In what appears to be a win for copyright holders, the Federal Court of Australia (Court) in Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317 ordered iiNet and five other ISPs (ISPs) to hand over the names and addresses of customers who allegedly infringed copyright in the 2012 film Dallas Buyers Club (Movie).

Among other things, the case highlights the tension between the enforcement of copyright and the obligations on ISPs and other businesses to use the personal information of their customers in accordance with the Australian privacy laws.

BACKGROUND

Dallas Buyers Club LLC (Dallas), which claims to be the owner of the copyright in the Movie, and its parent company (the Applicants) brought an action for preliminary discovery in the Court against the ISPs. Preliminary discovery is a procedure which enables a party who is unable to identify the person it wishes to sue to seek the assistance of the Court in identifying that person.

The Applicants claimed to have identified:

  • 4,726 unique IP addresses from which the Movie was shared without their permission and contrary to the Copyright Act 1968 (Cth); and
  • the ISPs that had supplied those IP addresses.

However, the Applicants did not know the identity of the individuals involved. It was this information the Applicants were seeking.

THE ARGUMENTS

The ISPs put nearly everything in issue. Their primary position was to resist the application on the following grounds:

  1.  The Applicants' evidence was not sufficient to identify the infringing IP addresses.

The Court relied on the Applicants' expert evidence in rejecting this argument.

  1. The claims against the individuals were speculative as it was unclear whether all individuals involved in the seeding process were liable or simply the 'end-user' (who, while had only uploaded a sliver of the file, was   the user that made the entire file available for sharing). Further, any claims against the individuals were not likely to materialise as the value of each copy of the Movie was less than $10 per distribution. Therefore, it   was commercially unsound for the Applicants to seek to recover that sum from each individual.

The Court was not persuaded that a suit by the Applicants naming individual infringers would be economically pointless and the Court went on to identify a deterrent effect the bringing of such cases may provide.

  1. The Applicants had failed to satisfy the preconditions required under the Court Rules for the Court to make orders regarding preliminary discovery, namely:
  • The Applicants had a right to relief against the individuals - no such right existed as 'seeding' involves the uploading of a sliver of a file, which was an insubstantial upload that could not amount to copyright  infringement.For the reasons outlined above regarding the end-user, the Court rejected this argument and held that the Applicants had a right to relief.
  • The Applicants could not identify the individuals - the Applicants could identify the individuals by monitoring internet chat rooms and comments made on links/websites. As the individuals would not have used their real names when illegally downloading/sharing the Movie, the Court noted this argument was unlikely.
  • The ISPs knew the identity of the infringers - While the ISPs may have the registered contact details for an IP address, they could not ascertain with certainty whether that registered individual was the person that     infringed copyright (or alternatively, whether there was another individual using that IP address that could have undertaken the illegal download).

The Court noted that while this may be the case, it is likely the owner of the IP address would be able to assist in identifying the person that downloaded the Movie.

  1.  The Applicants had not sufficiently identified that they are the owner of the copyright in the Movie.

The Court held that Dallas owned the copyright in the Movie and therefore had a right to sue for infringement.

Given the ISPs' primary arguments had failed, the Court took into consideration their supplementary position, namely that the orders sought by the Applicants be granted subject to the following constraints:

  • The Applicants should not be permitted to send 'speculative invoices' to account holders - the practice of sending a letter of demand to the individuals requesting a large amount of money and offering to settle for a smaller sum, which was still very much in excess of what might actually be recovered in any actual proceeding.
  • The privacy of the account holders should be adequately protected.

THE JUDGMENT

The Court identified the potential to breach both the Australian Consumer Law and the Australian Securities and Investment Commission Act 2001 (Cth) if correspondence to the alleged infringers was not carefully drafted. Such concerns however did not preclude the Court finding in favour of the Applicants.

The Court recognised that the privacy concerns raised by the ISPs were relevant. The Court was required to weigh up competing sections of legislation which on one hand allowed for disclosure of individuals' details if required by law while on the other hand prevented ISPs from disclosing their customer's details. The Court approach to this clash of rights was to try to accommodate both by requiring the information to be provided but by imposing, by way of conditions, safeguards to ensure that the private information remains private.

Ultimately, the Court ordered the ISPs to divulge the names and physical addresses of their customers alleged to have infringed the Applicants' copyright. The Court imposed upon the Applicants a condition that the information only be used for the purposes of recovering compensation for the infringements and was not otherwise to be disclosed without the leave of the Court. Further the Court imposed a condition on the Applicants that any letter they proposed to send to an alleged infringer needed to be first submitted to the Court. Finally, the Court ordered the Applicants to pay the costs of the proceedings.

IMPLICATIONS

Whilst it may be uneconomical for the Applicants to commence proceedings for copyright infringement against an individual for the cost of each distribution, say $10, the Copyright Act contains provisions for an award of additional damages. Additional damages are awarded having regard to, among other things, the flagrancy of the infringement, the need to deter similar infringements and the individual's conduct after he/she was informed of the alleged infringement.

Australians do not enjoy a right to privacy, except to the extent that the Australian privacy laws apply to their personal information. Further, in certain circumstances, private information may also be covered under an action for breach of confidence. Whilst the Australian privacy laws contain an exception which allows the disclosure of personal information if required by a court order, this case illustrates the Court's desire to exercise that exemption only to the extent that is necessary to enable a party to exercise another right.