Dallas Buyers Club: Precedent supports more compensation

The film studio hasn't finished arguing in the Federal Court, continuing to seek additional damages from the almost 5,000 people who downloaded the movie.
Written by Corinne Reichert, Contributor on

Dallas Buyers Club (DBC) has returned to the Australian Federal Court in an effort to extract additional damages from the almost 5,000 people who allegedly infringed on the studio's copyright by downloading the film of the same name, citing recent precedent supporting its claim for higher damages based on both licencing and rental fees.

On Wednesday, during an interlocutory hearing, counsel representing DBC referred the court to a recent precedent concerning corporate intellectual property in the Knott Investments v Winnebago decision made by Justice Yates on calculating additional damages from loss, asking Justice Nye Perram to revisit his own decision.

According to counsel for DBC, Perram's decision had been made on erroneous bases and could be amended without appeal to the Full Court of the Federal Court of Australia.

"I've decided it, so why would I decide again?" Perram asked DBC, conceding that he would amend the decision if it was a "howling error".

When asked by Perram what relying on this precedent would gain DBC in additional damages, counsel said it would be able to obtain a rental fee and a licence fee.

"It would get us both rental fee for use of the one-off copy, and it would also give us the licence fee that would be reasonably available for the uploading, which was Part B in Your Honour's reasoning," DBC said.

"We will set out in our submissions what is a very modest claim."

Counsel representing the internet service providers (ISPs) disagreed with DBC's argument, saying it would not be modest.

"My client does not accept the reasonable licence fee ... these are massive jumps between figures," iiNet barrister Richard Lancaster argued briefly.

DBC also referred to the Aristocrat Technologies Australia v DAP Services precedent, wherein it was ruled that in cases of flagrant copyright infringement where compensatory damages are inadequate, the court may award higher additional damages.

If successful in its arguments, it would allow DBC to claim total damages from each infringer based on the actual cost of legally purchasing the film; a one-off rental fee; a licence fee for uploading activity; and damages covering the cost it took for DBC to obtain that infringer's details.

By comparison, in August, DBC attempted to claim the actual cost of legally purchasing the film; the infringer's uploading activity of the film; additional damages for an infringer's other downloading history; and damages covering the cost it took for DBC to obtain that infringer's details.

At that time, Perram allowed only the first and final of these claims of damages, saying the others were "untenable claims".

The second head of damages, which referred to the infringer's uploading activity of the film, would have been dismissed immediately from court had it been the sole damages claim, according to Perram.

It had "no reasonable prospects of success", as "the idea that any court would assess DBC's damages on the basis that BitTorrent users who were going to share the Film over the BitTorrent network would have avoided infringement by approaching DBC to negotiate a distribution arrangement in return for a licence fee is so surreal as not to be taken seriously".

Meanwhile, the third attempted claim of damages, wherein DBC sought to charge alleged infringers for downloading unrelated copyrighted materials under the ownership of others, is not even covered by Australian law.

This attempt is unequivocally "inconsistent" with Section 115(4) of the Copyright Act altogether, with Perram saying that the legislation "does not permit recourse to other acts of infringement of other people's copyright".

The Federal Court said it would therefore not allow the company to send the letters to infringers unless it provided a written undertaking, backed up by lodging a AU$600,000 bond with the court, to not recover damages under those two heads.

"The applicant was claiming four heads of damages and was proposing to negotiate with account holders in relation to those four amounts. I've concluded that two of those amounts could never be recovered, and in those circumstances, I've decided that what is presently proposed by Dallas Buyers Club in terms of its correspondence ought not to be permitted," Perram said.

"I therefore make these orders: I dismiss the prospective applicant's application to lift the stay of order one made by me on the 6th of May; and I order the prospective applicants to pay the respondent's costs of that application."

DBC requested on Wednesday that the court lift its stay for 10 percent of the IP addresses, with a quid pro quo lifting of 10 percent of the bond in return. DBC would then seek additional damages from the people associated with those IP addresses -- all iiNet customers -- for the time being.

On the contrary, counsel for iiNet argued that there is no evidence available today that was not present in August and no change in the law, and therefore both the adjournment application and application to lift the stay should be rejected.

"The bond remains necessary to guard against applicants who are not in this jurisdiction to use this info in a way that is apt to collect a very large amount," Lancaster added.

DBC last month announced its intention to continue fighting for additional damages, despite Perram voicing his displeasure at the idea of revisiting the issue, enquiring as to whether the case would continue until his retirement.

On Wednesday, however, Perram recognised that he may have "misconstrued" the previous additional damages claim and said the precedent-based arguments advanced on Wednesday are relevant. He added, though, that they should have been put forward in the first place.

"I've written four judgments about this case, and I must say, the love is gone ... why must I keep deciding this case over and over again?"

In April, Perram ruled that ISPs iiNet, Dodo, Internode, Adam, Amnet, and Wideband were to disclose the customer details associated with 4,726 IP addresses that had allegedly breached the copyright of Dallas Buyers Club by downloading infringing copies of the film.

However, the court also ordered the film studio to pay the ISPs' court costs and provide draft copies of the phone scripts and letters it intended to send to copyright infringers for court approval before the customer information would be provided.

This decision was aimed at preventing Voltage, DBC's parent studio, from using "speculative invoicing" through which alleged copyright infringers in the US have been asked to either compensate Voltage by up to $9,000, or potentially have to pay hundreds of thousands of dollars in damages under court order.

"The court was not going to open the sluice gates until it saw the proposed correspondence, and until DBC satisfied the court that it was that approved correspondence, and not something else, such as a dead cat, that DBC was going to send to account holders," said Perram in August.

In June, ZDNet obtained a copy of the draft telephone script and letter submitted by Dallas Buyers Club to the court that the company said it would use to contact the users who had allegedly illegally downloaded the movie.

While the draft letters did ask for information on each infringer's wage, they did not mention a financial amount for compensation, with DBC saying that the fines would not be doled out in a "one-size-fits-all" approach, and would rather be calculated using a formula for each infringer.

Perram on Wednesday refused the adjournment application, with a decision to be given next week.

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