Hol­ly­wood stu­dios lose to ISP iiNet in copy­right autho­ri­sa­tion case

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In Brief

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.

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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 20^th 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.