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Available online at www.sciencedirect.com

www.compseconline.com/publications/prodclaw.htm

Is termination of internet users’ accounts by an ISP a proportionate response to copyright infringement? Kathy Eivazi Lawyer based in Australia

abstract Keywords:

In light of the significant case of Roadshow Films Pty Ltd v iiNet Ltd (No3) [2010] FCA 24;

Intellectual property

[2011] FCAFC 23; [2012] HCA 16, this paper examines the courts’ responses to the question

Copyright infringement

posed above highlighting the uncertainty in this area of law. It argues that this case

Authorisation

demonstrates that the existing copyright laws governing ISPs’ liability in Australia is

BitTorrent Peer-to-Peer file-sharing

inadequate and needs legislative reform.

Internet service provider liability

1.

Introduction

As online content distribution becomes increasingly prevalent, copyright protection is also becoming more challenging. Faced with such a challenge, copyright owners often resort to legal channels to protect their exclusive rights. Where it is often difficult and impractical to pursue individuals (primary infringers), copyright owners turn to other more financially viable alternatives (e.g., online intermediaries such as ISPs).1 iiNet, the third largest internet service provider in Australia is the latest casualty being pursued for authorising infringements committed by users via its internet services.2

ª 2012 Kathy Eivazi. Published by Elsevier Ltd. All rights reserved.

On 20 November 2008, an alliance of 34 film and television studios (referred to as the studios)3 in both Australia and the United States commenced legal action in the Federal Court of Australia against iiNet Ltd (referred to as iiNet) in Roadshow Films Pty Ltd v iiNet Ltd (No 3).4 The key issue in this case was based upon iiNet’s failure to take any action (i.e., issue warnings, suspend or terminate) against its users once it was notified by the Australian Federation Against Copyright Theft (AFACT) of the infringing activities via its services. The studios claimed that iiNet by failing to act to prevent or stop the infringement authorised the infringement of copyright (by means of the BitTorrent protocol)5 via the use of its internet access services.6

1 Groennings Kristina, “Cost and Benefits of the Recording Industry’s Litigation Against Individuals” (2005) 20 Berkeley Technology Law Journal 571, 589e90. However, there is no safety blanket for individual infringers. In Polydor Ltd v Brown [2005] EWHC 3191, a claim was brought against an individual (Mr Bowles) in relation to infringing activities that had been carried out by his children without his knowledge. 2 Lichtman Doug and Posner Eric comment that the copyright dispute is “.in many ways a dispute about the propriety of the underlying property right, not a dispute about the proper contours of indirect liability per se.” “Holding Internet Service Providers Accountable” Supreme Court Economic Review (2006) 14:221 at 258. 3 Including companies such as Roadshow Films Pty Ltd, Universal City Studios L L L P, Paramount Pictures Corporation, Warner Bros Entertainment Inc, Disney Enterprises Inc, Columbia Pictures Industries Inc, Twentieth Century Fox Film Corporation and the Seven TV Network. 4 [2010] FCA 24. 5 The most popular method of decentralised, peer-to-peer (P2P) file-sharing system. “The BitTorrent protocol (BitTorrent) is designed to facilitate the efficient distribution of data over the internet. It does this using a “peer to peer” system under which, in the primary judge’s words, “all computers seeking data participate in the distribution of it”.The distribution of data is decentralised in the sense that a computer which is used to download a file utilising BitTorrent connects to a swarm of other computers also using BitTorrent and begins the process of downloading the file from, and uploading it to, other computers in the swarm. This is quite different to the traditional client/server model of data distribution under which one computer (the server) sends data to another computer (the client) which requests it. BitTorrent breaks up large files (which are often hundreds or thousands of megabytes in size) into smaller parts (pieces) which usually are somewhat larger in size than the packets in which they are transmitted”: Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [547] per Nicholas J. 6 The applicants in this case were coordinated and organised by the Australian Federation Against Copyright Theft (AFACT). 0267-3649/$ e see front matter ª 2012 Kathy Eivazi. Published by Elsevier Ltd. All rights reserved. doi:10.1016/j.clsr.2012.05.009

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In the context of copyright law in Australian, a person who authorises the infringement of copyright is treated as if they themselves directly or personally had infringed copyright.7 Authorisation is a distinct tort that was introduced into Australian copyright legislation through the Copyright Act 1911 (UK), which was repealed by the Copyright Act 1912 (Cth) before any judicial application had been initiated. There were two different approaches to define the word authorisation. In a narrow approach Atkin LJ in Falcon v Famous Players Film Co,8 one of the earliest authorisation cases held that: “.to “authorize” means to grant or purport to grant to a third person the right to do the act complained of, whether the intention is that the grantee shall do the act on his own account, or only on account of the grantor.”9 A broader approach was used by Bankes LJ who held that authorisation occurs where a defendant “sanctions, approves or countenances” a third party’s infringement.10 This approach was adopted by the Australian High Court in Adelaide Corp v Australasian Performing Right Association.11 However, in this case the court did not consider authorisation until after the landmark case of University of New South Wales v Moorhouse12 which is the foundation of the modern doctrine of authorisation in Australia.13 In light of the iiNet case, this paper will firstly look at the law in Australia relating to authorisation in the context of copyright law. Secondly, it will examine the application of the concept of iiNet’s authorisation liability analysing the contestable legal issues in the courts’ decisions (both primary and appeal trials). Finally, by highlighting the existing inadequacy and uncertainty in this area of law in relation to ISPs’ liability, it will conclude that the time has come for legislative reform.

2. Authorisation liability for copyright infringement Section 13 (2) of the Copyright Act 1968 (Cth) states: “The exclusive right to do an act in relation to a work, an adaptation of a work or any other subject matter and includes the exclusive right to authorise a person to do that act in relation to that work, adaptation or any other subject matter.” Under sections 36 (1)14 and 101 (1)15 of the Copyright Act copyright infringement occurs not only by direct infringement but also by authorising the doing of the act of infringement of 7 It is not unreasonable to think that the studios took this aspect of Australian law into consideration when they decided to pursue an Australian ISP such as iiNet for copyright infringement. 8 [1926] 2KB 474. 9 [1926] 2KB 474 at 499. 10 [1926] 2KB 474 at 491.The original source of this definition was the Oxford English Dictionary. 11 (1928) 40 CLR 481. 12 (1975) 133 CLR 1. 13 However, Birchall Sydney argues that the bases on which the Moorhouse principles are founded were flawed: “A doctrine under pressure: The need for rationalization of the doctrine of authorisation of infringement of copyright in Australia” (2004) 15 AIPJ 227 at 236-230; see also Gelski RA, “Authorising Breaches of Copyright” (1976) 4 Business Law Review 192 at 195. 14 In relation to work (i.e., literary, dramatic, musical or artistic work). 15 In relation to subject matter other than works.

