibid section 66

[18] Ibid sections 67 and 69.

[19] The provisions of section 61(1) state:

(1)           It shall be unlawful for any person—

(a)           to publish or distribute written matter which is threatening, abusive, or insulting, or to broadcast by means of radio or television or other electronic communication words which are threatening, abusive, or insulting; or

(b)           to use in any public place as defined in section 2(1) of the Summary Offences Act 1981, or within the hearing of persons in any such public place, or at any meeting to which the public are invited or have access, words which are threatening, abusive, or insulting; or

(c)           to use in any place words which are threatening, abusive, or insulting if the person using the words knew or ought to have known that the words were reasonably likely to be published in a newspaper, magazine, or periodical or broadcast by means of radio or television,—

being matter or words likely to excite hostility against or bring into contempt any group of persons in or who may be coming to New Zealand on the ground of the colour, race, or ethnic or national origins of that group of persons.

It should be noted that Internet based publication is encompassed by the use of the words “or other electronic communication”.

[20] Derek Cheng “Winston Peters criticizes Brunei for imposing strict Sharia law” NZ Herald 31 March 2019 https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12217917

[21] New Zealand Law Commission Ministerial Briefing Paper Harmful Digital Communications:The adequacy of the current sanctions and remedies. (New Zealand Law Commission, Wellington, August 2012) https://www.lawcom.govt.nz/sites/default/files/projectAvailableFormats/NZLC%20MB3.pdf (last accessed 26 April 2019)

[22] See David Harvey Collisions in the Digital Paradigm: Law and Rulemaking in the Internet (Hart Publishing, Oxford, 2017) especially at Chapter 2

[23] Harmful Digital Communications Act 2015 section 11.

[24] Harmful Digital Communications Act 2015 section 22(4).

[25] It may also include a consensual or non-consensual intimate video recording

[26] Harmful Digital Communications Act 2015 section 6. These principles are as follows:

Principle 1  A digital communication should not disclose sensitive personal facts about an individual.

Principle 2  A digital communication should not be threatening, intimidating, or menacing.

Principle 3  A digital communication should not be grossly offensive to a reasonable person in the position of the affected individual.

Principle 4 A digital communication should not be indecent or obscene.

Principle 5  A digital communication should not be used to harass an individual.

Principle 6  A digital communication should not make a false allegation.

Principle 7  A digital communication should not contain a matter that is published in breach of confidence.

Principle 8  A digital communication should not incite or encourage anyone to send a message to an individual for the purpose of causing harm to the individual.

Principle 9  A digital communication should not incite or encourage an individual to commit suicide.

Principle 10 A digital communication should not denigrate an individual by reason of his or her colour, race, ethnic or national origins, religion, gender, sexual orientation, or disability.

[27] http://netsafe.org.nz

[28] Harmful Digital Communications Act Section 22(1)(c)

[29] See Police v B [2017] NZHC 526.

[30] For some of the statistics on prosecutions under the Act see Nikki MacDonald “Revenge Porn: Is the Harmful Digital Communications Act Working?” 9 March 2019 https://www.stuff.co.nz/national/crime/110768981/revenge-porn-is-the-harmful-digital-communications-act-working

[31] Harmful Digital Communications Act Section 16(4)

[32] Harmful Digital Communications Act Section 3(b)

[33] See New Zealand Bill of Rights Act section 6. Note also that the Harmful Digital Communications Act provides at section 6 that in performing its functions or exercising powers under the Act the Approved Agency and the Courts must act consistently with the rights and freedoms provided in NZBORA.

[34] [1999] EWHC Admin 733.

[35] Ibid at  para [20].

[36] Stephen Sedley Law and the Whirligig of Time (Hart Publishing, Oxford, 2018) p. 176-177. The emphasis is mine.

[37] For example see Timothy Garton Ash Free Speech: Ten Principles for a Connected World (Atlantic, London 2016) especially at 219 and following.

[38] Ibid.

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Digital Property Revisited

Preface

In Chapter 5 of my book “Collisions in the Digital Paradigm: Law and Rulemaking in the Internet Age” I discussed what I called the property problem and whether a digital file could amount to property. My main argument against such a proposition was based upon technological realities – digital material was paradigmatically different from earlier items or forms that could amount to property. It was a difficult position to sustain, especially in light of the decision of the New Zealand Supreme Court in Dixon v R.

I considered that the property problem was a true collision in the digital paradigm – a collision between accepted theory which had incrementally developed over the years and which had developed defining characteristics for items of property, and the technological realities of digital data.

Furthermore, the particular collision in the digital paradigm is that, with so much information being digitised – and important information at that – it may well be that current remedies for breach of confidence, copyright infringement and the like do not provide a sufficient remedy nor deterrent particularly when the behaviour is accompanied by clear instances of dishonesty associated with the appropriation of information which can be converted into something of value.  The difficulty is, as was observed in the case of Your Response Limited v Data Team Business Media Limited that the law of unintended consequences may come into play.

My view at the time was that the confluence of data on the one hand with information on the other placed the law in an invidious position. Data or electromagnetic impulses scattered across a medium could not be property although the “merger theory” utilised by US Courts seemed to provide a possible solution. I concluded Chapter 5 with the following observation

“The issue of virtual property remains an open question and much depends upon the nature of the terms and conditions that exist between the provider and the customer. It may be that legislation will address this problem in the future, recognising that in a paradigm of continuing disruptive change, changes to perceptions of whether what may fall within the category of intangibles may have value needs to be recognised along with a further recognition that existing remedies under “traditional”   fields of law such as intellectual property and breach of confidence may be too limited to accord sufficient protection. The concept of no property in pure information could remain. Information that is not associated with a medium could remain as intangible. But the digital file associated with a medium would have a level of tangibility sufficient to attract the protection of the civil and criminal law.”

The cases discussed in this paper seem to provide the pathway that I tentatively identified. Hence the title “Digital Property Revisited”.

.

Introduction

The Digital Paradigm poses challenges to existing legal concepts. One particular challenge has been whether or not a digital file may be considered property for legal purposes.

Recently the issue has been highlighted by cases involving two important property based issues. The first is whether or not a digital file – in the particular case the contents of a computer including emails – may be property for the purposes of conversion

The second is whether a cryptocurrency such as bitcoin can be property.

The “Property” Issue

Can computer files be property for the purposes of the exercise of a possessory lien or amount to property to sustain an action for conversion? There are diverging lines of authority. The English position is based upon the theory that computer files comprise information and that there can be no property in information.[1] The issue then becomes further complicated by the distinction between choses in possession and choses in action

The English Approach

In the case of OBG v Allen[2]  the House of Lords held that wrongful interference with contractual rights could not constitute the tort of conversion because the tort applied only to chattels and not to choses in action

The position was articulated by Lord Hoffman who pointed out that historically conversion was a tort against a person’s interest in a chattel and expressed the view[3] that the whole of the statutory modification of the law of conversion had proceeded on the assumption that the tort applies only to chattels. 

Although it was suggested by Lord Nicholls and Lady Hale that the tort of conversion should be extended to cover the appropriation of things in action Lord Brown rejected that proposition on the grounds that it would sever the link between the tort of conversion and the wrongful taking of physical possession of property.

OBG v Allan makes clear the sharp distinction in the common law between tangible and intangible property. The issue of tangibility is an important one in considering whether there may be a property right in information.  Information in and of itself has no tangibility at all. Information incorporated into a document is associated with a medium and in such a situation conversion could apply but it relates to the medium – the document – thereby creating an unlawful interference with a physical object to which a commercial value can be attached.  In contrast to chattels, choses in action are intangible things and incapable of the physical possession necessary to support a claim for conversion.

In England the case of Your Response Limited v Data Team Business Media Limited[4] developed the issue.

Rather than being considered within the context of a remedy for conversion the issue was whether or not a possessory lien could apply to a data base.  Data Team Business Media Limited carried on business as a data base manager. It offered customers the service of holding electronic data basis and amending them as required in order to ensure that the information contained was up to date.  In 2010 Your Response engaged Data Team to hold and maintain its data base of subscribers.

Following non-payment of fees Data Team refused to release the data base or give Your Response access to it until all outstanding fees were paid.  In the proceedings that followed the Judge at first instance held that the data manager, Data Team, was entitled to withhold the data until those fees were paid and rejected Your Response’s argument that the exercise of a lien was inconsistent with the terms of the contract and that it was not possible to exercise a lien over intangible property in this case the electronic data.

In his decision the Judge at first instance drew an analogy between information kept in hardcopy in the form of ledgers over which a book keeper could exercise control by means of physical possession and information kept in electronic form over which the data manager could exercise control by electronic means.

The Court of Appeal observed that the Judge had not had his attention drawn to the case of OBG Limited v Allen[5] and went on to consider the nature of a common law possessory lien, observing the possessory aspect of the remedy and the requirement for there to be actual possession of goods, requiring tangibility in contradistinction to a chose in action – essentially personal rights of property which could be claimed or enforced by action and not by taking physical possession.[6]

It was observed[7] that there are indications that information of the kind that makes up a data base – usually but not necessarily maintained in electronic form – if it constitutes property at all – does not constitute property of a kind that is susceptible of possession or of being the subject of the tort of conversion.  Under the provisions of the Copyright Designs and Patents Act 1988 (UK) the nature of protection accorded to the makers of data bases by that legislation reflects a recognition that data bases do not represent tangible property of a kind that is capable of forming the subject matter of torts concerned with the interference of possession.

Davis LJ observed[8] that the subtext of the argument on behalf of Data Team was that the courts should not leave the common law possessory lien stuck in its 18th and 19th century origins in developments but should go on to give it a 21st century application.  Although that appealed to modernism and had its attractions it should be resisted. Davis LJ observed that although that approach found favour with the minority in OBG v Allen it did not find favour with the majority. 

The second point made by Davis LJ was more far reaching. He observed that the law of unintended consequences is no part of the law of England and Wales but it is worth paying attention to it in the appropriate case.  He observed that if a common law possessory lien could arise in a case such as Your Response v Data Team it would be a right in rem and not a right in personam.   

Furthermore a right to such a possessory lien could have an impact upon creditors of the company and could confer rights in an insolvency which other creditors would not have.  In addition the possession of lenders could be affected and, given the number of IT companies and businesses, the impact of Data Team’s arguments, if accepted, could be significant.  Davis LJ also observed that if a data base is to be regarded as tangible property it may have implications for other areas of the law altogether for example, the law of theft (as contrasted with the legislation relating to misuse of computers). 

