Roadshow Films Pty Ltd & Ors v iiNet Limited
[2011] HCATrans 323
[2011] HCATrans 323
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 WEDNESDAY, 30 NOVEMBER 2011, AT 10.17 AM
Copyright in the High Court of Australia
____________________
MR A.J.L. BANNON, SC: May it please the Court, I appear for the appellants with my learned friends, MR J.M. HENNESSY, SC and MR C. DIMITRIADIS. (instructed by Gilbert + Tobin Lawyers)
MR R. COBDEN, SC: May it please the Court, I appear for the respondent with my learned friends, MR R.P.L. LANCASTER, SC and MR C.J. BURGESS. (instructed by Herbert Geer Lawyers)
MR M.J. LEEMING, SC: May it please the Court, I appear for the Australasian Performing Right Association Limited seeking leave to intervene in support of the appellants. (instructed by Banki Haddock Fiora)
MR C.A. MOORE, SC: May it please the Court, I appear for the Australian Recording Industry Association Limited seeking leave to intervene to support the appellants. (instructed by Allens Arthur Robinson Lawyers)
MR M.R. HALL: May it please the Court, I appear for the Media, Entertainment and Arts Alliance and Screen Actors’ Guild seeking leave to intervene in support of the appellants. (instructed by Banki Haddock Fiora)
MR E.J.C. HEEREY: May it please the Court, I appear for the Australian Digital Alliance Ltd seeking leave to intervene in the appeal or, alternatively, to be heard as amicus curiae. (instructed by Australian Digital Alliance Ltd)
MR P.W. FLYNN: May it please the Court, I appear for the Communications Alliance Limited seeking leave to intervene as amicus curiae or, alternatively, as intervener in support of the respondents. (instructed by Carwardine Legal Solicitors)
FRENCH CJ: Yes, thank you, Mr Flynn. Before we proceed we will deal with the question of the summonses.
There are before the Court six summonses. The Australian Recording Industry Association Limited (“ARIA”) seeks leave to intervene to make submissions to the Court in support of the appeal. The Media, Entertainment and Arts Alliance, jointly with the Screen Actors’ Guild, applies for leave to intervene as an amicus curiae. So, too, do the Australian Performing Right Association Limited and the Australian Privacy Foundation. The Communications Alliance Limited and the Australian Digital Alliance each seeks leave to be heard as amicus curiae and, alternatively, leave to intervene.
In determining whether to allow a non‑party intervention the following considerations reflected in the observations of Chief Justice Brennan in Levy v Victoria (1997) 189 CLR 579 are relevant. A non‑party whose interests would be directly affected by a decision in the proceeding, that is one who would be bound by the decision, is entitled to intervene to protect the interest likely to be affected. A non‑party whose legal interest, for example, in other pending litigation is likely to be affected substantially by the outcome of the proceedings in this Court will satisfy a precondition for leave to intervene. Intervention will not ordinarily be supported by an indirect or contingent affection of legal interests following from the extra curial operation of the principles enunciated in the decision of the Court or their effect upon future litigation.
Where a person having the necessary legal interest can show that the parties to the particular proceedings may not present fully the submissions on a particular issue, being submissions which the Court should have to assist it to reach a correct determination, the Court may exercise its jurisdiction by granting leave to intervene, albeit subject to such limitations and conditions as to costs as between all parties as it sees fit to impose.
The grant of leave for a person to be heard as an amicus curiae is not dependent upon the same conditions in relation to legal interest as the grant of leave to intervene. The Court will need to be satisfied, however, that it will be significantly assisted by the submissions of the amicus and that any costs to the parties or any delay consequent on agreeing to hear the amicus is not disproportionate to the expected assistance.
None of the applicants for leave to intervene demonstrates that any identified legal interest of that applicant will be directly affected by the outcome of this case. It follows that none of those applicants shows that it has a right to intervene in these proceedings.
In considering whether any applicant should have leave to intervene in order to make submissions or to make submissions as amicus curiae, it is necessary to consider not only whether some legal interests of the applicant may be indirectly affected but also, and in this case critically, whether the applicant will make submissions which the Court should have to assist it to reach a correct determination. Ordinarily then, in cases like the present where the parties are large organisations represented by experienced lawyers, applications for leave to intervene or to make submissions as amicus curiae should seldom be necessary or appropriate and if such applications are made it would ordinarily be expected that the applicant will identify with some particularity what it is that the applicant seeks to add to the arguments that the parties will advance.
In this case, the Court is of the opinion that:
1.The summons for intervention by ARIA should be dismissed on the basis that its legal interests and those of its non‑party members are not directly affected by these proceedings and that the matters it seeks to raise in these proceedings are unlikely to add to the submissions made by the parties.
2.The summons for leave to be heard as amicus curiae filed by the Media, Entertainment and Arts Alliance and the Guild should be dismissed on the basis that the matters they seek to raise are unlikely to add to the submissions made by the parties.
3.Leave should be given to APRA to be heard as an amicus curiae on the basis that its submissions may assist the Court in respect of matters not fully argued in the parties’ submissions.
4.The summons for leave to be heard as an amicus curiae by the Privacy Foundation should be dismissed on the basis that its
submissions are not sufficiently relevant to the matters which the Court has to decide.
5.Leave should be given to the Communications Alliance to be heard as an amicus curiae on the basis that its submissions may assist the Court in respect of matters not fully covered in the parties’ submissions.
6.The summons for intervention and for leave to be heard as amicus curiae by the Digital Alliance should be dismissed on the basis that its legal interests and those of the non‑party members are not directly affected by these proceedings and that the matters it seeks to raise in these proceedings are unlikely to add to the submissions made by the parties.
The applicants that have leave to be heard have leave only to the extent that the submissions of the applicant do not duplicate the submissions of a party.
Orders accordingly. Yes, Mr Bannon.
MR BANNON: Thank you, your Honour. Your Honours, this appeal raises for consideration by this Court the important issue of the circumstances in which an entity known colloquially as an ISP which provides an internet service to a customer on terms regulating the use of that service is liable, as an authoriser, of acts of infringement of copyright undertaken by the use of that service.
A key issue informing the judgments of the three members of the Full Court is the requisite quality of notice of actual or likely infringements on its customer accounts which the ISP must have before it is required to take a reasonable step or, alternatively, to be found to have authorised such infringements or repetitions thereof.
In the present case, all three members of the Full Court firstly noted that it was accepted that there were acts of infringement on iiNet’s customer accounts but were all in agreement that they are in fact multiple acts of infringement, unlike the trial judge’s view; secondly, all three members accepted that iiNet had a requisite degree of relevant control; thirdly, that there was a relevant relationship, albeit indirect, or potentially indirect, with the infringers at iiNet; and, fourthly and importantly, all three members of the court accepted that the giving of a warning notice to the account holder was, at least as a matter of principle, a reasonable step.
Where we lost the majority members, in the case of Justice Emmett, was Justice Emmett’s view that only unequivocal and cogent evidence of acts of infringement satisfied any relevant notice requirement and that AFACT notices issued on behalf of the appellants fell short of that standard although they were one hundred percent accurate. Plus his Honour added an issue in relation to costs, which I will come to in due course.
We submit there are three problems with his Honour’s approach. Firstly, that part of his Honour’s judgment which addressed that issue, the chapeau to the relevant paragraph, which is 211, makes it clear that his Honour was addressing was the issue of suspension and termination. In other words, although his Honour recognised that the issue of a warning notice was an available and reasonable step, his Honour addressed the issue only by reference to suspension or termination. Secondly, that the requirement that the notice constitute cogent and unequivocal evidence, we submit is at odds with Moorhouse and at odds with a proper application as to what might amount to sanction, approval or countenance and, in particular, countenance.
GUMMOW J: Mr Bannon, those are not statutory words.
MR BANNON: Sorry, 210.
GUMMOW J: I know. That phrase is not a statutory expression.
MR BANNON: No, quite.
GUMMOW J: Do you accept the primary judge’s – and I think you do, I think everyone does – the primary judge’s treatment at paragraphs 43 to 78, under the heading “Technical Background”?
MR BANNON: Yes.
GUMMOW J: So we can take that as not controversial?
MR BANNON: Yes. There is more technical detail in there than your Honours truly need – I am not suggesting your Honours would not be on top of it – because there were issues relating to acts of infringement which required a bit more technical detail as to precisely how the BitTorrent system worked in terms of working out who was actually causing a transmission in certain cases.
CRENNAN J: I know that there is reference in the submissions to an acceptance by the respondent of knowledge of primary infringement acts, but, speaking for myself, I would like to have a much better understanding of where in the evidence it can be shown that a person has made an unauthorised copy. That is to say, I would like to know what that knowledge refers to.
MR BANNON: Yes. It requires an understanding of the way in which the BitTorrent system works, but it was knowledge that on customer accounts copies of films were made available online because when one goes into the system, as I will explain in a bit of detail in a moment, one can see by reference to a particular IP address – again I will explain a bit more about it – that somebody is offering online a 100 per cent copy of a particular film.
CRENNAN J: So you will assist us to understand how the DtecNet evidence demonstrated the primary acts of infringement?
MR BANNON: Yes, I will. I will spend a little time on the facts, not so much because they are controversial but, in particular, for the reason your Honour suggests, that it is important to understand and to understand how the particular issue arises.
GUMMOW J: Well, to understand the issue we need to perhaps understand what relief you would be seeking. I do not think it is much good pushing it under the carpet and saying the Full Court can sort that one out.
MR BANNON: Well, we certainly seek a finding of authorisation and the relief would include damages.
GUMMOW J: Against whom?
MR BANNON: Against iiNet.
GUMMOW J: In respect of what?
MR BANNON: Acts of infringement.
GUMMOW J: Which acts? Infringement of whose works?
MR BANNON: The listed works which can be listed and identified by reference to the AFACT notice schedules which can be traced to particular customer accounts which are iiNet customer accounts.
GUMMOW J: That might be a very efficacious remedy. What you would really be after would be some injunctive relief, I should imagine.
MR BANNON: Injunctive relief would come up for ‑ ‑ ‑
GUMMOW J: How would that be framed? I am sorry to interrupt you. Would that be framed in the general terms of Universal Music 220 ALR 1, for example? There are a couple of pages of orders there at pages 6 and 7. The problem being perhaps that the court is probably reluctant to enjoin the commission of a threatened act with a threatened act is not necessarily productive of any infringement.
MR BANNON: Yes. I am not criticising the order in that case, of course, which we ask for, but I hear what your Honour says. A general form of order obviously runs into the TPC, Commodore and other case type issues which arise as to that. We do not seek to duck the question, but we would certainly accept that any injunctive relief, if it was to be granted, would have to be carefully considered, but the ultimate utility of the proceedings would not be dependent on the availability of injunctive relief, if not for the least reason that, for example, declaratory relief that authorisation had occurred would go a long way to resolving and potentially regulating conduct in the future.
CRENNAN J: I suppose it could give rise to a royalty arrangement.
MR BANNON: A form of damage could be a reasonable royalty.
HAYNE J: But at some point will you not have to identify how injunction could be framed beyond the form “do not authorise”?
MR BANNON: Yes.
HAYNE J: In particular, what acts would you say that the ISP should not perform? The emphasis on the negative is important, not just as a verbal formula. But what is it you want the ISP to stop doing? I understand that the case has a number of aspects in which you want the ISP to do things. What does it want to stop them doing?
MR BANNON: This answer may have an element of ducking about it, but ‑ ‑ ‑
HAYNE J: That is what you are paid for, Mr Bannon.
MR BANNON: I hope it is not my best talent. The ability to frame injunction which would cover all situations going forward beyond the circumstances of this case would require extreme attention and perhaps ingenuity and may not be possible at all because what I have in mind is that indicating when the ISP may not act may involve, including in the order, some definition of the quality of the notice you get which one can recognise may have a difficulty in framing going forward, but at a very narrow level it may be that there is a requirement that they issue a warning in relation to particular customers accounts in this case ‑ ‑ ‑
CRENNAN J: Well, you are getting into mandatory orders then.
MR BANNON: It could be, yes, but in relation to limited to particular customers which can be identified on the evidence as repeat infringers.
FRENCH CJ: Well, this raises the question, I suppose – I mean, in a sense, the pleading in the further amended statement of claim had the character of, if you like, a systemic complaint and the question is, at what point on your case did authorisation in respect of particular infringing acts take place? There is a separate tort with each act of authorisation, is there not?
MR BANNON: Yes. The notice after an infringement takes place, one accepts, is not authorising that particular act.
FRENCH CJ: It does not retroactively turn what has happened into an authorisation. It has to be future conduct.
MR BANNON: Quite, but the evidence indicates, at least in a number of specific instances, that the conduct was continuing over a period, notwithstanding ‑ ‑ ‑
FRENCH CJ: Well, you had an address called RC‑08, I think, did you not?
MR BANNON: Exactly, yes, and that conduct continued for months.
FRENCH CJ: Was the owner of that address known?
MR BANNON: No, because one of the issues in the case was whether or not the Telecommunications Act defence prevented that and it was not thought that – well, no, it was not known. It was not ordered and not identified or known.
FRENCH CJ: So is it your position that inaction after a warning notice constitutes authorisation in the circumstances?
MR BANNON: Yes, but I accept that injunctive relief or even damages, one would have to get to the level of specificity to identify and line up the dots as to when the notice was given and when the conduct continued. It may be too that a point is reached – and, again, there would be a separate hearing on the liability if we succeeded and relief, it may be a la Moorhouse, that where there was no specific notice of a specific act of infringement, nevertheless there was a declaration of authorisation, because of what was perceived to be reason to suspect in combination with provision of the photocopy machine and inadequate warning that the general behaviour of failing to take any step at all meant that they authorised all of those infringements beyond a certain point in time, notwithstanding you do not – in other words, that you do not have to line up the specific act of infringement with a specific notice.
KIEFEL J: Your case relies upon the level of knowledge that iiNet had at the commencement of the proceedings?
MR BANNON: And ongoing too.
KIEFEL J: More specifically, do you rely upon – I suppose it is more or less in the alternative – the acquired state of certainty that they may have reached about infringement during the course of the proceedings and after discovery?
MR BANNON: If need be, we do, and I will take your Honour ‑ ‑ ‑
KIEFEL J: Were the pleadings amended to reflect what would be a specific cause of action?
MR BANNON: We submit the pleadings pick it up and the Federal Court Rules specifically allow reliance on post‑proceeding commencement fact and causes of action.
KIEFEL J: Yes. Was there any dispute about your ability to rely upon knowledge acquired during the course of the proceedings?
MR BANNON: I think the way to frame it is we always said, to the extent necessary, we relied upon it. Our friends always said you cannot. His Honour, the trial judge, we say, did not address it as a specific issue but his reasons proceed on the basis that we could rely upon it because he addresses the issue specifically of them having, at least at some point in time, actual knowledge, as his Honour describes it.
KIEFEL J: And there were some concessions to that effect about the point at which they accepted that repeat infringements were shown in relation to a number of accounts?
MR BANNON: Yes.
CRENNAN J: It has always been perfectly orthodox to plead particulars of infringement and then to assert that they are continuing – acts of infringement are continuing.
MR BANNON: Yes, exactly. That is exactly what we did and they had a defence which did not say, well, you cannot rely on that. They said, we are continuing to take reasonable steps, in effect. His Honour the trial judge said that after acquired knowledge – he recognised the after acquired knowledge, but he said that even so, there is no authorisation because of his means test approach. In other words, he did not say it was because it was not permissible to rely upon it and it was only in the Full Court that the majority said, well, you cannot rely on that, but we certainly rely on both, but we do not shy away at all from the level of knowledge or notice beforehand.
The third aspect in which we say Justice Emmett’s approach involved error is that the matters which his Honour relied upon as being deficiencies in the information provided were matters which iiNet at the time never sought – it not only never sought, they actually told us in the last correspondence, we understand how you make the allegation and the uncontroversial evidence is and findings are they were not interested in any more information because they were never going to act on it and, indeed, the only basis they were ever going to act was if a court ordered them to act. That was their stated position.
Now, we say, that if reason to suspect is a proper approach – we say the evidence is beyond that – but if reason to suspect is a proper approach, if you have reason to suspect, you do not tell anybody of any doubts you have, you do not ask for any information, but you continue to permit the conduct which you are told about, then you must be taken to have countenanced and therefore authorised within what we say is the proper approach to the authorisation the conduct which you must assume is likely to be right because you have not bothered to and are not interested in taking any further steps to find out if it is wrong.
GUMMOW J: Mr Bannon, we are not going to get very far in criticising Justice Emmett unless we know what was put to him in this sense. Insofar as the section 101 is creating a distinct tort, when is that – if you are talking about damages, when is the commission of that tort completed?
MR BANNON: Causally related conduct must occur, so it would be completed then. In other words ‑ ‑ ‑
GUMMOW J: Causally related conduct?
MR BANNON: In other words, there must be an infringement after the authorisation. I am sorry, in other words, I think I am accepting what your Honour is inferentially referring to, namely, that there is no complete cause of action a la WEA v Hanimex, RCA v Fairfax, et cetera. You need an act of infringement consequential upon the act of authorisation.
GUMMOW J: The act of infringement by that actor is a joint tort, a separate tort?
MR BANNON: It is not a joint tort, it is a separate tort, yes. The difficulty with – if I can just perhaps interpolate. What we do say is and it is an important part of our case is that the authorisation has in Australia taken its own course both by reference to authority and the amendments which we say embodied on an assumption the accuracy of that authority which means we are not proceeding down a path of contributory infringement, joint tortfeasorship, which the authorities seem to require, one of two elements, namely, common design and there seems to be another basis of the authorities one can find, namely, inducing conduct, positive conduct inducing subscribers contributory infringement. The authorities in the US certainly go down the Grokster Case, for example, and the Sony Case, go down the route of what we would regard as contributory infringement and joint tortfeasorship. So that is why we say they are interesting but they do not assist this case.
GUMMOW J: Insofar as an injunction is sought, it could be sought on a quia timet basis, can it not?
MR BANNON: It could, yes.
GUMMOW J: Now, how strong does the threat have to be before you can move and how specific does the threat have to be, bearing in mind it is a threat to commit that infringement, not just to behave badly by infringing?
MR BANNON: Yes. The threat has to be real and substantial. Perhaps one may have to accept here that there may be a question in circumstances where the parties, in effect, raising an issue of principle – when I say the party, the defendants raising an issue of principle – as to whether or not a declaration, for example, would adequately resolve the circumstance. In other words, there would be a healthy argument as to whether there was a continuing threat if the Court was to determine that the ‑ ‑ ‑
GUMMOW J: Declarations are declarations of right, not of principle, I am afraid.
MR BANNON: Yes. But a declaration of particular conduct adequately ‑ ‑ ‑
GUMMOW J: It is an order which is a declaration of someone’s rights or liabilities, that is what a declaration is.
MR BANNON: One would have to be specific ‑ ‑ ‑
GUMMOW J: It is not a press release about some matter of principle.
CRENNAN J: The one unusual aspect, I suppose, in this context of what Justice Gummow is putting to you is when you talk about the concept of repeat infringers, here people will download a movie, they are not likely to necessarily re-download the same movie but may in some respects repeat the conduct by downloading a different movie. It is different from some patent and other IP context in which repeat infringement is to repeat the identical act that is complained of via the particulars of infringement on a continuing basis.
MR BANNON: There are examples in the IP area generally about specific declarations, but there are also cases where, we would say rightly but one could argue wrongly I suppose, more general injunctions have been given.
GUMMOW J: That is the problem with Universal Music, it seems to me, at the moment.
MR BANNON: Yes.
GUMMOW J: So I can understand your caution in embracing Universal Music.
MR BANNON: Well, obviously we have not come armed – I should not say obviously – but I do not have at my fingertips the cases, but one can find throughout the list of authorities examples where the courts have made broad orders and courts have said no, that is too broad, so that there are different circumstances which you can obtain, but one has to have, I accept, one has to have ‑ ‑ ‑
GUMMOW J: But the basic problem, Mr Bannon, is that these questions should not have to be fought out on contempt applications.
