The Full Federal Court recently confirmed the landmark copyright decision of Justice Cowdroy in the case of Roadshow Films & Others v. iiNet on appeal, determining on different grounds that iiNet was not liable for the copyright infringement of its users, who downloaded cinematograph films in a manner which infringed copyright.
However, as stated by Justice Emmett, “it is clear that the questions raised in the proceeding are ongoing”, and in certain circumstances, ISPs may be held liable for having “authorised” the copyright infringement of its users and be required to take “reasonable steps” to prevent infringement.
iiNet was served with infringement notices from The Australian Federation Against Copyright Theft (“AFACT”), alleging that iiNet users had infringed copyright of Hollywood films by engaging in peer to peer file sharing using the BitTorrent peer-to-peer protocol. Justice Cowdroy held that iiNet had not authorised the copyright infringement of its users (see our previous alert here).
The principal question on appeal was whether iiNet, by not having acted on the AFACT notices, had “authorised” the copyright infringement of its customers within the meaning of section 101(1) of the Copyright Act 1968.
The terms of section 101(1A) required the Court to consider whether iiNet had the power to prevent the infringements from occurring, the relationship between iiNet and its customers, and whether iiNet took any other “reasonable steps” to prevent the infringements from occurring.
The copyright owners suggested that “reasonable steps” by the ISP would include acting on the notices of infringement by way of verification, monitoring and adopting a “three strikes” policy against repeat infringers, potentially resulting in suspension or termination of a customer account, at iiNet’s expense.
None of the members of the Full Court (Emmett, Jagot and Nicholas JJ) adopted the reasoning of the trial judge and in particular, his central finding that iiNet did not provide the “means” of infringement.
The Full Court found (contrary to the trial judge) that the customer relationship agreement between iiNet and its customers afforded iiNet with a “power to prevent” the infringements by suspending or terminating the customer’s service.
However, the bench split on the question of whether iiNet’s policy of inaction in response to infringement notices was “reasonable” in the circumstances and accordingly, whether iiNet’s conduct amounted to “authorisation”.
Justices Emmett and Nicholas formed the majority, determining that iiNet had not authorised the infringement of its users. iiNet’s refusal to act on the AFACT notices was reasonable because the notices were not accompanied by sufficient evidence and did not identify the methods used to identify the infringements. Emmett J also considered that it would not be reasonable for an ISP to take action unless the rights owner undertook to reimburse the ISP’s cost of verifying the acts of infringement and establishing a regime to monitor further acts of infringement.
In dissent, Justice Jagot found that iiNet had “countenanced” or shown “tacit approval” of the copyright infringement of its subscribers. It was open to iiNet to adopt a responsive policy or warning scheme against allegations of copyright infringement, including suspension and termination.
The Court unanimously agreed that where an ISP’s conduct amounts to authorisation, it would not be merely “providing facilities” and therefore would not be covered by the protection afforded to carriage services providers under s112E of the Copyright Act. The section provides that a carriage service provider is not taken to have authorised any infringement of the copyright in an audio-visual item merely because another person uses its facilities in a manner which infringes copyright.
The effect of the decision appears to be that there is no absolute defence for an ISP to allegations of authorisation of copyright infringement. However, the circumstances in which an ISP may be liable for authorisation are not clear. It remains to be seen whether the rights holders will seek leave to appeal the decision to the High Court of Australia.