Roadshow Films Pty Ltd & Ors v iiNet Limited

[2011] HCATrans 324

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S288 of 2011

B e t w e e n -
ROADSHOW FILMS PTY LTD (ACN 100 746 870)
First Appellant
UNIVERSAL CITY STUDIOS LLLP
Second Appellant
PARAMOUNT PICTURES CORPORATION
Third Appellant
WARNER BROS. ENTERTAINMENT INC
Fourth Appellant
INC DISNEY ENTERPRISES
Fifth Appellant
INC COLUMBIA PICTURES INDUSTRIES
Sixth Appellant
TWENTIETH CENTURY FOX FILM CORPORATION
Seventh Appellant
PARAMOUNT HOME ENTERTAINMENT (AUSTRALASIA) PTY LTD ACN 003 914 609
Eighth Appellant
BUENA VISTA HOME ENTERTAINMENT
Ninth Appellant
TWENTIETH CENTURY FOX FILM CORP (AUSTRALIA) PTY LTD ACN 000 007 036
Tenth Appellant
UNIVERSAL PICTURES (AUSTRALASIA) PTY LTD ACN 087 513 620
Eleventh Appellant
VILLAGE ROADSHOW FILMS (BVI) LTD
Twelfth Appellant
UNIVERSAL PICTURES INTERNATIONAL
Thirteenth Appellant
UNIVERSAL CITY STUDIOS PRODUCTIONS LLLP
Fourteenth Appellant
RINGERIKE GMBH & CO KG
Fifteenth Appellant
INTERNATIONALE FILMPRODUKTION BLACKBIRD VIERTE GMBH & CO KG
Sixteenth Appellant
MDBF ZWEITE FILMGESELLSCHAFT MBH & CO KG
Seventeenth Appellant
INTERNATIONALE FILMPRODUKTION RICHTER GMBH & CO KG
Eighteenth Appellant
INC NBC STUDIOS
Nineteenth Appellant
DREAMWORKS FILMS LLC
Twentieth Appellant
WARNER BROS INTERNATIONAL TELEVISION DISTRIBUTION INC
Twenty First Appellant
%TWENTIETH CENTURY FOX HOME ENTERTAINMENT INTERNATIONAL CORPORATION%
Twenty Second Appellant
WARNER HOME VIDEO PTY LTD% ACN 002 939 808
Twenty Third Appellant
PATALEX III PRODUCTIONS LTD
Twenty Fourth Appellant
LONELY FILM PRODUCTIONS GMBH & CO KG%
Twenty Fifth Appellant
SONY PICTURES ANIMATION INC%
Twenty Sixth Appellant
UNIVERSAL STUDIOS INTERNATIONAL B.V.
Twenty Seventh Appellant
SONY PICTURES HOME ENTERTAINMENT PTY LTD ACN 002 489 554
Twenty Eighth Appellant
GH ONE LLC
Twenty Ninth Appellant
GH THREE LLC
Thirtieth Appellant
BEVERLY BLVD LLC
Thirty First Appellant
WARNER BROS ENTERTAINMENT AUSTRALIA PTY LTD ACN 003 773 411
Thirty Second Appellant
TWENTIETH CENTURY FOX HOME ENTERTAINMENT LLC
Thirty Third Appellant
SEVEN NETWORK (OPERATIONS) LTD ACN 052 845 262
Thirty Fourth Appellant
and
IINET LIMITED (ACN 068 628 937)
Respondent

FRENCH CJ
GUMMOW J
HAYNE J
CRENNAN J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 1 DECEMBER 2011, AT 10.01 AM

(Continued from 30/11/11)

____________________

FRENCH CJ: Yes, Mr Bannon.

MR BANNON: Thank you, your Honour. At the risk of infringing some rules, but in the interest of efficiency I have prepared a two‑page document which contains additional references arising out of matters raised yesterday, only a couple of which I will actually speak to. The first matter raises the issue raised yesterday by various members of the Court as to the causal connection between specified continuing acts of infringement and the conduct of iiNet.

The particular exhibit, not the whole of the exhibit, has been reproduced in the High Court appeal books, but one page of it, RC‑08, if I could go to that, your Honours. It is orange 5, 2275. What that is is one of the instances where, as we saw yesterday, a particular account, RC‑08, by provision of information whereby the peer IP information which we had was indicated by – under the discovery process – iiNet to indicate that this all came from a single account, this exhibit and the handwriting in the left‑hand corner includes part of the exhibit, identifies a date of notice provided by AFACT.

So the first is “28-11-08”. It identified the film Pineapple Express on that particular account and going across the page there is the hash number and going far to the right across the pages another item about which your Honours have not heard particular information, but it is the peer client ID. If I can just give your Honours these references, without going to them - trial judgment 115 and 277 records that peer ID on the evidence means that the BitTorrent application provides that number to a computer and a computer retains that number for so long as the BitTorrent application is still open on the computer. It does not depend on the computer being online. So that is that piece of information.

If one then proceeds to the next line, that tells us that on 3 December 2008 was the date of the next notice and in that next notice there were four more instances of the same film with the same hash number in respect of the same client account, so each of the handwritten pages identifies the date of one of the notices. The fact that a notice might have a number of different instances of the same occasion is just reflective of the fact that the detection process would from time to time intermittently over a period of time go and test iiNet account numbers.

So that one can conclude from that – this is just one example – that after identification of a particular customer account as having not only any infringing film of the applicant but a specific film, that film reappeared consistently over a period of time consistent with, one would inevitably infer, that film continuing to be made available online by that customer every time, one adds, iiNet provided the internet service to it.

CRENNAN J: You would treat that, would you, as forwarded communications to the public?

MR BANNON: Yes, once the act of communication to the public is complete, once iiNet provides the service to that customer. So this was a case, when one talks about permission, countenancing and all the rest, the act of communication to the public only exists and is only complete once iiNet not only provides but continues to provide that service on a daily basis. It is a positive act. It does not disconnect; it continues to provide the service every day, albeit under contract. The evidence also shows that in fact there are disconnections on a number of times. A customer disconnects and then iiNet reconnects them under its contract. So there is a very direct causal connection between the conduct of iiNet and the actual underlying infringements. We do not have the list for other films. They are in evidence but they are not for this Court.

HAYNE J: What in fact has happened is that the customer of iiNet has downloaded the film?

MR BANNON: Yes.

HAYNE J: Has left it on his or her computer?

MR BANNON: Yes.

HAYNE J: And has from time to time reconnected to the Net via iiNet?

MR BANNON: Yes.

HAYNE J: There has not been a further download?

MR BANNON: No.

HAYNE J: Simply that the customer has left that film in whichever folder or file it is that is accessible through the torrent system?

MR BANNON: Yes, that is so. Our point is that after warning, telling them of a particular customer account not only have any infringing films but a specific film, they continued, notwithstanding that, to continue to provide service to that customer which ‑ ‑ ‑

CRENNAN J: What I was asking is you are treating it as continuing infringements?

MR BANNON: Yes. Well, it ‑ ‑ ‑

CRENNAN J: Or not?

MR BANNON: The Full Court findings is there are actually a whole series of separate infringements every time there is a disconnection and a reconnection.

CRENNAN J: There is a separate infringement.

MR BANNON: Yes, but for the purpose of authorising conduct, is there a causal connection between authorising conduct which involves provision of a service and notwithstanding warning and notice a failure to warn, that is the authorising conduct, is there a connection between that conduct and actual underlying infringements, and the answer is yes, and this is an example of them.

HAYNE J: This would require more than warning. It would be warning against future conduct but also requiring take down. The notice would have to say to the customer, would it not, “We have information which suggests that you have downloaded copyright material. If you have, you must take it down.” Because you are leaving it up and connecting, is every time you reconnect to the Net a further a further infringement?

MR BANNON: Without providing any warning of some form, then they are authorising. The precise form of it – perhaps notifying them, yes, that is a continuing infringement, would be part of it. It would make a lot of sense. If the customer still continued to infringe notwithstanding the warning, iiNet may be able to say, well, we have done what we reasonably could and, therefore, we are no longer authorising. We have not got to that point. But in circumstances where they did nothing, we say they were authorising. So in terms of the causal connection between the conduct, it is very direct.

HAYNE J: It is by no means clear to me why you shy from the proposition that the notice would have to say “take down”.

MR BANNON: No. We do not have any difficulty with it and it would make a lot of sense if they did require it.

HAYNE J: But absent saying “take down”, I am not sure how your authorisation case works.

MR BANNON: Well, they have to inform them that they are undertaking infringing conduct whether it is by passing on our notice or by encapsulating what your Honour indicated and perhaps adding that if they continue to do it they are in breach of the contract and they are at risk of having the service terminated.

CRENNAN J: There has to be some consequence, has there not, in the warning notice?

MR BANNON: Quite, yes, but that is all part of the way they frame their policy.

CRENNAN J: One can imagine some shyness about take down because one of the difficulties in these contexts is that the service provider’s business depends on providing services.

MR BANNON: Yes.

CRENNAN J: And keeping their customers happy like any other business.

MR BANNON: Quite. Then item (b) – and I do not need to go to it – also in evidence, they made available on discovery documents which involve communications which iiNet was having with the particular customer who was guilty of infringing conduct, and that just demonstrates that they had no difficulty communicating with the particular customer and there are particular references in there such as you are over your account, they were going to shape your account or you are slowing down, et cetera. So that notwithstanding they were communicating with the customer, one might say, well, not unnaturally because they communicate with their customers, they did not include in one of these communications, by the way, you have this film on your system and that is in breach of your contract and in breach of the law.

This point of the direct connection between their conduct and iiNet’s conduct, and that is the making available online, we have referred to in our (c) in our appellant’s submission in reply. Justice Emmett refers to it in – looking at (d) – [152]. It is something we pleaded in the statement of claim. Item (f) – and again I do not need to go to it – is cross‑examination of Mr Malone where I actually put to him in circumstances where he accepted after the commencement of the proceedings that he knew that particular accounts had infringing films and I said to him, well, are you not therefore countenancing this conduct, and he said, no, and I put to him basically, your response to this knowledge you now have that that particular account has an infringing film is to actually continue to provide him with the service which is the very service which completes the act of communication.

CRENNAN J: But then that suggests that the warning notice should contain some reference to discontinuing, terminating the service or suspension of the service.

MR BANNON: Yes. Undoubtedly we would submit an appropriate warning notice would carry with it some indication of the potential consequences, if not immediate, then after it discontinues for a period of time for the customer. At item G we refer to there is no bar to a finding of authorisation although you cannot identify the actual user. Orders have been made to that effect in both Sharman and Universal v Cooper.

If one looks at the authorisation provision it is the authorising an act of infringement. You do not have to be able to identify the infringer. We have just indicated a form of finding a declaration is that the respondent authorised the specific acts of communication to the public making available online films. Online the films identified in the continuing infringement exhibit by users of the identified customer accounts between the date and one would have to select a date but we say, say seven days or it could be 14 days after the first notice of any infringing film on that account and it could either be any infringing film on that account followed by another infringing film or the same infringing film, either way.

We would opt for the broader form, at the time one would come for the relief, but obviously there could be debate about that. So far as the form of injunctive relief, Cooper v Universal is an example where the Full Court of the Federal Court approved the generalised form.

GUMMOW J: We had better look at that. Where do we see it, Mr Bannon? It is no good rushing through these things.

MR BANNON: That is 156 FCR 380 and at paragraph 40 there is reference to the trial judge’s – sorry, that reference is wrong. It is paragraph 23 and declaration 24 ‑ ‑ ‑

GUMMOW J: These are orders made by Justice Tamberlin, are they?

MR BANNON: Yes. So that should be paragraph 24, that first reference, and then the appeal was ‑ ‑ ‑

GUMMOW J: It was varied, was it?

MR BANNON: Varied, exactly, your Honour, to remove one of the respondents who succeeded on the appeal. That appears from paragraph 93.

GUMMOW J: Who was being restrained? What was Mr Cooper’s business?

MR BANNON: Mr Cooper’s business. The ISP and also ‑ ‑ ‑

HAYNE J: Was he an ISP? I thought he was ‑ ‑ ‑

MR BANNON: He was not, but one of the respondents was. That was E‑Talk and E‑Talk’s role ‑ ‑ ‑

GUMMOW J: Was there any differentiation between the position of E‑Talk and Mr Cooper? Obviously it is assumed that they are sui generis.

MR BANNON: No. Mr Cooper was a subscriber to the service. Paragraph 61 of Justice Branson’s judgment addresses the topic of E‑Talk’s role and whether it authorised.

HAYNE J: Paragraphs 2 and 3 are important, are they not? Paragraph 2, Cooper is the owner of the domain name and the operator of the website.

MR BANNON: Yes.

HAYNE J: The website was hosted by E‑Talk and Com‑Cen.

MR BANNON: That is right. Just finishing off that paragraph 3. Francis Bal was a director and the controlling mind of each of these companies:

Chris Takoushis worked in the Comcen business. It seems that he is an employee of Com‑Cen. Mr Takoushis was Mr Cooper’s primary contact at Comcen and he provided assistance –

There was no business relationship between Cooper and E‑Talk.

GUMMOW J: The injunctions were based on the Trade Practices Act as well, were they?

MR BANNON: No. If I could return to this short note. The ‑ ‑ ‑

GUMMOW J: Is there any dispute in this case as to the form of the injunction?

MR BANNON: There was a separate hearing about the form of order before Justice Tamberlin.

GUMMOW J: No, I mean in the Full Court. It was varied, but ‑ ‑ ‑

MR BANNON: I am being told by Mr Dimitriadis, who was involved in the appeal, that he does not recall a debate about the form of the order.

FRENCH CJ: I think the issue was the authorisation.

MR BANNON: Of course, your Honour the Chief Justice was involved.

HAYNE J: Com‑Cen was not an appellant. It did not appeal against the ‑ ‑ ‑

MR BANNON: Com‑Cen was not, but E‑Talk was. Then in 2(b), apropos the debate as to the potential form of a specific order and, in particular, whether this is an order which could come within 115(2), an order “could include an order restraining continuing provision of internet” ‑ ‑ ‑

GUMMOW J: Are you on 2(b), are you?

MR BANNON: Yes.

GUMMOW J: I want you to go back to 1(g). What is the proposition you are putting there?

MR BANNON: A finding of authorisation does not require the court or even an applicant to be able to identify the specific user who did the act of primary infringement. It does require an identification of the act of primary infringement, but the fact you cannot identify precisely who did the act is not a bar. If one looks at the Act it says “authorise an act of infringement”, not “an act/or of infringement”.

So, in other words the fact that we cannot, as may be acknowledged, identify who precisely was the person who used the particular computer which loaded the film on to that computer does not mean you cannot find liability for authorisation, provided you can identify an act of infringement, which is an act of communication to the public online, and if we are right iiNet authorised that act, then a finding of authorisation is complete.

GUMMOW J: Is that borne out by these authorities?

MR BANNON: Yes. In particular, the issue was argued with some vigour in Universal v Sharman.

GUMMOW J: Well we had better look at it. It may not be right.

MR BANNON: That is 220 ALR 1 at [414].

GUMMOW J: It is hardly an exposition of principle.

FRENCH CJ: Somebody must have done it.

MR BANNON: Well, there was, I can attest, your Honours, significant debate about the matter and obviously whether it was produced in the reasons ‑ ‑ ‑

GUMMOW J: We can only work off a judgment, Mr Bannon.

MR BANNON: But as a matter of principle, if one looks at the wording of the section 101 it is ‑ ‑ ‑

GUMMOW J: Normally, you cannot have an act without an actor.

MR BANNON: Quite, but the question for construction is whether the Copyright Act requires identification of the actor for the purpose of infringement because obviously you need to identify the actor if you want to sue the primary infringer and you need a defendant and one accepts that. But the question posed is do you need to identify the actor to have a finding of authorisation.

GUMMOW J: The secondary infringer might want contribution from the primary infringer, might that not be so?

MR BANNON: Yes, but that is not our problem. That is their problem, we would submit. But if one looked simply at the wording of the Act it is:

authorizes the doing in Australia of, any act –

So it is not authorising a particular person. It is the doing of a particular act.

GUMMOW J: Apart from Universal Music did you get anything out of Cooper at first instance – is that at first instance, 150 FCR?

MR BANNON: I think it just followed.

GUMMOW J: Paragraph 87, is it?

MR BANNON: It is first instance.

GUMMOW J: Just reading it quickly, I do not think it bears out that proposition.

MR BANNON: No, it does not address the question in detail ‑ ‑ ‑

GUMMOW J: You should not have put it in 1(g).

MR BANNON: ‑ ‑ ‑ but at 87, 88 it simply – that is the finding because in that case there were in fact no identified users.

CRENNAN J: What do you say about your RC‑08 evidence which you showed us just before in terms of this proposition?

MR BANNON: We accept that we do not have a name of an individual and one accepts we have an account holder and we also accept that you cannot know precisely who was using that account. That is not information available to us, but, as we say, that ‑ ‑ ‑

CRENNAN J: The most that iiNet could provide is the name of the account holder as distinct from users of that account.

MR BANNON: That is so, but iiNet may well have a greater capacity, if it really wanted contribution and if it was not satisfied with its contractual rights of contribution, to take steps, but there could be many instances of primary acts of infringement which are authorised by somebody where the person cannot be identified has disappeared off the face of the earth, but it would be, we would respectfully submit, a remarkable – well, there is no words in the Act which require identification in the Act for authorisation. It would be a remarkable outcome if that relief was so limited.

HAYNE J: That is a proposition that, in part at least, depends upon the content you are giving to the word “authorise”.

MR BANNON: It could affect the scope, yes. Then 2(b) is an example of the form of injunction which obviously there would be significant debate about these things if we were successful and it was sent back for relief. I should add, the parties agreed earlier on that any debate as to relief would be a subsequent hearing, but, as we said ‑ ‑ ‑

GUMMOW J: We cannot be bound by that sort of statement, Mr Bannon.

MR BANNON: No, but I am just explaining why it has not been the subject of debate beforehand. Your Honour may say it should have been in other contexts, but be that as it may. Not by defence, but by way of ‑ ‑ ‑

GUMMOW J: If you cannot work out a remedy, maybe there has not been an abuse of a right.

MR BANNON: But:

Example of specific form could include an order restraining continuing provision of internet services to particular accounts without obtaining confirmation from account holder that identified films had been removed.

That is a negative injunction, albeit it carries with it a condition, and the particular account holder can be identified and the particular film will be identified. That general form of order is a common form of order. This Court made an injunction many years ago in, I think, the GM Case that was not.....particular get up without sufficiently – a name without sufficiently distinguishing itself from, I think, General Motors Holden, from memory.

FRENCH CJ: It has the character of something that is designed to effect the consequences of authorisation rather than to prevent authorisation in terms of its analysis legally.

MR BANNON: But the particular conduct which is causally connected with the primary infringement is captured in such a negative injunction with such a condition. One can debate that the condition, whether it is a confirmation from the account or whether it is a notice saying you are in breach. One can debate the condition. So far as the issue of damages on account of profits, overnight we located a decision ‑ ‑ ‑

HAYNE J: Just before you leave this question of the example, you describe it as an example of a specific form. Do you tender or offer any other example of the order that may be made?

MR BANNON: Well, the generalised form of not authorising we ‑ ‑ ‑

HAYNE J: Well, “Go thou and sin no more” is not a useful form of injunction.

MR BANNON: No, we do not offer another form, but we would recognise – your Honours may regard this as not a sufficient response, but having said that we have not exhaustively considered all the possible remedies. But, having said that, we are comfortable that this is a form which would be a paradigm for the essential relief but we would recognise, in the absence of debate, that there may be debate as to the condition which has to be satisfied. One could also recognise there may be debate from our learned friends as to say whether it should be termination or whether, for example, it might be that they do not provide the service at full speed unless and until some things happen.

The order could be conditional upon – it would only come into operation, for example, 14 days after the date of the order to give them an opportunity to give a proper notice to the customer. So there may be variations in it but, essentially, it would be restraining the provision of the service or the service in its full form unless they did something to overcome their authorising conduct.

CRENNAN J: You are not really interested in mandating a series of warnings which, if ignored, have the result that details of the account holder are passed on to you.

MR BANNON: Well, that could be another variation of it. But there is a difference between an order which is a negative order restraining certain conduct in respect of specified films where there has been actual authorisation and what may be appropriate steps to avoid authorisation in the first place. We say that is not the exercise we would get involved in, nor would the Court attempt to get involved in because that would be an injunction in relation to continuing conduct in relation to different films and different circumstances.

The specific negative injunction could only relate to the circumstances before the court where one can see in relation to 20 – this is one of them – but RC‑08 is one of those 20 account customers of which a number involved particular films where there was specific conduct and the injunction could be framed in relation to each one of those so that the staged warnings would be inappropriate in a negative form of injunction to correct a specific state of affairs.

The general injunction as to what they do generally and how they should order their affairs is something which, we submit, one could not deal with because there are too many different circumstances to accommodate including the way in which they want to run their business.

CRENNAN J: What about the problem that identified films would be removed under this form of order and then some unidentified films would be downloaded thereafter?

MR BANNON: That would be a separate act of infringement and if we found out about it and they had not done anything in terms of setting up a regime of providing warnings, either at all, whether selectively across every customer or some selection basis – see, there are different ways they can do it. They do not have to actually – one view they may take is not to respond to every single warning and so we are going to take a random selection but we are going to advertise that fact on the Net because that is what we are doing. There are different ways to accommodate it.