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copyright. Accordingly, an ISP can be held liable for a breach of copyright where it has authorised the infringement. The new subsections 36 (1A) and 101 (1A) which were introduced by the Copyright Amendment (Digital Agenda) Act 2000 (Digital Agenda Act),16 specify the following inclusive list of key factors that must be taken into account in determining whether authorisation has occurred: (a) The extent (if any) of the person’s power to prevent the doing of the act concerned; (b) The nature of any relationship existing between the person and the person who did the act concerned; (c) Whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.17 However, the Act does not provide any direction to the courts regarding the weight that must be given to each of these factors. The courts ultimately must be satisfied that the person (the authoriser) had “sanctioned, approved or countenanced” infringement of copyright.18 These factors have been taken from the judgement of Gibbs J in the Moorhouse19 case where his Honour stated: “University had the power to control both the use of the books and the use of the machines. In the circumstances, if a person who was allowed to use the library made a copy of a substantial part of a book taken from the open shelves of the library.it can be inferred that the University authorized him to do so, unless the University has taken reasonable steps to prevent an infringing copy of that kind from being made.”20 However, s 112E21 of the Copyright Act 1968 (Cth) exempts a carriage service provider who provides communication facilities from potential authorisation liability. Under this section: “[a] person (including a carrier or carriage service provider) who provides facilities for making, or facilitating the making of, a communication is not taken to have authorised any infringement of copyright in an audio-visual item merely because another person uses the facilities so provided to do something the right to do which is

16 The explanatory memorandum to the Digital Agenda Act 2000 at para 57 notes that subsection 101 (1A) and the corresponding provision of subsection 36 (1A) is essentially a codification of the common law in relation to authorisation; it also refers expressly to the University of New South Wales v Moorhouse (1975) 133 CLR 1. 17 However, the list is non-exhaustive and other factors (e.g., knowledge) can be also taken into account. 18 Falcon v Famous Players Film Co Ltd [1926] 2KB 474 (CA); Adelaide City v Australasian Performing Right Association Ltd (1928) 40 CLR 481; University of New South Wales v Moorhouse (1975) 133 CLR 1. 19 (1975) 133 CLR 1. This case concerned the liability of a university that provided students with access to the university’s coin operated photocopying machines for infringing copies made using the machines. The university had no effective supervision over the machines, and although it had placed copyright notices on the machines, the signs were found to be inadequate. The High Court held that the university had authorised the making of infringing copies, and were therefore liable. 20 (1975) 133 CLR 1 at 14. Gibbs J followed obiter comments in Adelaide Corporation v Australasian Performing right Association Ltd (1928) 4 CLR 481 at 487-8,503. 21 And the corresponding provision of section 39B.

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included in the copyright.”22 It was common ground that iiNet was a carriage service provider within the meaning of s 112E of the Copyright Act 1968 (Cth). Section 112E purports to protect a carriage service provider that is found to authorise copyright infringement, but only where the carriage service provider does no more than ‘merely’ provide the facilities that are used by another to infringe copyright. This section was introduced into the Copyright Act by the Digital Agenda Act and its object was to “.promote certainty for communication and information technology industries that are investing in and providing online access to copyright materials.”23 However, the extent to which this exception may protect an ISP is completely unclear.24 Additionally, an ISP may take advantage of the safeharbour provision if it was found to be liable. In 2004 the safe-harbour provision (Division 2AA of Part V of the Copyright Act) was introduced into Australian copyright legislation to comply with a range of obligations under the Australia-US Free Trade Agreement (AUSFTA).25The purposes of the safeharbour provision were to provide legal incentives for ISPs to cooperate with copyright owners in deterring copyright infringement as well as putting in place some limitation on the scope of remedies available against ISPs for copyright infringement. For an ISP such as iiNet to qualify for this limitation it must (inter alia): “.adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the accounts of repeat infringers.”26 iiNet was a test case as the

22 Known as the ‘facilities exceptions’, influenced by an Agreed Statement to Article 8 of the 1996 WIPO Copyright Treaty. Pursuant to s 100A the identified films, as cinematograph films, are ‘audio-visual’ items for the purposes of s 112 E. 23 Section 3 (b) Digital Agenda Act. As the Second Reading Speech explains “The amendments in the bill also respond to the concerns of carriers and carriage service providers, such as Internet service providers, about the uncertainty of the circumstances in which they could be liable for copyright infringements by their customers. The provisions in the bill limit and clarify the liability of carriers and Internet service providers in relation to both direct and authorisation liability.” House of Representatives, Chamber Hansard, Copyright Amendment (Digital Agenda) Bill 1999 Second Reading Speech, Daryl Williams MP, 2 September 1999, 9750. 24 Lindsay David, “Liability of ISPs for End-User Copyright Infringements” (2010) 60 Telecommunications Journal of Australia 29.1, 29.19. 25 One aspect of those obligations was a requirement on Australia to enact a regime modelled on an aspect of US copyright law; the so called ‘safe-harbour’” AUSFTA article 17.11 (29). 26 The Copyright Act 1968 (Cth), section 116AH (1), Item 1. However, “This conditional limitation upon remedies represented by the safe-harbour regime overlaps somewhat with the mere use of facilities exception, but is both broader and narrower than that exception. It is broader in so far as it applies to all the economic exclusive rights (not merely communication to the public) and to both primary and authorisation liability (not merely authorisation). It is narrower in so far as it applies only to carriage service providers as defined (rather than providers of communications facilities), it is simply a limitation upon liability (rather than an exception to liability), and it requires infringement-deterrence policies and action from the carriage service for it to qualify for the limitation (whereas the exception requires neither).” Brennan David, “ISP liability for copyright authorisation: the trial decision in Roadshow Films v iiNet Part One” Communications Law Bulletin, Vol 28 No 4 (2010) at p.6.

application of the safe-harbour provision was addressed in some details for the first time.27 iiNet was a significant case in many respects. It was the first time that an ISP who acted in good faith and did no more than provide Internet access was on trial for authorising infringement committed by its users (via P2P file-sharing technology). It was thought to be the first action of its kind in the world to proceed to hearing, judgement28 and finally to the High Court of Australia.29 The landmark Moorhouse case in 1975 was the last High Court authority on copyright authorisation. In an ongoing battle between ISPs and copyright owners’ interests in a war against online piracy, this case has attracted intense public debates by putting the spotlight on Australian copyright law. Therefore, it is important to examine the courts’ judgements in light of the following questions.