Davis LJ’s observations about unintended consequences found favour with Floyd LJ. He made the observation that an electronic data base consists of structured information which may give rise to intellectual property rights but again emphasised that the law had been reluctant to treat information itself as property.  He observed that when information is created and recorded there are sharp distinctions between the information itself, the physical medium on which the information is recorded and the rights to which the information gives rise.  Whilst the physical medium and the rights are treated as property the information itself never has been and to accept Data Team’s arguments would result in a fundamental change in the law.[9]

I have discussed Your Response in some detail because it is of significance when the position in New Zealand is considered to which I shall now turn.

The New Zealand Approach – Henderson v Walker

The case of Henderson v Walker[10] dealt with a number of issues following upon the liquidation of Property Venture Ltd of whom the Plaintiff was a director. The defendant was the liquidator of the company and other companies in the group. He was instrumental in the Police seeking and obtaining warrants to seize the records of the companies. The actions of the defendant following receipt of a tape drive and a laptop owned by the Company that was the subject of the case. In particular, there were concerns on the part of the plaintiff that the defendant, fuelled by malice, provided his personal information to the Inland Revenue Department, the Official Assignee and other third parties.

There were some six causes of action pleaded but for the purposes of this discussion only one – in conversion – is relevant. The question was whether or not certain computerised information contained in files and emails was property that could sustain an action in conversion.

Thomas J started by considering the traditional position, taking into account three elements

a)      Plaintiff must have an immediate right to the goods

b)      Defendant’s conduct must be deliberate

c)       Defendant’s conduct must be so extensive an encroachment on the     plaintiff’s right as to exclude him from use and possession of goods.

There was an assumption that the tort applied to personal tangible property. Possession – which underlies the tort – requires physical control and an intention to exclude. Because intangible property is not physical thus it cannot be physically controlled and therefore possessed.[11]

Your Response Rejected

At first blush it would appear that Your Response Ltd was directly on point and would dictate the outcome. That was not to be. Thomas J considered that much of the reasoning in Your Response was specific to the UK context noting that the NZ Courts are not bound by OBG v Allan and that there is no statute that alters the tort of conversion. On that basis it was open to the Court to depart from the UK position.

Thyroff v Nationwide Mutual Insurance Co

Thomas J then considered the US position, noting that the New York State Court of Appeals[12] had explicitly extended the tort of conversion at cover electronic records. That Court focused upon the so-called “merger doctrine” which the courts had developed to allow claims for the conversion of intangible property where that property was represented by a physical asset, such as a stock certificate.

The Court noted:

The merger rule reflected the concept that intangible property interests could be converted only by exercising dominion over the paper document that represented that interest (see Pierpoint v Hoyt, 260 NY at 29). Now, however, it is customary that stock ownership exclusively exists in electronic format. Because shares of stock can be transferred by mere computer entries, a thief can use a computer to access a person’s financial accounts and transfer the shares to an account controlled by the thief. Similarly, electronic documents and records stored on a computer can also be converted by simply pressing the delete button (cf. Kremen v Cohen, 337 F3d at 1034 [“It would be a curious jurisprudence that turned on the existence of a paper document rather than an electronic one. Torching a company’s file room would then be conversion while hacking into its mainframe and deleting its data would not” (emphasis omitted)]).

Furthermore, it generally is not the physical nature of a document that determines its worth, it is the information memorialized in the document that has intrinsic value. A manuscript of a novel has the same value whether it is saved in a computer’s memory or printed on paper. So too, the information that Thyroff allegedly stored on his leased computers in the form of electronic records of customer contacts and related data has value to him regardless of whether the format in which the information was stored was tangible or intangible. In the absence of a significant difference in the value of the information, the protections of the law should apply equally to both forms – physical and virtual.

Unsurprisingly, given the direction of the discussion, it was clear that there were no New Zealand authorities on whether conversion extended to intangible property. There were, however, other cases where the issue of whether there was a property interest in a computer file had been considered. Thomas J referred to the case of Dixon v R.[13]

Dixon v R

Dixon centred around the use of a computer system to dishonestly obtain property – a digital file – in breach of section 249(1)(a) of the Crimes Act 1961 (NZ). In that case the Court of Appeal[14] held that a digital file cannot be property for the purposes of the criminal law. This finding depended upon the way in which various definitions contained in the Crimes Act coupled with the nature of the charge were interpreted by the court. The New Zealand Supreme Court reversed the Court of Appeal and adopted a different approach.

The facts of the case were that Mr Dixon had been employed by a security firm in Queenstown. One of the clients of the firm operated a bar in Queenstown and had installed a closed-circuit TV system in the bar. In September 2011 the English rugby team was touring New Zealand as part of the rugby world cup.  The captain of the team was a Mr Tindal who had recently married the Queen’s granddaughter. On 11 September 2011 Mr Tindal and several other members of the team visited the bar and there was an incident involving Mr Tindal and a female patron which was recorded on the CCTV system. 

Mr Dixon found out about the existence of the footage and asked one of the bar’s receptionists to download it onto a computer that was used at work. This was done under the impression that Mr Dixon required it for legitimate work purposes. The footage was located and saved onto the computer. Mr Dixon accessed the computer, located the relevant file and transferred it onto a USB stick belonging to him.

He then attempted to sell the footage but that proved to be unsuccessful and he posted it on a video sharing site, YouTube, resulting in a storm of publicity both in New Zealand and in the United Kingdom.

At his trial the Judge found that Mr Dixon had done this out of spite and to ensure that no one else would have the opportunity to make any money from the footage.  A complaint was laid with the Police and Mr Dixon was charged under s 249(1)(a) of the New Zealand Crimes Act.[15] 

The charge against Mr Dixon alleged that he had access to computer system and thereby dishonestly and without claim of right obtained property – the video file. The issue before the court was whether or not that file and digital footage stored on a computer amounted to property as defined in the Crimes Act.

In its discussion the Supreme Court referred to both Your Response Ltd v Datateam Business Media Ltd and Thyroff v Nationwide Mutual Insurance Co, but did not find it necessary to consider either in any detail.

The Court also found it strictly unnecessary to determine whether digital files are intangible property or tangible property. The Court emphasised that the meaning of the word “property” varies with context. The Supreme Court noted

“… we have no doubt that the digital files at issue are property and not simply information. In summary, we consider that the digital files can be identified, have a value and are capable of being transferred to others. They also have a physical presence, albeit one that cannot be detected by means of the unaided senses…”[16]

Ortmann v US

The decision in Dixon was referred to in the case of Ortmann & Ors v United States.[17] In that case consideration was given to the identification of “pathway offences” for the purposes of extradition for what could broadly be described as commercial copyright infringement involving among other things films in digital format.

The Court considered whether Section 240 of the Crimes Act was available as a “pathway offence”. Section 240 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.

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[18] – the 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. What Gilbert J did was to extend the limited purpose identified by the Supreme Court to encompass section 240, thus widening the applicability of the concept of digital property to other sections of the Crimes Act. However, Ortmann was not considered by Thomas J in Henderson.

Information and Data as Property

Thomas J considered competing academic views on the issue of data as property, leaning towards the view that in a modern society intangible property, such as data, is an increasingly valuable resource that requires legal protection. Tangibility, it is argued, is an arbitrary requirement and that the tort of conversion should be brought up to date with advancements in technology.[19]

The academic opponents of extension of property to data focus upon the issue of possession and how that important element of property could be extended to an intangible. The comment in Your Response that although “it is possible to transfer physical possession of tangible property by simple delivery, it is not possible to deal with intangible property in the same way.” 

It is the issue of possession that is significant. Opponents are of the view that the common law should not give total despotic control over anything with economic value. An illustration is that even tangible property does not obtain protection against ephemeral interferences such as visual trespass, and it is the concept of possession that provides the limitation in the case of tangible property.

Thomas J then went on to consider the issue of whether information was property. She acknowledged that information, unlike property, cannot be separated from any person who once possessed it. It is easily acquired, and its free communication is essential to human existence. Furthermore, classifying information as property would undermine all the intricate distinctions and limitations developed by the law of breach of confidence.

Digital Assets

However, Thomas J then developed the concept of digital assets. She said

“However, in my view, it is possible to draw a distinction, as the Supreme Court did in Dixon v R, between information and digital assets. Unlike information, it is possible to apply the concept of possession to digital assets. By digital assets, I mean to include all forms of information stored digitally on an electronic device, such as emails, digital files, digital footage and computer programmes.”[20]

Thomas J then addressed the issue of control in the context of digital assets. Control is an element of possession and may be cognitive control and\or manual control. Physical control is just one aspect of manual control and manual control has within it the elements of excludability and exhaustability.

Something is excludable if others can be excluded from its control, while something is exhaustible if its value can be deprived from others. These criteria fit logically with the basis for conversion because together they enable someone to control property to the detriment of another.[21]

Thomas J considered that digital assets are both excludable and exhaustible. In terms of excludability, digital assets have a material presence in the sense that they physically alter the medium on which they are held, which is illustrated by the fact that hardware only has a finite storage capacity for digital assets, a point the Supreme Court picked up on in Dixon v R.

Physical presence allows others to be excluded from the digital asset, either by physical control of the medium or by password protection, which can be considered analogous to locking-up tangible property with a key.

Conversion requires an extensive encroachment on the possessory rights of the plaintiff, so if exhaustibility is a key component of possession, then it follows that the defendant must in some way deprive the plaintiff of the asset to make out the tort.

This requirement removes any inconsistency between the tort’s application to tangible and digital assets. It also mitigates any policy concerns that extending the tort would inhibit the free exchange of digital information.[22]

Thomas J concluded by observing that it seems obvious that digital assets should be afforded the protection of property law. They have all the characteristics of property and the conceptual difficulties appear to arise predominantly from the historical origins of our law of tangible property. There is a real difference between digital assets and the information they record. Such permanent records of information are already convertible when they take a physical form and it would be arbitrary to base the law on the form of the medium, especially now that digital media has assumed a ubiquitous role in modern life.[23]

Observations

My criticisms of Dixon and my support of the English position in Your Response has been based upon technological realities. Essentially, at its most basic form, digital data is no more nor less that a series of electronic impulses recorded upon a medium that require a complex system of devices to render it into comprehensible form. In such a state – dynamic, alterable and often mercurial in that data changes as a computer is started – it can hardly have the stability required of tangible property.

However, in light of the reasoning in Henderson and particularly Thomas J’s characterisation of digital assets I have reconsidered my position, and have come to a middle way that recognizes technological realities and yet conceptually allows digital material to be property. It is based upon the architecture of a computer file system.