Your Honours’ discussion we had yesterday about the potential of saying, well, if we are entitled under our contract to provide information in the interest of enforcing it, we will provide your details to the copyright owner if there is going to be a debate about it and you are not going to continue – again, they do not have to be doing it. The Act under safe harbour recognises that a policy which is sensible and reasonable be developed, but it is not for the court or the copyright owner to work out the way they should do it, but there may be a wide range of things they can do and hence an injunction setting forward a pattern of business for them going forward is not something we can do or the court can do or the Act expects.

HAYNE J: But all of those could be’s, maybe’s are methods of doing business.

MR BANNON: Yes.

HAYNE J: The relief which you seek, the only form of relief which you formulate today is relief that would require identified account holders to take down material with the threat of if you do not, we will cut you off.

MR BANNON: Effectively.

HAYNE J: So that the relief that is sought, at least as framed at the moment, is confined to a series of take down orders, basically.

MR BANNON: Yes. Take down has got a certain compression about it, but yes, they are subject, I agree.

HAYNE J: I understand the compression, but that is ‑ ‑ ‑

MR BANNON: That is all we can do.

HAYNE J: The importance of this, at least from my point of view, Mr Bannon, is to understand what it is ultimately is the relief which is sought in this suite and at the moment that is all that is on the table as far as I can see.

MR BANNON: Plus damages, plus declaration. One has to recognise too as to the form of that specific order, that in fairness to the customer, those infringing, but they have not had what might be expected the graduated warning processes if iiNet had done what we say they should have done. So you have got to give them a chance to respond and time to respond, so you could not have it, when I say – that is why I am a bit hesitant to immediately say take down. They have to give them time to react. The order may not start until about 14 days or 28 days and there would be a timing issue.

But, yes, our relief, if the lower court or this Court was minded to think a general order is inappropriate, and I understand the debate in relation to that, our relief has to be limited to the specific acts of authorisation which we can identify, and we say we clearly have, in those repeat infringement.....and just emphasising, that is just one page of those notes, RC‑08.

GUMMOW J: Part of the problem for you is that the Copyright Act does not contain in its remedial sections a provision like section 86 of the Trade Practices Act, is it not, for the erection of a compliance regime for abuses of Part 4 or Part 5.

MR BANNON: No, it does not. Yes, we cannot get that sort of order.

GUMMOW J: On one view of it, that is what you would like to achieve through the use of a traditional injunction in some way.

MR BANNON: Yes, but even that order, as your Honour says, is a compliance program, the extent to which the court is actually supervising is probably limited anyway. It is not uncommon – and obviously not only a copyright case ‑ ‑ ‑

GUMMOW J: The fact that the Federal Court supervises a compliance regime under a statutory power is quite significant.

MR BANNON: Yes.

GUMMOW J: Ordinarily they would not be supervising mandatory injunctions in great detail.

MR BANNON: Of course, the fact that a specific suit produces relief in a specific case of a narrow – when I say of a relatively narrow kind – does not mean it does not have a wider utility or precedential value. The issue of damages on account of profits ‑ ‑ ‑

FRENCH CJ: Sorry, just before you go to that, linking the relief proposed back to the concept of – or the characterisation of iiNet’s conduct as authorisation, does this reflect a proposition that the minimum steps necessary to negative characterisation of what iiNet does as authorisation is the issue of a warning notice with follow‑up sanctions if the warning notice is not complied with. Is that your position?

MR BANNON: Yes.

FRENCH CJ: In respect of identified account holders. In respect of account holders whose addresses at least have been identified.

MR BANNON: Certainly, a warning notice and as to what they should do after a period of time, we keep repeating one has to see what the position is, because the difference between this form of negative order is in circumstances where we have positively proved – and there cannot be any argument about the fact that there were primary acts of infringement.

FRENCH CJ: Yes, I am going back to the concept of what do you need to show to characterise conduct as authorisation, what is the minimum that needs to be taken out of that to negative that characterisation? Do you see what I mean?

MR BANNON: Well, because of the fact that there is a difference between what we have now where there are proven acts of primary infringement to what might happen in response to a warning notice, for example, if a warning notice came back and said, “No, you have the wrong person, that is not happening”, and there is a genuine debate as to whether there is a factual matter, a threat - to require then to threaten to take it down in effect may be inappropriate.

That may be the occasion where, “Well, you sort it out with the copyright owner”, but if there is no dispute that they are doing the conduct and it continues, and whether or not it continues of course may require even the copyright owner to continue to monitor itself from outside and then provide another notice - that is why I add these qualifications, that is why the warning letter is an essential step, a necessary step, but to again predict the graduated program does involve going into a hypothetical and we cannot predict the whole range of circumstances.

HAYNE J: Are you not merging two different issues, namely, future events by future downloading and existing consequences of having downloaded? The person who has downloaded and leaves the relevant file available for sharing you say is continuing repeatedly to communicate.

MR BANNON: Yes, or continuing in other ways, yes.

HAYNE J: Yes, but the warning notice idea seems to be tied to a radically distinct question that here is an account holder’s service which has been used in the past and it is likely will be used in the future.

MR BANNON: Yes, in circumstances where one adds two factors. The use of it is under the control of the service provider. They now have notice that they are doing - and the service provider provides them the permission to continue it by providing the service.

HAYNE J: I understand the argument, but you tender no form of relief directed to that set of circumstances. The form of relief that you tender in paragraph 2(b) is relief which I can understand as being related to the past download still available for sharing.

MR BANNON: Yes.

HAYNE J: But for what you describe as the repeat infringer who is likely to do it again, do you tender a form of relief?

MR BANNON: No. Not now.

HAYNE J: I am not going in to consult the vendor, Mr Bannon.

MR BANNON: It is a very weak “not now” in the sense that we recognise there is no way we can set out a compliance program under the Trade Practices Act because it has got to be related to, short of being able to come up with some words which are generic and accomplish everyone’s interests which immediately suggests – my answer is, practically it is going to be very hard to say we can ever do it. We have not done it at the moment. One could look into it, but I can see all sorts of problems with it. But that does not mean it is not a useful proceeding or that damages or declaration or limited declarations are not useful. On damages and the account of profits, we located a case overnight, copies of which we can provide to the Court, of Spring Form – unless your Honours really want to look at it now. It relates to ‑ ‑ ‑

GUMMOW J: Have you got copies of it?

MR BANNON: Yes. Spring Form is a patent case. It relates to damages in relation to an infringing article. It is analogous. It is not directly applicable. At paragraph 32 is the statement ‑ ‑ ‑

FRENCH CJ: Who is this before? In the Patents Court?

MR BANNON: Yes. The effect of the point is if it is in the ‑ ‑ ‑

FRENCH CJ: Do we know who the judge is?

HAYNE J: That is why there is a printable RTF version to download. You can read the top of it.

FRENCH CJ: Anyway, paragraph?

MR BANNON: Paragraph 32.

FRENCH CJ: Somebody must have written it, to paraphrase ‑ ‑ ‑

MR BANNON: Yes. Somebody authorised it. This relates to the election of compensation damages:

the appearance in commerce of the infringing article or process, it seems to me that the compensation which he receives reflects all the commercial stages through which the article goes or all the purposes for which the process is used . . . Accordingly I consider that an election extends to all defendants in respect of any particular infringing article, infringing process or product of the latter.

.....picks that up, not specifically in relation to authorisation, but we would say the primary act of infringement is the act which is authorised, so therefore the damages which flow as against the authoriser must be the damages caused by the primary act of infringement that they are claimable against the authoriser. So even if there were separate suits, we would submit the approach would be that if one elects for damages – and those damages could include, for example, if the primary infringer was a commercial entity and sold multiple copies, those damages could conceivably be claimable against the authoriser, but you could not get damages against one and an account of profits against another – we would submit would be the correct approach. Conversely, if you went for account of profits against one, that approach would apply to both. The underlying principle of account of profits notionally is that the plaintiff is effectively approving the act, although ex post facto, and then proceeds on that basis, but you could have different profits from different defendants.

Then over the page on this note if I could move on, at paragraph numbered 4 we gave your Honours a reference to Justice Emmett’s paragraph 176. I asked him and we inferred that was the reference to a press release. It is likely also a reference to Mr Malone’s agreement that by use of that press release he intended to convey to customers that they were not going to do anything. That agreement is recorded in those passages of cross‑examination.

Then the issue of identification of reasonable steps was one of the questions asked by, I think, your Honour Justice Gummow as to whether we cross‑examined Mr Malone on those steps, including warnings. We did a lot. There are references in (e). The background to it was we provided particulars which included warnings. We have a reference to that in (c). Mr Malone put on a whole affidavit relating to the issue. Paragraph 17 dealt with warnings. A lot of it was only admitted as submission.

Perhaps, more importantly, the AFACT letter to the respondent, 9, 4448 specifically referred to warnings. Could I take your Honours to that? It is the last page in volume 9 of the appeal book. It is the third paragraph. Again, not seeking to dictate precisely how they run their business but their response to that appears to be “Well, that is out of order” – internal response, I should say, not to us. It is the previous page, 4447, at the top of the page. In 5(b) of this note we have given reference to Justice Emmett’s first sentence at 211 where he records that we did satisfy in substance prior to telling them the steps they could take.

Your Honour Justice Gummow asked the question, looking at item 6 on our note, whether there was cross‑examination about their knowledge of Telco – those references are there and how they were dealt with by the judges. Then lastly, item 7 – the matter raised by your Honour the Chief Justice as to the potential for subsequent legislation to have an impact on the interpretation of provisions which predated it, firstly, we say that if one looks at the reference in 101(1A)(c), which introduced any relevant codes of practice – industry codes of practice – that was inserted in 2000. The safe harbour provisions are the same ilk because they talk about compliance with policies. Of course, 101(1A)(c) and those factors are plainly having an impact, necessarily, and if it is an amending impact, so be it, on 101(1).

Then lastly and, perhaps, more by way of background, but 111(5) I did not take your Honours to yesterday, but is another form of relief added which specifically related to communication right. It is not directly relevant but insofar as the question of, perhaps, whether a new world order was being introduced with this communication right, there is plenty of legislative intent to reflect that the communication right truly was the centrepiece of these orders. I think Sony v Stevens actually said that, adopted that.

We have also handed up an explanatory memorandum in relation to that and it does not take the matter very far. But can I just then finish on this proposition that when one recognises that the direct relationship between the ISP and the act of communication making available online, one sees that really two things happen.

Section 22(6) is introduced to ensure that the ISP is not a direct infringer because they are not responsible for the content, because if you did not have 22(6) in there, they would be a direct infringer because they are one of the parties to the act of communication to the public. So they get the direct protection, 22(6), in recognition of their direct involvement of the infringing act, but they are still exposed on authorising that act unless they take steps to make sure – and what, as we have said over and over again, in circumstances where they are told that their customer is infringing and they permit that customer with that knowledge to complete that act, then it is the most direct form, much more direct than Moorhouse ever was.

GUMMOW J: Is there any judicial discussion of section 22(6)?

MR BANNON: In this case there was a significant debate as to whether the investigators who pulled down the – the only discussion I can think of is this case, Justice Cowdroy, it was not pursued on appeal, as to who was responsible for the determination in relation – who was responsible for the communication in circumstances where our investigators logged online and they said, well, your investigators are the ones who actually instigated the communication so it was not the act as ‑ ‑ ‑

GUMMOW J: Does Justice Cowdroy deal with it in his judgment?

MR BANNON: Yes, at 319, “Who makes the communication?” That is pointed out, actually it was discussed also – looking at paragraph 322, there is a reference to it in Cooper at first instance by the look of it, and Kazaa. I am sure the legislature says, well, we will release you from direct conduct but you are still on the hook for authorisation unless you pay. There is a paragraph in Justice Jagot’s judgment at 339 which bears on the issue, but I do not think it was in dispute. This issue was not in dispute on the appeal.

GUMMOW J: Paragraph?

MR BANNON: Paragraph 339. May it please the Court.

FRENCH CJ: Thank you, Mr Bannon. Mr Leeming.

MR LEEMING: May it please the Court. I wish, if I can, to advance three short points of construction all directed to 101. The first is the relationship between 101, as amended, and Moorhouse. The second is paragraph (a) of new subsection (1A) and the question of power. I am here to support what, in dissent, Justice Jagot said about power not being a binary on or off position as your Honour Justice Hayne referred to a couple of times yesterday. Thirdly, and very briefly, I want to say something about onus.

As to the first point, Mr Bannon took you yesterday to the extrinsic materials and what seems to have been common ground at trial that (1A) was legislation which essentially codified the common law, those magic words, in particular Moorhouse. There were some difficulties with that that are really the starting point of legal analysis. The first difficulty seems to be that no regard, at least expressly, has been paid to later decisions and the second difficulty, as your Honour Justice Gummow referred to, is that a lot of emphasis is given in the language to what Sir Harry Gibbs said, less so to what Justice Jacobs said, with the agreement of Justice McTiernan.

I noted yesterday, by coincidence, at paragraph 13 of Stoddart your Honour the Chief Justice and Justice Gummow referred to what Lord Reid had said on rare occasions when the legislature mistakes what the position of the common law is. This is not one of those cases, but can I suggest respectfully there are three propositions of construction that fall out of this rather unusual legislative history. The first is to understand what is meant by codify and we would say – I have given your Honours a reference in the outline to what this Court said in LK. This is codification with the exception very much at the forefront that Justice Windeyer referred to in cases like Vallance.

You do not just read (1A) on the face of it tabula rasa. One is in terms picking up the language used by Sir Harry Gibbs in Moorhouse and that carries with it all those connotations, just as in a different context your Honour Justice Gummow this morning and yesterday referred to the picking up of the language of injunction in the Act. So that where Justice Windeyer in Vallance referred to a palimpsest, this truly is a palimpsest. One can see on the same piece of paper the language in section (1A) that was used, particularly by Sir Harry Gibbs in Moorhouse.

Now, that means, in my respectful submission, that there is legislative endorsement of the reasoning process of Justice Gibbs in Moorhouse. That is quite important because the essential integers of the reasoning process are themselves picked out and put in the form of legislation, subsection (1A), and that means that his reasoning process has greater weight than otherwise would be the case in terms of precedential authority in this Court when it comes to being applied. In its application to cases like this we would say two things. First of all, Sir Harry Gibbs’ approach in Moorhouse is applied. There is nothing at all to suggest the legislature has any difficulty with that. Rather, there is an endorsement of it in all the extrinsic materials and the texts point in that direction.

So that if one can fall within the reasoning process of Justice Gibbs, then there will be authorisation, and there is more because, as is obvious, those Peko‑Wallsend mandatory relevant considerations in subsection (1A) are determinative. Of course one has to start with what authorisation is and so Moorhouse is not an outlier, Moorhouse is well within the expanded, we would say, concept of authorisation that one has regard to in subsection (1A).

CRENNAN J: Another point which might be made is that it is not as if there is a great gap between the reasoning process of Justice Gibbs and that of Justice Jacobs.

MR LEEMING: I am with your Honour on that.

CRENNAN J: The verbiage is different, I accept, but when properly deconstructed, they are very similar.

MR LEEMING: At a higher level there is one key difference that matters and it bears upon what I wish to say about power because Justice Jacobs refers to an unqualified invitation, whereas Sir Harry Gibbs is referring in terms to the effectiveness or lack of effectiveness of what was decisive for him, the warning that quoted the wrong section of the photocopier.

GUMMOW J: Where do we see this difference?

MR LEEMING: Can I take your Honours to that in just a moment, or I will do it straightaway. If your Honours have Moorhouse 133 CLR 1, what is decisive – and if I can at the same time answer your Honour’s question and also state that the passages I am about to go to are also directed to the proposition that power is not binary, partially effective steps which will or may reduce the incidence of primary infringement fall squarely within power.

CRENNAN J: What is a reasonable step might vary according to what has been done. In other words, there may be a graduation of steps.

MR LEEMING: I accept that completely, but I am at pains to say that the steps, the warnings that there has been so much talk about, fit in not merely to paragraph (c) but also to power. There is a textual reason for that and there is a construction reason for that. The construction reason was picking up the reasoning of Sir Harry Gibbs. Two passages there, on page 15 at 133 CLR 1 at about point 7 on the page in the middle of the last paragraph:

To place a clearly worded and accurate notice on each machine in a position where it could not be overlooked would be one measure which might be expected to have some value in informing users of the library of the limits –

That might have two consequences: one, reduce photocopying; two, qualify the invitation. So I am in agreement with your Honour Justice Crennan that at the end of the day the differences in language between the two reasons in Moorhouse may not much matter. That passage at 15 feeds into what on a fair reading, in my submission, is the critical aspect of the reasoning at page 17. At page 17, point 3, after dealing with various other matters, Justice Gibbs refers to:

The fatal weakness in the case for the University –

and that is the notice, the wrong notice, was completely inadequate –

no adequate notice was placed on the machines for the purpose of informing users that the machines were not to be used in a manner that would constitute an infringement of copyright.

Then there is something that resonates with what Mr Bannon said. It is not for the court to speculate what would happen had an adequate warning notice been given. His Honour says –

The fact is that the notices actually placed on the machines, which set out s 49, were completely ineffective for the purpose for which they were apparently intended.

We would say, especially in light of the next sentence:

did not adopt measures reasonably sufficient for the purpose of preventing infringements taking place.

His Honour there plainly contemplates the proposition that the notices will not be 100 per cent effective. These ones were 100 per cent ineffective. Having a notice that would, in part, reduce the level of primary infringement is something that was not considered but feeds directly into the finding of authorisation here because no attempt at all was given to either put in ‑ ‑ ‑

FRENCH CJ: How does the effectiveness or consequence of a notice or some step that is taken feed back into the characterisation of conduct as authorisation, or lack of authorisation?

MR LEEMING: Yes, your Honour, and Justice Jacobs takes it one step further ‑ ‑ ‑

FRENCH CJ: Well, how does it? You are looking at the consequences, whether a particular notice or a particular step has some effect or maybe a total effect, does not have to be totally effective. The question is what is the logic by which that feeds back into the question whether the conduct of the asserted authoriser is in fact authorisation?

MR LEEMING: Yes. If you do not do anything or if, as in Moorhouse’s Case, you do something which, the findings are, was wholly ineffective, then you are in difficulty in terms of authorisation. If you do something which is partially effective, then different question, not the case determined by the High Court, maybe, maybe not, and, as your Honour the Chief Justice says, one looks at the consolation of facts in the particular case and sees this is an easy case here, an even easier case than Moorhouse because on the warning side none at all were given.

The point that your Honour raises, in effect, well, what if something is given, then how does one analyse it and that is what Justice Jacobs does address at page 22, it is the last passage I wish to go to. Page 22 point 7, and this is in his Honour’s mode of reasoning directed to the invitation being qualified or unqualified. His Honour says where there is a hopelessly ineffective notice, then there is an unqualified invitation, but goes on to say:

Knowledge could become important if the invitation were qualified in such a way as to make it clear that the invitation did not extend to –

primary infringements, and then if the University then knew that the notice was being ignored and so was wholly ineffective, that is a separate stage of the analysis. So, taking up what your Honour the Chief Justice says to me, one looks at the facts as they are. So a notice is not going to be by itself prescriptive in terms of the outcome. One looks and sees all the facts. As I say, this is an easier case because on the warnings front nothing at all happened.

CRENNAN J: Also at 23 at about point 7 his Honour is really linking the unqualified nature of the invitation and the causing of the infringing acts.

MR LEEMING: Quite so, and hence you have the link ‑ ‑ ‑

CRENNAN J: That is why I ventured the view that the analysis, when you look at it finally, is not all that different from that of Justice Gibbs.

MR LEEMING: I do not disagree in the least. Now, that analysis and whether one looks at what Justice Gibbs said, and his language is more closely picked up in paragraph (1A), or on analysis the reasoning of Justice Jacobs for the majority of the High Court, both speak in terms of partially effective steps that were not taken. That is given weight and picked up by the digital reform legislation in (1A) and that is the reason by reference to authority that we would say, with respect, Justice Jagot was right to point to power not being binary on or off.

There is a textual reason as well, and the textual reason – in fact, there are two textual reasons, but I should say that one is much stronger than the other. The mandatory relevant consideration posed by 36(1A)(a) is not the power, if any, to prevent the doing of the act concerned, but the first two words, we would say with respect, are important:

the extent (if any) of the person’s power to prevent the doing of the act concerned –

Those words are otiose if one is simply asking oneself, is there power or is there not power. The second, and it is slight, consideration is the difficult word “other” in paragraph (c), which is conspicuous by its absence in the identical text which is put in early in the Act in the same amending legislation. If that word has work to do, then naturally it feeds in with a qualitative assessment of power rather than a binary assessment of power because one looks at whether warnings were issued and how effective they might be, and that naturally feeds in with other “reasonable steps” in paragraph (c).

In essence, what I have just said is the reasoning of Justice Jagot at about paragraph 424 and following. I do not need to take the Court there, but for those reasons I am here to resist the proposition that power is a binary thing and one does not, when one is looking at the efficacy of warnings, place that merely in the paragraph (c) pigeonhole. Now, in this case ‑ ‑ ‑

GUMMOW J: So what meaning are you giving to the word “power”?

MR LEEMING: I am looking not merely at the legal power but the practical effect of steps within the capacity of the authoriser to reduce primary infringements.

KIEFEL J: Well, it is the same. It is the power to take “reasonable steps to prevent or avoid”. You are reading (a) and (c) together.