3. What should an ISP do when it is made aware of infringements? The Australian Federation Against Copyright Theft (AFACT), despite the fact that it was not a party to the proceedings played a key role in gathering evidence of unlawful downloading for applicants.30 AFACT after finding evidence of illegal downloading, demanded of iiNet that it firstly, issue a warning to its users who were allegedly infringing copyright to stop their illegal activities. Secondly, that if the warning was not effective, iiNet would suspend their accounts. Finally, if regardless of these steps the users still remained uncooperative, iiNet would terminate their internet access service as the ultimate sanction. Despite AFACT’s demands, iiNet’s position was that it would not take any action against its users without a court order.31 In an email addressed to AFACT, iiNet’s response 27 Prior to the iiNet litigation, the safe-harbour provision had been pleaded in Cooper’s ISP, E-talk which had hosted the mp3s4free.net website. However, the provision was found not to have come into effect at that time, so the issue was not explored on appeal. 28 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [5]. 29 Grounds of appeal: 1) The Full Court had erred in holding that iiNet had not authorised user copyright infringements; 2)The Full Court had erred by failing to apply the principles stated in the 1975 Moorhouse copyright ruling, which found that the University of New South Wales had authorised copyright infringement of books in its library by providing a photocopier to let students make copies; 3) The Federal Court judges erred in considering whether iiNet had sufficient knowledge of copyright infringement; 4) Justice Emmett erred in his judgement that AFACT would have to provide iiNet with “unequivocal and cogent evidence” of copyright infringement before it could act on it; and 5) That Justice Nicholas had erred in holding that iiNet’s conduct did not constitute “countenancing” of copyright infringement in accordance with the Moorhouse case. 30 The Australian Federation Against Copyright Theft (AFACT) was established in 2004 to protect the copyright interests of its subscribers. AFACT engaged DtecNet to investigate copyright infringements occurring by means of the BitTorrent peer-to-peer file-sharing protocol. 31 In addition, iiNet by its press release, made it clear that it will not do anything unless AFACT could prove in court the alleged copyright infringement.

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reads: “iiNet will not take the responsibility of judge and jury in order to impose arbitrary and disproportionate penalties purely on the allegations of AFACT”.32 Following this the studios brought an action against iiNet alleging that, by failing to take any action in response to the AFACT notices of primary infringement, it was liable for authorising the infringing conduct of its users. However, the courts both primary and appeal ruled in favour of iiNet and held that it had not authorised infringement of copyright by its users.

4.

How did the primary court respond?

Justice Cowdroy in the primary trial found that iiNet had not authorised the infringement of copyright, and had no obligation to do anything in response to the AFACT notices of infringement despite widespread occurrence of infringement by its users.33 The key issue in the proceedings was whether iiNet had, by failing to take any action to stop or prevent infringing conduct by its users, authorised the copyright infringement of those identified users. In dealing with authorisation liability, Cowdroy J started by analysing the earlier case law on authorisation.34 In doing so, his Honour made a novel distinction35 between providing ‘means’ of infringement, and providing a ‘necessary pre-condition’ to infringement. His Honour held that: “.the findings of authorisation made by [those judgments] are predicated on a finding that the particular authoriser was the person who provided the ‘means’ of infringement.”36 Justice Cowdroy found that the use of the BitTorrent P2P file-sharing system was the means of infringement and therefore, as iiNet did not provide the ‘means’ of infringement nor had control over the BitTorrent protocol, it did not authorise the infringement.37 In his Honour’s view, iiNet’s provision of internet access was one of many necessary preconditions (e.g., providing electricity to a photocopy machine) and not the means of infringement. The view taken by the court was that iiNet acting in good faith was providing a legitimate communication services that was neither intended nor designed to infringe copyright.38 Justice Cowdroy stated: “I find that iiNet simply cannot be seen as sanctioning, approving or countenancing copyright infringement.The evidence establishes that iiNet has done no more than to provide an internet service to its users. This can be clearly contrasted with the respondents in the Cooper and Kazaa proceedings, in which the respondents intended copyright infringements to occur, and in 32 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [199]. This response was consistent with iiNet’s unwritten policy regarding ‘repeat infringers’, which was essentially to take action against a subscriber only where a court has found that the subscriber had repeatedly infringed copyright. 33 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [441]. 34 University of New South Wales v Moorhouse (1975) 133 CLR 1; Cooper v Universal Music Australia (Cooper) (2006) 71 IPR 1; Universal Music v Sharman (Kazaa) (2005) 220 ALR1. 35 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [417]. 36 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [383]. 37 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [414]. 38 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [19].

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circumstances where the website and software respectively were deliberately structured to achieve this result.”39 It was only after finding that iiNet did not provide the means of infringement and as a result it did not authorise the infringing conduct of its users, that his Honour went on to consider statutory factors in s101 (1A) of the Copyright Act 1968 (Cth).40 Such an ‘unconventional’41 approach by beginning to review a number of judicial authorities dealing with authorisation before considering the statutory criteria within s 101 (1A) of the Copyright Act has attracted much criticism.42 As one scholar commented “The great problem with the reasoning of the judge on this important point is that it reflects neither precedent nor the relevant provisions of the Copyright Act.”43

5. Did iiNet have power to prevent infringement? In relation to iiNet’s power to prevent infringement for the purpose of s 101 (1A) (a), the studios argued that due to iiNet’s Customer Relation Agreement (CRA) with its users it had contractual power and ability to suspend or terminate its users’ accounts for copyright infringement. As iiNet on previous occasions such as users’ failure to pay bills or exceeding their quota has used its power and cancelled its users’ account. It was reasonable to expect iiNet to take some action to prevent the infringement as iiNet’s inactivity “. may reach a degree from which an authorisation or permission may be inferred.”44 However, Cowdroy J rejected this argument and found iiNet’s contractual power to be irrelevant as the applicants were not privy to the contract. His Honour held that because iiNet neither provided the means of infringement nor had control over BitTorrent protocol (means of infringement), iiNet did not have the relevant power to prevent infringement.45 Despite finding a contractual relationship between iiNet and its users significant for the purpose of s 101 (1A) (b), the 39 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [14]. Cowdroy J distinguished previous authorities such as Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380; 237 ALR 714; [2006] FCAFC 187 and Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1; 65 IPR 289; [2005] FCA 1242 in which the respondents had provided the actual means for the infringements. 40 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [415]. 41 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [126] per Emmett J. 42 Lindsay David, “Liability of ISPs for end-user copyright infringements” (2010) 60 Telecommunications Journal of Australia 29.1 at p. 29.9; Brennan David, “ISP liability for copyright authorisation: the trial decision in Roadshow Films v iiNet Part” Communications Law Bulletin, Vol 29 No 1 (July 2010) at p.10; Wiseman Andrew and Vitins Matt, “The Means, Baby”-ISP Responsibility for Copyright Infringement and the Need for an Industry Code of Practice” (2010) 81 Intellectual Property Forum 13 at p. 14e15. 43 Lindsay David, “Liability of ISPs for end-user copyright infringements”, Telecommunications Journal of Australia, Vol. 60, No 2 (2010) 29.1 at 29.9. 44 Adelaide City Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481 at 504. 45 Roadshow Films Pty Ltd v iiNet (No 3) [2010] FCA 24 at [444].

