Internet service providers have once again emerged as the winners in the latest battle between internet service provider iiNet and the giants of the Hollywood film industry.
This week the Full Federal Court found in favour of iiNet, dismissing Roadshow Films' appeal against a finding by Justice Cowdroy that iiNet had not authorised copyright infringement.
The landmark case, launched by the Australian Federation Against Copyright Theft (AFACT) in November 2008 has attracted worldwide attention as content owners and internet users watch closely to see whether ISPs will be forced to do more to prevent their users from downloading content illegally through file-sharing.
The battle began when Hollywood studios - including Roadshow Films, Warner Bros and Twentieth Century Fox - alleged that subscribers or other users of iiNet, used peer-to-peer software (BitTorrent) and iiNet's facilities to download copies of Roadshow's films. They claimed that those films were made available from iiNet users' computers and shared via iiNet's facilities, resulting in an infringement of copyright. AFACT served notices to iiNet which alleged that iiNet's users were infringing copyright.
While dismissing the appeal by a 2-1 majority, the Full Federal Court rejected Justice Cowdroy's finding at first instance - that ISPs are simply a necessary precondition but not the "means" of infringement, and that as a result iiNet did not authorise copyright infringement.
"That blanket defence has been rejected. ISPs can't just say 'we're not the means therefore we avoid liability for infringement'," explained Clayton Utz senior associate, Timothy Webb.
In his judgement Justice Emmett went on to set out the necessary actions of ISPs and circumstances in which it would be reasonable for an ISP to suspend or terminate a customer's account.
"Clear signposts have been given by the court as to what is necessary to constitute authorisation of infringement by an ISP," Webb explained.
"However, in this particular case it was held that the notices and circumstances applying to iiNet were not sufficient [to be] liable for authorisation."
The key points emerging from the appeal, according to Webb, are that there is no absolute defence for ISPs to claims of authorisation; an ISP can be obliged to take action against a customer, including suspending or terminating their account; the content of the infringement notices sent to the ISP is critical and that ISPs need to have good policies in place to deal with repeat infringers.
"The fact that the court was split is an indication of the complexity of this area of law and the uncertainty that has exists today. It's not black and white. These are matters of judgment and turn on the particular facts. So it's a matter of watch this space," Webb said.
The Hollywood studios have until 24 March 2011 to appeal the Federal Court's decision. Representing iiNet in the proceedings, Herbert Geer partner Graham Phillips said although there is some expectation of an appeal to the High Court, there have been calls by iiNet as well as AFACT for a greater focus on resolving issues outside the court system.
"There needs to be more focus on resolving things outside court," Phillips said. "Putting in place regulations and putting things in code and having negotiations to solve things outside the court process."
Herbert Geer represented iiNet while Clayton Utz represented the Internet Industry Association in relation to earlier proceedings commenced by AFACT against iiNet.