MR LEEMING: I am, and “prevent” does not mean a hundred per cent prevent, but it stands to reason that there is at least a chance, maybe not RC‑08 but some of the tens or hundreds or thousands of primary infringers if they knew, as Justice Jagot says, that either what they might have thought was innocent and perfectly legitimate conduct was actually an infringement, or what they thought might be covert and undetectable was in fact readily detectable, some might stop. Hence, all members of the Full Court referred to warnings being an efficacious step, and your Honours have the references to those. Now, the warnings that were never issued from iiNet are really in the same category as the hopelessly ineffective warning that was on the photocopier in Moorhouse. The last thing I wanted to say was something very briefly about onus.

KIEFEL J: Just before you do though, the part that has not been dealt with by your submissions in relation to construction is (b), which is the nature of the relationship between the person and the person who did the act, which is the focus very much of iiNet’s approach.

MR LEEMING: I will deal with that in onus, if I might.

KIEFEL J: Good.

MR LEEMING: Yes, of course, it is for the plaintiff in an authorisation case to establish evidence that sounds in authorisation and because (1A) is in the language that it is, it is for the plaintiff to put forward evidence to support each of those factors. Your Honour Justice Gummow asked, where does the evidentiary burden lie in relation, I think, to power, but it applies to all three of the new paragraphs in (1A). Your Honours have seen in my outline, we say this is just a perfectly conventional application of Blatch v Archer. Now, how difficult in fact it is for the ISP to issue warning notices to connect a particular IP address at a particular time to an email address to whom a warning notice can be forwarded, that is a matter for the ISP to put forward, although in this – if the plaintiff can put forward evidence that other ISPs have a particular practice and have no difficulty in issuing notices and, as seems to be the case, RC‑08 received a whole lot of email traffic from time to time, then onus is going to shift in a Blatch v Archer way.

KIEFEL J: But to read it this way is really rather reading subsection (1A) as a statutory obligation which has to be performed under the rubric of authorisation. I know one keeps saying it has an extended definition. It almost disappears if you start reading this as a form of obligation which you approach, as I said yesterday, with the assumption that there is a responsibility.

MR LEEMING: Your Honour, I am in agreement that there is a real difficulty in the way that this legislation has been drafted, as it were.

KIEFEL J: I am not saying that that is not wrong. That might be the outcome of construction, really.

MR LEEMING: We say that it is, with respect. The difficulty that the primary judge had was to produce the judgment on authorisation at the outset and then apply the (1A) steps. That must be wrong, with respect, and no one is here to defend that point of view. So that one has to go to the matters identified in (1A). They are, in essence, the matters identified by Justice Gibbs in Moorhouse. We would say if they be established, then prima facie there will be authorisation, but there is more and that the consequence of there being more to it is, as I think Mr Bannon said, an expansion following (1A) of the notion of authorisation which is the ultimate notion at the end of the day.

KIEFEL J: So you start from the point that legislation says if there are – it is of first relevance because these are matters which must be taken into account. It is of the high sense of relevance that you have the power to take reasonable steps to some extent prevent or avoid the infringing acts.

MR LEEMING: Yes, your Honour.

KIEFEL J: You then go to the question of authorisation. What else are you asking about whether or not the power thus discerned has to be exercised or has been exercised? The connection between authority and – I can understand you saying there must be something more in the question of authorisation, but how does it connect to what appears to be the identification of a potential obligation which has to be given effect to?

MR LEEMING: There may be, as your Honour has said, questions of inducement and in old battles between Mr Bannon and me in the Kazaa Case there was a terrible t‑shirt that said “Join the Revolution” and that can be used even if (a), (b) and (c) are not satisfied, nonetheless, to say the concept of authorisation has been satisfied. One looks at all the circumstances and that is certainly something that both Justice Gibbs and Justice Jacobs say in Moorhouse, but legislature is, singling out three in particular, for early and essential examination and we would say if the answer to the compulsory three‑way factual analysis in (a), (b) and (c) is yes, yes, yes, then there will be a case of authorisation, at least, in most cases.

FRENCH CJ: Is there a purposive element in characterisation of conduct as authorisation? In other words, do you expand or contract the boundaries by reference to the purposes of the Act?

MR LEEMING: Yes, your Honour, in a way no different from other norms of conduct established in legislation. There is a difficulty because in identifying the purpose one has this grafting approach and so there might have been different purposes at different periods of time. But given the role that is important and preliminary role that (1A) has, the starting point for purpose, is the material that Mr Bannon took the Court to yesterday introduced at the same time as (1A). May it please the Court.

GUMMOW J: Do not go away. This phrase “to prevent” in paragraph (c), “reasonable steps to prevent”, does that mean steps which of their character were apt to prevent even if they did not prevent? By hypothesis they did not prevent.

MR LEEMING: Yes. It contemplates steps which in fact may not prevent all infringing acts. It contemplates, we would say ‑ ‑ ‑

GUMMOW J: What is the character of the steps?

MR LEEMING: Something that will – that there is a basis to think, will reduce overall primary infringement.

CRENNAN J: Is it a possibility or a capacity to prevent?

MR LEEMING: It is a counterfactual consideration, as I said in the written submissions, that will ultimately be determined on evidence. It is necessarily counterfactual in this case where none of those steps were taken, but there is nothing particularly complicated about it. At 408 at blue 2, 621 Justice Jagot says it is difficult to accept that passing on the AFACT warning notices to some of the particular customers whose family or itinerant backpackers were using the computer at the times identified, her Honour said it would be difficult to accept that there would be no deterrent effect whatsoever:

To the contrary, it could readily be assumed –

so it is looking towards the future –

that many people on receipt of a mere notice or warning would be deterred from future infringements irrespective of termination. The fact is that by receipt of a mere notice or warning people would realise that activities they might have thought innocent or at least undetectable were in fact unlawful and open to scrutiny.

GUMMOW J: I am just wondering about the relationship between (a) and (c). Paragraph (a) is talking about the power to prevent, (c) is talking about something reasonably apt to achieve a result even though, as a matter of power, it does not necessarily achieve the result. Is that the idea?

MR LEEMING: Yes. There are three things going on. First of all, the slightly different verbal language in (c), prevent or avoid, whereas there is merely prevent in (a). Secondly, all this comes in a context directed to communication right where in almost every case the infringements are going to be multiple, in the thousands, and nothing at all stands in the way contextually in applying singular includes the plural. The submission that I am making is that doing the act concerned means reducing the incidence of the primary infringements. That is what her Honour Justice Jagot said.

FRENCH CJ: How important is the scope of the term power? I think with unpaid accounts there is a process by which iiNet can slow down download speeds and I suppose one could imagine a similar technique applied to account holders who had been identified as potential infringers. Whether or not it falls within the scope of power and prevent, as distinct from, say, hindrance, would not matter. You could feed it into the general characterisation of the conduct of iiNet and the scope of authorisation, could you not?

MR LEEMING: Completely, yes. If it does not fit in (a), it will fit in (c). If it does not fit in (a) or (c) ‑ ‑ ‑

FRENCH CJ: If it does not fit in any of them, then you go back to authorisation.

MR LEEMING: Yes, your Honour.

GUMMOW J: What would be an unreasonable step to avoid a primary infringement?

MR LEEMING: It may well be that many judges would be persuaded on the evidence that merely receipt of one of these AFACT notices and then ipso facto terminating that account on no notice would be – it is something

that did not happen. It would be something that would prevent or avoid the doing of the act, but it would be unreasonable.

GUMMOW J: I am really asking, reasonable, which is always a weasel word, having regard to what interests, which were in competition in some way?

MR LEEMING: Indeed. Reasonable having regard to the underlying norm of authorisation. Reasonable in order to make it clear that, no, there is not an unqualified invitation for primary infringements to be undertaken using the carriage service provider’s facilities or reasonably sufficient to make it clear that the alleged authoriser was distancing itself and certainly not countenancing or sanctioning any primary infringements. It might even be something as simple as ‑ ‑ ‑

GUMMOW J: But does reasonableness have an application to the commercial position of the alleged authoriser?

MR LEEMING: I think I would have to concede that it does and there is obviously a commercial relationship and desire for the alleged authoriser to continue to provide services to their customers. May it please the Court.

FRENCH CJ: Thank you, Mr Leeming. Yes, Mr Cobden.

MR COBDEN: Thank you, your Honours. Your Honours, I propose to take the following course which is first to highlight some issues and passages in the cases that we submit are of particular importance and call for re‑emphasis in this case and which will assist me to address some matters of statutory construction, including those raised by my learned friend, Mr Leeming, a moment ago to identify what, we submit, remain serious shortcomings in the appellant’s case.

Those shortcomings, in particular, relate to formulation of a regime and they endure and perhaps indeed, we would submit, they are even more serious given the orders that the appellants now propound and then to comment briefly on the findings in the evidence and my learned friend’s excursion through the evidence yesterday and very, very briefly take your Honours to some important countervailing material and draw that together to indicate why, in the application of section 101(1A), we submit that iiNet did not authorise any infringements of copyright and then deal with section 112E briefly and some contentions we make.

Your Honours know that we have made submissions about the Telecommunications Act, which are contained in our written submissions. As we indicate at the end of the three‑page outline we supplied to your Honours earlier, we do not propose to add anything orally to those written submissions on the Telecommunications Act unless there is anything your Honours wish to ask us about it, in which case Mr Lancaster will deal with that.

I had some hopes, despite what I said yesterday, that doing those things might take me comfortably within today, but I think that things have gone a little longer this morning and I may not be able to do it. Nevertheless, I will try not to waste your Honours’ time, of course. A word that demands attention in the statute is the word “authorised”. That is the word “authorised” in section 101(1A):

authorised the doing in Australia of any act comprised in a copyright –

We would submit, just to leap ahead and deal with the submission made by my learned friend, Mr Bannon, this morning, that is an act done by an actor. The actor might not need to be identified by name, but they would have to be identified as an actor who did the act and there is, of course, a reference in section 101(1A)(b) to:

the nature of any relationship existing between the person and the person who did the act concerned –

which would appear to confirm that there must be an actor of each act. One starts and stops with the word “authorizes” in section 101(1). The exercise is to identify whether somebody has authorised:

the doing in Australia of, any act comprised in the copyright.

Section 101(1A) says in terms:

In determining, for the purposes of subsection (1), whether or not a person has authorised –

then one takes the matters into account. One cannot escape, starting with 101(1) and ending with 101(1).

Section 101(1A) and section 36(1A), it is counterpart in relation to works, each has that provision of (1A) saying in determining for the purposes of subsection (1). But there also exists in the Act section 13(2), to which brief reference was made yesterday, which describes the acts comprised in the copyright and the first subsection, subsection (1), is just a way of reading the phrase that is comprised in the copyright corresponding to other phrases where the act is the phrase “the exclusive right to do”. Subsection (2) is important for the purposes of this act, “the exclusive right to do an act in relation to a work”, et cetera, includes the exclusive right to authorise a person to do that act in relation to that subject matter.

There is no provision that says that the meaning of the word “authorise” in section 13(2) changed by the introduction of section 101(1A) or section 36(1A). Those sections say for the purpose of subsection (1) of each of those sections. But the proposition, we would respectfully submit, that somehow the use of the word “authorise” in 101(1) and 36(1) has differed in meaning since 2001 when these provisions became effective, the 2000 Act was introduced, from the provision in section 13(2) is a startling proposition.

GUMMOW J: But what is the relationship between 13(2) and 36(1)? Section 13(2) is spelling out the rights of the copyright owner.

MR COBDEN: I am sorry, your Honour?

GUMMOW J: Why did it need reference in 36(1) to authorise it?

MR COBDEN: It possibly did not. We would refer your Honours to your Honour Justice Gummow’s decision in WAE v Hanimex which traces these matters and indicates that there – that was of course before (1A) was introduced. Can I take your Honours to your Honour’s decision in WAE v Hanimex 17 FCR 274?

GUMMOW J: What does it say?

MR COBDEN: Your Honour says, and we would respectfully submit correctly, on page 281 of that decision, that:

It should however be noted that the concept of authorisation appears both directly and indirectly in the statutory description of infringement. That is to say, it appears in terms in the infringement section, s 101(1) and it also appears indirectly therein because the expression in s 101(1) “any act comprised in the copyright” itself imports the concept of authorisation through the operation of ss 13 and 85.

It probably does it, your Honour, although I do not think your Honour goes on to say this, because there is an important need to express the content of the property in section 13. Your Honours will recall ‑ ‑ ‑

GUMMOW J: Section 13 may be connected to section 31 primarily, might it not?

MR COBDEN: Yes, your Honour, but section 31 is in turn – we are dealing with the sections for works but they are the same in Part IV in relation to films.

GUMMOW J: Yes.

MR COBDEN: Section 31 is also related by section 13(1) to section 36 because the nature of copyright works is the exclusive right to do these acts, back to 13(1), reference to the exclusive right is the same as a reference to an act comprised in the copyright. Section 36 says you infringe by doing an act comprised in the copyright. They are intimately connected, your Honour. One of them is expressing perhaps the property right which feeds into section 196 copyrighter’s personal property assignable, able to be dealt with, et cetera, but they enjoy that relationship.

My learned friend, Mr Bannon, referred very briefly yesterday to the old chestnutty sort of authorising the authoriser. Some people have sought to read section 13(2) – that might include me – section 13(2) into section 36 to have it double authorise. In other words, because the right includes the right to authorise, that if you authorise the doing of the act comprise authorise the authoriser, but we do not need to go ‑ ‑ ‑

GUMMOW J: Yes, 196(2)(a) might be important. It contemplates a partial assignment.

MR COBDEN: Yes, of any Act – “the owner of the copyright has the exclusive right to do” that by reason of 13(2) is going to pick up, presumably, the right to authorise or licence the Act, so you can assign a right and that will include the right to authorise or sub‑licence.

GUMMOW J: Yes. Thank you.

MR COBDEN: There is that relationship, your Honour. I was going to draw some other matters from WEA v Hanimex, if I may, while your Honours have that before your Honours. First of all, that point. Secondly, perhaps because it came up yesterday in relation to importation from England in 1926 and then in 1988 about the meaning of the word “authorise”, just so we do not lose sight of it, perhaps for nationalistic reasons, your Honour does record the history at page 281 of WEA v Hanimex that the expression “authorise” actually appeared in our law before it appeared in imperial law. It was in our 1905 Act. Your Honour has recited the history there but, of course importantly, it was also, and I am now moving over to 282 at the foot of that page, in the 1911 Act brought into force in Australia by the 1912 Act.

Those are matters that arose yesterday. Then there is the discussion that your Honours have been taken to or referred to already. Can I take your Honours just to page 286 at the top of the page there, the second paragraph, second line:

As I have indicated, the term appears not only in the provisions dealing with primary infringement of copyright in works (s 36) and in subject‑matter other than works (s 101) but also in s 13 which speaks of “the exclusive right to authorise a person -

It is just another reference. The other important thing, a matter of general principle that we emphasised before, going to the statutory construction and some of the other cases is said at page 288, in the third paragraph on that page, a critical matter in this case because it was an advertisement that encouraged people on one reading of its text, although perhaps not on the proper reading – that is further down the page – to make tapes of a Madonna recording. Your Honour said, and we urge this as an important principle, that:

the statutory description of authorising a person [there] to make a record embodying a sound recording in which the applicants have copyright, is not satisfied until such a person has acted upon the authority purportedly conferred.

That, we respectfully submit, is absolutely correct. It ties into the notion of the primary infringements but it ties into the nature also of the invitation, to use the words of Justice Jacobs in the Moorhouse Case and an observation made by your Honour the Chief Justice yesterday, there not only has to be an act of primary infringement that occurs, as it were, later in time to the acts or omissions that are said to amount to the authorisation. We respectfully submit that there has to be some way in which the purported authorisation, even if it is an implied permission by omission, has acted upon the mind of the primary infringer so that the act of the primary infringer is some way causally connected to - causally follows the invitation or the act of authorisation and does not just simply follow it in time.

KIEFEL J: You are talking about a positive influence upon the actor’s mind, whereas it might be something not brought to their attention.

MR COBDEN: Yes, and, indeed, one has to analyse – in Moorhouse there is the living temptation of the books on the shelves and the photocopier right there available for what other purpose than to photocopy things in the library, legitimate things but also illegitimate things, but we say here there is no proper inference that could be drawn that any of the primary infringers had in their minds, I can keep on doing this because I am not being interfered with by iiNet. That is the point we wish to make to that and I will develop that further in due course.

KIEFEL J: It is in rather absolute terms.

MR COBDEN: Sorry, your Honour?

KIEFEL J: You are putting it in rather absolute terms. It might be a question of what could be taken to be fairly influential, for instance, the fact that their actions might be detected.

MR COBDEN: Yes, there is no indication in any of the evidence that the users had been told that their actions had been detected or might be detected.

KIEFEL J: That “might be detected” might be important.

MR COBDEN: Yes, it might be, your Honour, if I can come back to it. Just at that point, it is perhaps worth pausing at this point, in looking at WEA v Hanimex, that that dealt with the question of the provision of – it was in the milieu of the provision of blank tapes and the availability of tape‑to‑tape recording for ordinary consumers, and issues also raised in another case that has been referred to a couple of times, RCA v Fairfax, another advertisement case, and that just takes me to make a couple of observations about the CBS Songs v Amstrad Case in the House of Lords that was referred to yesterday. That was a closely related problem because on the one hand there were advertisements, WEA v Hanimex, which spoke of making home tapes of sound recordings. On the other hand, there was equipment of high speed double cassette players and recorders, and I just want to make a couple of observations, matters that arose out of the debate, your Honours, yesterday about CBS Songs v Amstrad [1988] AC 1013.

Can I take your Honours to the speech of Lord Templeman which commences at page 1045. First of all, at 1045 from the commencement of the speech to letter C, almost D on the following page, his Lordship summarises the problem of blank taping and the tension between one industry, electronic equipment industry manufacturers, and on the other hand the entertainment industry, and make some observations about the unattractiveness of 20th century music at around letter H. It says that these sorts of cases arose in the context of that problem; that is to say, the ability to copy the recordings on high speed equipment by ordinary consumers.

Not only the supply of the high speed recorders was in issue here, but also an advertisement issued by Amstrad. That is over at page 1050 where his Lordship refers to the advertisement first of all advertising the particular model of taping machine and, secondly, boasting, as his Lordship puts it at letter H, that the model:

features ‘hi‑speed dubbing’ enabling you to make duplicate . . . make a copy . . . even make a copy of your favourite cassette.

These observations feed into your Honour Justice Gummow’s reference yesterday to Lord Templeman speaking of procuring an infringement by inducement, incitement or persuasion. The courses of action that were involved in this case, page 1052 at about letter G, it makes it clear that this was an authorisation case. Your Honour Justice Gummow was asking us some questions about that yesterday. Your Honours see that just above letter G there is a recitation of the corresponding provision of a UK 1956 Act.

CRENNAN J: Was it confined to home copying as distinct from pirating?

MR COBDEN: Yes, your Honour, it was. This was a consumer item. So, at page 1053 it is clear that the case was about – letter B – sorry, the first case was about the selling of the equipment. That is at letter G on page 1052 by authorisation. The second one was the advertisement. That is 1053 at about letter B. Of course, it is an equipment case. It has not led into the digital era where there is a connection between suppliers of software and their licensees or suppliers of internet services. But at letters B down to F, his Lordship points out, so perhaps at C:

If Amstrad had considered the interests of copyright owners, Amstrad could have declined to incorporate double‑tape double‑speed recorders in Amstrad’s models or could have advertised the illegality of home copying. If Amstrad had deprived themselves of the advantages of offering improved recording facilities, other manufacturers would have reaped the benefit. The effect of double‑tape double‑speed recorders on the incidence of home copying is altogether speculative. If Amstrad had advertised the illegality of home copying the effect would have been minimal -

and the like. Those observations resonate, we would respectfully submit, with observations about what are reasonable steps here in an atmosphere where, as your Honours have heard, some half of the traffic on the internet worldwide is in BitTorrent and in an atmosphere where there is no industry approach to the question of peer‑to‑peer activity by identified subscribers and a subscriber to iiNet, if dissuaded by iiNet’s response to these notices or terminated can simply go to any other ISP including, for example, Telstra which is not even investigated by the applicants or the subject of the DtecNet process. Those observations by his Lordship are relevant to that approach.

At page 1054 is the discussion by his Lordship with whom the other members of the House of Lords agreed about Moorhouse and then further answer to your Honour Justice Gummow’s questions yesterday about what the case raised. Page 1055, there was also an allegation of joint infringer, effectively joint tortfeasorship. That is at letter E. That was a second case that was put. A third case that was put, 1057, just above letter G was one about a common law tort – incitement to commit a tort, incitement to commit a criminal offence and negligence. That all got fairly short shrift.

MR COBDEN: We would urge upon your Honours the proposition that the separate statutory tort of authorisation is not complete unless there has been an identified act of primary infringement.

FRENCH CJ: Yes, I understand that is the point you are putting. I am just going to the exercise of characterisation of conduct as authorisation. Is it right that there has to be in that process of characterisation identification of least a potential to have an effect on potential infringers?

MR COBDEN: Yes, there has to be an analysis that has that potential. I hope I am not misunderstanding your Honour if I say and that potentiality has to be carried through.

FRENCH CJ: That is for the completion of the tort.

MR COBDEN: Yes.

CRENNAN J: Here the nub of the case was that there was no control over the equipment once it was sold to consumers.

MR COBDEN: Yes.

CRENNAN J: So if you asked question (a) in 101(1A):

the extent (if any) of the person’s power to prevent the doing of the act concerned –

the answer would be there was none.

