High Court day 2: iiNet says AFACT lawsuit inevitable

No matter what kind of warning notice scheme iiNet put in place to stop users breaching copyright, if it didn't include an account termination threat, it wouldn't have been enough to prevent the Australian Federation Against Copyright Theft (AFACT) from launching legal action, iiNet counsel Richard Cobden has told the High Court.

On day two of the landmark High Court hearing that will ultimately decide whether iiNet authorised its customers' copyright infringement by not acting on notices provided by AFACT, the five judges heard from AFACT counsel Tony Bannon, iiNet counsel Richard Cobden and Communications Alliance counsel Patrick Flynn.

Cobden told the court yesterday that even if iiNet had a system in place for warning customers when the internet service provider (ISP) received an infringement notice from AFACT, the coalition of film organisations would have still deemed it not enough, laying out a hypothetical scenario where iiNet actually sent warning notices. Cobden said AFACT ultimately would have found a way to sue iiNet.

"OK, we should have sent a warning letter, that is a lawsuit number one, come back. We did send a warning letter. That was not good enough. It should have been tougher. That is suit number two. Next, the tougher warning letter went, did not threaten termination quickly enough. That is seven days or whatever it is. That is case number three," he said.

"We were never asked to issue warnings only. Even today when everyone says 'just issue a warning', only it always turns into a warning plus a termination. It was not reasonable for us to embark upon that graduated response given the way the information had been given to us and what we knew about the information."

Before any of this could happen, iiNet would have to have discovered what the AFACT notices even meant. Cobden said that AFACT executive director Neil Gane was dismissive of iiNet requests to explain what the notices meant.

"Given iiNet is presently the third largest ISP in Australia, it would have no shortage of technically qualified employees who should have no difficulty understanding the information provided to iiNet by AFACT," Gane was quoted as saying.

From there, iiNet would have to prove the reliability of the notices to customers that challenged the warnings, which Cobden told the High Court would require the disclosure of information contained in a confidential report created for the first trial in 2009 on how Dtecnet gathers its evidence.

Cobden said that this report was still confidential and had been heavily redacted for the High Court hearing.

"Confidentiality was maintained during the trial over the DtecNet report, it was released in bits over the course of the trial ... it is to this day still covered by confidentiality orders and parts of it have been redacted in your Honours' appeal book and the full DtecNet report was withdrawn from the appeal books only about three weeks ago on the basis that it is still too confidential to be put into the public arena."

The confidentiality of the report, Cobden said, would limit iiNet's ability to tell customers how reliable the evidence was, if such a warning scheme was in place.

Justice Susan Kiefel indicated this might limit iiNet's ability to terminate a customer connection, but not to warn that customer.

"If they denied the infringement and you could not take it further, that might make it reasonable for you not to terminate, but it might not have made it reasonable for you not to have sent the notice in the first place, given a prima facie case of infringement," she said.

Bannon had suggested that customers' accounts could be stopped or throttled until they stop sharing the infringing material online; however, Cobden said that it was difficult to know what any one customer was sharing online and implementing a graduated response system was not comparable to throttling the speed of a customer's account for going over their monthly download limit.

"[It is] nothing like the complication of extracting material from the AFACT notices and marrying it to the iiNet database and then saying, did that person respond within seven days, how do we know whether they have taken it down or not, wait for another AFACT notice, cross-check with that and then shake them."

iiNet also risked unhappy customers leaving for other ISPs without warning schemes in place, Cobden warned.

"If dissuaded by iiNet's response to these notices or terminated, can simply go to any other ISP including, for example, Telstra, which is not even investigated by the applicants or the subject of the Dtecnet process," he said.

iiNet's control revisited

The case centres around the 1975 Moorhouse vs. UNSW case that ruled that the university was authorising students' copyright infringement by providing photocopying facilities in the library with books. Cobden argued that iiNet does not provide the copyright works in this instance, and it does not have any control over the use of BitTorrent to obtain copyrighted material.

"We do not control, of course, whether people download the BitTorrent client. We do not control whether they use the BitTorrent client for legal or illegal purposes. We do not control what films they choose to rip onto their systems or email over their systems or send to people as an attachment. You cannot control any of that," he said, adding that there are legal constraints in place on ISPs monitoring user activities without a court order.

"It is not within the power of [iiNet] to deny iiNet users access to particular copyright material found on the internet short of denying access to the internet as a whole," he added.

This was a theme echoed by Communications Alliance counsel Patrick Flynn, who spoke at the close of day two of the hearing.

"The issue with the internet is that on one view the entire sum of human knowledge will, if Google have their way, eventually be on the internet and that means that if an internet service provider is held to have a relationship with a user in relation to a copyright work, there is no limit to the copyright works which could be involved."

Read the full transcript of day two here.