As technology advances, entertainment providers are finding it increasingly difficult to find an effective way to protect their intellectual property rights and prevent online piracy. One method is to bring proceedings against internet service providers (ISPs) under national copyright legislation to prevent profit theft and deter others from indulging in online piracy. The following article looks at a selection of recent online copyright infringement cases aimed at preventing piracy,1 and gives a brief overview of the various legislative responses that are being considered — or have been enacted — throughout the world.
Recently there have been a number of online copyright cases brought against those who actively provide internet users with the ability and means to infringe copyright. Some of the better known cases include The Pirate Bay case in Sweden, the Newzbin case in the UK and the RapidShare case in Germany.
The Pirate Bay
The Pirate Bay is a Swedish website which is the ninety-sixth most popular website in the world today.2 The Pirate Bay was initially established in November 2003 by Piratbyran, an anti-copyright organisation, but soon changed ownership and was conducted as a completely separate business by Fredrik Neij, Gottfrid Swartholm Warg, Peter Sunde Kolmisoppi and Carl Lundstrom (the operators).
The Pirate Bay website operates to share digital files between users of the system via a software and file transfer protocol called BitTorrent. BitTorrent software operates by dividing digital files into a number of segments, each of which is designated a mathematical number known as a hash total, and creating a torrent file. A torrent file contains information that identifies the components or segments into which the original digital file has been divided, as well as details of one or more trackers that allow the digital file to be distributed by informing users about which other users also have that same digital file. The torrent file is uploaded to The Pirate Bay’s server, which stores the torrent file for downloading by users. However, the digital files referenced by the torrent file are not stored or located on The Pirate Bay’s servers.
On 31 January 2008, criminal and civil proceedings were brought against the operators of The Pirate Bay with the trial commencing on 16 February 2009, and a decision being handed down on 17 April 2009. 3 The operators were indicted for complicity in breach of the Copyright Act (1960:729) and also for preparations for breach of the Copyright Act. In addition, six Swedish record companies, two Nordic film companies and six US film companies brought civil claims against the operators for breach of the Copyright Act on the basis that a number of films and songs had been made available through The Pirate Bay website without the permission of the copyright holder. The civil and criminal actions were heard together before Norstrom J of the Swedish District Court.
In order to establish complicity in breaches of the Swedish Copyright Act, the following elements had to be found:
- users of The Pirate Bay had infringed copyright;
- the operators had encouraged the infringer(s) to act;
- the operators had acted in such a way that each one could individually be held criminally responsible for their complicity; and
- the operators could be regarded as having acted together and in collusion.4
Having found that the recordings listed by the claimants were works in which copyright subsists, the judge noted that it was not necessary for the entire recording to have been downloaded or transmitted, saying “the making available of a segment of a work is sufficient for the offence to be completed”.5
The judge then considered whether the works were made available in the manner intended by the Copyright Act and said:
By connecting to the Internet and activating their BitTorrent software … [the operators] are making it possible for other Internet users to acquaint themselves of the content of and, therefore, produce copies of the relevant file themselves. As far as accessibility for other Internet users is concerned, the procedure is, in principle, the same as when a work is made available by downloading it to an open Internet website … the users who, through filesharing, have obtained all or segments of the current files does, in the District Court’s view, constitute the type of making available which, according to the Copyright Act, would be regarded as making available to the public.’6
The operation of The Pirate Bay website was found to constitute complicity in breach of the Copyright Act. However, in order to prove the charges against each operator, individual evidence was required to clearly establish that each and every operator was complicit in the infringements. Finding that each operator had been complicit in breaches of the Copyright Act, Norstrom J stated:
It is, in the opinion of the District Court, clear that Fredrik Neij and Gottfrid Svartholm Warg have played leading roles in the technical operation of The Pirate Bay. It has, however, also been shown that Peter Sunde Kolmisoppi and Carl LundstrOm have had a sufficiently direct or indirect influence over the technical development and functionality of the website that they can be regarded as also having been responsible for it … The fact that the defendants intentionally brought about the actual circumstances which constituted aiding and abetting must be regarded as established.’7
The operators had publicly acknowledged that they had been notified that copyright-protected works were available from The Pirate Bay, yet chose to not take action to prevent the infringement of copyright. Accordingly, the judge held that the combination of the above factors resulted in the operators together, and in collusion, knowingly aiding and abetting acts of copyright infringement by The Pirate Bay users.
