High Court dismisses Hollywood's piracy complaint

This morning the High Court delivered judgment in the highly-anticipated case of Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16, which considered the question of whether iiNet had “authorised” the infringement of certain film copyrights of the appellants, and thereby itself infringed those copyrights.

The appellants were the owners, or exclusive licensee, of the copyright in “cinematograph films”.  The statutory monopoly conferred by the copyright in a cinematograph film includes the exclusive right “to communicate the film to the public”.  For present purposes the term “communicate” the film means to “make available online or electronically transmit” the film. 

iiNet is an internet service provider that, for reward, contracts with its customers or “subscribers” to provide them with access to the internet.  The agreements with iiNet subscribers prohibited the use of the iiNet service to infringe the rights of others, and forbad the subscriber to “allow anybody else to do so”.  The agreements also empowered iiNet to cancel, suspend or restrict the supply of the service if iiNet reasonably suspected illegal conduct by the subscriber, or any other person, in connection with the service.

The appellants complained that computers used by iiNet subscribers were used (among other inoffensive activities) to make their films available online.  The online availability of the films was as a result of peer-to-peer communication between internet users using the BitTorrent software, and constituted an infringement of the copyright by those BitTorrent users.  The appellants argued that iiNet had the power to prevent its customers from infringing copyright in the appellants’ films by issuing warnings and suspending or terminating customer accounts. They also argued that AFACT notices provided credible information of past infringements by iiNet's customers sufficient to raise a reasonable suspicion that acts of infringement were

continuing, and that, once iiNet had received this information, its failure to take action amounted to authorisation of its customers' infringements.  The appellants submitted that these infringements were authorised by iiNet notwithstanding that as the ISP iiNet had no power to modify the BitTorrent software, no power to take down the infringing material (because it was not acting as host), and there was no “common design” between the infringers and iiNet (as had previously been found with respect to the Kazaa file sharing system).

The factors relevant to whether or not an entity such as iiNet has “authorised” an infringement include the extent (if any) of the person’s power to prevent the infringement, and whether they took any other reasonable steps to prevent or avoid the infringement, including whether the person complied with any relevant industry codes of practice.

The High Court unanimously dismissed the appellants’ claims.  The Court observed that iiNet had no direct technical power to prevent its customers from using the BitTorrent system to infringe copyright in the appellants’ films.  All that iiNet could do was to terminate the provision of its services to its customers. 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.  Neither suspension, or the threat of suspension, would necessarily have prevented the infringements, given the capacity of the subscriber to continue to infringe simply by moving to another ISP.  For these reasons, the Court held that it could not be inferred from iiNet's inactivity after receiving the AFACT notices that iiNet had authorised any act of infringement of copyright in the appellants’ films by its customers.