VZCZCXRO4335
RR RUEHNZ
DE RUEHWL #0064/01 0530316
ZNR UUUUU ZZH
R 220316Z FEB 08
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC 5089
INFO RUEHBY/AMEMBASSY CANBERRA 5113
RUEHNZ/AMCONSUL AUCKLAND 1630
RUEHDN/AMCONSUL SYDNEY 0647
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC 0213

UNCLAS SECTION 01 OF 03 WELLINGTON 000064 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EAP/ANP, EEB/TPP/IPE JBOGER, STATE PASS TO USTR JENNIFER 
GROVES AND COMMERCE FOR CASSIE PETERS ITA/MAC/OIPR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR NZ
SUBJECT: 2008 SPECIAL 301 REVIEW - NEW ZEALAND 
 
REF: STATE 9475 
 
¶1. (SBU) Summary: Post recommends that New Zealand (GNZ) not/not be 
placed on the Special 301 List in 2008.  The country's overall 
commitment to the protection of intellectual property (IPR) is 
relatively high as compared to most countries cited in the Special 
301 review.  Despite the slower than anticipated pace of legislative 
progress, the government remains committed to updating its 
intellectual property laws to ensure compliance with international 
standards, with planned revisions of the Patents Bill and the 
Copyright Amendments Bill ("New Technologies and Performers' Rights 
Bill") progressing through the legislative queue.  Some momentum has 
been lost over the past year due to slowdown in the legislative 
agenda as the Government shifts its attention to upcoming elections 
in 2008.  Though New Zealand generally provides adequate and 
effective protection of intellectual property rights (IP) under 
current law, Post will continue to engage Members of Parliament, the 
Ministry of Economic Development and local IP industry in order to 
press our concerns that pending legislation reflects international 
IP standards and passage occurs in a timely fashion.  To date issues 
raised about the draft Copyright Bill by IP industry are being 
considered by the government and will be monitored by Post.  It's 
reasonable to anticipate a renewed commitment to the passage of IP 
legislation by the GNZ post election cycle.  Placing New Zealand on 
the Special 301 list at this stage may prove to be 
counter-productive as it likely will result in a defensive rather 
than consultative exchange.  End summary. 
 
International Intellectual Property Alliance (IIPA)'s Special 
Mention of New Zealand's IP Regime 
--------------------------------------------- ------- 
 
¶2. (U) As IIPA noted in its Special 301 submission, that the 
Commerce Committee of the New Zealand Parliament issued its 
long-awaited report on the Copyright (New Technologies and 
Performer's Rights) Amendment Bill in July 2007.  This extensive 
proposed amendment to New Zealand's copyright law contains many 
valuable improvements but some provisions remain problematic for 
industry.  Post agrees with IIPA's recommendation that an effective 
course of action would be to continue to engage the government in 
order to ensure that the draft legislation provides more useful 
tools for dealing with piracy.  Post has presented the list of noted 
shortfalls in the draft legislation to Minister Tizard (Consumer 
Affairs), Minister Goff (Trade) and to officials within the Ministry 
of Economic Development, the agency primarily responsible for 
drafting legislation and monitoring IP enforcement.  Post remains 
engaged with Bronwyn Turley, Senior MED Policy Advisor for IP issues 
to maintain a dialogue to address the needed technical corrections. 
 
GNZ Response to IIPA Submission 
------------------------------- 
 
¶3. (U) The Copyright Bill is currently part way through its second 
reading in the New Zealand Parliament.  The concerns raised by IIPA 
regarding the Bill's shortcomings are currently being considered by 
the government.  Paragraphs 4 to 15 below summarize legislation 
intent and language in highlighted provisions of the draft Copyright 
Bill that have been brought to GNZ's attention by the IIPA. 
Detailed drafts of legal texts and proposed revisions to the 
Copyright Bill can be forwarded separately from MED if required. 
 
Anticipated Treatment of TPMs under Proposed Bill 
--------------------------------------------- ---- 
 
¶4. (U) Per MED, development and employment of TPMs have raised 
issues beyond the realm of copyright law for GNZ.  They often relate 
to disclosure issues, such as insufficient or incorrect information 
to consumers concerning technological protected materials and their 
usability restrictions, and could often be addressed by contract 
law, privacy laws or consumer protection laws.  The issuer of a TPM 
would still need to comply with those other existing laws as the TPM 
provisions do not 'trump' any other laws.  Copyright owners can 
continue using TPMs that control access, however, without assistance 
from the Act. Owners could, for example, continue to rely on other 
legal measures, such as the law of contract, where an access 
protection measure is circumvented. 
 
¶5. (U) GNZ notes that the WIPO Copyright Treaty 1994, to which New 
Zealand is not a party yet, not only calls for nations to "provide 
adequate legal protection and effective legal remedies against the 
circumvention of effective technological measures" but also 
recognizes "the need to maintain a balance between the rights of 
authors and the large public interest, particularly education, 
research and access to information" in updating international 
 
WELLINGTON 00000064  002 OF 003 
 
 
copyright norms to respond to challenges arising new technologies. 
GNZ feels that the translation of this balance into domestic laws is 
a matter of national circumstances and domestic policies, and 
parties to this treaty have implemented the TPM provision in 
different ways. 
 
ISP liability limitation 
------------------------ 
 
¶6. (U) Per MED, the Bill contains provisions which limit ISP 
liability for copyright infringement by third parties.  Copying is a 
central function of the internet and the services provided by ISPs. 
Material may be reproduced at many stages during the course of a 
transmission and it can be virtually impossible to identify when and 
where many of these copies are made.  When the material being copied 
is subject to copyright protection, an ISP could face liability for 
both primary and secondary infringement of copyright.  There is a 
public interest in ensuring cost-effective access to the internet, 
which may be affected by uncertain or increased liability for ISPs. 
 