MR BANNON: Quite. But I think all I can say is – perhaps I should come back to it a bit later in the day, but it is anticipated that there would be a separate hearing on relief and liability and we would recognise that one would have to be precise about the form of any injunctive relief and there would be a real question as to whether or not it should be granted at all and if so, on what terms, but that does not mean that no relief would be granted in the proceedings, and damages is one, and a declaration to identify the conduct which has constituted authorisation with a view to – and it would really be to say and potentially in answer to the need for an injunction. If that is adequately identified, then that would be a sufficient deterrent to the respondent engaging ‑ ‑ ‑
FRENCH CJ: The declarations sought in the application as it appears at 4 and 5 are not the kind of declarations you have in mind? They are very general in their terms. They reflect this kind of systemic approach to the conduct.
MR BANNON: Yes, they would need to be tighter than that. Now, we submit that the statutory scheme is the obvious starting point. Could I take your Honours to the Act? The first section I wish to take your Honours to is section 86 and section 86 identifies the nature of copyright in a cinematograph film and that is what is at issue here and the exclusive rights include:
(c) to communicate the film to the public.
If I could then take your Honours back to section 13 – “Acts comprised in the copyright” - subsection (2):
includes the exclusive right to authorize a person to do that act in relation to that work, adaptation or other subject‑matter.
So far as communication is concerned, “communicate” is defined in section 10 to mean:
make available online or electronically transmit . . . a work or other subject‑matter –
and that is the act of infringement which has been found and accepted and it can only be undertaken by means of access to the internet. Whatever other preconditions are necessary that is certainly one of them. In passing, there is a definition of “carriage service provider” which is picked up in the safe harbour provisions as having the same meaning as in the Telecommunications Act but there is no issue that iiNet was a carriage service provider, as I say, colloquially described as an ISP or internet service provider.
Sections introduced at the time of the 101(1A) amendments include section 22(6) – not directly relevant, but a consequential amendment of the introduction of the right of communication – the exclusive right to communicate a work or authorise its communication – which introduced the concept of determining who was responsible for determining the content of the communication and that is part of the range of legislative provisions balancing the respective interests and, in that regard, obviously that protection is afforded there, one might think, for the ISPs.
Then section 36 of the Act relates to works – again not directly relevant but part of the suite of provisions – and 36(1A) is the equivalent of 101(1A) although one might observe that in subparagraph (c) the word “other” does not appear before “reasonable steps”. It does so appear in 101(1A)(c). I am not sure it really much matters but there are two views expressed in the Full Court: one, Justice Nicholas thought that there was an error in 101(1A)(c). Justice Emmett thought it could be understood as meaning something other than actually exercising the power to prevent – but I just observe that.
Then 39B is the equivalent of 112E, obviously a critical section going to 101(1), the reference to “authorizes the doing in Australia of, any act comprised in the copyright”. In a sense, it is almost picked up twice by virtue of section 13 and 101(1). Then in (1A) it deals specifically with authorisation and the language is:
the matters that must be taken into account include the following:
(a)the extent (if any) of the person’s power to prevent the doing of the act concerned;
(b)the nature of any relationship . . .
(c)whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice.
Can I just observe there that we would respectfully submit that (a) and (c), not expressly but implicitly, are alluding to, and we submit legislatively reinforcing, the notion of sanction, approve or countenance. If the test for authorisation was understood by the legislature as meaning in effect specifically authorise in the sense of grant somebody a licence, (a) and (c) would have no work to do, because if you have the position where you have said to somebody, “You go and do that”, then the language of (a) and (c) is incomprehensible because (a) and (c) proceed on the assumption that somebody is doing it and the question is: what are you doing to stop it?
FRENCH CJ: What do you say is the nature of the judgment involved in determining whether somebody has “authorised” within the meaning of the statute? Is it an inference from conduct or a characterisation of conduct?
MR BANNON: It is a characterisation of conduct which we say is an objective analysis, albeit there is a mental element in the sense that you cannot be authorising something which you do not know about.
FRENCH CJ: But there is a necessarily evaluative component of that judgment, is there not? You take a constellation of elements of conduct and say, “Does this all add up to authorisation according to some meaning”.
MR BANNON: Yes, we accept that.
CRENNAN J: In relation to your points about (a) and (c), what about an implied licence? Why would they not work in that context, as distinct from the grant of a licence or express licence?
MR BANNON: The implication of a licence, again, we would respectfully submit is an implication from - if it is talking about an implication of perhaps a de facto licence in the sense of countenancing that is the way we submit they do work. But if it is working in the nature of an implied licence in the sense of a grant of permission, as was once thought or has been once thought to be the true meaning of “authorise”, we submit they do not make much sense.
CRENNAN J: So you read “countenance” as implying a licence?
MR BANNON: As standing by and allowing something to happen without doing anything about it. It is not so much a licence to the extent that licence carries with it the notion of ‑ ‑ ‑
GUMMOW J: It carries with it a warranty that it will be okay.
MR BANNON: Yes, potentially.
GUMMOW J: It might be important to the person receiving it.
MR BANNON: Obviously ‑ ‑ ‑
GUMMOW J: But if it turns out that they are important, they have a recourse against ‑ ‑ ‑
MR BANNON: Yes.
GUMMOW J: ‑ ‑ ‑ the party who said to them, “It’s okay to go ahead”.
MR BANNON: We submit that that is not ‑ ‑ ‑
GUMMOW J: But you say that is not what is involved here.
MR BANNON: No.
KIEFEL J: Do you say it is something more like control over the person’s ability to infringe?
MR BANNON: Yes. It was a number of elements. One is control is a necessary element. We accept that control is a necessary element and the absence of that element of control explains the sale of tape recorders and the like.
KIEFEL J: That brings the focus on the means by which the person infringes.
MR BANNON: That is part of it, yes.
HAYNE J: If you have in play a number of elements, some of which may be necessary, some of which may not be, and ultimately you have to determine which of the elements are sufficient and in a case where you are drawing an inference from acts, facts and circumstances, why are paragraphs (a) and (c) not relevant to the inquiry of whether the inference can or should be drawn?
MR BANNON: They certainly are. I accept that, but I was seeking to mount the proposition which effectively comes down to this, namely, that sanction, approve and countenance is a collocation of terms which one accepts are not in the statute specifically but have received the approval of this Court on at least two occasions, but just as importantly, that the legislature has enacted these amendments specifically by reference to the explanatory material in the light of those cases, in particular, Moorhouse, but consistently with that, we respectfully submit, when one sees (a) and (c), that is informing one that the way in which that language is framed, which is, in a sense, have you done anything to stop something, rather suggests a precondition to authorisation, does not include – does not require some form of licence which might, as Justice Gummow points out, lead to potentially some cross‑claim or some comeback.
HAYNE J: Even the notion of prevent is itself not without some difficulty. One ISP can prevent the use of that ISP’s service to access the Net.
MR BANNON: Yes.
HAYNE J: It cannot prevent a customer seeking or using the services of other ISPs.
MR BANNON: Quite. It is the specific act of infringement which is the subject of the authorisation claim. So it is no answer to an authorisation to claim and say, well, okay, our conduct may have enabled and we did not seek to prevent, in particular, making it available online, but they could have gone somewhere else and done it. But if they did go and do that, then they would be doing something – that would be a different act of infringement.
HAYNE J: Just so, and therefore you fasten upon an element that is a necessary element, you say, but not sufficient?
MR BANNON: Yes, quite.
KIEFEL J: Another feature or factor in relation to the infringement by the person using the computer and downloading is to download the program by which the infringement can occur.
MR BANNON: Yes.
KIEFEL J: That is a matter over which iiNet has no control.
MR BANNON: Yes, and, as I will come to, they have to actually then download a film themselves as well.
KIEFEL J: But the whole BitTorrent protocol only comes about when the software is downloaded.
MR BANNON: Yes. Then the next section is 112E.
GUMMOW J: Just before you leave (1A), what is the nature of the power being spoken of? Is it some de facto sense rather than exercise of legal rights to prevent? “Power” is a slippery word to put in a statute like this.
MR BANNON: Yes. Obviously, a power which would be a power – perhaps creeping up on the answer – a power which involved somebody acting illegally would not be conduct relevant ‑ ‑ ‑
GUMMOW J: Well, a power to terminate a contract?
MR BANNON: Yes, that would be embraced within that ‑ ‑ ‑
GUMMOW J: Well, that is a legal ‑ ‑ ‑
MR BANNON: That would be a legal power. It could be a practical power provided it was not, one would accept, acting illegally, but it may not necessarily need to be founded in contract, for example. At least the words do not restrict it and one can perhaps envisage situations where you would not need a contractual power. That may be overly narrow because you can have power in all sorts of circumstances.
CRENNAN J: Would the power be constrained by the possibility of a threats action?
MR BANNON: By?
CRENNAN J: Well, a threats action – or perhaps that will not work. Yes, I withdraw that.
MR BANNON: I think it would have to be against the actual infringer.
CRENNAN J: Yes, that is right.
MR BANNON: For example, this section could operate in the case of a parent/child circumstance and, indeed, that might be a common occurrence and one would not be an exercise of a contractual power. It may involve a bit of hopefully not too rough discipline, but the ‑ ‑ ‑
HAYNE J: Are you going to invite us to look at the reality of the power, are you, Mr Bannon?
MR BANNON: Yes, or flatmates or fellow travellers, et cetera, there are a wide range of circumstances.
GUMMOW J: What is the threat section? It is 242, is it?
MR BANNON: Section 202.
GUMMOW J: Section 202, plus 242. How does that fit into this scheme? When I say “fit into this scheme”, fit into what you say is this separate species of infringement, namely, authorisation.
MR BANNON: An infringement of copyright ‑ ‑ ‑
GUMMOW J: It would apply, would it not?
MR BANNON: ‑ ‑ ‑ would include an act of – yes. In other words, authorising somebody to infringe copyright is an act of infringement of copyright. So that if you made a groundless threat, the section would apply. It would have work to do.
GUMMOW J: “Justifiable” is another slippery word, too.
MR BANNON: Yes. As we know, the usual way those cases run is someone brings a threats action and it is defended by a cross‑claim for infringement. So, I think, when I answered your Honour Justice Crennan’s question it may be related to the underlying infringer, then that is wrong.
CRENNAN J: Look, I was just thinking along the lines that the respondent is not a licensee of any sort. That is all. In some ways, it is suggested that part of the relief should be that they pass on the information they have about infringement to users.
MR BANNON: Yes, if they do not ‑ ‑ ‑
GUMMOW J: So that they can then be threatened.
MR BANNON: Possibly, but they do not actually have to pass on a warning. Of course, our cases and indeed, Moorhouse and other cases, if they do not do it, then they are authorising. In other words, if they do not take reasonable steps, whatever the reasonable step be, let us take warning as the obvious example here, we say. If they do not do it then they run the risk of being an authoriser.
CRENNAN J: This issue, of course, may partly explain Justice Emmett’s view that evidence of infringement needed to be cogent and unequivocal.
MR BANNON: One needs to have an approach to the statute which works. iiNet’s evidentiary approach, that is Mr Malone, was to say we did not have to do anything unless we got a court order to do it. That just renders the statutory scheme completely at naught because you are forever chasing your tail, you will never have an authorisation because you wait for a court order to make them do it. So, that is, we would say, a nonsense.
To require cogent and unequivocal evidence also runs the potential to say that the authorisation will never work because you have to – there is undoubtedly a balancing of rights and liabilities which this legislation is trying to address, as did Moorhouse, for example. We say that is why reason to suspect is important. It may inform the nature of the step you take. In other words, and this is perhaps part of what we say involves an error in Justice Emmett’s approach, that having determined that a warning letter could be sent, he skips over that when he addresses what is needed for his requirements for suspension or termination.
You could have a range – and we say the Act actually contemplates this when it looks at the safe harbour policies – you could have a range of steps which would involve, for example, passing on to the account holder and say “We have this complaint about this”. They could add a comment – “We think it is reasonable”. They could say “We have no reason to doubt it”, whatever.
The way in which they deal with it is a matter for them and they may say, if they thought it was nonsense and they had a reasonable basis for that, then they would be – they could say that is not a reasonable step. But the range of steps they take is potentially quite wide and they could say, “What have you got to say about that”, for example. That is one way. Indeed, there is evidence as to a policy by one of the internet providers that that is, in effect, what they said. They say “We will pass on the notice to you and unless you come back and say something to us as to what is wrong, then we are going to take certain steps”.
FRENCH CJ: This is Westnet, is it not?
MR BANNON: Exetel. I will briefly take your Honours to that. So that there is a danger ‑ ‑ ‑
HAYNE J: Does that argument involve an inversion, this inversion, that what are reasonable steps are to be judged from the recognition that the only way peer‑to‑peer infringement can be stopped is at the level of the ISP, and therefore – and the only way the ISPs can be implicated in it is through the authorisation provisions and therefore you give content to reasonable steps in light of those facts? Now, is that the nature of the argument that is being made, Mr Bannon, and if it is, is that not inverting the inquiry?
MR BANNON: No, we do not say that that is the only way to do it. Demonstrating it is the only way to do it is the way you have to interpret the statute, but one can recognise that there are undoubted difficulties in proceeding one on one – effectively, one of the suggestions they made, you get a preliminary discovery application in relation to each instance, then you go to court, you drag the infringer in, you issue them and there are costs incurred, et cetera, on you go. Now, that is not to say that it cannot be done. The costs of doing it would be unbelievably prohibitive and quite frankly what you would end up with in court is potentially a whole lot of account holders, often parents, who will say “I never knew, if only you had let me know”.
FRENCH CJ: We would have to set up a separate division of the Federal Court to deal with it, I think.
MR BANNON: Yes, exactly. But there is a recognition in the background materials that there are potential problems and you require some balance in interest. But when one sees the safe harbour provisions, we say that the legislature recognises that there is the potential for – two things really. That the ISPs are definitely squarely in the gun as potential defendants for authorisation. That is explicitly recognised, we respectfully submit. But secondly that there are steps they can take which will protect them but the steps are going to be at their cost but that is part of the background with which one looks at this suite of provisions.
KIEFEL J: But does that come close to saying that authorisation in relation to ISPs connotes some obligation to prevent a freestanding obligation to prevent?
MR BANNON: No, because you have to still step through the steps in 101(1A). There is no avoiding that.
KIEFEL J: Is that where elements such as control come in?
MR BANNON: Control is a key, yes. We accept that notice is a key as well. But, for example, the next section I was going to go to is 112E, which is the subject of the notice of contention, and we have findings in our favour on that. But that says:
A person . . . who provides facilities for making . . . a communication is not taken to have authorised any infringement of copyright in an audio-visual item merely because another person uses the facilities so provided to do something the right to do which is included in the copyright.
There are a couple of things that come out of that. The importance of “merely” is important and the authorities say, well, if you do more than that, and that would include, we say, when you have notice and you control the content, which they do control the content because of their terms and conditions, but what it does is a recognition that the ISPs are squarely in the consideration of the legislature as parties against whom authorisation claims are likely to be brought in circumstances where the legislature has granted the copyright owner the section 86 additional right of communicate because, as I say, to communicate a work is make available or transmit online and you can only do that if you are online. So that almost a necessary concomitant of granting to the copyright owner that right drags in the ISPs necessarily.
The legislature is seeking to strike a balance between granting that right, which is in the interest of people generally because obviously there is some interest in being able to promulgate by dint of the internet – works legitimately, but, equally, it should not be a circumstance where that is abused and that the ISPs can say we have got nothing to do with that abuse in circumstances where they are (a) are a necessary part of it and (b) provided they do something more than merely provide the facility.
Now, 112E will pick up, for example, Telstra or Optus in circumstances where an internet provider such as a iiNet – and there are plenty others like them – who do not have their own cables and wires all around the world, or even in Australia, but they sub‑licence, in effect, and they sub‑distribute access to the systems. Telstra has got no idea, it does not have a contract with the customer, for example, but there are infringing works going down the line or made available down the line. They have to be protected and they are protected by 112E, and those like companies. So that is one relevant circumstance.
GUMMOW J: Can you just explain to me, Mr Bannon, when did this definition of “communicate” go in?
MR BANNON: Under the Digital Agenda Act, and I am going to come to the extrinsic materials.
GUMMOW J: All part of the one Act?
MR BANNON: Yes.
FRENCH CJ: This was 2000.
GUMMOW J: 2000?
MR BANNON: Yes, that is right. Your Honours, my next step after just finishing on this safe harbour is to go to that material.
GUMMOW J: But it went in at the same time as 112E.
MR BANNON: That is right. And safe harbours comes in later.
GUMMOW J: Just a minute. Section 112E is talking about authorisation.
MR BANNON: Yes.
GUMMOW J: Now, this new right under 86(c), as it were, is a primary right.
MR BANNON: Yes. Primary and also it gets caught up in section 13 as the protection extends to authorising.
GUMMOW J: I know that, but it is a primary right.
MR BANNON: Yes.
GUMMOW J: How is that primary right infringed?
MR BANNON: By making available – two ways.
GUMMOW J: Forget about authorisation. How would the primary right be infringed by a communicator?
MR BANNON: By somebody, for example, advertising on a website or by some other means of internet communication.
GUMMOW J: But communication is to make available online or electronically transmit.
MR BANNON: Yes.
GUMMOW J: Is there any primary infringement involved in the various activities we are looking at by anybody?
MR BANNON: Yes, it is make available online.
FRENCH CJ: To the public, of course.
MR BANNON: To the public, of course, yes. But the primary act is they have to do it online, but they cannot – unless it is an ISP themselves, they need the assistance of – using that word loosely – an ISP.
HAYNE J: But the BitTorrent client who has on his or her drive the film in question and makes it available through the BitTorrent protocol is the primary infringer by doing that, by making it available for download through BitTorrent?
MR BANNON: Yes. Say, person A who downloads the BitTorrent client onto his or her computer and then subsequently downloads a particular film, then once they have done that and, say, they turned off the computer – say, the moment they happened to get their film onto their computer and they turned off the computer, it does not quite work that way for the reasons we will indicate, but then they are not infringing – they may have infringed the right and they are the primary infringer of making a copy, but while the computer is turned off and they do not have – I am sorry, when they are disconnected form the internet, they are not infringing the 86(c) right. They only infringe the 86(c) right when they access the film with the benefit of a program which automatically makes that film available online.
FRENCH CJ: They are bits are available for the swarm, I think was the term used.
MR BANNON: Yes.
FRENCH CJ: So it is that uploading that is the communication to the public.
MR BANNON: Yes. The interesting aspect of the 86(c) right is that the effect of making it available online is you do not actually have to transmit the whole of the film. If you stand, as it were, in the internet ether and, say, like a shop, the old – because if you stand like a shop saying you can buy this film here – access this film here. If you are accessing – if you are making available the whole of the film, 100 per cent of the film, then the substantial part is – requirement is satisfied, you do not actually have to transmit that to anybody, any part of that, and you still nevertheless infringe the communication right.
GUMMOW J: Why is that?
MR BANNON: Because of the definition “communicate”, namely, make ‑ ‑ ‑
FRENCH CJ: What do the words “to the public” add to make available online?
MR BANNON: Yes, I am sorry. I keep forgetting that. Your Honour the Chief Justice is absolutely right. It is probably almost impossible to, short of.....network, I suppose, almost impossible to not be making it available to the public if you are on the internet, certainly in a way in which ‑ ‑ ‑
KIEFEL J: Because of the way the peer‑to‑peer communication works?
MR BANNON: Yes.
FRENCH CJ: Or the way BitTorrent works.
MR BANNON: BitTorrent works, anyway, yes. The definition of “to the public” includes persons who have a character which is no different to any member of the public. So even on a relatively private network it is probably going to be hard to avoid the “to the public” definition. But, in any event, be that as it may, there is no issue satisfied in this case, in the case of BitTorrent, but the point is, as I say, they do not have to send down the line a single scrap of the film, but if they are making available the whole of the film online or a substantial part of it – in this case it is the whole of the film – they are and are continuing to be a primary infringer.
