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The report of the decision here is a brief summary of the principal issue in the case relating to the circumstances in which an internet service provider (ISP) may be liable for authorising an infringement of copyright in circumstances where the ISP’s customers are known to be using the internet to unlawfully reproduce copyright material. 

Specifically the case involved the downloading of cinematograph films by iiNet users or subscribers (using the BitTorrent protocol) in a manner which infringes copyright.  The proceeding attracted a great deal of interest both within Australia and internationally and it is reported to be the first Australian trial to be twittered or tweeted.

The critical issue in the proceeding was whether iiNet, by failing to take any steps to stop the infringing conduct of its customers and subscribers, had authorised copyright infringement by those subscribers.

The first step in making any finding of authorisation was for the Court to determine whether certain iiNet users had infringed copyright.  The analysis that was required was to determine whether utilisation of the BitTorrent protocol by the iiNet subscribers amounted to an infringement of copyright under the Copyright Act 1968 (Cth).  The Court found that a number of primary infringements had occurred although a far fewer number than that which had been alleged by the applicants in the case.  The finding of primary infringement flowed by reason of the finding that a person makes each cinematographic film available online only once through the BitTorrent system and electronically transmits each film only once through that system.  Nevertheless, the finding of even a small number of primary infringements was sufficient to give rise to the issue of whether the ISP had authorised those infringements. 

The Court’s analysis of the issue of authorisation is complex and lengthy.  The judge described the law in this area as being replete with a “litany of competing and contrasting considerations and with one statement of principle frequently matched with a contradictory one.”

Nevertheless, Justice Cowdroy has done a very good job of comparing and contrasting the conflicting decisions in the area and distilling the principles of relevance.  This short article cannot do justice to all of the issues that were live before the Court and therefore we will only deal with the most important findings. 

It is important for the reader to know that the Applicants represented the major motion picture studios in Australia and the United States.  An organisation known as the Australian Federation Against Copyright Theft (AFACT) was prominent in the conduct of the proceeding.  It employed a company to investigate copyright infringement by means of a peer-to-peer system known as the BitTorrent protocol by subscribers and users of iiNet’s services.  The information generated from those investigations was then sent to iiNet by AFACT with a demand that iiNet take action to stop the infringements occurring.  AFACT wanted iiNet to warn the iiNet subscribers that they were infringing copyright and if that warning did not stop the infringing conduct iiNet was expected to suspend the internet service of that subscriber.

The Applicants alleged that iiNet had authorised the primary infringements because it had knowledge of those infringements but did not act to stop them, even after receipt of the AFACT notices.

The Court rejected the allegation that iiNet had authorised the infringements of copyright occurring by use of the peer-to-peer BitTorrent system.  The important findings were as follows:

• After a careful analysis of the cases the Court found there to be a distinction between the provision of the “means” of copyright infringement and the provision of a “precondition” to infringement occurring;

• An alleged authoriser of infringement could only be held liable if he provided the true “means” of infringement.  The mere provision of facilities by which an infringement can occur will not necessarily constitute authorisation;

• The Court held that all that iiNet had done was to provide its customers and subscribers with access to the internet.  It was, in fact, the BitTorrent system which was the “means” by which the Applicant’s copyright had been infringed and iiNet had nothing to do with that system;

• The Court held that the internet now plays a central role in all aspects of modern life and its mere provision could not possibly justify a finding that it was the “means” of copyright infringement;

• The Court distinguished an earlier case in which an ISP had been found liable for authorising a copyright infringement but in that case not only had the ISP hosted the “means” of infringement (the relevant website in issue) on their servers, they actively supported the primary infringer in the creation of the website and even contracted with the primary infringer to host his website free of charge in exchange for advertising.  That was very different to the iiNet situation, according to the Court.

Section 101(1A) of the Copyright Act requires the Court to take three things into consideration when considering whether or not a person has authorised a copyright infringement:

(i) Does the person have the power to prevent doing the doing of the act concerned?

