iiNet yesterday celebrated a major victory in its landmark online piracy battle with Hollywood. The Federal Court dismissed an appeal against justice Dennis Cowdroy's February 2010 ruling that the internet company had not authorised its customers to engage in acts of online film and music piracy. Middletons senior associate Troy Gurnett has the legal lowdown.
On 24 February 2011, the Full Court of the Federal Court of Australia handed down its decision in Roadshow Films Pty Ltd & Ors v iiNet Limited  FCAFC 23.
A majority of the Court (Jagot J dissenting) dismissed the appeal brought by Roadshow Films Pty Ltd and thirty-three other appellants representing major motion picture studios in Australia and the United States (Roadshow).
In order to properly appreciate the iiNet decision, it is first necessary to understand that the Copyright Act 1968 (Cth) provides for two types of infringement. A primary infringement occurs when a person who, without the licence of the copyright owner, does in Australia any act comprised in the copyright. A secondary infringement occurs when another person has "authorised" the primary infringement.
Against this background, the critical issue in iiNet can be appreciated: did iiNet Limited (iiNet) "authorise" the copyright infringements of its users who unlawfully made available online, electronically transmitted and made copies of copyright films and TV programs using a BitTorrent system?
The majority judges (Emmett and Nicholas JJ) held that iiNet did not "authorise" the infringements. While their Honours' reasoning is necessarily complex, they ultimately concluded the "notices" issued to iiNet by AFACT on behalf of the copyright owners did not contain sufficient information to justify iiNet terminating or suspending its subscribers' accounts.
Where to from here?
There can be no doubt that Roadshow will now carefully consider the judgment and assess the prospects of seeking special leave to appeal to the High Court of Australia.
However, the High Court aside, the majority judges have both left open the possibility that Internet Service Providers (ISPs) such as iiNet may in future be held liable for authorising copyright infringements in certain circumstances.
Emmett J went as far as setting out what he considered the copyright owners would need to show in order to establish authorisation: that the ISP had been provided with "unequivocal and cogent evidence" of the alleged primary acts of infringement; that the copyright owners had undertaken to reimburse the reasonable costs of verifying the particulars of the primary acts of infringement alleged and of establishing and maintaining a regime to monitor the use of the ISP's service; and that the copyright owners had undertaken to indemnify the ISP in respect of any liability incurred as a consequence of mistakenly suspending or terminating a service on the basis of the allegations made by the copyright owner.
It remains to be seen whether copyright owners are prepared to go to these lengths in order to force ISPs to act in the fight against internet piracy. Even if copyright owners choose to do so, there is no guarantee that the scheme proposed by Emmett J will be used as a definitive guide in other cases.
The copyright owners' potential alternative is legislative intervention. This approach has been proposed and debated in other jurisdictions, and has resulted in the attempted introduction of procedures to terminate customers' internet access for repeat infringements (often referred to as the "three strikes" policy). However, such attempts have created heated debate between civil libertarians and copyright interest groups, indicating that there is no simple legislative solution to this ongoing issue.