But, as I say – and it is an extraordinarily broad right, on one view, which is granted, but a necessary concomitant of being able to do that is access to the internet and that is really why the legislative minds and certainly the industry interests were pretty active in trying to wrestle with how they address this, which grants the right – and everyone has an interest in the right, in a sense, because everyone has an interest in the internet working well, including the ISPs, but at the same time affords sufficient protection, but in the recognition, we say, that the ISP is squarely involved and is at risk of being an authoriser, they build in certain protections and one of those is 112E.
GUMMOW J: Section 112E talks about “to have authorised any infringement”. That would include primary infringement under 86(a) or primary infringement and 86(c)?
MR BANNON: Both.
GUMMOW J: Both, yes.
MR BANNON: I have just noticed whether you can authorise and authorise it, but not – never been resolved I do not think, but it does not arise in this case. The other relevant suite of provisions is 116AA which are called the safe harbour provisions, colloquially, and they were brought in – and I will take your Honours to the free trade agreement provision pursuant to the – in 2004, so this is subsequent to the 2000 Digital Agenda Act – under the US Free Trade Agreement Implementation Act 2004 which took effect 1 January 2005, which, your Honours will appreciate, brought in a whole raft of provisions across a whole range of different legislations, but looking at 116AA:
(1)The purpose of this Division is to limit the remedies that are available against carriage service providers for infringements of copyright that relate to the carrying out of certain online activities by carriage service providers. A carriage service provider must satisfy certain conditions to take advantage of the limitations.
Note 1:Subdivision B contains a description of the relevant activities.
Note 2:Subdivision C contains details of the limitations on remedies.
Note 3:Subdivision D sets out the conditions that must be satisfied . . . The limitations are automatic if a carriage service provider complies with the relevant conditions.
(2)This Division does not limit the operation of provisions of this Act outside this Division in relation to determining whether copyright has been infringed.
The expression “copyright has been infringed” would include authorisation. Then in “Definitions”, 116AB:
copyright material means:
. . .
(d)a cinematograph film –
Over the page:
industry code means:
(a)an industry code that:
(i)meets any prescribed requirements; and
is registered or developed in accordance with the legislation. Section 116AC deals with “Category A activity”:
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 or transient storage of copyright material in the course of transmission, routing or provision of connections.
It is category A activity which is relevant to this case. I can perhaps leave the other B, C and D. In 116AG “Limitations on remedies”:
(1)A carriage service provider must satisfy the relevant conditions set out in Subdivision D before the limitations in this section apply.
(2)For infringements of copyright that occur in the course of carrying out any of the categories of activities set out in Subdivision B, a court must not grant relief against a carriage service provider that consists of:
(a)damages or an account of profits; or
(b)additional damages; or
(c)other monetary relief.
So that is if you satisfy that the provisions which you come to. That is a massive boon for the ISPs:
(3)For an infringement of copyright that occurs in the course of the carrying out of a Category A activity –
which is this case –
the relief that a court may grant against a carriage service provider is limited to one or more of the following orders:
(a)an order requiring the carriage service provider to take reasonable steps to disable access to an online location ‑ ‑ ‑
GUMMOW J: What is the ordinary injunction provision for infringement?
MR BANNON: Section 115.
GUMMOW J: It is 115(2), is it?
MR BANNON: Section 115(2).
GUMMOW J: Now, does 116AG(3) carry with it implicitly a conferral or an expansion of 115(2) to confer power to do these things, which power may or may not be exercised, but it must, must it not, because ‑ ‑ ‑
MR BANNON: Yes, it must.
GUMMOW J: There is a question of statutory construction about what it is in fact doing. It seems to assume that the Court could grant that sort of injunctive relief. I am not sure that is correct. So I think to make the section work you have to read it as expanding the notion of injunction in 115(2).
MR BANNON: The assumption your Honour refers to may take us back to the earlier discussion, namely, whether or not in an authorisation case what is the injunctive relief you can get. We would submit that the scope of remedies ‑ ‑ ‑
GUMMOW J: It may not matter, but we have just got to be clear. We cannot just skate through section 116AG(3), I think.
MR BANNON: We would certainly submit that it is an available construction of 115(2) in the context of an authorisation claim, that an order could be framed which could include a (3)(b), but if it cannot, then 116AG is, albeit under the context of a limitation, certainly affording power to make such an order.
FRENCH CJ: It would have to be read also, I suppose, if it were the Federal Court, for example, as in the context of – as a constraint on the power under section 23 of the Federal Court Act.
MR BANNON: Yes. When one sees the circumstances in which it applies, one can see why it is framed so. Then subsection (4)(b), (c) or (d) is not presently relevant. If one goes over the conditions ‑ ‑ ‑
GUMMOW J: I am sorry to interrupt you, Mr Bannon, but I think what it may come to is, even if one were outside the safe harbour provisions, does 116AG(3) throw light on 115(2) so that even outside the safe harbour provisions, (a) and (b) of 116AG(3) would be within the power in 115(2), the injunctive power in 115(2)?
MR BANNON: I think that that would follow, your Honour.
FRENCH CJ: It is a case of using a later amendment to construe an earlier provision, but that is not impossible.
MR BANNON: Yes. Well, 115(2) is not limited as it is broad and framing relief to ensure that somebody does not continue authorising conduct ‑ ‑ ‑
GUMMOW J: No, it is not an “open sesame”. It uses the word “injunction” which has a very specific meaning in equity.
FRENCH CJ: Section 116AG(3) also fed back into another constructional argument, did it not, about reasonable steps?
MR BANNON: In these proceedings?
FRENCH CJ: Yes.
MR BANNON: Yes, as to whether it informs – it has certainly been relied on by various – I think perhaps Justice Emmett says the fact that is there, it tells you the legislature contemplates that that would be a reasonable step to terminate.
FRENCH CJ: But again, that was a later amendment?
MR BANNON: It is, yes.
FRENCH CJ: Yes, it is (1A). Sorry, came in after (1A) of 101.
MR BANNON: In answer to your Honour Justice Gummow’s question ‑ ‑ ‑
GUMMOW J: It has a very specific meaning, particularly with reference to mandatory injunctions, which is what 116AG is talking about. You have to terminate and you have to take some steps, et cetera. They have to be supervised. The supervision may give rise to contempt questions, so on and so forth. So it is not just a question at large, as it were.
MR BANNON: No.
GUMMOW J: Probably not thought out adequately by those who promoted this legislation, but there it is.
MR BANNON: Can I give some more thought as to whether 115(2) could contemplate such as a matter of pre‑existing legislation and otherwise I note your Honour is raising the issue. Then 116AH(1) the table sets out the conditions for each of the categories of activities. Then condition 1:
All categories
1.The carriage service provider must adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the accounts of repeat infringers.
2.If there is a relevant industry code in force – the carriage service provider must comply with the relevant provisions of that code relating to accommodating and not interfering with standard technical measures –
That is perhaps not so relevant. Then Category A in Item 2:
1.Any transmission of copyright material in carrying out this activity must be initiated by or at the direction of a person other than the carriage service provider.
2.The carriage service provider must not make substantive modifications to copyright material transmitted.
So just taking a couple of those steps, the first one, “All categories”, item 1, that contemplates that before you get the protection of the limitations, that you will have a repeat infringer policy which we say inherently involves warnings. It does not specifically say that, but that is what it is inherently referring to. There is nothing there to suggest that that protection afforded by the legislature would only be triggered after there was a court order telling you to warn or, indeed, a court proceeding saying that there had been infringement.
That expression “repeat infringer” is not defined anywhere and it is perhaps part of the elasticity of all of this, but certainly you do not get a sense out of that that the approach iiNet took saying you only have to act if you get a court order – on the contrary, we say that squarely contemplates a proposal where the carriage service provider is relatively active in addressing issues of repeat infringers which they can only address if they have got some form of notice and it is plain that they can formulate a policy which accommodates some sort of warning process.
So we say the whole idea of a warning process is inherent in the legislation, firstly. Secondly, there is nothing there to suggest the precondition of any such policy would be that the copyright owners pay for it, which is Justice Emmett’s theory, which we say has no legislative foundation. It was not even a proposal put forward by iiNet. IiNet did not even argue for that. It has got all sorts of other problems.
Then the category at A2 tells one -that is that it must – that is item 2, Category A, No 1, it:
must be initiated by or at the direction of a person other than the carriage service provider –
It carries with it another relevance, namely, that it says, “Well, if you, the service provider are involved in the identification of the material then you can’t get into this protection at all”. Again, that is a legislative recognition that the idea of authorisation involves the conduct of somebody else which is not at the direction of the ISP but the ISP is involved in it by being a carriage service provider plus having some of the other elements beyond merely providing the facility à la 112E. The only other section I was wanting to take your Honours to, and that is section 116AH(2) which is:
Nothing in the conditions is to be taken to require a carriage service provider to monitor its service or to seek facts to indicate infringing activity except to the extent required by a standard technical measure –
Again, that may rather indicate that they do not have to go actively seeking it but that means, on the converse, it does not say they are entitled to ignore it when they get information. Those provisions were introduced against a background of extrinsic material. Your Honours should have a slim bundle which is headed “Appellants’ Extrinsic Materials”, the first item of which is parts of the Copyright Digital Agenda Act which the Court looked at in part in the context of the Sony v Stevens Case in relation to technical protection measures. The “Object of the Act”, we direct attention to 3(a):
ensure the efficient operation of relevant industries in the online environment –
not only by (i) but importantly (ii).
[MOMENTARY BREAK IN RECORDING]
FRENCH CJ: Somebody is attending to that. Are you able to read all of this?
MR BANNON: Yes.
GUMMOW J: We can hear you.
MR BANNON: I could add a few words, too, to assist the argument but ‑ ‑ ‑
FRENCH CJ: As Justice Hayne might say, that is what you are paid to do.
MR BANNON: It says:
(ii)providing a practical enforcement regime for copyright owners; and
(ii)promoting access to copyright material online –
Then the particular – if we can indicate how they came in - over the page - section 10(1) is the introduction of the various definitions. Item 2, sorry, is the “carriage service provider”. Over on the next page, item 6, the “communication” definition and then, just in passing, 15B, a couple of pages over, “technological protection measure” and as I say, this Court considered that section in Sony v Stevens. Then, over to item 26 there is the introduction of another protection as related to the suite of provisions. Item 39 is the addition of 36. Then item 87, a few pages over, is 101. The last of the pages we have reproduced in that is the 112E. The next document in the bundle behind tab 2 is the Copyright Amendment (Digital Agenda) Bill explanatory memorandum. The opening sentence refers to:
strategic framework for the development of the information economy in Australia . . . the challenges for copyright posed by rapid developments –
The next paragraph refers to:
challenges to the protection and enforcement of copyright –
Concerns of “owners of copyright” are referred to. The next paragraph refers to concerns of users in the first sentence and the concerns of ISPs, “they face uncertain and unreasonable liability”. Over the next page, page 3, the paragraph about a third of the way down the page commencing:
The centrepiece of the Bill is a new technology-neutral right of communication to the public . . . The new right of communication to the public also encompasses the making available of copyright material online.
Then, page 4, the paragraph commencing:
Telecommunications carriers and carriage service providers (including ISPs) play a key role . . . To encourage continued investment in these crucial new online businesses, the Bill provides greater certainty about the responsibilities of carriers and ISPs to copyright owners and the steps they need to take to avoid infringing copyright.
Page 5 under the heading “What is the problem being addressed?” - skipping the first paragraph, the opening sentence of the next paragraph refers to the fact that technology has “exposed gaps in the protection” and the last sentence:
Also, owners of copyright do not have fully effective rights in relation to the Internet, thus making it difficult for them to obtain appropriate redress or remuneration for use of their material on the Internet.
That picks up a matter your Honour Justice Hayne raised and this is part of the legislative background.
GUMMOW J: What is the relevant provision in the free trade agreement itself which called for this legislation?
MR BANNON: In relation to safe harbours is section 29.
GUMMOW J: Article 29?
MR BANNON: Article 29, I should say. I am sorry, I think we have just reproduced Article 17.1. It is page 17-27, behind tab 4 I should have said.
KIEFEL J: I am sorry, what was that article, Mr Bannon?
MR BANNON: Behind tab 4 we have reproduced the whole of article 17.1 – 17, I should say, and part of that includes a subsection of article 17.11 which starts at page 17‑20 and a particular subparagraph of that article is at 17‑27.
GUMMOW J: 17‑27?
MR BANNON: Page 17‑27 at the foot of the page, your Honour. It should have on it a paragraph 29 in the middle of the page and a heading “Limitations on liability for service providers”.
GUMMOW J: I think the assumption on the part of the United States would have been that their safe harbour provisions in section 512 of their 1976 Act, put in much later, what is now section 512 in the US would have complied with – had already complied with 29 that you have just referred us to.
MR BANNON: I think that must be right.
GUMMOW J: The language seems to be so general that it can be satisfied by either of these safe harbour systems.
MR BANNON: Yes. Albeit, perhaps, welded on to different jurisprudential bases for what we call authorisation which what they call contributory infringement. While your Honours perhaps have that open, the language of the whole of 29 is important but subparagraph (a) is important:
legal incentives for service providers to cooperate with copyright owners in deterring unauthorised storage and transmission –
limitation and scope of remedies. Then two pages over there is a subparagraph(vi) about eligibility and item (A) picks up the policy.
HAYNE J: What is the chronology of this, in particular, in relation to the development of peer‑to‑peer sharing?
MR BANNON: The peer‑to‑peer sharing is well – in terms of the free trade agreement, I think ‑ ‑ ‑
HAYNE J: Where does peer‑to‑peer sharing becoming common compared with when the free trade agreement provisions are written and come into force?
MR BANNON: This free trade agreement is dated 2004 and years before 2004 peer‑to‑peer is rife. The Kazaa Case, for example, is a peer‑to‑peer exercise. The case was heard in 2004 but relating to events which took place from about 2001, from memory.
HAYNE J: And BitTorrent?
MR BANNON: The evidence as to when BitTorrent came in – I am not sure whether it is in here, but BitTorrent is simply – when I say simply, these programs are unbelievably clever – but it is another form of distributing in an efficient way.
HAYNE J: Yes, but different from Kazaa.
GUMMOW J: It does not take a substantial part, does it? Each bit may not be a substantial part.
CRENNAN J: It is the package’s idea that characterises it.
MR BANNON: The package’s, yes.
CRENNAN J: So it is a decentralised system.
MR BANNON: It is decentralised, but Kazaa was decentralised in the sense that one could access musical recordings – unauthorised musical recordings – from a whole series of peers and one did not have to line up at one central server, but the role of the Kazaa operators was to provide a central indexing service which his Honour Justice Wilcox found could be the subject of control by means of filters. So they had the element of control there, so it was not like a Betamax type of case. But, nevertheless, the infringing conduct was – the transmission of material was peer‑to‑peer and here the transmission of material is peer‑to‑peer with a central tracking system which assists that process, but insofar as their path is transmitted, yes, there is going to be difficulties as to whether or not that is a substantial part, but insofar as they are making available an offer in the whole of the work, peer‑to‑peer, then there is no substantial part issue.
KIEFEL J: That is what differentiates it. The traditional method was the server to the person requesting, or the computer requesting.
MR BANNON: That is the traditional method, yes, pre‑Kazaa type setups. In other words, you distribute the infringing work ‑ ‑ ‑
KIEFEL J: More directly.
MR BANNON: You do not distribute it; you encourage peers around the world to be the banks of infringing works so therefore there is not a blockage in the pipes to get access to it. It also makes it much harder to get infringing conduct up because you have either got to chase millions and millions of peers, which can be hard to locate, or you can identify more central parties which are responsible. It is no secret that this is part of that exercise, quite frankly, and the question is does the legislature authorise it? We say that it does. Paragraph 60 of the trial judge’s judgment, if your Honours are using the appeal book volume 1 at 262, identifies the fact that the BitTorrent protocol was developed in 2001.
KIEFEL J: But not all users of the BitTorrent protocol system involve infringement.
MR BANNON: No. We do not know that, but, no ‑ ‑ ‑
KIEFEL J: You cannot say that.
MR BANNON: You cannot say that, no. Just if I could go back and identify a few more parts of the document behind tab 2, I think I had referred on page 5 of that to the gap issue. At the bottom of page 5 there is a reference to:
The need for copyright reform with respect to third‑party distributors online –
and there is a reference to the High Court decision in APRA v Telstra. There was an aspect in APRA v Telstra which dealt with the provision of music online. It was a different section, but it was an aspect which found Telstra liable, albeit it did not know music online was being sent down the wires by one of its subscribers. They say:
In light of this case, carriers and carriage service providers including ISPs have expressed concerns that they face a considerable, uncertain and unreasonable degree of liability –
et cetera. Under “Objectives” over on page 7 we invite reference to the first bullet point and the third last on the page, the second last on the page. Then on page 8 there is a consideration of options – 1, a package of major amendments to improve; 2, no specific action to amend. There is a discussion about that. Then over on page 9, importantly, under the subheading “Options for the liability of carriers and carriage service providers (including ISPs)”:
Currently, the Act provides that copyright can be infringed in two broad ways: by (i) directly exercising a copyright right without the owner’s permission and (ii) authorising a person to infringe copyright.
It is proposed that the person who is responsible for determining the content of a communication to the public is the person who directly exercises the right over that activity. This would mean that carriers and carriage service providers (including ISPs) who are not responsible for determining the content of the transmission would not be directly liable for those transmissions.
The section which picked that up is 22(6), but that is important. In other words, what they are saying is you will not be exposed to direct liability if you do not deal with the content, but even if you do not direct the content you can still be liable for authorisation implicitly. Then options A, B and C in relation to authorisation deal with, over the next page:
Option C: codify in the Act the principles set out in the authorisation case law and introduce a limitation –
In the middle of that page there is a paragraph commencing:
ISPs and users of copyright material opposed this approach –
Then at the foot of that page, the paragraph:
Option C builds on the proposal in Option B to amend the Act and includes a proposal to limit liability for authorisation –
That whole section deals with what became section 112E. Then over on page 12 under the heading “Identify broad constraints which make some options not viable”, under that heading:
The option of making no amendments . . . is not an acceptable option.
The next paragraph, last sentence:
For example, ISPs might find themselves liable for authorising copyright infringements by doing no more than providing facilities –
Then over on page 13 there is an issue about costs. Under 4.2.1:
Owners of copyright would bear the costs of monitoring compliance with their new rights and taking civil actions to enforce those rights. Owners would also bear the costs of the proposed exceptions –
Then the next paragraph:
Users of copyright, namely libraries and archives, would bear the cost of complying with proposed exceptions –
Importantly, over the next page at 14, the first complete paragraph:
Under Options A, B and C, carriers and carriage service providers (including ISPs) would bear the cost of becoming aware of any new laws relating to liability for authorisation of breaches of copyright. They would also bear the cost of taking any relevant measures to avoid liability.
Then the benefits, on the bottom of that page, the second last line:
The new right of communication . . . with more effective protection –
Over the page, page 15, the paragraph in the middle of the page commencing, “Carriers and carriage service providers”. Then page 16 under the heading, “Restrictions on competition” there is a sentence in the middle of that paragraph:
The benefits of the proposed amendments to owners of copyright and the community generally outweigh the disadvantage of possibly increasing the costs of using copyright material in the communications networks and the Internet.
FRENCH CJ: This reads rather unusually like a sort of a law reform discussion paper. Does it feed into construction?
MR BANNON: Well, it certainly makes it difficult to say that Justice Emmett’s proposal of saying a reasonable step could involve requiring us to pay the costs. What it demonstrates is that the legislature recognised that these proposals would have costs considerations, but the ISPs would have to bear their share of that cost. I think one can get that out of it as part of the balancing exercise.
FRENCH CJ: That informs the concept of reasonable steps, you say?
MR BANNON: Yes.
