Film studios lose court case against Internet Service Provider in Australia

The first major case by film and media studios against an Internet Service Provider (ISP) has been won by the ISP. In Roadshow Films Pty Limited & Ors v iiNet Limited (No. 3) FCA 24 (4 February 2010), Justice Cowdroy of the Federal Court of Australia dealt with

... the question whether an internet service provider or ISP authorises the infringement of copyright of its users or subscribers when they download cinematograph films in a manner which infringes copyright. In Australian copyright law, a person who authorises the infringement of copyright is treated as if they themselves infringed copyright directly.

This turns on the question of authorisation in Australian copyright law. This is a well established area of law, and for example, catches web site operators who post links to copyright music hosted on other web sites. It doesn’t matter that you  don’t host the music files – it matters that you impliedly authorise other people to download them by linking to them.

This case is the start of an important series of proceedings (given that there no doubt will be appeals).

That this trial should have attracted such attention is unsurprising, given the subject matter. As far as I am aware, this trial, involving suit against an ISP claiming copyright infringement on its part due to alleged authorisation of the copyright infringement of its users or subscribers, is the first trial of its kind in the world to proceed to hearing and judgment. (para 5, judgement summary)

Of course, this case was run by the film studios for many reasons other than suing iiNet. From the studios’ point of view:

• If they won, then they would have a judgement to put the frighteners in every other ISP in Australia. They would be able to force ISPs to disconnect users who are said by the studios to be downloading copyright material;
   
• If they lost, then they will go to the Australian federal government and lobby for changes in copyright and associated laws to give them greater rights to interfere with Australian internet users without the oversight of the courts.

In other words, this case was always going to be a win for the studios if their lobbying of the government is successful. One can imagine that AFACT will have a prodigious government relations team who is going to relentlessly harass the federal government. Unfortunately, the ministers and mandarins in the Federal government seem to be firmly in the camp of business, rather than taking a balanced view for all Australians. We may well see more proposals and perhaps even law with ill-considered, unnecessarily restrictive and hostile provisions in it.

Analysis of the judgement

9. The critical issue in this proceeding was whether iiNet, by failing to take any steps to stop infringing conduct, authorised the copyright infringement of certain iiNet users.

The Court found that a number of iiNet users had infringed copyright. However, that  number was significantly fewer than the number alleged by the studios.  This was based on the Court's understanding of BitTorrent, and that a person would make available a film only once. I'm not sure about that, but we'll see.

The critical part of the judgement summary is (with my emphasis):

11. The next question was whether iiNet authorised those infringements. While I find that iiNet had knowledge of infringements occurring, and did not act to stop them, such findings do not necessitate a finding of authorisation. I find that iiNet did not authorise the infringements of copyright of the iiNet users. I have reached that conclusion for three primary reasons which I now refer to.

12. Firstly, in the law of authorisation, there is a distinction to be drawn between the provision of the ‘means’ of infringement compared to the provision of a precondition to infringement occurring. The decisions in Moorhouse, Jain, Metro, Cooper and Kazaa are each examples of cases in which the authorisers provided the ‘means’ of infringement. But, unlike those decisions, I find that the mere provision of access to the internet is not the ‘means’ of infringement. There does not appear to be any way to infringe the applicants’ copyright from the mere use of the internet. Rather, the ‘means’ by which the applicants’ copyright is infringed is an iiNet user’s use of the constituent parts of the BitTorrent system. iiNet has no control over the BitTorrent system and is not responsible for the operation of the BitTorrent system.

13. Secondly, I find that a scheme for notification, suspension and termination of customer accounts is not, in this instance, a relevant power to prevent copyright infringement pursuant to s 101(1A)(a) of the Copyright Act, nor in the circumstances of this case is it a reasonable step pursuant to s 101(1A)(c) of the Copyright Act. The reason for this finding is complicated and lengthy, and is not suitable for reduction to a short summary for present purposes so I shall refrain from attempting to do so.

14. Thirdly, I find that iiNet simply cannot be seen as sanctioning, approving or countenancing copyright infringement. The requisite element of favouring infringement on the evidence simply does not exist. The evidence establishes that iiNet has done no more than to provide an internet service to its users. This can be clearly contrasted with the respondents in the Cooper and Kazaa proceedings, in which the respondents intended copyright infringements to occur, and in circumstances where the website and software respectively were deliberately structured to achieve this result.

15. Consequently, I find that the applicants’ Amended Application before me must fail. However, for the sake of completeness, I have considered all the issues argued before me.

So the Court found that some people did engage in infringement of the studios' copyright. It found that the number was less than that alleged by the studios. It found that iiNet did not authorise infringement of the studios' copyright.

The difference between this case and Kazaa is that Kazaa provided software - the 'means' of infringement; using Kazaa was inherently infringing. iiNet merely provided internet access; it didn't control software or the BitTorrent system.

The Court also found that disconnecting customers is not an appropriate or reasonable response.

Finally, the Court found that iiNet simply did not approve copyright infringement - there was no evidence that iiNet did anything more than provide internet access. It did not structure its systems or network to facilitate or encourage copyright infringement.

An interesting conclusiong by His Honour was:

Finally, I find that iiNet did have a repeat infringer policy which was reasonably implemented and that iiNet would therefore have been entitled to take advantage of the safe harbour provisions in Division 2AA of Part V of the Copyright Act if it needed to do so.

This is what we lawyers call obiter, since a decision didn't need to be made in this particular case on this point, but it remains instructive.

So, a good result for iiNet, and we'll watch the rest in the halls of justice and the halls of politicians' offices.