Case roundup: Supreme Court decision strengthens rights for New Zealand copyright owners

The Supreme Court of New Zealand's decision in Burden & Ors v ESR Group (NZ) Ltd [2025] NZSC 18 clarifies and strengthens copyright owners’ rights under New Zealand copyright law.  

Key issues

In this long-running case, the Supreme Court considered two questions on appeal:[1]

• Was the Court of Appeal correct to conclude, for the purposes of s 9(1) of the Copyright Act 1994 (the Act), that a copyright holder’s consent is not necessary for a work to be “in circulation”?
• Was the Court of Appeal correct to conclude, for the purposes of s 9(1) of the Act, that circulation outside of New Zealand could constitute “circulation”?

The Supreme Court considered the second question to be more important and addressed that issue first.

Overturning the Court of Appeal[2], the Supreme Court found that a copyright owner’s exclusive right to issue copies of a work in New Zealand (the "first distribution right") is only exhausted if copies have been circulated in New Zealand with the consent of the copyright owner. The appeal was allowed and the High Court[3] order reinstated.

Background

The appellants (PGT) are the copyright owners of furniture designs.

In this case, the respondent (ESR) imported for the purpose of sale, furniture that infringed the copyright in PGT’s design drawings. Relevant copies of the furniture had already been circulated in Vietnam.

ESR was made aware that the furniture infringed PGT’s copyright in August 2014 and ceased sales in November 2014.

The law

Under s 35 of the Act, a person is liable for secondary infringement if they import into New Zealand, a copy of a work which infringes copyright, with knowledge or reason to believe that it is an infringing copy.

Under ss 29(1) and 31 of the Act, a person is liable for primary infringement of copyright if they issue copies of a work to the public, without a copyright license. To issue copies of the work to the public is defined under s 9(1) of the Act as “the act of putting into circulation copies not previously put into circulation”.

Knowledge that an item is an infringing copy is not necessary for a person to be found liable for primary infringement.

Lower court decisions

The High Court initially ruled in favour of PGT, finding ESR liable for primary and secondary infringement. Downs J held that the issue of copies of a work to the public means the act of “putting into circulation copies [in New Zealand] not previously put into circulation [in New Zealand by or with the consent of the owner]”.

For remedies before the High Court, the plaintiffs elected an account of profits.  As to the quantum of profits:

• for secondary infringement from 28 August 2014 (being the date they were put on notice of PGT’s copyright rights) until cessation of sales on 22 November 2014: NZ$9,316.50; and
• for primary infringement covering the period March 2013 to 22 November 2014: NZ$221,134.50.

The key issue before the High Court was whether ESR was liable for the larger figure from March 2013, before it knew the furniture breached copyright. The High Court said “yes”, finding ESR liable for primary infringement.

On appeal, the Court of Appeal reversed the High Court’s decision regarding primary infringement, arguing prior circulation abroad (even without consent) exhausted the distribution right, limiting PGT to a secondary infringement claim (under s 35 of the Act) and therefore reducing the account of profits payable to NZ$9,316.50.

The Supreme Court’s decision

The Supreme Court overturned the Court of Appeal, reinstating the High Court’s decision.

The Supreme Court unanimously held that “to issue of copies of a work to the public” must mean “the act of putting into circulation copies that have not previously been put into circulation in New Zealand”. Therefore, the first distribution right in New Zealand cannot be exhausted by circulation overseas.  

The Court noted that it was not necessary for it to consider the issue of consent, given its conclusion that the right to first distribution can only be exhausted in New Zealand. However, it commented that consent of the copyright owner is required for prior circulation to exhaust its right to first distribution of copies of the work.

Glazebrook J further comments that subsequent distributors of the infringing copies can only be liable for secondary infringement. This is because the copies are already in circulation in breach of the first distribution right[4]. If subsequent distributors in New Zealand were liable for a breach of this right, it would mean that the “right would no longer be a first distribution right but a serial distribution right.”

Further discussion – this case is about more than copyright law

This is a long-running decision primarily about copyright in furniture with key issues of whether primary infringement occurred, or whether the importer (ESR) was only liable for secondary infringement.

The short story is that ESR (also) committed primary copyright infringement by issuing the furniture to the public, thereby contravening PGT’s right of first circulation in New Zealand in relation to the furniture. ESR found liable to PGT for profits of NZ$221,134.50 for the full period of sales of the infringing furniture.

However, for the legal academics out there, the real issue in this string of cases is one of statutory interpretation.

The Supreme Court acknowledges deficiencies in the statutory regime and comments that[5]:

… it is unfortunate that, having decided to adopt the UK Act’s first distribution right, the legislation did not make it clear in s 9 whether the purpose was to adopt the UK model in its entirety (which could easily have been achieved by adding “in New Zealand or elsewhere”) or to adopt it with modification (which could easily have been indicated by adding “in New Zealand”). The result has been unnecessary and avoidable uncertainty.

After traversing the various definitions and sections of the Act, considering the equivalent UK provisions, and reviewing New Zealand’s position with respect to international treaties on Copyright Law, the Supreme Court found that the position advanced by PGT was more consistent with the wording of the Act, the statutory history and context, and policy considerations.

At [62] Glazebrook J for the Supreme Court confirms:

This statutory scheme, with the emphasis on the exclusive right to do acts in New Zealand and the corollary that only acts in New Zealand will be infringing, provides support for the argument that the related definition in s 9(1) would by implication be confined to acts in New Zealand, absent words to the contrary.

At [104] the SC decision confirms:

Based on the above reasons, we hold that the first distribution right is not exhausted by the issue of copies to the public outside New Zealand. In other words, the s 9(1) definition—“the act of putting into circulation copies not previously put into circulation”—must be read as meaning “not previously put into circulation in New Zealand”. This conclusion is the result of a consideration of the 1994 NZ Act’s text, purpose, context and legislative history.

What does this mean for copyright owners?

This judgment clarifies and strengthens copyright protections in New Zealand by ensuring rights holders retain control over domestic distribution, even if infringing copies circulate abroad. The decision aligns with the statutory purpose of preventing unauthorised commercial exploitation of copyrighted works.

The SC decision resolved a long-standing dispute, awarding damages to PGT for ESR’s primary and secondary infringement of copyright.

What does this mean for importers of products?

Even if an importer has no knowledge that an item they have sourced from overseas is an infringing copy of another product, they may still be liable for “primary infringement” under the Act. This may seem “unfair” to some, but the Supreme Court confirms the policy arguments in favour of ensuring copyright owners enjoy their exclusive rights are stronger than the contrary policy arguments for encouraging trade.

The (at least partial) answer to the concern that importers may be unfairly punished is that s 121 of the Act provides that where a defendant did not know or have reason to believe that copyright existed in the relevant work, then the plaintiff will not be entitled to damages but only an account of profits. If an importer is aware of the copyright owner’s products, this may amount to “reason to believe that copyright existed in the relevant work”.

To avoid risk of liability for infringement, importers should exercise caution when ordering products from overseas, particularly when in search of cheaper alternatives for use in the course of business or resale in New Zealand. Importers should purchase from reliable sources and when in doubt seek legal advice.

If you have any questions about copyright law, please contact the experts at AJ Park.