FRENCH CJ: There is an element of authorisation but derived from Moorhouse.
MR BANNON: Yes, well, that is right, and, specifically, in relation to that matter, if one goes over to – we have skipped out irrelevant pages, or we go to the relevant pages – if one goes over to what is page 54, looking at the bottom numbering, the specific statement in 122 to 124 ‑ ‑ ‑
GUMMOW J: I am sorry, what are you reading from, Mr Bannon?
MR BANNON: From the document behind tab 2, the explanatory memorandum. It is at page 54, a number at the bottom, which follows page 20 because we skipped out some pages.
FRENCH CJ: You are giving content to reasonable steps, including cost bearing, by reference to elements of this discussion, but the reasonable steps criterion in the end is one of a constellation of factors from which you either characterise the conduct as authorisation or perhaps infer authorisation according to an established test which has nothing to do with this background, does it?
MR BANNON: No. Well, obviously we come back to the terms of the statute, but obviously the circumstances in which it was brought in and at least stated reasons inform part of the background to it and inform – a couple of propositions, namely, that it was, what we say is, is apparent from the legislation itself, namely, that the ISPs with the introduction were not regarded as going to be absolved from liability on authorisation grounds as a result of the introduction of the communication right, firstly. So that any construction of a statute which would effectively have that effect we say would be antithetical to the background material, and it is relevant for that purpose, and, secondly, that the intent behind 101(1A) was to codify what was understood by the legislation to be the relevant principles.
FRENCH CJ: Not codify in the sense of set out exhaustively the relevant factors?
MR BANNON: No.
FRENCH CJ: It is still a test of authorisation.
MR BANNON: Yes.
GUMMOW J: On that matter, Moorhouse is in 1975. In 1988, as you know, the House of Lords looked at this area in CBS Songs [1988] AP 1013. Did they look at it through the prism of authorisation or through the prism of joint and several tortfeasors? No need to answer it now, but ‑ ‑ ‑
MR BANNON: I think they did both.
GUMMOW J: But what Lord Templeman spoke of, regardless of whether he was getting at it through authorisation or joint and several tortfeasors, was procuring “an infringement by inducement, incitement or persuasion” and you say those words are too strong as to what is needed?
MR BANNON: Yes, we say those words are words of joint tortfeasorship.
GUMMOW J: It seems to be the context to which he is using it at 1058. What then happens if, as a matter of legal structure, the copyright owner gets damages both against the primary infringer and the authoriser?
MR BANNON: It could not be rewarded twice, so that it would not represent their loss. Could the authoriser have a claim against the primary infringer? In this case ‑ ‑ ‑
GUMMOW J: Could there be damages against one and an account of profits against the other?
MR BANNON: We would submit, no.
GUMMOW J: The moment you have a structure that sets up multiple miscreants, if I can put it that way, with remedies against each, you run into these questions.
MR BANNON: Yes. I am not sure how I would answer the account of profits issue.
GUMMOW J: But, anyhow, you say CBS Songs is not to be understood as requiring or inviting any further consideration of that phrase in Moorhouse.
MR BANNON: No.
GUMMOW J: Even though it was an English import.
MR BANNON: Yes, even so.
GUMMOW J: You do not want the later English import, just the early one. You have the tariff barrier up.
MR BANNON: I will come to this.
GUMMOW J: You have the tariff barrier up.
MR BANNON: I will come to this.
GUMMOW J: 1924 is okay but not 1988.
MR BANNON: Yes. I think that, for better or for worse, as perhaps your Honour recognises in WEA v Hanimex, we did – the High Court did proceed down a different path and the significance of this legislative statement is that is – one may accept that that was the basis on which legislature was proceeding as well. Again, rightly or wrongly ‑ ‑ ‑
GUMMOW J: It says “in particular”, does it not?
MR BANNON: I am sorry? Yes, it says ‑ ‑ ‑
GUMMOW J: Currently exists at common law.
MR BANNON: As expounded by ‑ ‑ ‑
GUMMOW J: Yes, all right.
MR BANNON: Then, the only document – I do not need to take your Honours to but for information purposes is the second reading speech. It does not really add anything. Could I then take your Honours to some aspects of firstly, Moorhouse in – I should start, sorry, with ATMA working backwards chronologically, the Tape Manufacturers Case 176 CLR 480 and simply to refer at page 497 to 498 - the bottom of 497 ‑ ‑ ‑
GUMMOW J: They treat CBS as having been an authorisation debate.
MR BANNON: Yes, I think it had both parts of it. The aspect of it which was relevant was the absence of control. Your Honour, when they deal with over the page at 498 the Sony Corporation they refer to it in the context of contributory infringement which as your Honour notes that does not address. Certainly CBS uses language of authorisation as well and then the paragraph it follows ‑ ‑ ‑
GUMMOW J: Do we know whether the author of this parliamentary material had looked at Tape Manufacturers?
MR BANNON: Was aware of it? Tape Manufacturers does not hurt us, we submit. It reinforces the aspects of Moorhouse, which are important, namely, the need for control so that neither under our law of – when I describe our law – under principles of authorisation CBS v Amstrad would not be an authorisation because the good leaves the vendor and is beyond the control.
GUMMOW J: It comes down to this meaning of “control”, does it not?
MR BANNON: In all the cases which have succeeded in Australia, they have been involved an element of control. Kazaa had that element.
GUMMOW J: Then, that brings us back to power in this new section. We saw that that might be perplexing.
MR BANNON: Yes, and flexible too.
CRENNAN J: Well, it is going to bear, is it not, on the relationship between the defendants, or respondents, and primary infringers and also whether or not a respondent took reasonable steps.
MR BANNON: Yes. So far we are winning on control in this case, your Honour. In other words, I think it is our learned friends who wish to attack the control issue.
KIEFEL J: But you have to say control over what. Control over their ability to ‑ ‑ ‑
MR BANNON: Infringe, yes.
KIEFEL J: Well, their ability to access the internet.
MR BANNON: Yes, to access the internet.
KIEFEL J: That is rather a step removed from their ability to infringe which requires more.
MR BANNON: Well, except that once one appreciates the concept of what 86(c) involves and the right to communicate – if you are sitting there with your infringing copy on your computer, if you are not connected to the internet, one thing you can be absolutely confident about, you are not communicating it to the – you are not infringing 86(c). The only way you can infringe 86(c) is if an ISP grants you access. ISPs have potential and are authorised under other legislation to, obviously, undertake a profitable business, but it involves serious responsibilities and quite properly they regulate the use of their facility to ensure that it is not used for improper purposes, including copyright material.
So there is no way they could offer that service without regulating its use and the case simply boils down to, really, an act of infringement which can only be undertaken by the provision of their service, which they have the right, they profit out of, generally speaking, they profit out of the business, they have the right to control the way their service is used and then, in effect, being told, look, on your service someone is infringing our copyright, what are you going to do about that, they say, I am going to keep plugging that person back into the internet everyday for the rest of their life and there is nothing you can do about it. That is our case.
We say that does not accord with any view of authorisation and that is completely consistent with the legislation. It does not offend anybody and the stage we have reached in this case is they say we are going to do nothing. We have not got down to the stage of what might happen, for example, if the account provider comes back and says do not listen to those Hollywood studios, they do not know what they are talking about, they are lying, we never did it. You may get to the different circumstances there. That may be a circumstance where Justice Emmett’s issue about cogent evidence, et cetera, may arise. But we are just saying with this notice, you do something about it. We do not care how you frame the wording of it, do something.
CRENNAN J: What about if dad is paying for the account and he says, “Well, I have never done any of this any infringing conduct. It is the kids.”?
MR BANNON: If he gets a notice like that and say, “Well, listen, that behaviour is going to stop otherwise you do not get access to it.” That is the most likely result.
KIEFEL J: But iiNet’s view about its responsibility or lack of responsibility does not tell us much about how one construes authorisation.
MR BANNON: I accept that, and that is one of the points we make, that maybe their internal view cannot determine it.
KIEFEL J: No.
MR BANNON: Apart from the fact that they need to have as a company some sort of notice.
HAYNE J: But the right to control the way their service is used, which is the expression you used in the pithy summation of your case, is ultimately on/off.
MR BANNON: Correct. In circumstances where, quite properly, as part of the exercise of the privilege if they are awarded by licence to be an ISP which is a powerful media power, in effect, is to say we will properly, as a proper citizen, ensure that nobody gets access to our system other than on terms which regulate the way they use it because this regulation covers not just copyright – and I say copyright is important – but it also covers crime, for example, pornography, and there are all sorts of issues in relation to that which have to be controlled.
KIEFEL J: But in the way in which you are speaking it suggests that you come to the question of authorisation with a viewpoint that there is an obligation to being an ISP - that you come with that view. You do not determine authorisation as a flat construct. You actually come at it with a policy objective applying to it.
MR BANNON: We are not trying to do that. What we are saying is we come at it from a point of view that, as the legislation recognises, this copyright right has as an essential precondition an involvement of an ISP, to put it loosely. They are aware of it, firstly. Secondly, they control the ability to infringe if anybody uses their system. Thirdly, they have terms and conditions, quite properly, which ensure they regulate that control and we simply say can it be properly inferred, having looked at all the circumstances, where they get credible information – we will go into that issue a bit more, but let us take an actual knowledge where they are convinced it happens, that is the easy way to test this point. Can they say we are not going to do anything? We are not going to enforce our terms in any way at all, even by a warning, even a slight little hint. Can you say under law that as a matter of inference that that is not sanctioning, countenancing or authorising that conduct?
FRENCH CJ: But you bring into this characterisation exercise policy considerations informing reasonable steps by reference to a cost sharing or burden sharing objective, do you not, under the Digital Agenda Act?
MR BANNON: That is more a step of resisting Justice Emmett’s introduction.
FRENCH CJ: I thought you were feeding it into the kind of exercise of characterisation. If you are not doing that ‑ ‑ ‑
MR BANNON: Well, I think what we are feeding into by way of background is a recognition that – legislative recognition that the ISPs are going to be necessarily involved in authorisation activity, or complaints, or liability, and that they are providing them the protection to protect themselves. But the legislative recognition informs what is – and you do not need it, I suppose – the fact that they do have control.
So they have control and there is a question of reasonable steps, but it is part defensive, in a sense, to say to the extent that it is put against us, well, ISPs should never be liable for authorisation and mere knowledge can never make them liable. In a sense I am being defensive about it, but we say on a review of the wording of the legislation and on an understanding of the nature of the communication right and necessary involvement it is a relatively simple step to conclude in circumstances where they do nothing that they are authorising. But to the extent that I need that background material to resist suggestions that it is all terribly unfair and some cost sharing then I do go to the legislative material.
KIEFEL J: Your case really is sufficient knowledge and sufficiently reasonable measures available means that there is authorisation.
MR BANNON: Plus control, plus control.
KIEFEL J: Well, but you feed into or add to the notion or expand the notion of control by saying the control that the legislature recognises carries with it certain responsibilities. You approach authorisation in that way.
MR BANNON: To the extent I have overlaid that and I did say that, it is not a necessary part of my argument.
KIEFEL J: I am not suggesting that this is not a valid approach to the question of what authorisation means in this wider statutory context which has somewhat developed since Moorhouse. I am just saying that if that is how we are - you were suggesting we should construe authorisation, it should be approached directly, rather than from starting from Moorhouse and then acknowledging that there are other things now that are recognised by statute necessarily because technology has advanced, we need to be able to see Moorhouse in its current – viewed in, not only in current technology, but what the legislation acknowledges about it. So, if there are aspects of the legislation which are relevant to what authority means and whether there is a responsibility attached somehow to it, if that is a starting point then that is what we should be looking ‑ ‑ ‑
MR BANNON: No, I cannot say that there is some general moral responsibility of the ISPs identified in the copyright legislation but – in the sense of some specific section, other than to point to the fact, the sections I have already pointed to which recognise implicitly, not explicitly, that the ISP is exposed to authorisation liability provided that the relevant tests are considered, not exhaustively, namely in 101(1A).
KIEFEL J: But you were saying before in relation to the extrinsic material that it acknowledged balancing exercises, sharing of economic burdens ‑ ‑ ‑
MR BANNON: I do rely on that. That comes out of the legislation.
KIEFEL J: You are not relying upon it in relation to construing authorisation. You are relying upon it further down the track or in relation to one aspect of it, namely reasonable means.
MR BANNON: If it assists my argument I rely on it, but ‑ ‑ ‑
CRENNAN J: I think one dimension that Justice Kiefel’s questions throw up is this. Perhaps it is going too far to say the right to control leads only to the possibilities of on/off in the context of authorisation and so on. I mean, what would be wrong with the idea that a reasonable step having been put on proper notice of, say, repeat infringements at a particular address, what is wrong with an obligation on the ISPs to notify the users, whom they know because they can associate the address with the user because they would do so for billing purposes, coupled with putting them on notice about the, as you say, terms of the agreement, in any event, and next step being to pass on the information about identity of the infringer in relation to repeat acts of infringement to the copyright owners.
I mean, I think Justice Kiefel’s questions throw up that you have looked at the explanatory memorandum, talked about balance, maybe this on/off idea is just putting the balance too much – throwing too great an obligation on the ISPs in the context of it being really the copyright owners’ responsibilities to ‑ ‑ ‑
MR BANNON: Yes. I think that the on/off idea is ultimately informing one that they have power to control. I think as even the Full Court members, all of them, agree, the fact that you have power control does not mean that the only reasonable step is to flick on and off. You need the ability to control to get into the sphere. They have the ability to control in terms of the on/off switch. They have the relationship, albeit it may be indirect in relation to users using the account, which is the terms of the arrangement, but what their actual reasonable step to do either in the first instance, we accept, does not mean that it has to be on/off at all.
Indeed, our real point, in terms of whether there is authorisation – I accept that other issues may arise on injunctive relief – is to say they actually did nothing at all and, having done nothing at all, then we submit there must be, we say, a clear case of authorisation.
As to your Honour’s suggestion as to the way in which they communicate to the particular account holder really informs the question that a copyright owner cannot pretend to dictate to the owner of a business how they deal with their clients. But we do object to the fact that they choose to do nothing. We submit it is an impermissible approach for him to stand there and say, “You haven’t exactly told us precisely how we should deal with our clients” in circumstances where they have made no attempt to address the issue at all.
Your Honour’s suggestion addresses the question, firstly, as to the form of communication, how strong it is, and that is a matter for them. For example, if they were to say, “Well, I don’t think we should threaten to terminate – that’s a bit strong – but we are going to inform them” and, as I say, the language they use may be framed in different ways. If they were to say, which was I think the matter your Honour suggested, “Do you agree with this? If you don’t agree, if you have a debate, well, we’ll let you and the copyright owner fight it out and we’ll hand your details over”. That would be part of one of the exceptions to the Telco Act, for the reasons which we have found to date.
CRENNAN J: It would be legitimate for them to be worried about substantiality issues, threats issues, in relation to termination – the whole issue about there being an account in relation to a household and perhaps only a member of the household engaging in the conduct complained of. There could be all sorts of issues which would bear on whether it is reasonable or not to terminate an account.
MR BANNON: Quite. I accept that.
CRENNAN J: Including non-infringing uses being available.
MR BANNON: Quite. The real point is that we have not got to that stage yet because they will not even take a first step. As your Honour poses, it cannot be said to be unreasonable to take a form of step which at least provides notice and one can see what happens from there. They seek to defend the case, inappropriately we say, to say, “You’re saying you have to terminate straightaway”. We have never said that.
CRENNAN J: Your problem is you do not know the identity of the persons by reference to the addresses.
MR BANNON: To take your Honour’s suggestion, for example, if they were to say to them, “This is an allegation” and if they came back and said, “No, they’re lying”, and they say, “Well, we’ll let you two sort it out; we’re going to hand your details over to the copyright owner unless you do something about it and we’ll find out very quickly as to whether they really are lying”. In other words, that would be a very effective step, one might think. Could I then refer to Moorhouse fairly briefly.
GUMMOW J: Well, the leading judgment is Justice Jacobs, is it not, because Justice McTiernan agreed with him?
MR BANNON: Yes, albeit that the legislature seems to have picked up the words which come from Justice Gibbs’ judgment.
GUMMOW J: Well, as Justice Crennan reminds us, both judgments refer to 1924, is it?
MR BANNON: So this is obviously in 133 CLR 1. Dealing, because it comes first in pages, with Justice Gibbs’ judgment, at page 12 is the acceptance of the approach to the meaning of “sanction, approve, countenance”.
GUMMOW J: Whereabouts are you?
MR BANNON: Page 12, Justice Gibbs, “The word ‘authorize’”.
KIEFEL J: It is Justice Gibbs’ notion of power to prevent and control by means which is the hallmark and that which the legislature appears to have taken up.
MR BANNON: Yes.
KIEFEL J: It is more aligned to a notion of general duty of care and tort which leads one to wonder if the legislature has taken that up in section 101(1A), whether or not authorisation is really some sort of deemed effect if you have the power to prevent and you do not take reasonable steps. I mean, that is all very much the language of tort, is it not?
MR BANNON: It can be associated with the language of tort, I accept that, your Honour, but we certainly would not infer that – although they may be getting assistance from that type of debate, that they were seeking to depart from the concept of authorisation as expounded in Moorhouse and, indeed, as picked up in the Tape Manufacturers Case as well. So the point about sanction, approve, countenance and again the fact that the legislature did not address that, is, we would say, an implicit recognition that – and Justice Jacobs adopts the same approach in relation to sanction, approve, countenance.
GUMMOW J: If I may say so, Justice Jacobs’ discussion is rather deeper, is it not?
MR BANNON: I am sorry?
GUMMOW J: At page 20, the last paragraph.
It is established that the word is not limited to the authorizing of an agent by a principal . . . wider than authority.
Then there is a reference to Falcon:
It is a wide meaning which in cases of permission or invitation is apt to apply both where an express permission or invitation is extended . . . and where such a permission or invitation may be implied.
This gets back to what Justice Crennan was putting to you earlier this morning –
Where a general permission or invitation may be implied it is clearly unnecessary that the authorizing party have knowledge that a particular act comprised in the copyright will be done.
MR BANNON: Yes. The way his Honour Justice Jacobs did it – because this was a case where there was no prior notice of the conduct – the way his Honour Justice Jacobs addressed it was that the combination of the library and the photocopy machines and the inadequate notice constituted a general invitation to make use of the photocopying facilities as they thought fit, and that appears at the section there ‑ ‑ ‑
GUMMOW J: Before that he quotes from Lord Justice Bankes:
The circumstances will include the likelihood . . . [t]he Court may infer an authorization or permission from acts which fall short of being direct and positive; . . . indifference –
which is what you rely on here I think –
exhibited by acts of commission or omission, may reach a degree from which authorization or permission may be inferred.
Is that not about all one can say?
MR BANNON: Yes.
CRENNAN J: It is your case.
MR BANNON: Yes, and then it continues over the next page to 22.
GUMMOW J: Well, the problem in this case was that the declaration that Mr Justice Hutley granted was too general, was it not?
MR BANNON: Yes. The appeal succeeded, so did the cross‑appeal.
GUMMOW J: Yes, it did.
MR BANNON: But over the page at page 22 his Honour addressed the question of knowledge. At page 22 and the section commencing “In the circumstances” a bit over halfway down the page:
In the circumstances it was of little importance whether or not the University authorities knew in fact that users of the machines were doing acts comprised in the authors’ copyrights. This knowledge or lack of it would not change the terms of the invitation extended by the supply of books and machines. 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 the doing of acts comprised in copyright and if nevertheless it were known that the qualification to the invitation was being ignored and yet the University allowed that state of things to continue. Then it might be found as a fact that the University authorized the continued state of things, the continued use of its machines to do acts comprised in authors’ copyrights ‑ ‑ ‑
CRENNAN J: There is a much greater simplicity in relation to the potential acts of infringement than on the facts of this case, I would have thought. That is why I have asked you before, right at the outset, that I would like to better understand that evidence which has been described in your submissions as leading to a concession that knowledge of infringements is not something that is the subject of debate.
