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Friday, 20 April 2012 12:31

AFACT loses High Court copyright appeal: calls for legislative change

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AFACT has called for legislative change after the High Court unanimously dismissed its appeal against the NSW Federal Court ruling that iiNet did not authorise copyright infringement when its Internet customers downloaded pirated movies.

AFACT said: "Today's decision by the High Court exposes the failure of copyright law to keep pace with the online environment and the need for Government to act."

AFACT CEO, Neil Gane said: "We are confident the Government would not want copyright infringement to go on unabated across Australian networks especially with the rollout of the NBN."

He claimd that the Australian Government was dragging its heels on legislation, and suggested that - not withstanding the absence of legislation - ISPs should take some initiative.

"In the three years since the case commenced, legislators, regulators and courts around the world have mandated that ISPs must play a central role in preventing online copyright theft. Fortunately, many ISPs have come to the conclusion that being involved in online copyright protection is in their commercial interests. ISPs are becoming increasingly dependent on monetising legal content and therefore protecting its value."

The High Court found that iiNet had no direct technical power to prevent its customers from using the BitTorrent system to infringe copyright by downloading movies, and that all iiNet could do was to terminate an offending customer's Internet access service. iiNet was awarded costs. iiNet said: "Legal costs of the case to date are approximately $9 million and have already been expensed. A portion of costs will be recovered."

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The Court also found that the information contained in notices provided to iiNet by AFACT did not provide iiNet with a reasonable basis for sending warning notices to individual customers threatening to terminate those customers' accounts.

For these reasons, the Court held that it could not be inferred from iiNet's inactivity after receiving the AFACT notices that it had authorised any act of infringement of copyright in the appellants' films by its customers.

iiNet CEO, Michael Malone, said the judgment supported the company's position and proved the claims made against it were unfounded.

He re-iterated his earlier advice to the film industry that increasing the availability of lawful, online content in a more timely, affordable and reasonably priced manner was the best method to protect content owners' copyright.

He said there was strong evidence that content partnerships and agreements between ISPs, legal websites and copyright holders had done more to reduce 'piracy' and to showcase copyright holders' materials than their legal battle against iiNet.

The Full Bench of the High Court delivered two separate judgements: one from Justices French, Crennan and Kiefel and one from Justices Gummov and Hayne. Both however dismissed the appeal and awarded costs to iiNet.

The judgement of Gummow and Hayne reached the same primary conclusion about lack of direct power to prevent but also undertook broader analysis of the legislative history and policy considerations.

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French et al found that "The appellants' submission, that iiNet should be taken to have authorised the infringements unless it took measures with respect to its customers, assumes obligations on the part of an ISP which the Copyright Act does not impose. A consideration of the factors listed in s 101(1A) [of the Copyright Act] does not permit a conclusion that iiNet is to be held liable as having authorised the infringements."

It also found that "The information contained in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers' accounts. For these reasons, iiNet's inactivity after receipt of the AFACT notices did not give rise to an inference of authorisation (by "countenancing" or otherwise) of any act of primary infringement by its customers.

The option is still open to rights holders to go after individual infringers. The majority judgement suggested that this would be a "teaspoon solution to an ocean problem." However in the US rights holders have adopted this approach, securing high value and high profile penalties from some individuals, presumably hoping that their fate will deter others.

The High Court's full judgement is available here.

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