Dallas Buyers Club, LLC v iiNet Limited & Ors [2014] (Federal Court)

There have been significant developments in Australia recently in respect of dealing with online piracy, namely:

  1. The application filed by Dallas Buyers Club LLC (DBC) (the owners of rights in Australia in the 2013 Oscar winning film, Dallas Buyers Club (Film)) in the Federal Court of Australia against a number of Australian internet service providers (ISPs) to hand over the details of their customers whom DBC suspect of illegally downloading the film;1 and
  2. The draft industry code proposed by ISPs and representatives of rights-holders (Rights-Holders) which sets out how they will deal with online piracy and copyright infringers of music, film and television content (Proposed Industry Code).2

The outcome of these developments will materially affect Australia’s online piracy landscape and the dynamic between Rights-Holders, ISPs and consumers of music, film and television content.

DBC Case

On 14 October 2014, DBC filed an application in the Federal Court of Australia against iiNet Limited (iiNet) and several other ISPs3 seeking orders that the ISPs provide details of their customers whom DBC suspect of copyright infringement by illegally downloading and sharing the Film. The proceedings involve an application for preliminary discovery, which is a process which may be used to identify person(s) that an applicant wants to take legal action against. DBC suspects that certain IP addresses of iiNet customers (and other ISPs' customers) are linked to the illegal download of the film for use in Australia.

iiNet is opposing DBC's application and has cited a number of concerns, namely:

  1. The possibility that their customers will be unfairly targeted to settle any claims out of court using a practice called "speculative invoicing".  This refers to the strategy where a company mails invoices to the alleged copyright infringer to get a cash settlement while trying to discourage the alleged copyright infringer from appearing in court;
  2. Given that the allegations are linked to the account holder associated with the IP address, the alleged copyright infringer could be incorrectly identified in circumstances such as a share household, a school or internet café; and
  3. Australian courts have not tested copyright infringement in the context of online piracy, and as such, any threat by DBC is merely speculative.

The preliminary discovery proceedings were heard late last month and Justice Perram has indicated that a decision will be handed down in the next two weeks. It is anticipated that Justice Perram will consider how such disclosure will interact with the provisions under the Privacy Act 1988 (Cth) and Telecommunications Act 1997 (Cth), which prohibits ISPs from disclosing certain information, including the identities and details of their customers. A further consideration relates to whether the disclosure would be consistent with the process set out in the Proposed Industry Code and whether deciding in DBC's favour would undermine the development and implementation of the Proposed Industry Code.

Proposed Industry Code – Copyright Notice Scheme

In December last year, Communications Minister, Malcolm Turnbull and Attorney-General, George Brandis, published a media release outlining how the Federal Government will tackle online copyright infringement. As part of these new measures, the Federal Government gave industry leaders (including ISPs and Rights-Holders) an ultimatum to immediately develop a voluntary industry code to deal with infringers of online piracy. If they failed to develop an industry code by 8 April 2015, the Federal Government indicated that it would impose a binding scheme by law.

Against this background, ISPs and Rights-Holders published a draft industry code on 20 February 2015, which contains proposals on how to deal with online piracy and copyright infringers of music, film and television content. Under the Proposed Industry Code, Rights-Holders are responsible for:

  1. identifying IP addresses associated with illegal downloading;
  2. generating an infringement report containing the alleged infringing IP addresses;
  3. submitting the infringement report for verification by a certification body; and
  4. providing the verified infringement report to the relevant ISP.

Customers suspected of illegally downloading content would be issued with a series of escalating infringement notices from ISPs (within seven days of receiving the infringement report). In the first instance, customers would be emailed an "Education Notice". If their IP address was continued to be identified as being associated with illegal downloading, then they would receive a "Warning Notice" followed by a "Final Notice" in the third instance.

Each of the notices would contain details of the alleged infringement, including the content involved and the time and date of the alleged infringement. In respect of the "Final Notice", the customer would be required to acknowledge receipt of the "Final Notice" and would be informed that the Rights-Holder may apply to the court to obtain their identity.

If a customer receives three notices within 12 months, the Rights-Holder would be able to apply to a Federal Court or a Tribunal to access the customer's name, address and contact details, and commence proceedings against them. Customers would be able to challenge any of the notices after receiving a "Final Notice" by applying to a proposed independent Adjudication Panel.4 There would be an application fee of $25 which will be refunded if the challenge is successful.

Given that the Proposed Industry Code is currently in draft form, there are a number of issues which will need to be addressed in greater detail, such as:

  1. whether restricting the Proposed Industry Code to residential fixed, internet customers may create a loop-hole for illegal downloading; and
  2. how the costs of the implementing the Proposed Industry Code will be apportioned between ISPs and Rights-Holders (and how the costs will affect consumers).

Further Developments

The Proposed Industry Code is subject to a 30 day public consultation period which concludes on 21 March 2015. It is anticipated that further amendments will be made to the Proposed Industry Code before it is approved by the Australian Communications and Media Authority.