Online infringers will soon receive a series of notices from their ISP under the proposed Copyright Notice Scheme 2015 (the Code).

The primary Australian telecommunications industry body, Communications Alliance, has submitted the final version of the Code for review and approval by the Australian Communications and Media Authority (ACMA). If the Code is approved, the majority of Australian ISPs must send notices to alleged copyright infringers at the request of a copyright owner. After a user receives 3 notices in a 12 month period, the ISP must then assist the copyright owner if it applies to the court for preliminary discovery to identify the alleged infringers.

What is the current process to deal with online infringers?

As seen in the Dallas Buyers litigation (discussed in further detail here), copyright owners are currently forced to pursue action against online infringement in court.  In that case, ISP subscribers had allegedly downloaded the 'Dallas Buyers Club' film illegally through a peer-to-peer service known as BitTorrent. However, the plaintiffs in that case had difficulty identifying these subscribers.

To identify the subscribers, Dallas Buyers LLC and its parent company applied for preliminary discovery in the Federal Court.  As explained by Justice Perram: 'Preliminary discovery is a procedure which enables a party who is unable to identify the person who it wishes to sue to seek the assistance of the court in identifying that person'.  On 7 April, Justice Perram indicated that the Court would order preliminary discovery.  It will be interesting to see how this case progresses now that Dallas Buyers LLC and its parent company will soon identify the alleged infringers.

How does the Code operate?

The Code provides a preliminary measure to stop copyright infringement, short of taking court action. The Code also streamlines the process for detecting copyright infringement, and for notifying subscribers of the alleged infringements.

Specifically, the proposed Code only applies to residential fixed internet accounts and would operate as follows:

Detect infringement

A copyright owner identifies the IP address of an alleged copyright infringer. To ensure that copyright owners' allegations have been fairly based, the Code requires a certification body to verify that the detection process gives reasonable grounds to believe that a person using the ISP's service has infringed the copyright.

Notify ISP

The copyright owner sends an infringement report to the ISP.  Before or at the time of sending the infringement report, the copyright owner must provide an indemnity to the ISP.  It is unclear exactly what form the indemnity will take.

Identify alleged infringer

The ISP confirms receipt of the report and takes reasonable steps to match the IP address to an account and an account holder.

Notify the alleged infringer

The ISP issues a notice to the subscriber. Depending on the number of times that the subscriber has received a notice in the previous 12 month period, the notice will be an 'Education Notice', a 'Warning Notice' or a 'Final Notice'. Each of the notices will contain information about the alleged infringement and the identify of the rights holder.

When it comes to a Final Notice, the ISP will require the subscriber to give a form of acknowledgement, such as requiring the user to sign to confirm receipt by registered post or by providing pop-ups that appear periodically until the user acknowledges receipt.

After receiving a Final Notice, an account holder can challenge any of the notices to an independent body called an 'adjudication panel'.

Significantly, even after a Final Notice has been issued, there are no sanctions leveled against the alleged infringer. The rights holder must obtain a court order before it can identify the individual. In this sense, the Code's bark is definitely worse than its bite.

Provide details to copyright owner

If a copyright owner receives a Final Notice, it may request a list containing information of the number of account holders who been issued with notices, acknowledgements and the IP addresses associated with the alleged infringement. Even at this stage, the copyright owner will not obtain details of the names of the ISP subscribers.

Facilitated preliminary discovery

If a copyright owner applies for preliminary discovery to identify the ISP subscribers, only at that stage must an ISP 'act reasonably to facilitate and assist' an application. However, it appears that an ISP will still not hand over an account holder's identity unless there is a court order.

When do these changes occur?

The Code is currently with ACMA for review and approval in accordance with the process under the Telecommunications Act 1997 (Cth). According to the Code, the scheme will commence 1 September 2015 at latest.

Who will pay for compliance with the Code?

The scheme is to be initially funded by commercial agreement negotiated between the ISPs and rights holders. Only if a rights holder has complied with its funding obligations must an ISP process an infringement report.

Who will administer the Code?

The Copyright Information Panel (made up of representatives from rights holders, ISPs and consumers) will administer the Code.  For example, the Copyright Information Panel will appoint certification bodies, determine the form of infringement reports and notices to be given, and appoint the adjudication panel.

If an industry participant fails to comply with a registered Code, ACMA has powers to direct an industry participant to comply with the Code and then to take action in the Federal Court if the participant fails to comply with that direction.  In the event that ACMA finds that an industry code is deficient, ACMA can also introduce industry standards.

Implications

The Code does not appear to affect the operation of preliminary discovery proceedings, in the sense that copyright owners must still apply to a court for orders disclosing ISP subscribers' identities.

However, the Code is expected to streamline the preliminary discovery process.  For example, in the Dallas Buyers litigation, Dallas Buyers LLC and its parent company led evidence regarding the technology used to identify the alleged infringers.  Following introduction of the scheme, rights holders would presumably rely on evidence provided by certification bodies to verify the methods used to detect copyright infringement.  In light of the 'facilitated preliminary discovery' approach, ISPs are also unlikely to challenge preliminary discovery applications made by a rights holder, and the Federal Court is more likely to exercise its discretion to order preliminary discovery.

It is also hoped that the Code will deter copyright infringement without the need for court action.  This kind of model, where alleged infringers receive an escalating series of notices before further action is taken (often called a 'graduated response' model) has been adopted in the United States, United Kingdom, Canada, Ireland, France, South Korea and Taiwan, with varying degrees of success.  The specific model used in each of these jurisdiction differs in terms of the kinds of online infringement that they target and the sanctions against online infringers after receiving the last notice.  For example, France's model controversially allows an ISP to slow the internet service upload and download times, or to temporarily suspend a user's service.  It is therefore difficult to anticipate how successful the Code will be in Australia in reducing online infringement, based on outcomes in other jurisdictions.

Other anti-piracy measures

The Code is only one measure to tackle online copyright infringement.  The Government is still in negotiations with the US for the Trans-Pacific Partnership (TPP) which may have further copyright law implications, and has also introduced the Copyright Amendment (Online Infringement) Bill 2015 which will enable rights holders to apply to the Federal Court to block websites that have a primary purpose of infringing copyright.