A computer file system consists of a number of layers. At its most fundamental is the physical file system which organizes the data which is scattered about the medium. A second layer, which in some considerations may be optional, is the virtual file system which allows support for multiple concurrent instances of the physical file system. Finally, the logical file system provides the application program interface (API) for file operations and passes requested operations to the layer below for processing. This layer provides file access, directory operations, security and protection.

The logical file system is presented to the user in the form of a directory tree which contains file folders and file names. These are labels defined by the user (or in some cases the device) that allow the system to bring together the scattered data into coherent form. In many operating systems file folders are represented as just that – a folder. File names may be accompanied by an icon which represents the type of file that it might be – a Word document, an Adobe pdf, an image file and so on. These correspond to what Thomas J has described as digital assets.

In my opinion, and adopting Thomas J’s conceptual approach, the logical file system can be viewed in this way. There is a differentiation between a file and the information that it contains. In other words, the file itself in total can be seen as a container – akin to a book or a piece of paper which may contain text or information[24]. One can interfere with the book or paper (putting to one side the differences in physical media between such constructs and a digital storage system) and be interfering with property without interfering with the information that either item contains. The problem with Thomas J’s characterization of “digital assets” is that it fails to make the distinction between the logical file construct on the one hand and the data contained on the other.

Therefore, I concede that a digital file can amount to property within the context of the logical file construct of a digital filing system. The question now becomes one of whether or not that approach applies to all forms of digital files and digital constructs, because digital data is often organized in different ways depending upon its use.

One such difference in organization is in the field of cryptocurrencies, which leads me to consider the case of Ruscoe and Moore v Cryptopia Ltd (In Liquidation)[25]

The Cryptocurrency Issue

Before embarking upon a discussion of Crytopia some remarks by way of introduction need to be made.

The issue of whether or not cryptocurrencies such as Bitcoin can be property has been considered in three cases[26], all of which are mentioned in Cryptopia.  What is significant is that the treatment of the issue has been superficial and within the context – as is so often the case – of interlocutory proceedings. Cryptopia is the first case to give a considered analysis of the issue.

Ruscoe and Moore v Cryptopia

Cryptopia – a cryptocurrency trading exchange – went into liquidation after a hack resulted in a loss to the Company of $30 million. The company held cryptocurrencies to a value of $170 million. The issue was the legal nature and status of those digital assets and the potential equitable interests in them.

Cryptoassets Defined

The judge, Gendall J first examined what cryptocurrency was and relied to a considerable degree upon British report of the “UK Jurisdiction Taskforce” entitled Legal Statement on Cryptoassets and Smart Contracts.[27] This report considers broadly the legal status of crypto assets and whether the law treats them as property. The report plays an important role in Gendall J’s decision as it did in the case of AA v Persons Unknown.[28]

Crypto assets arose as a result of a proposal by the pseudonymous Satoshi Nakamoto who proposed a new electronic payment system “based on cryptographic proof instead of trust”, with digital tokens – bitcoins – taking the place of traditional currency. The first bitcoin came into existence in January 2009, not coincidentally at the height of the global banking crisis.

Since then other systems have developed using cryptographic techniques. Most of the applications involve dealing in assets of some sort which are represented digitally in the system. This there is a link between a digital representation and an actual asset. The digital representations are referred to as crypto assets. However, because of the large number of different systems in use and the types of assets represented it is difficult to formulate a precise and all-embracing definition of the term.

In general terms there are common features of crypto assets which, when compared with conventional assets are novel or distinctive.

The starting point is to understand the rules of the system within which the crypto asset exists. Functionally, it is typically represented by a pair of data parameters, one public (in that it is disclosed to all participants in the system or to the world at large) and one private.

The public parameter contains or references encoded information about the asset, such as its ownership, value and transaction history.

The private parameter – the private key – permits transfers or other dealings in the crypto asset to be cryptographically authenticated by digital signature.

Knowledge of the private key confers practical control over the asset; it should therefore be kept secret by the holder. More complex crypto assets may operate with multiple private keys (multisig), with control of the asset shared or divided between the holders.

Dealings in a crypto asset are broadcast to a network of participants and, once confirmed as valid, added to a digital ledger. The main function of the ledger is to keep a reliable history of transactions and so prevent double-spending, i.e. inconsistent transfers of the same crypto asset to different recipients.

The ledger may be distributed and decentralised, that is, shared over the network with no one person having a responsibility for maintaining it, or any right to do so.

A common type of distributed ledger uses a blockchain, which comprises blocks of transactions linked together sequentially, but other models are also in use.

An important feature of some systems is that the rules governing dealings are established by the informal consensus of participants, rather than by contract or in some other legally binding way.

Consensus rules (employing methods such as proof-of-work or proof-of-stake) may also determine which version of the distributed ledger is definitive. The rules are self-enforcing in practice, even if not enforceable in law, because only transactions made in compliance with them and duly entered in the ledger will be accepted by participants as valid.[29]

Thus there are five common characteristics to crypto assets:

  • intangibility;
  •  cryptographic authentication;
  •  use of a distributed transaction ledger;
  • decentralisation; and
  • rule by consensus.

Gendall J also considered how Cryptopia operated and its terms and conditions which governed its relationship with its account holders. The, having established the technological and business model issues he went on to consider the legal position.

Legal Issues Arising

The starting point was the power to give directions to the liquidator of the company in relation to any matter arising in the liquidation.[30] There were a number of questions that the liquidator wanted the Court to answer as to the legal status of the Digital Assets. The first and most relevant to this discussion was whether or not they constituted property as defined by s. 2 of the Companies Act.[31]

There were also questions posed as to the nature of the way in which the assets were held for account holders, whether they were in trust and, depending upon the answers to those questions were a number of supplementary questions which arose. However the Court considered the two main issues were

(a)     Are cryptocurrencies a type of “property” in terms of the Companies Act and, linked to this, can cryptocurrencies form the subject matter of a trust?

(b)     Was Cryptopia, in providing a cryptocurrency storage and exchange service for its customers, a trustee of the currency brought onto the exchange by accountholders and held by it?

The account holders argued that cryptocurrencies must be seen as a form of intangible personal property both at common law and within the definition contained in s 2 of the Companies Act. The liquidators and the creditors disagreed with this. The creditors also contended that cryptocurrencies are not property capable of forming the subject matter of a trust at common law. Alternatively even if they are not property they are capable of forming the subject matter of a trust.[32]

It was contended for the account holders that any finding by the Court that cryptocurrencies are not property would have profound and unsatisfactory implications for the law in New Zealand including in particular insolvency law, succession law, the law of restitution and commercial law more generally. It was also contended that this was a matter for the Court to decide rather than be left to Parliament as argued by the creditors.

The Importance of the Property Issue

The Judge considered why it mattered that a cryptocurrency was property. He referred to a text which stated:

“Property is a gateway to many standard forms of transactions. A crypto-coin can never become the subject matter of a trust or a proprietary right of security, nor will it be an asset in a deceased’s person’s estate, unless it is first recognised as an object of property. The same is true of a secured creditor or trust beneficiary enforcing their claim in property to the unsecured creditors of an insolvent coin-holder. The development of a viable cryptocurrencies derivative market may sometimes require that the primary assets from which secondary claims are constructed are capable of legal recognition as property.”[33]

He then turned to the approach set out on the Legal Statement on Cryptoassets and Smart Contracts and concluded that the cryptocurrencies here situated in Cryptopia’s exchange are a species of intangible personal property and clearly an identifiable thing of value. Without question they are capable of being the subject matter of a trust.[34]

The starting point was that the Courts in New Zealand had accepted that the definition of property was a wide one, and after a brief reference to the case of  National Provincial Bank Ltd v Ainsworth[35] where Lord Wilberforce set out the four characteristics of property[36] (and to which he would later return) he went on to consider other cases involving the issue of cryptocurrencies as property.

Other Cases on Cryptocurrencies

B2C2 Ltd v Quoine Pte Ltd

The first case to which Gendall J referred was that of B2C2 Ltd v Quoine Pte Ltd (Singapore)[37] In that case Quoine had conceded that Bitcoin was a species of “property” but it did not concede that there was any trust. Thorley IJ considered that the concession on the “property” point was rightly made and in his judgment his Honour stated

“Cryptocurrencies are not legal tender in the sense of being a regulated currency issued by government but do have the fundamental characteristic of intangible property as being an identifiable thing of value. Quoine drew my attention to the classic definition of a property right in the House of Lords decision of National Provincial Bank v Ainsworth [1965] 1 AC 1175 (HL) at 1248:

…it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.

Cryptocurrencies meet all these requirements. Whilst there may be some academic debate as to the precise nature of the property right, in the light of the fact that Quoine does not seek to dispute that they may be treated as property in a generic sense, I need not consider the question further.”

The case went on appeal – one of the major issues was whether the cryptocurrencies were held on trust but as to the property issue the Court of Appeal declined to decide whether Bitcoin was property capable of forming the subject matter of a trust. Menon CJ noted

“There may be much to commend the view that cryptocurrencies should be capable of assimilation into the general concepts of property. There are, however, different questions as to the type of property that is involved. It is not necessary for us to come to a final position on this question in the present case.”

This comment was described by Gendall J as “helpful”.[38] The Singapore decision in B2C2 has previously been much cited despite the brevity of its reasoning.

Vorotyntseva v Money-4 Ltd[39]

In Vorotyntseva Birss J sitting in the Chancery Division of the English High Court granted ex parte a proprietary freezing order over some bitcoin and ethereum currency, stating that the defendant in that case had not suggested that “cryptocurrency cannot be a form of ‘property’ but there was no further discussion on the point.

Shair.Com Global Digital Services Ltd v Arnold[40]

In Shair.com the Supreme Court of British Colombia granted an ex parte preservation order to the plaintiff company against its former chief operating officer with respect to digital currencies that might still be in the defendant’s possession.

Without providing any reasoning the Court accepted that cryptocurrencies could be property within the rules for preservation orders, noting that in the correspondence between the parties that had been filed for the proceeding the defendant had not denied that the plaintiff had an interest to pursue.

AA v Persons Unknown[41]

 In AA Bryan J granted an interim proprietary injunction against a cryptocurrency exchange over bitcoin which represented proceeds of ransom monies paid out to a hacker by the applicant insurance company. The hackers had installed malware into the insurance company’s computer system, and demanded the company pay a ransom in bitcoin, to regain access to its system. The ransom was paid in bitcoin and transferred into the exchange. The insurance company applied to the Court for an interim proprietary injunction against the exchange over the bitcoin, amongst other things.