MR COBDEN: There was a very high level on/off power to do the act concerned with the Amstrad equipment, which was to disable the double, that is what Lord Templeman refers to, or Amstrad simply not to sell a double cassette, high speed recorder.

CRENNAN J: It would be capable of being used for non‑infringing uses.

MR COBDEN: Quite so, your Honour. Indeed, we would say, asking the proper question here, iiNet does not supply BitTorrent, although BitTorrent is capable, of course, of substantial non‑infringing uses. That is clear from the case and clear from the findings. iiNet supplies an internet service which is par excellence, capable and indeed, one can easily infer, used by every user here, including RC‑08, for very substantial non‑infringing purposes and very important non‑infringing purposes, including, as I will come to and take your Honours to the evidence, in the case of many of these subscribers they are telephony. So capable, for example, of a non‑infringing purpose of ringing 000 and other such activities.

While there is in the electronic world a continuous link which is not present in the electronic world when you sell something and it goes, even that may be being blurred these days because one’s television is capable of downloading fresh software to update it from the internet and the like, but I will not go into those new blurrings in the relationship between vendors of goods and purchasers of goods. Nevertheless, the analysis of control still works if you look at the proper core of the relationship, the incident of the relationship, which is, not here, the provision of BitTorrent for infringing films, not here, the provision of any of the infringing material or films, the provision of internet services, capable very much so of non‑infringing uses. At the end of Lord Templeman’s speech there is, indeed, at page 1060, a cri de coeur about the position about blank taping which is probably now mutated into ‑ ‑ ‑

GUMMOW J: What page?

MR COBDEN: Page 1060, your Honour, letter E, and it goes all the way over the page and well into letter B about parliamentary reform. It has a couple of resonances in this case. It is the same sort of approach, we would respectfully submit, that the appellants adopt here. This is a terrible thing that is going on, there is so much of it, something must be done.

FRENCH CJ: It is Sergeant Pepper and Miserere playing together.

MR COBDEN: Sergeant Pepper and the Miserere - your Honours can go back and read the comments on 20th century orchestral music and bands who group without a voice singing a song without a tune back at page 1045 to get the full shape of his Lordship’s musical tastes. But he is saying this is a problem crying out for a solution and we would respectfully submit that this resonates with the issue – some of the questions your Honour Justice Hayne put yesterday. It leads to an inversion of the question here, a teleological approach. There is a problem, there must be a solution.

The solution is not in suing the individual infringers. It must be somewhere in section 101(1A). It must be there because ISPs are the only people you can sue for this so let us turn section 101 upside down with 101(1A) on the top and start with the answer. We would respectfully submit this - my learned friend, Mr Leeming, perhaps moved towards this position in some of the submissions he made this morning. Let us start with the answer that ISPs are going to be liable and then take it from there.

That part of his Lordship’s speech at 1060 was quoted in terms in the dissenting judgment of Justices Dawson and Toohey who quoted that passage in Australian Tape Manufacturers 176 CLR 480 at page 513. If I can just tie that together with some other – the opening part of that speech I think from that section of speech, E to about G, is quoted.

GUMMOW J: Whereabouts?

MR COBDEN: Sorry, your Honour, I just lost my note.

HAYNE J: Page 513.

MR COBDEN: Page 513, yes. Yes, 513, your Honours can see it there. That informs us, remembering what Part VC was about until it was struck down in that very case, Tape Manufacturers reflects some of the concerns or issues your Honour Justice Crennan raised yesterday is not the way to do this payment of a reasonable royalty, people may not mind so much if they pay a reasonable royalty on this sort of thing. That is exactly - when the law of authorisation failed in respect of Blank Tapes Part VC sought to do.

That is often the solution that is sought. It is the solution that was ultimately sought and implemented in relation to university photocopying. In our own Act now present in Part VB you have an intractable problem of too much infringement in a way that cannot be dealt with by the copyright owners, including by authorisation.

CRENNAN J: Are you suggesting the statutory scheme just does not work?

MR COBDEN: Well, not if it is inverted. We do not authorise, for the reasons that I will attempt to explain to your Honour ‑ ‑ ‑

CRENNAN J: Does not work, I meant, in the sense of being intended to deal with the problem of these infringements on this scale that is evident in this case.

MR COBDEN: It does not work in preventing infringements of this kind going on at this scale.

CRENNAN J: Maybe it would have been a reasonable step when you got the notices for you to raise the issue of a reasonable royalty which would then be a business cost. I know you cannot compel a party to enter a contract, but that is one thought.

MR COBDEN: Your Honour will see when I take your Honours to the evidence we have been, along with other ISPs, indeed up to the very month before the first notice was issued going to the Government trying to have dialogue with the rights owners to say we would like to participate in a much cheaper preliminary discovery method, for example. We were not bereft of ideas or suggestions that we were suggesting to try and deal with this problem.

KIEFEL J: But what you are really saying is that in the absence of an industry code or a policy taken by an internet service provider the legislation is ineffective to require some measure of responsibility in breach of which there will be sanctions?

MR COBDEN: But the legislation is not directed to ISPs.

KIEFEL J: No, but I mean in its application. Section 101 in its application to ISPs is ineffective.

MR COBDEN: Section 101 was never introduced and section 101(1A) was not introduced to deal with a problem of either home taping or of internet P2P usage.

KIEFEL J: I appreciate that. But you were saying that ISPs would be in a position where the legislation cannot touch them. So it is just a question of choice of either having a policy or the industry not having a code and that is it.

MR COBDEN: I am certainly not saying that, your Honour, because an ISP could well and truly be in a position where it could be touched. The ISP in the Cooper Case was not just providing the hosting facility to Mr Cooper. They had an advertisement on each other’s website to promote each other. There were factors there that took the ISP quite out of the ordinary and an ISP who ran an advertising campaign – Mr Leeming referred to the one run by the Kazaa people; join the revolution, download music. Forget about the old record companies. An ISP who engaged in that sort of conduct would authorise, plainly authorise, with respect.

If there really were proper evidence of encouragement by us in this case, conceivably iiNet would authorise, but for reasons – and I will take your Honours to it – the encouragement case seemed to disappear for most of yesterday. It popped up again with the press release, for reasons that I will take your Honours to and we have put in the written submissions, and we respectfully submit Justice Nicholas got this exactly correct. There was no encouragement whatsoever by issuing a press release saying we are going to defend a proceeding. Indeed, on the other side of the coin looking at the whole of iiNet’s conduct, as we have submitted on a number of occasions, particularly for his Honour the primary judge, iiNet takes a whole lot of steps to encourage people to use legitimate conduct and the studio witnesses who I cross‑examined agreed with me, I think, almost all of them if not all of them and the references are there, that the provision of legitimate content side by side on the same computer was a factor that would drive people away from downloading.

People conceivably do not mind spending a little bit of money. It is not $30, I think, to download a film; it is quite a lot less. If the thing is available as an authentic item, they will download it and iiNet made a particular policy of trying to include legitimate content on its system and making that legitimate content, the downloading of it, not count towards your monthly plan.

CRENNAN J: What is the mechanism behind that in terms of the copyright owners? What is the mechanism that lies behind you having available the legitimate content?

MR COBDEN: I cross‑examined some witnesses on that. First of all, the legitimate content is mostly available on things like Apple iTunes and other such sites. So iiNet while it has some material in its free zone, it negotiates directly with the content holder. Its negotiation is otherwise with the Apple iTunes people. Then a link to that gets parked on the iiNet site and, most importantly, the user who downloads, using the correct link to the iTunes site, they download a one gigabyte movie and they have got a 50 gigabyte monthly allowance, that does not come off their monthly allowance. So they are very much encouraged to do that. So they have got the 50 gigabyte allowance to do as much streaming or watching of YouTube or emailing or uploading and downloading of their own photos as they can. We have always pressed that upon the courts and, of course, this litigation has been part of the overall conduct of iiNet which goes to encouraging legitimate use which has an effect in discouraging illegitimate use.

CRENNAN J: Are there problems with that in relation to the timing of the access to lawful use? That is to say, are users in a position where they prefer unlawful downloading because they can access something they want to see which would not be available lawfully? Is that part of the background?

MR COBDEN: I could not resist that proposition. The movies that are released onto, for example, Apple iTunes – and again I dealt with this in cross‑examination of studio witnesses – will depend upon the timing that the studio decides to allocate to it and an illegitimate may well turn up well before that. I cannot resist that proposition. But what the response to home taping reveals is that just because there is a big problem – and we have always accepted that there is a big problem for the studios in relation to this, that iiNet has accepted that, we have not shied away from that – just because there is a big problem, it does not mean that it is going to be solved by authorisation or, indeed, primary infringement cases.

Your Honours know that we urge upon your Honours the difficulties that arise out of synonyms, sanction, approve, countenance. Authorise does not mean countenance. It does not, with respect, mean suffer, although that is a synonym embraced by our learned friends. It does not mean permit either. Yesterday your Honours Justices Gummow and Crennan pointed out that the Adelaide Corporation Case, of course, was about a different statutory provision and that was a statutory provision which remains in a similar form in the Act as it presently stands, which is section 39. It is still there, not far on from section 36. There is doubtless overlap between 36 and 39, but the Adelaide Corporation section from the 1911 Act, which is also split apart from the ordinary infringement section, is still there in 39 and, of course, the phrase is:

permits a place of public entertainment to be used for the performance in public of the work –

So that was the section – a similar section was in play in Adelaide Corporation – so, strictly speaking, it was only looking at the meaning of the word “permits”, although the Justices in that case did also refer to “authorise” and that is probably because, in Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd, Lord Justice Bankes, which your Honours referred to yesterday, both sections – that is to say the authorising of a performance and permitting in a public place entertainment – were in play there. That is why, if I can just turn to Moorhouse 133 CLR quickly, when looking at Justice Jacobs’ decision at page 21 and the critical passages on that page, we represent the decision of the majority in this case. Your Honours have been taken to it, but it is important to see why there are some extra words in there. The paragraph starts:

The acts and omissions of the alleged authorizing party must be looked at in the circumstances in which the act comprised in the copyright is done. The circumstances will include the likelihood that such an act will be done -

Open quotation and the quotation is for the next few lines from Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd. The reason the words “or permission” appears twice in there – “the Court may infer an authorization or permission from acts which fall short”, et cetera, is because, in Performing Right Society v Ciryl Theatrical Syndicate, the Court of Appeal in England was looking at both the sections – the permit the place of public entertainment and authorise the act in the copyright.

Strictly speaking, the words “or permission” in a case about section 36(1) or 101(1) should not be there. They are not there because they are pure synonyms. They are there because they were two separate statutory provisions. So we are with authorisation, not with permission. Doubtless there are meanings of “authorise” that are also meanings of “permit”, but doubtless there are also meanings of “permit” that are not meanings of “authorise”.

I have to say I am quoting directly from Professor Pearce and Mr Geddes’ book - and we have not given it on our reference -paragraph [3.30]:

The use of a dictionary to assist in the understanding of words used in an Act must not, however, result in the words of the Act being abandoned in favour of synonymous expressions.

Because Parliament has chosen to use the word “authorise”, not the word “sanction”, “approval”, “countenance”.

CRENNAN J: It puts you in mind of what Justice Learned Hand had to say about uses of dictionaries?

MR COBDEN: Yes, I think we gave a reference to also Cozens v Brutus, that question. There are other references to ‑ ‑ ‑

FRENCH CJ: Just go back for a moment to the reference you made earlier to the free zone. How does the availability of the free zone feed into the characterisation of the conduct as authorisation? Is it merely negativing encouragement or is it doing something else?

MR COBDEN: If you stand back and see what invitation has been given, what invitation is to be implied by the conduct of iiNet to the world at large by its provision of internet services, it would be wrong, unless iiNet emphasises some part of the way it is providing the services, not to look at the whole of the way it is providing internet services. Is its provision of internet services, payment of a fee, monthly quota for download, just to be looked at, well, that is an invitation for infringement of copyright? We say it cannot possibly be that. Or do you look at the whole of the messages given to people? We would say it can characterise – we do not need it, with great respect, the free zone, but it is there and the provision of the free zone – on the case we put forward, your Honours, and I am going to come particularly in relation to reasonable steps and to graduated responses, another ISP who did not offer the free zone would not infringe either in the circumstances through not having taken steps ‑ ‑ ‑

KIEFEL J: Are there aspects of commercial necessity to the provision of a free zone though in terms of competition?

MR COBDEN: Not necessity, your Honour, but ‑ ‑ ‑

KIEFEL J: Importance?

MR COBDEN: Importance. No question that Mr Malone’s evidence makes it clear that the provision of the free zone is ‑ ‑ ‑

KIEFEL J: Expected by consumers.

MR COBDEN: I think iiNet invented it and it was a point of difference. It may become expected by consumers. I do not think there is any evidence about that. It was an important point of difference for iiNet over and above its competitors. In summary, the word “authorise” has not been expanded by the introduction of section 101(1A). There is no reason why it should have been. If it were, given the opening words of 101(1A) and 36(1A) that it is only useful in determining “authorise” to subsection (1) and not to section 13(2), there would be a strange difference between the word “authorise” in section 13(2) and the word “authorise” in subsection (1) in each of those infringement sections which was never there before and, we would respectfully submit, just as a matter of statutory construction is not there now.

The other reasons urged upon your Honours as to why there might be some expansion or change in the meaning of “authorise” after 2001, which is the date when those 2000 amendments came into effect, I think 4 March 2001, were two matters put by our learned friends. First of all, the introduction of section 112E and, secondly, the introduction of Division 2AA of Part V, which is the safe harbour provisions. We would submit, your Honours, that neither of those matters can have had any effect on the word “authorise” or the content of the word “authorise” in subsection 101(1) in 2001 or in 2004 when the safe harbour provisions were introduced. They came into effect on 1 January 2005.

CRENNAN J: What is the implication of all of that from the point of view of construction and Moorhouse? What is the implication of what you are saying from the point of view of the task of construction and what has stood as the authority in Moorhouse?

MR COBDEN: The authority of Moorhouse remains. The implication that I think is put against us from the introduction of 112E and Division 2AA is that, in particular, the word “authorise” has changed in meaning or reach insofar as it applies to suppliers of electronic facilities or, put another way, people who would fit within section 112E and people who could fit within Division 2AA.

CRENNAN J: Do you mean something like encourage by implied approval or something along those lines?

MR COBDEN: Yes, or that the reasonable steps in 102(1)(a) must include certain things that are contemplated by Division 2AA. That was one way it was put. Or that because of the focus of 112E on the supplier of facilities and carriage service providers and carriage providers, that they must have been somehow particularly in the focus of what is put in 101(1A) and that seems to be, in my respectful submission, the direction Mr Leeming was heading in today, that 101(1A) was specially put there to deal with electronic infringements. We do not accept that that is necessarily so. It is there for all infringements, electronic or otherwise, and that there is some special focus of 101(1A) on electronic providers and if you fit somehow within the boxes of 101(1A), then a prima facie authorisation must be displaced by consideration of some other principle.

CRENNAN J: So only contending against some expansion over Moorhouse, not contending that – you are not raising some challenge to whether sanction and countenance can be employed in the context of authorisation?

MR COBDEN: We do not resist the proposition that the definition of “sanction, approve, countenance” is the definition approved by Moorhouse and that that is not still a working definition. We do suggest that if one does not look for synonyms of countenance and see whether one falls in – or weak meanings of countenance that are not the authorised meanings of countenance and then say, well, if you fall into those, then you are also going to fall into authorisation, we certainly resist that proposition. That does not involve resisting Moorhouse. That involves resisting extreme applications of Moorhouse.

CRENNAN J: Of course, you could say Justice Jacobs implied invitation is countenancing, could you?

MR COBDEN: You have to look at the terms of the invitation, the unqualified terms, but in some circumstances it might be countenancing in its sense of authorising but not suffering, not just permitting, not ‑ ‑ ‑

CRENNAN J: No. It is tied up, is it not, with the notion of implied approval of some sort?

MR COBDEN: Yes, and even the invitation has to act on the mind of somebody. So if you are just watching them go by and doing it and not stepping forward to intervene, just suffering them to do it, that may well be countenancing in one of its weaker senses, but not countenancing in the sense of coming back to the statutory term which is authorise. Can I just indicate to your Honours why we say that section 112E does not have this expansionary role which was urged upon your Honours by the appellants and that really, simply derives directly from its terms.

First of all, we again invoke the starting position that “authorise” in section 101 has not changed meaning by 101(1A) and invoke the connection back to 13(2), but in its terms and, indeed, in the explanatory materials 112E was designed or intended to provide an answer to:

A person (including a carrier or carriage service provider) who provides facilities –

et cetera, to an accusation of authorisation. It would be very odd, we would respectfully submit, if a section that in terms seeks to offer protection to someone like a carriage service provider has the effect of increasing the carriage service provider’s exposure to the liability that it is seeking to protect it from. That would just simply be illogical and you would have to find a very strong statutory intention that by making sure that a party in the new electronic environment does not fall foul of section 101(1), because it is only section 101(1) you fall foul of by authorising, not 101(1A). By offering that protection to make sure they do not fall foul of it you somehow impliedly increase the scope of the liability itself.

GUMMOW J: What do you say is involved in the notion of “merely because” in 112E to the facts of this case?

MR COBDEN: I was going to deal with that in our contentions at the end of the oral submissions. I am not going to duck it, your Honour. Can I postpone it until then? I probably can deal with it shortly now. It is in paragraph – leaping ahead in paragraph 17 of our three‑page outline. We take a verge, a different approach to section 112E that has been taken before. It is approached in three different ways in the Full Court because there is a conceptual difficulty in simply working out what section 112E is doing. Can I take your Honours to Justice Nicholas on this topic. It is at paragraph 784 of his Honour’s judgment.

The first question arises is, what work is section 112E doing in any event and pose the counterfactual to it, as it were. If somebody, a person providing facilities, including a carrier or carriage service provider, was providing those facilities and merely because someone used them – would they become liable for an authorisation infringement if all that happened was that merely somebody else used the facilities?

GUMMOW J: It may be that 112E has to be read with 101(1A).

MR COBDEN: That is what our learned friends say.

GUMMOW J: You have been putting to us that 101(1A) applies generally and 112E would be a specific indication of that general operation. So that you would say that provision, even though it had an element of control, I suppose, was not necessarily adverse, as it were, when you are working out paragraph (a). When it says the extent of their power, in looking at the extent you would have to take on board 112E if it is a communication case.

MR COBDEN: Conceivably, your Honour. But as Justice Nicholas says, if one starts from ordinary principles, and I accept that I am ducking the question by saying that, but if one starts from ordinary principles of authorisation, it is hard to see how if you are a service provider providing facilities and someone else merely uses them, that you would thereby be liable for their primary infringement.

CRENNAN J: If you knew nothing about it, that is all quite logical, is it not?

MR COBDEN: Yes, and, as our learned friends have pointed out and as we agree, knowledge or reason to suspect of the requisite sort is an essential element of authorisation. So saying if you knew nothing about it just says well then you would not authorise. So it is difficult to see the work that section 112E is doing, that is what Justice Nicholas says. His Honour disagrees, respectfully, at 785 with the analysis in Cooper and there is a confusing legislative history because of the reference to the Telstra Case.

HAYNE J: But does 112E intersect most closely with that part of the definition of “communicate” which is electronically transmit a work?

MR COBDEN: Yes, I think so, your Honour. Indeed, its interaction with the primary right is evident in its genesis which, as his Honour says at paragraph 791 – his Honour Justice Nicholas says – the apparent genesis of the enactment of 112E – and there is an equivalent section in relation to works at 39B – was the WIPO Copyright Treaty and Article 8 is set out there by his Honour. It says:

It is understood that the mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Treaty or the Berne Convention.

That is, of course, dealing with the primary right and, in any event, as was submitted this morning by my learned friend, Mr Bannon, section 22(6) actually does the work of saying that the primary right is not engaged by the provision of facilities because it has to be the person who determines the content of the communication. So even looking at the genesis of section 112E, it does not really assist the analysis. That is why his Honour says in that paragraph 791 going on:

it is inaccurate to speak of s 39B and s 112E as giving effect to the agreed statement –

because that agreed statement is about the identification of the primary right and who does it and not authorisation –

they are certainly in the spirit of it. The existence of the agreed statement at the time of the enactment of s 39B and s 112E tends to confirm, in my view, that both provisions were introduced out of an abundance of caution.

GUMMOW J: Is there a definition of “audio‑visual item”? Where do we see that?

MR COBDEN: Yes, your Honour, it is at the beginning of the part where your Honour has seen the fair dealing defences – 100A. It is the beginning of Division 6.

GUMMOW J: Yes, thank you. What was it that was put against you to say that you had provided a facility for the electronic transmission and that you had - by reason of that you were not to be taken to have authorised any infringement. What else were you said to have done that put you into trouble?

MR COBDEN: Effectively, the elements of authorisation itself.

CRENNAN J: Knowledge?

MR COBDEN: Knowledge and not exercise the power to prevent and not taken reasonable steps.

HAYNE J: But to prevent what - to prevent copying or to prevent communication to the public?

MR COBDEN: To prevent communication, the only copying ‑ ‑ ‑

HAYNE J: Prevent communication to the public?

MR COBDEN: Yes.

HAYNE J: That is, not to have taken down the copies that had been downloaded?

MR COBDEN: Not to have stopped them continuing to be made available, thus emphasising the difficulties of section 112E. Now, if I could go back to Justice Nicholas and his Honour’s ‑ ‑ ‑

GUMMOW J: I do not know what the difficulties are supposed to be with 112E at the moment. You keep saying it.

