The Federal Court of Australia will order six Australian Internet Service Providers (ISPs), including iiNet and Dodo, to provide to the producers of the movie, Dallas Buyers Club, the names and addresses of 4276 ISP addresses which were said to have illegally shared the movie through a peer-to-peer network.

This case has drawn significant public and media attention. However, this case is also legally interesting as:

  • it is the first case in Australia where preliminary discovery has been used to assist with identifying those individuals who may have illegally shared a movie
  • it provides an example of circumstances where preliminary discovery can be utilised
  • it contemplates the issue of speculative invoicing.

Preliminary discovery

Preliminary discovery is, as the name suggests, a process by which a party can obtain discovery prior to substantive legal proceedings being commenced. However, the type of information which can be obtained is quite limited, as are the circumstances in which preliminary discovery will be ordered.

In the Victorian, NSW and Federal jurisdictions, preliminary discovery can only be used to obtain information to identify:

  • the identity or whereabouts of a prospective defendant
  • whether or not a cause of action exists.

It is not a mechanism to obtain general discovery without first having to commence legal proceedings. Nor is it a mechanism to be used to enable a party to generally bolster their claim against a party prior to the commencement of proceedings. Further, prior to bringing a preliminary discovery application, parties are required to make reasonable inquiries to attempt to obtain the requested information.

The iiNet case related to the first category of preliminary discovery – where the party knows that they have a claim against certain individuals, however, they do not know the identity of those individuals. Dallas Buyers Club LLC was able to identify 4276 ISP addresses which were used to share the movie through peer-to-peer networking. However, Dallas Buyers Club LLC did not know any information about the account holders of these ISP addresses. This was the focus of the preliminary discovery application.

The iiNet case did not deal with the second category of preliminary discovery – where a party needs information to determine whether or not a cause of action exists against a defendant. The plaintiffs clearly believe that they have a cause of action against those persons who shared the movie through peer-to-peer networking.

Speculative invoicing

One of the issues raised by the ISPs as a discretionary factor that outweighed against the granting of the application, was that it was likely that the plaintiffs would use the information obtained from the ISPs to engage in ‘speculative invoicing’.

Speculative invoicing generally involves sending letters to persons demanding payment of large sums for an alleged copyright infringement. These letters often threaten court action and state that, if the demand is not complied with, the recipient will be liable to pay large monetary penalties.

The Court noted that it did have evidence that one of the plaintiffs had engaged in speculative invoicing in the US.

The Court stated that whether speculative invoicing was lawful in Australia was not necessarily an easy matter to determine. However, the Court acknowledged that representing to a person:

  • that they have a liability which they do not
  • that their potential liability is much higher than it could ever realistically be

may well be misleading and deceptive conduct under the Australian Consumer Law.

Here, the Court was not required to make any determination on the legality of speculative invoicing. It was merely required to consider the potential for speculative invoicing to be used when exercising its discretion to order preliminary discovery.

In this case, the Court resolved the issue in a practical fashion by ordering that the letters to be sent to the identified account holders required the approval of the Court.

However, it will be interesting to see how Australian Courts deal with the practice of speculative invoicing in the future.