Only counsel for the applicant insurance company appeared at the hearing in that case and filed submissions. It seems the High Court in AA primarily relied on the Legal Statement on Cryptoassets and Smart Contracts, and that no other argument was addressed to the Court on the issue.

While from the above cases it will be apparent that this was not the first common law decision to consider the status of crypto assets, it is both the first to give detailed consideration to the point, and the first to consider the careful reasoning of the UKJT Legal Statement.

While Bryan J caveated his conclusions, stating that his conclusion is “at least to the level required for the purposes of this application for interim relief”, the otherwise unreserved endorsement and complete adoption of the careful and well-reasoned position taken by the UKJT Legal Statement strengthened the status of that publication, and had given one of its major conclusions a strong judicial endorsement.

New Zealand Cases

Gendall J referred not unsurprisingly to Dixon v R[42]and to Henderson v Walker[43] noting the findings in those cases as to the nature of digital property. He considered that the findings in Henderson, could be properly extended to wrongful interferences with cryptocurrency or digital assets. Any person who gained unauthorised access to the private key attached to cryptocoins and used it would permanently deprive the proper possessor of the cryptocoins of that property and its value.[44]

In the case of Commissioner of Police v Rowland[45] the Court approved a settlement under the Criminal Proceeds (Recovery) Act 2009 that included quantities of two cryptocurrencies – bitcoin and ethereum. The question whether the cryptocurrencies were “property” that was amenable to forfeiture under that legislation, however, was not raised in the proceeding. An assumption was made that they did fall within the definition in terms of that legislation[46].

Importantly the Judge analysed the approach in Dixon and Henderson noting the New Zealand courts involved have accepted that the orthodox position that information is not “property” does not attach to cases involving digital assets. There, digital files were seen as “property” by distinguishing them from “pure information”.

National Provincial Bank Ltd v Ainsworth

Gendall J then went on to consider Lord Wilberforce’s four requirements for property and considered that all four of his requirements could be applicable to computer data.

Identifiable Subject Matter

As to the requirement of identifiable subject matter, in the context of cryptocurrencies, computer readable strings of characters recorded on networks were sufficiently distinct to be capable of then being allocated uniquely to an accountholder on that particular network. For the cryptocurrencies involved here, the allocation is made by what is called a public key – the data allocated to one public key will not be confused with another.

This is the case even though the identical data is held on every computer attached to the network. Indeed, the working of the system is such that the distribution of the data across a large network of computers, when combined with cryptography that prevents individual networks from altering historic data over the network, assists in giving that data stability. It is these features that provide the basic underpinning for the existing cryptocurrencies.[47]  

Thus the combination of the data together with the unique identifier which related to that data fulfilled the criterion of identifiability. This differs from the means of identification of computer data in a container within a logical file system, and shows the difficulty in trying to reach a common and all-embracing approach to computer data as property because of the diverse types of circumstances surrounding the storage and recover of such data.

Identifiable by Third Parties

Can the subject matter be identifiable by third parties. This second item of Lord Wilberforce’s criteria refers to the thing that is identified as having to have an owner capable of being recognised as such by third parties.

This is the aspect of exclusivity that is referred to by Thomas J in Henderson. There has to be a degree of control over the asset to the exclusion of others. That is as much if not more significant than the power to use of to benefit from the asset.[48]

Gendall J considered that exclusivity was achieved with cryptocurrencies by the computer software allocating to each public key a second set of data made available only to the holder of the account (the private key), and requiring the combination of the two sets of data in order to record a transfer of the cryptocurrency attached to the public key from one account to another.

The judge observed that a varied public key and a new private key for the cryptocurrency are generated after each transfer of cryptocurrency. He likened the private key to a PIN. Anyone who learns of the private key attached to a public key can transfer the public key but the private key, having been used once in respect of the public key, cannot be used again.[49]

Assumption by Third Parties

Third parties must respect the rights of the owner in that property. This means that the law will give effect to proprietary rights if a third party asserts a claim to ownership without justification.

Usually, although not invariably, an asset recognised by the law as an item of property will be something which is potentially desirable to third parties such that they would want themselves to obtain ownership of it. It may well be that an asset has no market value, but that matters not.[50]

Degree of Permanence or Stability

It was recognized that some assets have little permanence yet still remain property. Gendall J gave the example of a ticket to a football match which had a short useful or valid life and unquestionably was regarded as property.[51] The judge also considered that there was no problem in situations where the short life of an asset is the result of the deliberate process of transferring the value inherent in the asset so that one asset becomes replaced by another. This is the way that cryptocurrencies work but by the same token bank payments use a similar process which he described as native to the property in question.[52]

He also considered the action of wrongful interference with a cryptocurrency , by someone gaining unauthorised access to the private key or by hacking the address to which an owner intends to send a coin. He considered this from the position of risk, observing that the risk was not markedly greater than those borne by an owner of tangible property or a person relying on the integrity of a bank account record with or without the use of a PIN.[53]

Gendall J concluded his analysis of the Ainsworth categories with the following comment:

“I am satisfied that cryptocurrencies meet the standard criteria outlined by Lord Wilberforce to be considered a species of “property”. They are a type of intangible property as a result of the combination of three interdependent features. They obtain their definition as a result of the public key recording the unit of currency. The control and stability necessary to ownership and for creating a market in the coins are provided by the other two features – the private key attached to the corresponding public key and the generation of a fresh private key upon a transfer of the relevant coin.”[54]

Arguments Against Cryptocurrencies as Property

The Judge then considered some of the arguments against the concept of cryptocurrencies as property. These were identified primarily for the purposes of discounting them.

Tangibles or Choses in Action

The first argument arose from the dicta of Fry LJ in Colonial Bank v Whinney[55] and the theory that the law recognizes only two classes of personal property – tangibles or choses in action. Gendall J was of the view that cryptocurrencies could be classed as choses in action and observed that it would be ironic that something that might be said to have more proprietary features than a simple debt is deemed not to be property at all when a simple debt qualifies.[56]

No Property in Information

The second argument was that surrounding the suggestion that information was not property. I have discussed this in the context of Henderson and I repeat the differentiation that may be made between the contents (information) and the container (the logical file system).

He considered Your Response Ltd but was dismissive of it in a summary manner saying  “[as] I see it, however, the decision in Your Response does not go much further than to make a determination upon the particular facts of that case. I am satisfied it is an inconclusive precedent in a case such as the present.”[57]

There was probably a very simple way to provide a rationale for dismissing Your Response by perhaps observing that there were differences in the subject matter of Your Response (a database) and that of Cryptopia (a cryptocurrency supported by blockchain and with a public\private key authentication process).

The common feature between the two cases is that they involve digital data but the way that data is stored and accessed is quite different and requires an analysis in each case to determine whether or not the legal requirements of “property” are fulfilled.

If there is a problem with Your Response it is that the Court of Appeal placed excessive weight upon the contents of the database which, correctly was the information, as opposed to the container within which it resided – that is the logical framework within which the data was contained.

Gendall J considered whether or not cryptocurrencies could be mere information. On the basis of my analysis the answer is no but Gendall J adopted a different line of reasoning.

Firstly he considered the purpose of cryptocurrencies which was to create an item of tradeable value not simply to record or to impart in confidence knowledge or information. Although cryptocoins are not backed by the promise of a bank, the combination of data that records their existence and affords them exclusivity is otherwise comparable to the electronic records of a bank. The use of the private key also provides a method of transferring that value. This might be seen as similar in operation to, for example, a PIN on an electronic bank account.

He then observed that cryptocoins were no more information than are the words of a contract. At its most basic level this is incorrect because words are capable of being read or heard.[58] Words are information. They inform and have meaning.

But what Gendall J meant, with respect, is that words within the framework of a contract are not information because collectively and cumulatively they create a relationship recognized by equity. The contract is conceptualized as the container for the specific information that establishes the equitably recognized relationship.

Another reason for rejecting the “cryptocurrency as mere information” argument is that the data is not available for those with eyes to read or ears to hear. Every public key recording the data constituting the coin is unique on the system where it is recorded. It is also protected by the associated private key from being transferred without consent.

In addition, cryptocurrency systems provide a more secure method of transfer than a mere assignment of a chose in action. It is possible in equity for the holder of a chose in action to assign it multiple times. Only one assignment will be effective to bind the debtor but the winner may not be the first assignee in time but rather the first assignee to notify the debtor. By way of contrast, a cryptocoin can not only be assigned in that way but it can also be sold only once and that the argument that cryptocurrency is mere information and therefore it is not property is a simplistic one and, in the view of Gendall J  is wrong in the present context.[59]

Conclusion

Cryptopia is a significant case because, unlike its predecessors discussed above, it is the first case to give detailed analysis of the nature of cryptocurrencies and why they are property. It provides a carefully considered rationale for its conclusion and settles a complex question about aspects of digital property.

But it is not a complete answer. It is not a universal authority for the principle that digital data is property or that digital files are property. It is authority only for the proposition that cryptocurrencies are property. With little difficulty the rationale could probably be extended to other aspects of blockchain.

However, what Cryptopia and Henderson do give us is an analytical pathway to a consideration of whether the different flavours of digital data comprise property. Once the analysis recognizes that a consideration of the data alone without a consideration of the way in which it is technologically structured – what could be referred to as “the container theory” –  is a flawed approach, the analytical pathways become significantly clearer.

As is the case with all aspects of the common law, further developments in this field will be incremental. However, on the present state of technological understanding of the Digital Paradigm it is unlikely that at law there will be a Unified Property Theory that will be applicable to all forms digital data.


[1] See Phipps v Boardman [1967] 2 AC 46 (HL).  – information “is normally open to all who have eyes to read and ears to hear” See also Oxford v Moss (1979) 68 Cr App R 183.

[2] [2007] UKHL 21, [2008] 1 AC 1.

[3] Ibid. para [97].

[4] [2014] EWCA Civ 281, [2015] QB 41..

[5] Above n.2

[6] Torkington v McGee [1902]  2 KB 427

[7] Your Response Ltd v Data Team Business Media Ltd above n. 4 at para [17]

[8] Ibid. at para [38].

