iiNet win puts onus on ISPs: lawyers

Despite the fact that the Australian Federation Against Copyright Theft (AFACT) lost the appeal of the landmark iiNet copyright infringement case in the Federal Court yesterday, intellectual property law experts believe it is in a much stronger position to compel internet service providers to act on infringement notices.

(Gavel image by walknboston, CC2.0)

The full bench of the Federal Court yesterday dismissed AFACT's appeal of Justice Cowdroy's ruling that iiNet had not authorised its users to infringe copyright via sharing files with peer-to-peer technology. The court ruled in majority with Justices Nicholas and Emmett agreeing to dismiss the appeal, while Justice Jagot dissented.

"While the evidence supports a conclusion that iiNet demonstrated a dismissive and, indeed, contumelious, attitude to the complaints of infringement by the use of its services, its conduct did not amount to authorisation of the primary acts of infringement on the part of iiNet users," Emmett said in his judgement.

However, while the judges did dismiss AFACT's case, the justices effectively ruled that internet service providers (ISPs) were obligated to act on infringement notices if the information was substantial enough, which in AFACT's case it wasn't.

In his judgement, Emmett laid the groundwork for AFACT to re-evaluate its methods of issuing infringement notices to ISPs in such a way that the providers would then be compelled to act on them or be considered to have authorised infringement. According to Emmett, if iiNet was provided with "unequivocal and cogent evidence of the alleged primary acts of infringement by use of the iiNet service in question" and information on how that evidence was gathered in order for iiNet to verify the claims, and still didn't act, then the provider could be found to have authorised infringement.

He also recognised that copyright owners such as AFACT should be required to reimburse ISPs for the cost of verifying infringements and the cost of establishing and maintaining a system to monitor internet use to determine infringements. He said the copyright owner should also protect the ISP from loss or damage in the case that the company mistakenly suspends or terminates the internet service of a user who the copyright owner alleged to have infringed on copyright.

According to RMIT University general counsel John Lambrick, the judgement was a close call for iiNet.

"It seems the only thing that saved iiNet was that AFACT didn't present it with sufficient information for it to verify that the breaches had occurred," he said. "It doesn't really afford ISPs the latitude to ignore complaints by content owners in the way that the original judgement by Justice Cowdroy suggested."

"The thing that just puzzles me in all this is that despite the criticism of Justice Cowdroy's ruling, [the judges] still at the end of the day didn't overturn the [original] judgement. If they wanted to, they had plenty of ammunition to do so."

Middletons senior associate Troy Gurnett agreed.

"I think ISPs are going to have to look at that part of the reasons very carefully because the copyright owners, AFACT, probably won't make the same mistake twice."

Gurnett said the real question would be whether copyright owners such as AFACT would be willing to establish an ISP piracy action funding scheme similar to the one outlined by Justice Emmett, because it could be very costly for them.

"If we were just talking about one ISP, you could see how the copyright owners would go to that. If they have to put that kind of arrangement in with all the ISPs it's a pretty big ask," he said. "It's difficult to know what approach the copyright owners will take to that, but they still might think it's still preferable to try and lobby government and try to have a statutory scheme."

Clayton Utz partner John Fairbarn said the proposal of the compensation scheme for ISPs was an important step that may allow the two parties to agree on a mechanism of protecting copyright.

"That's a very important qualification on the notice requirement because one of the main complaints that has been made publicly by ISPs is that AFACT is trying to push the cost of enforcement on ISPs. Emmett has recognised this and in his view those costs should be met by the copyright owner," he said.

Lambrick suggested that if copyright owners were compensating ISPs to investigate the thousands of infringement notices they receive, then it might be a new business for the providers.

"If you were going to find compensation in respect of each one of those complaints it might create a rather lucrative second business arm for iiNet," he said.

Lambrick said that AFACT may not be too concerned if it is unable to get the case heard before the High Court.

"My view is even if they don't, it may not worry them too much because AFACT is in a stronger position than it was initially following Justice Cowdroy's original decision," he said, adding it was time for the government to step in.

"There is a need for the government to pass legislation that facilitates a solution which provides for downloader accountability, but at the same time doesn't impose an unreasonable cost or burden on the internet industry. Courts aren't really in a position to do that," he said. "That's really a matter for government and legislation and I think that's what we need to be looking at now."

Communications Minister Stephen Conroy last week said the government would examine policy regarding copyright infringement as part of an upcoming media convergence review.

AFACT executive director Neil Gane told ZDNet Australia that the organisation would consider the scheme outlined by Justice Emmett and was also willing to discuss alternatives with the ISPs.

"Even before the litigation we sent out correspondence to industry to have constructive discussion to find solutions to deter online infringements," he said. "We are more than happy to sit down and discus a model that does not impact on their business and one that protects the content of copyright holders."

He said the judgement paved the way for ISPs to be held liable for known repeat infringement copyright. He said all three judges said it was reasonable and effective for ISPs to send warning notices to customers shown to be downloading copyright infringing material and therefore the ISPs were in the "best position" to throttle, shape or suspend infringing accounts.

AFACT has 28 days to seek leave to appeal to the High Court; however, the group isn't automatically guaranteed the appeal will be heard.