David Bushby

We're speaking with John Fairbairn, a partner in the Intellectual Property Group at Clayton Utz in Sydney. A warm welcome to Boardroom Radio John.

Yesterday we saw the Full Federal Court hand down its long-awaited decision in the iiNet case for intellectual property infringement brought by film studios. What was the outcome? John Fairbairn

Well in a 2:1 decision (there were three judges) iiNet won. The Full Court in effect agreed that iiNet was not liable for the copyright infringement of its users but its victory was not as absolute as it was at first instance.

David Bushby

So what were the key findings in this one?  

John Fairbairn

I think there were probably four elements to it. The first is there is no absolute defence for ISPs to allegations of copyright infringement. The reasoning at first instance was that ISPs didn't provide the means of infringement, they merely provided access to the internet; the Full Court rejected that approach.

Also in relation to the defence under section 112E of the Copyright Act, the Full Court continued to read that very narrowly so that once an ISP has knowledge of infringement it can no longer rely on that section.

I think the second aspect of the decision is the Full Court indicated that ISPs do, or in some circumstances, do have obligations to terminate users or to send them warnings, in other words take the sort of graduated response that copyright owners have been pushing for, but the case really turned on the quality of the infringement notices that the entertainment industry had served on this particular ISP.

So in other words, whether or not an ISP comes under an obligation to take positive steps in relation to infringement will depend on the quality of the information that is provided by the copyright owner, and in this case two out of the three judges came to the conclusion that those notices that were the subject of this proceeding were insufficient.

And the fourth aspect is about the safe harbour provisions which provides a defence for damages to ISPs in certain circumstances. The court found that iiNet's repeat infringer policy, which was required for it to get the benefit of the safe harbours, was insufficient.  

David Bushby

It was insufficient, so it certainly seems as though, well like you said, it is not as an emphatic a victory as it was at first instance. What implications does this have for ISPs out there?

John Fairbairn

Well for ISPs I think certainly they should be looking at the quality of their policies to come within the safe harbours. I think they have to be alive to the fact that copyright owners now potentially are in the position to improve the quality of those notices, and if that's a viable proposition for them they may well deploy that.

I think it's interesting that one of the judges went further than just advocating an improvement in the quality of the notices to also say that for an ISP to take steps, the copyright owner also has to undertake to reimburse the ISP for its reasonable costs of doing so and also indemnify it for any liability it may incur as a consequence of wrongfully terminating a particular user. That's a very interesting aspect of the judgment and it'll be interesting to see whether copyright owners will take up that option. David Bushby

Speaking of next steps, what are we looking at here? Possible appeal avenues to the High Court I imagine?

John Fairbairn

Well that's certainly the next stage and it will be interesting to see what the parties will do in that regard. I think prior to this decision, the public indications were that whichever way the decision was going to go they were going to seek leave from the High Court to appeal.

It will be interesting to see, given some of the guidance that the Court has given and a possible solution or a way through this impasse, whether or not the parties think that's sufficient for them to perhaps come to a negotiated outcome in terms of what processes could be deployed by ISPs to meet some of the copyright owners' demands, or whether these parties think that they could each potentially improve their position through the High Court.

I think the way the judgment has gone, both parties could improve their positions but whether or not they're prepared to do so I think we'll have to wait and see.  

David Bushby

Well just finally John, would this sort of decision now trigger the need or a further push for law reform in this area?  

John Fairbairn

I would be surprised if there was going to be law reform before the High Court heard the appeal. I mean just looking at the way the Government's conducted itself so far. It seems to have been prepared to sort of allow this court process to run its course, and it hasn't run its course yet, so I would have thought any Government response would probably wait until the appeal process had exhausted itself.

And certainly I think given that we have now four different judgments in this area with differing views as to where liability lies and the sort of obligations that are on ISPs, it's certainly an area that's ripe for further guidance from the High Court. David Bushby

We'll certainly keep a close eye on it but we'll leave it there for now. Thanks again for your time today John.