HG Alert: iiNet victorious... for now - 5 Feb 2010

Perth-based internet service provider iiNet, the third largest ISP in Australia, secured a resounding victory in the Federal Court this week, successfully defending proceedings brought against it by some of the biggest media companies in the world. This is certain to be one of the most important Court decisions this year in the area of copyright law.

A total of 34 applicants, including Universal Studios, Paramount Pictures and Warner Bros, joined forces to bring proceedings against iiNet in late 2008. The applicants claimed that iiNet was liable for copyright infringement, as it authorised its customers to access the internet to use peer-to-peer file sharing programs to share and download various movies and other media.

The idea that someone could be liable for authorising an infringement of copyright is nothing new, and the Copyright Act has a number of sections which specifically deal with infringements of this nature. However, as Justice Cowdroy noted, a trial involving proceedings against an ISP because it allegedly authorised infringements by its users or subscribers is the first trial of its kind in the world to go to hearing and judgement.

The critical issue in the case was whether iiNet, by failing to take any steps to stop conduct that infringed copyright law, authorised the copyright infringement of certain iiNet users. The applicants argued that they had sent iiNet various complaints about the infringing acts of its customers for over a year before they began proceedings in court.

Justice Cowdroy noted that the law of authorisation recognises the distinction between providing the means of infringement (such as a university providing a photocopier in its library, which students then use to make infringing copies of books) and providing the precondition to infringement occurring (such as manufacturing the photocopier itself). In this case, all iiNet did was provide its users with access to the internet. Some of these users then used file sharing programs, which infringed copyright.

Justice Cowdroy differentiated the iiNet case from other authorisation cases, such as the well known Kazza and Cooper cases, and stated that:

“The evidence establishes that iiNet has done no more than to provide an internet service to its users. This can be clearly contrasted with the respondents in the Cooper and Kazaa proceedings, in which the respondents intended copyright infringements to occur, and in circumstances where the website and software respectively were deliberately structured to achieve this result.”

Justice Cowdroy, although sympathetic to the plight of the applicants, also said that:

“The result of this proceeding will disappoint the applicants. The evidence establishes that copyright infringement of the applicants’ films is occurring on a large scale… however, such fact does not necessitate or compel, and can never necessitate or compel, a finding of authorisation, merely because it is felt that ‘something must be done’ to stop the infringements.”

It is expected that this decision will be appealed by the applicants, who will now have to sue the individual offenders - a proposition which it is not only impractical given the sheer magnitude of online copyright infringement, but also difficult to justify from a public relations perspective.

An alternative route for the applicants is to push for legislative reform. For example, in the United Kingdom, a “three strikes” policy requires ISPs to provide three warnings to repeat infringers, after which internet access is terminated. Critics of that policy say it is unjust, given that entire households can be denied internet access because of the actions of one person.

For more information about this case or copyright infringement, please contact HopgoodGanim’s Intellectual Property and Technology practice.