Big Studios Lose Appeal in Copyright Case Against Australian ISPs

Ruling in favor of iiNet upheld as ISP found not liable for copyright violations by customers.

SYDNEY -- Hollywood studios and some of their Australian content partners Thursday lost their legal appeal against a 2010 Australian Federal Court decision that found that Australian Internet Service Provider iiNet was not liable for copyright infringements by its customers.

In a lengthy and complex judgment, a full Federal Court bench agreed to dismiss the appeal by Australian Federation Against Copyright Theft, whose members include all the major studios and other Australian distributors like Roadshow Films and the Seven Network.

However, one judge, Justice Jayne Jagot, found AFACT had effectively proved that iiNet had authorised the copyright infringements and could not rely on either safe harbor provisions of the Copyright Act or those in the Telecommunications Act, although she agreed the appeal should be dismissed.

The precedent-setting legal action began in 2008 when AFACT filed a suit alleging that iiNet infringed copyright by failing to take reasonable steps, including enforcing its own terms and conditions, to prevent customers copying films and TV shows over its network.

Federal court justice Dennis Cowdroy ruled last year that iiNet had not intended to infringe copyright and had not authorized its customers to infringe copyright, although it did have knowledge of infringements. He said that the means of infringing the studios' copyright was the use by iiNet customers of the BitTorrent file-sharing system. AFACT appealed the case.

In a statement, AFACT said the decision by the Federal Court “was not an emphatic win for iiNet."

“The effect of this judgment is that an ISP can no longer claim that they have no responsibility for the known repeat infringement of their customers’ accounts.

“Further, the court provides guidance for future cases against ISPs who fail to prevent known copyright theft on their network. The Court found that iiNet would not have had the protection of the safe harbor provisions because they had no repeat infringer policy.

“We take heart from this decision and we will now take the time to consider our options," it said.

That could include a High Court appeal.

“We note that the court will now revisit costs for the primary case and will also hear costs on the appeal given that AFACT’s members were successful on many grounds,” the organization added.

Michael Malone, CEO of iiNet, said the judgment “again demonstrates that the allegations against us have been proven to be unfounded.”

“Our original intention was upheld,” he said. “We don’t believe that we have authorized breach of copyright or done anything to encourage customers to breach copyright.

“We urge the Australian film industry to address the growing demand for studio content to be delivered in a timely and cost-effective manner to consumers and we remain eager to work with them to make this material available legitimately," he added.

Malone said there was growing evidence that content partnerships and agreements between ISPs, legal websites and copyright holders was doing more to reduce piracy and showcase copyright holders materials.

Nevertheless AFACT last week revealed a new study which showed that piracy cost the Australian economy $1.37 billion ($1.35 billion) last year. 

IiNet said in its half year results last week that the case had cost it $6.4 million.