The new industry piracy proposal will help shield internet service providers (ISPs) from further lawsuits from copyright holders, according to legal experts, but questions still remain over costs and potential effectiveness.
Just days out from the copyright showdown between iiNet and the coalition of film studios known as the Australian Federation Against Copyright Theft (AFACT), the Communications Alliance, along with ISPs, including iiNet, Optus, Telstra, Internode and AAPT, released a proposal for a new copyright-infringement notice scheme designed to deter customers from infringing copyright through BitTorrent and other methods.
Under the proposal, an ISP will provide one education notice, three warning notices and one discovery notice to customers alleged to have infringed on copyright by the copyright holder, and if a customer continues to infringe after this, the ISPs will tell the rights holder, which may decide to apply for a subpoena to get access to the customer's details for legal action.
The High Court is not expected to hand down a judgment on the iiNet case this week, but the argument that will be put in front of the judges will be largely over whether iiNet authorised its users' alleged copyright infringement by not acting on infringement notices provided to the ISP by AFACT. According to RMIT University general counsel John Lambrick, the new proposal would make it "much harder" for AFACT to argue that an ISP has authorised copyright breaches.
"If ISPs follow the scheme, it would make it much harder for content owners to successfully claim in court that they have 'authorised' copyright breach by their account holders who download copyright-protected content, as AFACT has claimed in the case of iiNet," he said.
"The advantage for ISPs is that it gives them some certainty in terms of their potential liability," he said.
Lisa Egan, intellectual property partner with law firm Middletons, wouldn't go that far — instead indicating that the piracy model could be more appealing to rights holders than simply launching more lawsuits.
"This is going to be a protocol between those organisations, rather than a legal requirement, but it would be advantageous if they're working in a more coordinated way," she said. "You would hope that that would mean that would be less incentive for anyone to march straight off to court because they'd be trying to work it out at a more practical method to begin with."
Egan said that the timing of the announcement ahead of the High Court hearing would seem to pre-empt potential legislative changes by government.
Lambrick commented that the proposal could ease the tension for the government to introduce legislation, if the proposed scheme is successful.
"There is also an advantage for the Federal Government, in that it will avoid having to provide a legislated solution in a difficult area and the controversy which comes with it, as has occurred in the UK, France and New Zealand," he said.
Yet Egan cautioned that the High Court decision could change the position of the pieces on the board again.
"It will be interesting to see if anything that the court has to say impacts on this proposal," she said. "It might be possible that the High Court might make comment, which might prompt there to be more of a push for legislative change."
John Linton, chief executive of Exetel — which is not a signatory to the proposal — told ZDNet Australia that legislation is definitely still required, as the proposal does not address "any of the issues".
"I don't see why federal legislation can't be put in place to clear this issue up — it seems to have been possible in other English-speaking countries around the world," he said.
Will it work?
Pirate Party Australia noted that the trial stage of the proposal would not see the participating ISPs send out more than 100 notices per month, and said that the proposal is a gesture to copyright holders in a way that wouldn't turn customers away.
"ISPs are pandering to the interests of the industry as little as possible, so as to not alienate their own customers the same way the media industry has. ISPs realise that they will face losses as their customer base diminishes if they follow the same path," Pirate Party Australia secretary Brendan Molloy said in a statement.
"Internet service providers should not be the mouthpieces for media-industry propaganda. I find it very likely that this system will be used to spread misinformation by the industry, and can and will be abused," he added.
However, both Lambrick and Egan suggested that the education notices would go a long way to deter users from further copyright infringement.
"Research indicates that about two thirds of unlawful downloaders stop downloading when they receive the first couple of warning notices," Lambrick said.
But he warned that some users may just find other ways to get content.
"There is also the possibility that the scheme may simply turn downloaders towards 'safer' means of downloading content, such as darknets or virtual private networks, which can allow users to access content anonymously through encryption," he said.
The Australian Communications Consumer Action Network (ACCAN) overall welcomed the announcement, and said that it would be meeting with ISPs and copyright holders in the coming months to discuss the proposal.
AFACT declined to comment, stating that it is focused on the High Court case this week.
The tricky issue of who will bear the costs for implementing the new system is not pinpointed within the proposal. The Communications Alliance said that — based on AFACT's own research of the supposed impact of piracy — copyright holders stand to recoup $420 million per year from users who are deterred from copyright infringement by the new system, and said that this could more than fund the proposal.
"A small fraction of this economic value would be more than sufficient to fund the initial establishment and primary operating costs of the scheme."
However, Lambrick warned that the cost may ultimately end up on the customer.
"The downside is the cost of implementing the scheme, which still needs to be worked through — the likelihood is that the cost will end up being passed on to subscribers through increased subscription fees," he said.