MR BANNON: I do propose to do that. Perhaps I have spent too long on some of these things. Can I perhaps just make reference to these propositions, namely, that the subjective state of mind of the university or the vice chancellor, for example, if he or she were standing next to the photocopy machine watching photocopying taking place but thinking deeply to him or herself, I wish that would not happen, I really do not want that to happen, that uncommunicated state of mind does not avoid an inference of authorisation. That is an objective question, and obviously we rely on what Justice Gibbs said as well.
To the extent that the argument proceeds on the basis that Justice Gibbs said critical to the issue was the provision of the books and the photocopying machines, we say, no, the proper understanding of his Honour’s reasons is the means of infringement to the extent that is a relevant argument. It was the photocopying machine. The provision of the books provided the basis on which one could infer that they had reason to suspect. The books stood as the reason to suspect and that really appears at the foot of page ‑ ‑ ‑
HAYNE J: What is the distinction you draw?
MR BANNON: Well, I think part of our learned friend’s argument is to say the key to Moorhouse was understanding that both books and the copyright material was provided as well as the machines.
HAYNE J: Yes.
MR BANNON: We say that to the extent they say that informs the way you approach authorisation, perhaps one answer to that is to say the actual provisions which deal with ISPs and the terms of 101(1A) make no suggestion that the ISP will only be liable if it determines the content, which would be like providing the books, on the contrary, firstly. Secondly, if one analyses Moorhouse in relation to the role that the books played so far as Justice Gibbs is concerned, it provided the basis for saying in the absence of a specific notice that they was going to happen, the basis for saying that because they provided the books they must have realised it was likely that some infringements, unspecified, would occur.
FRENCH CJ: Justice Jacobs characterised it at 23 as an invitation.
MR BANNON: Yes. In terms of an unqualified invitation to infringe anything, without any ‑ ‑ ‑
FRENCH CJ: It sends a message, in other words, to the user.
MR BANNON: Yes.
KIEFEL J: A form of encouragement.
MR BANNON: At 22 he addresses the question, which is really our case, namely, to say, well, what if they have got notice and do nothing?
FRENCH CJ: This is from the perspective of the relationship between the user and the provider. Even if you stay with sanction, countenance, approve, they all involve an element of communication to the user, the potential infringer, do they not, by implication or inference or characterisation?
MR BANNON: The user knows, as a term of the contract which says he is not supposed to use it for copyright infringing purposes. The user, one may infer, is likely to know that it is being used for copyright infringing purposes, or that somebody on that account is doing it or they have not sufficiently controlled that and they know that nothing is happening in relation to it. One can infer from those circumstances ‑ ‑ ‑
FRENCH CJ: So this comes back to the question I think I put at the beginning about at what point does authorisation occur?
MR BANNON: Yes.
FRENCH CJ: You would say in the case of a user of the service who has infringed without any consequence, so far as that user is concerned, the user might not even know, on your submission, that the ISP has received some notice of the infringement?
MR BANNON: Quite.
FRENCH CJ: But nevertheless the combination of those circumstances constitutes authorisation.
MR BANNON: Yes.
GUMMOW J: Then at the bottom of page 23 Justice Jacobs says at about line 10:
a declaration should be made that the [University] authorized the doing by Brennan of the act of reproducing the literary work “The Americans, Baby” in a material form and thereby infringed –
So the authorisation is only complete by the reproduction?
MR BANNON: Yes.
GUMMOW J: Then he says –
I do not think that any declaration in a more general form can be made. Proof of an authorizing of a breach of copyright in certain circumstances does not entitle a plaintiff to a declaration that in other circumstances an authorizing of breach had occurred or would occur in the future.
MR BANNON: Yes, I accept that.
GUMMOW J: In other words, a systemically based declaration will not readily be granted it seems to be said.
MR BANNON: We accept the force of that, your Honour. Your Honours, the other three cases which we have given reference in our running outline, WEA v Hanimex, can I not go to that but the pages there are obviously important. The paragraphs in Cooper v Universal Music are important and Adelaide v APRA which is perhaps a case our learned friends rely on.
GUMMOW J: It is about another section.
MR BANNON: Yes, Adelaide v APRA. I think the other issue in Adelaide v APRA, if one examines closely the decisions of the majority, there are two clauses in the relevant agreement. Perhaps I will just go to it very quickly. If one turns to page 483 ‑ ‑ ‑
GUMMOW J: The relevant word was “permit”, was it not, in section 2(3) of the 1911 Act - permitting a theatre or place of entertainment?
CRENNAN J: That is right.
MR BANNON: There is a different section. Clause 16 does not refer to copyright infringing material, which is referred to on page 483, just the general discretion to say do not go ahead. The one which might have been thought to refer to copyright material is clause 27, also on that page, about 15 lines from the bottom, refers to the programme as “objectionable”. When one looks at the reasons for Justice Higgins, firstly at 498 in the paragraph at the foot of that page, his Honour refers to clause 16, which is a clause which says nothing about do not use it for copyright infringing purposes.
Then if one goes over to page 500, his Honour refers to, at the last paragraph on that page, “Perhaps I ought to state that clause 27”. That is the one which might have been thought to relate – do not use it for copyrighting purposes. He expressly finds that has nothing to do with copyright. His Honour actually goes on to find that to exercise the other general power would actually be a breach of the agreement, and he says that at the foot of 502. Maybe he had in mind for the exercise of a power not for in good faith ahead of other authorities.
CRENNAN J: I was concerned with the proportionality of what is sought in the context of subsection (3).
MR BANNON: Yes, but also there was no control, no provision ‑ ‑ ‑
CRENNAN J: It was a deemed provision in relation to permitting, as Justice Gummow said, a theatre or a place of entertainment, to be used for performance in public. So it is a very narrow provision.
MR BANNON: Yes, and also that Justice Higgins found that there was no provision under the lease which controlled the use of the infringing copyright. Justices Gavan Duffy and Starke only dealt with the general provision as well. So against that background, can I move onto some factual matters.
HAYNE J: Before you do, can I interrupt you one stage further, just to return to the question of reasonable steps and 101(1A)(c). As I understand the argument as you have developed it thus far, the argument is that where there are repeat infringers – let me leave aside the content of that expression – where there is repeat infringement on an account, a warning by the ISP either of future termination or the disclosure of details – again let me walk past the content of the warning – is a reasonable step to prevent future breach of copyright by an infringer who at that point is not known with any certainty, (a) the infringement has not occurred, (b) all you have got is the account detail. You do not know who is actually downloading. Again, assume that all of those uncertainties were to be resolved in your favour, what 101(1A) tells us, that this is a matter that must be taken to account in determining whether or not there is authorisation. Would not the facts identified permit an inference at most that the ISP suffers, permits in the sense of suffers, future infringement rather than permits in the sense of induces, encourages, procures?
MR BANNON: It is more like suffers and induces, I accept that, and encouragement, yes, although continual suffering can amount to inducement. But I accept generally what your Honour is saying.
HAYNE J: Thus am I right to identify as a central element of your argument being an understanding of “authorisation” as suffering in circumstances of the kind I have described?
MR BANNON: Yes.
HAYNE J: Thank you.
MR BANNON: Exactly, where you hand over your facility on terms that they will not be used for that purpose and you know they are.
HAYNE J: But suffering suffices.
MR BANNON: Yes, with knowledge. Then could I identify – your Honours will have seen references to the customer relationship agreement.
GUMMOW J: What content do you give to the word “suffering”, which you have accepted?
MR BANNON: To use another word, “countenancing”.
GUMMOW J: I thought you might do that.
CRENNAN J: Hence your keenness to add knowledge – your keenness to add knowledge to your acceptance of what Justice Hayne put to you.
MR BANNON: And control where the terms can only – it is like me saying, or a simpler example, “If you hand over to somebody an axe to chop down a tree, whatever you do don’t chop down the house”.
CRENNAN J: It reminds me of what used to be called or maybe still is called double bind theory in human relationships, that is, conveying a command to do X but also conveying in some other way the opposite.
MR BANNON: It is like a homely example, they tell the child to behave when they are out and they stand there and they misbehave and you sit there and the parent or the guardian keeps drinking and ‑ ‑ ‑
CRENNAN J: Or give them a hammer and say do not smash up the concrete.
MR BANNON: Exactly. So then the terms of the customer relationship agreement your Honours will find in volume 9 of the orange book, commence at 4033, relevant provisions to which the various judgments make reference, just so your Honours see where they are, conclude at the foot of – I am sorry – orange 9, the commencement of the agreement is at 4033. Then, 4035, there is 4.1. Over the page, 4.2(a).
FRENCH CJ: How does the customer enter into that? Is there a thing which says “I accept”?
MR BANNON: There is evidence of an online process and they have got to, I think, click a button to say they have read the agreement.
HAYNE J: Read and I accept the 42 pages of closely printed type.
MR BANNON: And I think your Honours can take judicial notice that nobody hits that button without reading it and sometimes getting advice from a lawyer.
KIEFEL J: You are relying on our experience, are you?
MR BANNON: Other than lawyers themselves who never read it. They know they cannot negotiate their way out of it. But no I think that is the evident sense that they can put it in. But there is also some evidence of notices saying, “Your terms are” – on the website – “Your terms are you cannot use it for impermissible purposes”. Then 4.2(a), (e) and the last couple of words of 4.2; 4.3, the effect of which is to say you are responsible for anything that happens on it; 4.4:
we may be required by Law to intercept –
That is more related to other issues. Then over to page 4042 is the section on personal information. That will come up on the Telco argument, so I will not pause on that, but just for your Honours’ reference. Then 4044 cancellation, 14.2(i), over on page 4045 and the power is to cancel, suspend or restrict. Then (j):
we reasonably suspect fraud or other illegal conduct –
14.3, 14.4 it can be without notice. Then 4049 deals with, in 18.2 and 18.4, adverts to something about which there is evidence in findings, namely, this issuing of IP addresses, public IP addresses. Could I then go to the matter of the BitTorrent system, firstly, in Justice Cowdroy’s judgment at paragraph 58. Here his Honour describes sufficiently any other – the Full Court members effectively pick it up. Paragraph 58:
The BitTorrent client is a computer program or software which allows a person to access groups of computers –
Then 59 says this program, that is:
The BitTorrent client can have no operation by itself, as it needs to be provided with information . . . from a .torrent file.
Then paragraph 61 explains what a .torrent file is and, in particular, after the reference to the Kazaa Case, the sentence:
This .torrent file contains the information necessary for the BitTorrent client to contact and participate in a swarm. It is important to emphasise that the .torrent file does not contain the underlying date of a film or television program.
KIEFEL J: How is the .torrent file created?
MR BANNON: In a sense of who does it or ‑ ‑ ‑
KIEFEL J: Where does the information – it is a file extension. Does it contain the information itself?
MR BANNON: What it does is contain information as to how you can log onto a tracker.
KIEFEL J: And the tracker obtains the information.
MR BANNON: The tracker directs the person who has downloaded the computer program, which is the client, to the various peers who have copies of that file.
KIEFEL J: Bits of information accumulated by the tracker.
MR BANNON: Yes. So this torrent file is a tool. It is not actually the film yet. It is a tool and it contains the name of the file sought, which would be the name of the film, for example, the size of the file, the hash value, again the detail of hash is probably not that important. But 62 tells us that:
The BitTorrent protocol operates by breaking up large files, such as film files . . . into smaller parts –
and 64 identifies the size, but perhaps more relevantly, 65, the breaking it up into different parts, as I say, it is like a jigsaw puzzle and wherever you get it from, once they land on your computer they line up in the right order automatically. So once you have got it all you have got the whole film, but it does not really matter where you get it from or the order in which you get it.
Then paragraph 66 refers to “file hash”. Basically that is the hash number for the whole file. Then 68 tells one that the torrent files can be located from various sites, such as the inauspiciously named Pirate Bay site, and then 69 describes the tracker, which is the third bit of the protocol:
The tracker is a computer program on a server made available for contract by BitTorrent clients . . . This tracker monitors the particular swarm to which it is attached and monitors the IP addresses of peers in the swarm. The BitTorrent client, when provided with the location of the tracker by the .torrent file –
So the BitTorrent client, a putative infringer, downloads this computer program called the BitTorrent client, it then downloads a torrent file, the torrent file locates the tracker, the tracker identifies to the user where that computer can find the bits of the film from a whole lot of other people who have it, and then it starts providing that and it starts downloading it. Then an example of just how that works, looking at pictures, which is perhaps a bit easier ‑ ‑ ‑
GUMMOW J: This phrase “BitTorrent client”, what is the force of the word “client”?
MR BANNON: It is just a word used to describe what is nothing more than a computer program.
GUMMOW J: But these clients, what is the force of describing them as “clients”?
MR BANNON: It is jargon - as my learned Mr Cobden, who would know this, it is just jargon.
GUMMOW J: They are not paying for anything.
FRENCH CJ: It is just the personification of a program.
MR BANNON: Yes, there is no client. I would hazard only a guess. It may be a relationship with the tracker system, but fundamentally, it is simply no more or less than a computer program.
FRENCH CJ: Mr Smith in The Matrix. All right, we might adjourn to 2.15 now.
AT 12.47 PM LUNCHEON ADJOURNMENT
UPON RESUMING AT 2.15 PM:
FRENCH CJ: Yes, Mr Bannon.
MR BANNON: Thank you, your Honours. Could I invite your Honours to turn to volume 6 of the orange book to look at the demonstration of how the BitTorrent client system works. At page 2700 of that volume there is the commencement of the section of a part of Mr Carson’s report who was an expert witness who demonstrated the use of the system under the heading “Practical demonstration of BitTorrent”. In 3.2 he identifies he download a BitTorrent client. He describes it as a popular BitTorrent client which is “utorrent”, just a name given to it. Then over on 2702 is a screen shot where he has downloaded onto his computer what is described as “the client”, which is the computer program. In the description underneath he describes it as:
On first running the application the interface appeared uncluttered and simple to use. Until it was supplied torrent files it performed no obvious function. A search box was available in the top right hand corner –
One starts with that screen. There is a reference to “Peers”, “Pieces”, “Files” and then over the page he, at 2703, identifies how in the search box one is linked to a number of potential sites, one of which is “The Pirate Bay”. Then at 2704, having clicked onto that, he selects out a program called “Top Gear”, a television program related to motor vehicles.
Then if one turns over to page 2706, this is what one sees on the screen when any member of the public without any particular internet skills starts. Having selected Top Gear, things start happening and what happens is one can click on the tab “Peers”, which is what has happened here, and the tab “Peers” identifies firstly a series of coloured flags. Next to that, what is an IP address which, if one drops down, one will see an address “203-59-148-51.perm.iinet.net.au”. One can tell by the numbers allocated there the evidence is that the findings were, there is no dispute, there are a certain range of numbers allocated to particular ISPs and one knows if the number starts, I think with the first five numbers, it must be an iiNet issued number and, indeed, this also includes the iiNet address here as well.
If one goes over to the right, one sees that there is a percentage column, 100 per cent. The effect of that is to say – that is saying that the person who is operating a computer from that IP address has on that person’s computer 100 per cent of the television program of the particular episode Top Gear which is available to be either in whole or in part accessed under the BitTorrent system.
So just pausing there, that means on the evidence that the person who is working from the iiNet IP address 203-59-148 has their computer on and they are connected to the internet, they have not specifically turned off their own BitTorrent program. Within their own BitTorrent program they have loaded on a copy of this episode and they have the whole episode and for so long as they are attached to the internet, they are making the whole of that film 100 per cent available online to anybody who wants to uses it and that process continues for so long as they are on the internet or for so long as they deliberately delete that from their program.
FRENCH CJ: Is it right to say you can access uTorrent by simply googling illicit Torrent sites, clicking onto one of those, whoever your service provider is?
MR BANNON: Yes. So if one goes back a couple of pages to page 2703, what he has done has gone on to Google search, typed in BitTorrent client and a whole lot of different sites are thrown up, one of which is Get BitTorrent and you click on that and you can download what is a computer program as described as the client and he says what happens there and he said run or save, over the page, and so at 2702 we pick up the story. He has that program on his computer but as the findings indicate, nothing happens until he pulls down what is called a torrent file and, again, even when that happens, that does not pull down the film but as the evidence indicates, that causes the tracker to be activated an then the tracker searches around the place for peers which are other computer which have on their computers bits of or 100 per cent of the film.
Can I just add this detail which is referred to in the judgment. I will come back to where it is referred to. Every individual copy which is made by somebody who launches one of these things originally, so somewhere around the world someone will actually make an unauthorised copy of, in this case, Top Gear, every time they make a copy for the purposes of a torrent file, it gets a unique hash value and that is a hash value which describes that particular copy of that episode. That thing is divided into multiple separate hash pieces but they are part of the overall hash value, but every hash value is unique for each copy which is made.
The way the hash system works is if you can – you know that the individual hash pieces are linked to a particular copy because of the way the system organises itself and by looking at a hash piece you can work out whether or not it has come from that particular copy. I will take your Honours to the findings in relation to that.
FRENCH CJ: There is nothing particular about iiNet as a service provider that facilitates access to BitTorrent?
MR BANNON: No, and we accept they have got nothing to do with BitTorrent and they have got nothing to do with the decision by ‑ ‑ ‑
FRENCH CJ: It could be BigPond, it could be anybody.
MR BANNON: It could be anybody. They have got nothing to do with the decision by the customer or whoever is using the account to take the decision to download the BitTorrent client or to identify the particular film; we accept all of that. Another example of the same exercise, because it is bigger it is a bit easier to see, starts at page 2781. We actually did this live in court and captured the shots on screen shots as it progressed. So that 2781 again was downloaded in court, a copy of the client program, and then what happened was – if one jumps over to 2835, one should see in the top there “The Dark Knight” with an arrow pointing down next to it. That is indicating it has started to download but has not finished. You can see it is 0.0 per cent at that point. Status download, that is short for downloading.
“Seeds” is the 100 per cent sources of the film – the copy of the film. “Peers” is clear. At that point in time there are no seeds identified and no peers identified. Just pausing now, if one looks at the next one “Top Gear”, there is a tick there, it has been 100 per cent downloaded and it is finished. But the way the system works is that immediately becomes what is called uploaded and available to be copied by anybody else who joins in the system. Then one looks at the next page and one can see that it started to download and this time the user has clicked on the tab “Pieces” and one can see there that it is telling you there are 16 blocks to come.
If one then jumps over to page 2841, again that is a similar page to the one we looked at before but this time in relation to “The Dark Knight”, and the second entry there is an Australian flag with a number and that is another iiNet number and this tells you that, if one goes over to the far right hand column, that that account user had 100 per cent of that film, “The Dark Knight”, the Batman film, available to be online, to be taken in whole or in part by anybody who wanted it under the BitTorrent system and it tells you that at that point in time some 16 kilobytes had been downloaded from that particular user at that point in time. That detailed description of what was happening – perhaps I should just invite your Honours – I am sorry to go backwards again – to 2706.
KIEFEL J: This process is relevant to proof of infringement, is it not?
MR BANNON: Yes.
KIEFEL J: It is not really directly relevant to authority.
MR BANNON: No, that is right. It is proof ‑ ‑ ‑
KIEFEL J: Or knowledge, I should say, more particularly.
MR BANNON: It is related to knowledge. It is a step in showing what DtecNet did and what information they got, but it is also relevant because one of the matters I am going to take your Honours to is that iiNet as a company had knowledge of the BitTorrent system generally. There is some issue as to the extent of Mr Malone’s personal detailed knowledge, but the company is a company.
CRENNAN J: Then presumably you will take us to a sample notice that was given with the spreadsheet.
MR BANNON: Yes, I am going to do that.
KIEFEL J: But iiNet could not access this information without something like DtecNet.
MR BANNON: It could do exactly what we have just done there. DtecNet ‑ ‑ ‑
KIEFEL J: Just by becoming a peer.