In relation to the charge of preparation to infringe copyright, the district prosecutor alleged that The Pirate Bay website and torrent files were specifically set up to be used for the purpose of copyright infringement. In accordance with the Swedish Criminal Code, which provides that anyone deliberately intending to aid and abet the committal of an offence and who has received or stored something to be used specifically in the execution of that offence shall be sentenced for preparation of the offence, Norstrom J found that the operators of The Pirate Bay were liable for preparing for breach of copyright. The operators of The Pirate Bay have appealed the decision on a number of grounds with the appeal decision expected at the end of November 2010. The Pirate Bay website is still operating, but utilises a different way of indexing, searching and linking with files via the BitTorrent protocol. The new system of operation has not to date been the subject of any litigation.
In 2010, Twentieth Century Fox and other parties (Fox) sued British-based Newzbin for copyright infringement on the basis that the Newzbin website operated to locate and identify unlawful copies of films online and then display the titles of those files, allowing visitors to the website to acquire unlawful copies of the films by clicking on the link provided. Newzbin created a new type of digital file called NZB, which operates on similar principles to torrent files, but are specifically for use with Usenet. Usenet is an internet discussion system which allows users to post and view messages on the Usenet system. In simple terms, the Usenet system works by interconnecting a series of servers (Usenet servers), and messages posted on the Usenet system are exchanged between the Usenet servers, which are regularly synchronised. Any content uploaded to the Usenet servers is stored in a hierarchy of newsgroups that are named to indicate their content. Members of Newzbin are provided with a report regarding the content available via Usenet upon logging in to the website.
Fox argued that in locating and categorising unlawful copies of films, displaying the titles of those films in searchable format and providing one-click links allowing users to download those films, Newzbin authorised acts of infringement by its members, worked in common design with its members to infringe copyright or, in the alternate, had acted as a service provider with actual knowledge of persons using its services to infringe copyright. Newzbin argued that the Newzbin website provided the same services as Google, namely search engine services but such services were specifically designed to index the entire content of the Usenet system, and referred to their statement located at the bottom of the Newzbin website that:
Newzbin indexes the contents of Usenet, however, it neither provides nor uploads any of the files that may be contained within it. Any descriptions are a result of the indexing and therefore do not relate to downloadable files.
In a very detailed decision, Kitchin J found Newzbin to have:
- authorised acts of infringement by its members;
- procured, encouraged and entered into a common design with its members to infringe; and
- communicated the claimants’ copyright works to the public, namely the defendant’s members.
According to the judge, Newzbin “was aware for very many years that … members of Newzbin who use its NZB facility to download those materials, including the claimant’s films, are infringing copyright”. 8 Furthermore, Newzbin had been put on notice by the claimants that Newzbin was being used to infringe the claimants’ copyright, and the claimants had provided details of the works being infringed.
Considering the claim that Newzbin had authorised infringement, Kitchin J said:
“Authorise” means the grant or purported grant of the right to do the act complained of. It does not extend to mere enablement, assistance or even encouragement. The grant or purported grant to do the relevant act may be express or implied from all the relevant circumstances.
Unlike the Australian Copyright Act 1986, the UK Copyright, Designs and Patents Act 1988 does not provide a list of criteria to be taken into account when considering a claim of authorising infringement. Referring to the Australian legislation and a previous decision of the House of Lords, 9 Kitchin J considered the following factors in deciding that Newzbin had authorised infringement:
- Newzbin’s members had infringed copyright;
- the number of active members of Newzbin was substantial and those members were primarily interested in films;
- Newzbin was aware of alleged infringements and had not installed any filtering system despite evidence that a suitable filter could have easily been installed; and
- the Newzbin website was conducted in such a manner that members were provided with full information and the ability to easily download infringing content.
Saying that Newzbin had also entered into a common design with its members to infringe the claimants’ copyright, Kitchin J noted that the Newzbin site was structured in such a way as to promote infringement; the operators of Newzbin had provided members with the means to download infringing materials, had provided advice through its forums assisting members to engage in infringement, and had profited from such activities.10
In relation to the claim of communicating copyright works to the public, Kitchin J held that Newzbin had communicated the copyright works by providing a service enabling its paying members to identify films and download those films:
This service is not remotely passive. Nor does it simply provide a link to a film of interest which is made available by a third party. To the contrary, the defendant has intervened in a highly material way to the make the claimants’ films available to a new audience … As a result, I have no doubt that the defendant’s premium members consider that Newzbin is making available to them the films in the Newzbin index.11
Finally, the claimants sought an injunction to prevent Newzbin from including in its indices or databases “entries identifying any material posted to or distributed through any Usenet group in infringement of copyright”. 12 Newzbin conceded that it was a service provider as defined by s 97A of the Copyright, Designs and Patents Act 1988 but disputed that it had been provided with a notice setting out full details of the infringement in question as provided for in s 97A(2). Refusing to grant the requested injunction, Kitchin J said that a s 97A(2) notice was not required in order to establish that a service provider had actual knowledge of another person using its service to infringe copyright. However, since the injunction sought a restraint of Newzbin in respect of all copyright material, and not just copyright material belonging to the claimants, Kitchin J refused to grant the injunction, saying the scope of the injunction was undefined and furthermore that he was not persuaded that Newzbin had actual knowledge of all such rights being infringed.
