iiNet defeats AFACT in High Court case

The High Court has unanimously dismissed the Australian Federation Against Copyright Theft's (AFACT) case against iiNet, saying that it didn't authorise its customers' copyright infringement.

The judgment, handed down this morning, said that all justices ruled together to dismiss the case:

"The High Court unanimously dismissed the appeal. The court observed that iiNet had no direct technical power to prevent its customers from using the BitTorrent system to infringe copyright in the appellants' films. Rather, the extent of iiNet's power to prevent its customers from infringing the appellants' copyright was limited to an indirect power to terminate its contractual relationship with its customers. Further, the court held that the information contained in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers' accounts. For these reasons, the court held that it could not be inferred from iiNet's inactivity after receiving the AFACT notices that iiNet had authorised any act of infringement of copyright in the appellants' films by its customers.

iiNet welcomed the decision, saying that the court vindicated iiNet's position that although it never supported or encouraged unauthorised file downloading, it was not liable for its users' actions.

"Today's High Court five-nil ruling confirms that iiNet is not liable for 'authorising' the conduct of its customers who engaged in online copyright infringement," iiNet CEO Michael Malone said in a statement.

He said that the best way for the film industry to protect its own copyright is to make legal content available online in an affordable and timely manner, which means that partnerships with ISPs, instead of lawsuits, are the most effective way forward.

"Increasing the availability of licensed digital content is the best, most practical approach to meet consumer demand and protect copyright," he said. "We have consistently said we are eager to work with the studios to make their very desirable material legitimately available to a waiting customer base -- and that offer remains the same today."

iiNet expects to have some of the $9 million costs of the three-year court battle returned to it, as the High Court dismissed the appeal with costs.

Malone thanked iiNet staff, customers and its legal team, Herbert Geer, for their support during the case.

AFACT managing director Neil Gane said that the the decision showed that Australian copyright law had failed to keep up with the pace of technology changes, and called for the government to amend the legislation.

"The message is very clear: it is time for the government to act. The decision shows that Australian law has been left behind in overseas development in online copyright protection. In the three years since the case commenced, legislators, regulators and courts around the world have all mandated that ISPs have a central role to play in the protection of copyright infringements that are occurring across their networks."

Gane said that as monetising content is becoming a key part of ISP business models, it was in their interest to protect content from copyright infringement.

He added that the government would not want copyright infringement to go on "unabated across Australian networks, particularly with the roll-out of the NBN [National Broadband Network]".

In November 2008, 34 film studios, including Village Roadshow, Warner Bros and Universal, took internet service provider (ISP) iiNet to court, alleging that it had authorised its customers to infringe the copyright of 86 titles by sharing them via BitTorrent services.

The Australian Federation Against Copyright Theft (AFACT) 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 infringements. At the start of the case, AFACT alleged that because iiNet had ignored these thousands of infringement notices provided over a five-month period, and had not taken reasonable steps to stop the copyright infringement being committed by its customers, the company was authorising that infringement.

In 2010, Justice Dennis Cowdroy dismissed the case, ruling that "the mere provision of access to the internet is not an authorisation of infringement". He found that the notification scheme proposed by AFACT, which included the possibility of account suspension or termination for repeat infringers, was not reasonable.

AFACT appealed the judgment, but again lost before the full bench of the Federal Court when two of the three judges ruled in favour of iiNet in early 2011.

Experts said that in this ruling, one of the judges, Justice Arthur 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 were provided with "unequivocal and cogent evidence of the alleged primary acts of infringement by use of the iiNet service in question", along with information on how that evidence had been gathered in order for iiNet to verify the claims, and still didn't act, then the provider could be found to have authorised infringement.

Following the failure of the Federal Court appeal, AFACT appealed to the High Court. The case was heard by Chief Justice Robert French and Justices William Gummow, Kenneth Hayne, Susan Crennan and Susan Kiefel over three days at the beginning of December 2011.

The case came down to an argument over control-- of an ISP over its users, and of a copyright holder over his or her works.

While the High Court has deliberated, the Attorney-General's Department has held a number of secret meetings between ISPs and copyright holders, looking to find a solution to deal with copyright infringement. The government has stated that it favours an industry-led solution. However, the proposed model, put up by the Internet Industry Association (IIA), has been met with opposition from copyright holders, who are against a system that forces them to pay a fee for ISPs to investigate claims of user piracy.

Telstra CEO David Thodey said yesterday that the industry will be able to find the best way forward.

"There's been a lot of work done with the Attorney-General's [Department] at an industry level. I think it's actually manageable through the period. I think there's some principles here about who's responsible for copyright and enforcement; however, I think we need to feel our way through this one," he said.

"Obviously, the US has gone, New Zealand has gone, there's a few different models there," he said. "I think we've got a plan to handle it."

Updated at 12:52am, 20 April 2012: included comment from iiNet and AFACT.