iiNet vs. AFACT: the road to High Court

Today marks the beginning of the end for the landmark copyright infringement battle between iiNet and the Australian Federation Against Copyright Theft (AFACT). ZDNet Australia looks back into the three-year history of the case.

(Road image by Nico Kaiser, CC BY-SA 2.0)

It all started with the stoner film Pineapple Express.

In November 2008, 34 film studios including Village Roadshow, Warner Brothers and Universal took internet service provider (ISP) iiNet to court alleging it had authorised its customers' to infringe copyright on 86 titles — including Pineapple Express — through sharing via BitTorrent services.

The consortium, known collectively as AFACT, had used the services of Dtecnet to discover users sharing copyrighted content through BitTorrent, and traced internet protocol (IP) addresses back to iiNet. The company then issued thousands of notices to iiNet informing the ISP of the infringement. At the start of the case, AFACT alleged that because iiNet had ignored thousands of infringement notices provided over a five-month period and had not taken reasonable steps to stop its customers' copyright infringement, the company was authorising that infringement.

iiNet was not going to take the case lying down and vowed to vigorously defend the charges.

The iiTrial

When the first directions hearings kicked off in February 2009, iiNet said that it saw the case as centring on whether the ISP authorised copyright infringement of its customers, whether it was liable and whether safe harbour provisions in the Copyright Act protected iiNet. iiNet CEO Michael Malone also revealed that the company had received legal advice from Telstra.

By June, Justice Dennis Cowdroy had determined that the best way to examine the case was to take a sample of 20 anonymous iiNet customers found to have repeatedly infringed on copyright held by members of AFACT. In August, iiNet argued that to act on AFACT infringement notices would have been a breach of the privacy obligations in the Telecommunications Act.

The trial officially got underway at the beginning of October in the Federal Court in Sydney. iiNet argued that AFACT had "bombarded" the ISP with notices, up to 7500 in a period of five months. AFACT then revealed that in the course of its investigations of copyright infringement, it had focused on Optus, Exetel and Internode, as well as iiNet.

A Kazaa investigator and Hollywood executives were called in to give evidence in October, while Malone himself gave evidence in November, when he was criticised by AFACT counsel for cancelling iiNet subsidiary Westnet's policy of forwarding infringement notices after iiNet acquired the company.

Then-CEO of the Internet Industry Association, Peter Coroneos, also faced heat in the court room over an email he allegedly sent proposing to change the ISP code to limit the period ISPs could retain IP address information, thus limiting AFACT's ability to use this information against customers.

The first appeal

After a lengthy deliberation, Justice Cowdroy dismissed AFACT's case against iiNet.

Cowdroy said in his judgement that "the mere provision of access to the internet is not an authorisation of infringement" and that the notification scheme proposed by AFACT, which included the possibility of account suspension or termination for repeat infringers, was not reasonable.

He dismissed the case and ordered AFACT to pay iiNet's legal costs.

Unsurprisingly, AFACT appealed to the full bench of the Federal Court. The group said that while iiNet was powerless to stop people using BitTorrent, it did have the power to prevent breaches that occurred over its network by suspending or terminating customer accounts.

When the appeal got underway in August before Justices Arthur Emmett, John Nicholas and Jayne Jagot, AFACT counsel David Catterns argued that as iiNet was in constant communication with its customers over issues such as billing inquiries or when a customer goes over their download limit, it wouldn't have been too difficult for iiNet to pass on infringement notices. He also said that the graded response system that iiNet had in place to deal with users found to be spamming or distributing malware would also be applicable to copyright infringement.

In iiNet's rebuff, the counsel acting for the ISP argued that there were thousands of notices per week, and there was not enough information from AFACT for iiNet to act on.

At the end of the appeal, the judges asked for a map or decision tree of the issues to be put together by both parties, but ultimately the two parties could not agree and two separate documents were produced.

In February 2011, two of the three judges found in iiNet's favour once again and AFACT's appeal was dismissed.

Experts said at the time that in the ruling, Emmett had laid the groundwork for AFACT to re-evaluate its methods of issuing infringement notices to ISPs in such a way that the providers would then be compelled to act on them or be considered to have authorised infringement. According to Emmett, if iiNet was provided with "unequivocal and cogent evidence of the alleged primary acts of infringement by use of the iiNet service in question" and information on how that evidence was gathered in order for iiNet to verify the claims, and still didn't act, then the provider could be found to have authorised infringement.

The High Court

Despite this small victory for AFACT, the consortium again decided to appeal the case to the last stage — the High Court — and was successful in seeking a hearing for two days in December.

After the High Court took submissions on the case, it was decided that the case would have to push out to three days in length, beginning today. It is believed that the first day will be dedicated to organisations that sought to intervene on the case.

The Australian Privacy Foundation, the Australian Digital Alliance and the Communications Alliance have all sought to intervene in the case in iiNet's support. The Australian Performing Rights Association; the Australian Record Industry Association; the Media, Entertainment and Arts Alliance; and the Screen Actors Guild have all sought to intervene in support of AFACT.

A judgment on the case is not expected to be handed down until early 2012.

While the case has been running, AFACT has been pushing for a graduated response system outside of court that includes suspension of the accounts of repeat infringers, citing research that claims copyright infringement costs Australia $1.4 billion per year. iiNet had proposed its own model for dealing with copyright infringement by bringing in a third party that could independently assess the claims made by AFACT. Since then the ISP has joined a new piracy proposal from the industry that does not include suspension but provides education and warning notices to customers.

The Federal Government has yet to move publicly on copyright infringement; however, the attorney-general has been having a number of closed-door meetings with the industry and other stakeholders in recent months. This culminated in the publishing of a proposal for a "streamlined" piracy model that would make it easier for rights holders to obtain the information of alleged infringers from ISPs. This proposal, however, was quickly withdrawn, with the Attorney-General's Department saying this was a discussion best held with the industry.

Stay tuned to ZDNet Australia for all the coverage of the High Court hearings over the next few days.