(ii) Is there a relationship between the alleged authoriser and the primary infringer?

(iii) Did the alleged authoriser take reasonable steps to prevent or avoid the doing of the infringing act?

The Court held that there was a relationship between (i) and (iii) in the sense that one could not be said to have the power to prevent infringement if the step to be taken to prevent it is not a reasonable step in the circumstances. 

The Applicants alleged that iiNet had the power to prevent infringements in four ways – they had the power to do so under the agreement with their subscribers, iiNet suspended or terminated users in other circumstances, iiNet had the capability to do so technically and lastly the safe harbour provisions of the Copyright Act implied a duty on the part of iiNet to take positive action to prevent primary infringement. 

The Court held that none of these factors compelled iiNet to act positively against infringers and that, while termination of accounts would undoubtedly stop the infringement, that step would have more far reaching implications and in the circumstances it would not be reasonable to compel iiNet to act in that way.  The Court stated that in no previous case had any attempt been made to render an alleged authoriser responsible, or to act as a conduit to punish those who are responsible for infringing copyright directly.

The mere existence of a contractual relationship between iiNet and its subscribers was not sufficient to persuade the Court that iiNet had authorised the primary infringements.  There was no sufficient nexus between iiNet’s profitability and its commercial interests on the one hand and the infringing activity on the other such that it was necessarily in iiNet’s interest to have its users infringing.

As to reasonable steps, the Court had previously found that the only power available to iiNet to prevent infringement was the system of infringement notification and termination or suspension of subscriber accounts and it had already held that such a step was not reasonable. 

Accordingly Section 101(1A) could not therefore be called in aid by the Applicants.

Next, the Court went on to consider whether knowledge of infringing conduct would, alone, be sufficient to make iiNet liable as an authoriser of the infringement.  The Court held that mere knowledge, as well as the power to prevent it, is not, ipso facto, authorisation.  It was conceded that iiNet had a general knowledge of copyright infringement committed by its users but at that level of abstraction the knowledge was not meaningful.   For knowledge to be relevant to support a finding of authorisation it must be at a level sufficiently specific to compel the alleged authoriser to take a reasonable step to prevent the infringements from occurring.  That level of knowledge had not been established in the present case. 

It was also alleged that iiNet had encouraged infringement by failing to act to prevent infringement;

• by a November 2008 press release;

• by a radio advertisement; and

• by an encouragement to its subscribers to upgrade to greater bandwidth.  None of these factors were sufficient to convince the Court to depart from its finding of non-authorisation.

Finally, the Court considered the classical test for authorisation, namely had iiNet approved, sanctioned and countenanced the primary infringement?  The Court held that all of those terms imply a sense of official approval or favour of the infringements which occur and that in the circumstances no such approval or favour was capable of being found.  The Court observed:

 “The Applicants appear to premise their submissions on a somewhat binary view of the world whereby failure to do all that is requested and possible to cooperate with copyright owners to stop infringement occurring, constitutes approval of copyright infringement.  Such a view is not the law.  It is possible to be neutral.”

Other, for present purposes technical, arguments were raised in relation to the application of certain provisions of the Telecommunications Act, section 112 E of the Copyright Act and the safe harbour provisions contained in division 2AA of part V of the Copyright Act but space prevents consideration of those issues in this article.

Implications for internet service providers

This decision, which is now the subject of an appeal, will undoubtedly be welcomed by internet service providers and other electronic service providers as a vindication that they are merely providing a communication platform and cannot be held legally responsible for the way in which that platform may be utilised by their subscribers and customers.

At one level there is, indeed, a measure of comfort to be derived from the decision.  But it is also very clear that the ultimate decision in such cases will turn very much on the facts which are established.  The greater the relationship or nexus between the communications provider and the owner and operator of the “means” by which primary infringement is enabled to occur the greater the prospect that, in a future case, the communications provider may well be held liable as an authoriser.

For further information, contact: Wayne Condon, Principal, wayne.condon@griffithhack.com.au

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