A number of recent developments have brought the issue of online copyright infringement in Australia to the fore. This article provides a summary of the Federal Court’s recent decision in the Dallas Buyers Club litigation, a proposed Industry Code for a copyright Notice Scheme and a new Bill that would enable copyright holders to apply for court orders to block infringing overseas websites. Content owners and transmitters should take heed as this year is likely to bring about significant change.

Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317

On 7 April 2015, Justice Perram of the Federal Court of Australia held that iiNet and five other internet service providers (ISPs) should disclose to Dallas Buyers Club and Voltage Pictures the personal details of the account holders of 4,726 IP addresses alleged to have been used to infringe copyright in the Dallas Buyers Club film. This decision represents a qualified victory for copyright owners, as the Court was careful to place limits on the type of information to be discovered and the purposes for which it can be used.

By way of background, the proceedings originated in October 2014, when DBC and Voltage Pictures (together referred to as “DBC”), the owners of the copyright in the Dallas Buyers Club film, brought an application for preliminary discovery in the Federal Court of Australia. Preliminary discovery is a court process pursuant to which the Court may order that a person produce documents or information to assist in commencing proceedings. In this case, DBC said that it had identified 4,726 unique IP addresses from which its film was shared online using the BitTorrent file sharing network. DBC sought orders requiring iiNet Limited and the other ISPs to disclose the personal details of the account holders of these IP addresses.

In response, the ISPs refused to hand over their customers’ personal details unless ordered to do so by a court. The ISPs cited privacy concerns as well as the danger that DBC would engage in the practice of “speculative invoicing”. This is something that the ISPs alleged that DBC had engaged in in the past in the US; DBC had sent letters of demand to potential infringing account holders, threatening legal action claiming large monetary damages unless those people paid a settlement fee stipulated in the letters.

In his decision, Justice Perram held that the Court would make orders to allow the preliminary discovery sought by DBC. However, his Honour imposed certain conditions on the use that DBC could make of the customer details which would be disclosed by the ISPs.

First, his Honour held that the personal information of the account holders associated with the IP addresses in question should be protected so as to avoid any breach of privacy of this information. As such, his Honour held that DBC must only use the personal information disclosed to it for the following purposes:

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

In this regard, his Honour noted that a draft industry code was to be released by the Communications Alliance which would deal with internet privacy (summarised below). However, as there was no sensible chance of the code coming into force in the next few months, His Honour held that the existence of the draft code provided no reason to decline relief to DBC.

Secondly, Justice Perram considered the practice of speculative invoicing. His Honour considered that such a practice may fall foul of misleading and deceptive and unconscionable conduct provisions in Australian law. As a result, and having regard to the potential vulnerability of the account holders to such a practice, his Honour proposed to impose conditions on this practice, namely that DBC submit drafts to the Court of any letters it proposes to send to account holders before those letters are sent.

Copyright owners and ISPs should be aware of the implications of the Dallas Buyers Club decision. In particular, Justice Perram has made it clear that ISPs may be ordered to comply with preliminary discovery orders to hand over customer details of account holders associated with potentially infringing ISP addresses. However, copyright owners may be subject to certain conditions on the use they seek to make of such customer details.

The birth of a new industry standard: The Copyright Notice Scheme Code 2015

On 8 April 2015, a day after Justice Perram handed down his decision in the Dallas Buyers Club litigation (summarised above), the Communications Alliance submitted its Copyright Notice Scheme Code 2015 (“Code”) to the Australian Communications and Media Authority (ACMA) for registration. If the Code is registered as an industry code, then ISPs will need to comply with the Code or face civil penalties under the Telecommunications Act.

The Code represents a collaborative effort from representatives of ISPs, consumers and copyright owners from the music, film, television and performing arts industries to reduce the incidence of online piracy.

