iiNet vs AFACT: iiNet wins landmark copyright infringement decision

After several weeks of hearings, on 4 February 2010, the Federal Court handed down a landmark decision concerning internet piracy and the liability of iiNet, an Internet Service Provider to the film industry (iiNet Decision).

Justice Cowdroy of the Federal Court decided that iiNet did not authorise copyright infringement on its network, despite finding that iiNet's customers had downloaded pirated material.

Facts

For a more detailed background of the case please see our previous article by clicking here.

In the proceedings, AFACT, (on behalf of the film and television studios), alleged that iiNet had authorised copyright infringement by failing to take reasonable steps to prevent sharing and downloading of movies and television shows via the BitTorrent system.

AFACT had collected evidence (whilst posing as an iiNet customer) showing that iiNet's customers were using the BitTorrent system to download copyrighted movies and television programmes.  AFACT sent multiple emails to iiNet informing it of the copyright infringement and asked it to take steps to prevent its customers from continuing to download such material.  AFACT's notices also required iiNet to cancel its infringing customers' subscriptions.  iiNet refused to comply with AFACT's requests and in fact did not take any steps at all to stop the infringing conduct.

Decision

The Court found that the conduct of iiNet's individual customers in downloading the pirated material amounted to copyright infringement.  However, the critical question was:- did iiNet authorise the copyright infringement of these iiNet customers by failing to take any steps to stop that infringing conduct?

Under the Copyright Act1968 (Copyright Act) a person who authorises the infringement of copyright is treated as if they have infringed copyright directly.

The Court commented that while iiNet had knowledge of the infringements occurring, and it did not act to stop them, that fact did not necessarily mean that it had authorised those infringements. 

In deciding whether iiNet had authorised the infringement, the Court considered the following:

1. the distinction between providing the "means" of infringement in contrast to providing merely a precondition to infringement occurring;
2. the power to prevent the infringements; and
3. the extent to which iiNet approved the infringement.

The Court distinguished providing the "means" of infringement, such as a website dedicated to peer-to-peer file sharing (such as in Cooper) or a series of photocopying machines, which could amount to authorisation, with providing a precondition to the infringement occurring.  It found that merely providing access to the Internet did not amount to providing the "means" of infringement.  It found that the "means" of infringement was the use of the BitTorrent system and iiNet had no control over such use.

The Court considered iiNet's power to prevent the infringements and because iiNet had no control over the BitTorrent system itself, it found that the measures requested in the AFACT notices would not, if iiNet had taken those measures, have been considered to be a relevant power to prevent the infringement nor would they be considered reasonable steps to prevent it.

Consequently, the Court found that iiNet, by doing no more than provide the Internet to its customers could not be seen to be approving the infringement.  The Court again compared the current circumstance with those set out in the Cooper and Kazaa decisions where the parties intended copyright infringements to occur.

Rather helpfully, although not required to do so, the Court also considered the following issues:

1. Telco defence: Under the Telecommunications Act (Telco Act), ISPs, such as iiNet, must protect the confidentiality of information of its customers. iiNet argued that if it had adhered to AFACT's requests it would have breached the Telco Act. The Court disagreed with iiNet and found that the information could be disclosed in accordance with one of the exceptions to the Telco Act.

2. Safe harbour provisions for repeat infringers:

(a) Under the Copyright Act, if a service provider, such as iiNet satisfies certain conditions, the Court cannot impose damages, account of profits or other monetary relief against that provider (Safe Harbour provisions). 

(b) In order to take advantage of the Safe Harbour provisions, the service provider must have a repeat infringer policy.  Such a policy was in dispute and AFACT argued that iiNet did not have such a policy.

(c) The Court found iiNet's policy of requiring a Court to find that an infringer had repeatedly infringed copyright was appropriate in this case and formed the basis of a repeat infringer policy in the context of the Safe Harbour provisions.

(d) Therefore, had the Court found that iiNet had authorised the infringement, it would have been able to rely on the Safe Harbour provisions to reduce its liability.

Practical Implications

This is a significant development in the decisions concerning internet piracy and copyright infringement.  Importantly, the Court has confirmed that there is no legal obligation or duty on any person to protect the copyright of a third party.  The extent of the obligation is a legal prohibition on doing an act comprised in the copyright or authorising another to do that copyright infringing act.

In addition, it is one of only few Australian decisions to have considered the impact of the Safe Harbour provisions.  Although the comments do not form part of the Court's decision, it will be useful as a starting point to achieve compliance with those provisions.

Future

Whilst the Court recognised the legitimate interests of the industry to prevent what it acknowledged was widespread infringement through the use of the BitTorrent system, this interest does not make ISPs, such as iiNet, responsible for protecting and enforcing the industry's rights.

Despite the comprehensive judgement, we expect that this matter has only just begun.  It is likely, that AFACT (on behalf of the film and television studios) will appeal the decision to the Full Federal Court. 

Senator Stephen Conroy's recent comments may also increase the chance of an appeal by AFACT, as he would prefer that the ISPs and the movie industry have discussions rather than introducing new laws regarding illegal file sharing. A full report of Senator Conroy's comments is available by clicking here.

The decision is no doubt a significant development in clarifying the law as it relates to ISPs. However, for all the individuals who may think this decision gives them free reign to download as much copyrighted material as possible, they should consider the recent Australian who was fined $1.5million in damages and ordered to pay $100,000 in legal costs for illegally downloading from and uploading to, the Internet, a popular game for the Nintendo Wii.  It is important to note that the infringer here went beyond a mere downloader when he uploaded the game to the Internet for download using the BitTorrent system.  A full report of the story is available by clicking here.