20 April 2012

iiNet's High Court win means ISPs must still tread carefully on copyright infringement

Does an ISP have to prevent its customers from infringing copyright? When is an ISP liable for its customers' copyright infringement? iiNet's unanimous victory in the High Court this morning has given some guidance (Roadshow Films Pty Ltd v iiNet Limited [2012] HCA 16), and left the Full Federal Court's decision standing.

As a result, copyright owners will find it hard to prove ISPs are liable for their customers' copyright infringement, and legislative reform might be necessary. It does not mean, however, that ISPs will never be liable.

iiNet, its customers and the Copyright Act

iiNet is an Australian ISP. The Australian Federation Against Copyright Theft (AFACT) served it with notices which alleged that iiNet's customers were infringing the copyright of the major film studios by sharing and downloading films and TV shows via the BitTorrent peer-to-peer protocol.

The copyright owners and their exclusive licensees then launched legal action against iiNet, alleging that it had authorised its users' copyright infringement.

What is authorising copyright infringement?

This turns on two key sections of the Copyright Act 1968 (Cth): section 101 and 112E. Section 101 says you can infringe copyright by authorising another's copyright infringement. In considering whether authorisation has occurred a court will look at:

  • the extent (if any) of the person's power to prevent the copyright infringement;
  • the nature of any relationship between the person and the copyright infringer; and
  • whether the person took any other reasonable steps to prevent or avoid the doing of the copyright infringement, including complying with any relevant industry codes of practice.

Section 112E however says that carriage service providers such as ISPs will not authorise copyright infringement merely because another person uses their facilities to infringe copyright.

Did iiNet authorise its customers' copyright infringement?

There were four facts that Roadshow said showed iiNet had authorised the copyright infringement:

  • its provision of the internet connections, a necessary but insufficient step for the acts of primary infringement;
  • its technical ability to control the use of its service and its contractual ability to issue warnings and suspend or terminate accounts;
  • the evidence provided by the AFACT Notices given before and after it commenced proceedings; and
  • its lack of action in response to the AFACT Notices.

The High Court said mere indifference to its customers' infringing activities does not mean an ISP is authorising it:

"The extent of iiNet's power was limited to an indirect power to prevent a customer's primary infringement of the appellants' films by terminating the contractual relationship between them. 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."

How does this help copyright owners?

Not much.

Any allegation of authorisation will of course turn on the facts, but this decision suggests it will be quite hard to show an ISP has done so. The High Court's view that indifference is not authorisation, combined with the need for quite specific infringement notices, will make this a challenging route for copyright owners.

This doesn't mean that ISPs can sit back and relax. They must not encourage their customers' primary infringements.

As Chief Justice French and Justices Crennan and Kiefel pointed out, the authorisation provisions were introduced before peer-to-peer software was available, and as a result:

"the concept and the principles of the statutory tort of authorisation of copyright infringement are not readily suited to enforcing the rights of copyright owners in respect of widespread infringements occasioned by peer-to-peer file sharing, as occurs with the BitTorrent system."

Legislative reform may well be needed.

Clayton Utz senior associate Timothy Webb acted for the Internet Industry Association in relation to the proceedings when heard by the Federal Court.

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