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existence of such a relationship did not compel the court to find authorisation.46

6. Did iiNet financially benefit from the infringement? The applicants also argued that it was in iiNet’s financial interests that users use as much bandwidth as possible to engage in unlawful downloading of copyrighted material. However, Cowdroy J found no sufficient nexus between the infringing conduct of users (primary infringers) and iiNet’s profitability required under s 101 (1A) (b).47 As his Honour stated: “.the applicants have simply not proven that bandwidth use, downloading or quota use is, ipso facto, infringing. There are multiple uses for the internet and there are multiple means to consume significant amounts of quota for non-infringing purposes. Even where there is evidence before the Court of accounts where infringing activity is occurring, the evidence does not suggest that a significant amount of quota was being used for the purpose of infringing the applicants’ copyright.”48 However, against this finding Cowdroy J acknowledged that iiNet financially benefited from its users consuming bandwidth through sharing copyright material and stated that: “Of course the respondent profits in an absolute sense in that some of the subscribers are infringing and it is taking money from them.”49 iiNet was distinguished from previous cases such as Cooper or Kazaa where they financially benefited from the infringement50 as they were designed to facilitate infringement of copyright and their business success depended on infringements.

7. Was termination of a user’s account a reasonable step against copyright infringement? The Copyright Amendment (Digital Agenda) Act 2000 refers to the industry code of practice51 but it does not give guidance as to the steps that would be reasonable or expected from an ISP to comply with regarding copyright infringement. Obviously an industry code of practice can provide a direction for all stakeholders such as ISPs, copyright owners and courts in case of a failure to comply.52

In dealing with s 101 (1A) (c), Cowdroy J found that iiNet’s only relevant power to prevent infringements was to warn then suspend or terminate users’ accounts based upon AFACT notices of infringement.53 However, his Honour found that: “It may be readily assumed that merely passing on notices could hardly be a power to prevent infringement or a reasonable step without more, given that a person’s intent on infringing would quickly become aware that such warnings were ineffectual if termination of accounts did not follow.That is, an ineffectual step is not a power to prevent infringement nor is it a reasonable step.”54 In addition, the court found that unlike the termination of users’ accounts for non-payment issues, it was not reasonable for iiNet to make a decision regarding copyright infringement without a court order as copyright infringement is a complex matter and difficult to be assessed by a party such as iiNet.55 Following such an observation, the court found that the complexity and cost of implementing a scheme of warnings and suspension or termination as reasonable steps to prevent the occurrence of copyright infringement: “.manifestly militates against the conclusion that such scheme is a relevant power to prevent.”56 Therefore, Cowdroy J found that considering the lack of guidance and safeguards for iiNet in case of breach of contract brought about by users whose accounts had been terminated or suspended mistakenly or without proven evidence, iiNet was right to be cautious in its passive attitude.57 It is worth noting that his Honour was critical of AFACT’s notices of infringement and treated them as unsubstantial or unreliable allegations of copyright infringement. iiNet also argued that where it was receiving up to nearly 350 automatically generated emails daily (referred to as robots) from the United States alleging copyright infringement, it was not an easy task for it to distinguish between reliable notices of infringement (AFACT notices) and the unreliable one (robots). Justice Cowdroy accepted that the receipt of the robot notices by iiNet was another reason to characterise taking steps such as warnings, suspension or termination as impractical.58 In addition, there was a concern that termination of account would also deny internet access for non-infringing users who did not commit infringement of copyright. Considering the pivotal role of the internet in almost all aspect

46

Roadshow Films Pty Ltd v iiNet (No 3) [2010] FCA 24 at [448]. Roadshow Films Pty Ltd v iiNet (No 3) [2010] FCA 24 at [452]. The mere existence of such a relationship did not convinced the court that iiNet financially benefited from the infringing conduct of its users. 48 Roadshow Films Pty Ltd v iiNet (No 3) [2010] FCA 24 at [450]. His Honour found that “.this was not a commercial interest in the same sense that was relevant for the purposes of the consideration of s 101 (1A) (b) in Kazaa and Cooper”: at [452]. 49 Roadshow Films Pty Ltd v iiNet (No 3) [2010] FCA 24 at [452]. 50 For example, in Cooper, E-Talk (an ISP) benefited from infringement by putting advertising on its site which received lots of visits because of the infringing recordings to be found there. Similarly, in Kazaa the business model was based on luring users to the service with infringing material. 51 The criteria for the safe-harbour provision also include references to an industry code of practice. 52 It was a common ground that there was no relevant industry code of practice. 47

53

Roadshow Films Pty Ltd v iiNet (No 3) [2010] FCA 24 at [424]. Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [433]. 55 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [435]. 56 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [435]. iiNet argued that as it derive a financial benefit from the continuation of its commercial relationship with its subscribers, taking steps (i.e., warning, suspension or termination) against them could have a negative commercial impact on its business. 57 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [427]. The court acknowledged that iiNet did not have the benefit of any guidance before the court proceeding as to the frequency and number of infringements that would be required before it should take such action. 58 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [434]. 54

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of people’s modern life, Cowdroy J found termination of the internet access to be a serious penalty.59 Finally, based on Cowdroy J’s previous findings, his Honour held that issuing warnings, suspension or termination of the users’ accounts did not amount to reasonable steps. His Honour stated: “.I find that a scheme for notification, suspension and termination of a customer account is not, in this instance, a relevant power to prevent copyright infringement pursuant to s 101 (1A) (a) of the Copyright Act, nor in the circumstances of this case is it a reasonable step pursuant to s 101 (1A) (c) of the Copyright Act”.60 Such an approach, confusion between the first and third statutory criteria has attracted some criticism as each of these factors should have been treated separately. As it was expected the applicants appealed the decision. However, the Full Federal Court dismissed the appeal and ruled in favour of iiNet on the basis that it did not authorise its users’ infringement.61

