19 July 2012

 

Legal News & Analysis – Asia Pacific – Australia – TMT

 

On 20 April 2012, the High Court of Australia unanimously dismissed the appeal by an alliance of film and television studios against internet service provider (ISP) iiNet. This decision is a win for ISPs, and highlights some similarity with the approach adopted recently by European courts, insofar as ISPs will not be required to behave disproportionately in combating online infringements.
 
Copyright infringement
 
In 2008, the studios commenced proceedings in the Federal Court of Australia, claiming that iiNet authorised its users' infringement of copyright in their cinematograph films under the Copyright Act 1968. The studios had monitored the downloading and sharing of television shows and films using BitTorrent by iiNet users over a number of months, and sent iiNet spreadsheets outlining alleged infringements.
 
The studios argued that, as a result of the infringement notices sent to iiNet, the ISP knew or reasonably suspected that its users' conduct infringed the studios' copyright. They claimed that iiNet had a range of actions reasonably available to it to prevent its users' unlawful conduct, including sending a warning notice or suspending or terminating its users' accounts, but did not take such steps and thereby authorised its users' infringements.
 
Section 101(1A) of the Copyright Act 1968
 
The following three matters must be taken into account when determining whether authorisation of primary copyright infringement has occurred:
 
  • the extent (if any) of the person's power to prevent the unlawful act;
  • the nature of any relationship existing between the person and the primary infringer; and
  • whether the person took any reasonable steps to prevent or avoid the unlawful act, including whether the person complied with any relevant industry codes of practice.
 
Decisions of Federal Court and Full Federal Court
 
The first instance judge found that while iiNet had knowledge of certain unlawful activity and did nothing to stop it, iiNet's conduct fell short of authorisation of copyright infringement.
 
On appeal, all three members of the Full Federal Court held that iiNet's contractual right to cancel, suspend or restrict its customers' internet service in the event of copyright infringement meant that the ISP did have a technical power to prevent infringement. However, they reached different conclusions in terms of what steps had been taken by iiNet to prevent infringements, and whether there were reasonable steps available that had not been taken, with the majority holding that iiNet's conduct was reasonable in the circumstances.
 
Decision on appeal to the High Court
 
The High Court unanimously decided in favour of iiNet, finding that iiNet did not authorise its customers' copyright infringement, since its conduct in not taking steps to prevent the infringements was reasonable in the circumstances, especially given that iiNet would be disproportionately penalised by taking steps based only on the insufficiently detailed information contained in the studios' infringement notices. In particular:
 
  • iiNet had no technical power to prevent customers from using BitTorrent peer-to-peer file sharing, to modify the BitTorrent system or to take down the films that were being shared online by their customers;
  • iiNet had only a power to indirectly prevent primary infringements by terminating the contractual relationship it had with its customers;
  • the studios' infringement notices did not contain information about how the data had been gathered or how it was to be interpreted by iiNet; and
  • it would be possible for a customer threatened with termination to simply engage with another ISP, iiNet would need to invest time and money in monitoring the conduct of its customers in order to act on the studios' notices to terminate an account, iiNet could be exposed to liability for any wrongful termination of a customer's account and there was no industry code of practice that applied to iiNet in this regard.
 
Implications
 
In the absence of legislative reform to specifically place obligations on ISPs to implement systems to tackle copyright infringement, ISPs will be able to rely on the High Court's decision to absolve themselves of responsibility in similar circumstances.
 
It will be interesting to see whether the Australian Law Reform Commission, in its recently commenced review into the operation of copyright in the digital environment, recommends that the legislature follows the lead of a number of overseas jurisdictions (including the UK, New Zealand and Canada) and introduces legislation which places obligations on ISPs to issue infringement notices to its customers.
 
 

For further information, please contact:

 

Dhana Doobay, Partner, Ashurst

dhana.doobay@ashurst.com

 

 

Leave a Reply

You must be logged in to post a comment.