New Zealand's government today dealt a major blow to the "graduated response" bill championed by the music and movie industries by saying that it would scrap the hugely controversial plan and rewrite it from the ground up.

"Allowing section 92A to come into force in its current format would not be appropriate given the level of uncertainty around its operation," said Commerce Minister Simon Power in a statement. "These discussions have exposed some aspects of section 92A which require further consideration. While the government remains intent on tackling this problem, the legislation itself needs to be re-examined and reworked to address concerns held by stakeholders and the government."

Objections

The plan, also known as a "three strikes" rule because it would disconnect Internet users after three notices of copyright infringement, showed up in last year's rewrite of New Zealand's copyright law. Vague in wording, the law required the disconnection of repeat copyright infringers but said nothing about the mechanism.

ISPs began meeting to hash out an implementation plan with rightsholders like the Recording Industry Association of New Zealand (RIANZ), a key backer of the plan. Those meetings produced no agreement by the date the law was to come into force, so the government delayed implementation from late February to March 27.

In the weeks since, the situation has deteriorated further, with Google expressing its profound skepticism towards such a plan and one major ISP (TelstraClear) simply refusing to sign on to a draft document. End-users also launched an Internet blackout and a physical protest of the new rules, which they called a "guilt by accusation" law.

The government has now accepted the reality that ISPs and users simply won't go along with the scheme being drafted, and it has pledged to rewrite the entire provision to produce "a more workable piece of legislation."

Of hat-eating and suicide

Users and ISPs were most concerned that the rules would apparently disconnect even huge businesses after a few employees downloaded illicit files. A high-profile judge raised concerns that the procedure could run afoul of contract law in New Zealand. ISPs weren't keen on disconnecting their own customers for the benefit of one set of industries, and they couldn't believe the law provided no indemnification from lawsuits; the ISP could be sued both by users and rightsholders if they didn't like the way it was handling the three strikes program. And users wanted some form of third-party or judicial arbitration before any Internet disconnection.

InternetNZ, which runs the .nz domain and works "to keep the Internet open and uncaptureable," applauded the government's move. Executive Director Keith Davidson said, "This decision to change the law will be a relief to those who have valiantly opposed Section 92A and all that it stood for—the way it necessitated termination of Internet accounts based on mere allegations, imposed compliance costs on all sorts of businesses and organisations, and failed to protect these businesses and traditional Internet Service Providers who were caught in the middle through no fault of their own.

"Terminating an Internet account was always a disproportionate response to copyright infringement," he added, "and to force ISPs and other organisations to be copyright judges and policemen was never an acceptable situation."

A rewritten law will probably still lead to some sort of graduated response proposal, but the decision to back down form the current process and take all the complaints into account can't sit well with RIANZ (which was recently arguing that the whole process should actually be tightened up a bit more).

As for all those worries about false positives and the quality of evidence? RIANZ has never taken them too seriously, since (like the RIAA) it insists that its detection methodology is basically foolproof. In a recent interview posted on the RIANZ website, CEO Campbell Smith was asked if he would "eat his hat" if music industry copyright notifications turned out to contain numerous errors.

"Yes," he said. "I will fall on my sword and eat my hat. Hat first."

Fortunately for Smith, such hat-eating (and the far more painful sword-falling-upon) won't be worries for quite a while now as the legislative machinery gears back up for another bit of sausage-making.