8. What was the Full Federal Court’s response? On appeal Emmett and Nicholas JJ held that, although iiNet’s attitude towards the complaints of the studios was dismissive, iiNet’s conduct did not amount to authorisation of its users’ primary acts of infringement. It was found that the refusal of iiNet to act on the infringement allegations was reasonable in the circumstances. In particular, their Honours held that AFACT notices of infringement issued on behalf of the studios lacked the necessary detailed information and that it would have been immensely difficult, time consuming and costly for iiNet to implement procedures for analysing and responding to the infringement notices in that form. Emmett J found that before termination could be reasonable, ‘unequivocal and cogent’ evidence of the allegation of infringements would be required. His Honour stated that “Mere assertion by an entity such as AFACT.would not, of itself, constitute unequivocal and cogent evidence of the doing of acts of infringement.”62 Therefore: “.while the evidence supports a conclusion that iiNet demonstrated a dismissive and, indeed, contumelious, attitude to the complaints of infringement by the use of its services, its conduct did not amount to authorisation of the primary acts of infringement on the part of iiNet users.”63 59 Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [411]- [425]-[436]. The court found that the identified users’ account (by AFACT) was not predominately used for infringing purposes. iiNet also argued that the Telecommunications Act 1997 (Cth) prevented it from terminating a user account on the basis of the AFACT notices of infringement. However, the court rejected this argument because of a defence in the Telecommunication Act that would have applied to iiNet: at [508]-[532]. 60 Roadshow Films Pty Ltd v iiNet Ltd (N0 3) [2010] FCA 24 at [13] and [444]. His Honour accepted that the terms of the Customer Relationships Agreement (CRA) gave iiNet technical and contractual power to suspend or terminate accounts, but without the benefit of any safeguard from the copyright owners or AFACT, it was reasonable for iiNet to be cautious and a decision to take such an action was not a simple one. 61 Except Jagot J dissenting. 62 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC at [257]. 63 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [257].

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Similarly, Nicholas J found that: “While there is room for argument about the level of detail that the AFACT notices might have contained, it is clear that they did not contain any explanation of how the DtecNet Agent operated. Nor did they contain any statement verifying the accuracy of the data or the reliability of the methods used to collect it.”64 Therefore, his Honour also found that iiNet could not reasonably be expected to act upon AFACT notices and take steps such as to issue warnings, or to suspend or terminate its users’ accounts. Lack of guidance was another relevant factor in determining whether or not it was reasonable for iiNet to suspend or terminate infringers’ accounts. As Nicholas J stated: “.in the absence of applicable regulations or access codes which might guide an ISP’s decision making in relation to such questions, it seems to me that an ISP should be given considerable latitude when working out the detail of such a system. It is always possible to argue that a system for the issue of warnings and termination could be tougher than it is. But it would be difficult to criticise an ISP on that account if it acted in good faith to devise and implement a system that involved taking such steps against subscribers who the ISP was satisfied had used (or permitted others to use) its facilities for the purpose of committing flagrant acts of copyright infringement.”65 Finally, his Honour found that iiNet’s failure to take any action (i.e., issue warnings, suspend or terminate users’ accounts) in response to the AFACT notices of infringement was not unreasonable.66 However, Jagot J in dissent took a different view and found AFACT notices of infringements to be more than merely unsubstantiated or unreliable allegations and manifestly different from the robot notices.67 Her Honour stated: “Merely because iiNet received hundreds of robot notices each day and did nothing in response to those robot notices, does not mean it was reasonable for iiNet to treat the AFACT notices in the same manner.”68 Justice Jagot formed the view that AFACT notices of infringements provided prima facie credible evidence of widespread and repeated infringements of copyrighted material by iiNet users.69 Her Honour found that iiNet had a range of powers available that could have been reasonably exercised in order to prevent the infringing activities of its users, and which were the subject of AFACT’s complaints.70 In summary: “Through its CRA, iiNet had available to it control over its customers’ use of the iiNet internet service as specified in the CRA’s terms. iiNet also had a range of powers available to it to prevent or avoid copyright infringements including issuing warnings, recording the issuing of warnings against customer accounts, as well as shaping, suspending or terminating accounts.”71 Being critical of iiNet’s indifferent attitude towards the occurrence of copyright infringement, Jagot J found iiNet’s attitude inconsistent with the way it managed infringements of its internet service use such as users not paying bills or 64

Roadshow Roadshow 66 Roadshow 67 Roadshow 68 Roadshow 69 Roadshow 70 Roadshow 71 Roadshow para 3. 65

Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [762]. Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [750]. Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [783]. Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [402]. Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [438]. Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [467]. Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [450]. Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [476]

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exceeding their quotas.72 Despite being notified by AFACT of the infringements, iiNet continued to provide its service where half the traffic over its network was via the BitTorrent protocol, all the while being fully aware that a substantial proportion of this traffic involved the infringement of copyright.73 Justice Jagot stated that: “The unavoidable inference is that when its own interests were at stake, iiNet exhibited no hesitation in:-(i) using IP addresses to identify the relevant customer accounts, (ii) treating the customer as responsible for all use of the iiNet service on the customer’s account, and (iii) promulgating a regime of warnings, suspension and termination (albeit discretionary) of the customer’s account. However, when its own interests were either not at stake or, at worst, might have been adversely affected by taking action, iiNet adopted a contrary position.”74 Therefore, Jagot J in her conclusion held that iiNet had authorised the primary infringements of copyright.75

9. Does an ISP have a positive duty to prevent infringement even in the absence of any bad intent? Considering the widespread practice of online piracy76 copyright owners have been arguing that ISPs have a moral and legal responsibility to take action to prevent their users from infringement of copyright. However, any suggestion that ISPs should have a duty to prevent or stop infringement and act as ‘gatekeepers’ for internet users who participate in copyright infringing conduct was ruled out in this case.77 Although, iiNet had the power to prevent infringement and could therefore suspend or terminate users’ accounts under the terms of its customer contracts, Cowdroy J found that this did not equate to an obligation to suspend or terminate accounts for copyright infringement. His Honour held that: “There is no legal obligation or duty on any person to protect the copyright of a third party. There is only a legal prohibition on doing an act composed in the copyright without the licence of the owner or exclusive licensee of that copyright or authorising another to do that copyright infringing act. Consequently, merely being indifferent or inactive in the knowledge that copyright infringement is occurring cannot possibly constitute authorisation.”78 Further on, his Honour stated: “The result of this proceeding will disappoint the applicants. The evidence establishes that copyright infringement of the applicants’ films is occurring on a large scale, and I infer that such infringements are occurring worldwide. However, such fact does not necessitate or compel, and can never