[9] There have been a number of other cases which have held that information does not amount to property.  In the case of Boardman v Phipps [1967] 2 AC 46 it was held that confidential information was not property.  The position in Australia and in New Zealand is similar – See TS and B Retail Systems v Three Fold Resources No 3 [2007] FCA 151 and Farah Construction Pty v Saydee Pty [2007] HCA 22.  A similar conclusion has been reached in Hunt v A [2007] NZCA 332; [2008] 1 NZLR 368. In Money Managers Limited v Foxbridge Trading (Unreported High Court Hamilton CP 67/93 15 December 1993 per Hammond J) the observation was made that “extreme caution should be exercised in granting proprietary protection to information and that if protection is to be granted at all, it should be in very narrowly circumscribed terms.” The rejection of the argument that information is property was also upheld in Taxation Review Authority 25 [1977] TRNZ 129. 

[10] [2019] NZHC 2184

[11] Ibid at [251]

[12] Thyroff v Nationwide Mutual Insurance Co 8 NY 3d 283 (NY 2007)

[13] [2015] NZSC 147 (SC); [2016] 1 NZLR 678

[14] Above n. 1.

[15] That section provides as follows.

Accessing computer system for dishonest purpose

(1) Every one is liable to imprisonment for a term not exceeding 7 years who, directly or indirectly, accesses any computer system and thereby, dishonestly or by deception, and without claim of right,—

(a) obtains any property, privilege, service, pecuniary advantage, benefit, or valuable consideration; or

(b) causes loss to any other person. (My emphasis)

[16] Dixon above n. 13 [25].

[17] [2017] NZHC 189

[18] Above n. 13.

[19] Henderson above n. 10 para [260].

[20] Ibid para [263].

[21] Ibid para [264].

[22] Ibid para [266].

[23] Ibid para [270].

[24] I advance that comparison tentatively and solely for the purposes of illustration.

[25] [2020] NZHC 728.

[26] B2C2 Ltd v Quoine Pte Ltd (Singapore) SGHC(I) 3, [2019] 4 SLR 17 [B2C2 (SGHC); Vorotyntseva v Money-4 Ltd [2018] EWHC 2596 (Ch) and AA v Persons Unknown [2019] EWHC 3556, [2020] 4 WLR.

[27] UK Jurisdiction Taskforce Legal Statement on Cryptoassets and Smart Contracts (The LawTech Delivery Panel, November 2019) [Legal Statement on Cryptoassets and Smart Contracts] https://technation.io/news/uk-takes-significant-step-in-legal-certainty-for-smart-contracts-and-cryptocurrencies

[28] Above n. 26.

[29] Legal Statement on Cryptoassets and Smart Contracts above n. 27.

[30] Section 284(1)(a) Companies Act 1993.

[31] Section 2 in defining property states “Property means property of every kind whether tangible or intangible, real or personal, corporeal or incorporeal, and includes rights, interests, and claims of every kind in relation to property however they arise.”

[32] Cryptopia above n. 25 at paras [50} – [51].

[33] Ibid [63].

[34] Ibid [69].

[35] [1965] AC 1175 (HL) at 1247–1248

[36] Before a right or an interest can be admitted into the category of property, or of a right affecting property, it must be definable, identifiable by third parties, capable in its nature of assumption by third parties, and have some degree of permanence or stability.

[37] SGHC(I) 3, [2019] 4 SLR 17 [B2C2 (SGHC)

[38] Cryptopia above n. 25 [84].

[39] [2018] EWHC 2596 (Ch).

[40] 2018 BCSC 1512.

[41] [2019] EWHC 3556, [2020] 4 WLR 35.

[42] Above n.13.

[43] Above n.10.

[44] Cryptopia above n 25 [93].

[45] [2019] NZHC 3314.

[46] The Criminal Proceeds (Recovery) Act 2009 defined property.

[47] Cryptopia above n. 25 [105].

[48] Ibid. [109] – [110].

[49] Ibid. [112].

[50] Ibid. [114].

[51] Care must always be employed in considering analogies with exemplars from a different paradigm. See David Harvey Collisions in the Digital Paradigm (Hart Publishing, Oxford, 2017) at p. 63 et seq.

[52] Cryptopia above n. 25 [117].

[53] Ibid. [119].

[54] Ibid. [120]. This identical point is made in the Legal Statement on Cryptoassets and Smart Contracts which says that a cryptoasset is “a conglomeration of public data, private key and system rules.”

[55] (1885) 30 Ch D 261

[56] Cryptopia above n. 25  [124].

[57] Ibid. [126].

[58] As specified by Lord Dilhorne in Boardman v Phipps [1967] 2 AC 46

[59] Cryptopia above n. 22 [127] – [128]

Do Social Network Providers Require (Further?) Regulation – A Commentary

This is a review and commentary of the Sir Henry Brooke Student Essay Prize winning essay for 2019. The title of the essay topic was “Do Social Network Providers Require (Further?) Regulation

Sir Henry Brooke was a Court of Appeal judge in England. He became a tireless campaigner during retirement on issues including access to justice. His post-judicial renown owed much to his enthusiastic adoption of digital technology although he spear-headed early initiatives for technology in courts and led and was first Chair of the British and Irish Legal Information Institute (BAILII) – a website that provides access to English and Irish case and statute law. Upon his retirement many came to know of him through his blog and tweets. He drafted significant sections of the Bach Commission’s final report on access to justice, and also acted as patron to a number of justice organisations including the Public Law Project, Harrow Law Centre and Prisoners Abroad.

The SCL (Society for Computers and Law) Sir Henry Brooke Student Essay Prize honours his legacy.  For 2019 the designated essay question this year was 2000-2,500 words on the prompt “Do social network providers require (further?) regulation?” the winner was Robert Lewis from the University of Law. His essay considers some of the regulatory responses to social media. His starting point is the events of 15 March 2019 in Christchurch.

The first point that he makes is that

“(h)orrors such as Christchurch should be treated cautiously: they often lead to thoughtless or reflexive responses on the part of the public and politicians alike.”

One of his concerns is the possibility of regulation by outrage, given the apparent lack of accountability of social networking platforms.

He then goes on to examine some examples of legislative and legal responses following 15 March and demonstrates the problem with reflexive responses. He starts with the classification of the live stream footage and the manifesto posted by the alleged shooter. He referred to a warning by the Department of Internal Affairs that those in possession of the material should delete it.

He then examines some of the deeper ramifications of the decision. Classification instantly rendered any New Zealander with the video still in his computer’s memory cache, or in any of his social media streams, knowingly or not, potentially guilty of a criminal offence under s.131 of Films Videos and Publications Classification Act 1993. He comments

“Viewing extracts of  the footage shown on such websites was now illegal in New Zealand, as was the failure to have adequately wiped your hard drive having viewed the footage prior to its classification. A significant proportion of the country’s population was, in effect, presented with a choice: collective self-censorship or criminality.”

Whilst he concedes that the decision may have been an example of civic responsibility, in his opinion it did not make good law. Mr. Lewis points out that the legislation was enacted in 1993 just as the Internet was going commercial. His view is that the law targets film producers, publishers and commercial distributors, pointing out that

“these corporate entities have largely been supplanted by the social network providers who enjoy broad exemptions from the law, which has instead been inverted to criminalise “end users”, namely the public which the law once served to protect.”

He also made observations about the maximum penalties which are minimal against the revenue generated by social media platforms.

He then turned his attention to the case of the arrest of a 22 year old man charged with sharing the objectionable video online. He commented that

“that faced with mass public illegality, and a global corporation with minimal liability, New Zealand authorities may have sought to make an example of a single individual. Again, this cannot be good law.”

Mr. Lewis uses this as a springboard for a discussion about the “safe harbor” provisions of the Communications Decency Act (US) and EU Directive 2000/31/EC, which created the “safe harbour” published or distributed.

Mr Lewis gives a telling example of some of the difficulties encountered by the actions of social media platforms in releasing state secrets and the use of that released information as evidence in unrelated cases. He observes

“The regulatory void occupied by social network providers neatly mirrors another black hole in Britain’s legal system: that of anti-terrorism and state security. The social network providers can be understood as part of the state security apparatus, enjoying similar privileges, and shrouded in the same secrecy. The scale of their complicity in data interception and collection is unknown, as is the scale and level of the online surveillance this apparatus currently performs. The courts have declared its methods unlawful on more than one occasion and may well do so again.”

A theme that becomes clear from his subsequent discussion is that the current situation with apparently unregulated social media networks is evidence of a collision between the applicability of the law designed for a pre-digital environment and the challenges to the expectations of the applicability of the law in the digital paradigm. For example, he observes that

“The newspapers bear legal responsibility for their content. British television broadcasters are even under a duty of impartiality and accuracy. In contrast, social network providers are under no such obligations. The recent US Presidential election illustrates how invidious this is.”

He also takes a tilt at those who describe the Internet as “the Wild West”.

“This is an unfortunate phrase. The “wild west” was lawless: the lands of the American west, prior to their legal annexation by the United States, were without legal systems, and any pre-annexation approximation of one was illegal in and of itself. In contrast, the social network providers reside in highly developed, and highly regulated, economies where they are exempted from certain legal responsibilities. These providers have achieved enormous concentrations of capital and political influence for precisely this reason.”

He concludes with the observation that unlawful behaviour arises from a failure to apply the law as it exists and ends with a challenge:

“ In England, this application – of a millennium-old common law tradition to a modern internet phenomenon such as the social networks – is the true task of the technology lawyer. The alternative is the status quo, a situation where the online publishing industry has convinced lawmakers “that its capacity to distribute harmful material is so vast that it cannot be held responsible for the consequences of its own business model.””

The problem that I have with this essay is that it suggests a number of difficulties but, apart from suggesting that the solution lies in the hands of technology lawyers, no coherent solution is suggested. It cites examples of outdated laws, of the difficulty of retroactive solutions and the mixed blessings and problems accompanying social media platforms. The question really is whether or not the benefits outweigh the disadvantages that these new communications platforms provide. There are a number of factors which should be considered.

First, we must recognize that in essence social media platforms enhance and enable communication and the free exchange of ideas – albeit that they may be banal, maudlin or trivial – which is a value of the democratic tradition.

Secondly, we must recognize and should not resent the fact that social media platforms are able to monetise the mere presence of users of the service. This seems to be done in a number or what may appear to be arcane ways, but they reflect the basic concept of what Robert A. Heinlein called TANSTAFL – there ain’t no such thing as a free lunch. Users should not expect service provided by others to be absolutely free.

Thirdly, we must put aside doctrinaire criticisms of social media platforms as overwhelming big businesses that have global reach. Doing business on the Internet per se involves being in a business with global reach. The Internet extends beyond our traditional Westphalian concepts of borders, sovereignty and jurisdiction.

