Roadshow Films Pty Ltd v iiNet Ltd - [2012] HCA 16

HIGH COURT OF AUSTRALIA
FRENCH CJ,
GUMMOW, HAYNE, CRENNAN AND KIEFEL JJ
ROADSHOW FILMS PTY LTD & ORS APPELLANTS
AND
IINET LIMITED RESPONDENT
Roadshow Films Pty Ltd v iiNet Limited [2012] HCA 16
20 April 2012
S288/2011
ORDER
Appeal dismissed with costs.
On appeal from the Federal Court of Australia
Representation
A J L Bannon SC with J M Hennessy SC and C Dimitriadis for the appellants (instructed by Gilbert + Tobin Lawyers)
R Cobden SC with R P L Lancaster SC and C J Burgess for the respondent (instructed by Herbert Geer Lawyers)
M J Leeming SC appearing as amicus curiae on behalf of the Australasian Performing Right Association Limited (instructed by Banki Haddock Fiora)
P W Flynn appearing as amicus curiae on behalf of the Communications Alliance Limited (instructed by Carwardine Legal Solicitors)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS
Roadshow Films Pty Ltd v iiNet Limited
Intellectual property – Copyright – Infringement – Authorisation – Appellants owners and exclusive licensees of copyright in commercially released films and television programs ("appellants' films") – Respondent internet service provider supplied internet services under agreement requiring that services not be used to infringe others' rights or for illegal purposes – Users of respondent's internet services infringed copyright in appellants' films by making appellants' films available online using BitTorrent peer-to-peer file sharing system – Notices served on respondent alleging copyright infringement by users of respondent's internet services – Respondent took no action in response to notices – Whether respondent authorised infringement of copyright in appellants' films by users of respondent's internet services.
Words and phrases – "authorise".
Copyright Act 1968 (Cth), ss 86(c), 101(1), 101(1A).

FRENCH CJ, CRENNAN AND KIEFEL JJ. This appeal from the Full Court of the Federal Court of Australia (Emmett and Nicholas JJ; Jagot J dissenting)[1] concerns the authorisation of copyright infringement by a person who is neither the owner nor the licensee of a copyright under ss 101(1) and 101(1A) of the Copyright Act 1968 (Cth) ("the Copyright Act").
[1]Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285.
The 34 appellants are Australian and United States companies which either own or exclusively license the copyright in thousands of commercially released films and television programs, including a sample of 86 films in evidence before the courts below ("the appellants' films"). The respondent ("iiNet") is an Australian internet service provider ("ISP") which provides its customers with access to the internet in return for a monthly fee.
A number of parties sought leave to intervene or to appear as amicus curiae. Leave to appear as amicus was granted to the Australasian Performing Right Association Limited, which supported the appellants, and to the Communications Alliance Limited, which supported the respondent.
As will appear, some customers of iiNet have used the internet access provided by iiNet to infringe copyright in the appellants' films by making the films available online using the BitTorrent peer-to-peer file sharing system, explained below. The appellants claim that iiNet has infringed copyright in their films by authorising its customers' infringing acts.
The key question in the appeal, whether iiNet authorised its customers' infringing acts, "depends upon all the facts of the case"[2]. The facts and circumstances on which the appellants rely to support their contention that iiNet authorised its customers' infringing acts include the following:
.the provision by iiNet to its customers (and to other users of those customers' accounts) of access to the internet, which can be used generally and, in particular, to access the BitTorrent system;
.the infringement of the copyright in the appellants' films by customers of iiNet who have made the films available online in whole or in part using the BitTorrent system;
.the knowledge by iiNet of specific infringements, as drawn to its attention by notices from the Australian Federation Against Copyright Theft ("AFACT"), representing the appellants;
.the technical and contractual power of iiNet to terminate the provision of its services to customers infringing copyright; and
.the failure by iiNet to take reasonable steps to warn identified infringing customers to cease their infringements and, if appropriate, to terminate the provision of its services to them.
For the reasons that follow, in our opinion, the conduct of iiNet did not constitute authorisation of its customers' infringing acts.
[2]University of New South Wales v Moorhouse (1975) 133 CLR 1 ("Moorhouse") at 12 per Gibbs J; [1975] HCA 26. See also Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 at 9 per Bankes LJ.
Relevant statutory framework
Part IV of the Copyright Act (ss 84-113C), headed "Copyright in subject-matter other than works"[3], includes provisions in respect of "cinematograph films", which are defined in s 10(1)[4]. Section 86 provides that copyright in relation to a cinematograph film includes the exclusive right to make a copy of the film (s 86(a)), and to communicate the film to the public (s 86(c)). Under s 10(1), "communicate", in relation to a cinematograph film, means "make [the film] available online or electronically transmit [the film]".
[3]"Works" are "original literary, dramatic, musical and artistic works" covered by Pt III.
[4]Relevantly s 10(1) provides:
"cinematograph film means the aggregate of the visual images embodied in an article or thing so as to be capable by the use of that article or thing:
(a) of being shown as a moving picture; or
(b)of being embodied in another article or thing by the use of which it can be so shown;
and includes the aggregate of the sounds embodied in a sound-track associated with such visual images."
