Allens Arthur Robinson

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Focus: ISPs off the hook – for now

8 February 2010

In brief: A highly anticipated Federal Court decision, finding that iiNet had not authorised copyright infringements committed by users of its services, has been handed down. This case has attracted global interest, and is the first in the world of its kind to reach hearing and judgment. Partner Andrew Wiseman (view CV) and Lawyer Amanda Parks report.

• Background
• The decision
• Conclusion

Background

The 34 applicants in this case, who represent major film and television companies in Australia and the United States, brought action at the end of 2008 against iiNet, the third-largest ISP in Australia. The applicants claimed that iiNet had authorised copyright infringement by failing to prevent its users from engaging in peer-to-peer file sharing of infringing copies of films and television shows via the 'BitTorrent' system, which provides for easy online sharing of data.

The applicants involved the Australian Federation Against Copyright Theft (AFACT) in their conduct of the case. AFACT employed a company called DtecNet to conduct investigations of copyright infringement occurring via the BitTorrent system and presented the results of those investigations to iiNet, requesting that iiNet take steps to bring an end to the copyright infringements said to be occurring. AFACT wanted iiNet to issue a warning to each user who was allegedly infringing copyright and, if that warning failed to stop the infringement, to suspend each user's Internet service. If such suspension still did not suffice, AFACT sought iiNet's termination of the relevant user's account and also suggested that iiNet should block certain websites.

The decision

The key issue in this case was whether, by failing to take any steps to stop the copyright infringing conduct of certain users, iiNet authorised the copyright infringement of those users. Justice Cowdroy explained that, in order to find that iiNet had authorised copyright infringement, it was first necessary to establish that certain iiNet users had, in fact, infringed copyright. His Honour answered this question positively, although noted that the occurrences of copyright infringement were significantly fewer than the applicants had alleged. Justice Cowdroy held that a user generally makes each film available online,² and electronically transmits that film to the public,³ only once using the BitTorrent system, whereas the applicants had contended that a new infringement occurred each time a user's dynamic IP address changed.⁴

Despite finding that copyright infringement 'on a large scale' ⁵ had indeed occurred, Justice Cowdroy went on to find that iiNet had not authorised such infringement. There were three key reasons for this finding.

'Means' versus 'precondition'

First, his Honour distinguished between the provision of the actual 'means' for the occurrence of copyright infringement and the provision of a 'precondition' to such infringement occurring. The critical finding in this case was that iiNet's mere provision of access to the Internet did not constitute the means of infringement, as it was not possible to infringe copyright simply by use of the Internet itself. In this case, it was the iiNet user's use of the BitTorrent system that provided the means by which the copyright infringement had occurred. Justice Cowdroy held that iiNet had neither control over, nor responsibility for, the operation of the BitTorrent system and iiNet 'did not extend an invitation to the iiNet users to use its facilities to do acts comprised in the copyright of the applicants'.⁶

Power to prevent infringement

Second, Justice Cowdroy concluded for a number of reasons that a scheme for the notification, suspension and termination of an iiNet user's account did not, in this case, constitute a relevant power to prevent copyright infringement under section 101(1A)(a) of the Copyright Act 1968 (Cth) (the Act). It was made clear that the power to prevent infringement is neither absolute nor indefinite, and it necessarily interacts with the reasonableness of the steps that may be taken in order to prevent infringement, as contemplated by s101(1A)(c) of the Act.⁷

Justice Cowdroy found that iiNet's only relevant power to prevent infringement was to warn and then suspend or terminate an infringing user's account based on the information submitted by AFACT,⁸ but the determination of whether copyright infringement had occurred would not be a straightforward 'yes or no' matter.⁹ His Honour expressed the view that iiNet did not provide the means for infringement to occur and it could not be incumbent upon iiNet to stop the infringements from occurring, but even if it were, this did not require a finding that it would be a reasonable step for iiNet to take action.¹⁰