Fourthly, we must recognize that the Digital Paradigm by its very nature has within it various aspects – I have referred to them elsewhere as properties – that challenge and contradict many of our earlier pre-digital expectations of information and services. In this respect many of our rules which have a basis in underlying qualities of earlier paradigms and the values attaching to them are not fit for purpose. But does this mean that we adapt those rules to the new paradigm and import the values (possibly no longer relevant) underpinning them or should we start all over with a blank slate?

Fifthly, we must recognize that two of the realities in digital communications have been permissionless innovation – a concept that allows a developer to bolt an application on to the backbone – and associated with that innovation, continuous disruptive change.

These are two of the properties I have mentioned above. What we must understand is that if we start to interfere with say permissionless innovation and tie the Internet up with red tape, we may be if not destroying but seriously inhibiting the further development of this communications medium. This solution would, of course, be attractive to totalitarian regimes that do not share democratic values such as freedom of expression

Sixthly, we have to accept that disruptive change in communications methods, behaviours and values is a reality. Although it may be comfortable to yearn for a nostalgic but non-existent pre digital Golden Age, by the time such yearning becomes expressed it is already too late. If we drive focused upon the rear view mirror we are not going to recognize the changes on the road ahead. Thus, the reality of modern communications is that ideas to which we may not have been exposed by monolithic mainstream media are now being made available. Extreme views, which may in another paradigm, have been expressed within a small coterie, are now accessible to all who wish to read or see them. This may be an uncomfortable outcome for many but it does not mean that these views have only just begun to be expressed. They have been around for some time. It is just that the property of exponential dissemination means that these views are now available. And because of the nature of the Internet, many of these views may not in any event be available to all or even searchable, located, as many of them are, away from the gaze of search engines on the Dark Web.

Seventhly, it is only once we understand not only the superficial content layer but the deeper implications of the digital paradigm – McLuhan expressed it as “the medium is the message” can we begin to develop any regulatory strategies that we need to develop.

Eighthly, in developing regulatory strategies we must ask ourselves whether they are NECESSARY. What evil are the policies meant to address. As I have suggested above, the fact that a few social media and digital platforms are multi-national organisations with revenue streams that are greater than the GDP of a small country is not a sufficient basis for regulation per se – unless the regulating authority wishes to maintain its particular power base. But then, who is to say that Westphalian sovereignty has not had its day. Furthermore, it is my clear view that any regulatory activity must be the minimum that is required to address the particular evil. And care must be taken to avoid the “unintended consequences” to which Mr Lewis has referred and some of which I have mentioned above.

Finally, we are faced with an almost insoluble problem when it comes to regulation in the Digital Paradigm. It is this. The legislative and regulatory process is slow although the changes to New Zealand’s firearms legislation post 15 March could be said to have been done with unusual haste. The effect has been that the actions of one person have resulted in relieving a large percentage of the population of their lawfully acquired property. Normally the pace of legislative or regulatory change normally is slow, deliberative and time consuming.

On the other hand, change in the digital paradigm is extremely fast. For example, when I started my PhD thesis in 2004 I contemplated doing something about digital technologies. As it happens I didn’t and looked at the printing press instead. But by the time my PhD was conferred, social media happened. And now legislators are looking at social media as if it was new but by Internet standards it is a mature player. The next big thing is already happening and by the time we have finally worked out what we are going to do about social media, artificial intelligence will be demanding attention. And by the time legislators get their heads around THAT technology in all its multiple permutations, some thing else – perhaps quantum computing – will be with us.

I am not saying therefore that regulating social media should be put in the “too hard” basket but that what regulation there is going to be must be focused, targeted, necessary, limited to a particular evil and done with a full understanding of the implications of the proposed regulatory structures.

Paperless Lawyers, Paperless Courts

A temptation for lawyers is to use technology to mirror paper-based practices. Technology merely means that the screen becomes the functional equivalent of paper and underlying behaviours relating to information do not change. What should make the utilisation of technology different is that underlying the functional equivalent of a paper based file are all the tools and advantages that digital technologies can bring such as indexing searching on the fly annotating and so on.

Andrew Downie, a lawyer in Victoria, Australia, in February of 2014, blogged on the creation of an electronic brief – ahandy “how to” guide focusing particularly upon methods of converting documents and organising them using a computer system.

But electronic case files are not the exclusive preserve of counsel. In New Zealand there are several practice notes on the utilisation of electronic bundles of documents in court.  The Senior Courts Civil Electronic Document Protocol addresses the use of electronic documents in the Higher Courts in New Zealand. The Electronic Document Practice Note 2017 is intended to encourage and facilitate the use of electronic documents for civil cases in the Court of Appeal. The 2016 Practice Note “The Use of Electronic and Common Bundles and Electronic Casebooks in the High Court” sets out guidance about when an order should be made for a common bundle and/or casebook to be filed electronically in the High Court and the default directions that apply. It is to be read and interpreted consistently with the Senior Courts Civil Electronic Protocol.

The concept of functional equivalence is to the fore and it seems to me that one of the purposes of the practice note and the move towards electronic bundles is to save space and paper. This is consistent with the imitative approach adopted in the Electronic Courts and Tribunals Act 2016 (NZ) about which I have blogged here.

What the practice notes do is provide an electronic platform for the assembly of bundles of documents but by doing so it also enables counsel to utilise technology to enhance case presentation and argument.  None of this of course is specified in the practice notes which are designed to encourage and facilitate the use of electronic bundles the various Courts.  The fact of the matter is, however, that by virtue of the advantages bought by the technology, counsel may be creative in the way in which the electronic bundle is utilised.  One of the requirements of the electronic bundle is that all documents be scanned into OCR format.  One would think that it would be unnecessary to have such a requirement, and that rendering pdf documents searchable would almost go without saying but regrettably it needs to be emphasised.  This effectively means that the information in the document may be subject to search and manipulation in a way that would not be possible in mere image format.

The practice notes make it clear that electronic bundles will not be used in every case.  They will only be used in document intensive cases where the common bundle would be likely to exceed a certain number of pages.

In “building” in electronic bundle documents must be contained in electronic folders equivalent to the physical volumes of hard copy bundles and within those folders each separate document must be a multipage pdf document.  Each folder must be named with an appropriate description and if there is more than one volume of a particular electronic bundle the folder for that type of bundle will include subfolders for each volume.  The rules also provide for electronic bundles in document intensive criminal cases.

One of the difficulties in using electronic bundles effectively lies in the fact that the majority of advocates have been bought up in the paper based environment and find it uncomfortable or difficult to make the shift into the digital paradigm with the changes in thinking that such requires.  The concept of functional equivalence gets in the way.  One uses technology merely to mirror what one would normally do with paper rather than utilise the technology to its fullest capacity.  Often software packages will themselves create difficulties.  Some software packages make it almost impossible to move from page to page without entering a code or a key.  Other software packages allow for the utilisation of barcodes whereby documents could be selected and projected using a barcode scanner but the simple fact of the matter is that counsel don’t utilise that aspect of the technology which would save considerable time and effort in moving through document intensive cases.

The various electronic document protocols effectively replace the lever arch paper folder with a USB stick or other form of storage medium. Lawyers and judges maintain an informational distance as a result. Each participant has to locate the “document” the subject of the discussion on his or her own device. A centrally located document bundle to which every participant has access and which can be displayed in Court would expedite matters. Such a tool is available in the form of Caselines which is effectively a digital court platform.

Caselines does not require software or infrastructure. It is a cloud based solution. To connect to a Caselines bundle for a trial or hearing all that is needed is a wireless connection at the Court.

Caselines bundles may be created by the parties or by the Court. Participants in a case have access to the bundle with varying levels of credentials. There are a number of different types of functionality including the ability to make notes, mark up and, importantly, to allow counsel who is referring to a document, image, video or other piece of digital material to make that available to all the participants in the case simultaneously. This means that everyone is on the same page, literally. Caselines is now used throughout the Crown Courts in England and Wales for criminal trials. Digital is the default position. Paper is no longer used

The Digital Paradigm allows lawyers to devise their own means of employing electronic technologies in the practice of law and the Courts judges in the management and presentation of cases.  What will be interesting to see is how courts and judges will respond.

But to make that leap it is necessary to examine some fundamental premises and reasons for why it is that we conduct cases in the way that we do. I have written elsewhere that the practice of law is really an exercise in information exchange, be it by way of receiving instructions from the client, processing those, seeking an information flow from research and communicating the results of that to the client by way of advice, or by way of a case in court where information flows come from witnesses whose information is assessed for relevance and reliability and which in turn inform the decision-maker’s decision which is them communicated to the parties and often to a wider audience by means of digital publication systems or by reporting in the law reports.

In court the information flows were oral exchanges. Indeed, written pleadings were not a part of court procedure until the reign of Edward IV, and most of the cases noted in the Year Books dealt with the technicalities of pleading rather than reports of decisions on substantive points of law. The first reports that revolutionised the way in which cases were recorded were those of Edmund Plowden, first printed in 1571. But the way that cases were presented in court was largely an oral process with witnesses orally stating what they saw or did and the lawyers making their points by oral rather than written argument. Or at least that was the case in the Common Law courts. Prerogative courts such as Star Chamber and the Courts of Chancery used the written record more extensively, albeit a handwritten one.

(For a full description of Star Chamber procedures see Thomas G. Barnes “Due Process and Slow Process in the Late Elizabethan – Early Stuart Star Chamber” (1962) 6 American Jnl of Legal History 221)

But despite the apparent written procedures adopted by Star Chamber and the Chancery Courts, much of the information exchange remained an oral..

The oral nature of information exchange in court over the centuries requires the physical presence of the “players” in the one place – the Courtroom. Indeed it has not been until comparatively recently – and by that I mean since I was admitted to the Bar in 1970 – that judges have countenanced and encouraged the provision of arguments in writing. These may range from the massive briefs that characterise written argument in the United States to the much smaller outline style  “skeleton arguments” in England. Indeed in some appellate jurisdictions – again predominantly in the United States – oral argument is time limited, demonstrating a declining emphasis upon oral argument in favour of documentary material. Yet despite the brevity of oral argument, physical presence is still required.

Another Form of “Presence”

Technology is changing this and there is a declining emphasis on actual physical presence following upon the introduction in New Zealand of the Courts Remote Participation Act 2010 which allows for “presence” of a participant by way of audio-visual link.(AVL) In the majority of cases in the District Court the participant “attending” by way of AVL will be a  defendant who is in custody. I haven’t yet come across the case where counsel has sought to be present by way of AVL and perhaps the custodial remand focus of the technology deployed in New Zealand Courts is responsible for that, although there is nothing in the legislation which excludes the use of Skype or Facetime. I imagine that all that is required for a lawyer and a Judge to break the ice.

