New Zealand Court of Appeal rules on the extradition of Kim Dotcom (Megaupload)

There is a new development in the judicial saga featuring the founder of Megaupload, Kim Dotcom, against the US government. New Zealand Katfriend Ken Moon (AJ Park) explains it for Kat readers.

“As many readers will know, the US Government has, since 2012, been seeking the extradition from New Zealand of Kim Dotcom, based on charges of criminal copyright infringement in the US. Megaupload purported to simply provide file storage on its website. In reality, Dotcom’s website hosted or stored infringing digital copies of movies – often ripped from DVDs. Each uploader would receive a link which they could share via third party websites. The viewing or downloading of movies was free for the first 72 minutes and thereafter Megaupload levied charges through a subscription service. The website also generated revenues by hosting advertisements. The movie companies had persuaded the US Government that Megaupload’s business operation constituted a criminal offence under the DMCA, but in the meantime Dotcom had moved out of the jurisdiction to New Zealand. 

The extradition saga commenced early 2012 at the request of a US Federal Prosecutor with a police raid conducted on Kim Dotcom’s Auckland home. There have been many interlocutory proceedings, but the extradition proceeding proper has now been through three courts on appeals by Dotcom: the District Court, the High Court and now the Court of Appeal. 

On July 5^th, the New Zealand Court of Appeal held that ‘double criminality’ is required for extradition to the US. That is, that there must be a New Zealand copyright offence corresponding to the alleged US offence, despite argument that this principle may not apply under the New Zealand – United States Treaty 1970. In considering whether New Zealand had a comparable copyright offence to that under which Dotcom was charged in the US, the Court decided the act of facilitating the dissemination of infringing digital copies of protected works over the internet was a criminal offence under the Copyright Act 1994 (NZ).

The Copyright Act 1994 (NZ) was amended in 2008 to introduce in Section 16 the right of ‘communicating a work to the public’, the infringement of which is subject to civil remedies. No equivalent amendment was made to Section 131 of the same Act, which lists possible criminal offences for copyright infringement.

This contrasts with the 2003 amendment of copyright law in the UK for example, where the introduction of the communication to the public under the Copyright, Designs and Patent Act 1988 was paired with an equivalent criminal offence (see s. 20 and s. 107(2A)).

Section 131 of the Copyright Act 1994 (NZ), standing unchanged after the 2008 amendments of the act, reads:

‘Every person commits an offence … who … (d) in the course of business, (iii) distributes … an object that is, and the person knows is, an infringing copy of a copyright work.’

Kim Dotcom

Contrary to the High Court below, the Court of Appeal reasoned that the word ‘object’ was not limited to physical tangible copies, but also extended to digital files. Consequently, the infringing digital copies of movies stored on Megaupload’s websites are ‘objects’ in the meaning of Section 131 of the 1994 Copyright Act (NZ).

The Court oddly took support for their interpretation from the fact that the 1994 Copyright Act had substituted the word ‘object’ wherever the word ‘article’ had been used in previous legislation (1962 Act). The Court also noted the NZ Supreme Court decision in R v Dixon [2015] NZSC 147 [see here], holding that digital CCTV footage was both a ‘document’ and ‘property’ under the NZ Crimes Act 1961.

Most copyright practitioners in New Zealand, including this one, had interpreted ‘object’ in s.131 (and elsewhere) in line with the Oxford English Dictionary meaning – ‘a material thing that can be seen and touched’. However, the new meaning given to it by the Court of Appeal in their decision will now ‘digitise’ a number of provisions in the 1994 Act which employ the word ‘object’. By interpreting the text in this way, the Court of Appeal may have updated the law for the government which is currently reviewing the NZ Copyright Act, reducing the extent of the reform required.”

Subsequent to the Court of Appeal issuing its judgment, Kim Dotcom’s legal team has announced that an appeal will be lodged with the Supreme Court.