Ultimately, Justice Cowdroy concluded that the termination of an infringing user's account would do far more than stop the infringing conduct, as it would also bring about the end of that user's ability to use the Internet for non-infringing activities. His Honour stated that '[w]hile termination of accounts would stop the infringement it would do much more and in the circumstances it would not be reasonable. Consequently, warning and termination/suspension does not relevantly constitute a power to prevent infringement on the part of the respondent.'¹¹

Sanctioning, approving or countenancing infringement

Third, Justice Cowdroy found that, on the basis of the evidence presented, iiNet had done nothing more than provide its users with an Internet service and could not be seen to be sanctioning, approving or countenancing the copyright infringement of its users. His Honour stated that these three terms all 'imply a sense of official approval or favour of the infringements which occur. Such approval or favour cannot be found'.¹² Justice Cowdroy expressed the view that an ISP such as iiNet provides a legitimate facility for communication that is not designed, nor intended, to bring about copyright infringement. Justice Cowdroy distinguished this case from others, such as Kazaa¹³ and Cooper ¹⁴ , in which the respondents had intended for copyright infringement to occur and had deliberately structured the relevant software and website to bring about such infringement.

Based on these three key findings, the applicants' claim failed. Although it was not necessary to do so because no authorisation of infringement was found to have occurred, Justice Cowdroy did consider all issues that had been argued before him and, importantly, held that even if authorisation had been established, iiNet would have been entitled to enjoy the benefit of the Act's safe harbour provisions. The safe harbour provisions limit an ISP's liability for copyright infringements that occur when the ISP carries out certain activities, provided that the ISP satisfies the necessary conditions specified in the Act. One such condition is that the ISP must reasonably implement a repeat infringer policy. In this case, Justice Cowdroy concluded that while iiNet's policy did not necessarily meet the standards set by the applicants, it did meet the Act's requirements.

Conclusion

With the delivery of Justice Cowdroy's decision last week, iiNet is able to breathe a sigh of relief, at least for now. However, a question mark looms as to how long iiNet and other ISPs can sit comfortably with this decision and rest assured that they will not be held responsible for their users' infringing conduct. Justice Cowdroy's decision was based largely on the specific facts of this case and it is possible that, in different circumstances, ISPs may not get off quite so easily. Further, in summarising his judgment before a packed courtroom, Justice Cowdroy acknowledged the magnitude of copyright infringement of the applicants' films and recognised the existing sentiment that 'something must be done' to stop such infringement from occurring.¹⁵

In not so many words, an invitation has been extended to copyright owners to persist in addressing the problems of online copyright infringement. It seems that a reconsideration of the issue that was the subject of a highly anticipated judgment yesterday may not be too far off. Whether judicially, legislatively, or on some industry basis, a shared responsibility for online piracy involving all with vested commercial interests resonates well with a long-term investment in a content pipeline.

Footnotes

1. [2010] FCA 24.
2. [2010] FCA 24 at [299].
3. [2010] FCA 24 at [317].
4. [2010] FCA 24 at [284].
5. [2010] FCA 24 Summary at [19].
6. [2010] FCA 24 at [414].
7. [2010] FCA 24 at [421].
8. [2010] FCA 24 at [424].
9. [2010] FCA 24 at [430].
10. [2010] FCA 24 at [436]
11. [2010] FCA 24 at [438].
12. [2010] FCA 24 at [501].
13. Universal Music Australia Pty Ltd and Others v Sharman License Holdings Ltd and Others (2005) 65 IPR 289.
14. Universal Music Australia Pty Ltd and Others v Cooper and Others (2005) 150 FCR 1.
15. Roadshow Films Pty Ltd v iiNet Limited (No. 3) [2010] FCA 24 Summary at [19].
    

For further information, please contact:

• Andrew WisemanPartner, Sydney
  Ph: +61 2 9230 4701
  Andrew.Wiseman@aar.com.au
• Miriam StielPartner, Sydney
  Ph: +61 2 9230 4614
  Miriam.Stiel@aar.com.au
• Tim GolderPartner, Melbourne
  Ph: +61 3 9613 8925
  Tim.Golder@aar.com.au
• Peter JamesPartner, Brisbane
  Ph: +61 7 3334 3360
  Peter.James@aar.com.au

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