Intellectual Property Law - Copyright Law - Internet Service Provider (ISP) not liable for downloading habits of its customers breaching australian copyright laws.

Date: May 17, 2010

Authors: Michael Pickering B.A., LL.B. (Hons.), LL.M., M. A.

In February 2010, Justice Dennis Cowdroy of the Federal Court of Australia ruled in favor of internet service provider iiNet against the Australian film and television industry.

iiNet was and is an internet service provider. It iss accessed by many thousands of users everyday. There was evidence to suggest that up to 100,000 downloads in breach of Australian copyright laws of pirated movies and television programs had taken place via iiNet.

A group of over 30 film and television companies and the Australian Federation Against Copyright Theft (AFACT) argued in the Federal Court that by providing its internet service, iiNet was allowing its account holders to be placed in a position whereby they could breach copyright directly themselves.

iiNet conceded that there was no question there had been some unauthorized use by some of its account holders and that those holders were breaching copyright by unlawfully downloading pirated movies and television programs.

Nevertheless, Justice Cowdroy maintained that merely because the account holders were themselves in breach of copyright did not necessarily infer for the purposes of the Copyright Act that iiNet had authorized the breach. AFACT and the film and television companies had argued in the Federal Court that iiNet had breached its user agreement by allowing its account holder members to use BitTorrrent software to download content illegally. Justice Cowdroy disagreed. His Honor ruled that while iiNet involvement was necessary for copyright to be breached, it was the use of the Bit Torrent software that enabled the breach and that this use was by the account holders rather than by the internet service provider.

Justice Cowdroy decided that copyright was breached in one of two ways. The first was by directly breaching copyright. This only occurred by the account holders. They had not been sued. The second way was whereby a person authorizes a breach of copyright which can occur by placing persons in positions where they can breach copyright. AFACT and the film and television companies had argued that by providing its internet service, iiNet was putting its account holders into a position where by they could breach copyright directly themselves. Again, Justice Cowdroy disagreed. His Honor held that it wasn’t iiNet’s system that was responsible for the breach of copyright. It was actually the BitTorrrent’s software system that was the means by which copyright was breached.

Justice Cowdroy went on to rule that even if iiNet were to be found guilty of any breach of copyright, ‘safe harbor’ provision within the Copyright Act meant that the internet service provider could not be sued for damages.

Safe harbor provisions in the Copyright Act provide that even if a specific internet service provider is found to have authorized a breach of copyright by its account holder users, ISP will not be liable for damages if it complies with the conditions of the safe harbor provisions. Those provisions generally state that the ISP must have a policy of reviewing the activity of users and of terminating the account of repeating infringers and of reasonably implementing that policy. Justice Cowdroy ruled that iiNet did in fact have such a policy of terminating the account of repeating infringers. Accordingly, even if the Federal Court had ruled that iiNet’s actions constituted a breach of copyright, iiNet would not have been liable for damages.  

The Federal Court decision will raise interest overseas. The U.S.A and European Union countries have legislation similar to the safe harbor provisions in the Australian Copyright Act and are based on the US Digital Millennium Copyright Act.

iiNet led evidence that it did not condone copyright breaches in any way and that copyright violations did not benefit iiNet at all. Such evidence is problematic. Knowledge that the internet service provider will allow some breaches before taking action will always attract unscrupulous internet users.

The film and television companies are currently considering appealing Justice Cowdroy’s decision. The chances of a successful appeal will be limited by the fact that the decision very much stands upon particular factual scenarios.

A more likely result is that AFACT will lobby the Rudd Government to amend the Copyright Act. It is difficult, however, to see how such an amendment would be possible without severely interrupting legitimate, lawful and essential internet use by internet service providers.

Another practical problem avoided by Justice Cowdroy’s decision is that if the Federal Court had ruled in favor of the film and television companies, the judgment would have resulted in legions of content owners inundating internet service providers with claims for damages for breach of copyright. The inevitable result of that would have been substantial reductions in ISP access or the introduction of substantial fees for internet access via ISP’s which would have unfavorably impacted upon the internet industry and commerce generally.     

This article is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to render legal advice. No reader should act on the basis of any matter contained in this article without first obtaining specific professional advice.

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