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Thursday, 04 February 2010 10:32

iiNet scores comprehensive copyright win - UPDATED

iiNet has scored a comprehensive victory in the copyright case brought against it by 34 movie industry players, with the judge finding that iiNet as an ISP did not authorise copyright infringement and was not required to act against those of its users who downloaded copyright movies.

Justice Cowdroy, in his findings handed down this morning in the Federal Court in Sydney found that iiNet was aware of copyright infringements by its users and had not acted to stop them but nevertheless had not authorised copyright infringement because:

"The mere provision of access to the Internet is not a 'means' of infringement...a scheme of notification, suspension and termination of customer accounts is not a relevant power to prevent copyright infringement [under the Copyright Act]...[and] the requisite element of [iiNet] favouring infringement, on the evidence simply does not exist."

Justice Cowdroy awarded costs to iiNet. CEO Michael Malone estimated the case had cost it $4m in addition to an unspecified portion of the total cost provided through insurance.

AFACT, representing the 34 movie companies, had employed a company known as DtecNet to investigate copyright infringement by iiNet customers using BitTorrent. The information generated from these investigations was then sent to iiNet. AFACT wanted iiNet to send a warning to the infringing customers and if they failed to respond to suspend or, ultimately, terminate their service.

iiNet argued that by simply providing Internet access it did not authorise copyright infringement and that, for it to take the action requested would be in breach of the telecommunications Act.

In his judgement Justice Cowdroy laid the blame for infringement on the end users and on the developers of BitTorrent, saying: "The 'means' by which the applicants' copyright is infringed is an iiNet user's use of the constituent parts of the BitTorrent system. iiNet has no control over the BitTorrent system and is not responsible for the operation of the BitTorrent system."

He said: "The decisions in Moorhouse, Jain, Metro, Cooper and KaZaA are each examples of cases in which the authorisers provided the 'means' of infringement. But, unlike those decisions, I find that the mere provision of access to the Internet is not the 'means' of infringement."

The 34 movie industry companies have 21 days in which to lodge an appeal. In the wake of the judgement, AFACT issued a statement expressing its disappointment with the ruling and claiming it would have a negative impact on the Australian Film industry. "Today's decision is a setback for the 50,000 Australians employed in the film industry," it said.

iiNet CEO, Michael Malone, however contends that what is needed is for the industry to be more proactive in finding ways to make content legally available. He said that the US industry was ahead of Australia in this regard and that the volume of BitTorrent traffic in the US had declined as a result.

He said: "We are eager and willing to engage with the film industry and copyright holders to make this material legitimately available."

He added that the music industry in Australia had made some progress in this direction and cited a report in the Australian Financial Review that music industry revenues in Australia had risen 5.8 percent in the past year.

AFACT executive director, Neil Gane, said "We believe this decision was based on a technical finding centred on the court's interpretation of the how infringement's occur and the ISPs ability to control them."

iiNet had claimed that the Telecommunications Act both protected it from allegations of infringement and prevented it from taking any action, such as service suspension, based on infringements alleged by third parties.

Justice Cowdroy, however ruled that the Act would not have prohibited iiNet from acting on AFACT's infringement notices, but since iiNet had not authorised copyright infringement, the question was irrelevant.

Had iiNet been found to have authorised infringement of copyright, it would have been able to seek the protection of the safe harbour provisions of the Copyright Act because it did have a repeat infringer policy, which was reasonably implemented, even though it was not what the applicants believed was required.

AFACT's defeat against iiNet now raises the possibility that it wil follow the course chosen by copyright owners in the US of pursuing offenders directly. There have been several very high profile cases where individual downloaders have been faced with fines running to hundreds of thousands of dollars.

In the iiNet case AFACT has presented evidence of end user infringement and has had that evidence accepted by the court, although not on the scale it would have wished.

AFACT had submitted evidence of 97,942 infringements, but Justice Cowdroy said: "I have found that the number of infringements that have occurred are significantly fewer than the number alleged by the applicants. This follows from my finding that, on the evidence and on a proper interpretation of the law, a person makes each film available online only once through the BitTorrent system and electronically transmits each film only once through that system...Further, I have found, on the evidence before me, that the iiNet users have made one copy of each film and have not made further copies onto physical media such as DVDs."

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