Importantly, the Code proposes a “three strikes” response scheme (called the “Copyright Notice Scheme”) to help deter internet users from infringing copyright. Under this scheme, if a copyright owner identifies an alleged infringement from an IP address, the copyright owner can report the alleged infringement and the IP address to the ISP. The ISP must then try to match the IP address identified by the copyright owner to an account holder who was assigned that IP address at the time of the alleged infringement. If there is a match, the ISP must then send a notice to the account holder informing them of the alleged infringement by following the process set out below:

  1. Education Notice – the first notice issued to an account holder is to notify the account holder that its IP address may have been used to infringe copyright. The notice is to warn about the consequences of further infringements and is to provide links to educational material about how to access legitimate content alternatives.
  2. Warning Notice – if a second infringement using the same IP address occurs within 12 months, a second notice is to advisethe account holder that if it receives another notice, the copyright owner may commence court proceedings, including a preliminary discovery application to obtain the account holder’s details. This notice will suggest that the account holder seek legal advice.
  3. Final Notice – if a third infringement using the same IP address occurs within 12 months, a third notice is to explain that the copyright owner could immediately seek a court order compelling the ISP to reveal the account holder’s details and that the owner could commence proceedings for copyright infringement.

Account holders can challenge the notices by sending a Challenge Notice to an Adjudication Panel. However, if an account holder does not challenge the Final Notice, then the copyright owner can seek a court order to compel the ISP to commence preliminary discovery to reveal the details of the account holder. The copyright owner could then commence a copyright infringement action directly against the account holder.

ACMA will now consider whether it will register the Code. Copyright owners and ISPs should closely follow developments in this area so that they keep abreast of their rights and obligations in relation to online copyright infringement.

Copyright Amendment (Online Infringement) Bill 2015

On 26 March 2015, the Federal Government introduced the Copyright Amendment (Online Infringement) Bill 2015 (Cth) (“Bill”), which if enacted, would allow copyright owners to apply to the Federal Court to require carriage service providers (CSPs) to block overseas websites that exist primarily to facilitate copyright infringement. This Bill could be an effective means to reduce the occurrence of online piracy. However, a number of details are yet to be finalised and appropriate safeguards will need to be implemented in order to balance the interests of copyright owners and service providers.

The Bill proposes to introduce a new section to the Copyright Act, section 115A, which would enable a copyright owner to apply to the Federal Court for an injunction requiring a CSP to take reasonable steps to block access to overseas websites that have the primary purpose of providing users with access to copyright infringing material. The Court would only grant the injunction if it is satisfied that:

  1. a carriage service provider provides access to an online location outside Australia; and
  2. the online location infringes, or facilitates an infringement of, the copyright; and
  3. the primary purpose of the online location is to infringe, or to facilitate the infringement of, copyright (whether or not in Australia). 

While the Bill provides for a specific and targeted remedy for copyright owners, it will only cover those overseas websites whose “primary purpose” is to infringe copyright. This test sets a high threshold for proving that an overseas website is one that is infringing copyright. Therefore, overseas websites such as YouTube, as well as search engines and overseas websites that provide legitimate copyright material, are unlikely to be blocked given that their primary purpose is not to infringe copyright. However, overseas websites that provide torrent files to enable the unauthorised downloading of copyright material are likely to be blocked by the proposed legislation.

If the Bill is enacted, there are some important implications to keep in mind:

  1. An injunction can be granted without the copyright owner having to establish that an ISP or user was infringing copyright or facilitating infringement (see test above).
  2. The Bill requires CSPs to take “reasonable steps” to disable access to the online location. However, this could result in legitimate websites being inadvertently blocked as part of the disabling process.
  3. The CSP is not liable for any costs in relation to the injunction proceedings unless it enters an appearance and participates in them. This could incentivise CSPs not to take part and result in a copyright owner applying for default judgment. The Court would still need to consider whether the copyright owner is able to meet the high threshold of the “primary purpose test”.

In terms of next steps, the Bill has been referred to the Senate Legal and Constitutional Affairs Legislation Committee for industry consultation and review. The Committee is due to report on the Bill by 13 May 2015.

These recent developments show just how much is happening in the online copyright infringement space in Australia at present. Copyright owners and CSPs should keep abreast of further developments in relation to the regulation of online copyright infringement.