MR BANNON: Yes. The agent was exactly a client, exactly the thing, but it had been ‑ ‑ ‑
KIEFEL J: It just has to mimic being a ‑ ‑ ‑
MR BANNON: ‑ ‑ ‑ modified to enable it to do a couple of things. One was to filter out anybody other than iiNet addresses, so it could just make sure it got iiNet addresses, and the other thing it could do was download particular bits and stop it, control it.
KIEFEL J: But this would not be particularly useful if iiNet were playing detective because you would just pick a subject and then you might be able to see how many people had downloaded in a particular swarm. You would not cover the field with very many – you would have to go into each subject individually to see what the current state of play was and then monitor it over a long period of time.
MR BANNON: Exactly; they could not do that. What they do know is that when we send them a notice which is based on BitTorrent and we provide them all the DVDs, if Mr Malone as a company was not familiar precisely with the way these things work, anybody with a half a technological facility and a familiarity with BitTorrent would be able to know that what we were doing was something which was basically what anybody could do and it had a likelihood of veracity about it.
KIEFEL J: But they could not check that for themselves because the moment in time in had passed.
MR BANNON: Correct. Just at the bottom of 2706 the description is:
The Peers tab identified the seeders and peers that the application was connected to and tabulated useful information about criteria such as the percentage of the file each peer has, the amount of the file that they have uploaded to or downloaded from you, individual data transfer speeds –
I think he described earlier the reference to “seeders” as an entity which had the whole 100 per cent of the file. Then his Honour the trial judge just described the process we have just looked at paragraphs 75 to 77. This is describing the example we have just seen. The torrent file was placed on Pirate Bay. His Honour says:
Upon opening the file, uTorrent will contact the tracker, seeking details about the swarm sharing that file, particularly the IP addresses of peers in that swarm. This initial contact is called “scraping”. Once uTorrent has the IP addresses it can contact those peers directly. It does so in a process called handshaking. Once this process is completed the peers can communicate directly.
76 The person in this scenario will not, initially, have any pieces of the TheDarkKnight.avi, but uTorrent will know because of the .torrent file all of the pieces it needs to obtain, and the piece hashes of those pieces. uTorrent will query the peers to which it is connected, in order to ascertain which pieces of the TheDarkKnight.avi those peers have. Some peers will have the whole of the TheDarkKnight.avi, and therefore all pieces will be available. These peers are known as “seeders”. Other peers may have less than the whole file because they are still in the process of downloading it, but they will still be able to share the pieces that they have.
Then, the description in 77 is also generally relevant but I will not go to it. Can I just go back in relation to the hash point. I was describing it generally but that is described in detail in paragraphs 65 through to 67. Just looking at the end of paragraph 65, the last sentence of 65 his Honour said:
When the BitTorrent client receives a piece of the file from another peer in the swarm, it checks that the piece hash of the piece is identical to the piece hash for that piece in the .torrent file. If it is, the BitTorrent client knows that the piece is the correct piece and was correctly received. If it is not, it is discarded –
His Honour describes:
The “file hash” is different from the piece hash.
Effectively, he goes on to say that each file copied has its own hash.
KIEFEL J: I thought you said also that when it was downloaded it was given a hash to identify. No? Did I misunderstand what you were saying?
MR BANNON: No. It is ‑ ‑ ‑
KIEFEL J: The hash identifies the data?
MR BANNON: The hash identifies the data, yes. Once it is – it has got the same hash. When downloaded it has the same file hash and within that the piece hash as the copy is downloaded.
KIEFEL J: Right.
MR BANNON: So the file hash identifies it as an individual copy, although that will be repeated on everyone’s computers as downloaded and the piece hash will be the uniquely identified reference to that file hash so that you know – the Torrent system knows that the pieces they need – or get all the pieces of that copy represented by the file hash must have those numbers. Then in 67 his Honour says:
The file hash is used by the applicants –
that is referring to us, of course –
to show that a particular swarm is sharing one of their films, because they can watch a copy of the film with that file hash –
so we can download the whole of the particular copy –
identify it as their own, and then know that any copy with that file hash would be the same, because if the underlying file were different it would have a different file hash.
And, equally, we can identify a piece. If a piece of that file hash is the same as one of the pieces from the film, then they know it is from the film. Then his Honour describes at paragraph 113 what DtecNet did and then the DtecNet he describes there – his Honour describes:
The DtecNet Agent, being the software used to provide the information underlying the allegations of copyright infringement in the AFACT notices, is, in essence, a BitTorrent client.
In other words, basically the same with modifications –
However, it has been programmed to fulfil specific functions beyond that of a publicly available –
version. The way the information was obtained is firstly:
a)An employee of DtecNet would identify .torrent files of interest based on content files which were supplied by the [film studios]. The DtecNet agent would then open the .torrent file.
b)By opening the .torrent file the DtecNet agent, like any BitTorrent client, was able to query the tracker; connect to peers in the swarm; and download pieces from those peers. Given that DtecNet was gathering evidence of iiNet users infringing, the DtecNet agent employed an IP filter . . . to ensure that it only connected to iiNet users. Initially, the DtecNet agent downloaded one complete copy of the film sought to be investigated. This copy was then viewed to ensure that the film corresponded with one that was owned by the applicants. Given the information already discussed regarding hashes, this process established beyond doubt that a particular file hash corresponded with a film –
In other words, for the purposes of proving in court proceedings you would have to undertake that but, on the other hand, the prospect that populating these pirate sites was a film called “Dark Knight” which was not the original film, is low in the ordinary course of human experience because if it was somebody’s homemade copy of “Dark Knight”, then no one would be bothering to make an authorised copy. It would be off the scene and nobody would be remotely interested in it. It is a matter of ordinary human probabilities, but this was an extra safeguard for the purposes of proving a case finally.
CRENNAN J: It is a bit like a trap order.
MR BANNON: Yes. Just to make sure it is the right product so that you ask for Coke and you get Coke rather than something else. Then:
c)The DtecNet agent then reconnected to iiNet users who had a copy of the file or parts of the file of interest and downloaded a piece of that file from those users. It then matched the piece downloaded with the piece hash through the hash checking process discussed in Part B. The DtecNet agent then recorded information referrable to the peer from which it had downloaded that piece of the file. The DtecNet agent was calibrated to download only one piece from each IP address and then disconnect from that IP address.
So just pausing there, they could have, in a matter of theory, downloaded 100 per cent of the file from each one of the iiNet customer accounts where it would have taken forever. Because of the hash system, they only needed to downloaded a piece, check that it was the same as the original hash file and then they would know it was a copy. So that was why they did that and then they created a running log. Then it was recorded, et cetera.
That formed the basis of the notices provided, and if I could take your Honours to the first such notice. This is the schedule of infringement notice dated 2 July 2008, and that appears in volume 9 of the evidence at page 4364, and this is the letter accompanying it. Before I go to the schedule it is probably convenient just to identify parts of the letter itself. It is addressed to Mr Malone. It is on AFACT letterhead. It identifies the role of the author of the letter. The next paragraph identifies the studios represented. The third paragraph identifies the investigation being undertaken and identifies the use of the BitTorrent protocol. The last sentence:
These infringements involve the communication to the public of unauthorised copies of the motion pictures and television shows shared with other internet users via BitTorrent.
Then at the top of the next page:
Attached is a spreadsheet containing the information relevant to infringing activities of the identified iiNet Customers occurring between –
those dates:
a) The date and time infringements of copyright took place;
b)The IP addressed used by the Identified iiNet Customers at the time of the infringements;
c)The motion pictures and television shows in which the copyright has been infringed; and
d)The studio controlling the rights in the relevant motion pictures and television shows.
A CD containing an electronic copy of the spreadsheet is enclosed with the hard copy of this letter.
There is identification of the numbers of films. Then a couple of paragraphs down:
AFACT is unaware of any action being taken ‑ ‑ ‑
CRENNAN J: At about point 2 you have a reference to repeat infringers.
MR BANNON: Yes. The next reference is communication to the public of motion pictures and television shows. Then about line 30, point 30 on the page:
The failure to take any action to prevent infringements from occurring, in circumstances where iiNet knows that infringements of copyright are being committed by its customers, or would have reason to suspect that infringements are occurring from the volume and type of the activity involved, may constitute authorisation –
Then it refers to “action”. Then over the page is a distillation of what one perceives to be relevant provisions of the customer relationship agreement and also item numbered 2 at the bottom of that page – and obviously the cross‑reference for that agreement is the reference I took you to this morning, namely volume 9, 4035 – and then at the bottom of the page there is a reference to that iiNet website which apropos the issue as to the extent to which people read these agreements that provided an additional reminder. Then one comes to the spreadsheets. This is in the printed form.
GUMMOW J: Just going back to 4365, nothing was indicated as to what might be involved in prevention from continuing?
MR BANNON: No, that is so. The allegation of continuance, of course, is in circumstances where once one understands the system, namely, that unless somebody takes a specific step to remove from their computer a copy of a film they have downloaded by BitTorrent for so long as they are on the internet it continues to be made available on a continuing basis. So each one of these customers of theirs which are identified, short of there being some reason why, even if any one of those customers let alone – when I say customers, a user on that account – let alone the majority of them, would have occasion for removing from the BitTorrent system, their computer at least, a copy of the file, and no one in the evidence suggested there would be a reason, then there is an entirely reasonable inference that that film will continue to be made available online for so long as that person stays online, and if they went offline and came back on again, and it is likely they would go online and come back again if they are a continuing customer, then that film would continue to be made available.
That is 100 per cent available, so you have no issues about substantial part, you have no issue really about likely continuing conduct, so, yes, it is related to a past act, but whether it be a presumption of continuance or just a recognition that it is likely to be continuing, those issues in relation to what might otherwise arise in this case just do not arise.
GUMMOW J: Now, there was provision of IP addresses, but that is not the same as an identification of a particular iiNet customer, is it?
MR BANNON: That is right. So each of those IP addresses, starting off looking at 4367, each one identifies an IP address which must have been allocated by iiNet to one of its customers because of the numbers.
GUMMOW J: Address in fact is one of these many misnomers in this area. It is not an address of anyone, is it?
MR BANNON: It is a protocol I think ‑ ‑ ‑
GUMMOW J: It just leads to misunderstandings.
FRENCH CJ: Is an address capable of designating an entry point to an intranet?
MR BANNON: Yes.
FRENCH CJ: I think there was something about that in one of the findings.
MR BANNON: There is in the reasons.
FRENCH CJ: So it may not necessarily designate a particular person, but it might be a group of users.
MR BANNON: It will identify a user account.
FRENCH CJ: A user account, yes, but in terms of actual people.
MR BANNON: Quite. There is no doubt that the – and it identifies – I will pick up the references in the judgment, there is no dispute about this, but it is called a public address which is allocated to the particular router, or modem perhaps I think it is, and so if there is an intranet system behind it or more than one computer behind it, then they will have their own internal IP address, but that is not a public one, but it would be the one allocated to the customer account, albeit the customer account may be subdivided to other computers. That is where the relevance of the relationship issue arises, namely, because the account holder is required to not only not infringe him, itself or herself, but ensure nobody else uses the account for the same reason.
So looking at the first line, as I say, that is an IP address which is definitely an iiNet allocated address. The next entry, “Date and Time UTC” is a reference to universal time clock. So that on 23 June 2008 at 0814, I think that is, the file name “Family Guy” was downloaded, and that is the hash reference to the file. The regular title is described as “Family Guy Season 4”. Then the “Studio”, the amount of the file shared, that is, from those tabs, 100 per cent available and “MB Downloaded” referring to the amount of the file actually downloaded in the investigation and that is the percentage of the file downloaded as well. Then the “Peer Hostname” which is just a repeat of the IP address but one adds the iiNet. It is a bit cut off there. The last thing is Australia. So each one of those things goes on and on for each one of their customers. In the middle column, going back to the filed shared, one can see not all but the vast bulk of them are 100 per cent. So that is the spreadsheet information.
CRENNAN J: Is there some analogy between this information and the information that iiNet would need for the purposes of terminating a service by reason of non‑payment for the account?
MR BANNON: I do not think the evidence indicates that to terminate an account they need to do a matching of IP addresses.
CRENNAN J: Does the evidence indicate how they go about it?
MR BANNON: Yes, they issue warnings.
CRENNAN J: To?
MR BANNON: To the account holder. Yes, they make no attempt to identify a particular user within the account. What they do is they have multiple warning systems in relation to payment of bills. The evidence also indicates they have multiple communications with accounts where the extent of usage is getting near to their account usage limit. The effect of which if they go over their limit, their speed gets slowed. So what they do is – perhaps “bombard” is a strong word, but they send a lot of emails saying you are getting close you are getting closer, you are going to slow down, here are your options, and now might be the time you want to upgrade and pay more and get into the next category. They have significant communications where they want to with accounts.
KIEFEL J: I assume the evidence did not show that any regular monitoring it does of, for instance, the speed at which any customer, any IP address is using the site indicates anything abnormal?
MR BANNON: No.
KIEFEL J: I am thinking of the analogy with electricity and how that sometimes is an aid to investigation in criminal matters?
MR BANNON: No.
KIEFEL J: Nothing like that.
MR BANNON: There is also evidence where – that the federal police identify to give notice to iiNet in the case of suspected use of the system for pornographic material, for example, or some other offensive behaviour where they are provided just with the public IP address and iiNet has to do the matching exercise to identify the customer and provide information in that way.
GUMMOW J: That is under some requirement of the criminal law, is it?
MR BANNON: Certainly to co‑operate with the police, no doubt, whether it is a requirement or good sense. The exercise is having to match, as an example, where they do that.
CRENNAN J: Are you saying that the technology permits a matching exercise?
MR BANNON: Yes. There is no issue that they maintain, as all ISPs maintain, records of who had which IP address at a particular point in time, so they can identify, we say readily – and they certainly did not lead any evidence to suggest there was anything complicated – which account had that IP address at any particular point in time.
KIEFEL J: Because the addresses change, at least in relation to the non‑commercial operations.
MR BANNON: That is so, but they maintain a record of that in the systems.
FRENCH CJ: Given the general availability of that BitTorrent via Google, to what extent is there evidence of enforcement practices by other providers, or was this really defined to some extent by the fact that you were generating notices and setting up an authorisation situation? I am not using it in a pejorative sense. But there are so many providers out there. There was a mention of Westnet, I think, in one other that you mentioned. Is there any other comparative evidence which might feed in, for example, to questions of reasonableness?
MR BANNON: There is evidence, and I will take your Honours to it, of other internet providers. Westnet had a policy of passing on notices of infringement.
FRENCH CJ: They are mentioned specifically because they have been acquired by iiNet.
MR BANNON: That is right, but there is also evidence of other published policies by other providers which are in evidence – and I am going to take your Honours to them – which involve them saying that they will pass the things on.
HAYNE J: But in a single sentence this information shows there was after the event information that could be used as a basis for warning.
MR BANNON: Yes.
HAYNE J: That is the point ‑ ‑ ‑
MR BANNON: That is right.
HAYNE J: ‑ ‑ ‑ and the only point you seek to make out of this material, is it not?
MR BANNON: Yes.
HAYNE J: And it is after the event information.
MR BANNON: It is after the event but understanding that in a context where it is likely going to be continuing.
HAYNE J: I understand that is the point you would next seek to make from it, but it is the quality of the information or the kind of information, rather, which is my concern at the moment.
MR BANNON: Quite, but it is in the nature of things. It is like saying there is a shop down the road infringing adidas shoes, that they are not genuine adidas shoes, and when you notify the shop proprietor then yes ‑ ‑ ‑
HAYNE J: Analogies get us into all sorts of difficulties and that is a very slippery one.
MR BANNON: The next matter in relation to that is the information on the discs as well. If I can invite your Honours to go to volume 6. The letters indicate they had not only the spreadsheet but also a disc, initially a CD and later a DVD. In volume 6, at page 2724 is another part of Mr Carson’s report which he puts in the yellow bracket words which appeared in one of the notices and they took the same form, referring in this case to the CD.
Then he described under 2.1.2 that the spreadsheets were on CDs and DVDs and had various columns of information. He extracts an example of that which has the information which we have seen put vertically in relation to a film “Hancock” shown as being 100 per cent available. Then he identifies, if one goes over to page 2729, that by opening up the files one sees, firstly, that the name DtecNet Software appears – that is a relevant issue I will come to in a moment – investigation details; the IP address which is the same one as in the schedule; the initiated and completed time, universal time; the protocol, BitTorrent; target ISP iiNet Limited. Then if one goes over to page 2731 ‑ ‑ ‑
KIEFEL J: What is a fingerprint?
GUMMOW J: It is another metaphor, I am afraid.
MR BANNON: At 2730 Mr Carson was not entirely sure but he says:
This appears to be some form of hash, possibly used to check the integrity of the capture.
Then over at page 2731, the detailed information ‑ ‑ ‑
HAYNE J: What am I meant to be getting out of this, Mr Bannon? Somebody owns an excel spreadsheet and can use zip files, but what else?
MR BANNON: That one of the issues which two of the majority judgments raised as to whether or not there was sufficient information provided to indicate the process by which the information was obtained, and what they either did or if they did, they did not let on – sorry, this shows that if they had gone into the DVDs, they could find not only which the company was but the process which was undertaken. So that the issue – and Justice Jagot refers to this in paragraph 405 of her judgment, I will take your Honours to that – but if they were truly concerned – see, one of the matters really on appeal, quite frankly, it came out is to say, well, what we did not have was information about collection methods. Once we got your evidence, we understood collection methods and only now we can say, yes, we have got knowledge.
But the true position is they had no interest in – they never asked a question about collection methods, they were not interested in it. If they did, they did not tell anybody but they gave no evidence that somebody with technical knowledge had gone and looked at any of this material and the point is, as Justice Jagot says – and I will take your Honours to Mr Malone’s evidence, he accepted, if one goes to it, one can see what the process was. In other words, that they engaged in the process of sending a handshake and downloading a piece, and that sort of information appears on 2731 and 2732. So that is the only point of going to that. If I may just go to Justice Jagot’s paragraph 405, her Honour says:
Further, the AFACT notices, on their face, provided credible evidence ‑ ‑ ‑
GUMMOW J: What paragraph, Mr Bannon?
MR BANNON: Paragraph 405 of Justice Jagot’s judgment, on page 619 in the volume of the appeal book:
Further, the AFACT notices, on their face, provided credible evidence of widespread infringements of copyright by users of iiNet’s services. The fact that iiNet did not appreciate the strength and substance of the information provided in the AFACT notices until after the commencement of the proceeding was primarily a product of iiNet’s adopted position from the outset that it was not obliged to “do squat” in response.
Her Honour is there quoting from an email which they sent –
The two factors that Mr Malone said ultimately provided the compelling nature of the evidence of infringements (that the DtecNet agent actually downloaded parts of files and did so repeatedly) were apparent from the schedules and other information in the AFACT notices –
and that is really picking up the CDs –
had iiNet personnel bothered to analyse them. iiNet did not do so because its position was that it had no obligation to do anything . . . It cannot be doubted on the evidence that iiNet’s position was that it need not do anything in response to the AFACT notices irrespective of the cogency of the information AFACT supplied about widespread infringements of copyright by users of iiNet’s service.
The evidence in relation to that - as Mr Malone was taken to that – if I can take your Honours to that. Firstly, at volume 1 at 354 at bold 20 on the page ‑ ‑ ‑
FRENCH CJ: This was dealing with his communications with Westnet?
MR BANNON: That is right, and his answer about doing damage to the industry, and at about – perhaps I will use the lines from the original transcript – at line 35 he is asked a question about the answer about doing damage and he gives an answer – it “was not consistent”. Over at the top of the next page he explains at about line 10 of the original transcript:
Because these notices were unsubstantiated. And, you know, certainly, if I am permitted to refer to it, there is much – the way that the US notices –
That is referring to notices which come directly from the US, not this sort of notice:
it was using an organisation called Media Sentry. And Media Sentry has been rife with errors ‑ ‑ ‑
KIEFEL J: Is that an implied criticism of Dtec?