MR COBDEN: I am sorry, your Honour, they are that the thing that you are given protection against would not be an authorisation in any event on any analysis. That is to say, providing facilities and then someone else using them, per se, would otherwise lead to a finding of authorisation. Now, just so I am clear, I am making my submissions on 112E out of the order in the three page outline so if I could just continue to make – we suggest is a way around them.

GUMMOW J: I still do not understand. What beyond the contractual provision of this facility to be operated in a particular fashion, was said to have been an authorisation against you?

MR COBDEN: The very knowledge ‑ ‑ ‑

GUMMOW J: Knowledge of what?

MR COBDEN: Knowledge of the primary infringement by reason of the notices that your Honours have been taken to.

GUMMOW J: Knowledge of something that had happened in the past?

MR COBDEN: Yes, and having a power to prevent it under our contract and failing ‑ ‑ ‑

HAYNE J: What is the “it” – prevent “it”? What is the “it”?

MR COBDEN: Prevent the communication – prevent the primary infringement, I am sorry your Honour. Prevent the primary infringement by the identified users continuing to make available films online and conceivably making available other films online in the future.

GUMMOW J: And?

MR COBDEN: And not taking reasonable steps, that is to say, not issuing warnings and not – we say not issuing warnings and terminating. In other words, the very analysis that is necessary for section 101, 101(1A) to decide whether you authorise becomes an analysis of why you do not have the excuse against authorisation in 112E. There is, we respectfully submit, another way of looking – I am sorry, could I just indicate where Justice Nicholas takes that – and that is the reason why his Honour makes that analysis. It is the art of ‑ ‑ ‑

GUMMOW J: Where does Justice Nicholas say these things?

MR COBDEN: I had taken your Honours as far as 791 and what his Honour says – at 793 his Honour identifies the problem:

Clearly, a provider of communication facilities who actively encourages their use for the purpose of copyright infringement will have done something more than merely provide the communication facilities used to infringe copyright. The same is true of a person who not only makes the communication facilities available, but who also supplies the copyright material which is infringed through the use of those facilities.

Section 112E would not apply there but neither does either of those remarks apply to us. As his Honour says:

the real problem arises in relation to knowledge.

Can I pause there. The question yesterday was asked or example was put up by Mr Bannon, Telstra would fall within 112E because it would not know, but one asks, why cannot Telstra be sent a notice to say iiNet’s customers over your facilities are making available these films.

GUMMOW J: There is a step between paragraphs 793 and 794, is there not? Paragraph 793 is talking about active encouragement.

MR COBDEN: Yes.

GUMMOW J: Paragraph 794 seems to be assuming that knowledge is active encouragement, or is it doing something more?

MR COBDEN: Yes, and ‑ ‑ ‑

CRENNAN J: Or is it knowledge coupled with an omission to do something?

MR BANNON: Yes, which is another way of saying authorise. His Honour then goes on to say at paragraph 795:

no easy answers to these questions but they do not arise if s 112E is simply understood as making clear what I understand to be the true position under s 101(1) in any event, namely, it cannot be inferred that a person authorises copyright infringement merely because he or she provides another person with communication facilities used by the other person to infringe copyright.

So, in effect, his Honour is saying it is no more than declaratory of a position that would already obtain. The other way to look at it which is what we urge upon your Honours, but I do not want to spend too much more time on it, is what we have put in our written outline and what we put in our outline today and this is fully developed in our written outline and we have given the references to that and your Honours will see them, which is look at the two conditions and give them proper context in their overall commercial setting.

First of all, if you are a carriage service provider it necessarily involves a number of the factors that are dealt with in section 101(1A). You are necessarily going to have a relationship with the subscribers. You are going to engage with them in a range of ways. You are almost certainly going to have a contract with them, that is all going to be material that feeds into 101(1A)(b). That is the first limb of 112E.

The second limb is that someone uses the facilities to infringe copyright and the only connection between you and the infringer – and we would say this is the meaning of the word “merely” and this gets to the answer that we set off on this excursion what your Honour Justice Gummow asked me – that is to say, that providing the facilities in an ordinary way, obtaining the facilities under your usual terms, then you are not taken to authorise unless you take some other overt step of the kind Justice Nicholas referred to, that is to say, encouragement for the provision of some sort of link or the provision of some sort of – of the films, the very subject matter of the infringement.

FRENCH CJ: Your conduct is said to constitute the authorisation in the context pleaded in – I am looking at page 29 of the first volume – is that which appears at paragraph 63, is it not, of the further amended statement of claim and picked up in paragraph 65. So the context is set by reference to your provision of the service, 57 and 58?

MR COBDEN: Yes.

FRENCH CJ: Then, the things that you did, “knew or had reason to suspect”, “took no action”, “offered encouragement”, “failed to enforce” and then the acts are those referred to in 59, “made available online to other persons”, et cetera, through the uploading process.

MR COBDEN: Yes. First of all, we say that knowledge or “reason to suspect” is an essential ingredient of any authorisation yet section 112E is excusing you from authorisation.

CRENNAN J: Is it not just indicating that authorisation cannot be inferred merely from the provision of the facility? Is that not how it works?

MR COBDEN: If it is saying that then, with respect, it is doing nothing.

CRENNAN J: You would say it is surplusage, somehow.

MR COBDEN: It is not really doing any work at all.

GUMMOW J: The difficulty is the word “provision”.

MR COBDEN: Yes, your Honour.

GUMMOW J: It is not just handing over a chattel, is it?

MR COBDEN: No, quite so, your Honour.

GUMMOW J: It would be under a contract, I would imagine.

MR COBDEN: Yes. We embrace that, with respect, your Honour, because it plainly recognises that provision is a continuous act and there is almost no other way one can think of it as being done by a carriage provider or a carriage service provider except under a contract. It would be unlikely that Parliament would think that this is something that has been done for free and with no terms and conditions attending to it. It is taking into account, already, section 112E by the word “provision” the notion of the continuing relationship but by maintaining the continuing relationship you do not infringe, you do not authorise. What is happening is merely because somebody else is using the services, presumably by reason of that provision as part of that relationship, but, with respect, we would embrace the word “provision” because it emphasises that continuing relationship, quite unlike the supply of goods.

It is plainly talking about the electronic environment. It could not be talking about carriage and carriage service providers. Just so your Honours know, by the way, what those terms mean - and I need to answer another point raised by my learned friend, Mr Bannon, yesterday. Your Honours were taken to section 10 of the Copyright Act and to the definition of “carriage service provider” and “carrier”. I am sorry if I keep on saying the wrong word there – “carrier” in the little bundle we have put together for your Honours today, which your Honours should have there.

This may be important in answer to your Honour Justice Gummow’s concerns about the provision and these services. We have given your Honours the relevant parts of the Telecommunications Act 1997 behind tab 3 because they are incorporated directly into the Copyright Act and page 9 of the Act – the bundle is also paginated at the top – page 33 of the bundle, your Honours can see that “carriage service provider” has the meaning given by section 87. “Carrier” means the holder of a carrier licence. “Carrier licence” means a licence granted under section 56. Page 37 of the bundle, “carrier licences”:

A person may apply to the ACMA for a carrier licence, so long as the person -

fulfils those eligibilities - must be in writing, et cetera and there is a process and section 56 is the grant of the licence by ACMA and Telstra, for example, is a carrier. We all agree with that. Carriage service providers are people who meet a definition – section 87. Yesterday, at one point, my learned friend, Mr Bannon, referred to iiNet having got a licence to become a carriage service provider and having some benefit in getting a public licence. With great respect, he was incorrect in that. There is no licence you get to be a carriage service provider. You simply become one. You fit these conditions or, here, you can get a declaration that somebody is a specified listed carriage service provider, but otherwise it is simply a matter of fitting into the definitions.

When you become a carriage service provider you then attract a range of obligations under the telecommunications legislation and also under the Broadcasting ServicesAct. Now, one of the schedules to that deals with a lot of online activity, but there is no licence or public resource handed across to somebody being a carriage service provider.

So, in our submission, which is summarised in the three‑page outline, section 112E recognises that it is an ongoing relationship, must accept there are ongoing incidents to that relationship and provided we fit within the description of being a carriage service provider and providing those facilities and somebody else is our customer merely using the facility, that the provision of notice to us does not make any difference. We are entitled to the broad protection given to section 112E, but that it would not continue to offer us that protection if we did the sorts of things referred to by Justice Nicholas in that paragraph of his Honour’s judgment or the sorts of things that happened in the Cooper Case, providing direct links to the infringing equipment and the exchange of advertising between Mr Cooper and the ISP. Those are our submissions on section 112E.

Of course, if we are correct about authorisation in a sense, your Honours, we do not get to 112E or, indeed, to our telecommunications defence. If we do not authorise anyway, we do not meet section 112E. But if I can go back to my submissions on the questions of statutory construction, for the reasons we have submitted, section 112E is not apt to and does not expand the meaning of “authorise” in section 101(1) whether in relation to people generally or to carriage service providers particularly.

The next candidate for expansion of section 101(1) and the meaning of “authorise” in that section was the safe harbour provisions in Division 2AA of Part V and the expansion was put, at least in this way, that because the safe harbour provisions scheme contemplates that there might well be a policy of terminating the accounts of repeat infringers or orders to terminate accounts or block particular sites, that gives an expanded content to the meaning of the word “authorise” or conceivably to the injunction that might be granted under section 115(2). We accept applying authorities such as Project Blue Sky in this Court that conflicting provisions should be reconciled as far as possible and that should speak harmoniously as far as possible, but if there is a conflict between provisions of an Act, that one has to identify some sort of hierarchy to work out how the conflicting provisions operate.

What we call in aid in relation to Division 2AA, Part V, the safe harbour provisions, is first that they do not conflict with any other provision of the Act as, we would respectfully submit, was identified yesterday. What Division – I will call them the safe harbour provisions, if I may, to keep on avoiding that mouth full of Division 2AA of Part V, is that they cut in at the point when liability is otherwise found for infringement, authorisation or direct infringement by a person who is eligible for the safe harbour protection and replace section 115(2) and possibly section 116 which otherwise provides the remedies that would be available against a person who can take the protection of those circumstances.

The protection of the safe harbour provisions is voluntary. You can choose not to take the protection offered and you can indeed choose to take some of the protection offered and not other of the protection offered. So there is no inconsistency or hierarchy that needs to be established between safe harbour provisions and the rest of the Act, simply that the remedies that would otherwise be available under sections 115 and 116 are simply not available if the conditions are met and one is driven instead in terms of the statute, if that is the case, to the provisions that your Honours were taken to yesterday, which was 116AG in Division 2AA of Part V, the limitations on remedies.

Indeed, when one considers both the terms of the safe harbour provisions and their genesis, which is to come in via the Australia‑United States free trade agreement and use a terminology that is derived directly via that agreement from the Digital Millenium Copyright Act, the US Act that introduced section 512 into the 1976 Copyright Act (US), one can see that there has in fact been effectively no attempt to harmonise the language used in the safe harbour provisions with many of the other provisions in our Copyright Act, no attempt to harmonise those provisions that were there before and make them mesh with the provisions of the safe harbour provisions.

If I can make that proposition good just by a few illustrations. I will take your Honours to the safe harbour provisions themselves, the agreement, which is in the bundle our learned friends provided yesterday, and also the Digital Millenium Copyright Act which is in the bundle that we provided your Honours today.

What, in our submission, has happened the starting point is the Digital Millennium Copyright Act which is in the bundle we provided today at tab 7 and that is the language introduced into the US Act in 1998. As your Honours see at the foot of page 83 of this bundle, it is plain that what is being introduced is a new section into the title 17, United States Code which is the Copyright Act 1976 section 512. It starts:

A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider’s transmitting, routing –

I think the Americans would say –

or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections ‑

Seizing upon that phrase and going to the free trade agreement in our learned friend’s bundle behind tab 4 and the page numbered at the foot, 17‑27, which your Honours were taken to, clause 29 of article 17.11. Then we see 29(b)(i):

These limitations shall preclude monetary relief and provide reasonable restrictions on court-ordered relief . . . and shall be confined to those functions:
(A)transmitting, routing, or providing connections for material . . . or the intermediate and transient storage of such material in the course thereof –

Now, the words “without modification of its content” simply come from another part of section 512. Then if you go to the safe harbour provisions and you go to section 116AC, category A activity, which is what is relevant here, it says:

A carriage service provider carries out a Category A activity by providing facilities or services for transmitting, routing or providing connections for copyright material, or the intermediate and transient storage of copyright material –

Although our draftsman has rewritten and reorganised in a style familiar to Australian legislation the provisions that are contained in the agreement which derive textually directly from the United States Act and included some provisions that we need for the division to work with our Act, for example, the definition of copyright material in 116AB, throughout the safe harbour provisions there is the textual derivation of phrase after phrase. One can perform a tracing exercise over and over again in relation to all these various categories of activity in relation to the limitations on remedies and in relation to the conditions that are necessary before you can call in aid the limitations. They are derived directly from the US Act via the treaty and into our Copyright Act.

As an example of how similar concepts are expressed quite differently, possibly with different effect, in our Act outside the safe harbour provisions – can I take your Honours, for example, to section 111A of our Act, which came in in 2001, along with the other digital agenda amendments – where there is the notion of a copyright not being infringed by the making of a temporary copy of an audiovisual item as part of the technical process of making or receiving a communication. That has similarities, if I may so, to what we just looked at in section 116AC:

transmitting, routing . . . or the intermediate and transient storage of copyright material in the course of transmission, routing –

et cetera, but is quite different language.

What we respectfully submit that indicates is that quite aside from the sort of language that we have chosen to use in the 2001 digital agenda amendments, the safe harbour provisions were dropped, effectively, prefabricated, using the American language, into our Act and they provide – the categories of activity in sections 116AC to AF are not divided up by reference to authorisation liability or primary liability. A person able to call in aid the safe harbour provisions, which would be a carriage service provider, when conducting category A activity may well commit authorisation infringements by providing facilities in certain circumstances or may commit primary infringements, “intermediate and transient storage of copyright material”. That is quite different to the section 111A excuse.

A category B activity will be direct infringement “caching copyright material” and possibly also authorising infringement. Category C activity is storing. That is probably direct infringement. Category D activity seems to refer to things that may well not be infringements at all:

referring users to an online location using information location tools or technology.

It is almost hard to conceive of how that would apply. That would give rise to authorisation liability, certainly not to direct liability. There is no attempt, we respectfully submit, to mesh any parts of the safe harbour with the Act itself. There is no warrant by reason of the fact that there are references to the limitations of remedies or to the provisions of having a policy against repeat infringers to say that that has influenced since 2004, retrospectively – sorry, by later legislation affecting earlier legislation, affected the meaning of section 101 of the word “authorise” in section 101.

GUMMOW J: At volume 9, 4438, you complained in paragraph 9 of your submissions this morning that customer information was not handed over to you. You asked for it and they said no.

MR COBDEN: I am sorry, your Honour?

GUMMOW J: Customer information was not handed over to you.

MR COBDEN: In paragraph 9 of our submissions?

GUMMOW J: Yes.

MR COBDEN: Sorry, your Honour, it sounds like a strange complaint.

GUMMOW J: Volume 9, 4438, there is a letter.

MR COBDEN: Yes, I have that, your Honour. That is not customer information that was handed to us.

GUMMOW J: I beg your pardon?

MR COBDEN: No customer information was handed to us by AFACT.

GUMMOW J: That is right. They would not do it.

MR COBDEN: They did not have it, your Honour.

CRENNAN J: They would not have it, would they?

MR COBDEN: They did not have it. I think I am at cross‑purposes with your Honour, but AFACT did not have our customer information. They had on the spreadsheets the details of the IP address connections which were transient and could change hour to hour or day to day depending on whether someone switched off their computer. I am going to come to 4438 and deal with it quite directly, your Honour. The final point – and I think I have spent too long on it, but I will just quickly address a question your Honour Justice Gummow raised in relation to how 116AG worked. We respectfully submit, if the orders in 116AG(3) are outside section 115(2), then 116AG(3) is an independent conferral of power by necessary implication. It says:

the relief that a court may grant against a carriage service provider is limited to one or more of the following orders –

but that is equally capable of being a grant of power to make that order. You can make these orders, but you can make no other orders. That is why we say how it works and harmonises with the rest of the Act. It simply takes this activity outside 115(2) completely and the injunction power there and replaces it with that grant of power.

FRENCH CJ: That might be a convenient moment, Mr Cobden. Court will adjourn until 2.15.

AT 12.45 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.16 PM:

FRENCH CJ: Yes, Mr Cobden.

MR COBDEN: Thank you, your Honour. If I just correct one thing in respect to which I may have given a wrong impression earlier when I was discussing carriers and carriage service providers. I may have said that that iiNet is not a carrier. In fact iiNet is a carrier but not in respect of its operations as an ISP and contrary to what my learned friend, Mr Bannon, said yesterday, an ISP as a carriage service provider does not require a licence to engage in those activities.

One last point on the safe harbour regimes which just answers, I think, something that your Honour Justice Hayne raised yesterday which is about the chronology of the safe harbour provisions and their relationship to the prevalence of peer‑to‑peer activities. The safe harbour provisions, as I attempted to demonstrate in one small way this morning but which carries through to the rest of them, find their textual origin pretty much lock, stock and barrel in the 1998 US Act that we gave your Honours a copy of this morning. Then your Honours know the rest of the chronology 2000. The Digital Agenda Act 2001, that commenced 2001. The BitTorrent protocol created by Mr Cohen, that was in evidence, and then our safe harbour regime picking up by reason of the agreement the US provisions of 2004.

A material fact might be then, what was the prevalence of peer‑to‑peer in 1998 when effectively those provisions were texturally drafted? In the bundle that we gave to your Honours this morning, behind tab 1 there is a decision of the United States Court of Appeal for the District of Columbia Circuit, Justice Ginsburg – I think his Honour was at that stage the chief judge of that circuit – Recording Industry Association of America v Verizon Internet Services. Over at page 1238, the first column, then a long discussion of the legislative history, indeed, into the debates before Congress of letters people wrote to try and illuminate the provisions. His Honour writes in the first column:

DMCA betrays no awareness whatsoever that internet users might be able directly to exchange files containing copyright works. That is not surprising; P2P software was “not even a glimmer in anyone’s eye when the DMCA was enacted.”

That perhaps casts a little bit of illumination on the language of it and its relation to peer‑to‑peer. One last matter about sanction approved countenance that was to go back on that, but there was – the focus of the appellant’s case yesterday until very late in the day was on the issue – the approach that we were suffering or countenancing – encouragement got a little look in late in the day – reference to Justice Emmett’s remark about the press release. We would respectfully submit that encouragement by reason of that press release can safely be put to bed for the reasons that Justice Nicholas gives in 752 to 755 and that we have dealt with in our written outline at paragraph 13.

GUMMOW J: What do you say in response to I think what is put against you that at least in respect of those of your customers who are identified in the material supplied to you, you by doing nothing in relation to them countenanced what had happened and thereby yourself in respect of those acts by the customers yourself then authorised those acts even if thereafter there was no countenancing that could be proved? So you are at least stuck with a liability by reason of failure to respond to that specific situation in a specific fashion.

MR COBDEN: I understand the accusation, and the answer to it, your Honour, is that it has to be we have to take reasonable steps, whether one applies 101(1A)(c) and manifestation Moorhouse – and I will come to it very shortly. There was never a suggestion, and there really cannot be a suggestion, that just a warning or passing on that notice was all that was ever required of us or would be a sensible deterring step. Even today when our learned friend said that they did not anything, including send a warning, we are always driven back to a warning with the threat of termination. For the reasons that we will seek to develop, it was never reasonable in these circumstances, on those notices, to require us to send a warning that included a threat of termination.

I was, in fact, going to turn to the question of the relief proposed right now and see if I can engage with that. As your Honour Justice Gummow pointed out yesterday, one needs to understand the relief that is being sought and to understand what primary infringements we are accused of authorising. There was a considerable debate about the relief yesterday and then overnight ‑ ‑ ‑

GUMMOW J: On that hypothesis that has just been put to you, the relief would be clear enough, would it not? There would have been a number of specific identified primary acts. You would have authorised them. You would be liable for damages and a declaration.

MR COBDEN: On that hypothesis, yes. I understand that, your Honour.

GUMMOW J: It is only when you get into futurity that you get into remedial problems.

MR COBDEN: The way the notice system worked – another way the appellants propounded it – was that once we received a notice of the existence of the films being made available online then there were steps that we should have taken to prevent the infringements continuing. That is the way in which they framed their letter and their case. That immediately asked the question what are the steps that we should have taken to prevent the infringements continuing? No matter which way one approaches the question, one cannot escape that proposition.

HAYNE J: Why is the answer not “Inform your customer that their holding of the film has been detected; they must take it down. If they do not, they are in breach of their agreement and there will be termination”.

MR COBDEN: At least in relation to the facts of this case, up to late 2009, that would not have been a reasonable step for this reason alone, that one must assume, we would respectfully submit, that if we do that and, indeed, to hundreds of customers – possibly thousands of customers – a proportion of them and we do not know which proportion or who they will be, would have come back to us and said “You say that I have got an infringing film on my system. What basis do you have for saying that?” Our answer from mid 2008 to the end of 2008 could only have been, “We received a notice from someone called AFACT that said that the connection - IP address on that date - which we have, by reason of going back to two databases connected to your account, had the film on it on that day”. If they had said, “I do not agree with you, I do not accept that ‑ ‑ ‑

HAYNE J: Your reasonable steps might have ceased at that point.

