This is an informal case summary prepared for the purposes of facilitating exchange during the 2024 WIPO IP Judges Forum.
Session 5
Supreme Court of New Zealand [2020]: Ortmann v United States of America [2020] NZSC 120; [2020] 1 NZLR 475
Date of judgment: November 4, 2020
Issuing authority: Supreme Court
Level of the issuing authority: Final instance
Type of procedure: Judicial (Criminal)
Subject matter: Copyright and Related Rights (Neighboring Rights)
Appellants: Mathias Ortmann, Bram van der Kolk, Finn Habib Batao and Kim Dotcom
Defendant: United States of America
Keywords: criminal copyright infringement, infringing copy, possession, distribution, object, safe harbour, extradition
Basic facts: In 2005 Mr. Dotcom established a business providing cloud storage and file sharing facilities for internet users, collectively referred to as Megaupload. The other appellants were all involved in the Megupload business.
The United States (US) alleges that, by design, the Megagroup business model encouraged third parties to upload to the Megasites digital files that infringed copyright, which could then be shared. It is said this cost film studios and record companies more than $500 million. The US alleges the appellants knew that third parties were uploading infringing material to Megasites and that they incentivised it, generating more than $175 million in revenue for the website.
The US claims this is criminal conduct in the US and meets the threshold for extradition under the NZ/US extradition Treaty. The US therefore requested the extradition of the appellants to face trial in the US for conspiracy to commit racketeering, conspiracy to commit copyright infringement, conspiracy to commit money laundering, criminal copyright infringement and wire fraud.
The request was made under the Extradition Treaty but was required to be dealt with under the Extradition Act 1999. The Extradition Act provides a two-stage process, the first and presently relevant of which requires the District Court to determine whether the person for whom an extradition request has been made is eligible for surrender.
A positive eligibility finding was made by the District Court and later confirmed by the High Court and the Court of Appeal. The Supreme Court granted the appellants leave to bring a further (final) appeal.
Held: The Supreme Court dismissed the appeal. It confirmed that the double criminality requirement applied, notwithstanding the terms of the NZ/US treaty. So, eligibility for surrender turned on whether the US could show the appellants’ alleged conduct would constitute criminal offending in both the US and New Zealand (NZ). More particularly it turned on whether the online dissemination of digital copyright works in the course of business is an offence under s 131 of the Copyright Act 1994 (NZ), which criminalises various kinds of (mostly commercial) dealings in an “object” that is (and is known by the defendant to be) an infringing copy of a copyright work”.
Among other things, the Court held that the outdated language of s 131 fell to be interpreted in light of NZ’s international obligations and so its application was not limited to knowingly dealing in infringing copies in tangible form, and encompassed intangible or digital copies.
The Court was also required to consider the operation and application of the safe harbour provisions (ss 92B and 92C) of the 1994 Act. The Court held the provisions were not defences but rather imposed a positive obligation on a prosecutor to establish that they did not apply. The Megagroup could not, however, avail itself of the protection of the provisions. The allegation was that the Megagroup business model was designed to encourage and facilitate widespread copyright infringement. An interpretation of s 92B that would cover the Megagroup’s activities would deprive s 92C of any effect.
Overall, therefore, the Court found that s 131 provided an available extradition pathway for all counts other than conspiracy to commit money laundering. It also found the evidence tendered by the US had proved the existence and ownership of copyright to prima facie standard.
The NZ Minister of Justice has since made an order for the extradition of Mr. Dotcom, although he presently remains in NZ.
Relevant legislation:
· Crimes Act 1961
· Extradition Act 1999