In a keenly awaited decision made late last week, the Full Federal Court, by a majority, upheld an earlier judgment and affirmed that iiNet was not liable for infringements of copyright committed by its customers.

However, the Full Federal Court's approach appeared to depart significantly from that of the trial judge.

Background

In 2008, a consortium of film and television studios (known as AFACT) sued iiNet for 'authorising' the copyright infringement of iiNet's customers. Under Australian copyright laws, a person who authorises an infringement of copyright committed by another person can also be liable for that infringement.

In the first trial, Cowdroy J of the Federal Court accepted that iiNet's customers had committed infringements of copyright. However, Cowdroy J rejected the claim that iiNet was liable for authorising this infringement of copyright. Even if iiNet had authorised its customers' infringements, Cowdroy J accepted that iiNet could have relied on the 'safe harbour' provisions of the Copyright Act 1968 (Cth), on the basis that it had a policy for the termination of accounts of repeat infringers.

AFACT appealed this decision to the Full Federal Court. In its appeal, AFACT argued, in particular, that:

  • iiNet had the power and the means to prevent the infringement of copyright simply by passing on warning emails to its customers who had infringed copyright or by terminating their internet accounts;
  •  the exercise of this power is reasonable; and
  • iiNet could not rely on the 'safe harbour' provisions because it did not adopt and reasonably implement a policy to terminate the accounts of repeat infringers.

The appeal decision

The majority (Emmett J and Nicholas J) found that iiNet did not authorise the infringement of copyright by its customers.

This was because AFACT's infringement notices were only assertions of copyright infringement and did not adequately explain how and why copyright had been infringed, nor provide evidence of infringement.

As such, it was not reasonable to expect iiNet to act on the infringement notices by warning, suspending or terminating the alleged infringing customers' accounts.

In a notable dissenting judgment, Jagot J held that, despite the AFACT notices containing 'prima facie credible evidence of widespread and repeated infringements', iiNet adopted a position that it had 'no obligation to do anything'. This amounted to 'tacit approval' of its customers' copyright infringement and, therefore, authorisation of copyright infringement.

However, all three judges then agreed that had iiNet been found liable for authorising the infringement of copyright by its customers, it could not rely on the 'safe harbour' provisions because it had not properly adopted a policy nor had processes in place to terminate the accounts of repeat infringers.

Implications

While AFACT was not successful in this instance, the Full Federal Court appears to have left open the possibility that AFACT could, in the future, compel iiNet to suspend or terminate the internet accounts of suspected infringers.

Significantly, Emmett J of the majority set out circumstances where it would be reasonable for iiNet to act on the infringement notices.

These circumstances are:

  • iiNet is provided with 'unequivocal and cogent evidence' of alleged copyright infringement by its customers. This evidence would typically be provided by the copyright owner;
  • iiNet then provides its customers with an opportunity to refute the allegations; and
  • the party making the allegation provides iiNet with an undertaking to indemnify iiNet for any liability incurred by iiNet as a consequence of iiNet mistakenly suspending or terminating an account.

If the above circumstances were in place in this case, iiNet would then be required to act on the infringement notices.

This approach is particularly interesting as it now appears that a copyright owner can influence the circumstances in which another party could be in a position to 'authorise' copyright infringement by another.

Given the strong dissenting judgement and the comments by Emmett J, it would appear unlikely that this decision will be the end of this matter.