MR COBDEN: Not, with respect, on the relief that has been now framed and put up by the appellants. We would not because the appellants say that there is to be a declaration that we infringe by authorisation in relation to any film that was still up seven days after we first got the notification. That is their – their 1(h) says that there is a declaration.

GUMMOW J: Where are you reading from, Mr Cobden?

MR COBDEN: The document from this morning from the appellants, your Honour, sorry.

GUMMOW J: Paragraph 1(h)?

MR COBDEN: Yes, 1(h) and 2(a) and (b) are a form of short minutes of order of the relief sought and the only relief, except for damages, now sought. So 1(h) seeks – and this is in response to your Honour Justice Gummow’s invitation yesterday – to say well what is this relief? A declaration that we authorise:

the specific acts of communication to the public of making available online the films identified in the continuing infringement exhibit by users of the identified customer accounts between the date which is, for example, 7 days after the first notice of any infringing film on that account or alternatively after first notice of the particular infringing film –

So it seemed that the first variant which they would like is that any film from all of these appellants that appears on the account more than seven days after the notification of the first one. So if you are notified about Pineapple Express it picks up The Dark Knight and everything else. Or, alternatively their fallback about Pineapple Express on that account.

HAYNE J: My question was more directed to that which is identified in paragraph 2(b).

MR COBDEN: I am sorry, your Honour. That is an order restraining us to continue to provide:

internet services to particular accounts without obtaining confirmation from account holder that identified films have been removed.

Your Honour, that relief presupposes that there has been an authorisation first because there would not be relief granted against us unless we have authorised the infringement and the question of whether we authorised the infringement goes back to the question of what we did upon receipt of the notice. Paragraph 2(b) is just saying, well, now that everything has happened and we as a group of people all know that there are some infringing films sitting out there, they should all be removed, that would be a nice easy way to tidy things up.

GUMMOW J: Well, 2(b) is directed to restraining the commission of further authorisation. It is injunction restraining future activity which would be an authorisation.

MR COBDEN: Yes, your Honour.

GUMMOW J: It is not telling you or not giving any remedy in respect of past authorisation. For that you have to go to 1(h), do you, I think, the declaration in (h)?

MR COBDEN: Yes, I understand that, your Honour, but the injunction in 2(b) must be based on a past infringement, an infringement of copyright by us, and the only basis upon which there is an infringement of the copyright by us is the authorisation consequent upon receiving those notifications.

CRENNAN J: But it is directed to suspending the account until the identified films in relation to past infringements have been removed on the thesis that they continue for each user to be available to be communicated to the public.

MR COBDEN: Yes. We actually do not know, of course, whether those particular films do still remain available because these events took place in 2008, 2009 and we have received no further notifications of what is online from any customer since, I think, August 2009.

CRENNAN J: But if you had reacted contemporaneously and the user communicated to you that they have taken that film down, that is the end of the matter, is it not?

MR COBDEN: Yes, but whether we had to react contemporaneously is a matter to be looked at at the time we received the notices and whether it was reasonable for us to pass on any notice, in particular, a notice that included the threat of termination.

CRENNAN J: Is this a repeat of the argument that until November 2009 you did not actually understand the import of the spreadsheets and so on?

MR COBDEN: It is an aspect of that argument, your Honour, and I think I was part way through a little pantomime of what would happen if we – because we say we have to look at it at the time when we received the notice and what was expected of us at that time because that is the time when the authorisation infringement occurred or was about to occur and in my little pantomime I was saying that somebody would ring us up and say, you tell us that this film was – not for the benefit of the hearing and the findings about the films that happen now, but back at the time – “You tell us that this film is on our computer and being illegally shared. What is your basis for doing that?” Mr Dalby gave evidence that he would expect there would be a proportion of customers who would do it both innocent – because there was evidence that you could use wireless networks that can be used by people next door or even outside in the street, and that happened. Mr Carson, the appellant’s expert, agreed that that happened.

KIEFEL J: This just goes to the question of the reasonableness of whether or not you should respond to the notice.

MR COBDEN: Yes, it does.

KIEFEL J: More specifically though, if you were found to have authorised the continuance of acts of infringement because without advising customers to take them down they continue to be out - communicated to the public, are you saying now because of the lapse of time in terms of relief on that hypothesis that that finding was made that the relief could only be damages because there can be no certainty that there is any utility or any need for the order now?

MR COBDEN: Well, certainly such an order 2(b) if made now would appear to require us – I am just thinking about this on my feet, your Honour – would appear to require us to go back over the thousands and thousands of entries, each line of the spreadsheet that your Honours have been taken to ‑ ‑ ‑

KIEFEL J: I thought it might be limited to the repeat infringers where you have a proven continuation of conduct.

MR COBDEN: That is not what it says. We have not seen a fully formulated order. I saw this for the first time today.

KIEFEL J: All right, I might be wrong about that.

MR COBDEN: A sorting process has taken place in respect of 20 of those, and when your Honours have seen some of those spreadsheets that open out ‑ ‑ ‑

KIEFEL J: Yes, you are quite right, is it not limited to that.

MR COBDEN: RC‑08, for example, your Honours have seen. We never saw the data in that form at any time. That data was created in that form by an affidavit of Mr Williams, the solicitor for the appellants.

KIEFEL J: Mr Cobden, what do you say about the question of relief though?

MR COBDEN: Sorry, your Honour. May I go back to ‑ ‑ ‑

KIEFEL J: Do you say, firstly, that there is any difficulty – there is no difficulty with your communicating with the account holders?

MR COBDEN: There is no technical difficulty with us communicating with our account holders. As to the ‑ ‑ ‑

KIEFEL J: Do you say – is there some problem with the utility of the injunction?

MR COBDEN: Can I just develop a little further in what would appear to be necessary from this? It means some analysis, it is not just the RC‑20 analysis as far as one can tell, of who repeat infringers are. Can I just indicate to your Honour, and I will come back to it, but to prepare those spreadsheets like happened for RC‑08 took several weeks as far as we can tell in relation to the 20 accounts because information not only had to be extracted from our databases too often and supplied and matched with the information in the Excel spreadsheets, but also with information that was buried in the DVDs – which I will take your Honours to. That would all have to be done, some analysis would have to be done to identify who was a repeat infringer on some view of the world, and then a notification would have to go out to all those people, thousands of people, at this stage most of whom, many of whom, who knows, may have removed these films from their BitTorrent client years ago.

CRENNAN J: Well, maybe they are business expenses in relation to your profits.

MR COBDEN: I am sorry, your Honour?

CRENNAN J: Maybe they are business expenses, the effort and cost of doing what you describe in relation to your profits?

MR COBDEN: Well, and provoking, I concede, but this will get me back to what I wanted to say about the people ringing up – and provoking at this stage a vast number of telephone calls and communications saying “What on earth are you talking about?” That is looking at this order being made now. What I am trying to really address is what was it reasonable of us to do at the time, and certainly up until – as I will seek to demonstrate in a moment – November 2008, and if your Honours are with me I am assuming that some proportion of people would ring up and say, “Why are making this accusation and what is your basis for it?” I will come back to section 202 in a moment, your Honours. All we could have said between June and December 2008 was, “We have been told this by AFACT according to some spreadsheets and some DVDs that we have been sent”.

From November 2008, as I have said, we have now received a statement of claim that tells us a bit more about all of this. If they had said to us, “So where does AFACT get the information from?”, we could have said, “We now know they got it from someone called DtecNet in Denmark.” They say to us, “Well, how does DtecNet in Denmark know what I am doing in Australia? Tell me what method they used”. That information, and your Honours know this from our submissions, was supplied to us on a confidential basis, subject to confidentiality undertakings given in February, not appreciated – Mr Malone’s evidence – by human arts senior executives and understood until April 2009, in the course of the proceeding, that the confidentiality restriction and the Harman undertaking were maintained over that material until it was read into evidence in October.

Confidentiality was maintained during the trial over the DtecNet report, it was released in bits over the course of the trial away from confidentiality, it is to this day still covered by confidentiality orders and parts of it have been redacted in your Honours’ appeal book and the full DtecNet report was withdrawn from the appeal books only about three weeks ago on the basis that it is still too confidential to be put into the public arena. So we had a Harman confidentiality, an express confidentiality up until 10 November when all we could have said to whatever this proportion of people who rang up was, “I am sorry, we cannot tell you why the DtecNet report – why this information is reliable. An evidence gathering mechanism has been used. We are not allowed to tell you about it”.

KIEFEL J: That might make it reasonable for you then not to terminate. If they denied the infringement and you could not take it further, that might make it reasonable for you not to terminate, but it might not have made it reasonable for you not to have sent the notice in the first place, given a prima facie case of infringement.

MR COBDEN: Which, as we would submit, the evidence showed, you will appreciate, until April 2009, because only then did the DtecNet report become available to explain the methods used. Nevertheless, one is inviting in a customer‑based organisation, a subscriber‑based organisation, sending out a large number of notifications that ‑ ‑ ‑

KIEFEL J: It is just as well one has computers.

MR COBDEN: Your Honour, there is evidence that it would not have been a trivial task at all to computerise this. There has been talk about passing on the notices. Your Honours will see very shortly some of the robot notices which arrived by email and could no doubt be simply passed on to an email address. That was the Westnet activity, although it was not in relation to all of them and it was not for a very long time.

GUMMOW J: An association of users might satisfy the description of a person aggrieved for a threats action against you.

MR COBDEN: Yes.

GUMMOW J: You need not be the owner or licensee of the copyright to be on the wrong end of a threats action.

MR COBDEN: No. I am agreeing with your Honour.

GUMMOW J: So that potential operation of 202 may have to be taken into account in getting into this world of notices.

MR COBDEN: A very real potential, your Honour. It was identified by your Honour and Justice Crennan yesterday. Your Honour says “unjustifiable” is a slippery word. It is a very draconian word in the context of section 202 because as the text of the section says, if you threatened:

a person with an action or proceeding in respect of an infringement of copyright –

whether or not you are the owner you – you do not have to be the owner or licensee to make it:

a person aggrieved –

we know the breadth of that phrase now, your Honour, if it was ever narrower –

may bring an action –

So iiNet is the threatener, the customer is the threatened party and that action will succeed, if threats are unjustifiable, because unless – the only way in which the action does not succeed “the first-mentioned person”, iiNet:

satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.

So it is a very draconian word. There is no other way to get out of it being unjustifiable unless you can demonstrate that the action was an infringement of the copyright. We are not the owner or licensee, we cannot even prove that copyright exists in the film, let alone in this circumstance, but certainly before the DtecNet report was available to us for any purpose outside this proceeding. Confidentiality established that.

KIEFEL J: The section 202 was no doubt what Justice Emmett’s suggested indemnities were directed to.

MR COBDEN: No doubt, your Honour, no doubt. Now, of course, your Honour, one could seek to phrase the notification in such a way that it did not amount to a threat of:

an action or proceeding in respect of an infringement of copyright –

My learned friends will say. Your Honour Justice Gummow referred yesterday at a point in the transcript which I have lost because I am out of order about if it was a tough threat, a tough warning, mention legal proceedings and the like, then it might be an effective warning. But of course the tougher it gets the more danger there is under section 202, and Avel v Multicoin 171 CLR 88 in this case turns partly on the inability of the threatener to ‑ ‑ ‑

CRENNAN J: I suppose another complication is the possible defences to the evidence of prima facie infringement such as a fair use. Just remind me, are there provisions here for educational institutions and so on which govern communication to the public by electronic transmission and so on?

MR COBDEN: Educational institution copying including copying of audio visual items is dealt with by Part VA of the Act and is a very complex regime, but it is in rare circumstances I think that they could make – I am looking at Ms Haddock, she knows all about this much better than I do – rare circumstances where the educational institution could make a copy of the whole of the feature film and I am not sure that they could share it at all. But there is a regime, all I can say to your Honour ‑ ‑ ‑

CRENNAN J: But subjects called film studies are very popular these days, they do them instead of English literature.

MR COBDEN: It may well be a fair dealing. It is not beyond possibility that it could be a fair dealing in a whole film for there to be a downloading of it by somebody studying it for the purpose of writing a thesis, particularly if it is not available to buy.

GUMMOW J: The scheme in Part VA, for example, as 135J is a regime of what are called sampling notices, I think.

MR COBDEN: Yes. That overtook the old section 53B where you had to write down next to the photocopier every copy that you made and Justice Sheppard in the Copyright Tribunal ordered two cents a page initially. We are getting very off topic, as it were. But yes, your Honour Justice Crennan, I could not say that there would be a huge prevalence but there could be a circumstance where somebody would say that. More likely that they would say “This is not on my computer anywhere, it is on a computer next door because I secure my Wifi network”.

CRENNAN J: Well, I suppose the answer to the fair use problem would be you may elicit a response in relation to having a defence and that is the end of the matter after sending a warning notice.

MR COBDEN: Yes. But, nevertheless, there are very real problems with us passing on the assertion, under section 202, particularly in that period of time when we are even more unable than usual to back it up by saying these are the reasons it is an infringement of copyright now that you ask.

CRENNAN J: The warning notice would presumably indicate that the information emanated from representatives of the copyright owners.

MR COBDEN: It conceivably could. But the text of the warning notice, we would respectfully submit, contrary to what our learned friends say, would be all important and one thing my learned friend said yesterday, well, we could have sent a warning, then if that had not been sufficient, they might have sued us because the warning was not sufficient, the text of the warning letter was harsh enough, it did not mention the sanction of termination, et cetera, and, in effect, we would submit that what that would mean would be that in an incremental process courts may be involved in writing a code in any event. Okay, we should have sent a warning letter, that is a law suit number one, come back.

We did send a warning letter. That was not good enough. It should have been tougher. That is suit number two. Next, the tougher warning letter went, did not threaten termination quickly enough. That is seven days or whatever it is. That is case number three. Eventually what the court is doing is involved in writing a code which has not been supplied by the industry or not been imposed, as is increasingly the case in other countries – we have given your Honours some materials about that – either UK and New Zealand by legislation and by the authorities.

KIEFEL J: Mr Cobden, did iiNet at trial assert that the information provided by AFACT through the DtecNet material did not establish a prima facie case in their understanding of how one could track these things since it would obviously understand the technology involved?

MR COBDEN: At trial what happened was that we did not admit the primary infringements up until we had been given the DtecNet report and been allowed to show that, which took a bit of wrestling, to iiNet officials and then we put on a statement of nature of case in April 2009 which accepted at that point that there were primary infringements. That is recorded in his Honour’s ‑ ‑ ‑

CRENNAN J: So knowledge was accepted or not in contest thereafter of primary infringements?

MR COBDEN: Knowledge of primary infringements was not in contest of primary infringements by reason of making available online a 100 per cent of the film was not in contest. A series of other matters were in contest. The appellants propounded up to the trial and up to the appeal that there was a separate variety of communication infringement which was transmission infringements and that was each of the little pieces that had gone to the DtecNet people. We resisted those – your Honours heard a little bit about that – on the basis that the DtecNet people had selected the content of the transmission. It was not to the public because at that stage it was a one‑on‑one communication between the iiNet user and the ‑ ‑ ‑

KIEFEL J: But we are not talking about that now, are we?

MR COBDEN: No, but I am just trying to explain why – I am sorry, your Honour, I should not perhaps put it that way.

KIEFEL J: No, I did not mean to interrupt you.

MR COBDEN: And whether it was a substantial part, but we were faced with that and we did not admit those infringements by transmission, electronic transmission, as opposed to making available live issue to trial – held that there was one electronic transmission by Justice Cowdroy to the swarm, appealed against by our learned friends, notice of contention from us and the Full Court held, not in issue any longer, that none of the transmissions were of a substantial part of the film. So we were faced with a real fight about primary infringements which, of course, on the theory that we are now exploring we should presumably have included in our warning letter, you are engaging in a couple of copyright infringements, you are making it available online, and the appellants would have had a say, presumably, and you are electronically transmitting it on a day to day basis.

Now, they lost ultimately on that second variety of infringement. If we had threatened that, that would have been wrong. It might not have made a huge difference, but nevertheless it is a separate variety of infringement and they lost on that. There was no concession ever about repeat infringer or whatever that meant, not least because up until the appeal we maintained we have lost that and now I do not press it any longer, but there was just one making available online because the person, as your Honour saw yesterday, downloaded the film and although they fired their computer up occasionally, nothing changed. That film sat in that box of the BitTorrent.

So there has been a very real contest about all that and we have won part of it, half of it. There was another contest for a long while about us making copies on her own system, but that has gone away. Had we passed on in a detailed fashion these accusations both we and the studios would have been wrong about some of them as the case has unfolded.

FRENCH CJ: Is your primary position in response, in particular, to the cases framed in paragraph 63 of the further amended statement of claim that your provision of service, your knowledge of infringement, you, let us assume, even knowledge of specific addressees infringing and the absence of effective action or, for that matter, any action would not constitute authorisation?

MR COBDEN: Yes. Because – yes.

GUMMOW J: Because?

MR COBDEN: Because it was not reasonable for us to – it was never a point in issuing warnings only and, we respectfully submit, that read properly we were never asked to issue warnings only. Even today when everyone says just issue a warning only it always turns into a warning plus a termination. It was not reasonable for us to embark upon that graduated response given the way the information had been given to us and what we knew about the information.

FRENCH CJ: I just wonder whether there is not a risk that while recognising the relevance of reasonable steps, as mandated as a relevant factor, that delving too much into the fact or complexities of reasonableness or too finely nuanced an approach may not cause us to drift away from the central concept of authorisation and the question is, what do you hold that central concept to be?

MR COBDEN: Yes. Well, we have to exercise our control in some way. The step – sorry to go back to steps – but the step that is asked of us is, we submit, directly related to the sort of knowledge that we have. If the step that is asked of you is to put a warning notice up near a photocopier, then you do not need anything more than a general knowledge that the photocopier is likely to be used for the copying of infringing books that are kept nearby it. If the step that is asked of you is to take highly detailed information about specific things happening in a specific technical way at specific dates by specific users and to convey that to them, then that conveys with it – it is already built into it a factual complexity that needs to be addressed in a business context. I hope I have given your Honour an answer.

FRENCH CJ: Is it your position that you did not or could not know, absent specific notice, that BitTorrent was being used by at least some or a not insignificant number of users in a way that infringed copyright?

MR COBDEN: I think it is accepted that that was known at a general level and there are findings to that effect which we do not challenged, but, as his Honour, the trial judge said, knowledge at that general level is not useful or able to be deployed in relation to a reasonable step except at the general level of putting a notice, as we did, on our website saying do not use this for infringing purposes.

FRENCH CJ: What is the conceptual difference between knowing that your service – and one would imagine that every ISP provider whose service can be used to provide access to BitTorrent would know that a significant proportion of users would use it for infringing purposes, what is the difference conceptually between that knowledge and knowledge of a specific user based on a notice that brings you into the territory of authorisation?

MR COBDEN: What you can do about it with the knowledge that you have been given, which is why we say there is a relationship between the knowledge and the reasonable step, or what an earth it is you are going to do. It is not being said against us or against any ISP, and it would have to be as true of any ISP as of us, that everyone is authorising specific acts of infringement, ie, what has happened here, because people do not put up a notice often enough on their website or on their accounts do not use BitTorrent. That has not been suggested. One would then run into the issues – that is the sort of distance between the inviting conduct and the ensuing acts of primary infringement that was the sort of distance discussed in WEA v Hanimex, RCA v Fairfax and one is even getting to the product cases.

On that note, can I take your Honours to some of the material about the notifications and knowledge, just briefly, to avoid going to the documents again – I know your Honours do not want to do that if avoidable. There was some discussion yesterday, as your Honours looked at the screen shots of BitTorrent and taken to Mr Malone’s evidence about BitTorrent and iiNet, the evidence was at Justice Cowdroy at 467 – I am just going to give your Honour these references on the transcript – that Mr Malone and Mr Dalby did not use BitTorrent.

Back in those passages of cross‑examination your Honours were taken to in orange book 1 at 373 to 375, Mr Malone’s cross‑examination, it is clear reading those that he gave his answers about BitTorrent based on a general knowledge. He had not seen the BitTorrent client running. BitTorrent was not supported by iiNet in the sense that if somebody rang up and said, “I’m having trouble with my computer. I am using BitTorrent” the customer service representative was told, “Tell them we have nothing to do with BitTorrent. We are not supporting it.” If you rang up with a problem with Microsoft Word, you were told try the spell check or something like that. That is Justice Cowdroy at paragraph 407.

Yesterday, your Honours were taken to the appearance of the BitTorrent screens with all the different users and the national flags running down the side, one of which, from Mr Carson, was downloading Top Gear and was an iiNet user supplying it. I think your Honour Justice Kiefel said iiNet could not check it for ourselves because the moment in time had passed. We could not check it all, with respect, your Honours, because the only way you can do what Mr Carson did is to infringe copyright. The only way you can do what Mr Carson did is to sign up and download a copyright program or film – in that case Top Gear, or he had done The Dark Knight – and infringed copyright. BitTorrent was not used; it was iiNet for that purpose. It was nothing to do with BitTorrent for that purpose.

There was even an argument raised at the trial that not Mr Carson but the other DtecNet people, and particularly the employees of AFACT, had themselves infringed because they did not have a licence and they just went about the investigations on their own. That case was lost at trial. His Honour held that they were licensed. But there is no question that you cannot go on there and have a look at what is going on without infringing copyright, so even later in the piece to have a look and a check and see if there are any iiNet people popping up, for example, still sharing Pineapple Express, we cannot do that without infringing copyright.