RapidShare is a Swiss-German hosting and filesharing service founded in 2006. In 2009, the German royalties collector GEMA brought proceedings against RapidShare before the Regional Court of Hamburg for copyright infringement in respect of 5000 recordings, which GEMA alleged had been shared through the website. 13 GEMA argued that it had notified RapidShare a number of times regarding the instances of copyright infringement taking place via the website, and that RapidShare had not taken any action to prevent the infringement occurring, despite RapidShare’s use of a filter which employed MD5 hash filtering.
While the Regional Court of Hamburg found that RapidShare itself was not responsible for direct copyright infringement, the court held that it was the legal duty of RapidShare to ensure that copyright infringement did not occur through use of the website. The court also found that RapidShare’s use of the MD5 hash filter was not sufficient to effectively prevent users sharing files in which copyright subsisted. In order to avoid the injunction ordered by the court, RapidShare would have needed to take further steps to prevent users from illegally uploading copyright-protected files to its servers and thus making the infringing works available to the public. The court issued an injunction that RapidShare cease making available the recordings which were listed by GEMA in the proceedings, including an obligation that RapidShare prevent its users from making the recordings available as well, or face a fine of up to EUR250,000 for each instance of infringement that occurred. To avoid such liability RapidShare was ordered to apply a heavier filter to block certain types of files (RAR files) and block uploads which contained the words of the titles of the tracks listed by GEMA. RapidShare appealed the decision.
In April 2010, the Higher Regional Court of DUsseldorf held 14 that RapidShare was not liable for the actions of its users as RapidShare mandates that users choose how their content should be distributed, rather than making the content available to the public automatically. The court also found that the filter ordered by the lower court was ineffective as specific file types can be used for legitimate purposes, and not just infringing purposes. The court considered other means of filtering but rejected all options (including IP address, file name and content scanning) as ineffective.
Legislative developments to counteract online copyright infringement
Because of the expense and uncertainty involved in litigation, entertainment providers have turned to legislative measures as a means of preventing copyright infringement. Throughout the world, a number of countries have introduced legislation that requires ISPs to take action against copyright infringement or be liable, despite ISPs historically being limited under “safe harbour” provisions.
In May 2009, French parliament introduced a law promoting the distribution and protection of creative works on the internet (HADOPI law). The law required ISPs to contact account holders by email and then by letter to warn that they were infringing copyright with the result that, if the warnings were ignored, the account could be terminated for up to a year. In June 2009, the Constitutional Council struck down the legislation on the basis that the law was unconstitutional, saying free access to online communications services is a human right and any decision to terminate that access required judicial consideration. Furthermore, the surveillance required of the ISP would breach French citizens’ right to privacy.
In October 2009, the Constitutional Council approved a revised version of the legislation which requires that a judge approve any suspension or termination of user accounts before action can be taken.15
Republic of Ireland (ROI)
In January 2009, Irish ISP Eircom agreed to introduce a system of graduated response as a result of settlement negotiations with the Irish Recorded Music Association (IRMA). The system, introduced on 24 May 2010, is currently within its three-month pilot phase. Under the graduated response system, Eircom has agreed to:
- inform its broadband subscribers that the subscribers IP address has been detected infringing copyright;
- warn the subscriber that unless the infringement ceases the subscriber will be disconnected; and
- in default of compliance by the subscriber with the warning it will disconnect the subscriber.
During the pilot phase, Eircom has agreed to process 50 IP addresses a week which have been identified by IRMA and Dtecnet as addresses used to share — and not just download — a specific list of copyrighted works via peer-to-peer networks. A recent decision of the High Court has indicated that there is nothing in Irish legislation to force ISPs to disconnect users.16
In October 2008, NZ parliament also introduced a “three strikes” law for copyright infringement under the Copyright (New Technologies) Amendment Act 2008.
After the Act had taken effect at the end of February 2009, there was public outrage at the provisions, resulting in the NZ government suspending the law until further notice. To date, the law has not been reactivated.