By s 13(2), found in Pt II (headed "Interpretation"), an exclusive right of a copyright owner to do an act includes the exclusive right to authorise a person to do that act.
Section 101(1) provides that:
"Subject to this Act, a copyright subsisting by virtue of [Pt IV] is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright."
Accordingly, a primary infringement of a copyright in a cinematograph film occurs when a person, who is neither the owner nor the licensee, makes the film available online without the copyright owner's consent; a secondary infringement occurs when a person, who is neither the owner nor the licensee, authorises the making available online of the film without the copyright owner's consent.
Section 101(1A)[5] provides for three matters that must be taken into account when determining whether authorisation of infringing conduct has occurred:
"In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in a copyright subsisting by virtue of this Part without the licence of the owner of the copyright, 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 existing between the person and the person who did the act concerned;
(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."
Something more will be said later about the context in which s 101(1A) was introduced.
[5]Introduced into Pt IV by the Copyright Amendment (Digital Agenda) Act 2000 (Cth).
It is also necessary to note specific provisions relevant to the liability of an ISP in respect of a communication.
Section 22(6) provides:
"For the purposes of this Act, a communication other than a broadcast is taken to have been made by the person responsible for determining the content of the communication."
Accordingly, iiNet is not liable for any primary infringement in respect of the conduct of its customers[6].
[6]Cf Telstra Corporation Ltd v Australasian Performing Right Association Ltd (1997) 191 CLR 140; [1997] HCA 41.
Section 112E qualifies the operation of ss 101(1) and 101(1A) to the extent that they apply to a person (such as an ISP) who provides facilities for making communications. It provides:
"A person (including a carrier or carriage service provider) who provides facilities for making, or facilitating the making of, 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."
As an ISP, iiNet is a "carriage service provider"[7]. A cinematograph film is an "audio-visual item" within the meaning of s 100A, and the meaning of the word "communication" in s 112E corresponds with the definition of "communicate" in s 10(1).
[7]Defined in s 10(1) by reference to the Telecommunications Act 1997 (Cth).
Sections 116AA to 116AJ limit the remedies available against carriage service providers for infringements of copyright which result from the carrying out of particular online activities by the carriage service provider, provided that the carriage service provider meets certain conditions. All of the members of the Full Court agreed that iiNet was not entitled to the benefit of these provisions in the circumstances of this case[8], and iiNet does not seek to rely on them in this appeal. What might be noted, however, is that s 116AG(3)(b), which limits remedies against carriage service providers, empowers a court to make "an order requiring the carriage service provider to terminate a specified account".
[8]Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285 at 347 [272] per Emmett J, 406 [524] per Jagot J, 464 [800] per Nicholas J.
Technical background
The technical background to the appeal has been explained in the courts below[9] and is not contested on the appeal. Nevertheless, it is convenient to summarise some aspects of the relevant technology before considering the submissions made on the appeal.
[9]See Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 263 ALR 215 at 229-235 [44]-[78] per Cowdroy J; Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285 at 296-300 [35]-[63] per Emmett J.
The Internet Protocol and IP addresses
Computers connected to the internet communicate with each other by means of a common language, or protocol, called the Internet Protocol ("IP"). Data sent by means of the IP is broken up into small "packets". Computers sending and receiving data are allocated IP addresses, which enable packets to be exchanged (in much the same way that postal addresses enable mail to be exchanged). Such IP addresses are sold in blocks to ISPs, and ISPs allocate IP addresses to their customers. The identity of the ISP to whom a particular block of IP addresses has been sold is publicly available information.
Where a customer's computer is directly connected to the internet (through a modem), the ISP will assign a public IP address to that computer. However, many computers are not directly connected to the internet, but are instead connected to a "router" – a device which can "route" data between a private network of computers. Where a customer's computer is connected to a router, the router will be directly connected to the internet (through a modem), and the ISP will assign a public IP address to the router. Where multiple computers are connected to a router, all of those computers will be able to access the internet – but only the public IP address assigned to the router will be visible to other computers on the internet. As such, a public IP address does not necessarily correspond to a specific person or computer.
iiNet allocates "dynamic" IP addresses to all of its non-business customers – this means that the IP address by which an iiNet customer's computer or router connects to the internet will change over time. Systems instituted by iiNet enable it to identify the customer account to which a particular IP address has been allocated at a particular time, but not necessarily the specific person or computer using that IP address (which may be several).
The BitTorrent system
The BitTorrent system[10] is designed to enable rapid and decentralised distribution of data across the internet, and operates differently from certain peer‑to‑peer file sharing systems which have been the subject of litigation in Australia[11] and the United States of America[12]. Types of data which might be distributed using the BitTorrent system include, for example, documents (usually .doc files), films and television programs (usually .avi files), and songs (usually .mp3 files). Unlike traditional centralised methods of data distribution, the BitTorrent system operates on a peer‑to‑peer file sharing basis and all of the computers seeking the relevant data participate in its distribution.
