Malone to AFACT: You lose, you pay

iiNet managing director Michael Malone said today that the Australian Federation Against Copyright Theft (AFACT) shouldn't be able to get out of paying for its failed attempt to sue the provider over copyright breach.

iiNet chief Michael Malone (Credit: iiNet)

"We didn't ask to be sued. They came to us and sued us and they lost, so I don't see why we should be paying any of their legal expenses," Malone told ZDNet.com.au today.

The company reported in its half-year earnings that it had forked out $5.7 million in legal costs defending the case. While iiNet's insurance reduced its exposure to $3.7 million, AFACT and the 34 applicants that took part in the litigation may be left with the full bill, including its own costs to date.

AFACT intends this Thursday to try and trim its legal bills, arguing to the Federal Court that it should not face costs incurred for portions of the hearing that were not decided in iiNet's favour — for example, the legal costs incurred while iiNet was still denying that its customers had breached copyright while using its service.

Malone is also waiting for AFACT's decision on whether it will appeal Justice Cowdroy's decision, due this Thursday. He believed the costs for an appeal were unlikely to be as high as the initial proceeding.

"You might assume costs go up with each new level of court, but there are no new witnesses and no new evidence can be presented in an appeal. So really you're down to the lawyers arguing matters of law. [AFACT] can't go back and reintroduce new stuff," said Malone.

Malone said he had "speculated" on what grounds AFACT may appeal that Cowdroy was "equivocal in his conclusions".

"There wasn't a lot of grey in there," he said. "If there were grey areas where you could say [Justice Cowdroy] had a bet each way, and honed in on this one issue, you'd immediately hone in on that and say that was where they would focus their appeal. Right now we've no idea where an appeal would be focused."

Malone labelled AFACT's legal action against it as a "pointless exercise". "The legal action over the past one-and-a-half years has not done anything to curb piracy in Australia, whereas things like Hulu [a US-only online service owned by the NBC TV network] and iTunes have done considerable amounts," he said.

"I look at the amount of money we have spent on litigation, and no doubt there would have been a lot more [spent] by the studios. Think of what that could have been spent on if it was applied to online content instead."

iiNet is gearing up for the launch of its own IPTV service expected by the end of March this year, according to Malone. The set-top box product will enable customers to receive free-to-air TV channels and other content that it has yet to lock in deals for.

Malone said the product would be comparable to Foxtel rather than Apple iTunes movie download service, and iiNet was in negotiations with movie studios to distribute content via the product. "There's certainly an intent to get video deals on there," he said.