The owner of the copyright relating to the 2013 film ‘Dallas Buyers Club’ (Film) has successfully forced several internet service providers (ISPs) to hand over details of accounts suspected to have infringed its copyright. The victory is a significant milestone in the ongoing litigation initiated by a number of copyright owners against persons they allege have been infringing their rights through the downloading and sharing of content. After earlier proceedings against ISPs were stymied by the High Court1, a copyright owner has now been successful in requiring ISPs to divulge information which may assist it to identify alleged infringers. The prospect of individuals facing court proceedings for copyright infringement is now one step closer to reality.

Background

In Dallas Buyers Club LLC v iiNet Ltd [2015] FCA 317, Dallas Buyers Club LLC (DBC), an American company that owns the rights to the Film, secured orders in the Federal Court of Australia requiring various ISPs to divulge information relating to the identify of persons suspected of sharing the Film online.

DBC, along with production company Voltage Pictures LLC (Voltage), sought the orders by an application for preliminary discovery to ascertain the identity of persons or entities it thought it may have a case against.2

Specifically, DBC sought access to documents held by the ISPs that identified the account holders associated with 4,726 unique IP addresses which, DBC alleged, had been used to share the Film in a manner which contravened DBC’s copyright in the Film.

Are illegal downloads infringements of copyright?

In support of the application for discovery, DBC led evidence about the file sharing mechanism, known as BitTorrent, by which films and other files (such as music and television shows) are downloaded and shared.3 BitTorrent is a form of peer-to-peer network which is a conglomerate of computers that link together to share information, files or data with one another through the use of specialised software. A downloaded file is compiled from a number of different sources, which comes from people who are downloading, or have already downloaded, that file. 

This means that by downloading a file using BitTorrent software, a person simultaneously shares a small sliver of that file with other participants on the network. They do not just copy the file for their own purposes; they also make at least a small part of the file available for others to download. This is an important distinction for copyright purposes.

DBC argued that the sharing of the Film (as opposed to the downloading) using BitTorrent infringed its copyright by communicating the Film to the public in contravention of section 86 of the Copyright Act 1968 (Cth) (Act). Section 10 of the Act defines ‘communicate’ to include ‘make available online’. DBC submitted that this is exactly what people did when they used BitTorrent to share the Film.

The issue, as Justice Perram saw it, was not whether the end-user had engaged in substantial copying of the Film but rather whether, having been detected as sharing a sliver of a film, it followed that the end-user might be involved in making the film ‘available online’ within the meaning of section 10 of the Act.

Given the case only involved a preliminary application for discovery, Perram J did not have to decide whether or not the sharing of the Film using BitTorrent infringed DBC’s copyright in the Film.4

However, his Honour thought there was enough evidence on a preliminary discovery application, stating:

I am comfortably satisfied that the downloading of a sliver of the film from a single IP address provides strong circumstantial evidence that the end-user was infringing the copyright in the film.5

Finding infringers: can it be done (and does it matter)?

The ISPs argued that even if they divulged information which identified the relevant account holders to DBC, there was no guarantee that those account holders were the people who actually shared the Film. It is plausible that the IP addresses used to share the Film were being used at that time by someone other than the person identified as the account holder in the ISPs’ records. According to the ISPs, it follows that in many cases divulging the information sought by DBC will not assist it to identify the people who have potentially infringed copyright in the Film. For that reason, the ISPs argued that DBC’s discovery application should be dismissed.

Perram J disagreed. He cited two decisions5 of the New South Wales Court of Appeal which held that information is discoverable if it is likely to assist an applicant to identify a person or people against whom they might bring proceedings. The information does not need to identify the relevant person or people with specificity.7

In this case, the documents sought from the ISPs by DBC may not directly identify the people who have potentially infringed copyright in the Film by sharing it using BitTorrent (for example, where the account holder is just one member of a household using the internet access linked to the account). However, the information in those documents would certainly assist DBC to identify the people who did share the Film. Perram J held that that was enough to justify making the discovery orders sought by DBC.

It is important to note that, while the ISPs may be required to provide DBC with details of the account holders, DBC will still be required to prove with specificity the identity of the people who shared the Film if it is to be successful in any further action. However, this did not provide an adequate reason for refusing discovery in this case.

Economics, privacy and speculative invoicing

In a final attempt to resist DBC’s application for discovery, the ISPs raised a number of reasons which they argued mitigated against allowing the application.8 Three of the more significant reasons raised by the ISPs were:

  • given the trivial nature of the alleged infringements, it would be economically irrational for DBC to pursue claims against individuals who shared the Film;
  • ordering the ISPs to divulge information about the account holders would be in breach of the ISPs’ privacy obligations; and
  • DBC would be likely to engage in the unconscionable practice of ‘speculative invoicing’ if it was given access to information which identified the ISPs’ account holders.

Economic rationality

In relation to the first point, Perram J noted that an application for preliminary discovery is intended to identify potential respondents to a future claim. It is not an assessment of the merits of that future claim, so long as it is not frivolous. Certainly, the potential award of damages available to the applicant is not a relevant consideration.9 Even if it was, Perram J held that the availability of aggravated damages under section 115(4) of the Act was enough to justify DBC (and other copyright owners) bringing proceedings for infringement of copyright against individuals.10

Despite the judicial support, copyright owners still face economic difficulties in bringing proceedings against individuals for copyright infringements. In the United States, copyright owners such as DBC and Voltage can pursue individual infringers for substantial damages claims, in some cases as much as $150,000.11 However, different rules apply in Australia.  Where a copyright infringement is found, a court can award both compensatory and pecuniary damages. Pecuniary damages will be awarded in cases of flagrant infringement, with the amount to be determined at the discretion of the court.12

Privacy

Perram J held that issues of privacy were highly relevant to the divulging of the personal information of account holders by the ISPs. Whilst maintaining that DBC had a right to access the information, his Honour held that such access should be subject to certain conditions to ensure that the personal information remains private.13 Accordingly, Perram J held that the ISPs must divulge their account holder’s personal information to DBC on the condition that DBC only use that personal information to:

  • identify people who have downloaded the Film;
  • sue those people for copyright infringement; and
  • negotiate with those people in regards to their liability for copyright infringement.14

Speculative Invoicing

Speculative invoicing is a practice that involves copyright owners contacting the ISPs’ account holders demanding a large sum of money for a copyright infringement and offering to settle the matter for a smaller sum that is still very much in excess of any damages that might actually be recovered for the infringement in a court.15 His Honour noted that “there is no doubt that Voltage has done this in the past”.16 He concluded that, given Voltage had a record of engaging in speculative invoicing, it is likely to do so again if not restricted by the Court.17

It is not clear whether speculative invoicing is legal in Australia. Perram J suggested that it may breach the consumer law prohibitions against misleading or deceptive conduct and unconscionable conduct.18 In any case, his Honour held that the prospect of speculative invoicing by DBC and Voltage would be addressed by the Court approving the draft of any letters which DBC and Voltage proposed to send to account holders.

Final comments

There is no doubt that Perram J’s judgment is a significant first step for copyright owners seeking to enforce their rights. However, there remain a number of challenges for copyright owners to take successful action against alleged infringers. Firstly, even with the ISPs’ account holder records, it could be difficult for the copyright owner to identify with precision the person who has actually potentially infringed its copyright. Secondly, even if the alleged infringer can be identified and an infringement claim sustained, as the quantum of any pecuniary damages (if available at all) will be awarded at the discretion of the court, there is a degree of uncertainty as to the extent of any damages which may be awarded.

The final orders will be made on 21 April.