High Court reaches decision in iiNet copyright litigation – Casenote

20 April 2012:  The High Court has handed down its decision in the long-running iiNet copyright litigation.[1]  The case concerned a contention that iiNet had authorised infringement of copyright in films by its customers, in contravention of ss 86 and 101(1) of the Copyright Act 1968 (Cth) (‘Copyright Act’).  In particular it was alleged that iiNet’s ‘indifference’ to Australian Federation Against Copyright Theft (AFACT) notices specifying IP addresses on which infringement had occurred amounted to countenancing and therefore authorising copyright infringement.

The action in the High Court was an appeal from the Full Court of the Federal Court (‘FCFC’) which held that there was no authorisation by iiNet but left it open as to whether ISP’s may be liable for authorisation if presented with stronger evidence of infringement on their networks than the AFACT notices provided.[2]  The majority (French CJ, Crennan and Kiefel JJ) and the separate opinion of Gummow and Hayne JJ dismissed the appeal and appear to have dismissed any real possibility that ISP’s will be responsible for authorisation of copyright infringement by their customers under the current provisions of the Copyright Act.

I Majority Judgment (French CJ, Crennan and Kiefel JJ)

The majority focussed squarely on the issue of authorisation, accepting its established definition as to ‘sanction, approve, and countenance’.[3]  Their Honours examined this definition in the context of the three criteria in s 101(1A) of the Copyright Act that can be used to assess whether authorisation had occurred.  These are:

(a)    the extent (if any) of the person’s power to prevent the doing of the act concerned;

(b)   the nature of any relationship existing between the person and the person who did the act concerned;

(c)    whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.

Their Honours determined that the definition of ‘authorised’ in the context of these factors meant that the mere lack of exercise of a contractual power to terminate customer accounts by iiNet is insufficient to show authorisation.[4]  They distinguished between acts that authorise and those that merely ‘support’ or ‘encourage’ infringement.[5]  They noted that iiNet had no technical power to prevent infringement.[6]  Importantly they also observed that there is no industry code or protocol which would require other ISP’s to prevent customers who had their service terminated from entering new service contracts and infringing over those connections.[7]  This further weakened the case the iiNet had any real power to prevent infringement.

It was also found that it would not be reasonable to expect iiNet to act purely on the evidence of AFACT notices and potentially expose themselves to claims by customers for violation or improper termination of contract.[8]  As a final observation the majority stated that the Copyright Act provisions on authorisation appear to be not ‘readily suited’ to protecting copyright owners from widespread infringement over the internet.[9]

II Separate Opinion of Gummow and Hayne JJ

Gummow and Hayne JJ examined the case in the wider context of tort law regarding ‘special relationships’ to make a party liable for damage caused by a third party to the litigation.[10]  Their Honours stated that the claim against iiNet was essentially one for breach of an alleged duty they owed to copyright holders.[11] Their Honours argued that the ‘immediacy’ of the relationship between iiNet and its customers was an important issue.[12]  Like the majority they then assessed the grounds in 101(1A) of the Copyright Act, with particular focus on the power iiNet had to prevent infringement.[13]

The ultimate conclusion reached by Gummow and Hayne JJ was that the control iiNet exercised over customers and therefore their power to prevent infringement was insufficient to establish authorisation.[14]  They also noted the importance of a lack of an industry code to prevent customers simply going to another ISP to use their networks to infringe.[15]  They stated that the progression from ‘indifference’ to ‘countenance’ to ‘authorise’ is ‘too long a march’.[16]  As a matter of policy they observed that it should be up to the Parliament to react to changes in technology that present new threats to copyright and that the courts should avoid radical interpretations of existing legislation to keep up with technological change.[17]

III Further points and Conclusion

None of the written judgments considered the issues of either the ‘safe harbour’ provisions of the Copyright Act nor Pt 13 Div. 2 of the of the Telecommunications Act 1997 (Cth), issues which were decided against iiNet in the FCFC judgment.[18]

In light of this decision ISP’s can feel significantly more certain that infringement by customers on their networks will not expose them to claims for authorisation under the Copyright Act, as the court has recognised that they lack the requisite power to prevent copyright infringement.[19]  It has also demonstrated the need for copyright owners to lobby for an industry code to assist in preventing repeat offending customers from accessing the services of ISP’s.

Full text of decision here.

[1] Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16 (‘iiNet’).

[2] Roadshow Films Pty Ltd V iiNet Ltd (2011) 275 ALR 1.

[3] See Evans v E Hulton & Co Ltd and Monckton v Pathé Frères Pathephone Ltd [1926] 2 KB 474, 491; University of New South Wales v Moorhouse (1975) 133 CLR 1, [20].

[4] Ibid [77]-[78].

[5] Ibid [69].

[6] Ibid [66]-[70].

[7] Ibid [71], [75].

[8] Ibid [75].

[9] Ibid [79].

[10] Ibid [109].

[11] Ibid [115].

[12] Ibid [127].

[13] Ibid [135]-[144].

[14] Ibid [146].

[15] Ibid [139].

[16] Ibid [143].

[17] Ibid [120].

[18] Ibid[148]-[150].

[19] See ibid [79].

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