KIEFEL J: Without a licence from the copyright owners to do that.

MR COBDEN: Yes. We certainly did not apprehend we would be given a licence. The very first affidavit we were served in this case was to the effect that the AFACT investigators were also infringing and did not have a licence, and that remained a live issue right up to trial. If I can take a perhaps slightly absurd step, in other words, it would not have been a reasonable step for us to ask for a licence to go and check for that in this case.

There was some debate about Media Sentry. Media Sentry was the different searching agent, not the DtecNet agent, that was used and that Mr Malone had had some experience with and felt was unreliable. Justice Cowdroy, at paragraph 192, held that the robot notices were unreliable and at 468 held that Media Sentry had been shown to be unreliable. Media Sentry was still being used into 2009 by the very studios that are among the appellants and are still being used ‑ ‑ ‑

FRENCH CJ: What does this have to do with the characterisation of your conduct?

MR COBDEN: It has to do with, your Honour, our understanding ‑ ‑ ‑

FRENCH CJ: That is your understanding?

MR COBDEN: It has to do with our response to the notices, your Honour, whether it was reasonable to expect us to respond to the notices. I will take your Honours very quickly to the material.

FRENCH CJ: That is transient; you have moved on. This is the position at the beginning of the proceedings. That is what you are saying, is it?

MR COBDEN: And up to the time when the DtecNet report was furnished sufficiently to our executives, up to April 2009. Can I take your Honours – I will see if I can make this quick – to volume 9?

I am going to take your Honours to page 4170. Can I make this just general observation, your Honours, about what would be reasonable to be done in response to a notice of this kind. I am going to show your Honours a robot notice for just two of them, what would be reasonably done in response to the notices that we got from AFACT starting June 2008.

Your Honours, this case, of course, concerns the cinematograph film copyright owners and a group of them waiting in the wings and well known to any ISP, including iiNet particularly, as at June 2008 was that if this system required the sending of notices and in response to every single one of these notifications precisely the same system would be able to be used by sound recording copyright owners, by educational publishers, games, software and software distributors, and they knew that because these are the robot notices that come from all those separate sectors. This is one of the robot notices. Can I just explain to your Honours so your Honours are not confused going through this. Some of these documents at 4170, a little box with sources on them, that was done for the Full Court to source each document back to where it came up in the evidence.

The robot notices, this is a sample of them for all the different types of copyright, they go through up until 4213. For example, 4212 and 4213 is a robot notice received during 2009 about halfway between filing of the case and the hearing of the case from one of the copyright owners in this case about one of the films in their catalogue, although not one of the nominated films, and is signed by one of the witnesses in this case, Vicki Solmon. So the robot notices kept on coming in. There is evidence, and his Honour has recorded it, the sheer volume of them that were coming in.

CRENNAN J: Did any of the robot notices make reference to Australian legislation in relation ‑ ‑ ‑

MR COBDEN: Your Honour, they did, but where they did, they made erroneous reference to it. If your Honours go to, for example, 4175, do your Honours see it has got:

COMMONWEALTH OF AUSTRALIA
Copyright Regulations 1969
NOTICE OF CLAIMED INFRINGEMENT –

et cetera. That follows the form in the copyright regulations for:

STORAGE, CACHING, OR REFERRAL TO INFRINGING COPYRIGHT MATERIAL

Your Honours saw those categories (b), (c) and (d) this morning in the safe harbour, yet the notice of infringement concerned is plainly a notice of exactly the same kind as the AFACT notices, that is to say, of something appearing at a dynamic IP address and, your Honours, we can see that at about line 50, “Title: Dead Space”, “Infringement Source: eDonkey”. That is a different peer‑to‑peer program. Timestamp, GMT, just like the ones that our learned friends have, and then “Infringing Filesize”, “Infringer IP Address: 210.84.14.179”, et cetera.

CRENNAN J: So the complaint is about communicating to the public, not about storage?

MR COBDEN: That is right. So it is wrongly headed as if it comes under a different – there is a copyright legislation that says a take down notice has to take a certain form and these arrive by the crate load, automatically generated but also automatically generated from people who gave evidence in this proceeding. I will leap ahead your Honours. I mentioned in answer to questions from Justice Crennan about did we offer to pay a royalty or did we engage in any sort of dialogue. At page 4291 there is a covering letter from Telstra from a group that included iiNet – you can see that in 4292 – in which there was submission made to the Government and communicated to the rights holders groups about other ways of dealing with the problem at hand.

I will do no more than refer your Honours to 4293 which is a contents page. It was a proposal for a streamlined discovery process. There is material in this bundle that continues to follow that sort of line. What I am trying to get from this, your Honours, as well as we travel along is to seek to make it clear to your Honours that it was never proposed that we just pass on notice or just give a warning, always proposed that there be a graduated system which included switching people off, which is a thing we shied away from for reasons we have already developed.

Can I take your Honours to 4360 in the middle of all this and almost upon the time when the first notices started to arrive. Your Honours appreciate from the case that AFACT is effectively an emanation of the motion picture association in its Singapore branch and is governed from the United States by and large and the head of the MPA was out here and met with Mr Coroneos who was trying to debate the sorts of schemes that I just indicated to your Honour. He says, second paragraph – that letter is a bit obscured:

Enclosed for your assistance is an outline of some of the various types of technical steps – short of termination – available to ISPs to prevent infringement –

There is a little pie chart and they had user web browsers being redirected, maximum download and upload speed reduced, protocols widely used for illegal activity blocked for the ISP, users internet accounts suspended. It is not suggested at that stage, right on the eve of the notice campaign, but just warnings would do.

Can I say something just at this point, because it has come up looking at that, about shaping and, your Honours, shaping had very little attention in this case except in relation to iiNet’s policy which superseded the old policy that when you went over your limit which you had prepaid for, you started to pay a very expensive continue use and people got very large bills. It was iiNet that introduced the idea you could buy your big block of quota and if you used it up, you did not lose your internet but you went down to a very slow speed. That, of course, is something that is easily internally and automatically done by iiNet’s systems. It is totting up your usage all the time for the purpose of billing and making sure you have paid for it. As soon as it gets to a certain point, it just simply says that user is reduced to that speed. Nothing like the complication of extracting material from the AFACT notices and marrying it to the iiNet database and then saying, did that person respond within seven days, how do we know whether they have taken it down or not, wait for another AFACT notice, cross‑check with that and then shake them.

As Justice Nicholas pointed out at paragraph 736 and onwards that shaping can receive very little attention, other than that in the course of the trial - 736 and 737 is a summary of what I have just said to your Honours. A very brief cross‑examination at 738, and we would respectfully submit 740 his Honour is correct in this. About halfway through 740:

What is most relevant for present purposes, is that the question whether it would be feasible to shape accounts which do not exceed their quota was not explored in the evidence. In circumstances where the appellants’ particulars made no mention of shaping, I would hesitate to act on what appears to be very slender material on which the appellants now rely. It was for the appellants to establish that shaping was a reasonable step which the respondent could have taken to prevent or avoid iiNet users engaging in copyright infringement. I do not think that they have done so.

I will be giving your Honours some detail very shortly about the question of onus and what we have said about it consistently through the course of the case about reasonable steps. If I could return to the volume and to 4364 of volume 9. Your Honours have seen this, the letter which the other letters followed the form of. The words “Communication and Transmission” are used in the heading. The word “communication” is used at the bottom of the first page. Your Honours were taken to that.

Nothing is ever said in detail about what is happening is making available online 100 per cent and electronically transmitting different percentages. The tone of the letter is to focus on the multiple infringements, and some of them are called repeat infringements. Certainly Mr Malone had taken it to be referring to all the little tiny downloads that were happening which he mistakenly believed until well up to 2009 were actually downloads that were being somehow created by the AFACT investigators and pushed onto the users.

As your Honours have observed in the demand, such as it is, there is just…..prevent the identified from continuing to infringe copyright, not warn them, not engage in a graduated response. Just prevent them, take other actions appropriate, please get back to us and tell us when that has been taken. You have prevented them from infringing copyright. It does not give one any clues at that point what is demanded.

Then, just so your Honours appreciate the bulk of it all, what is on those spreadsheets printed out from Excel from 4367 to 4405 was week one and it came again for week two and all the way through. And none of that could be passed on to the user. It would have to have been extracted from that, matched to the database, something created and then passed on. Your Honours have been taken to some of the correspondence. I will take your Honours again to some of it, but in particular 4435 Mr Bannon took your Honours to. Mr Parkinson back to Mr Gane who said:

you have provided data containing IP addresses, dates, time and other details which are not explained, and some of which iiNet does not recognize.

That is a reference to the spreadsheets which is also on the CD. It is not a reference to what is on the DVD which is even more complicated and far more, we would say, impenetrable. So you would have thought that was a moment for AFACT to say, “Well, here is what it means, here is how to work it out. It does tell you exactly what you need to know for these reasons. We could pop over and explain it to you or you could come and see us about that”. There is some earlier correspondence in this bundle from MIPI, the music industry group, where they propose a quite detailed regime and say come and talk to us about it.

KIEFEL J: Why do I think this has the air of unreality about it, about wanting people to pop over and have a talk to you? Perhaps we should just read the correspondence then we will ‑ ‑ ‑

MR COBDEN: Yes. There is no question, your Honour, there was an industry impasse about what should happen and it is at an industry level. It is not, with respect, at an iiNet level, and that is clear from the Telstra correspondence. But can I just say this, your Honours, about the technical material because it gets very technical. Mr Gane’s response at 4438, which I think Justice Gummow went to this morning, was to say to Mr Malone:

I have received an email from [Mr] Parkinson . . .
The notices of infringement and the attached material provide iiNet with detailed information . . . Given iiNet is presently the third largest ISP in Australia, it would have no shortage of technically qualified employees who should have no difficulty understanding the information provided to iiNet by AFACT.

We respectfully submit that that has the character of saying you explore the material and find out about it yourself having been told that there is material they do not understand. So we would respectfully submit that that is a missed opportunity by AFACT to change iiNet’s mind and when at 4448, the letter that my friend took your Honours to this morning, AFACT says:

iiNet could contact each of the customers –

that is not a sample –

warn them against infringement and could impose sanctions if they continue to infringe copyright using iiNet’s network –

it tells you that at every opportunity it has been a regime of warning plus the sanction of termination.

GUMMOW J: Mr Cobden, you took us to volume 9, 4291 and to the submission. At page 4309 at about line 30 there is reference to encryption:

A potential impact of terminating Internet access of users said to be involved in copyright infringement via P2P is to drive filesharers towards encryption.

Was that pursued further in the evidence?

MR COBDEN: No, your Honour. This was something raised at an industry level with government.

GUMMOW J: Then on page 4294, footnote 3, there is a reference to 116AH(2). That is in the safe harbour provisions?

MR COBDEN: It is the safe harbour provisions, yes.

GUMMOW J: Does that provision, plus 112E, throw any light on what might be reasonable steps for 101?

MR COBDEN: I cannot have my cake and eat it too, so if I am right in saying that safe harbour provisions were dropped in as a standalone regime, which I submitted this morning, and therefore we cannot influence 101, I could not then say that cannot work in our favour by saying there is a prohibition on monitoring. That is my primary submission, that they came as a prefabricated unit from the US legislation. Does it work in answering 115(2)? If Mr Bannon is right, the addition of those provisions does cast light on section 101 by saying it contemplates that an ISP will terminate repeat infringers, yes, then I take the benefit of what is in footnote 3 there. I hope that is clear, your Honour. That is also the point against me. This submissions suggests that it is inherent in 112E that there will not be monitoring. I am not quite sure that that necessarily follows.

Can I take your Honours, still in volume 6, to 2720. I will not dwell on it but just so your Honours know what I am doing I am merely responding to Mr Bannon going to this material and saying, look, it is all perfectly technically clear, Mr Carson worked it out and iiNet should have been able to work it out, Mr Malone said that he could not, Mr Dalby said that he could not. It was still a bit of a mystery to him up until they received the DtecNet report. Mr Carson’s second report starts at 2722. Your Honours remember that from the third letter DVDs came as well so there was not just was not the spreadsheet but a package of other information.

Just to emphasise what was on those, 2726, your Honours see a little picture there with a DVD partly in the top of it in the box and then there are six folders called “Duplicate1” down to “Duplicate6” and then a little icon next to “124.168.2.163”. Do your Honours see that? If your Honours had opened this DVD and it happens to be present in the book if your Honours are interested in doing so - it is at 2756 – when you open the DVD there is one of those lines either in that folder or in one of those duplicate folders for every single one of the 948 lines on week one, so there is one of those for -and when you double click or open that 124.168.2.163.zip then you get the set of files that is on 2728.

I think that is the complete set for that zip file. There is one of those for every single line, 948 lines – 928 lines for week one and there is one of them with all those files for every single week thereafter which was never explained to iiNet, DVDs were just dropped into the post from the third week onwards. If you know which one of those to click on on 2728 then it opens up the database that appears on 2729 and that is where some of the terms appear, one of which Mr Carson did not even understand well into this case. That is where the raw peer ID was revealed which is the last line there, your Honour. That raw peer ID is one of the keys to the creation of all the RC‑08 – the big yellow spreadsheets that your Honours have been taken to.

That information was not on the CDs or the Excel spreadsheets that iiNet got every week. It was buried deep in the DVDs following the…..I have just shown. That is why those sorts of spreadsheets that we have seen in the RC‑08s and RC‑20s and other sheets sorted by their client ID that were in the evidence were done by the solicitors for the appellants expending, one assumes, a great deal of effort and time not from material that was, on the face of it, available via iiNet unless it had worked out how to go into all this and then extracted this material – this is some sort of proprietary database - rebuilt it all and then matched it to the two databases.

That is the background against which the material was furnished so that if you see, for example, any one of these pages – 2773 I will take your Honours to – it came up in the evidence. That is all sorted on peer/client ID in that very long hexadecimal string. That is not a document that was ever served on iiNet in the course of the provision of the notices. No document like that was ever served on iiNet. That is a document that has been created by going into at least two sources of data and operating with the knowledge of where that data is and reassembling all the information in a completely different form to that which was ever provided to iiNet outside the affidavit evidence in this proceeding.

Her Honour Justice Jagot at paragraph 305 says the letter, the original letter from iiNet, enclosed a spreadsheet entitled “Summary”, et cetera, “The spreadsheet contained numerous entries referenced by “PeerID”, date and time”, et cetera, and then her Honour says at 306:

As explained by the trial judge (at [115]) the PeerID is number generated by the BitTorrent client upon the program initiating.

Her Honour has made a mistake there. The spreadsheets and the CD did not contain the peer ID. That is something that was deep in the DVDs and not matched up until well into the evidentiary phase of the trial by very knowledgeable people behind those to my left. The explanation did not come until the DtecNet report. I will not take your Honours to it. The DtecNet report is at orange book 5. As your Honours read through the DtecNet report your Honours will see the big areas of white space. That is not attractive layout. That is redacted material that to this day is secret and was never released and made its way into falling into the book.

That is the background against which the useable, reliable and defensible information was allegedly provided to iiNet. We would respectfully submit, for the reasons I have gone over a few times, they are essentially not useable for these purposes because they were not defensible until at least well into 2009. Your Honours will recall that just before the trial there were no notifications in evidence.

Can I now turn to the particular factors in section 101(1A). Can I first make a very brief response to Mr Leeming. The proposed construction that Mr Leeming proposed this morning, we submit, began from an incorrect conclusion that 101(1A) operates a codification of considerations related to authorisation or at least it flows from the decision of Justice Gibbs in Moorhouse. In its terms it enacts a non‑exclusive list of matters to be taken into account. No single matter is either necessary or sufficient.

It is also put, as we apprehend it, a “tick the box” approach. Throughout we have accused our learned friends of and, I think, even Mr Bannon may actually have used the expression “tick the box” this morning. None of the paragraphs (a) to (c) stipulates any minimum criteria or threshold and each of them uses words like “extent (if any)”, “nature” and “reasonable”, thus indicating that they are all matters of degree. One simply cannot tick the box and if one could tick the box it would really change the evaluative nature of the exercise and, even more so, if the box to be ticked for (c), as we apprehend Mr Leeming submitted, is that if there is a measure available that is apt to reduce in some way the infringements, then that box is ticked and some sort of authorisation is found.

We respectfully submit that that cannot survive an examination of the statutory terms of section 101 or the history in the cases. The question of the power to prevent – our learned friend said yesterday that power to prevent expressed as control, that we “do control” – this is at line 892 yesterday – we, iiNet, “control the content because of their terms and conditions”.

That is just not so. We do not control, of course, whether people download the BitTorrent client. We do not control whether they use the BitTorrent client for legal or illegal purposes. We do not control what films they choose to rip onto their systems or email over their systems or send to people as an attachment. You cannot control any of that. We actually cannot dip in and monitor, quite aside from whatever the safe harbour provisions say. There are other legal constraints on us monitoring, without court orders and expressed statutory sanction, what is on our system. Justice Nicolas said at paragraph 723:

it is not within the power of the respondent to deny iiNet users access to particular copyright material found on the internet short of denying them access to the internet as a whole.

His Honour is correct. Justice Emmett gave a description at 60 to 64 on how a customer obtains a form. It is all done by the BitTorrent client program or the tracker. Nothing we can do about them getting it. So, of course, this is not about them getting, this is about them sharing it.

Our learned friends’ injunction which says we have to make sure that the customer has removed the film actually goes beyond the act of primary infringement we said are to be authorising which is sharing it. We cannot make anybody who happens to be our internet customer take anything off their computer per se. The only references in Justice Cowdroy’s summary of the technical background, 43 to 78, which is non‑controversial, the only references to us is references is references to our physical facilities.

Can I move to section 101(1A)(c), first, on the word “other”. We would respectfully submit that one has to come to the view, ultimately, that “other” must be there by error. It seems very strange otherwise that it is not in section 36(1A). There is no legislative intention in (1A)(c) showing that there should be a different consideration in respect of works and they should be in respect of subject matter, other than works. It would also do violence to the common application of 13(2) to both Part III and Part IV subject matter but we submit it does not really matter in a sense because if you are taking into account the extent of any of a power to prevent, it must be a power to prevent that is going to be exercised reasonably in the circumstances and the reasonable steps are said to be reasonable in any event.

Your Honours, in relation to the use of the word twice “prevent”, we have given your Honours some references. “Prevent” to Stevens v Sony where the phrase was a technological device designed to have the purpose of preventing or inhibiting infringements of copyright, your Honours held in that context – the High Court held – your Honour Justice French was on the intermediate Full Federal Court – that “prevent” or “inhibit” still meant inserting oneself into the process and stopping the infringement. Now, “prevent” is a hard word, but we do not ultimately quibble with what my learned friend, Mr Leeming, said which is reasonable steps to prevent or avoid, we accept, must include steps that are apt to prevent or avoid if put into effect.

GUMMOW J: Is the treatment by Justice Cowdroy consistent with what was said in that submission in volume 9 at 4298?

MR COBDEN: The treatment of what, I am sorry, your Honour?

GUMMOW J: The treatment by Justice Cowdroy of the technical matters, is that consistent with what is set out at 4298 in volume 9 in that submission under the heading, “What is peer to peer”?

MR COBDEN: Yes, I see it, your Honour. If your Honour will give me a moment?

GUMMOW J: Paragraph (a) would be, I think?

MR COBDEN: Yes. Paragraphs (b) and (c) together, legitimate/illegitimate purposes.

GUMMOW J: Paragraph (d) would be correct, would it not?

MR COBDEN: Yes, contrasting take down, and that was the error in the robot notice that I took your Honours to.

GUMMOW J: Yes.

MR COBDEN: Paragraph (e) is starting to stray into legal questions rather than technical descriptions.

GUMMOW J: Yes.

MR COBDEN: As is (f), as is (g) and then (h) is an expression of a submission or opinion.

GUMMOW J: Is it right that a critical distinction flows from (a), namely, the place of storage?

MR COBDEN: Yes. That was the critical distinction when one moved from Napster which had a central server, to Kazaa, Grokster, same thing, which did not have a central server.

GUMMOW J: Then the question is this term “control” which comes out of the authorisation cases, how that then works where there is not, as it were, the immediate facility provided by the presence of a particular storage on the ISP network.

MR COBDEN: Yes.

GUMMOW J: Then the step is taken, well, there is a contractual link between the ISP and the P2P and what has to be done is some dealing with that contractual relationship and if that dealing does not take place, there is a countenancing. That seems to be the idea.

MR COBDEN: That is the appellants’ idea.

GUMMOW J: Yes.

MR COBDEN: Yes, your Honour. At the risk of repeating ourselves, we say that that is putting the cart before the horse and we respectfully say Mr Leeming did it again this morning, which is to say that you assume that 101(1A) is somehow directed to facilities providers or ISPs, you assume that if they are doing these things something must follow from it, therefore authorisation.

GUMMOW J: All of which might suggest that the safe harbour regime needs to be supplemented in some way legislatively.

MR COBDEN: Yes.

GUMMOW J: If that is the perceived policy wish.

MR COBDEN: Yes, your Honour, and it is in that connection – I will not be taking your Honours in detail to it – that we have given your Honours the references to the legislative regimes that have been set up in the UK and New Zealand for that reason and also to just indicate what happens when we talk graduated response, what happens when sensible minds apply themselves to the question of graduated response. You ask a simple question, you put the simple question, proposition something should happen with ISPs and their customers over file sharing and you have to develop the answer over many, many pages and clauses of procedures and what needs to happen and who gets indemnified and who gets paid and who bares what cost and that is the reason we put those up.