MR BANNON: It is a criticism which has nothing to do with Dtec because, as I took him up about that, because Media Sentry is not Dtec and he ‑ ‑ ‑
KIEFEL J: Is it a different method?
MR BENNETT: Yes, it is a different company.
FRENCH CJ: These are the robotic notices, so‑called?
MR BANNON: Yes, some of them, at least, anyway. That is a belief. Then he cites in the next couple of paragraphs some studies. A bit later, perhaps a lot later, I asked him about that at volume 2 at page 578. At 578 he is being asked about a particular article which became an exhibit which was an article which was circulated in email correspondence between the internet providers including iiNet. At about line 10 he is asked:
May we take it you understand now, reading . . . this article –
And he said he had read it –
that what it was suggesting was that there are two methods of detection for BitTorrent users advertising unauthorised files available for download. One was indirect, which relied on the published IP list . . . the second was direct detection actually connecting to a peer reported and exchanging data with the peer.
In other words the difference between is you just look at the shown up list which shows up 100 per cent files and the second one is you actually download a bit of the file to avoid any question of false positive and basically he agrees. Then over at page 580 ‑ ‑ ‑
FRENCH CJ: You are taking us to his, as it were, his obduracy but if we are looking at objective criteria for authorisation you have inaction, on your view of it, coupled with consideration, inter alia, of what were reasonable steps that could have been taken - another objective question. What does his state of mind matter?
MR BANNON: It just demonstrates to the extent he raised an issue about a lack of information. These answers I am just going to take your Honours to – he agreed that if he had looked at the CD, or asked anyone to do it, the matters which he said were a problem would have been resolved and that appears from ‑ ‑ ‑
HAYNE J: Was that found as a fact below?
MR BANNON: No, because it was not addressed.
HAYNE J: But is it in dispute here?
MR BANNON: Well, Justice Jagot said in paragraph 405, as I have read, his Honour below did not address it. We say you do not have to go to this detail, but to the extent it is said you do, that there is some deficiency, the information was all there.
KIEFEL J: Could I ask you about a finding, a reference, in Justice Jagot’s judgment at paragraph 406? The last two sentences – that is at page 620:
Mr Malone agreed that he knew both that about half of all of the traffic on iiNet’s service . . . is via BitTorrent and a substantial proportion of BitTorrent traffic involves the infringement of copyright.
MR BANNON: Yes.
KIEFEL J: Is there a dispute about that on this appeal? I had thought ‑ ‑ ‑
MR BANNON: I am not sure.
KIEFEL J: I might not be correct about this. I had thought issue was taken with it and if that is correct, I would appreciate a reference to Mr Malone’s evidence.
MR BANNON: Yes. Still on that volume 2 ‑ ‑ ‑
KIEFEL J: Perhaps you could come back to that when it is convenient. I do not mean to hold you up.
MR BANNON: There is an evidentiary reference to that. I have just misplaced it. Can I come back to that, your Honour?
KIEFEL J: Yes.
MR BANNON: But can I go back to that passage at page 580, volume 2? What he agrees at 580 between about line 20 and line 40, he says:
What I want to suggest to you, that if you had read this, you would have appreciated and understood that the difficulties which had been asserted in relation to previous methods of detection were related to indirect detection methods which did not involve a download of the data and comparison of hash values. Do you accept that?‑‑‑Yes.
And if you had gone into and looked at the DtecNet material which was provided with the notices you would have – you would now accept, would you agree – firstly appreciated that it wasn’t Media Sentry but DtecNet?‑‑‑Yes.
And secondly that they had, in fact, made a connection with a peer and downloaded part of the file?‑‑‑I now appreciate that, but I must say that was post being given access to DtecNet’s confidential material.
But the next question is:
But there was nothing to stop you looking at the CDs and DVDs to come to the same conclusion: correct?‑‑‑Correct.
And that’s something you just simply didn’t do?
He agreed with that. And then at 584, and this is related to the reason to suspect and deliberate determination not to get information. At about line 30 he is asked questions about what it was about the DtecNet material for the right information. He gave an answer including a reference to engineers. Then there is a discussion over the page, a part which Justice Jagot sets out, but particularly over at page 586, about line 5 he is asked about a Mr Bader, and he is the technical officer.
But you didn’t ask him at any time prior to the commencement of the proceedings to look at the underlying data which was provided with the notices of infringement, did you?‑‑‑I didn’t, no.
And at 588, between lines 10 and 35, in that passage he agrees that the matters which the two judges in the majority say was a key issue, information about the collection process, he did not ask questions about that. He attempts in the next couple of answers to say we asked him the questions in the letters. He agreed that ultimately he did not, and I will take your Honours to demonstrate that he did not. At line 30 the position was it did not matter what information was going to be provided, they were not going to do anything:
No matter what answer AFACT had given to any question, that position . . . ?‑‑‑Yes, that’s correct.
Now, I appreciate it is an objective issue, but information is provided and our point is that gave them at the bare minimum reason to suspect. They did not come back and say, “Listen, there is some issue about collection, I want to know.” They said, “Actually, we understand how you make the allegation, we are not going to do anything.” When it comes to – maybe they took this point at the trial, but certainly on appeal – they come to say, “Well, the big problem here is we did not have information about X”, and that is why it was not reasonable to even give a warning. But the truth of the matter is they did not ask at the time or suggest at the time there was a problem with the information (a); (b) if they had bothered to ask anyone to look at the information, they would have got the answers anyway in the material they provided; (c) their grim determination was they are not interested in finding out any information and if they did, they would not have done anything, they would not have acted upon it.
Now, that gives content to the importance of reason to suspect. One can be in a position having reason to suspect where one raises a question with the provider of the information and says, “Look, I agree that gives reasonable grounds to suspect there were likely infringements but I have got some doubts, can you satisfy them?” But if your position is you have got reason to suspect, you actually do not entertain any specific doubts or you do not communicate them and you certainly do not ask any questions and you give the impression everything is okay but say this has got to be decided by a court or some third party, then you are taken to go ahead and continue to provide the service to the customers with reason to suspect they are infringing, we say that means whether it be suffering, countenancing, then to continue what has been alleged to be happening and you make no attempt to work out whether there is any problem with that allegation at all, you cannot, we submit, under authorisation, you cannot in those circumstances say you need categorical knowledge before you can act, because that truly does subvert what we say is the correct approach to authorisation.
Those evidentiary references your Honour Justice Kiefel raised are volume 1, 395, at the foot of the page, line 45. Sorry, that is the beginning of that sequence, but it is 399 at about line 30 he accepts that that applied, that half, applied to his service. At page 491, line 35 of the original transcript, lines 35 to 40 he gives that answer, and that is clarified over the page, 492, the top of the next page:
so far as you were concerned it’s common knowledge that peer‑to‑peer software, including BitTorrent is used for infringing activites?‑‑‑Not solely for infringing activities, but, yes, it was common knowledge and is today that BitTorrent is used for infringing activities.
So that is the evidentiary reference.
HAYNE J: Am I to understand the reference at 396, line 5 or 10, bold 10, 5, that the half is applying to iiNet what is described as an international estimate?
MR BANNON: Yes.
HAYNE J: So am I to understand that as meaning that about half the traffic on the net is devoted to BitTorrent traffic?
MR BANNON: Yes, and a genius of the BitTorrent system is to make the rapid dissemination peer to peer of high – probably gigabyte, if I can remember the word – files, either big heading files which you take forever to download from one site, and they are the sort of files which are associated with films.
Can I just give your Honour reference to that Media Sentry issue, firstly, paragraph 177 of his Honour’s judgment. This relates to an issue, which I will come back to briefly, about compelling evidence, but his Honour in the last full paragraph, part of that overall paragraph commencing at about point 40 on the appeal book page:
The reference to ‘in the past’ would appear to be a reference to investigations conducted in previous years by Media Sentry –
His Honour also referred to this at 468 in passing. That is referring to a 29 July 2008 response. At point 20 of the appeal book his Honour refers to the context:
whereby ISPs such as the respondent had received, and continue to receive, thousands of notices of infringements from overseas (in the form of the “robot” notices . . . which the Court cannot find to be reliable) –
It was an unusual way of expressing it. They did not actually find they were actually unreliable; they had not been tested –
and previous mechanisms to inform ISPs of infringements occurring, such as those using Media Sentry, had been shown to be unreliable –
That seems to be just based on Mr Malone’s evidence that there were studies in any event:
there was an obligation on AFACT to make clear that their data was different if they expected a positive response.
We refute that in circumstances where they had had actually come back to us and said, “Everything is okay”. But that was the context in which his Honour referred to it. His Honour then addressed that paper, which is the paper I was asking Mr Malone about, but again none of that answers the question. They were given the data in the CD and their position was ferociously they were not going to look at anything, or certainly, if they did, they did not tell anybody. They had technical people who could have looked at it, but they did not. Of course, that paragraph is immediately after paragraph 467 where his Honour records their response, which is really their last statement, the 12 August response:
‘IiNet understands how AFACT has come to its allegation –
If there was an occasion to express a concern about collection methods, and is this the same as Media Sentry, they did the contrary. They say, “That’s fine”. The reason they did is they were not interested in any information. Then in relation to the making available online issue and its continuance, I think it is adequately dealt with in Justice Emmett’s judgment. This is not a matter in issue. At paragraph 106 of his Honour Justice Emmett’s judgment his Honour identifies an exercise which was done as a result of a discovery process. At 106 his Honour refers to the fact:
In the course of discovery in the proceeding, data compiled by DtecNet was provided to iiNet to enable the identification of the accounts of 20 iiNet customers.
This was the subject of an interlocutory debate and dispute that we were allowed to get 20 customers but not their names. We asked for the names but we did not get it.
While the identity of the customers was not disclosed, it was possible to create a schedule of infringements that occurred in respect of the 20 accounts.
One of those 20 ac counts (customer RC‑08) . . . attached to twelve of the Infringement Notices.
Then it refers to the fact that, in effect, two of those films – Pineapple Express and Twenty One –were there online over a significant period of time. That is just demonstrative of the fact that once you have this on your system every time you – unless you do something to take it off it will stay there.
FRENCH CJ: The upload is automatic. There is nothing for the customer to do?
MR BANNON: That is right. I think there is a function you can specifically, from memory – I will double check it – I think there was a function you could actually, specifically, indicate to say you do not want to upload but it had some, from memory, negative consequences for you. You cannot download as quickly. You get punished in the download. So it is a high incentive to play the game.
Then the next matter I was just going to address is iiNet’s general knowledge of the BitTorrent system. Justice Cowdroy’s reasons at paragraph 241 refers to that matter which your Honour Justice Kiefel raised about the extent of BitTorrent traffic and whether a significant portion was infringing. Then at 467, his Honour refers to Mr Malone’s general awareness of the BitTorrent protocol. Your Honour did not identify the evidence in relation to that, but there are some references to the nature of that evidence which I wish to take your Honours to because it bears on the reasonableness of their response in not looking at the material and the suggestion that there was some reasonable basis for thinking the information we provided was not reliable. If one invites your Honours’ reference to Mr Malone’s evidence at volume 1, page 373, the answers at line 10, he had a general awareness and had it for years, lines 30 to 35, familiarity with general trackers and tabs.
CRENNAN J: Sorry, what page are you on?
MR BANNON: Sorry, page 373 of the book and then looking at the original transcript lines, the two questions and answers at line 10 and at line 30 to 35 and then line 45 particularly. The top of the next page, the first two questions and answers, page 375, the two questions and answers at about original line 10, starting “In what context?” and then “Just explain”. Then at the bottom of that page, about line 45, that question and answer. Then at the bottom of 377, the two questions and answers at the bottom of that page. At the top of the next page, at 378, questions and answers down to line 15, in particular, the general understanding that the system discloses, whether or not ‑ ‑ ‑
GUMMOW J: Now, in the course of this very lengthy cross‑examination, was it ever put to this witness what he could or should have done to prevent? Your client had written in a letter in fairly tough terms demanding that. Now, was he ever cross‑examined as to what he might have done to comply with it?
MR BANNON: My recollection is yes, but I will double check the precise.....and give your Honours the references to it. Bear in mind, his approach was he was not going to do anything until a court ordered him to do anything. That was his position.
GUMMOW J: Yes. All this seems designed to create an emotional atmosphere in a primary judge’s court which in my day as a primary judge was counterproductive.
MR BANNON: Well, the last two references on this topic are 399 at line 30.
GUMMOW J: Are we to understand that as global?
MR BANNON: Yes, but additionally in the light of the answers, yes, that is right. That is an answer over his service. Then over the page, 400, lines 10 to 30, which is again having regard to the fact that BitTorrent was such a significant aspect of their traffic that they had people within the organisation who were completely familiar with it who could have been asked if there were any issues and he said he never asked them about the material; that is the point of that. So when his Honour says he had a general familiarity with it, he had the familiarity which is identified there, plus, as one would expect, the organisation undoubtedly had a deep familiarity with it as well. This is not directed to perhaps the matter your Honour Justice Gummow raised but rather the issue to the extent to which there is some insufficiency in the notice and some suggestion that we should have done more than what we did in terms of giving notice.
GUMMOW J: Is there any questioning directed to the telecommunications legislation and its impact on what might or could be done?
MR BANNON: Their position was it was not something that they had thought of at the time. In other words, they did not in correspondence suggest that was a problem.
GUMMOW J: No, but we are trying to work out what is reasonable for (1A), as Justice Hayne said to you about an hour ago.
MR BANNON: There is no point in asking him – I did ask him whether it was a matter that occurred to them and they said that it was not an impediment, so that was not a reason for not doing it. Then the correspondence I have given your Honours a reference to in relation to the matter they raise in response in relation to paragraph 467. That particular answer, that request that they raised, is at volume 9 at page 4445 and it is the answer in the second paragraph.
FRENCH CJ: All that is reflected in the judgment, is it not?
MR BANNON: Yes.
FRENCH CJ: Some of what you have been taking us to makes us feel a bit like an intermediate Court of Appeal.....particular points.
MR BANNON: I am sorry for doing that, but it is important to understand the basis, from our point of view, as to the material which goes to the issue of their familiarity with the system, and the point which is raised against us is the quality of knowledge they had or did not have.
HAYNE J: But with a view to us making some finding of fact not made below?
HAYNE J: Overturning a fact as found below?
MR BANNON: No.
HAYNE J: With a view to doing what?
MR BANNON: A view to supporting the view that a reason to suspect existed and the information which was provided was perfectly adequate and to answering Justice Emmett’s and Justice Nicholas’ position that there was some deficiency in the form of notice. The only other two issues on knowledge which I was going to address your Honours in relation to, firstly, the compelling evidence issue. It starts at paragraph 172 of Justice Cowdroy’s judgment.
GUMMOW J: I can see this cross‑examination might have gone to a case for the application of 115(4) for additional damages for flagrant authorisation, but that is not what seems to be the idea.
MR BANNON: No, but the point of – our case, as your Honour knows, was that we provide them with sufficient and adequate notice. They said they were justified in doing nothing and at one point they suggested there was some problem with the information, but what the cross‑examination disclosed and the findings supported it that they were determined not to ask any questions and they were not interested in responding to it. So that is relevant to the question of whether or not there truly was a deficiency or if that is a deficiency which can be laid at our door. In other words, it may be answered simply, on one view, that we provided the information and they did not ask for any clarification.
GUMMOW J: Who had the evidentiary burden of establishing the availability of steps that could have been taken? That seems never to have been attended to in the submissions at trial or in the Full Court. I may be wrong about that.
MR BANNON: I think the question of evidentiary burden was not addressed in that form. Certainly there was debate as to what were reasonable steps or what steps could be taken.
CRENNAN J: I suppose the question is, what is your position? You ask in the notice please take steps to prevent continuation of these past infringements.
MR BANNON: Yes, and their continuation.
CRENNAN J: Yes. Then the next step in your argument is if the minutia of the material provided attached to those notices was attended to, that would have been sufficient, you say, to establish knowledge of the past infringements by reference to the identity so far as an address is concerned.
MR BANNON: Yes.
CRENNAN J: So then you get the response back that you have just told us about. Well, you know, a service may be at a school or something. Is it your position that what you provided was sufficient to send warning notices?
MR BANNON: Yes.
CRENNAN J: Or sufficient to send warning notices and then do something further or what was supposed to be the content of the warning notice?
MR BANNON: Well, we did not specify the content of the warning notice, but in circumstances where we say once they are put on notice that infringements are occurring and we tick the other boxes about control and relationship, unless – one accepts it is an issue to be considered. Is there no step which can be taken? If there is no step that can be taken at all, then there may be an issue as to whether there is authorisation. But in circumstances where it is their business and their client, we have always maintained that it was not for us to identify a step at which – the precise way in which they would undertake the exercise of seeking to prevent, but at trial we certainly maintained that a warning notice was an appropriate step.
GUMMOW J: But not a sufficient step.
MR BANNON: In the first instance.
GUMMOW J: No, no, not a sufficient step.
MR BANNON: It would depend on the outcome of the step.
GUMMOW J: Exactly, so it is not a sufficient step.
MR BANNON: But it may be a sufficient step.
GUMMOW J: May or may not be. Therefore, it is not.
CRENNAN J: If you ask for it to desist, you are inviting a response to that request to desist, are you not?
MR BANNON: I am sorry, your Honour?
CRENNAN J: If the warning notice asks in terms of continuing conduct that the user desist, you are inviting a response, are you not? I mean, in the orthodox context in which these debates arise you would be asking for an undertaking, not a continuation of past infringements would not occur. So does a warning notice have to go that far or does it just put them on notice that they are acting in breach of the copyright law?
MR BANNON: What we say is and always said that you cannot do nothing, which is what they were doing and if you do nothing, then implicitly – the question is not so much that the Act is – the outcome is not the proceedings necessarily or at all as to whether or not the Act obliges the specific step to be taken. What the act asks for consideration and what a copyright owner is entitled to have determined, we say, is whether or not the conduct which they did engage in amounted to authorisation. So there is a difference between determination of liability and a determination of relief. What we have always said is that in circumstances where you had notice, you had control and you had a relationship and we told you about it and you did absolutely nothing, then that infers that you can draw the conclusion from that that they were authorising the conduct.
CRENNAN J: You have still got to understand reasonable steps, have you not, in the context of what you are saying? It sounds as though it will not be until you get to the stage of seeking injunctive relief and maybe taking evidence on that application for injunctive relief that anyone is going to know what the reasonable steps are or might be.
MR BANNON: When I say we never said nothing about it, we regularly said at least a warning notice could be sent, but it was not for us to say, we respectfully submit, that you have to tease out at that point in time precisely every step down the line as to what would or would not happen.
HAYNE J: Why not? The question was one of authorisation. The definition requires your – 101(1A) requires you to take account of three matters. The three matters are not defining of authorisation, are they?
MR BANNON: No, but they are not exhaustive.
HAYNE J: That is, they are matters that must be taken to account.
MR BANNON: Yes.
HAYNE J: It is not an exhaustive list and the significance of each of the matters depends upon the content you have first given to the concept of authorisation. You cannot take these matters to account in determining whether there is authorisation without first having your concept of what constitutes authorisation. Now, the arguments you have been presently advancing seek to begin with questions of reasonable steps, fasten upon the fact that there is no response to your notice, but then seem, if I may say so, Mr Bannon, to slide imperceptibly by the word “therefore” to the conclusion that there is authorisation. There is a number of intermediate steps, I would have thought.
MR BANNON: The legislation says whether or not they have taken any reasonable steps. Perhaps I should be precise ‑ ‑ ‑
HAYNE J: Any other reasonable steps, yes. I would have thought it was for your side – I may be wrong – to point to steps, to demonstrate they were reasonable, to demonstrate that they were not taken. But perhaps that is a misunderstanding of the way in which the burdens fall.
MR BANNON: What we say is if one goes through the items did they have a power to prevent the act of doing and we say they did. The nature of the relationship - the relationship indirectly was that they had a control over the use of a service, including a requirement to ensure that it was not used for copyright infringing purposes. They had notice that it was being used for copyright infringing purposes and they were doing nothing about it. The question is whether the person took any other reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any industry codes of practice.