The issue of physical presence is one part of the expanded use of technology in case presentation. At the moment document management technology is used in document intensive cases where scanned copies of documents are assembled and presented on screens by means of software tools. I interpolate to express wry amusement that documents are scanned into these programmes rather than using software tools which allow “document” assembly of digital documents in native file format, but perhaps that is yet to come. That is fine as far as it goes.

What about expanding the scope of the hearing so that by using “presence” technology such as AVL – or perhaps, in the future, holography –  counsel may run the case remotely. Where there is a need for text based information to be presented (what we call “documents”, retaining our paper based language despite attempts by legislators to include any information however recorded as fulfilling the definition of a “document” but why retain the use of a word which conceptually is associated with hard copy media?) that can be communicated to the court by electronic means. Witnesses can be present by AVL links. The range of information that is communicable or admissible to inform the Court’s decision could include multimedia, 3D imaging, maps or satellite shots from Google Earth or Street View. All the clumsy time consuming methods currently employed for evidence presentation could be significantly more efficient without compromising information flows or the ability of fact finders or law deciders to reach a conclusion.

Our “presence based” focus has its roots in rituals which, with modern communications technologies, can no longer be justified.

These ideas may seem to be radical – perhaps revolutionary – but the reality of the fact is that we are and will continue to be for some time in the midst of an information technology driven by continuous disruptive change. It is incumbent upon lawyers, judges and those involved in the information exchange process that underlies the activities of all lawyers to maximise and deploy these new technologies.

Medium Messages

A new Bill has been introduced to the New Zealand Parliament. It is called the Legislation Bill. It is meant to be the “one-stop shop” for the law relating to legislation. It is described in a New Zealand Law Society posting as “one legislation bill to bind them all”.

The Bill has some very good proposals. One relates to secondary legislation.  It will  give New Zealand a single, official, public source of legislation, excluding only legislation made by local authorities.

Over 100 agencies are empowered to make secondary legislation on a wide range of matters such as food standards and financial reporting standards. There is no single source for the legislative instruments, many of which are published on agency websites or in gazette notices. The Bill will make it easier to find and access secondary legislation by requiring it to be published on the New Zealand Legislation website alongside Acts of Parliament. This is an excellent move. It will enhance easy access to legal information.

In addition the Bill proposes to replace the Interpretation Act 1999. One of the terms that the Interpretation Act defined was “writing”. That definition reads as follows:

writing means representing or reproducing words, figures, or symbols in a visible and tangible form and medium (for example, in print).

Now that may have been excusable in legislation enacted in 1999 but in fact that definition was placed in the Interpretation Act in 2003 by section 38 of The Electronic Transactions Act 2002. When I saw that the Interpretation Act was being repealed and updated in the Legislation Bill I thought that we had a chance to see an updated medium neutral definition of writing.

But lo – here is the “new” definition which reads as follows

writing means representing or reproducing words, figures, or symbols in a visible and tangible form and medium (for example, in print)

No change at all. So why is this a problem? Simply that it does not reflect the reality of written material in the Digital Paradigm. It holds to the old association of the message (in written form) with the medium (paper) hence the exemplification “in print”.

I have no difficulty with the suggestion that writing is a representation of words, figures or symbols. It is simply a means of encoding and preserving the ephemerality that is oral language or orally based concepts. And of course, writing has to be visible.

But does it have to be tangible?

This is where we run into a problem – one that the law seems to have difficulty understanding in the electronic age. The issue of tangibility has nothing to do with the message. It has everything to do with the medium. The inextricable and historical association of the medium with the message is perpetuated in the requirement that the message be tangible.

This overlooks (or ignores) the reality of information in the digital paradigm. This is what I have said elsewhere ( see Collisions in the Digital Paradigm: Law and Rulemaking in the Internet Age) on the topic:

Electronic data is quite different to its pre-digital counterpart.  Some of those differences may be helpful to users of information.  Electronic information may be easily copied and searched but it must be remembered that electronic documents also pose some challenges.  Electronic data is dynamic and volatile.  It is often difficult to ensure that it has been captured and retained in such a way as to ensure its integrity.  Unintentional modifications may be made simply by opening and reading data.  Although the information that appears on the screen may not have been altered, some of the vital metadata which traces the history of the file – and which can often be incredibly helpful in determining its provenance and may be of assistance in determining a chronology of the events, and when a party knew what they knew, – may have been changed.  To understand the difficulty that the digital paradigm poses for our conception of data it is necessary to consider the technological implications of storing information in the digital space.  It is factually and paradigmatically far removed from information recorded on a medium such as paper.

If we consider data as information written on a piece of paper it is quite easy for a reader to obtain access to that information long after it was created.  The only thing necessary is good eyesight and an understanding of the language in which the document is written.  It is “information” in that it is comprehensible. It is the content that informs.  Electronic data in and of itself does not do that.  It is incoherent and incomprehensible, scattered across the sectors of the electronic medium upon which it is contained.  In that state it is not information in that it does not and cannot inform.

Data in electronic format, as distinct from writing on paper, is dependent upon hardware and software.  The data contained on a medium such as a hard drive requires an interpreter to render it into human readable format.  The interpreter is a combination of hardware and software.  Unlike the paper document the reader cannot create or manipulate electronic data into readable form without the proper equipment in the form of computers.

There is a danger in thinking of electronic data as an object “somewhere there” on a computer in the same way as a hard copy book is in the library.  Because of the way in which electronic storage media are constructed it is almost impossible for a complete file of electronic information to be stored in consecutive sectors of the medium.  Data on an electronic medium lacks the linear contiguity of a page of text or a celluloid film. An electronic file is better understood as a process by which otherwise unintelligible pieces of data are distributed over a storage medium, assembled, processed and rendered legible for a human reader or user.  In this respect “the information” or “file” as a single entity is in fact nowhere.  It does not exist independently from the process that recreates it every time a user opens it on a screen.

Computers are useless unless the associated software is loaded onto the hardware.  Both hardware and software produce additional evidence that includes, but is not limited to, information such as metadata and computer logs that may be relevant to any given file or document in electronic format.

This involvement of technology makes electronic information paradigmatically different from traditional information where the message and the medium are one.  It is this mediation of a set of technologies that enables data in electronic format – at is simplest, positive and negative electromagnetic impulses recorded on a medium – to be recorded into human readable form.  This gives rise to other differentiation issues such as whether or not there is a definitive representation of a particular source digital object.  Much will depend, for example, upon the word processing programme or internet browser used.

The necessity of this form of mediation for information acquisition in communication explains the apparent fascination that people have with devices such as Smartphone’s and tablets.  These devices are necessary to “decode” information and allow for its communication and comprehension.  Thus, the subtext to the description of electronically stored footage which seems to suggest a coherence of data similar to that contained on a piece of paper cannot be sustained.

So why not forget about tangibility and this medium focussed approach to information. Interestingly enough a solution is proposed in the definition in the Bill which contains the following parenthetical remark

(but see Part 4 of the Contract and Commercial Law Act 2017, which provides for meeting written requirements by electronic means)

So what does that say. Simply this

A legal requirement that information be in writing is met by information that is in electronic form if the information is readily accessible so as to be usable for subsequent reference.

Not quite a solution, but getting there. It focusses upon two important concepts that underly any information in writing. First – it must be accessible. Second, there is the concept of utility.

So perhaps a 21st Century medium neutral definition of writing should go something like this

Writing means representing or reproducing words, figures, or symbols in a visible form and in such a format as to be readily accessible and usable for subsequent reference.

There is no need for tangibility. We have moved on from the inextricable message\medium association. But many lawyers and lawmakers seem to be unaware of the unique and paradigmatically different qualities surrounding information in the Digital Paradigm.

 

 

Misunderstanding the Internet

 

I heard an interesting interview on the radio on Saturday last. Kim Hill was interviewing Jonathan Taplin. Taplin has written a book entitled Move Fast and Break Things about the Internet and what is currently wrong with it.

First, a confession. I haven’t read Move Fast and Break Things. What I know about Mr Taplin’s views are what I heard him say on the radio and a report of the interview on the RadioNZ website and what I have to say is based on what I heard on the radio rather than a reading of his book. But it does sound to me that Mr Taplin occupies a space along with a number of other disenchanted by the Digital Paradigm including Andrew Keen who wrote The Internet is Not the Answer, Nicholas Carr who wrote The Shallows and Mary Aiken who wrote The Cyber Effect. A common theme among these writers seems to be that for one reason or another the Internet has lost its way, failed to fulfil its promise or that it has been hi-jacked. This last view is that expressed by Mr Taplin.

I don’t have a problem if that is what he thinks. But I do have a problem with some of his assertions of fact which simply do not stand up to scrutiny. Mr Taplin seems to engage in sweeping generalisations to support his position and then argues from that point. In other cases he misinterprets facts in a way that cannot be supported. But his main problem is that he fails to understand the nature of paradigmatic change and that in such an environment things are not going to remain the same, and old models, ways of doing things, concepts and values are either going to be swept away or are gradually going to be eroded and replaced with something else.

Let us look at some of his early assertions that he made on the broadcast. He claims that the Internet originated as the “hipster” project of a group of people who wanted to decentralise control. “Stewart Brand (author of The Whole Earth Catalog, a book which anticipated the internet) was Ken Kesey’s partner in the acid tests, Steve Jobs acknowledges taking LSD. It was a bunch of hippies” – or so Mr Taplin asserts.

Anyone who has studied the history of the Internet will agree that decentralisation was one of the early goals of the development of the network that later became the Internet, originally undertaken by DARPA – the Defence Advanced Research Projects Agency, an agency of the US Department of Defense. DARPA supported the evolution of the ARPANET (the first wide-area packet switching network), Packet Radio Network, Packet Satellite Network and ultimately, the Internet and research in the artificial intelligence fields of speech recognition and signal processing. Hardly a bunch of hippies. And were Brand, Kesey and Jobs involved in this early development. No they were not. Jobs involvement with the Internet came much later. In 1985 he suggested that the most compelling reason for most people to buy a computer would be to link it to a nationwide communications network. But it wasn’t until 1996 that he predicted the ubiquity of the Web. In 1996 Google was still a research project at Stanford and Amazon had only just begun selling books.

What Mr Taplin conveniently ignores is the enormous contribution made by computer engineers and developers to the development of the Internet – people like Vint Cerf and Bob Kahn, Ray Tomlinson who developed email – although that is contested by Shiva Ayyadurai – Jon Postel, Ted Nelson, Tim Berners-Lee and Robert Caillau.

