iiNet may have pre­vailed in copy­right infringe­ment case, but ISPs should beware 

In Brief

After much delib­er­a­tion, the iiNet mat­ter has been laid to rest with the High Court uphold­ing the Full Fed­er­al Court deci­sion that iiNet is not liable for the copy­right infring­ing actions of its customers.

Ulti­mate­ly, the case turned on what it meant to ​“autho­rise” con­duct in breach of sec­tion 86 of the Copy­right Act, and whether, based on the facts, iiNet had autho­rised its cus­tomers to infringe the copy­right of the film stu­dio appellants.

As the deci­sion in this case was heav­i­ly depen­dent on the facts and cir­cum­stances sur­round­ing the alleged breach, it is arguable as to what com­fort it gives to the rest of the ISP industry.

Recap

The film stu­dios and the Aus­tralian Fed­er­a­tion Against Copy­right Theft (AFACT) argued that iiNet was in breach of sec­tion 86 of the Copy­right Act because it autho­rised the users of its inter­net ser­vices to com­mu­ni­cate infring­ing mate­r­i­al to the pub­lic online using the Bit­Tor­rent sys­tem. The autho­ri­sa­tion was said to occur when iiNet failed to sus­pend or ter­mi­nate its cus­tomers’ accounts, which would block their access to its ser­vices, upon notice by the AFACT of copy­right infring­ing conduct.

iiNet respond­ed that it could not be inferred that it was autho­ris­ing the actions of its cus­tomers, by act­ing to sus­pend fol­low­ing receipt of the AFACT notices.

The appel­lants lost both at the tri­al and appeal pro­ceed­ings. As the tri­al and Fed­er­al Court judg­ments were con­flict­ing, AFACT and the film stu­dios appealed to the High Court for clo­sure on the issue.

For fur­ther details on the pre­vi­ous actions, please see our arti­cles: Appeal Dis­missed – Full Fed­er­al Court Con­firms that iiNet is not Liable for Infringe­ments by its Users, Film and TV Stu­dios Appeal to High Court in iiNet Copy­right Case and Hol­ly­wood stu­dios lose to ISP iiNet in copy­right autho­ri­sa­tion case.

High Court pon­ders authorisation

The ques­tions before the High Court were:

1. Did iiNet have the pow­er to pre­vent the pri­ma­ry infringe­ment by its cus­tomers, and if so, what was the extent of that power?
2. Was it rea­son­able for iiNet to send warn­ings and sub­se­quent­ly sus­pend or ter­mi­nate its cus­tomers’ accounts upon receiv­ing the AFACT notices?

Did iiNet have the pow­er to pre­vent the pri­ma­ry infringe­ment by its customers?

The High Court looked to iiNet’s tech­ni­cal and con­trac­tu­al pow­er and what rea­son­able steps it could take in the circumstances.
On the facts, iiNet:

• had no involve­ment with any part of the Bit­Tor­rent system;
• did not host the infring­ing mate­r­i­al or the web­sites mak­ing the files relat­ing to the infring­ing material;
• did not assist its cus­tomers to locate Bit­Tor­rent clients;
• could not mon­i­tor the steps tak­en by the users of its inter­net ser­vices; and
• could not direct­ly pre­vent those users from down­load­ing Bit­Tor­rent clients and using these for pur­pos­es in breach of the law.

Fur­ther, once the infring­ing mate­r­i­al was stored, iiNet could not take down or remove the con­tent, nor could it block the com­mu­ni­ca­tion of that mate­r­i­al over its inter­net service.

Accord­ing­ly, iiNet had no tech­ni­cal pow­er to com­pel or pre­vent the infringe­ment by its customers.

In terms of con­trac­tu­al rights, iiNet’s Cus­tomer Rela­tion­ship Agree­ment indi­cat­ed iiNet’s express, for­mal and pos­i­tive dis­ap­proval of using its ser­vice for infring­ing or ille­gal purposes. 

The appel­lants claimed that iiNet’s inac­tiv­i­ty after receipt of the AFACT notices con­sti­tut­ed ​“coun­te­nanc­ing” the acts of pri­ma­ry infringe­ment by its cus­tomers. How­ev­er, the High Court reject­ed this argu­ment stat­ing that even if iiNet’s con­duct did amount to sup­port­ing or encour­ag­ing the infringe­ment, this was not enough to make iiNet liable for sec­ondary infringe­ment under s 101(1A) of the Copy­right Act. Ulti­mate­ly, an alleged autho­ris­er must have a pow­er to pre­vent the pri­ma­ry infringe­ments, which, on the facts, iiNet did not have.

The High Court also recog­nised that even if iiNet did ter­mi­nate its con­tracts with its cus­tomers, this only pre­vent­ed those per­sons from engag­ing in the ille­gal con­duct on iiNet’s ser­vices and did not pre­vent the con­duct from occur­ring on anoth­er ISP’s ser­vices.

Was it rea­son­able for iiNet to send warn­ings and ter­mi­nate its rela­tion­ships with its customer?

It was clear to the High Court that, until dis­cov­ery in the mat­ter was con­clud­ed, the AFACT notices did not pro­vide enough evi­dence that iiNet could rea­son­ably rely on with­out fear of con­trac­tu­al lia­bil­i­ty to its cus­tomers. iiNet’s response was pru­dent in the cir­cum­stances.

Are ISPs pro­tect­ed? Maybe, maybe not…

The High Court acknowl­edged that this case and the ques­tions before it were ones of fact, and that each case will turn on its par­tic­u­lar facts and circumstances.

iiNet was able to show that its pow­er was lim­it­ed to an indi­rect pow­er to pre­vent a cus­tomer’s pri­ma­ry infringe­ment by ter­mi­nat­ing the con­trac­tu­al rela­tion­ship between them. Fur­ther, the infor­ma­tion in the AFACT notices was insuf­fi­cient to rely on as the basis for send­ing warn­ing let­ters to its cus­tomers and then sus­pend­ing or ter­mi­nat­ing that cus­tomer’s account. On these facts, iiNet’s inac­tion did not amount to autho­ri­sa­tion on iiNet’s part.

This does not mean that ISPs are always pro­tect­ed from lia­bil­i­ty as a sec­ondary infringer, and ISPs should still take any alle­ga­tion of copy­right infringe­ment very seri­ous­ly going forward. 

In the clos­ing remarks in their judg­ment, French CJ, Cren­nan and Kiefel JJ state that the Copy­right Act is not equipped to deal with the chal­lenges in tech­nol­o­gy that the sit­u­a­tion of peer-to-peer file shar­ing presents and indi­cat­ed a need for leg­isla­tive intervention. 

Watch this space.

For fur­ther infor­ma­tion, please con­tact Swaab Attorneys.