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17 May 2012 iiNet may have prevailed in copyright infringement case, but ISPs should beware

 


In Brief

After much deliberation, the iiNet matter has been laid to rest with the High Court upholding the Full Federal Court decision that iiNet is not liable for the copyright infringing actions of its customers.

Ultimately, the case turned on what it meant to "authorise" conduct in breach of section 86 of the Copyright Act, and whether, based on the facts, iiNet had authorised its customers to infringe the copyright of the film studio appellants.

As the decision in this case was heavily dependent on the facts and circumstances surrounding the alleged breach, it is arguable as to what comfort it gives to the rest of the ISP industry.


Recap

The film studios and the Australian Federation Against Copyright Theft (AFACT) argued that iiNet was in breach of section 86 of the Copyright Act because it authorised the users of its internet services to communicate infringing material to the public online using the BitTorrent system.  The authorisation was said to occur when iiNet failed to suspend or terminate its customers' accounts, which would block their access to its services, upon notice by the AFACT of copyright infringing conduct.

iiNet responded that it could not be inferred that it was authorising the actions of its customers, by acting to suspend following receipt of the AFACT notices.

The appellants lost both at the trial and appeal proceedings.  As the trial and Federal Court judgments were conflicting, AFACT and the film studios appealed to the High Court for closure on the issue.

For further details on the previous actions, please see our articles: Appeal Dismissed – Full Federal Court Confirms that iiNet is not Liable for Infringements by its Users, Film and TV Studios Appeal to High Court in iiNet Copyright Case and Hollywood studios lose to ISP iiNet in copyright authorisation case.
 

High Court ponders authorisation

The questions before the High Court were:

  1. Did iiNet have the power to prevent the primary infringement by its customers, and if so, what was the extent of that power?
  2. Was it reasonable for iiNet to send warnings and subsequently suspend or terminate its customers' accounts upon receiving the AFACT notices?

Did iiNet have the power to prevent the primary infringement by its customers?

The High Court looked to iiNet's technical and contractual power and what reasonable steps it could take in the circumstances.
On the facts, iiNet:

  • had no involvement with any part of the BitTorrent system;
  • did not host the infringing material or the websites making the files relating to the infringing material;
  • did not assist its customers to locate BitTorrent clients;
  • could not monitor the steps taken by the users of its internet services; and
  • could not directly prevent those users from downloading BitTorrent clients and using these for purposes in breach of the law.

Further, once the infringing material was stored, iiNet could not take down or remove the content, nor could it block the communication of that material over its internet service.

Accordingly, iiNet had no technical power to compel or prevent the infringement by its customers.

In terms of contractual rights, iiNet's Customer Relationship Agreement indicated iiNet's express, formal and positive disapproval of using its service for infringing or illegal purposes. 

The appellants claimed that iiNet's inactivity after receipt of the AFACT notices constituted "countenancing" the acts of primary infringement by its customers. However, the High Court rejected this argument stating that even if iiNet's conduct did amount to supporting or encouraging the infringement, this was not enough to make iiNet liable for secondary infringement under s 101(1A) of the Copyright Act.  Ultimately, an alleged authoriser must have a power to prevent the primary infringements, which, on the facts, iiNet did not have.

The High Court also recognised that even if iiNet did terminate its contracts with its customers, this only prevented those persons from engaging in the illegal conduct on iiNet's services and did not prevent the conduct from occurring on another ISP's services.

Was it reasonable for iiNet to send warnings and terminate its relationships with its customer?

It was clear to the High Court that, until discovery in the matter was concluded, the AFACT notices did not provide enough evidence that iiNet could reasonably rely on without fear of contractual liability to its customers.  iiNet's response was prudent in the circumstances.

Are ISPs protected?  Maybe, maybe not...

The High Court acknowledged that this case and the questions before it were ones of fact, and that each case will turn on its particular facts and circumstances.

iiNet was able to show that its power was limited to an indirect power to prevent a customer's primary infringement by terminating the contractual relationship between them.  Further, the information in the AFACT notices was insufficient to rely on as the basis for sending warning letters to its customers and then suspending or terminating that customer's account.  On these facts, iiNet's inaction did not amount to authorisation on iiNet's part.

This does not mean that ISPs are always protected from liability as a secondary infringer, and ISPs should still take any allegation of copyright infringement very seriously going forward. 

In the closing remarks in their judgment, French CJ, Crennan and Kiefel JJ state that the Copyright Act is not equipped to deal with the challenges in technology that the situation of peer-to-peer file sharing presents and indicated a need for legislative intervention. 

Watch this space.

For further information, please contact Swaab Attorneys.


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This article is not legal advice and the views and comments are of a general nature only. This article is not to be relied upon in substitution for detailed legal advice.

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