Rather he focussed upon the high profile and very successful entrepreneurs like Peter Thiel, Larry Page and Jeff Bezos. He suggested that they “all are libertarians. They were schooled on Ayn Rand’s work, in which the businessman hero architect is always impeded by the mob, by democracy, by government, by regulation, and he has to be free.”

My reading of Rand would suggest that there are aspects of libertarianism that are inconsistent with her objectivist views. In fact Ayn Rand has become a whipping girl for those who would condemn the forge ahead entrepreneurial spirit untroubled by regulatory systems or collectivist thinking. True, Rand has had an influence on the right and upon libertarianism although some of her views were atypical of rightwing conservative thought. For example she was pro-choice and an atheist. But Mr Taplin throws Ayn Rand into the mix for perjorative rather than evidential value.

Another interesting comment that Mr Taplin made had to do with data. Here is what the report from RadioNZ said

“The core business of Facebook is creating a giant database of information on 2 billion individual people, says Taplin.

“What is the raw material to manufacture a product? You – your desires. You’re willing to leave everything hanging out there and they’re willing to scrape it and sell it to advertisers. It’s called rent. They’re renting [Facebook’s] database.”

That is a degenerate form of capitalism if it’s capitalism at all, he says.

“It doesn’t create anything, you’re renting. That’s the end of capitalism and the beginning of feudalism.”

And that indeed was how it came across on the broadcast. The problem is that Mr Taplin fails to understand the nature of the Digital Paradigm and how it disrupts current business models. He suggests that the user is the raw material – based upon data that has been left behind. I disagree. The data is the raw material of the new digital product and indeed it does create something – a more thoroughly refined and granular understanding the of the nature of markets. Raw materials are necessary for any product. It is just that the raw material now is data in digital format.

What distinguishes digital data from iron ore (another raw material) is that iron ore is sold by the mining company to the refinery or smelter. Iron ore is like any other traditional form of property. You own it by, among other things, exclusive possession. You sell it and by doing so part with exclusive possession. That vests it in someone else.

Now with digital material you can part with possession of a copy but retain the original. The Digital Paradigm turns the traditional property model on its head. Two people can possess the same item of property. And it is here that the “rent” argument advanced by Mr Taplin falls apart. The rent argument only works if there is one instantiation of the property. The “owner” leases the property – be it land or a car – to the tenant or lessee. The owner parts with possession for a period of time. At a later stage the owner retakes possession – when the tenancy or lease comes to an end. But the owner, during the term of the rental does not have possession of the property.

Remember what I said about digital property – two people can possess the same item. That concept is part of the disruptive effect that the Digital Paradigm has on property concepts. Now to say that data is “rented” is using a concept that does not hold up in the Digital Paradigm. To equate renting data with a form of feudalism – which was based upon an exchange of an interest in land for the rendering of a duty – is historically and legally incorrect. And to say that using data does not create anything ignores the fact that data is the raw material – not the individual – and the data goes to creating a profile for any one of a number of purposes of which market research may be one.

So Mr.Taplin’s analogy – like so many attempts to draw analogies between the digital and pre-digital world – fails.

But there is a bigger picture in that paradigm shifts bring paradigmatic change. The Internet and all those myriad platforms that are bolted on to the backbone have revolutionised communication and have opened up a market for digital products. But the content that the Internet enables is only a part of the story.

To understand the nature of the paradigm we need to look below the content layer and comprehend the medium. For, as McLuhan said, the medium is the message. I am sure Mr. Taplin understands this. But what I think he has difficulty in accepting is that the old ways of doing things are going to be swept away. There will be a period of co-existence of the digital and the pre-digital but that won’t last long. The paradigmatically different properties of exponential dissemination, dynamic information, information persistence, permissionless innovation and continuing disruptive change are all factors built in to the technology and cannot be changed. At the risk of sounding deterministic these and other underlying technological qualities are what will drive the inevitability of change.

The music market with which Mr Taplin was familiar has changed dramatically and part of the problems suffered by the industry and those associated with it involved an unwillingness to adapt. iTunes got the idea and now people buy by the song rather than by the album. Adaptation by content providers means that Netflix thrives – despite geoblocking – on-demand has replace appointment viewing and content providers have finally “got it” that consumer demand is for content now – not next week. Hence “Game of Thrones” and “Walking Dead” are advertised in New Zealand as screening on the same day as in the US. The reason for this – the Digital Paradigm provided alternatives – piracy and Bittorrent.

The reality is that many old business models will have to adapt to survive. Those that do not will fall by the wayside. The new paradigm will usher in new industries and new opportunities. But in the Digital Paradigm, business will be done on a global scale rather than from a local storefront. And the result of that scale is that many new digital businesses will do very well such as Google and Facebook and Amazon. Mr Taplin laments the advantages that these companies have, that their power is unaffected by who is in government. But should successful businesses be a matter of concern. For sure, conspiracy theories will abound; the spectre of rampant capitalism will be conjured up. But isn’t this just envy speaking?

I really think we should be embracing the opportunities that the new technologies bring and look for ways in which we can enhance our lives in the Digital Paradigm rather than moaning about it. Because it is not going away.

New News Opportunities

In the newspaper this morning there were a couple of articles that caused me to reflect on the level of understanding of the Digital Paradigm. The first by respected business journalist Fran O’Sullivan was about the consequences of the refusal of the Commerce Commission to approve a merger of media giant Fairfax and NZME. But the real focus of the article was about the effects that digital businesses are having on established organisations and the inroads that are being made to traditional funding models. The second was about Margarethe Vestager, the head of the Directorate General for Competition. That article was about the importance, at least to the EU, of the philosophy that a well-policed economy yields the largest and most widespread benefit for society. Some of the examples of steps that were taken involved digital economy giants like Apple, Google and Amazon.

By way of a very brief background, the New Zealand Commerce Commission has made a few waves lately by refused approval for two significant attempts by large media companies to merge. The first was Sky and Vodafone – a broadcaster and a communications company. The benefits of the merger for both companies were obvious. Access to a large well developed Internet provider (Vodafone) by Sky. Ability to enhance an established content delivery service with an established customer base (Sky, albeit content delivery methods are outdated but the merger would have changed that) by Vodafone. But no, said the Commerce Commission. For reasons expressed in a 140 + page decision, this was not a good idea.

The second attempt was a proposed merger between news media companies Fairfax (an Australian company) and NZME (publisher of the NZ Herald). Not a good idea, said the Commerce Commission once again, failing to see the dire state of the news media market but concerned that one company might have too much control over content, especially in an election year – conceptually, a lack of diversity in the news media market.

So that is the background. What Fran O’Sullivan complains about is the fact that the Commerce Commission overlooked or understated the impact of digital players like Google and Facebook on advertising revenue, and the effect that this is having on the viability of news media operations. And of course, a viable Fourth Estate is an important and critical feature of a modern democracy – prepared to hold authority to account, prepared to ask to hard questions, prepared to investigate and uncover malpractice of any sort in the corridors of power.

The focus of the article of the EU Directorate for Competition (EUDC) is mistrust of large corporates and one wonders whether or not that mistrust is the starting point or develops from an evidential foundation. Although there is a hat-tip to the market, it seems to me that the EUDC is about policing and control.

But common to both articles and especially to that of Fran O’Sullivan is a concern about the disruptive effects that new technologies are having on commercial activity. From the news media perception the concern is palpable. The old model is under threat. The solution, according to O’Sullivan is to regulate what she described as the oppressive behaviour of the digital corporates. She suggests that it is time that politicians woke up to the problem and cites steps that are being taken in Australia to examine the impact on public interest journalism of search engines and social media as well as an investigation into “fake news”.

The disruptive effects of new technologies have been going on for some time. We are well into the Digital Paradigm, but not so far out of the old pre-digital paradigm to be concerned that the past ways of doing things may not continue. We anchor ourselves in a comfortable past and really do not like change – especially when there are those who have the foresight and initiative to profit from disruptive change.

The news media provides an interesting model because in fact it is the child of the first communications technology paradigm shift – the printing press. I have suggested elsewhere that the Digital Paradigm is at least as significant, especially in the field of communications, as the printing press. And for some time it has been having a disruptive effect. Initially news media answered the new technology by putting news content online. Some providers set up paywalls for content – an attempt to continue to monetise what they were publishing. This is not a bad thing. You have to pay to buy a “kinetic” newspaper. Why not do the same online?

Convergence posed its own challenges as newspapers online began to include video content and broadcasters included text articles among their offerings. The question arises as to which standards apply to whom. Are broadcasters who make text available subject to the Press Council? Are traditional print media who make video available via a website subject to the Broadcasting Standards Authority? Since the Online Media Standards Authority (OMSA) was absorbed into the Press Council it would seem that the Press Council may be the answer to the regulatory convergence problem. The Government missed the opportunity presented to it by the Law Commission in 2013 to have a single media regulatory body – a very bad call in my opinion.

But the regulatory bodies that have been set up deal with content. The Press Council and the Broadcasting Standards Authority don’t deal with struggling or failing business models. The Commerce Commission could indirectly have done so but didn’t.

One option is to try and maintain the existing business model. As O’Sullivan suggests, bring the digital corporates to heel in the same way as the EUDC does. In this way they may not pose such a threat to the established model which may just manage to hang on for just a little while longer. But in preserving the existing model it is necessary to call on the coercive power of government. A protectionist perpetuation of a model that has had its day.

Another option is to recognise that the business models that underpin the news media and so-called public interest news media is the child of a paradigm that no longer exists. Unless the news media adapts it will die. And if this sounds like a call for evolution in the face of revolution – a sort of economic Darwinism – that is exactly what it is. The Digital Paradigm is so fundamentally different from what could be called the print or kinetic paradigm that news media companies are going to have to examine more than just content delivery but realise that they must examine, understand and utilise the underlying qualities of the new paradigm to develop their business models. And that takes a lot of thinking outside the box and a willingness to start again from scratch.

The result may be an entirely different method of news dissemination – not local but global. Multinational media companies are not unknown, even now but the business model and the way that business is conducted may be radically different from, say, Newscorp.

The third way may be based on the adage “if you can’t beat’ em, join ‘em” One of the targets of the EUDC has been Amazon. Amazon’s founder and CEO is Jeff Bezos. And Jeff Bezos bought the Washington Post for $250 million – and turned a legacy news media organisation around. Perhaps those who are concerned that the digital corporates are posing a threat to current news media business models should rather view them as an opportunity for change.

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].