The same thing followed when a simple decision was made, well, universities had better start paying per page for copies they make for students rather than people worrying about whether it is fair dealing for a course pack and the like. Our Parliament put in initially a short section, 53B, that was the subject of CAL v Haines. Your Honour Justice Gummow will recall those cases at 40 and 42 ALR, the Department of Education’s memos about 53B. Then 53B did not work and Part VB was put in, and one sees the degree to which one must think these things through once one adopts the ‑ ‑ ‑

GUMMOW J: Part VB in a way is a sequel, a prolonged sequel maybe to Moorhouse.

MR COBDEN: Prolonged sequel to Moorhouse. Moorhouse was really about the students copying on their own behalf but it brought into very sharp focus the practice of photocopying in universities.

GUMMOW J: The lesson of Moorhouse is that it achieved a situation which had to be solved by legislation and Moorhouse is treated as if it is some revelation from Mount Sinai, but it is not really.

MR COBDEN: No.

GUMMOW J: The sequel to Moorhouse was a spate of legislation. To the immediate situation in Moorhouse there was a spate of legislation.

MR COBDEN: Yes, and what Moorhouse exposed, which is the problem of photocopying in universities where, unsurprisingly, it was happening a lot, both the universities making the course packs and the students doing their own copying. Quite so, I am repeating myself, your Honour.

KIEFEL J: But in a way the legislation, and particularly in the terms of 101(1A), does lead to the inquiry about how much of Moorhouse truly remains relevant. There are obligations cast, arguably, in (a), (b) and (c).

MR COBDEN: It must, with respect, remain relevant not for the reasons that Mr Leeming said, we would respectfully say, but because the word “authorise” was not interfered with, if I am right about the early submission I made, particularly at 13(2).

KIEFEL J: Yes, but the starting point is to determine what the section requires you to consider and then to work out what is left about authorisation that you need to know in a particular case once you have answered that inquiry.

MR COBDEN: Yes.

KIEFEL J: That is why I am saying I am not sure that historical notions of authorisation, and all of what was said in Moorhouse about questions of degree, need to be understood literally in pars because you start with the section and then consider what it reflects about Moorhouse. That is about as far as it seemed to go.

MR COBDEN: I am repeating myself, but of course we submit that you start with section 1 and that requires you to go to section 101(1A) ‑ ‑ ‑

KIEFEL J: Yes, that goes without saying.

MR COBDEN: ‑ ‑ ‑ and one ends up back at 1 because all you are doing is working out what “authorise” is in 1. But I am repeating myself. Burden and onus on reasonable steps, your Honour, we have said from way back at pre‑trial steps, but at the trial in submissions that it was the appellants who bore the onus on reasonable steps. Justice Nicholas appeared to agree with us at 731 to 733. I read your Honours the passage about shaping. We have maintained that position here in this Court. Our paragraphs 75 and 85 of our outline said that we did maintain that position on onus; we do maintain it. So we have not forgotten about it.

It may not carry a great deal of weight because it was after the trial, but there certainly appeared to be to us an agreement by the appellants at the appeal that they bore the onus. Mr Catterns said, at page 7 of the appeal transcript your Honours do not have, but that if we wanted to say – that is to say iiNet wanted to say – we took certain steps which are reasonable towards preventing or avoiding the doing of the acts that happened, that is for them to prove, but if we – that is the appellants – want to say our friends stood by and did nothing, whereas they could have done (a), (b) or (c) that is for us to prove.

He went on to submit that they had gone to prove that, but we say that they did not go to prove what would be reasonable, in terms of particularly cost and complexity. The sorts of issues that I have ventilated with your Honours today about the clear difficulties of dealing with whatever percentage it is of persons who would ring up and say or contact us and say, “Well, what on earth are you talking about?”, Mr Dalby also gave evidence, for which there are references in our outline, to the fact that the telecommunications industry ombudsman is a real presence in the business life of a party such as iiNet. People do invoke it.

Requirements to terminate or take certain steps under the customer relationship agreement are imposed upon iiNet by the telecommunications industry ombudsman and the system of that which is explained in the submissions and the evidence is that that is something that always has to be borne by the ISP – internet service provider. Contrary to what our learned friends say there is evidence, to which we have referred in our outlines, our written outlines, as to the cost and complexity.

It was mentioned in a number of those documents, such as the industry submissions that I have just taken your Honour to and that Justice Gummow has just looked at and there was some evidence. We certainly sought to lead even more evidence about it. A significant part of it was rejected and admitted only as a submission, but they are the sort of submissions that we can make just as our opponents can make the submissions, “It would be really cheap and simple”.

We can make the submissions to say “Well, experience indicates that it would not be cheap and simple” and, indeed, when one looks at the overseas regimes, which we have given to your Honours then that indicates that nobody overseas who has thought this through seems to think that it would be cheap and simple.

GUMMOW J: What is the relevance of the absence of an industry code? To what extent does 101(1A) assume that in certain circumstances it falls for application where you are looking to the conduct of an industry, as distinct from – as has always been so in the past – something less than that and would still be less than that in many applications of (1A)?

MR COBDEN: If there were an industry code that dealt with matters that were outside the usual purview of authorisation then a difficult question would arise, with respect, your Honour, as to in what way the industry code was informing the exercise under 101(1). That is a case ‑ ‑ ‑

GUMMOW J: Is there a definition of “industry code”?

MR COBDEN: Not for the purposes of the Act at large.

FRENCH CJ: It is not a statutory concept within the framework of this Act.

MR COBDEN: Not in this part of the Act, your Honour.

GUMMOW J: Is it elsewhere?

MR COBDEN: It is not defined ‑ ‑ ‑

FRENCH CJ: You have industry codes of practice under the Trade Practices Act and I suppose under its replacement.

MR COBDEN: It does not go to that level of specificity. Safe harbour, your Honour, does. This will be the last point, I think. In the safe harbour provisions, if I take your Honours back to Division 2AA, the notion of an industry code is relevant in a number of places. Can I take your Honours to where that turns up and then take your Honours to the definition? In 116AH, the necessary conditions to get into any of these categories, item 1, condition 2:

If there is a relevant industry code in force –

et cetera, et cetera. Item 3, condition 2:

If there is a relevant industry code in force –

I took your Honour to the (d), (c) and (a), and to the treaty. That industry code is reflected in all that wording. An industry code is defined for this division in section 116AB in a particular way, which does not carry over to 101(1A), and it is:

an industry code that:
(i)meets any prescribed requirements; and

(ii)is registered under Part 6 of the Telecommunications Act 1997; or

(iii)an industry code developed in accordance with the regulations.

We have given your Honour the full regulations behind tab 4 of the bundle this morning – regulation 20B. Your Honour sees that it requires “an open voluntary process by a broad consensus” and “must include” material that is specifically referable to the safe harbour provisions. There has been an attempt to agree an industry code for safe harbour. It failed. When your Honours look closely at Justice Jagot’s judgment, your Honours will see that her Honour makes use of that by saying, “It failed, but it tells us the sorts of things an industry code could do. Therefore, it is the sort of thing that iiNet could have done under an industry code under subsection (1)(1A) ‑ ‑ ‑

FRENCH CJ: Such a code would have to go through a competition or authorisation process. There is a whole regime there, I think, for industry codes. There are not too many of them around, but there are a number.

MR COBDEN: One can see why that would be so and I am sorry, your Honour, I do not know. But we do not accept that an industry code for safe harbour would necessarily meet the description of an industry code for 101(1A).

FRENCH CJ: The words “in force” do not necessarily mean having statutory force, is that right?

MR COBDEN: In 101(1A)?

FRENCH CJ: I think it was in the conditions you took us to.

MR COBDEN: Yes, your Honour. I do not think so, your Honour. So that is the role of industry codes, but there has not been a case yet invoking authorisation of which I am aware where there has been an industry code. In Kazaa there was not an industry code, Cooper no industry code, this one no industry code. The usual practice is to stand up and say there is no industry code, everyone agrees that factor not present.

Your Honours, in relation to the other matters which are some matters of contention, in our notice of contention which are the factual findings, we do not wish to add to the written submissions and unless there is anything your Honours wish to ask us about in relation to the Telecommunications Act contention, we are content to rest on our written submissions. Unless there is anything else I can assist your Honours with, those are the submissions for the respondent.

FRENCH CJ: Thank you, Mr Cobden. Yes, Mr Flynn.

MR FLYNN: May it please the Court. If your Honours have the outline of oral argument and my written submissions, your Honours, what I propose to do is briefly with reference to those two documents develop several points related to the interaction of the factors in 101(1A) with the decision in Moorhouse, and it is essentially directed at a submission that when one looks at (a), (b) and (c) together – this is paragraphs (a), (b) and (c) of (1A) – one cannot view them firstly divorced from the words “the doing of the act concerned” and “the act concerned” appears in paragraph (a), paragraph (b), and “the doing of the act” in paragraph (c).

Secondly, one cannot ignore the interaction between the three. In my respectful submission, what has happened in (1A) is that effectively what has been thought to be the holding of Moorhouse has in some ways – and I do not mean this in a trivial way – but in some ways Moorhouse has been punctuated into (a), (b) and (c). The risk that arises from the way in which it is set out is that really in Moorhouse what was involved was a compound conception which involved within the same inquiry a relationship between the authoriser and the infringer which involved the copyright material and involved the relevant power.

So, in other words, (a), (b) and (c) were all aligned in the one compound conception and what has happened is it has been disaggregated out. The risk with the disaggregation is a matter of construction if that is not kept firmly in mind, is that one tends to view (a), (b) and (c) effectively as salient features, to borrow from a tort context, or matters such as in a sentencing context one talks about an instinctive synthesis.

The difficulty with listing them out in the way in which the statute has done is that it says they must be taken into account but it does not say the weight to be given to which, it does not say the relative hierarchy between them. In my respectful submission, the way to avoid that difficulty is to recognise that it is a statutory enactment of a compound conception that comes from Moorhouse. Your Honours, in my written submissions, I have said ‑ ‑ ‑

GUMMOW J: How would that bear upon the immediate problem we have got in this litigation?

MR FLYNN: Well, your Honour, the end point of my submission is that there is no relationship between iiNet and its customer which involves a copyright work or several copyright works. So in Moorhouse the relationship was, admittedly, in relation to many copyright works. It was in relation to all the books in the library. But if one looks at the reasoning both of Justice Gibbs and Justice Jacobs, one sees the essential focus on the copyright work. Could I just take your Honours briefly to Moorhouse to demonstrate that. Could I take your Honours to page 23 at about point 6 of the page. This is in Justice Jacobs’ decision. Justice Jacobs was using the rubric of invitation and, having regard to what his Honour had earlier said about the invitation, your Honours see at about point 6 of the page:

Brennan by his conduct accepted the invitation which had no relevant qualification to use the book “The Americans, Baby” and the copying machine. The unqualified nature of the invitation sufficiently caused him to do the acts –

So the invitation was in relation to a copyright work, albeit as part of the group of copyright works over which the university had control. Now, iiNet does not have any relationship, certainly predating the sending of any notice, with any copyright work. So, in my respectful submission, if one reads (a), (b) and (c) as though they are merely salient features that do not bear interrelation between them, one ignores, firstly, the context in which the section was enacted which was said to codify the principles in Moorhouse and, secondly, one de‑emphasises the repetition of the doing of the act concerned. Here, the doing of the act concerned is the 86(c) right which is to communicate the film to the public. The film is the copyright work.

So the power to prevent the communication of the film to the public, the nature of any relationship existing between the person and the person who communicated the film to the public and whether the person, the alleged authoriser, took any reasonable steps to prevent or avoid the communication of the film to the public. In my respectful submission, that provides a connection. That is the thread that runs through (a), (b) and (c) and it is the thread that was present in Moorhouse and what has happened is that focus has been lost on the need for the relationship to be a relevant relationship in relation to the copyright work.

If your Honours have my outline of oral argument, the way in which it is set out in paragraph 3 is probably not completely accurate in the sense that the reasoning in relation to (a) and (b) also applies in relation to (c), but it is most easily seen in relation to (a) and (b). But the reason it also applies to (c) is that the reasonable steps focus on the power that arises in the context of the relationship that has a bearing on a copyright work or works.

Now, the issue with the internet is that on one view the entire sum of human knowledge will, if Google have their way, eventually be on the internet and that means that if an internet service provider is held to have a relationship with a user in relation to a copyright work, there is no limit to the copyright works which could be involved. So we say that when one reads the subsection in the light of Moorhouse and particularly when one has regard to the decided cases at the time of the enactment of this section, that is clear.

FRENCH CJ: When you use the term “disaggregating the compound conception of Moorhouse” you are not saying, are you, that (a), (b) and (c) exhaustively define the concept of authorisation?

MR FLYNN: No, your Honour. What I am saying is that (1A) starts by saying:

In determining, for the purposes of subsection (1), whether or not a person has authorised –

So that presupposes that authorisation has a freestanding existence of (a), (b) and (c).

FRENCH CJ: Or the words include the following, also. The inclusive nature, I think.

MR FLYNN: Yes, your Honour. What this is saying is that these are the factors one has to take into account and the reason one has to take them into account is because they are interrelated in the way described in Moorhouse. Just to make good the proposition in relation to the judgment of Justice Gibbs as well which – I do not mean this disrespectfully when I say that the legislator may have sought to in some ways punctuate the decision but at page 13 of Moorhouse at about point 4 of the page your Honour sees the statement that we have been looking at in the course of the hearing:

It seems to me to follow . . . by which an infringement of copyright may be committed – such as a photocopying machine – and who makes it available –

On one reading that would suggest that merely making a photocopying machine available is enough but in my submission that has to be read in the context of what appears at about point 7 of the page which is:

In the present case the University made available –

That is the repetition of the concept of “made available”. The second time his Honour refers to it his Honour says:

to a section of the public the books in its library –

That is the relationship in relation to the copyright work. The University was the bailor of the copyright work, the student was the bailee and that is how one must view it. The other thing I wish to point out whilst I am on page 13 of Moorhouse is that Justice Gibbs’ reference to “reasonable steps” is a reference:

to take reasonable steps to limit its use to legitimate purposes –

In my respectful submission, the way in which this case has developed is that the power of the internet service providers which is sought to be invoked is a power not to limit the use of its users to legitimate uses of copyright work but it is a power to disconnect. In my respectful submission, that is not a relevant power to prevent within subsection (a) and it is not - a reasonable step cannot focus on something which achieves the greater result. Your Honours, the final point I wish to develop ‑ ‑ ‑

GUMMOW J: Just a minute. Can you just repeat that point again?

MR FLYNN: Yes. Your Honour, the reference by Justice Gibbs to taking “reasonable steps to limit its use to legitimate purposes” ‑ ‑ ‑

HAYNE J: It is the use of the machine for limited purposes, is it not - “its” is a harking back to the machine?

MR FLYNN: Yes, your Honour.

HAYNE J: Yes.

MR FLYNN: Yes, “to limit” – “to take reasonable steps to limit” the use of the photocopier “to legitimate purposes”. What is being asked here is not a step by the internet service provider to limit the use of the internet service to non‑infringing copies, it is being asked of the internet service provider to stop the use altogether, so to remove the photocopier from the library is the analogy.

CRENNAN J: Although one form of relief sought is a suspension of the account until the identified films, the subject of past infringements, have been taken down.

MR FLYNN: Yes.

CRENNAN J: I am just talking about 2(b) of the appellant’s consequential injunctive relief in the additional document that we were handed this morning.

MR FLYNN: Your Honour, during the currency of the suspension, the use of all works will be prevented during the currency of the suspension. It will not be the case that during the suspension all works other than infringing works can be used. During the currency of the suspension no works can be used. Your Honour, the final point that I ‑ ‑ ‑

GUMMOW J: Just before you come to your final point, have we been taken to these legislative regimes in the United Kingdom which you contrast in your point 12?

MR FLYNN: No, your Honour, in the interests of time and not trespassing ‑ ‑ ‑

GUMMOW J: I am not interested in time. I am interested in getting some assistance so I can write a judgment, Mr Flynn.

MR FLYNN: Yes. Your Honour, the detail of the regime is summarised at paragraphs 57 and 58 of my written document.

GUMMOW J: Right. What does it come to? How would it apply to the facts in this case? What would Mr Cobden’s client have had to do under the English system and what would Mr Bannon’s client be doing under the UK system?

MR FLYNN: Under the English system, for example, Mr Cobden’s client would have been required to notify their subscriber if the IP address associated with them had been reported by a copyright owner. Mr Cobden’s client would have had to keep track of the number of reports provided to him by each subscriber. On request of Mr Bannon’s client, Mr Cobden’s client would have been required to compile, on an anonymous basis, a list of those subscribers who are reported on by the copyright owner above a threshold level of infringement. Your Honour, the significant feature of both the New Zealand regime and the United Kingdom regime is a requirement to make payment in advance of the obligation to act arising – the copyright owners pay the internet service providers in advance of the obligation of the internet service providers to act arising.

GUMMOW J: What sort of payment? How computed?

MR FLYNN: Your Honour, in New Zealand it is computed by a flat rate of New Zealand $25 per IP address.

FRENCH CJ: You translated that to a weekly rate, in this case, of 75,000 if it were 5,000 users who were notified.

MR FLYNN: Yes, your Honour, based on the robot notices which were received.

FRENCH CJ: That is just on the robot notices?

MR FLYNN: Yes. Your Honour, my learned friend, Mr Cobden, points out that these provisions are behind tabs 5 and 6 of his bundle should your Honour require the details beyond what is developed in my submissions. Your Honour, there is some question about the effectiveness of the UK regime at the moment because there is still a draft cost sharing code that is being negotiated which is why that code has not yet been finally settled and the legislation does not commence until those provisions are settled.

GUMMOW J: And 512 of the United States statute, though it is rather difficult drafting, but it does not seem anywhere near as specific as this from the United Kingdom or New Zealand.

MR FLYNN: No, your Honour. It may reflect the difference between safe harbour once liability is established and liability, but because the UK and New Zealand regime provide effectively an exculpation to liability it brings into play the competing considerations on both sides of the debate that we have been discussing.

Your Honours the final point I wish to make is that whether reasonable steps were taken by the ISP in this case has to be looked at in the context that there was a contest as to enforcement, that is, which entity, the ISP or the copyright owners, had the obligation to really enforce the copyright owner’s rights. In my submission, what is sought to be done in this case is that the copyright owners are seeking to use the ISP’s ultimate power of disconnection as an indirect way to enforce their rights. If the copyright owners had sued the user directly, the copyright owners would not have been able to obtain an injunction disconnecting the user from the internet.

Now, query: would they have been able to obtain an injunction that said, “User A may not connect to the internet for so long as they have these files on their machine”? But they could not obtain an injunction saying they must disconnect from the internet. What is sought to be done, really, by the copyright owners is to speak softly to the infringers but carry a big stick, and the big stick is the internet service provider’s power to disconnect.

In my respectful submission, in taking into account whether the refusal to comply with the copyright owners’ demands evidences inaction capable of mounting to authorisation, one has to take into account both the industry contest which my learned friend, Mr Cobden, has referred to and the fact that what happened after the first notification was that the internet service provider was being put in a position where they were being told, “Prevent the infringements or I will sue you for authorisation”.

Whether authorisation can be inferred in those circumstances is something which requires close attention than, for example, the situation in Moorhouse where the artificial setting of threatened litigation had not arisen.

GUMMOW J: There would also be the prospect – or there could be a prospect – of an action for unjustified threats against the ISP by a collection of users if it turned out the information on which the ISP was acting was faulty.

MR FLYNN: Yes, and my learned friend Mr Cobden has taken your Honours to the provisions and it is correct that a threat by (a), whether expressed or an implied threat, is sufficient for the purposes of the section. A threat by (a) to (c), that (c) is infringing (b)’s copyright is sufficient to engage the section and so that is part of the context. The debate over who is responsible for enforcing the possible exposure to threats action means that one starts the inquiry in a reasonably artificial situation where there are already lawyers at 20 paces and whether authorisation can be inferred in those circumstances is an inquiry of a different character than where one had, as it were, untrammelled facts in Moorhouse where one just took the facts as one found them.

Your Honour the Chief Justice yesterday said to my learned friend, Mr Bannon, that your Honour did not mean to use the words set up pejoratively when your Honour said what they are doing is setting up the authorisation case, but, in my respectful submission, whether one uses the word “pejoratively” or not, the fact that steps have been taken specifically designed to both threaten and then invoke concept of authorisation, unless

unspecified steps are taken to prevent the infringement, it needs to be weighed in the balance in saying, does this conduct in refusing bear the character of authorising? Those are my submissions.

FRENCH CJ: Thank you, Mr Flynn. Mr Bannon, how long would you expect to be in reply?

MR BANNON: More than five minutes, but not overly long.

FRENCH CJ: I think we might adjourn then at this stage, Mr Bannon.

MR BANNON: I am not intending to be terribly long, but all I can say is I would be more than five minutes.

FRENCH CJ: Yes, I think we should give you a reasonable opportunity, though.

GUMMOW J: And some thought overnight.

FRENCH CJ: We will adjourn until 10 o’clock tomorrow morning.

AT 4.08 PM THE MATTER WAS ADJOURNED
UNTIL FRIDAY, 2 DECEMBER 2011

[2011] HCATrans 324

Key Legal Topics

Areas of Law

Intellectual Property

Commercial Law

Statutory Interpretation

Legal Concepts

Injunction

Remedies

Breach

Statutory Construction

Jurisdiction

Appeal