Online infringers beware.

In a landmark decision, Justice Perram of the Federal Court has indicated that he will order Australian ISPs to divulge the names and physical addresses of their customers associated with IP addresses that shared the film 'Dallas Buyers Club'. The decision can be found here. In light of the decision, copyright owners can expect to find it easier to obtain prospective online copyright infringers' details.

Background

Dallas Buyers LLC, and its parent company, Voltage Pictures LLC (the Applicants), applied for preliminary discovery under Rule 7.22 of the Federal Court Rules 2011 (Cth) to access details of the customers of iiNet and other ISPs. The Applicants had identified 4,726 unique IP addresses from which the 'Dallas Buyers Club' film was shared online, using the BitTorrent file sharing protocol. But they did not know the identity of those individuals, and sought preliminary discovery to fill this gap. As explained by Justice Perram: 'Preliminary discovery is a procedure which enables a party who is unable to identify the person who it wishes to sue to seek the assistance of the court in identifying that person'.

The Respondents refused to hand over customer details. Amongst other reasons, they claimed that the information would be used for 'speculative invoicing'. This practice is commonly seen in the United States – the copyright owner writes to account holders demanding a large sum of money and offers to settle for a smaller sum which is still in excess of what might actually be recovered in any actual suit.

The Respondents were also concerned that:

  • there was insufficient evidence to identify the infringing IP addresses;
  • the claims against the putative respondents were merely speculative;
  • the pre-conditions for the court ordering preliminary discovery had not been satisfied; and
  • the Applicants had not proven that one of them owned copyright in the film.

Even if the Court rejected all of these grounds, the Respondents argued that the Court should exercise its discretion to refuse to divulge the information. Amongst other reasons, the ISPs claimed that the monetary sums against each infringer were so small that no case would be maintained against them, and the statutory obligations of privacy should not be lightly set aside by the court in light of the paucity of the case against the customers.

Decision

Justice Perram indicated that he will order that the ISPs divulge the names and physical addresses of customers associated with each of the 4,726 IP addresses. On the evidence, Justice Perram:

  • accepted, through expert evidence, that the software called Maverik Monitor 1.47 could identify IP addresses which were sharing a given file using BitTorrent, and the identity of the relevant ISP;
  • found that there was a real possibility that the IP addresses were by end users who were breaching copyright in the film by making it available for sharing online using BitTorrent;
  • accepted that Voltage Pictures LLC could sue for infringement (because a Distribution Licence Agreement relating to the film authorised Voltage to commence copyright infringement proceedings) and that it was reasonably arguable that Dallas Buyers Club LLC owns the copyright and therefore could sue for infringement. On this basis, both companies were entitled to preliminary discovery; and
  • found that the pre-conditions for Federal Court Rule 7.22 had been met. In doing so, the Court confirmed an expansive interpretation of Federal Court Rule 7.22. The ISPs had argued that preliminary discovery could only be required to be given in relation to the identity of the putative defendant; it could not be used to reveal the identity of someone else who might know who the wrongdoer was. After reviewing the authorities, Justice Perram rejected the Respondents' contention, commenting:

From the point of view of view of principle, it is difficult to identify any good reason why a rule designed to aid a party in identifying the wrongdoers should be so narrow as only to permit the identification of the wrongdoing.

Finally, the Court declined to exercise its discretion to refuse to divulge the information. In Justice Perram's view, the claims were not frivolous, and could attract significant damages under the Copyright Act. Obligations under the Privacy Act 1988 (Cth) also did not constrain the ISPs from disclosing the information under a court order. In proposing that preliminary discovery occur, his Honour nevertheless will impose conditions to safeguard the privacy of the account holders, and to prevent speculative invoicing. The conditions will:

  • restrict the Applicants from using the information other than for recovering compensation for the infringements;
  • prevent the Applicant from disclosing the information without leave of the Court; and
  • require the Applicants provide to the Court a draft letter of the letter proposed to be sent to account holders.

Justice Perram indicated that the Applicants will pay the costs of the proceedings.

Implications

The Dallas Buyers litigation addresses some of the difficulties copyright owners otherwise faced following the High Court's decision of Roadshow Films Pty Ltd v iiNet Ltd (2012) 248 CLR 42. In that case, Australian and American film and television companies brought proceedings, not against the end users of the BitTorrent protocol but against iiNet, an ISP. The copyright owners claimed that iiNet had authorised the copyright infringements of subscribers who used the BitTorrent system. The High Court unanimously held that iiNet was not liable, effectively placing the onus on copyright owners to pursue end users directly. (Our previous summary of this decision can be found here.)

In light of the result in Dallas Buyers, copyright owners can more easily identify (and in turn litigate against) end users.

Next steps

The case is listed for directions on 21 April 2015 for orders to be made on the specific form of relief. Once this occurs, the Respondents may decide to appeal the decision. On the one hand, iiNet has made public statements that it will 'continue to defend the privacy of its customers' personal details' and its view is that this case is an important test case. On the other hand, because t the Applicants will need to pay the costs of the proceedings and there will be conditions that safeguard customers' interests in terms of privacy and speculative invoicing, the Respondents may consider that the decision is not worth appealing.

If the customer details are ultimately divulged, the Applicants can use these details to bring proceedings against individual end users for copyright infringement. It is difficult speculate as to the amount of damages that may be awarded. For single instances of infringement, Justice Perram stated that:

… the damages are likely to be modest and quite possibly limited to the forgone licence fee that would have been paid had the film been lawfully downloaded, although quaere whether this is so where the film had been shared because it was not available in the Australian market at all.

In the case of multiple downloaders from an individual BitTorrent 'seeder', it must be considered at least plausible that a copyright owner may be able to obtain aggravated damages. To this point, his Honour stated:

It is not beyond the realm of possibilities that damages of a sufficient size might be awarded under this provision in an appropriately serious case in a bit to deter people from the file sharing of films.

Tackling online copyright infringement also continues to be a Government focus.

The Copyright Amendment (Online Infringement) Bill 2015 (Cth) proposes to enable copyright owners to apply for an injunction to disable access to website where it has the primary purpose of infringing copyright or facilitating the infringement of copyright. When making such an application, the copyright owner does not need to establish that the ISP is liable for copyright infringement.

In December, the Government also requested that industry develop a voluntary code to tackle infringing downloading. The Communications Alliance, the primary telecommunications industry body in Australia, has since released an industry code. Today, it submitted the code to Australian Communications and Media Authority to be registered, known as the Copyright Notice Scheme Code 2015. The Code allows copyright owners to notify ISPs of alleged copyright infringement, and for customers to receive an escalating series of infringement notices before an ISP will assist the copyright owner to identify the individual for infringement action.