The saga began back in November 2008 when AFACT, representing studios such as Village Roadshow, Universal, Warner Bros, Paramount, Sony Pictures, 20th Century Fox and Channel Seven, took iiNet to court, alleging that the ISP had authorised its customers to download films and TV shows using peer-to-peer technologies, infringing copyright.
AFACT argued that iiNet could have taken reasonable steps to stop users downloading illegally by, for example, issuing warnings and suspending or ultimately terminating user accounts.
On 4 February 2010, Justice Cowdroy ruled in iiNet's favour, stating that such steps were not relevant powers to prevent copyright infringement and that iiNet could not have been seen to have sanctioned copyright infringement as it was merely providing an internet service to its users.
AFACT appealed the ruling and the case went before the full bench of Justices Nicholas, Jagot and Emmett at the Federal Court in Sydney from 2 August 2010.
AFACT argued in its appeal that Justice Cowdroy had made a "fatal error" in his judgement comparing an ISP to an electricity provider, because iiNet was in constant contact with its customers about service-related issues, and that it was well within its capacity to pass on AFACT's copyright infringement notices.
Counsel acting for iiNet said the telco had received too many infringement notices to act on: allegedly around two and a half thousand notices per month. It also argued that iiNet did not have the power to terminate a customer's account without a court order, and that without a threat of disconnect, warning customers would not be a useful deterrent.
iiNet said it was prohibited by section 276 of the Telecommunications Act 1997 from preventing copyright infringement, because it would have to disclose personal information about users to do so.
At the end of the appeal process, the judges requested each party work together to produce a "map" documenting each side's stated case in the appeal, however, the two parties couldn't agree on a single document and two final documents were handed to the judges.
It is widely expected that regardless of the outcome of today's ruling, the case will be appealed to the High Court of Australia for a final judgement.
AFACT is keen for the Federal Government to move on strengthening copyright laws surrounding piracy before the onset of the National Broadband Network, however Communications Minister Stephen Conroy has said the government is keeping an eye on the outcome of the iiNet case and will also wait for the completion of an upcoming media convergence review before considering any new policy.
In iiNet's half-yearly results released earlier this week, the company revealed to investors it had spent approximately $6.5 million on legal fees for the case, $2 million of which were reimbursed by iiNet's insurers.
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