iiNet strikes the first blow

The result

Case Summary

Proceedings were brought against iiNet by a group of 34 separate applicants, and were conducted on their behalf by the Australian Federation Against Copyright Theft (AFACT). The applicants were amongst the major motion picture studios both in Australia and the United States.

The proceedings were brought on the basis of allegations that iiNet had failed to take reasonable steps to prevent contraventions of the Copyright Act 1968 after being notified by AFACT that some iiNet customers were illegally downloading films and TV programmes using the internet service provided by iiNet.

AFACT investigated the infringement of copyright by iiNet users, who were downloading films and television programmes using a peer to peer system known as the BitTorrent protocol. AFACT provided details of the users’ infringing activities to iiNet, and wanted iiNet to first warn the allegedly infringing subscriber, and if this was not enough to stop the infringement, suspend and ultimately terminate the subscriber’s internet service (commonly known as the “three strikes”). Alternatively, AFACT suggested that iiNet should block certain websites to reduce the opportunity for its subscribers to engage in illegal downloading.

The primary issue was whether iiNet, by failing to take any steps to stop infringing conduct, authorised the copyright infringement of these iiNet users (an infringement under s101(1) of the Copyright Act).

Whilst the Court held that there were iiNet users infringing copyright, that iiNet had knowledge of these infringements, and did not take steps to prevent them, nonetheless iiNet did not authorise these infringements.

The Court had 3 primary reasons for its decision:

• Distinguishing the likes of the Cooper [2] and Kazaa [3] cases, the Court held that by merely providing access to the internet, iiNet was not providing the users of its service with the means of infringement. AFACT’s copyright could not be infringed merely from use of the internet. Copyright was instead infringed through iiNet customers’ use of the BitTorrent system, which iiNet has no control over.
• iiNet did not have the power to prevent the copyright infringement occurring, and that warning subscribers and terminating their accounts based on notices issued by AFACT was not a reasonable step for iiNet to take.
• iiNet had not sanctioned or approved copyright infringement and had done no more than provide an internet service to its users. The facts in this case were again distinguished from those in the Cooper and Kazaa cases, in which a website and software respectively were deliberately structured to assist copyright infringement.

What now?

Whilst at the time of writing no announcement had been made by AFACT, AFACT will no doubt be considering whether to appeal the decision. For now at least, iiNet and other ISPs will take comfort in the view that the Court has unambiguously stated at this point: in merely providing a service allowing subscribers access to the internet, they are not accountable for the activities undertaken by these subscribers. Whether or not this will ultimately be the case remains to be seen.

ISPs will probably also be taking note of the Judge’s comments that a repeat infringer policy actually used by iiNet (which was not precisely documented as it was split between 2 documents, as well as then supplemented by an internal, spoken understanding within iiNet) would have been sufficient for it to have taken advantage of the safe harbour provisions in the Copyright Act if it had needed to have done so.

As the Court acknowledged, the illegal downloading of film and music is rife worldwide. However, the Court expressed the view that the mere provision of a legitimate communication facility not intended or designed to infringe copyright should not put ISPs in the firing line if their subscribers use the facility to access a system which the ISP has no control over, and make use of that system to infringe copyright.

That said, the serious issue of cost effective protection of valuable and legitimate rights in relation to illegal downloads remains.

The main problems for rights holders such as film studios and record companies are the need to identify who can be held liable for infringement of their rights, and the cost of bringing enforcement proceedings individually. For the moment it appears that the Federal Court will not hold ISP’s liable in circumstances such as this case, and, whilst generating publicity, it is simply too costly to try and prosecute each individual infringer. Will companies behind the likes of BitTorrent be next in the firing line (even though such systems have legitimate uses)? Or will rights holders turn their attention to lobbying governments to make laws compelling ISPs to implement the sorts of “3 strikes” policies which appear to be favoured by the industry.

Stay tuned for the next instalment…

For more information regarding this case, please contact Michael Sutton, Senior Associate, Intellectual Property and Technology Group, ph: +61 2 8233 9587.