iiNet survives second round of copyright litigation - but only just

iiNet survives second round of copyright litigation - but only just - Griffith Hack

28 February 2011

The Australian Full Federal Court affirms that the internet service provider iiNet is not responsible for the unlawful downloading and sharing of films and TV programs by its customers.


The applicants in this case were copyright owners comprising a number of major film and television show producers (the Copyright Owners). In 2008, before legal proceedings were commenced, the Australian Federation Against Copyright Theft (AFACT) wrote on behalf of its members, including the Copyright Owners, to iiNet asserting that iiNet had a significant number of customers who appeared to be engaging in infringing activity by unlawfully downloading or sharing films and television programs using iiNet’s service. iiNet had an agreement with each customer which allowed iiNet to cancel, suspend or restrict the customer’s service if the customer used the service for illegal purposes. AFACT informed iiNet that iiNet had the capacity and contractual right to prevent primary acts of copyright infringement by its customers by suspending or terminating their accounts.

AFACT sent further letters to iiNet asserting that iiNet’s failure to take any action to prevent the primary infringements carried out by a number of its customers may constitute authorisation of copyright infringement. In one of AFACT’s letters, AFACT enclosed a spreadsheet listing the time and date of the alleged infringements, the associated IP addresses of the alleged primary infringers, the films and television programs in which copyright had allegedly been infringed, and the names of the corresponding Copyright Owners. In the accompanying letter, AFACT requested iiNet to prevent the customers responsible for the alleged infringements listed in the spreadsheet from continuing to infringe copyright. iiNet did not act on AFACT’s request.

In early 2010, the Copyright Owners commenced proceedings against iiNet alleging that iiNet had authorised the acts of primary copyright infringement by its customers who unlawfully downloaded and shared films and television programs using the BitTorrent system.

The case was heard at first instance by Justice Cowdroy of the Federal Court who held that iiNet had not authorised the infringements because:

  • the mere provision of access to the internet by iiNet was not the “means” of infringement. Rather, the BitTorrent system, which iiNet had no control over, provided the “means” by which iiNet customers made unlawful downloads;
  • iiNet did not have adequate power to prevent customers from making the unlawful downloads; and
  • iiNet did not “sanction, approve or countenance” copyright infringement.

The Copyright Owners lodged an appeal against Justice Cowdroy’s decision. The appeal was heard by Justices Emmett, Nicholas and Jagot in the Full Court.

The Full Court affirms that iiNet did not authorise infringement

On Thursday 24 February 2011, the Full Federal Court published its judgment in Roadshow Films Pty Limited v iiNet Limited [2011] FCAFC 23. While Justices Emmett and Nicholas each agreed with Justice Cowdroy’s conclusion that iiNet did not authorise the infringements, their respective reasoning departed from that of Justice Cowdroy.

Under the
Copyright Act 1968 (Cth), the act of authorising copyright infringement is itself a breach of copyright. When considering whether a person has authorised infringement, a Court must consider:

  • the extent (if any) of the person’s power to prevent the infringement;
  • the nature of any relationship between the person and the primary infringer; and
  • whether the person took any other reasonable steps to prevent the infringing activity.

Ultimately, the Court must be satisfied that the person has “sanctioned, approved or countenanced” infringement such that it authorised infringement.

In separate judgments, Justices Emmett and Nicholas decided that although iiNet demonstrated an indifferent attitude to the Copyright Owners’ complaints of infringement and requests to suspend or terminate infringing customers’ accounts, iiNet’s inaction did not amount to authorisation of the primary acts of infringement. Both Justices considered that:

  • iiNet was aware of the allegations made by AFACT and the Copyright Owners that some of its customers had engaged in infringing activities;
  • iiNet had the power to prevent the infringing acts of customers by suspending or terminating their accounts; and
  • iiNet was in a technical and contractual relationship with customers whereby each customer had the obligation not to use the service to infringe copyright.

However, on the issue of whether iiNet took reasonable steps to prevent the infringements, Justices Emmett and Nicholas considered that it was unreasonable for iiNet to act on AFACT’s request for iiNet to suspend or terminate certain customers’ services given that AFACT had not given iiNet sufficiently credible, verifiable and cogent evidence of primary infringement. They accepted iiNet’s argument that the data presented in AFACT’s spreadsheet required further analysis in order to identify the allegedly infringing customers and to gain specific knowledge of each alleged infringement. It was accepted that such further analysis was likely to be onerous and costly to iiNet, and hence unreasonable for iiNet to undertake.

Therefore, the two Justices in the majority held that iiNet’s continued provision of internet access, without specific knowledge of any of the primary acts of infringement, did not amount to sanctioning, approving or countenancing infringement such that iiNet could be said to authorise infringement.

In her dissenting judgment, Justice Jagot concluded that iiNet was responsible for authorising the primary infringements. Justice Jagot based her conclusion on several findings including that iiNet knew that half of all of the traffic on iiNet’s service was via BitTorrent and a substantial proportion of BitTorrent traffic involved the infringement of copyright; and that iiNet had a range of powers available to it to prevent infringement including issuing warnings to customers, reducing access speeds, and suspending or terminating accounts. Notably, Justice Jagot considered that AFACT provided iiNet with credible evidence of widespread and repeated infringements. This finding contrasted with the findings of the majority. Justice Jagot held that iiNet routinely identified its customers from their IP addresses in a number of contexts – for example, when customers did not pay their service fees. Therefore, in Justice Jagot’s opinion, it was sufficiently straightforward and reasonable for iiNet to identify the customers responsible for primary infringement listed in AFACT’s data.

Are we likely to see an appeal to the High Court?

Although iiNet succeeded in this appeal, Justice Jagot’s dissenting decision contains reasoned findings and conclusions which may encourage the Copyright Owners to apply for special leave to appeal to the High Court of Australia.

In addition, Justice Emmett expressly recognised that the outcome of this case may be different in a future proceeding. He stated,
“Even though the Copyright Owners are not entitled to the relief claimed in this proceeding, it does not follow that that is an end of the matter. It is clear that the questions raised in the proceeding are ongoing. ... It does not necessarily follow from the failure of the present proceeding that circumstances could not exist whereby iiNet might in the future be held to have authorised primary acts of infringement on the part of users”.

Justice Emmett suggested that if the Copyright Owners wished to pursue iiNet for authorising future acts of infringement based on iiNet’s failure to suspend or terminate its customers’ accounts, they would need to show that at least the following circumstances exist:

  • “iiNet has been provided with unequivocal and cogent evidence of the alleged primary acts of infringement by use of the iiNet service in question”; and
  • “The Copyright Owners have undertaken:
  • to reimburse iiNet for the reasonable cost of verifying the particulars of the primary acts of infringement alleged and of establishing and maintaining [an infringement monitoring regime] ..., and
  • to indemnify iiNet in respect of any liability reasonably incurred by iiNet as a consequence of mistakenly suspending or terminating a service on the basis of allegations made by the Copyright Owner.”

It remains to be seen whether these suggestions will be heeded by the Copyright Owners in a potential appeal or by litigants in other future proceedings.

Su-Ann Burke, Lawyer, Geraldine Farrell, Special Counsel and Wayne Condon, Principal

If you would like more information or legal advice, please contact:
Wayne Condon, Principal
Email Wayne

Geraldine Farrell, Special Counsel
Email Geraldine