In brief
- As a result of the decision in Roadshow Films Pty Ltd & Ors v iiNet Ltd we have confirmation that in Australia, ISPs in the position of iiNet do not have an obligation to act as judge, jury and executioner when it comes to allegedly infringing conduct of their users.
- An ISP who does no more than "merely provide the facilities" over which users infringe copyright, will not itself be liable for authorising copyright infringement even if the ISP does not disconnect the users after being informed of allegedly infringing conduct.
Landmark copyright case: ISP liability for copyright infringement
Internet Service Providers (ISPs) across the country gave a collective sigh of relief this morning when Justice Cowdroy handed down his decision in the Federal Court of Australia in the much anticipated Roadshow Films Pty Ltd & Ors v iiNet Ltd decision.
The decision represents a test case for ISP liability for copyright infringement in Australia. In particular, it was expected to be a test case for the application of the so-called "safe harbour" provisions of the Copyright Act 1968 (Cth) (Copyright Act), which have not been judicially tested since their implementation as part of the Australia-United States Free Trade Agreement in 2004. Ultimately, the Court decided it did not need to decide the safe harbour issue, although Justice Cowdroy has commented on the availability of the provisions in any event.
Justice Cowdroy also noted that the case was the first of its kind against an ISP anywhere in the world to proceed to both hearing and judgment.
The case highlights the tensions between copyright owners on one hand and ISPs on the other, with the key issue being who should be responsible for protecting copyright material in an online environment. It is a battle that is being fought around the globe, with copyright owners, ISPs and legislators grappling with the challenges of the new digital age. Given what is at stake, we can expect the studios will be looking at grounds to appeal the decision and in that respect, the issues may still be quite some way from being finally resolved.
For now at least, we have confirmation that in Australia, ISPs in the position of iiNet do not have an obligation to act as judge, jury and executioner when it comes to allegedly infringing conduct of their users. An ISP who does no more than "merely provide the facilities" over which users infringe copyright, will not itself be liable for authorising copyright infringement even if the ISP does not disconnect the users after being informed of allegedly infringing conduct.
Background
On 20 November 2008, an alliance of film and television studios (the studios) commenced proceedings in the Federal Court for copyright infringement against iiNet, one of Australia's largest ISPs.
The studios claimed that iiNet authorised its users' infringement of the copyright in their cinematograph films under section 101 of the Copyright Act.
The case concerned iiNet users downloading and sharing television show episodes and films using the peer-to-peer protocol BitTorrent, and follows the music industry's successful action for illegal music file sharing in Universal Music Australia Pty Ltd & Ors v Sharman License Holdings Ltd & Ors (2005) 220 ALR 1; (2005) 65 IPR 289 (the Kazaa decision).
Each studio had particularised films and/or television episodes in its catalogue in which copyright subsists and for which it owns the copyright (by way of exclusive licence). The applicants alleged that iiNet's users had downloaded and shared that material without their permission or licence.
The studios engaged an investigator from the Australian Federation Against Copyright Theft (AFACT) to set up an iiNet account and connect to other iiNet users to download and share copies of the films using BitTorrent. Then, over the course of months, the studios sent iiNet spreadsheets detailing each instance of alleged infringement, the copyright material affected and the customers involved.
The studios' claim
The studios argued that as a result of the notices sent to iiNet, iiNet knew of, or reasonably suspected, its users' infringing conduct but did not act on the infringement notices. As such, the studios alleged that iiNet not only failed to take any action to prevent ongoing infringements but positively encouraged continuing infringements.
The studios argued that iiNet could have taken a variety of actions to prevent or cease its users' alleged infringing conduct: send a warning notice, limit their bandwidth so they are unable to easily download large film and music files or terminate the accounts of repeat infringers.
The studios also argued that iiNet failed to enforce its own terms and conditions of use of its service that prohibit illegal file sharing.
The essence of the studios' claim was that iiNet authorised its users' conduct pursuant to section 101(1) of the Copyright Act and that it was accordingly liable for copyright infringement.
iiNet's defence
iiNet argued that it is merely a conduit that provides the "pipes only" for users' online conduct. iiNet sought to rely on section 112E of the Copyright Act, arguing that it is a carriage service provider that is "merely providing facilities" which its customers have allegedly used to infringe copyright.
The Federal Court in the Kazaa proceedings made it clear that section 112E does not confer a general immunity to authorisation liability. The owners and operators of the Kazaa file sharing system were found to be more than messengers – they knew that the Kazaa website was predominantly used for sharing copyright-infringing material, they were capable of curtailing infringing conduct by using filters, and they had a financial interest in maintaining the system.
Like Kazaa, the respondent in Cooper v Universal Music (Cooper) could not rely on section 112E in a more overt case of authorisation liability, where the Court found that the respondent actively invited use of his site in a way that would infringe copyright in music files (by downloading mp3s for free).
iiNet sought to distinguish its conduct from the conduct of the respondents in those earlier cases.
