Key Points:

ISPs will be ordered to divulge the names and physical addresses of customers whose ISP addresses were used to download the film Dallas Buyers Club.

The latest salvo in the war against online piracy has been won by rights-holders, with the Federal Court finding it can order ISPs to turn over IP addresses –but it was a qualified victory, with limits on the type of information, and the uses the rights-holders can make of it (Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317).

Dallas Buyers Club LLC and its parent company Voltage Pictures LLC applied for preliminary discovery to require iiNet and five other internet service providers to turn over the IP addresses of persons who had illegally downloaded the movie "Dallas Buyers Club". They gave evidence that they had identified 4,726 unique IP addresses from which the film was shared online using the BitTorrent file sharing network.

Not surprisingly the ISPs resisted the application on a number of bases, prompting Justice Perram to say "the ISPs have put nearly everything in issue". At its heart, however, was the submission that a film is distributed using BitTorrent by an individual computer downloading a mere sliver of a film from other multiple computers – and that computer is simultaneously uploading its own slivers.

A sliver can support the rights-holders' case

Justice Perram accepted that each of the slivers comprising the illegal download may be very small. He did not accept that the end users could not have infringed the film's copyright because no substantial reproduction had occurred. He found that a single sliver being uploaded was consistent with a number of different scenarios:

  • the end user had a whole entire copy of the film and had made it available to other BitTorrent users;
  • the end user is in the process of downloading the film and the sliver is being shared from the portion he or she has downloaded so far;
  • the end user has partially downloaded the film but stopped the process midway; or
  • the end user has managed to download a single sliver and is sharing it.

The exercise of discretion

The ISPs put forward eight reasons why the court's discretion to give preliminary or pre trial discovery, ought be refused:

  • only a single sliver of the film was shared from each IP address and therefore whatever infringement of copyright was involved it was minor; 
  • it was unlikely therefore that any case would be brought against an infringer as the value of each copied film was less than $10 and it was not plausible to think that the applicants would seek to recover such funds; 
  • there was no realistic chance of obtaining an injunction either because all that was shown was a sliver of the film or because there was no demonstrated risk of repetition; 
  • the applicant had failed to undertake adequate monitoring which could have revealed serious infringers; 
  • there was evidence to suggest that the applicants were going to engage in speculative invoicing of those persons whose details were provided and require a payment in excess of what actually might be recovered should proceedings be commenced; 
  • the ISPs were subject to privacy obligations with respect to their customers; 
  • the Federal Government has required that the industry formulate an industry code dealing with the issue of internet privacy and the Court should wait until that code is in place; and 
  • the preliminary discovery process was being used as a tool of investigation rather than identification.

None of these was sufficiently persuasive, but in addition to his views on slivers, Justice Perram made some interesting comments on three of them.

The need to deter vs the small amounts the rights-holders might recover

Justice Perram said that it was not beyond the realm of possibility that damages of a sufficient size could be awarded where there was an appropriately serious case. What the rights holders had in mind was neither frivolous or de minimis, and the ISPs argument did not give sufficient weight to the rights-holders' genuine rights, expressly recognised by statute.

Customer confidentiality and privacy obligations

While it was a relevant issue, Justice Perram said confidentiality and privacy could be dealt with by imposing restrictions on the use to which the information provided could be put by:

  • seeking to identify end users using BitTorrent to download the film;
  • suing end users for infringement;
  • negotiating with end users regarding their liability for infringement.

Speculative invoicing

There was evidence that Voltage in the United States had sent very aggressive letters indicating to the identified account holder a liability for substantial damages and offering to settle for a smaller (but still large) sum.

While Voltage said it would not do the same here, the legality of this speculative invoicing in Australia is unclear, so Justice Perram thought it appropriate to impose conditions to prevent it.

What next

While no orders have been made and the proceedings have been stood over until 21 April 2015, Justice Perram has indicated that he will make orders that:

  • the ISPs divulge the names and physical addresses of the identified customers (but not the email addresses, as he found that the Federal Court Rules did not give him the authority to do so);  
  • the information obtained only be used for the purpose of recovering compensation for the alleged infringements and be subject to strict privacy obligations;  
  • that he be provided with a draft of any letter intended to be sent to account holders.

These orders would allow the applicants to trace downloads to a particular IP address, although not an email address. To find out who lies behind 4,756 IP addresses is likely to be an expensive exercise and one that would not seem to offer the opportunity of significant damages. The cost of that exercise plus the ISPs' costs incurred in defending the application would appear to be significant. Nevertheless the deterrent effect of a copyright owner knowing the identity of illegal downloaders may be sufficient.

Communications Alliance Draft Code of Practice

Significantly, on 8 April 2015, one day after the judgment, the Communications Alliance released its draft Code of Practice designed to deal with online copyright infringement. Under the proposed Code, if a copyright rights-holder detects unauthorised sharing of its works, it can notify the ISP associated with the relevant IP address. The ISP will then be able to issue an "initial notice" stating that the activity detected indicates an infringement of copyright and providing information about how to locate non infringing content.

If the account holder receives three notices within 12 months, the "ISPs will, on the request of a Rights Holder, facilitate an expedited preliminary discovery process…". In other words the rights holder will be allowed to take action against the infringer.

The Communications Alliance has lodged the draft Code for registration with the Australian Communications and Media Authority. The effectiveness of the Code is intended to be independently evaluated 18 months after its commencement.