Introduction

The Federal Court has now dismissed this case after iiNet failed to convince the presiding Judge, Perram J, of an acceptable solution to accessing and using relevant iiNet account holder information. This might be the final blow to what could have been a case which altered the legal landscape for piracy in Australia. What is clear is that Australia is not the USA and will not be dealing  with issues of piracy in the same manner. Particularly, Australia has so far rejected the speculative invoicing and perhaps what might be considered by some as a "bullying" approach, common place in some overseas jurisdictions. Unless the case is appealed, then it seems we will need to wait until another similar challenge is made to see if an intellectual property owner can come up with the right balance to convince a Court this sort of approach is reasonable and palatable in Australia.

The Case So Far

We have previously reported on the online piracy case1 brought by Dallas Buyers Club LLC (makers of the film Dallas Buyers Club (DBCL) and Voltage Pictures LLC against iiNet and other internet service providers (ISPs) for copyright infringement. The detailed facts and progress of the case can be found in our previous focus papers (Australian Solution to Piracy - Industry Code for Internet Service Providers,  Landmark Piracy Case - ISPs to HandOverCustomerDetails  and Speculative Invoicing - not the Australian Way).

In summary, in the initial proceedings, Perram J of the Australian Federal Court granted DBCL a preliminary discovery order pursuant to regulation 7.22 of the Federal Court Rules 2011 (Cth) (FCR) against various ISPs for the release of the personal details of account holders who illegally downloaded the film using BitTorrent technology. This would allow DBCL to bring an action against, or seek compensation from, those users. However, Perram J stayed the order and required DBCL to provide the Court with a copy of the proposed correspondence to be sent to account holders believed to have downloaded the film. This was to ensure that any correspondence sent to the relevant account holders did not amount to "speculative invoicing". In proceedings brought in August 2015 (the August Judgment)2, DBCL sought to lift the stay, providing copies of the proposed letters of demand it sought to send to the ISP account holders. The proposed correspondence included four demands:

  1. Payment for the cost of purchasing a copy of the film (Payment Cost);
  2. Payment of a licence fee by each uploader (Licence Fee);
  3. Additional, punitive damages depending on any other copyrighted works that person had downloaded (Additional Damages); and
  4. The cost of DBCL’s expenditure in obtaining the details of each infringer (Expenditure Fee).  

However, Perram J dismissed DBCL’s application to lift the stay, finding that DBCL’s proposals to demand the Licence Fee and Additional Damages from account holders were “untenable claims” and as such, the proposed letters of demand could not be sent.

The Present Case

In this most recent case3, DBCL again sought to lift the stay. However, rather than confirm that it would comply with the undertakings specified in the August Judgment, DBCL again proposed to write to account holders demanding, each of the Payment Fee, Expenditure Fee, Licence Fee and Additional Damages.

In the August Judgment, Perram J remarked that the DBCL’s claim for the Licence Fee was “so surreal as not to  be taken seriously”4 and rejected the claim on the basis that this would require a complex inquiry as to whether each infringer would have entered into negotiations with DBCL for a licence to distribute the film.

DBCL sought to contest the correctness of his Honour’s conclusions in the August Judgment, relying on a point raised in the recent judgment of Yates J in Winnebago Industries Inc v Knott Investments Pty Ltd (No 4) [2015] FCA 1327 (the Winnebago Case) that it is not necessary to prove that each infringer would have sought a hypothetical distribution licence.

In respect of the Additional Damages, DBCL submitted that Perram J had not fully dealt with DBCL’s submissions in the August Judgment, as to how a nominal figure for the Additional Damages would be assessed and calculated.

The Decision

Perram J again rejected DBCL’s claim to seek the Licence Fee from users on the basis that the Winnebago Case, as a case concerned with passing off, was distinguishable from the present case as a case of copyright infringement, and therefore did not apply. Further, Perram J held that, even if his Honour were to accept the change in legal principle, DBCL had failed to lead any evidence of what the proposed Licence Fee may be.5

His Honour refused DBCL’s application to adjourn in order to obtain this evidence, stating that the matter before the Court “is a preliminary discovery application, not Ben-Hur”6 and to allow the adjournment would prolong the case and further delay the resolution of the case. Ultimately, Perram J rejected DBCL’s claim that his conclusions in the August Judgment were incorrect and declined to revisit the Licence Fee issue.

In relation to the Additional Damages, Perram J in the August Judgment rejected DBLC’s proposal that a downloader’s activities in relation to other films was relevant to the assessment of the  Additional Damages. DBCL argued that Perram J had focused specifically on this factor and had therefore overlooked the balance of a number of other factors that DBCL had proposed would be considered in assessment an amount of Additional Damages.

However, Perram J rejected this submission, concluding that the downloading of other films was a central factor in DBCL’s  claim  in  the  August  proceedings  and  that  his Honour’s approach in the August Judgment was complete in determining the issue.

Ultimately, his Honour concluded that, even if he was to entertain DBCL’s argument, DBCL still did not have the particulars relating to the facts and circumstances giving give rise to its entitlement to seek Additional Damages from each infringer. The only information DBCL would have against the account holder, is that the account holder has been detected as uploading or downloading the film, Dallas  Buyers  Club.    As  a  result,  his  Honour  rejected DBCL’s claim to seek Additional Damages from each infringer.

Outcome

After declining each of DBLC’s requests in respect of the Licence Fee and Additional Damages, Perram J remarked that “some finality  must  now be brought  to these proceedings.”7   Critically, his Honour proceeded to make a self-executing order to terminate the proceedings, on Thursday 11 February 2016 at noon, unless further steps were taken by DBLC before this date.

Conclusion

In what could be the critical, final stages of these proceedings, if DBLC fails or declines to appeal or take any further action before this date, the case would be dismissed in its entirety.

As noted above, this decision reiterates the conservative approach adopted by the Australian Court in relation to speculative invoicing, demonstrating that, while the Court may allow access to the identity of those who may have allegedly illegally downloaded content, the Court will not allow copyright owners to use that information to seek excessive and unsubstantiated claims for damages, particularly if there is no evidence to support how such damages will be calculated.