¶7. (U) The Select Committee made some changes to the ISP provisions. 
 It removed the provision that limits ISP liability only when the 
ISP had adopted and reasonably implemented a policy relating to 
termination of the accounts of repeat infringers.  A number of 
submitters raised concerns about this provision, including that it 
was unnecessary (because standard ISP terms and conditions generally 
already allow for this) and that its scope and application were 
quite unclear. 
 
¶8. (U) Drafting changes were made to the provisions in new sections 
92B and 92C which preserve the ability for a copyright owner to seek 
injunctive relief.  These changes were suggested by the specialist 
advisers to the Committee and arose out of concern that the 
provisions were not drafted in a way that would effectively preserve 
the ability for a copyright holder to seek an injunction against an 
ISP. 
 
¶9. (U) Changes were made to section 92C (2) at Select Committee and 
new sections 92CA and 92CB were added.  These changes arose out of 
recommendations by the specialist advisers to the Committee. 
Section 92C previously specified that an ISP is not infringing 
unless they know or have reason to believe that the material is 
infringing, and do not delete or prevent access to the material as 
soon as possible after they become aware.  Concern was raised by the 
advisers that this test did not provide sufficient certainty for 
ISPs about when they would be required to take material down, and 
that it diverged from the tests used in other jurisdictions.  In 
response to these concerns, the following changes were made: 
 
-- The test was altered to clarify that the ISP must either know or 
have received a notice that the material was infringing; 
 
-- There is a new requirement that notices must be properly 
completed, signed and in the prescribed form; 
 
-- There is a new offence for knowingly or recklessly providing a 
notice that is materially false or misleading. 
 
Access to Pharmaceuticals and Patent Protection 
--------------------------------------------- -- 
 
¶10. (SBU) While the U.S. pharmaceutical industry (PhRMA) urges that 
New Zealand be placed on the priority watch list (PWL) in 2008, post 
continues to believe that the industry's restricted access to New 
Zealand's market stems primarily from the cost containment 
strategies for subsidized drugs that are a part of the National 
Medicines Strategy (NMS).  The government affiliated Pharmaceutical 
Management Agency (PHARMAC) is mandated to spend less than its 
budget allows, and the pharmaceutical industry has a number of 
legitimate complaints about its treatment in the purchasing process. 
 However, these industry concerns are not IP problems per se.  While 
Post will continue to work to improve access for U.S. 
pharmaceuticals in the New Zealand market, we believe this should be 
dealt with as a market-access barrier and not as a failure to 
protect intellectual property.  Even the pharmaceutical industry 
trade association here, Researched Medicines Industry Association of 
New Zealand (RMI - affiliated with PhRMA), assesses that the 
government's practices do not violate its TRIPS commitments.  Post 
will continue to engage appropriate Ministers and MED to find ways 
to improve market access. 
 
¶11. (SBU) While the new draft Patent Bill unfortunately has remained 
on the parliamentary docket for some time now, sources at the 
Ministry of Economic Development claim the Bill will meet 
 
WELLINGTON 00000064  003 OF 003 
 
 
international IP legislative standards.  Modeled largely after 
current British patent law, the GNZ drafters had hoped to capture 
the UK's experience in structuring its revised patent regime to EU 
standards. An unofficial preliminary draft version of the bill, 
called an "exposure draft," was initially released in 2005 and 
received only technical comments as to the form of the bill.  These 
have been reviewed and applied as appropriate.  Despite the bill's 
long gestation period, MED attorneys responsible for drafting feel 
that the bill is likely to pass with little additional modification. 
 Under current law, the level of IP protection for pharmaceuticals 
remains adequate.  Post does agree that it is in New Zealand's and 
our best interests to complete work on the draft Patents Bill 
promptly in order to ensure that New Zealand's patent regime 
reflects international standards.  Post believes the better course 
of action is to continue to work/consult with the GNZ to ensure 
industry's concerns are reflected in pending legislation. 
 
Enforcement 
----------- 
 
¶12. (U) GNZ remains committed to enforcing its IP laws adequately 
and effectively.  In most instances, the government responds to 
complaints raised by rights holders against IP infringers.  The 
government set up a new office within New Zealand Customs in 2007 
that is exclusively dedicated to IP enforcement issues.  Currently, 
New Zealand Customs can confiscate and destroy pirated products if 
the holder of the trademark or copyright has requested that Customs 
detain the goods.  That request is valid for five years and can be 
renewed.  Almost all the infringing goods imported into New Zealand 
originated in Asia, particularly China, and most of the intercepted 
and investigated goods were clothing, footwear and headwear.  The 
number of pirated CDs and DVDs intercepted by Customs has declined 
sharply, after peaking in 2006.  While it appears that CDs and DVDs 
are increasingly being copied to order within New Zealand, making 
detection of local production increasingly difficult, industry as an 
ongoing cooperative dialogue with local authorities to better police 
IPR as new forms of piracy are detected. 
 
¶13. (U) Conclusion:  Post maintains that, despite certain technical 
deficiencies and delays in the pending intellectual property laws, 
there remains a strong commitment on the part of the GNZ to continue 
to improve its IP regime and bring it into conformance with 
international standards.  GNZ's enforcement of current IP laws also 
reflects the government's proactive stance as they learn and adapt 
to help stem new forms of piracy.  While there is additional work to 
be done to strengthen the law and enhance enforcement, Post 
recommends the better course of action is to continue engagement 
with the GNZ and monitor the progress of IP legislation rather than 
place New Zealand on this year's watch list.  End conclusion. 
 
MCCORMICK