Telcos argue costs of compliance and workarounds process in piracy website blocking

Internet service providers (ISPs) Telstra, Optus, M2, and TPG have argued that they should not have to bear the costs of compliance in implementing website blocks in their case against Australian pay TV provider Foxtel and media company Roadshow Films.

Under recently passed piracy website-blocking legislation, Roadshow is seeking to block video-streaming site Solarmovie, while Foxtel is taking issue with four torrenting websites involving 61 domain names -- The Pirate Bay, Torrentz, isoHunt, and TorrentHound -- through an Australian Federal Court order.

When counsel representing both Foxtel and Roadshow Richard Lancaster stated that the costs of compliance are within the normal cost of doing business for ISPs, and therefore should be borne by them, Telstra pointed out that without the court order, no block would occur -- making it irregular for the business.

Telstra added that under the High Court of Australia decision in favour of iiNet over the Australian Federation Against Copyright Theft in 2012, ISPs are not responsible for their customers' copyright-infringing activities, and therefore should not bear the cost.

"It's plain from the iiNet decision in the High Court that a number of things has to be established to establish authorisation [of the illegal downloads], and mere knowledge is not enough," counsel for Telstra said.

"There is nothing from our case law on the topic to suggest that there would be a legal requirement for any of the CSPs to do anything without a blocking order. So absent a blocking order, there would be no blocking of these sites. So to say that to implement a blocking order is a cost of doing business is not an accurate reflection of the evidence, or the state of claim, or the state of the law."

Telstra also disputed that ISPs get any benefit from infringing activity.

Optus agreed, saying that since the ISPs are not responsible for their customers' illegal downloading and streaming, they should not be stung by compliance costs.

"In relation to the costs of compliance, our position of course is that we strongly disagree with the suggestions [by the rights holders] ... this is an unusual situation, we are innocent, we are not obtaining benefit as a result of the activity that's occurring, we say that differentiates us," counsel for Optus said.

"The carriage service providers are not responsible for the copyright infringement, and the benefit of the block flows to the copyright owners," TPG counsel Chris Burgess added.

Counsel for ISP M2 took the benefit argument even further, contending that copyright holders profit from the provision of internet services themselves, as it provides a revenue stream for legal access to their property.

"The applicants [Foxtel and Roadshow] clearly benefit from usage of carriage services, particularly for lawful access to their works, so things like Netflix or other lawfully accessed and authorised content," M2 said.

"So to the extent that they say usage [of internet services] is solely to our benefit, we say there's no evidence that increased usage benefits us; if anything, it benefits them. Against that, the studios point to no other particular feature of this case that would warrant an unfavourable compliance costs against us.

"The benefit of the blocks sought accrues entirely to the applicants ... we say we ought to be compensated for the modest but real costs of implementing these blocks and any future blocks."

M2 added that there is no feature of the case or any conduct suggesting that ISPs should pay legal costs, either.

Costs were not determined prior to the passage of the Copyright Amendment (Online Infringement) Act 2015, which passed both houses of parliament in mid-2015 and allows rights holders to obtain a court order to block websites hosted overseas that are deemed to exist for the primary purpose of infringing or facilitating infringement of copyright under Section 115A.

M2 on Friday said it has estimated it to cost AU$420 excluding GST to block the four domain names involved in this case, with extra domain names to cost AU$250 per notification, which includes the cost of reviewing and considering how to implement a block, and AU$40 for each domain name's URLs, which arises from having to review orders and arrange an application, and then to manually enter and block addresses.

Telstra, meanwhile, said it would cost AU$10,000 in labour costs for setting up initial compliance, then AU$3,000 for a landing page, and around AU$1,500 for the 61 domain names involved.

TPG last month said it would cost just AU$50 per domain name to implement a domain name server (DNS) block. According to TPG's figures, just in blocking Foxtel's targets, this would amount to $3,050 per ISP, not including Roadshow's streaming target.

Laurie Patton, CEO of not-for-profit internet representative group Internet Australia, concurred that rights holders themselves should bear the costs of site blocking.

"Our ISP members don't see why they should be expected to absorb the costs of implementing a scheme designed to help a third party, especially one they don't believe will necessarily work," Patton said in a statement following the court action.

"It looks to me like we've become collateral damage in a global PR war waged primarily by Hollywood and aimed at more serious offender countries. If the local rights holders thought site-blocking would substantially increase their takings then surely they'd be willing to pay upfront in order to secure the additional revenue?"

On Thursday, the case had become bogged down while the court struggled to grasp the definition of "online location", with Lancaster pushing for the term to extend beyond a single website, mainly because the owners of a piracy website can easily move the content elsewhere if a simple URL or IP address block is put in place.