It argued that its actions did not constitute authorisation liability because:
- it did not have any power to prevent its users' alleged infringing conduct;
- its relationship with its subscribers is contractual;
- its relationship with iiNet users who are not subscribers is neither direct nor commercial; and
- it took reasonable steps to prevent or avoid the alleged infringing conduct, including by implementing internal training, policies and procedures for dealing with infringement notices, through the terms of its Customer Relationship Agreement, and operating a "Freezone Service" for its subscribers to legitimately download or stream copyright material.
It also argued that it derived no commercial advantage from its customers using its services to deal with copyright material over and above payment of their subscription fees. In fact, iiNet argued that increased sharing of large music and video files reduces bandwidth and probably the speed of service iiNet can offer its customers.
iiNet argued that even if it were found to have authorised copyright infringement, it was able to rely on the "safe harbour" provisions in Division 2AA of the Copyright Act, which limit the remedies available against carriage service providers who are found to have authorised copyright infringement on their services.
iiNet argued that its alleged authorising conduct fell within the Category A activity for which safe harbour is granted to a carriage service provider that provides facilities or services for transmitting, routing or providing connections for copyright material where the carriage service provider complies with the prescribed conditions set out in section 116AH(1) of the Copyright Act. iiNet claimed that it satisfied the prescribed conditions because:
- it did not initiate the transmission of copyright material over its network;
- it did not substantively modify the copyright material;
- it implemented a policy for terminating the accounts of repeat infringers; and
- there is no relevant industry code of practice.
It is interesting to note that section 116AH(2) of the Copyright Act contains a qualifier that the safe harbour prescribed conditions do not require an ISP to actively "monitor its service or to seek facts to indicate infringing activity".
The decision
Justice Cowdroy essentially agreed with iiNet. He noted that while iiNet had knowledge of infringing conduct and did not stop that conduct, iiNet's conduct fell short of authorisation of copyright infringement. He further commented that simply because copyright infringement does occur on a very large scale on the Internet, this was not a reason to impose authorisation liability on an ISP.
Justice Cowdroy distinguished the case from previous authorisation cases including the Cooper and Kazaa decisions where the respondents provided the actual means for the infringements rather than providing some facilities that are a mere precondition for infringement. The mere provision of access to the Internet is not providing the means for infringement. The means is the Internet users using that part of the BitTorrent system required to enable them to infringe copyright. iiNet was not responsible for that use.
His Honour also commented that iiNet did not have the relevant power to prevent the infringements under section 101(1A)(a) of the Copyright Act, nor was it a reasonable step for iiNet to have taken under section 101(1A)(c).
Justice Cowdroy held that iiNet had not "sanctioned, approved or countenanced" the infringing conduct and again distinguished the case from previous authorisation cases.
His Honour confirmed iiNet's position as a mere carriage service provider. He stated "iiNet is not responsible if an iiNet user uses that system to bring about copyright infringement" noting that "the law recognises no positive obligation on any person to protect the copyright of another".
As the Court found there was no authorisation of copyright infringement, it was not necessary to decide whether iiNet was able to rely on the safe harbour provisions of the Act. Nonetheless, His Honour commented as an aside that iiNet had satisfied the conditions required to have relied on those provisions as its repeat infringer policy was sufficient. His Honour noted that he had relied on US case law in coming to that conclusion.
The Court dismissed all claims and made a costs order costs against the studios.
Implications for ISPs and copyright owners
The decision has significant repercussions for ISPs and copyright owners.
At a practical level, the decision imposes the burden of policing online copyright infringement back on copyright owners. Accordingly, until such time as the decision is overturned or there is legislative intervention, copyright owners must seek to protect their copyright online themselves.
ISPs will feel vindicated and will say that this is the correct result from a legal and practical perspective and that it is also good policy: copyright owners, being the parties to benefit from the policing of their rights, should be the parties responsible for the cost of that policing.
On the other hand, from a policy perspective, copyright owners will argue that the costs of such policing is merely a cost of ISPs doing business and a cost that would ultimately be passed on to users of their services.
For the moment, ISPs appear to be on relatively safe ground. Having said that, overseas developments, together with this decision in Australia, indicate an increasing industry focus on ISPs as the gatekeepers of internet users who participate in copyright-infringing conduct.
Further, the Copyright Act has since 2001 required a court considering the question of authorisation liability to consider whether the person complied with any "relevant industry code". Despite murmurings of the development of such a code for ISPs over a number of years, no such code has yet been developed.
Given what is at stake, we can expect the studios will look at grounds to appeal the decision. We can also expect copyright owners to use the case as leverage in lobbying government for the introduction of a code of practice for ISPs.
Far from being over, it is likely that the battle has only just begun.
