Video Ezy International (NZ) Ltd v Roadshow Entertainment (NZ) Ltd & Ors

Auckland High Court, CL 23/01,

Paterson J

1 November 2001

Since its enactment in 1994, the New Zealand Copyright Act 1994 (“Act”) has contained provisions restricting the rental of copies of sound recordings and films.   In 1998, the Act was amended to remove the ban on parallel imports.  Consequently, it is no longer a breach of the Act to parallel import copyright works directly from overseas rather than purchasing them from the authorised New Zealand distributor. 

This proceeding sought to ascertain whether the removal of the ban on parallel imports had, in turn, allowed the rental of copies of sound recordings and films (including DVDs) which were themselves parallel imports.  Specifically, could a company parallel import the latest DVDs into New Zealand and then rent these out to members of the public without the consent of the relevant copyright owners?

Section 31 of the Act provides that “the issue of copies of a work to the public” is a restricted act.  In turn section 9 of the Act relevantly defines “issues to the public” as follows:

“9.  Meaning of ‘issues to the public’

(1) References in this Act to the issue of copies of a work to the public mean the act of putting into circulation copies not previously put into circulation; and do not include the acts of -

(a) Subsequent distribution or sale of those copies; or

(b) Subject to sub-sections (2) and (3) of this section, subsequent hiring or loan of those copies; or

(c) Subsequent importation of those copies into New Zealand; or

(d) Distribution of imported copies that are not infringing copies within the meaning of section 12 subsequent to their importation into New Zealand.

(2) ...

(3) The issue of copies of a work to the public, in relation to sound recordings and films, includes the rental of copies of those works to the public.”

Pivotal to this case was the “rental rights” exception to the definition of “issues to the public”. Pursuant to section 9(3), the definition of “issue of copies of a work to the public” in relation to sound recordings and film includes the rental of copies of those works to the public.  This preserves to copyright owners the right to exploit the commercial rental to the public of those works.

Section 9 was amended in 1998 (as a result of the removal of the ban on parallel importing) by the introduction of section 9(1)(d).   Section 9(1)(d) provides that the definition of “issues to the public” does not include “distribution” of parallel imported copies because these are no longer infringing copies. 

The copyright owners’ position was that although it is lawful to parallel import DVDs into New Zealand, and it is lawful to sell the parallel imported DVDs within New Zealand, it is a breach of the Act to rent those DVDs to the public without the consent of the copyright owner.  

They contended that the “rental right” in section 9(3) was introduced to give effect to Article 11 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPs”) which required Member States to grant to copyright owners the right to control the commercial rental of “at least” computer programs and films.  It was further asserted that the amendment of the Act in 1998 did not take away that right.  Therefore, the word “distribution”, as referred to in section 9(1)(d), does not include the renting of copies of films.  The consequence of this argument is  that the enactment of section 9(1)(d) would have no effect on the operation of section 9(3) - the rental of copies of copyright sound recordings and films, whether parallel imports or not, would still be prohibited.

By contrast, the renter argued that the word “distribution” in section 9(1)(d) encompassed all forms of distribution, whether by sale or rental or otherwise. 

The renter also contended that it was clear from the wording of section 9 that a work could not be “issued to the public” if it was already in circulation.  It argued that, as the DVDs were sold from the importer to the renter, they were already in circulation; they could not be “issued to the public” by a subsequent renting.

Paterson J did not accept, as a matter of statutory interpretation, that the works had already been put into circulation by reason of the sale by the importer to the renter.  Also, on a purposive approach, he found that such an interpretation would not give effect to the Legislature’s obvious intent to comply with New Zealand’s obligations under Article 11 of the TRIPs Agreement.  His Honour referred to the presumption of statutory interpretation that so far as the wording allows, legislation should be read in a way which is consistent with New Zealand’s international obligations. 

Paterson J held that the enactment of section 9(1)(d) in 1998 did not affect the operation of section 9(3), which had been introduced as a result of the Legislature’s intent to comply with its TRIPs obligations. If it had intended to do so, the Legislature could have amended section 9(3) specifically.  It did not do so.  He concluded there was no indication in the Act as amended to suggest the Legislature was prepared to abrogate its responsibilities under the TRIPs Agreement. 

As a result of this decision, it is now clear that the rental of copies of copyright sound recordings and films in New Zealand, whether parallel imports or not, is prohibited - unless with the consent of the copyright owner.