As a result, Justice Nicholas on Friday sought to have two experts speak on the matter.

Nigel Carson, an IT consultant specialising in forensic technology, who supplied two affidavits and one report on behalf of Foxtel and Roadshow for the case, defined an online location in much the same way as Lancaster.

"Ultimately, the online location as per my report is really representing itself to the user as a website. It's a website that sits on a computer," Carson said.

Aaron Herps, senior manager of Global Content Protection for the Motion Picture Association, who also provided a report for the rights holders, said an online location is determined by content more so than any geographical location of a server.

"I'm not sure that there's a widely accepted view of this, but my understanding of online location is that it's a discernible set of content that's made available over the internet via a combination of IP addresses, URLs, and domain names," Herps said.

"In the case of Solarmovie, in our case, it's represented by four distinct URLs on four different IP addresses that have been known to change over time, but the content has remained largely the same despite the changes, so I say it's the content that determines the online location."

Lancaster's main basis for the argument in favour of a broad definition of "online location" was to prevent workarounds from occurring -- simply, to extend blocking orders to any mirrored websites that pop up without having to return to court every time.

"In the spirit of [s]115A in providing an efficient mechanism for meeting the pirates' attempt at workarounds, we suggest the mechanism ... that can be notified to the CSPs and that can become part of the bundle of websites that are regulated by Your Honour's order," Lancaster said.

"The CSPs want a more elaborate process where we have to prepare another affidavit and come back to court for an additional order by Your Honour, and our contention is that that's contrary to the stated purpose of [s]115A and it provides additional cost, delay, and inefficiency in making compliance with Your Honour's order effective."

Lancaster referred to the system implemented in England, which consists of out-of-court notices to carriage providers who then form a view about whether a website is unlawful.

When Justice Nicholas enquired as to whether Lancaster simply wanted "to broaden the court order without going back to court", Lancaster disagreed, saying he wanted the original order to be given sufficient breadth as to cover many future instances of new websites with mirrored content.

"These are for the hydras, these are for the same or substantially the same content ... [so that it] doesn't take court time unnecessarily," Lancaster said.

Optus, however, said that regardless of whether a new website pops up with the same content, it is still a new location, and should be subject to a new court order.

"Still implicit in Roadshow's definition of online location is the notion that the online location is all about content rather than the larger concept of being content located on a particular server," counsel representing Optus noted.

"On our construction of online location, the IP address is itself part of an online location, so that if notified under 12A about a new IP address, we would respectfully contend that we are being notified about a new location, because it's a new IP address. That is precisely what the court is required to consider and be satisfied about in [s]115A(a); that is, the online location being located outside of Australia."

Counsel representing Telstra agreed, saying that every website being targeted by rights holders must be proven to be hosted in a location outside of Australia, as well as for existing for the primary purpose of infringing copyright. Telstra added that proving this will involve the same amount of work regardless of whether rights holders do it outside or inside of court.

"The amount of work to do that by sending the document to court, and the amount of work to do it internally -- the incremental difference if it exists at all is negligible," Telstra argued.

"Our scheme also assumes that the court would have some supervision of it, be satisfied, and the order would be made -- which is similar to interception orders which are regularly made by this court."

Telstra concluded that there is nothing in the legislation or explanatory memorandum saying that the jurisdictional requirements are satisfied by the rights holders saying so for new online locations, and that the court should always have oversight and a final say on this.

In regards to the landing page required under the Act to be served to any users attempting to access the torrenting and streaming websites after they have been blocked, Lancaster described the dispute between rights holders and ISPs as one between "must" and "may".

"The landing page will be there -- the dispute is whether or not it's a may or a must in terms of redirecting to that," he explained to Justice Nicholas.

"The purpose is to block access to the site by reason it's facilitating infringement of copyright. Users who attempt to access that site should see a message that says the Federal Court has blocked access to it. They shouldn't just see a blank page and wonder if their coverage has dropped out or the CSP doesn't work or their computer's playing up again, there should be an explanation rather than an absence of info about what occurs when someone types in Solarmovie.ph or The Pirate Bay. It's a way of affirming and explaining the effect of Your Honour's orders."

The majority of ISPs subsequently acquiesced to the view of the copyright holders, bar Telstra, which argued that the landing page should be controlled by the ISPs themselves rather than redirecting.

"The contractual relationship is between the user and the ISP, and we should be entitled to have control over that relationship," Telstra argued.

"The landing page has an impact between the relationship between our customer and ourselves."