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iiNet’s High Court victory: ISP did not authorise copyright infringements by customers

2 minute read

Roadshow Films Pty Ltd v iiNet Limited [2012] HCA 16

In an historic judgment handed down on 20 April, the High Court of Australia has unanimously held that internet service provider (ISP) iiNet did not authorise the infringement by its customers of the copyright in films and television programmes owned or exclusively licensed by 34 Australian and United States movie studios.

iiNet v Roadshow in-depth
For a comprehensive analysis of the High Court’s decision and its policy implications, read our recent case note, End of the road for Roadshow: iiNet did not authorise copyright infringement.

This decision follows last year’s judgment by the Full Federal Court which also found in favour of iiNet. The High Court found, as did the Full Federal Court, that iiNet had no direct power to prevent its customers from infringing copyright, and furthermore it was not reasonable to expect iiNet to take action against individual infringers.

This decision illustrates the difficulty facing copyright holders trying to enforce their rights in the current online environment where infringement by file sharing through the BitTorrent system is widespread.

iiNet found not to have authorised infringement

The High Court’s finding on whether iiNet had authorised copyright infringement turned on two pivotal questions:

  1. Did iiNet have a power to prevent its customers from infringing the studios’ copyright, and if so, what was the extent of that power?
  2. Was it reasonable to require iiNet to take steps to prevent those infringements, including via warnings, suspension or termination of customers’ accounts?

The studios argued that iiNet had the power to prevent its customers from infringing copyright by issuing warnings, or suspending or terminating customers’ accounts upon receiving notice of their infringing activity from the Australian Federation Against Copyright Theft (AFACT).

1. Did iiNet have the power to prevent the infringements?

The High Court found that iiNet had no direct power to prevent the infringing activity as it had no control over the BitTorrent System. Rather, iiNet through the provision of internet access to its customers, had an indirect power to prevent the infringements which was limited to suspending or terminating a customer’s account. In emphasising iiNet’s limited power, Chief Justice French and Justices Crennan and Kiefel noted that upon termination of a customer’s account, the customer could simply engage another ISP.

2. Was it reasonable for iiNet to issue warnings, suspend or terminate a customer’s account?

The High Court found that iiNet’s inactivity after receiving notice from AFACT of its customers’ infringements did not constitute authorisation of copyright infringement. This was because the information provided by AFACT was insufficient to give iiNet a proper basis for sending warning notices to its customers. Chief Justice French, Justice Crennan and Justice Kiefel accepted that iiNet’s inactivity was not “indifference” as to the studios’ rights but was based on its assessment of the risks involved (i.e. the risk of liability for wrongly terminating a customer’s account) in taking action based on the information provided by AFACT.

Legislative reform or an industry code on the agenda

Along with other recent cases, such as the current appeal before the High Court regarding Optus’ TV Now television recording service, this decision demonstrates the challenges copyright holders face in protecting their rights online. The Government has sought to address these challenges with a combination of legislative review and industry consultation: comments are currently being sought on the terms of reference for an Australian Law Reform Commission review of the Copyright Act 1968 and the Commonwealth Attorney-General’s Department has been conducting talks with content owners and internet service providers on a voluntary industry code to deal with online infringement. While the Attorney General, Hon Nicola Roxon MP, on Friday confirmed that the talks would continue in the wake of the High Court decision, iiNet CEO Michael Malone has now threatened to “walk away” from these negotiations.

Whether adopted voluntarily or mandated by legislation, there is a real possibility that Australia may follow other jurisdictions such as Canada and New Zealand, and implement a code of practice in which ISPs and copyright holders work together to tackle infringement. Last year, New Zealand introduced a “three strikes” policy where upon notification from a copyright holder, an ISP will send up to three warnings to an infringer before possible disconnection from the internet or a NZ$15,000 fine. Although a similar “five strikes” policy proposed earlier this year by an alliance of ISPs was rejected as “fall[ing] well short” by rights holders, today’s decision will undoubtedly serve as a catalyst for further negotiations.

We will keep you posted with any developments.