72 Clause 14.2 (j) of the CRA provides that the iiNet may, without liability, immediately cancel, suspend or restrict the services it provides to a user if iiNet suspects “illegal conduct” (referring to conduct that is contrary to or forbidden by law) by the user. 73 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [468]. 74 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [406]. 75 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [477]. 76 Ipoque, Internet study 2007 at pp 2e4; see also www.mipi. com.au/What-is-music-piracy.html. 77 However Belgian copyright owners obtained a court order against Scarlet ISP ordering it to prevent users uploading music files which breached their rights. 78 Roadshow Films Pty Ltd v iiNet (No 3) [2010] FCA 24 at [492].

necessitate or compel, a finding of authorisation, merely because it is felt that ‘something must be done’ to stop the infringement.”79 Similarly, on appeal, it was held by majority that iiNet was under no legal obligation to protect the rights of the copyright owners. As Nicholas J found: “.the inactivity relied upon was the failure of the respondent to take steps to issue warnings and, if appropriate, terminate or suspend particular accounts in response to the AFACT notices. It was not suggested that the respondent was under any legal obligation to respond to the AFACT notices in this way.”80 However, the court did not rule out the possibility that such an obligation may arise in future.81

10.

What role did knowledge play?

The studios argued that iiNet had sufficient knowledge of infringements to enable it to act, but it took no action to prevent or stop infringements even though it could have taken a variety of actions. Apart from being notified through the AFACT notice of infringements, iiNet knew that a substantial proportion of (P2P) BitTorrent traffic involved the infringement of copyright. Furthermore, iiNet’s contractual relationship with its users enabled it to take steps to prevent infringements but it chose not to act. Although knowledge may be necessary to establish authorisation liability, it does not appear as a criterion under s 101 (1A) of the Copyright Act.82 It was submitted that once iiNet knew about the occurrence of infringements, its defence under Copyright Act does not apply as its conduct went beyond the ordinary scope of merely providing online communication facilities. Arguably, the ordinary provision of internet access services by an ISP does not involve providing or continuing to provide access to persons known as primary infringers who are in breach of the terms and conditions upon which the ISP provides the service. It is worth noting that under clause 14.2 (j) of the Customer Relationship Agreement (CRA) iiNet could without liability, immediately cancel, suspend or restrict its services to a user if it reasonably suspected any ‘illegal conduct’ by the user.83 Therefore, iiNet’s authorisation liability, at least arose from its contractual and legal powers coupled with the knowledge it had acquired through the AFACT notices of infringements.84 79

Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [19]. Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [769]. 81 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [257] per Emmett J; [757]-[765] per Nicholas J. 82 The House of Representatives Standing Committee on Legal and Constitutional Affairs, Advisory Report on the Copyright Amendment (Digital Agenda) Bill 1999, (The Parliament of the Commonwealth of Australia, November 1999) para 6.21 (Recommendation 33) recommended including the knowledge element to the list. 83 “illegal conduct” referred to conduct that is contrary to or forbidden by law. Thus, this gives iiNet a wide legal and technical power to undertake some steps to prevent infringements. 84 In response, iiNet argued that to take any steps (e.g., suspension or termination) would cause commercial harm to its business as the users may cease to use its services and start using a competitor’s service instead. Further, as iiNet was not sure about the reliability of AFACT evidence of infringements, it was difficult for iiNet to act upon the allegation. 80

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Justice Cowdroy in the primary trial held that iiNet’s knowledge “.is not, ipso facto, authorisation.”85 His Honour was critical of the AFACT notices and considered them to be allegations of infringement where iiNet had no means of obtaining independent verification of these allegations. While iiNet had general knowledge of infringements occurring and did not act to prevent them: “. the existence or lack thereof of that knowledge does not compel a finding either way on the question of authorisation.”86 On appeal, despite iiNet’s knowledge of the compelling evidence of infringements, the Full Federal Court (2-1) reached a similar view and found that iiNet did not have sufficient knowledge of the infringements. Justice Emmett J noted that even if iiNet had reason to suspect the occurrence of infringing activities, there had to be ‘unequivocal and cogent’ evidence for iiNet to act. Similarly, Nicholas J stated: “While there is room for argument about the level of detail that the AFACT notices might have contained, it is clear that they did not contain any explanation of how the DtecNet Agent operated. Nor did they contain any statement verifying the accuracy of the data or the reliability of the methods used to collect it.”87 Further: “In my opinion the AFACT notices were not sufficient to provide the respondent with knowledge that its network was being utilized by users of particular accounts to infringe the appellants’ copyright in the identified films. I accept that they must have given the respondent reason to suspect that such infringements had occurred. However, knowing that specific acts of copyright infringement have occurred and merely suspecting that they have occurred are quite different things. In the circumstances of the present case, the difference is of considerable significance.”88 However, Jagot J in dissent found the AFACT notices of infringement as credible evidence of substantial and repeated copyright infringement by iiNet’s users. Her Honour held that: “While iiNet may have been entitled to be “cautious” before acting on information provided by someone other than a party to the CRA.the AFACT notices rose well above the status of mere unsubstantiated or unreliable allegations of copyright infringement.”89

11. Could iiNet be protected by s 112E, the mere use of facilities exception? iiNet sought to rely on s 112E of the Copyright Act to exclude its authorisation liability by arguing that it is a carriage service provider and that it is ‘merely’ providing facilities to its customers. However, the courts both primary and appeal found unanimously that iiNet’s knowledge concerning infringements took the use of its service beyond the mere use exception; therefore, s 112 E would not apply. Cowdroy J found that iiNet has not authorised the infringement by its users and there was no need to deal with s 112 E of the Copyright Act, however, for completeness his Honour considered its application. In his Honour’s view s 112E can only have meaningful effect where a person merely provides facilities for the making of the infringement and does no more. In this 85 86 87 88 89

Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [472]. Roadshow Films Pty Ltd v iiNet Ltd (No 3) [2010] FCA 24 at [463]. Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [762]. Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [763]. Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [402].

