The Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317 decision handed down earlier this year provided the first foray into internet piracy in Australia.

The court of public opinion was divided, as was the Federal Court, which has recently provided a further decision clarifying what a copyright holder in these particular circumstances can do. 

Can internet pirates expect a letter of demand for an astronomical sum any time soon?  

WHAT IS THE BACKGROUND TO THE CASE? 

In its original decision (covered here) the Federal Court of Australia found that iiNet had to provide the Dallas Buyers Club LLC (‘DBC’) and Voltage Pictures LLC, who were the holders of the copyright in the film Dallas Buyers Club, with infringers’ account details to allow ‘preliminary discovery’.

However, this order was stayed pending the DBC providing the court with a copy of the correspondence that it proposed to send to infringers.

During proceedings in May 2015, DBC provided the court with a draft letter to be sent to infringers. This letter did not make a demand for a specific sum of money, but instead encouraged the recipient to make contact with the company. Some may think of this as a lure and bait strategy – to coerce internet pirates to pay unenforceable fines for infringement on copyright.  

In June 2015, the court stated it would not approve anything unless it was shown what amount DBC intended to demand.

WHAT ARE THE FACTS OF THIS CURRENT CASE?

In the most recent decision of the case, Dallas Buyers Club LLC v iiNet Limited (No 4)[2015] FCA 838, the DBC sought to lift this stay so they could seek damages from infringers.

Before lifting the stay, the court wanted to be satisfied that the letters DBC intended to send were in accordance with the purpose contemplated by r 7.22 of the Federal Court Rules 2011 (Cth) (primarily that there is a right to obtain relief from an individual).

The court addressed that DBC had not previously specifically disclosed what it was going to do with the account information once obtained or indeed how much money it would demand.

WHAT DEMANDS DID THE LETTER CONTAIN?

In order to satisfy the court, DBC then prepared a more detailed letter of demand that constituted payment under four heads:-

  1. A claim for the cost of an actual purchase of the film for each copy downloaded;
  2. A claim for each of the infringers’ uploading activities (seeking a substantial sum);
  3. A claim for additional damages for downloaded copies of other copyrighted works;
  4. A claim for damages arising from the amount of money it cost DBC to obtain each infringers name.

The court was happy with the amounts claimed under (a) and (d), considering these reasonable. However, it did not agree that claims (b) and (c) were within the purpose or power of the Act.

In relation to claim (b), DBC suggested that the number of uploads was potentially very large given that each user could share the film with other users by silvers of the film.  The court intended to put DBC in a position it would have been in had the infringements not occurred.

It was proposed by DBC that each infringer should and would have sought DBC’s permission prior to sharing the film and paid the appropriate licence fee demanded. The court labelled this argument ‘so surreal as not to be taken seriously’.

The court reasoned that there were multiple ways the infringements might not have occurred including that the infringer might have instead rented the film, watched it at the cinema or forged seeing it altogether.

In relation to claim (c), the court reasoned that the wording of s 115(4) of the Copyright Act 1968 (Cth) was inconsistent with being able to calculate damages in relation to infringements other than the one the downloader was being sued for.

The court further highlighted that DBC had made no submissions about how these claims would be calculated or the amount sought from infringers.

WHAT WAS THE OUTCOME?

The court agreed to lift the stay if it received DBC’s written undertaking to only use the account holder information for claims (a) and (d) and secured this undertaking by lodging a bond in the sum of $600,000.00.

The application was dismissed with costs.

WHY IS THIS DECISION RELEVANT?

Internet piracy and copyright infringement in general is not going to go away. Downloading, sharing and copying of films, television shows and video games is commonplace in our digital society.

If copyright holders want to stay away from the Streisand Effect then some care needs to be had in the manner and approach of enforcing the copyright. Simply providing a letter of demand or ‘speculative invoicing’ as DBC attempted in this matter will not be tolerated in Australia.

Those brave infringers ought to be wary of the increased steps copyright holders are now attempting to enforce copyright also – is the price of watching an illegal film worth being targeted by the copyright holder? See it in the movies, or wait for the DVD to come out.