The Australian High Court has dealt a damaging blow to the film industry with the dismissal of a copyright infringement appeal case against Internet Service Provider (ISP) iiNet in a landmark ruling.

The High Court’s five judges unanimously dismissed the appeal. The court observed that iiNet “had no direct technical power” to prevent its customers from illegally downloading pirated content using file-sharing protocol BitTorrent.

Although the court’s ruling is final, copyright law experts suggest that more ISPs could be targeted in future and pressure will remain on them to act against piracy on their networks. The Australian Federation Against Copyright Theft (AFACT), which has been representing the studios in media commentary and in court, is already lobbying the government to change copyright laws to crack down on piracy.

The court said iiNet’s power to prevent customers from pirating movies and TV shows “was limited to an indirect power to terminate its contractual relationship with its customers”.

It also ruled that infringement notices sent by the film industry to iiNet did not provide the ISP “with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers”.

iiNet welcomed the High Court’s unanimous decision to dismiss the appeal lodged by Roadshow Films & Others against iiNet.

Chief Executive Officer, Michael Malone, said the judgment supported the company’s position and proved the claims made against it were unfounded. “iiNet has never supported or encouraged unauthorised sharing or file downloading,” he said. “Today’s High Court five-nil ruling confirms that iiNet is not liable for ‘authorising’ the conduct of its customers who engaged in online copyright infringement.”

Malone reminded the film industry that increasing the availability of lawful, online content in a more timely, affordable and reasonably priced manner, brought the focus back to customers and 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 this unproductive legal battle.

“Increasing the availability of licensed digital content is the best, most practical approach to meet consumer demand and protect copyright,” he advised. “We have consistently said we are eager to work with the studios to make their very desirable material legitimately available to a waiting customer base – and that offer remains the same today.”

The High Court dismissed the appeal with costs. Legal costs of the case to date are approximately A$9 million and have already been expensed. A portion of costs will be recovered.

Attempts have been made by content owners and ISPs to resolve the piracy issue, but it is understood that a consensus has yet to be reached. The Communications Minister, Stephen Conroy, has previously said that he was awaiting the outcome of the iiNet case before deciding whether new legislation was needed to crack down on illegal downloaders.

AFACT said the ruling exposed the failure of copyright law to keep pace with the online environment and the need for Government to act, leading film and television industry companies said following the announcement of the decision.

AFACT Managing Director Neil Gane said the judges in the case had unanimously recognised that legislative change was required to address the widespread copyright infringements via Peer to Peer technology in Australia.

“Both judgements in this case recognise that copyright law is no longer equipped to deal with the rate of technological change we have seen since the law of authorisation was last tested. They both point to the need for legislation to protect copyright owners against P2P infringements,” he noted.

“The Judges recognise the significant rate of copyright infringement online and point to the fact that over half the usage of iiNet’s internet service by its customers (measured by volume) was represented by Bit Torrent file sharing which was known to be used for infringing activities,” he said

“Now that we have taken this issue to the highest court in the land, it is time for Government to act. 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 added.

He suggested the decision showed that Australian law has been left behind by overseas developments in online copyright protection. “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,” he said. “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.”

He confirmed that content owners would be having discussions with Government in due course.

Telecommunications industry trade body Communications Alliance CEO, John Stanton said the judgement provided welcome clarity for all Australian ISPs on the legal situation where copyright infringement by their customers is alleged to have occurred. “The Court’s unanimous finding that the conduct of iiNet did not constitute authorisation of infringing activity is a particularly welcome piece of guidance for all players in the industry,” he said.

Stanton said Communications Alliance and Australia’s major ISPs were ready to continue discussions already underway with Rights Holders and the Australian Government to see whether a cooperative industry-led scheme could be implemented to address online copyright issues. “We hope that the High Court judgment will help us accelerate the process of agreeing with rights holders the basis for an industry-led scheme that will discourage copyright infringement, appropriately protect customers’ rights and benefit the industry as a whole,” he stated.

A spokeswoman for Attorney-General Nicola Roxon said the government would examine the judgment closely. “Industry stakeholders have been meeting regularly during the last year to develop a code of conduct to address the issue of illegal downloading,” she said. “The Attorney-General’s Department will continue to facilitate these discussions and we hope that industry will continue to work together to find a range of solutions to illegal downloading.”

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