Significant developments in Australian internet copyright protection

08 April 2015

Justin Hart

Two significant developments occurred last week in Australia which seek to address the vexed issue of the protection of intellectual property rights in the online environment.

The first is the decision in the case of Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317 ("Dallas Buyers Club Decision"), a case in which the Federal Court of Australia made preliminary discovery orders requiring a group of Australian ISPs to divulge identity details of customers associated with IP addresses alleged to have unlawfully shared the film Dallas Buyers Club online. Whilst not making new law, the decision demonstrates how existing law can be used by copyright holders to identify and potentially pursue online infringers, and how the Court is prepared to manage the competing concerns for customers arising from disclosure of their identity details (both as to privacy and protection from misuse of the disclosed information).

The second is the finalisation of an industry code to combat internet piracy, the Copyright Notice Scheme Code 2015 ("Code"), which has been submitted by Communications Alliance, the primary communications industry body in Australia, for registration by the Australian Communications and Media Authority ("ACMA"). The Code has been finalised following consideration of more than 370 public submissions made in response to a call for public comment on the initial draft Code issued by Communications Alliance earlier in the year, and the final product represents input from ISPs, consumers and rights holders across the music, film, television and performing arts industries. If registered, the Code will apply to the largest 70 Australian ISPs.

Dallas Buyers Club Decision

Dallas Buyers Club LLC ("Dallas") and Voltage Pictures LLC ("Voltage") (together the "Applicants") have succeeded in an application against six Australian ISPs ("Respondents") for preliminary discovery pursuant to r 7.22 of the Federal Court Rules 2011 (Cth) ("FCR") to obtain the details of 4,726 unique IP addresses that allegedly shared the film, Dallas Buyers Club online. Dallas alleged that the people that engaged in this activity infringed the Applicants' copyright pursuant to the Copyright Act 1968 (Cth) ("Copyright Act"). Further, the Applicants alleged that they were not aware of the identity of the 4,726 unique IP addresses. However, they had evidence that the Respondents supplied those IP addresses and could identify the relevant account holder associated with each IP address.

The Applicants conceded that the account holders are not necessarily the person alleged to have infringed their copyright, but that the account holders may assist in identifying the actual infringers. In essence, the Court held that the Respondents must divulge the names and physical addresses of the customers associated with the 4,726 IP addresses. Perram J found that there is a "real possibility" that the IP addresses identified by Maverick Monitor (software that is able to identify the IP addresses which are sharing a given file using BitTorrent, together with the identity of the relevant ISP) were being utilised by the end-users who were breaching copyright in the film by making it available for sharing on-line.

Perram J held that in order to obtain an order for preliminary discovery pursuant to r 7.22 of the FCR, it is necessary for the applicants to satisfy the Court that they may have a right to obtain relief against a prospective respondent, that they cannot identify the prospective respondent and that the ISPs know or are likely to know the identity of that person or have a document which reveals it. The Court held that both Voltage and Dallas may have a claim and are therefore eligible applicants, as Voltage can sue for infringement and it is reasonably arguable that Dallas may also be able to sue.

There was an argument by the Respondents that they would not have information that could help to ascertain potential respondents (people who allegedly infringed the copyright) because the ISPs could only identify the account holders, and there was no guarantee that the account holders were the persons that shared the film using BitTorrent. Relying on NSW Court of Appeal authority, Perram J rejected that argument, finding that it is sufficient to ascertain a description of the account holder as that may provide information as to the identity of the person actually infringing the copyright (assuming they are not the same person).

Perram J ultimately found that the requirements pursuant to r 7.22 of the FCR had been satisfied and that the issue was then whether or not an order pursuant to that provision should be made. The Respondents made a number of arguments as to why the Court ought to exercise their discretion not to order preliminary discovery, including an argument as to "speculative invoicing" (aggressive letters indicating that the identified account holder is liable for substantial damages, but offering to settle for a smaller but still large sum) that may result from an order for preliminary discovery. In order to countervail against that concern, Perram J imposed the condition that draft letters making claims against individual BitTorrent users must be first submitted to him. The Respondents also raised privacy concerns as to the disclosure of the identity of the relevant account holders. In order to accommodate the privacy rights of those people, Perram J held that the information as to their identity and whereabouts would be limited to only seeking to identify end-users using BitTorrent to download the film, suing end-users for infringement and negotiating with end-users regarding their liability for infringement.

The case ultimately concerned whether or not the court should order preliminary discovery and does not determine any potential liability of the users of the IP addresses that have been alleged to infringe the copyright of the Applicants.

Copyright Notice Scheme Code 2015

In the meantime, ACMA will now consider whether or not it should register the Code, published by Communications Alliance, which will apply to 70 Australian ISPs.

The Code implements a Copyright Notice Scheme ("Scheme") whereby residential fixed internet users who are alleged to have infringed copyright online will be subject to an escalating series of infringement notices, which will also include educational material that is designed to discourage infringing behaviour and encourage users to obtain material lawfully.

There are safeguards incorporated into the Scheme to protect privacy of internet users, and allowing account holders in certain circumstances to have the allegations made against them independently reviewed.

The Code also provides for a 'facilitated preliminary discovery' court process. Where an account holder receives 3 notices under the Scheme within a 12 month period and where a copyright owner or an exclusive licensee of copyright work files an application for preliminary discovery in court seeking access to the account holder's details, ISPs must act reasonably to facilitate and assist in relation to the application. It remains a matter for the Court to decide whether preliminary discovery should be granted. An account holder’s details will not be provided by ISPs to rights holders in the absence of a court order. The Code and the Scheme are not affected by the Dallas Buyers Club Decision.

In the event that the Code is registered by ACMA, it will effectively have the force of law. An independent evaluation of the Code and the Scheme will take place 18 months after its commencement.