In July 2009, South Korea introduced a graduated response system under amendments to the Copyright Act. 17 The amendments allow the Korean Copyright Commission to recommend to ISPs that accounts belonging to repeated copyright infringers be suspended for up to six months. Under the Act, account holders’ email accounts may not be suspended.
After two years of controversy and heated debate, the Digital Economy Act 2010 came into force on 8 April 2010. Under the Act, ISPs with 400,000 subscribers or more are required to police file sharing and introduce the “Three Strikes” procedure, which may result in users who continually infringe copyright having their internet bandwidth reduced or even terminated. Two British ISPs, Talk Talk and BT, have sought judicial review of the Act from the High Court in order to clarify whether the new Act conflicts with the EU’s e-commerce directive which limits the liability of ISPs.18
Australia currently does not have plans to introduce similar legislation, despite urgings from the Australian Federation Against Copyright Theft (AFACT) and the film and television industries since the decision in the iiNet case.19 The government has indicated that it is waiting to see if the industries are able to reach a consensus before stepping in, but it seems that the ALRC is to be asked to review copyright laws to determine whether they should be amended in light of advancing tecimology.20 In the meantime, the Attorney General’s department is continuing to monitor international developments.21
The recent copyright cases discussed above identify some interesting aspects of the liability of ISPs in respect of account holders who repeatedly infringe copyright. It seems to be the case that where account holders are provided with the technology to infringe copyright, and where the ISP appears to have been established particularly for the purpose of allowing copyright infringement to occur, an ISP will be liable for authorising or inducing copyright infringement. However, the decisions also indicate that where an ISP’ s services are provided or can be used for legitimate purposes, the ISP may escape liability (eg, RapidShare).
The television, music and film industries in Australia are pushing for the introduction of legislation requiring ISPs to police the file sharing activities of their users. However, because such legislation has only been introduced in other countries during the past two years, there is no evidence to indicate that such legislation has any effect in preventing or deterring copyright infringement. For the moment at least, it seems that entertainment providers have no choice but to rely on litigation against ISPs established blatantly for the purpose of assisting copyright infringement.
This article was originally published in Volume 13(7-8) of the Internet Law Bulletin and is republished here with permission.
- Because of the attention and analysis which has already been directed at the iiNet decision, this case will not be discussed.
- According to “Thepiratebay.org Site Info” produced by Alexa Internet, Inc (www.alexa.com ) as accessed on 21 July 2010.
- The following case summary has been created from an unofficial English translation of The Pirate Bay judgment as commissioned by the International Federation of the Phonographic Industry (IFPI), available at www.ifpi.org (The Pirate Bay).
- The Pirate Bay at 36-37.
- The Pirate Bay at 48.
- The Pirate Bay at 41.
- The Pirate Bay at 51.
- Twentieth Century Fox Film Corporation, Universal City Studios Productions LLP, Warner Bros Entertainment Inc, Paramount Pictures Corporation, Disney Enterprises, Inc, Columbia Pictures Industries, Inc v Newzbin Ltd  EWHC 608 (Ch) (Newzbin) at .
- CBS Songs Ltd v Amstrad Consumer Electronics plc  AC 1013;  2 All ER 484; (1988) 11 IPR 1 (Amstrad).
- Newzbin at .
- Newzbin at .
- Newzbin at .
- he original judgment of the Regional Court of Hamburg is available in German from www.gema.de . At this time, there does not seem to be an English translation available. The comments made within this article are based on information taken from the following sources: Hamburg court rules on copyright liability of RapidShare by Fabian Niemann of Bird & Bird from www.lexology.com , accessed on 26 July 2010; www.theregister.co.uk, accessed on 21 July 2010; and www.ipkitten. blogspot.com , accessed on 20 July 2010.
- www.arstechnica.com and www.newteevee.com, accessed on 27 July 2010.
- www.nytimes.com, accessed on 8 July 2010.
- J Collins, “Eircom to cut broadband over illegal downloads”, 24 May 2010, The Irish Times, located online at www.irishtimes.com.
- www.apaaonline.org, accessed on 9 July 2010.
- www.the1709blog.blogspot.com, accessed on 9 July 2010.
- Roadshow Films Ply Ltd v iiNet Ltd (No 3) (2010) 263 ALR 215; 83 IPR 430;  FCA 24; BC201000250.
- Eyres, J, “Copyright law to be reviewed”, 24 September 2010, Australian Financial Review.
- “Hollywood takes hear from miners’ win”, 27 July 2010, Australian Financial Review, at 33.