The High Court has published its full judgment for the landmark copyright case between iiNet and the Australian Federation Against Copyright Theft (AFACT).
This morning, the High Court ruled unanimously that iiNet had not authorised its customers' copyright infringement of using BitTorrent over iiNet's services.
The judgment, published online shortly after the announcement, stated that iiNet has limited power over how its subscribers use its services as part of the commercial relationship.
"iiNet could not control the choice of its subscribers and other users to utilise the BitTorrent software, nor could iiNet modify the BitTorrent software or take down the appellants' films, which were made available online," the court stated.
At the time of the original trial, iiNet had close to 500,000 customers, and had been receiving thousands of infringement notices from AFACT every month. The court questioned whether it was a reasonable step for iiNet to monitor the activities of every single user to determine when an infringement may occur, and then to stop future infringements.
"Warnings might or might not have that effect. Evidence was lacking of likely behaviour in that respect by users of ISP facilities. Further, with respect to the AFACT notices, was it reasonable to expect iiNet to issue warnings or to suspend or terminate the contracts of customers when AFACT had not fully disclosed the methods used to obtain the information in the AFACT notices?"
The court said that the only practical course of action would have been to terminate accounts suspected of infringing, but the court said that this would go too far.
"[T]his would not merely avoid further infringement; it would deny to the iiNet customers non-infringing uses of the iiNet facilities. And, in any event, in the absence of an effective protocol binding ISPs (and there is no such protocol) the iiNet subscribers whose agreements were cancelled by iiNet would be free to take their business to another ISP."
The High Court also ruled that the evidence that AFACT had provided to iiNet in the form of infringement notices was not enough for iiNet to act upon, especially given that the ISP might be held liable for the termination of its customers' services.
"The information in the AFACT notices did not approximate the evidence, which would be expected to be filed in civil proceedings, in which interlocutory relief was sought by a copyright owner in respect of an allegation of copyright infringement. Also, any wrongful termination of a customer's account could expose iiNet to risk of liability. These considerations highlight the danger to an ISP, which is neither a copyright owner nor a licensee, which terminates (or threatens to terminate) a customer's internet service in the absence of any industry protocol binding on all ISPs, or any, even interim, curial assessment of relevant matters.
iiNet's failure to act on the notices was not because the ISP was completely indifferent to them, but rather because it felt there was a lack of evidence of the infringements, the court found.
"The evidence showed that the inactivity was not the indifference of a company unconcerned with infringements of the appellants' rights. Rather, the true inference to be drawn is that iiNet was unwilling to act because of its assessment of the risks of taking steps based only on the information in the AFACT notices. Moreover, iiNet's customers could not possibly infer from iiNet's inactivity (if they knew about it), and the subsequent media releases (if they saw them), that iiNet was in a position to grant those customers rights to make the appellants' films available online.
The court noted that the term "authorisation", which sat at the heart of the case, was not suited in law for enforcing copyright owners' rights for widespread infringements over peer-to-peer services like BitTorrent. The court suggested that this could be addressed either through legislation or through industry codes of conduct.
"The difficulties of enforcement, which such infringements pose for copyright owners, have been addressed elsewhere, in constitutional settings different from our own, by specially targeted legislative schemes, some of which incorporate co-operative industry protocols, some of which require judicial involvement in the termination of internet accounts and some of which provide for the sharing of enforcement costs between ISPs and copyright owners."
The court said that it was not unreasonable for iiNet to take the view that it didn't need to act on the allegations from AFACT without further investigation that iiNet should not be required to undertake itself. For that reason, the High Court dismissed the case with costs.
Because of this, the court did not go on to consider the other elements of the case, including iiNet's defence that if it was liable for authorisation, it would be prevented from taking action under the Telecommunications Act, or the argument that iiNet would be covered by safe harbour provisions.
The High Court also said that it was not appropriate for the court to consider the copyright infringement schemes enacted in the UK and New Zealand — the three-strikes warning system for repeat copyright infringers.