Rights holders are using increasingly novel methods to protect their copyright from the scourge of global internet piracy. The latest of these attempts was the recent highly controversial and largely unsuccessful application by the copyright owners of the movie Dallas Buyers Club before the Australian Federal Court against 6 large Internet Service Providers. This decision follows in the wake of similar high profile disputes in the UK and Canada.

The Dallas Buyers Club (“DBC”) decision highlights the Courts’ reluctance to allow rights holders to obtain an Norwich Pharmacal Order, a court order against an innocent third party, such as Internet Service Providers ("ISPs"), to furnish information in relation to an alleged wrong-doer to be used for the purpose of speculative invoicing, or “pay up or else” campaigns. Speculative invoicing involves copyright owners, such as movie studios or recording companies, sending letters to internet subscribers demanding a settlement sum for alleged copyright infringements, such as illegal downloading, in order to avoid expensive legal proceedings. These letters often contain misleading and intimidating claims.

Business Impact

The business impact of this decision is that those seeking Norwich Pharmacal relief may now have to fulfill a legitimate purpose requirement to avail of the relief.

Background

On 7 April 2015, the Federal Court ordered the ISPs to give DBC access to the personal details of 4,726 Australians, who allegedly downloaded or shared the movie using the peer-to-peer file sharing software BitTorrent. This decision generated extensive publicity and debate at the time. While Norwich Pharmacal relief itself is not unprecedented, this was the first time preliminary discovery was awarded on such a scale in Australia to a copyright holder. However, the Court first required that the applicants submit, for its approval, a draft of the letter they proposed to send to the infringing subscribers once the subscriber details were known.

On 14 August 2015, the Federal Court ruled that the movie makers’ draft letter was inappropriate and refused to allow the release of the subscribers’ details for this use. In summary, the proposed letter sought four main forms of damage from the infringing subscriber:

  1. the cost of the purchase of a single copy of the film, for each copy of the film downloaded;
  2. a "licence fee" for the uploading the film;
  3. extra damages depending on how many copies of other copyrighted works had been downloaded by each infringer; and
  4. legal costs of retrieving the subscriber’s personal details.

The letter was similar to correspondence sent previously in the US by DBC and its parent company, Voltage Pictures, which threatened to pursue infringing US subscribers for damages of up to a quarter of a million dollars unless individuals settled for about US$7,000.

Judge Perram considered the claim for an amount relating to each infringer’s uploading activities, as well as the claim for additional damages, to be untenable (claims 2 and 3 above). He indicated he would allow access to the subscribers’ details, subject to a written undertaking from the applicants to use the information obtained solely for the purpose of seeking amounts for the permissible claims (claims 1 and 4 above). In a further blow to DBC, the Court ordered that prior to the release of the information by the ISP’s, the applicants, must post a bond of $600,000 to cover any breach of that undertaking to the Court. This bond was to ensure that the applicants, who had no presence in the jurisdiction, could be pursued for any breach of their undertaking. The time to appeal this decision has now passed without any action by the movie makers. It remains to be seen if DBC will avail of the restrictive relief granted. However, given the prohibitive bond requirement this seems unlikely.

This form of speculative invoicing has previously been ruled against by the Courts in the UK and Canada in Golden Eye (International) Ltd & Anor v Telefonica UK Ltd andVoltage Pictures v. Does.

Conclusion

The safeguards imposed by the Courts in this case strike a fair balance between the rights of subscribers and rights holders. They should also help to discourage copyright holders from engaging in speculative invoicing, while still allowing them to pursue legitimate copyright infringement claims.

Closer to home, rights holders are pursuing other means to prevent copyright infringement. Earlier this year, the Irish Commercial Court awarded an injunction against UPC, one of the largest broadband providers in Ireland, to implement and adopt a Graduated Response Scheme, in favour of the Irish recording companies, Sony Universal and Warner. This injunction provides for a system whereby UPC will send warning letters to subscribers who engage in alleged copyright infringement, followed by a Norwich Pharmacal application by the rightsholders to obtain the personal details of the allegedly infringing subscribers. This decision is currently under appeal to the Court of Appeal. However, if upheld on appeal, this ruling will be a ground breaking decision in the copyright sphere. It remains to be seen if this or other increasingly novel approaches by the rights holders will convert the pirates of the digital world into paying customers.