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case, iiNet’s knowledge of the infringements would mean that the mere use facility exception has no practical effect.90 On appeal, the Full Federal Court also unanimously held that there was no room for s 112E’s application as an ISP such as iiNet would not merely be providing communication facilities in circumstances where it has knowledge of primary infringements. As Nicholas J stated: “ If I had been satisfied that the respondent had approved, sanctioned or countenanced the acts of copyright infringement which have been found to have occurred, then I would have found the respondent liable for authorisation in spite of s 112E.”91 As the extent of the s 112E provision in protecting ISPs is not clear, it is difficult to envisage how providers of online communication facilities such as ISPs without doing something more, can be held liable for authorising infringements. The poorly drafted mere use facility exception creates uncertainty and consequently contradictory results. As one scholar puts it: “.the awkward wording of the facilities exception makes it difficult for courts to decipher its intended operation”.92

12. Was iiNet entitled to rely on the safeharbour provision to limit its liability? Applicants submitted that iiNet could not be afforded the benefit of the safe-harbour defence under the Copyright Act because iiNet had never genuinely adopted or implemented a policy of terminating the accounts of repeat infringers as part of the provision’s requirement. The application of the safe-harbour provision only becomes relevant after a finding that a carriage service provider is liable for copyright infringement. As iiNet was found not liable for authorising the infringing conduct by it users, there was no need for the court to consider the application of the safe-harbour provision. However, Cowdroy J felt that given ‘a complete vacuum of legislative guidance’ on what was meant by ‘repeat infringement’93 or judicial consideration of this provision for ISPs broadly, there will be value in the court considering the application of this provision. Justice Cowdroy was of the view that the requirements of any repeat infringer policy appear to be minimal, allowing ISPs significant latitude to determine their policy. His Honour held that, if iiNet was found liable for authorisation, its unwritten policy would have satisfied the conditions required to have relied on the safe-harbour provisions of the Copyright Act.94 However, on appeal, the Full Federal Court unanimously held that the safe-harbour provision would not have been 90 Roadshow Films Pty Ltd v iiNet Ltd (No3) [2010] FCA 24 at [579]. His Honour found it difficult to see how a communication facility provider who merely did what s 112E describes could ever be found liable for authorisation even in the absence of that section. 91 Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [797]. 92 Lindsay David, “Liability of ISPs for end-user copyright infringements”, Telecommunications Journal of Australia, Vol 60, No 2 (2010) at p. 29.14. 93 Roadshow Films Pty Ltd v iiNet Ltd (No3) [2010] FCA 24 at [593]. 94 Cowdroy J found that iiNet’s unwritten policy was sufficient to constitute a repeat infringer policy for the purpose of condition 1 of item 1 of s 116AH (1). This section requires “The carriage service provider must adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the accounts of repeat infringers.”

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available to iiNet, since it did not have an adequate policy for the termination of the accounts of repeat infringers in appropriate circumstances. Although the Full Federal Court confirmed that iiNet was not liable for authorising its users infringing activities, the court delivered a clear message that, in different circumstances, an ISP may well be held liable for authorising infringements of its users.95 As discussed above, there were some concern in relation to the reliability of AFACT notices as evidence of infringement and the lack of safeguard for ISPs in case of any liability reasonably incurred by them as a result of mistaken suspension or termination of a user’s account. On appeal, Emmett J has provided some guidance and has suggested that in order to compel ISPs to take action to prevent infringements, copyright owners will need to provide ‘unequivocal and cogent’ evidence of alleged copyright infringements and to reimburse and indemnify them in connection with the alleged infringements. ISPs will also need to implement an adequate repeat infringer policy.96 Justice Emmett stated: “Before the failure by iiNet to suspend or terminate its customers’ accounts would constitute authorisation of future acts of infringement, the Copyright Owners would be required to show that at least the following circumstances exist:  iiNet has been provided with unequivocal and cogent evidence of the alleged primary acts of infringement by use of the iiNet service in question. Mere assertion by an entity such as AFACT, with whatever particulars of the assertion may be provided, would not, of itself, constitute unequivocal and cogent evidence of the doing of acts of infringement. Information as to the way in which the material supporting the allegations was derived, that was adequate to enable iiNet to verify the accuracy of the allegations, may suffice. Verification on oath as to the precise steps that were adopted in order to obtain or discern the relevant information may suffice but may not be necessary.  The Copyright Owners have undertaken: 1. to reimburse iiNet for the reasonable cost of verifying the particulars of the primary acts of infringement alleged and of establishing and maintaining a regime

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Justice Emmett stated “Even though the Copyright Owners are not entitled to the relief claimed in this proceeding.It does not necessarily follow that there would never be authorisation within the meaning of s 101 of the Copyright Act by a carriage service provider, where a user of the services provided by the carriage service provider engages in acts of infringement such as those about which complaint is made in this proceeding. It does not necessarily follow from the failure of the present proceeding that circumstances could not exist whereby iiNet might in the future be held to have authorised primary acts of infringement on the part of users of the services provided to its customers under its customer service agreements”: Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [274]. 96 Nicholas j, concurring. However, Jagot J in dissent stated “The notices did not make bare allegations of copyright infringement. They provided substantial supporting information which, on its face, indicated that considerable time, effort and money had been expended to provide iiNet with credible evidence of substantial and repeated copyright infringements by persons using the service iiNet provided”: Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [402].

to monitor the use of the iiNet service to determine whether further acts of infringements occur, and 2. to indemnify iiNet in respect of any liability reasonably incurred by iiNet as a consequence of mistakenly suspending or terminating a service on the basis of allegations made by the Copyright Owner.”97 However, while the court delivered some clear signposts for ISPs and copyright owners, it failed to remove all uncertainty in this area of law.

13.

What was the High Court’s response?

On 20 April 2012, in a unanimous decision, the High Court found that iiNet had not authorised the copyright infringements. The court ruled that iiNet had no direct power to prevent its users from using the BitTorrent system to infringe copyright through the use of P2P file-sharing. IiNet’s power was found to be limited to an indirect power to terminate its contractual relationship with its subscribers. This significant ruling has clearly demonstrated the failure of legislation to keep up with technological changes in dealing with online piracy and the liability of online intermediaries such as ISPs in the context of copyright law. As the High Court stated “.the concept and the principles of the statutory tort of authorisation of copyright infringement are not readily suited to enforcing the rights of copyright owners in respect of widespread infringements occasioned by peer-to-peer file-sharing, as occurs with the BitTorrent system.”98 In dealing with the difficulties of enforcement, the High Court has put pressure on the Government by stating that “The history of the Act since 1968 shows that the parliament is more responsive to pressure for change to accommodate new circumstances than in the past. Those pressures are best resolved by legislative processes rather than by any extreme exercise in statutory interpretation by judicial decisions.”99

