In brief

In response to the Government’s Online Copyright Infringement Consultation1 and its letter2 of 10 December 2014, ISPs and rights holders have now agreed a draft scheme to tackle online copyright infringement.

The scheme allows for warning notices to be sent to end users accused of copyright infringement. However, it does not include direct sanctions or give rights holders access to account holder personal details without a court order. Rights holders will still have to pursue alleged infringers through the usual court processes. Who will pay for the costs of the scheme has yet to be agreed.

The scheme3

In response to the Federal Government’s letter to industry leaders calling for a notice scheme to be agreed between Internet Service Provider (ISPs) and copyright owners (Rights Holders), the Communications Alliance has now released a draft 'Copyright Notice Scheme Industry Code' (Draft Code).4

The Draft Code has been agreed between members of the Communications Alliance (which is made up of Australia’s main ISPs) and representatives of the main Rights Holders organisations.

Perhaps unsurprisingly, given the Government’s threat to impose its own preferred solution if a scheme could not be agreed, the Draft Code follows closely the Government’s proposal outlined in its 10 December letter.

The basic structure of the scheme is:

  • Rights Holders must indemnify ISPs against any claims arising out of the ISPs’ participation in the scheme,
  • a Rights Holder can notify an ISP that it has detected copyright infringement by an end user using an IP addresses controlled by that ISP,
  • the ISP will be required to issue a warning notice to the account holder associated with the IP address,
  • there will be 3 levels of warning notice issued to account holders. An 'education notice' will be sent if the account holder has not received a notification in the last 24 month period. A second notification will trigger a 'warning' notice. A third notification will prompt a 'final' notice to be sent, as will any subsequent notifications, with the result that an end user may receive multiple, and an unlimited number of, so-called 'final' notices,
  • a Rights Holder can request a list of the final notices sent to account holders,
  • the ISPs will co-operate with any applications made by Rights Holders to the Courts for disclosure of the personal details of the account holders on a final notice list, and
  • the Rights Holder can pursue the account holders through the usual enforcement mechanisms (ie issuing letters of demand and bringing legal action).

At this stage the parties have not agreed on the contentious question of how the costs of the new scheme will be paid. The Government’s letter referred to 'fairly apportioning' the costs of the scheme between the ISPs and Rights Holders so it is likely that both parties will have to bear some of the cost.

The impact on end users

In spite of some recent press coverage and concerns expressed by consumer group Choice,5 it is not clear that the scheme will make it more likely that individual end users will ultimately be sued by Rights Holder. Rights Holders are already able to bring actions for copyright infringement against account holders by following the two step process of first applying to a court for an order requiring an ISP to identify the account holder and then taking action for copyright infringement against that account holder. Under the new scheme this remains largely unchanged. The only clear difference in terms of these legal processes, is that ISPs will now be required to cooperate with Rights Holders in seeking preliminary discovery from the Court to identify Account Holders. It is not clear how important the co-operation of ISPs will be in obtaining preliminary discovery, the outcome of the ongoing Dallas Buyer’s Club6application for preliminary discovery may help answer this question.

Choice has expressed a concern that the ‘fines’ to which account holders could be subject for copyright infringement are unlimited. Australian copyright law ordinarily awards pecuniary remedies by reference either to the damages suffered by the rights holder or by profit obtained by the infringer; neither of these are likely to result in significant sums of money being awarded if only a single or a small number of works have been copied. The act does provide for the payment of ‘additional damages’ in some circumstances, including where the behaviour of the infringer has been ‘flagrant’ or where the court wishes to deter future infringement. However, it is by no means clear that a court would be prepared to award substantially more than the costs of legitimately acquiring the infringed material. In any event, nothing in this scheme alters the infringer’s liability.

The scheme does not introduce any new sanctions for end users such as account disconnection of bandwidth throttling. It will, however, result in account holders becoming aware that online infringement has been detected. To date most Australian ISPs have not passed on infringement reports to their customers.

It remains to be seen if mere notification will be enough to deter online infringement or whether the Rights Holders will be prepared to take action against enough account holders who receive final notices to deter other would-be infringers.

The impact on ISPs

While the Federal Government has now abandoned its proposed changes to the law of 'authorisation' liability (accessorial liability for copyright infringement), the existence of this new code may make it harder for ISPs who do not sign up to the code to avoid liability for their account holders’ actions.

In Roadshow v iiNet7 the High Court ruled that ISPs would not generally be found to have 'authorised' acts of  copyright infringement carried out their account holders even if they have been notified of the infringing activity by the Rights Holder. The test for authorisation liability under the Copyright Act 1968 allows the court to consider whether the person alleged to have authorised an infringing act had complied with a relevant industry code of practice. At the time iiNet was decided there was no code of practice to consider. Once this scheme goes live it may be harder for ISPs who do not sign up to escape liability.

Next steps

The Communications Alliance is calling for public comments on the draft scheme by 23 March 2015. It is understood that negotiation on the outstanding issue of who will pay for the scheme will continue in parallel.

The scheme, once agreed, is intended to be registered with the ACMA pursuant to the Telecommunications Act 1997.

This article was written by Peter FitzPatrick, Solicitor, Sydney.