Digital files "property", says court in "female patronage" case

From Katfriend Ken Moon (IP/IT consultant to AJ Park, Auckland, New Zealand) comes this most helpful analysis of Jonathan Dixon v The Queen [2015] NZSC 147, a New Zealand Supreme Court ruling that goes further than traditional British rulings by analogising digital files to "property". This is what Ken writes:

New Zealand Supreme Court holds digital files to be property

Might there now be property in computer software in addition to the subsistence of copyright?  Might copying digital files from a computer system constitute a crime as well as copyright infringement?  A somewhat bizarre, and some might think minor, criminal case has gone all the way to New Zealand’s Supreme Court.  Dixon was charged under section 249(1)(a) of the Crimes Act, one of the ‘computer misuse’ crimes, for accessing a computer system dishonestly to obtain property.  The alleged offence was committed during the 2011 Rugby World Cup in New Zealand.  

As a security guard at a bar in Queenstown, Dixon had made a copy on to a USB memory stick of digital files containing the bar’s CCTV footage of the then Vice Captain of the English rugby team, MikeTindall, when he was socialising with a female patron.  His intention was to sell the footage to English media, but when this was unsuccessful he posted it on a video-sharing site. 

The primary issue was whether digital footage stored on a computer system was ‘property’ as defined in the Crimes Act.  That definition states: 

“property” includes “real and personal property … and any other right or interest.”   

The Court of Appeal [2014] NZCA 329 in this case had decided that it was not.  It had pointed to the English criminal case of Oxford v Moss (1979) 68 Cr. App. R. 183 and the Canadian criminal case of Stewart v The Queen (1988) 1 SCR 963, which had both held that information, which had held that information, even confidential information, was not property, noting that this was consistent with the general approach taken in civil cases.  The Court of Appeal, in analysing whether digital footage might be distinguished from confidential information, concluded it could not – ‘bytes cannot meaningfully be distinguished from pure information’. 

After an intensive spell of IP blogging, many Kats find
rugby a restful and genteel pastime ... 

On further appeal the Supreme Court disagreed, taking the view that digital files were more than pure information and that it could put aside the criminal and civil authorities which had held information was not property.  It also noted that the Court of Appeal for England and Wales in Your Response v Datateam Business Media [2014] EWCA Civ 281 had taken a contrary view in holding that digital files constituting a database were not property. 

Proceeding unencumbered by these authorities, the Court noted that the other computer misuse offences referred to software and data and that therefore a purposive construction of section 249(1)(a) suggested the reference to ‘property’ must include digital files. 

The Supreme Court also considered it was a fundamental characteristic of property that it was something capable of being owned and transferred.   The digital files taken by Dixon were capable of being sold and this was another indicator that they constituted property.  It observed that the Crimes Act definition of ‘document’ included an 'electronic file': surely a Microsoft Word document must be property and, if so, so must other forms of digital files. 

Finally, the Court noted that US courts were agreed software was property even if they did not agree on whether it was tangible or intangible. The Court particularly discussed the decision of the Supreme Court of Louisiana in South Central Bell Telephone Co v Barthelemy 643 So 2d 1240 (Lou 1994) which held software to be not only property, but tangible property.  The New Zealand court added that, even when software was considered to be intangible, US courts had held it to be capable of conversion, confirming its status as property.  It was recognised this was contrary to the House of Lords' view in OBG v Allan [2007] UKHL 21 [better known as Douglas and others v Hello!] where the majority held the tort of conversion applied only to chattels and not intangibles.  Having approved US law on software, the Supreme Court took the view that there was no reason not to accord digital files the same status as software in for the purposes of section 249 of the Crimes Act. 

This decision of the Supreme Court may have implications under the Crimes Act for other acts of ‘taking’.  For example, if someone without consent took a copy of a legally downloaded film from a friend’s computer it would seem that may now be a crime under section 249 (as well as copyright infringement).  It may also have implications for civil cases resulting in New Zealand courts confirming that software is personal property.  However, much as this writer has favoured software being confirmed as property and more particularly intangible property, it is unfortunate that the Supreme Court relied on South Central Bell.  That case was decided under the New Orleans City Code and in the context of civil law concepts derived from the French and Spanish codes.   

More controversially, does the decision mean that confidential information (and possibly any information that can be sold) now constitutes property in New Zealand, contrary to current UK and Australian law?  Unlike software, how can ‘digital files’ be distinguished from information?  Digital files are simply information that has been digitised and formatted and their physical storage medium is no more relevant than the physical sheets of exam paper were in Oxford v Moss.  Further, while software constitutes digital files it differs substantially from data files because it is more than just information.  It is created to control the operation of computers rather than for consumption by humans.

Thanks, Ken, for this analysis. This Kat bets that this decision will be subjected to some fairly close scrutiny before long, though he hopes that legislation will get there first and that this area of sensitive uncertainty will be left to a systematic law-making exercise rather than to the random factor of which appellate judges happen to be selected to hear the inevitable appeals.