14. The muddled nature of authorisation doctrine Australian copyright law is not clear when it comes to authorisation liability. Despite its importance the ‘incoherent’ and ‘unnecessary complex and uncertain’100 state surrounding the authorisation doctrine is ‘shocking’.101 As one scholar commented the doctrine of authorisation has been distorted over the years and lawmakers have failed to coherently adapt the principles underlying the doctrine to

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Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 at [257]. Roadshow Films Pty Ltd v iiNet Limited [2012] HCA 16 (20 April 2012) at para 79. 99 Roadshow Films Pty Ltd v iiNet Limited [2012] HCA 16 (20 April 2012) at para 129. 100 Lindsay David, “Internet intermediary liability: a comparative analysis in the context of the Digital Agenda reforms” (2006) 1 & 2 Copyright Reporter 70 at 77. 101 Giblin Rebecca, “The uncertainties, baby: Hidden perils of Australia’s authorisation law” (2009) 20 AIPJ 148 at 149. 98

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the challenges presented by emerging technologies.102 The source of much of the difficulty is blamed on the unnecessary complexity of the poorly drafted statutory provisions103 and courts’ reluctance to dictate clear line rules to clarify the uncertainty.104 The partial codification of authorisation liability (addition of ss 36(1A) and 101 (1A)) by the Digital Agenda Act 2000 which aimed to provide greater certainty, unfortunately, did not go far enough to remove the uncertainties. As Cowdroy J states where “...the law of authorisation has continued to grow more complicated and unwieldy,with a litany of competing and contrasting considerations, and with one statement of principle frequently matched with a contradictory one. The authority on authorisation has become amire”.105 The extent to which the ‘mere use of facilities’ exception (ss 39B and 112E) of the Copyright Act may protect ISPs is unclear. There is no explanation about what additional circumstances would cause an ISP to be more than ‘merely’ providing the internet access. As Cowdroy J in iiNet points out the exception has no practical effect: “.the authorities appear to leave little room for s 112E to have meaningful operation. It will not protect a person from authorisation when there is a factor found to exist which entitles a finding of authorisation.Consequently, it appears that s 112E purports to provide protection where no occasion could arise to require that protection.”106 Another area of uncertainty is the messy overlay of the safe-harbour provision (Division 2 AA of Part V of the Copyright Act) which has been inserted simply to comply with the Australia-US Free Trade Agreement without taking into account the Australian law governing ISPs’ liability for copyright infringement. As one scholar comments: “.if there is little possibility of a person who merely provides communications facilities being held liable for copyright infringements, there appears to be little scope for the operation of the complex safe harbour regime.”107 The iiNet litigation is going to have significant ramification for the regulation of the internet in Australia. As expected, this case has caused intense debate calling for legislative reform. So far, there have been some tentative actions:  On 25 February 2011, The Attorney-General’s Department announced that it will soon be releasing a consultation paper outlining proposals to adopt a broader definition of ‘carriage service provider’ for the purposes of the safeharbour provisions in the Copyright Act. 102 Birchall Sydney, “A doctrine under pressure: The need for rationalization of the doctrine of authorisation of infringement of copyright in Australia” (2004) 15 AIPJ 227 at 236e239. 103 Lindsay David, “Liability of ISPs for end-user copyright infringements”, Telecommunications Journal of Australia, Vol 60, No 2 (2010) at p.29.19. 104 Herring CJ in Winstone v Wurlitzer Ltd [1946] VLR 338 at 345 stated “.any attempt to prescribe beforehand ready-made tests for determining on which side of the line a particular case will fall, would seem doomed to failure. In the end the matter must in each case depend on a careful examination of all the relevant facts.” 105 Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 263 ALR 215 AT [358]. 106 Roadshow Films Pty Ltd v iiNet Ltd (No3) [2010] FCA 24 at [574]. 107 Lindsay David, “Liability of ISPs for end-user copyright infringements”, Telecommunications Journal of Australia, Vol 60, No 2 (2010) at 29.20.

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 On 11 March 2011, the Internet Industry Association (IIA), announced that it would immediately start work on an industry copyright code of practice for online intermediaries such as ISPs  On 15 March 2011, iiNet released a discussion paper entitled “Encouraging legitimate use of online content: an iiNet view” wherein it suggested the creation of an independent body to manage and police allegations of copyright infringement. The paper suggests removal of any direct contact between copyright owners, ISPs and users on copyright infringement issues. This model would relieve ISPs of their involvements and compliance costs, thus preventing them from being passed on to the consumer.

15.

Conclusion

The policy behind copyright laws is to strike an appropriate balance between competing interests and policy considerations. As this case has shown Australian copyright laws in its current state has failed to achieve such a balance. With ongoing tension between the competing interests of copyright owners and ISPs in the battle against online piracy, legislative reform that strikes the right balance in this complex area is not an easy task. In addition, there is a risk that any legislative solution could lag behind the advancement of technology, as is the case in most instances. However, while it is a difficult task, it is time for the Australian Government to give serious consideration to amending current legislation. As the High Court suggested, some thoughts should be given to the so called “graduated response”, a three strike notice system which imposes regulatory requirements on ISPs that requires them to cooperate with copyright owners for infringements in online P2P file-sharing. The “graduated response” was originally initiated in France (known as HADOPI) introduced in 2009 as a result of a three-way deal between the government, ISPs, and copyright owners. Later other jurisdictions such as Taiwan, South Korea and New Zealand enacted this model. In the most recent model, the New Zealand Copyright (Infringing FileSharing) Amendment 2011 Act), a three strike notice system is established in which primary infringers should be given a warning notice, detection notice, and an enforcement notice. After the third notice, the copyright owner may claim damages in the Copyright Tribunal, or seek an order to terminate the account. Each of these countries has adopted different details which indicate the problems faced with implementing this system. Another option that the Government seems more likely to adopt is to seek the cooperation of ISPs and copyright owners’ in formulating an industry code of conduct, a code that is not just directed at copyright enforcement or copyright compliance, but also addresses other issues such as users’ e-privacy and e-security. A code of conduct should make end-users aware of their responsibilities in relation to their online activities by clearly indicating the kind of information that will be collected by ISPs, how and why it is collected, and for how long. Kathy Eivazi ([email protected]) is a lawyer based in Australia. She has a D.E.A. in Penal Law from University of Paris II (Pantheon) France & Bachelor of Laws (LLB) from Southern Cross University Australia.

ID 467480

Title Is termination of internet users’ accounts by an ISP a proportionate response to copyright infringement?

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http://FullText.Study

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