Hollywood studios lose to ISP iiNet in copyright authorisation case
Hollywood studios have appealed the recent landmark Federal Court decision that found internet service provider (ISP) iiNet not liable for copyright infringements by its customers.
Illegal downloading by iiNet customers
Despite prolific illegal downloading by iiNet customers using the BitTorrent peer-to-peer protocol, iiNet did no more than provide a legitimate means by which a person can access the internet, and so iiNet did not do anything to authorise any infringing activity.
iiNet was notified by the Australian Federation Against Copyright Theft (AFACT) that iiNet customers were infringing the copyright of major film studios like Universal, Warner Brothers, Paramount and 20th Century Fox. It then failed to take any action to prevent its customers from continuing in that infringing conduct.
According to Roadshow Films, iiNet’s failure to terminate the Internet connections of infringing customers amounted to iiNet authorising the infringements.
Authorisation of infringing conduct
Under the Copyright Act 1968 (Cth), an intermediary that authorises the infringing conduct is also liable for infringement. To be liable for authorisation, a party must sanction, approve or countenance the infringement. This will depend on the extent (if any) of the relationship with the infringer, its power to prevent the infringement and whether it took any reasonable steps to prevent or avoid the infringement.
However, an intermediary that does nothing more than merely provide facilities for communication does not authorise any activity. As in the United States, even if authorisation of infringement is found, ISPs in Australia are protected from liability (under “safe harbour” provisions), if the ISP implements procedures that allow for the termination of accounts of customers who are repeat infringers and of whom the ISP is aware.
Infringement authorisation by UNSW
The copyright owners relied on the leading case in Australia in respect to copyright authorisation (University of New South Wales v Moorhouse), where it was decided that UNSW authorised copyright infringement by allowing library users to make infringing copies of textbooks using photocopiers owned by the University. UNSW had under its control the means by which the infringement occurred, it reasonably suspected that infringements were occurring and it failed to take reasonable steps to prevent the infringement. On this basis, the film studios sought to hold iiNet (and potentially other ISPs) to account for the acknowledged widespread illegal downloading of movies and soundtracks.
Federal Court exonerates iiNet
However, the Court found that there was no authorisation because iiNet only provided the means of accessing the Internet. It did not have control over the means by which the infringement occurred, it did not invent software that made infringing easier and it did not encourage its customers to infringe — which is the point of difference with the KAZAA litigation (a 2005 Australian case concerning an online file sharing network where KAZAA made available software that it had developed, that allowed users to copy and share copyright infringing files).
Given the unpopularity and the enormous task of chasing individuals who infringe copyright online, making ISPs liable for authorisation would allow copyright owners to force ISPs to terminate the accounts of customers who infringe copyright. However, this ruling has put ISPs in a strong position.
Swaab will keep you posted of the outcome of the appeal and any developments.