We respectfully submit that does not dictate that the copyright owner has to identify precisely what it is the person who has control over the activity knows is happening, has a power to prevent and does nothing about it. That does not dictate that the burden falls as a matter of construction. The copyright owner says, “Well, you have to identify the person on whose system that is taking place, who knows about it and knows its own systems.” “You, the copyright owner, unless you can work out precisely what is the appropriate wording, you should speak to your customers about how you do it”, then you lose on authorisation.
We submit that would be an incorrect way of interpreting the legislation. What we say is the correct approach is it is an open question as to whether or not there are reasonable steps which can be taken. If there are no reasonable steps at all, we say it is going to be most unlikely. It is not going to happen in circumstances such as this where it is on their system; they have contractual powers and control. It is inconceivable there is nothing that can be done. The steps plainly include a warning notice, but we should not have to draft the warning notice. We should not have to predict what the response should be after that because it may depend on what the response is.
GUMMOW J: I am just looking at Justice Jacobs again at page 21 of 133 CLR. It seems to me that you would have to satisfy the primary judge that the Federal Court would infer an authorisation or permission by looking to indifference exhibited by acts of omission – what acts of omission, one might ask – and that those acts of omission reached a degree from which authorisation or permission might be inferred. That seems to be the ultimate question that had to be decided by the primary judge. In that process (1A) comes into play.
MR BANNON: Yes.
GUMMOW J: But (1A) is not, as it were, of itself the resolution of the issue.
MR BANNON: But equally his Honour said, at 22:
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 the doing of acts comprised in copyright and if nevertheless it were known that the qualification to the invitation was being ignored –
This is the second part of 22:
and yet the University allowed that state of things to continue.
What the High Court did in that case was to truly take it a step at a time. What they said is you have the machines, you have evidence of infringement, you have the library. They said the notice was inadequate, so it is effectively no notice.
GUMMOW J: I thought you were relying on indifference.
MR BANNON: Yes.
CRENNAN J: Well, I suppose one answer might be that the scheme in (1A) gives some indication about degrees in relation to indifference or omissions, that is to say, it impliedly recognises there is a duty to take reasonable steps.
MR BANNON: Yes, impliedly.
HAYNE J: Well, that turns on whether (c), reasonable steps, is linked in any way with (a), power to prevent, because the reasonable steps are reasonable steps to prevent and (a) is power to prevent.
MR BANNON: Yes.
HAYNE J: Prevent here is ultimately is on/off.
MR BANNON: But, we say the reasonable steps do not have to be on/off. In other words, there does not have to be a direct relationship with the power to prevent. In other words, a general warning in some circumstances may be sufficient, in circumstances where, no doubt, it is backed implicitly by an ultimate power to prevent by turning them off ultimately. But the difficulty, we submit – and we say it is consistent with Moorhouse because what they are effectively saying is, well, there is no notice there at all. You have to have a notice. If the notice gets ignored, then that does not mean the university is off the hook. There may be circumstances which have to be looked at again.
If, for example, this was a case in which iiNet in response to the notices had sent warning notices to customers, we investigated and still found infringement and then went back to them and then they refused to take no further step in relation to it, then you would ask whether it is reasonable in those circumstances for them to simply rely on the warning notices. But it becomes a hypothetical exercise to map out what is the likely response over time to a series of warning notices and predict now and oblige the copyright owner to predict now what that sequence of events would be and to map it out. We certainly said at all times as an initial step they need to provide a warning notice. We never said you have got to cut them off straight away. We did not frame a form of a warning notice.
FRENCH CJ: It is very easy with this kind of logic to slide into a response to the question of, was there authorisation, which involves prescribing some kind of industry code. The question must always be, was there on the facts authorisation.
MR BANNON: Yes. But that is why there is the importance of (a) and (b) in 101(1A). In other words, once we prove control, once we prove the relationship, once we prove notice, as I say, you have got a situation where on their system, on a continuing basis their customers are making available online, we are inviting them to do something and they do nothing and can you infer from that fact authorisation? Really, in one sense, the evidentiary onus may fall to them to say there is nothing we can do, nothing sensible we can do, rather than for us to specify the way they should conduct their business in circumstances where they are conducting their business in a way which we know as a matter of fact produces multiple daily infringements and we have told them about it and we know as a fact that there is no problem with issuing a warning notice as at least a step, and if they had done that, then the question in that factual circumstance is whether they have taken a step. That is the fact which has to be considered. So if they have taken the step, that has to be examined as part of the.....circumstances to ask, in those circumstances, can they be said to be indifferent to the activity?
GUMMOW J: Would it have been open to your clients to seek preliminary discovery to connect the client numbers with the client details?
MR BANNON: I think so, yes.
GUMMOW J: But the tactic may have been to put the public reaction to pursuing individuals to put that in the responsibility of iiNet.
MR BANNON: Except that ‑ ‑ ‑
GUMMOW J: If you had done that you could have made an example of a few users which might have had an impact on others.
MR BANNON: There is no particular evidence of this one way or another but the fact of the matter is, and Kazaa is an example, infringements are rife in the music industry, infringements are rife in the film industry. Infringements are rife in circumstances where there have been prosecutions of people who have been located. The only prosecutions that actually have ever been brought are against people who ‑ ‑ ‑
GUMMOW J: I am not thinking of criminal law.
MR BANNON: No, but even damages cases who supply multiple copies. The cost benefit analysis of pursuing an individual case against one individual user for downloading three films or three records would be a use of the judicial system which the court would not be wildly enthusiastic about (a), but (b) the very fact that it is so unworkable and so implausible and so illogical and costly because you will always lose money because you will never get your costs back anyway, that is an inbuilt protection for the users themselves. They know that rights holders cannot track down everybody.
HAYNE J: But it confronts the basic conundrums for the copyright holder. It is the existence of the network of networks, namely the Net, which enables unauthorised sharing of copyright work. The prevention of it ultimately depends upon the individual choice of the user of the Net. You seek to achieve the result through the medium of the company that provides access of the user to the network, and the conundrum is the power that the ISP has, the steps that the ISP can take depend ultimately for their effect on the individual user’s choice, for all that the ISP can do is switch off.
MR BANNON: Well, to the extent that that involves a presumption that people will ignore warning notices, we submit that is not justified and the three members of the Full Court were unanimous in the view that that is not an appropriate way to proceed. In other words, that is not an appropriate way to proceed, ie, on the assumption that ‑ ‑ ‑
GUMMOW J: It would depend on what the warning notice said.
MR BANNON: Indeed.
GUMMOW J: It might be one thing if it threatened them with a court action in specific terms.
MR BANNON: Yes.
HAYNE J: Threaten them with slowing their connection down might be just as effective too.
MR BANNON: Yes, exactly. But the difficulty is – there is no doubt we said for all times, from the beginning of this case, that they should take a step at least of warning notices. Did we say that is enough? We never said that would necessarily be enough, that it depends, because we have not got to that situation yet, but we could not dictate and if one comes down to the form of a court order, if it was a mandatory order, the court could not dictate the form of a notice to a client, a customer of an internet service provider.
I mean, the internet service provider is entitled to draft its own form of notice to balance its own interests, namely, to ensure that its business is still viable, it does not aggravate clients unnecessarily to have a court drafting – or a copyright owner drafting the form of the notice is not something which we would ever submit a court would dictate and to have a court pouring over, for example, whether it be in the High Court or in any intermediate court or a trial, saying, is this form of warning notice the right form, is this the right sort of words, it would become like a form of advertising agency or a press release.
That is not the exercise we say the copyright owner is obliged to be involved or court to be expected to be involved in, but in circumstances where it is perfectly legitimate, we respectfully submit, for the court to approach and the copyright owners to approach it on the basis that if that is an available step, a warning notice, then that is for them to draft, they come up with their own system.
KIEFEL J: Is the question of the efficacy of the notice involving inquiry as to whether or not it is reasonable?
MR BANNON: We would submit not.
KIEFEL J: Why not? What would be the point of asking an internet service provider to send notices which you would say because, as I understood your earlier submission to be, that infringement is rife despite knowing that it is wrong, why is that not relevant? Does it make it a useful step?
MR BANNON: But it is rife in the circumstances where it is impractical for a copyright, for the rights holders, to track down every single computer and sue them.
KIEFEL J: You draw a distinction from, say, a notice which draws to the attention of infringers that they are liable to detection which may not be commonly known?
MR BANNON: Well, that, but also in circumstances where they are under a contractual obligation not to use the system.
KIEFEL J: Which is the particular power arising out of the relationship.
MR BANNON: That is right.
CRENNAN J: Is not the real conundrum lying behind all of this that in an ideal world, for the copyright owners, everyone who wants to watch a film will go and pay $30 for the DVD? It only costs a few cents to download it, which probably lies behind perceptions about the nature of the conduct of downloading, probably explains why infringement is rife, so that it is very difficult, is it not, just by referring to an obligation to send notices, to get some efficacy into the sending of the notices or to get the balance right between the stake of the copyright owners in what is happening and duties on the service providers?
If you had a royalty arrangement, for arguments sake, where you had regular audits in relation to scale of infringement or something, probably the truth is that users who want to download films would not mind their service charges increasing by a margin in order to do that lawfully. That seems to me to be the very large conundrum that is at the heart of this case.
MR BANNON: There is no doubt that, however the warning notice is framed, the extent of its efficacy is a function ultimately of the fact that they could be turned off. That makes it a big difference between the world of individual infringers and computers that are sitting in locations which may be mobile in any event, be they students or whatever. That is a big difference to the circumstance where such persons are under the control of the service provider because they are subject to this contract and they are subject to the risk of being turned off. It does come back in part to the context of which the legislation is created in the context of – the same time the 86(c) right is introduced.
GUMMOW J: Yes, it may be that 86(c) - the new right conferred by 86(c) or the expanded right which is reflected in 86(c) is really only of commercial value to the copyright owner, not for the primary infringement but for the prospect of catching the intermediary on secondary infringement.
MR BANNON: There may be ‑ ‑ ‑
GUMMOW J: Which makes one wonder what is the efficacy in achieving it that way through that form of legislation, rather than a direct form of legislation aimed directly at the intermediary. But that is not what has been done.
MR BANNON: There may be an exercise – that is what they have done. What we respectfully submit is what they perceive to be ‑ ‑ ‑
GUMMOW J: After some intensity of urging, I should imagine.
MR BANNON: Yes, quite. I think that comment your Honours made – or some of your Honours in this Court made in Sony v Stevens is sometimes these provisions are the product of somebody getting ‑ ‑ ‑
GUMMOW J: Now it is said that this new right will not work effectively unless we can catch the intermediary by, well on one view of it, is an expanded view of what authorisation requires.
MR BANNON: The legislation - we are not entitled to use the legislation to make them the complete enforcer of these rights. We have not got to that ‑ ‑ ‑
FRENCH CJ: Is enforcement an element necessary to negative authorisation? If iiNet sent to one of the addressees mentioned in the AFACT notice, having identified the customer, a notice saying “We neither sanction, countenance nor approve your downloading films in which copyright subsists without paying for them” and that reflected its genuine position, is the fact that it does not follow up with enforcement relevant then to authorisation?
MR BANNON: Yes.
FRENCH CJ: Why is that? Is the notice a sham, is it?
MR BANNON: We may descend into debates about notice, a form of notice, but something which just says that – it may require a further step, but if it said that without referring to the allegation or the issue, then that would be insufficient. In other words, if it sent some sort of broadcast memo saying we do not approve of copyright infringement, that would be insufficient. I may have misunderstood your Honour’s question.
FRENCH CJ: I am just going to what is necessary for characterisation of authorisation and I suppose – and what is sufficient to negative it. They are sort of two sides of the one question in a way – and the relationship between a notice which said no more than that and a contractual provision which may or may not be drawn to the customer’s attention, and it goes back to this concept of invitation to which Justice Jacobs referred in Moorhouse. He said, and yet I am concerned about sliding into, even though there are appropriate disclaimers, prescriptions of what is the necessary practice in order to negative authorisation even if one does not prescribe what the content of the notice is going to be in a particular case.
MR BANNON: We submit there is absolutely nothing wrong as a matter of principle with our approach to say when you do nothing in the circumstances to identify that must be authorisation in circumstances, one may add, when there is no issue – sorry, there is not some issue, but the reality is there is no problem and other ISPs have done it, and Westnet was one of them, you can send a warning notice, and a particular warning notice would, of course, identify the particular conduct which is alleged in relation to that account.
Now, that is why I say, if they had done that but they did not take an enforcement step thereafter and we had done nothing more, then that is a different factual case. Each case of authorisation has to be considered not on a systemic basis but it has to be considered on a factual basis, and all we can do as a rights owner is say, well, we have given you this notice, you have got those rights, this is what is happening, you have done nothing. It may be a different case, and the ability of this Court or any court to say, well, this is the policy which has to be employed and we are going to – whether it is one warning, two warnings, three warnings – is something which this Court cannot engage in. Can I identify a couple of instances of policies on the internet of other service providers just to indicate what they have said about it, and there are some slight differences. At volume 5, page 2330 ‑ ‑ ‑
KIEFEL J: Are there any findings about this by the primary judge?
MR BANNON: No. There are findings in ‑ ‑ ‑
GUMMOW J: How do they get into evidence, apart from being interesting?
MR BANNON: As a published policy.
FRENCH CJ: Relevant to what issue?
MR BANNON: Relevant to the issue of whether or not it is something which – because they were running an issue as to whether or not you could practically do it or there were any impediments. One of the problems they had on that was Westnet, a company they took over, either had its own policy, actually issue the thing, and there was a lot of cross-examination as to whether or not there was any particular difficulty in sending notices in circumstances where they sent notices to their people all the time.
FRENCH CJ: Well, these are being put up as counterfactual examples.
MR BANNON: Yes. But for present purposes it is perhaps an exercise in saying that different companies might have different ways of approaching it. The website starts, I think, at 2330 but at 2332:
4.1) Downloading copyright material or making copyright material available to others on the internet is illegal unless specific permission is granted by the copyright owner.
4.2) Exetel will forward any copyright infringement notices received -
That is one way of dealing with it. There are other ways of dealing with it by other accounts in the same volume. If your Honours go back to 2323 ‑ ‑ ‑
KIEFEL J: I am sorry, what was that number?
GUMMOW J: You could have a knock for knock system, I suppose.
HAYNE J: What page are we at?
GUMMOW J: These people get referred to iiNet, the iiNet people get referred to these people.
FRENCH CJ: Like public school expulsions.
MR BANNON: But the legislature has provided for a system where they can have – if they have a policy they avoid any issue in relation to damages, and of course the fact that you have a policy will be plainly relevant to whether or not you can be understood as prepared to suffer or countenance legislation. So it is not as though ‑ ‑ ‑
HAYNE J: It is an odd policy to move them on to the next ISP, but there we are. What is the next page we are going to, Mr Bannon?
MR BANNON: Page 2323. They have a first warning, second warning, third warning system. But my point is really to say that neither the court nor copyright owners should be obliged to get into this exercise of precisely what they should be doing. But the legislation accepts that if you have a policy, then that may be enough – and it is a reasonable one and you implement it, that is enough. So all these questions which are directed to, which our friends say, well, you are getting us to do your dirty work for you, has to be considered obviously in the questions of control in relation that we refer to but, secondly, the legislature seems to recognise that, yes, there is, in effect, things they have to do but if they do those things, then they are protected or may be protected.
CRENNAN J: I suppose one way of looking at it is it may be a way of getting away from the implied invitation idea of Justice Jacobs – the implied invitation to infringe.
MR BANNON: Yes. If they have such a policy, absolutely.
CRENNAN J: In other words, the circumstances would be such that you could no longer infer that invitation.
MR BANNON: They would certainly vigorously argue that and they may well be right. But our problem is to say we cannot tackle that as an issue now which is looking at something in the future. That truly is a hypothetical issue which cannot involve an exercise of our mental ingenuity, but perhaps even one could put it higher as to exercise whether the courts exercise a judicial power in relation to that.
CRENNAN J: Is it not something you would want to raise on some application for injunctive relief?
MR BANNON: I am sorry, your Honour?
CRENNAN J: Is it not something you would want to raise if you were pursuing an application for injunctive relief?
MR BANNON: As to what they should be doing?
CRENNAN J: Yes, if you want mandatory injunctions.
MR BANNON: Yes, up to a point, but certainly we want to establish their authorising firstly, but, secondly, what relief we would actually get. But say, for example, in these particular cases we would say if there was interlocutory injunction relief, say, well, here you have a whole lot of these instances of these accounts and we want you to send out a warning notice to each of these accounts and we would have a very good chance, we would respectfully submit, on that in circumstances where, as I say, the likelihood is they are still making it available online. Now, the proposition to say, well, other ISPs are not doing it and that people will just switch, is simply a function of this is the first case. One cannot treat the case and how one relates to it on the basis that just because this case will bind iiNet but it will not have a necessary impact both legally and practically on every other ISP.
But to answer the question, which is what they would say - throw their hands up and say, “There’s nothing we can do and it’s all unfair”, we submit is a wrong approach in principle and would not, we submit, do service to the intent of the legislation, and that is ultimately what the exercise has to serve. Could I just give your Honours some references in the reasons of the Full Court to what their Honours said about warning notices. Firstly – this is not directly on warning notices – Justice Emmett, at paragraph 173, the third sentence:
Countenancing does not mean the same thing as approving and includes turning a blind eye –
In paragraph 176, the second‑last sentence, his Honour does not give an evidentiary reference:
it sought to assure its customers that it would not act on the Infringement Notices.
We interpret that his Honour is there referring to the press release at the time of litigation, the effect of which was the same ‑ ‑ ‑
GUMMOW J: What is the reference to the press release?
MR BANNON: I think it is volume 3, 1215.
GUMMOW J: Thank you.
MR BANNON: We infer that is what his Honour is referring to. Then paragraph 182 in relation to warning notices and then 187 and 188.
CRENNAN J: When his Honour refers in 182 to:
iiNet frequently communicated warnings to its customers –
that is warnings about other matters, I take it?
MR BANNON: Yes.
KIEFEL J: What kind of things? Technical use of the ‑ ‑ ‑
MR BANNON: Usage. Certainly, one common one was your usage coming to the limit.
KIEFEL J: Coming to the – yes.
MR BANNON: Warnings about not paying bills. There may be some other matters I cannot presently think of. Then 194, then Justice Nicholas, paragraph 748, and 749 through to 751 and in particular 750 where his Honour recognised that it has got to be a matter for them the way they do it, albeit the way they do it – and then Justice Jagot at 417. I do not have much more to say. I notice the time.
FRENCH CJ: How much more, Mr Bannon?
MR BANNON: There are a couple of things raised today which – both references and a couple of matters that I will try and address briefly in the morning. But that is the substantive body of the things I wanted to say.
FRENCH CJ: Thank you, Mr Bannon. Mr Leeming, you will not be terribly long, I imagine? Okay. Mr Cobden?
MR COBDEN: Your Honour, I am happy to agree to a division of time with the – which we are not very far behind and with the – there are only two interveners at the moment, we will make up a little bit of time with that, so we would still be on that division of time on track to finish. We had planned Friday lunchtime, if that was convenient to the Court. In other words, I would be the best part of the day tomorrow and a little bit of the next day.
FRENCH CJ: Mr Flynn?
MR FLYNN: No more than 10 minutes, your Honour.
FRENCH CJ: All right. We will adjourn until 9.45 tomorrow morning for pronouncement of orders and 10 o’clock for the resumption of this matter.
AT 4.16 PM THE MATTER WAS ADJOURNED
UNTIL THURSDAY, 1 DECEMBER 2011
Key Legal Topics
Areas of Law
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Intellectual Property
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Commercial Law
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Statutory Interpretation
Legal Concepts
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Injunction
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Remedies
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Breach
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Statutory Construction
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Jurisdiction
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Appeal
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