[10]Created by Bram Cohen in 2001.
[11]See, for example, Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 220 ALR 1 ("Kazaa").
[12]See, for example, Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd 545 US 913 (2005) ("Grokster").
The BitTorrent system has a number of parts, all of which must be employed before data can be distributed (that is, before a file can be downloaded). These parts are described below using the example of a person who wants to download a film (a .avi file):
1.BitTorrent client: A BitTorrent client is a computer program which allows a computer to access groups of computers sharing a particular .torrent file. These groups of computers are called "swarms", each computer in a swarm being a "peer". A person who wants to download a film using the BitTorrent system must first download and install a BitTorrent client.
2..torrent file: A .torrent file contains the information necessary for a BitTorrent client to contact and participate in a swarm – in this case, the swarm sharing the .torrent file associated with the relevant film. The .torrent file does not contain the underlying data associated with the film – that information is contained in the .avi file. Rather, the .torrent file contains the name of the .avi file sought, the size of the .avi file, the "hash value" of the .avi file, the "hash value" of the pieces of the .avi file, and the location of the "tracker". .torrent files are available from websites which allow users to search for the .torrent file associated with a particular underlying file (in this case, the film) which they wish to obtain.
3.Hash value: Just as the IP breaks data into "packets", the BitTorrent system breaks data into "pieces". The hash value of a particular piece is unique, and identifies that piece. Hash values are important because the BitTorrent system distributes data (in this case, the film) in pieces. Pieces are downloaded out of sequence, rarest first, and must later be reassembled into a complete file.
4.Tracker: A tracker is a computer program on a server which monitors the particular swarm with which it is associated. Instructions for locating the relevant tracker for a swarm are contained in the relevant .torrent file. Once located by the BitTorrent client, the tracker provides the BitTorrent client with the IP addresses of the peers in the swarm, enabling the BitTorrent client to participate in the swarm as a peer – that is, to send and receive pieces of the relevant file (in this case, the film).
In summary, a person who wants to download a film using the BitTorrent system must first download a BitTorrent client, and then locate and download a .torrent file associated with the relevant film. When the person opens the .torrent file, the BitTorrent client will use the instructions in the .torrent file to contact the tracker, and then start requesting and receiving pieces of the relevant .avi file – out of sequence – from peers in the relevant swarm. Once the BitTorrent client has received all of the pieces of the .avi file, it will use the instructions in the .torrent file to reassemble those pieces into the completed film and will save the file as instructed by the person who has downloaded the film.
As the BitTorrent client requests (and receives) pieces of the relevant .avi file that it has not yet obtained, it will receive requests from other peers in the swarm for pieces of the relevant .avi file that they have not yet obtained. Generally, once it has received a piece of the .avi file, the BitTorrent client will share that piece with any peer from whom it receives a request. When the BitTorrent client has received all of the pieces of the .avi file, it will continue to share those pieces as long as the computer on which the .avi file has been downloaded is connected to the internet and the BitTorrent client is running. In most cases, this process of sharing will only end when the .torrent file is removed from the BitTorrent client by deliberate deletion by the person using the BitTorrent system. A user of the BitTorrent system who downloads a film, the subject of copyright, will infringe not only s 86(a) of the Copyright Act, but also s 86(c), because the BitTorrent system will automatically make that film available online on the user's computer until the .torrent file is removed from the BitTorrent client.
Legislative background
This Court has recognised on many occasions that ascertaining the meaning of the text of statutory provisions may require consideration of their context[13]. Section 101(1A) was part of a group of amendments to the Copyright Act made by the Copyright Amendment (Digital Agenda) Act 2000 (Cth) ("the 2000 amendments") described by the then Attorney‑General, the Hon Daryl Williams, as the legislature's response to "rapid developments in communications technology, in particular the huge expansion of the Internet"[14]. The relevant Explanatory Memorandum contains echoes of those remarks[15] and, by reference to Moorhouse, explains that s 101(1A) partially codifies the principles in relation to authorisation which exist at common law[16].
[13]Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 281 [12] per McHugh ACJ, Gummow and Hayne JJ; [2004] HCA 14; Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at 46-47 [47] per Hayne, Heydon, Crennan and Kiefel JJ; [2009] HCA 41; Australian Education Union v Department of Education and Children's Services (2012) 86 ALJR 217 at 224 [26]-[28] per French CJ, Hayne, Kiefel and Bell JJ; 285 ALR 27 at 34-35; [2012] HCA 3.
[14]Australia, House of Representatives, Parliamentary Debates (Hansard), 2 September 1999 at 9748.
[15]Australia, House of Representatives, Copyright Amendment (Digital Agenda) Bill 1999 (Cth), Explanatory Memorandum at 1.
[16]Australia, House of Representatives, Copyright Amendment (Digital Agenda) Bill 1999 (Cth), Explanatory Memorandum at 52 [122]-[124].
The 2000 amendments followed the opening for signature by the World Intellectual Property Organisation ("WIPO") of the WIPO Copyright Treaty on 20 December 1996. Article 8 of the WIPO Copyright Treaty provides that "authors … shall enjoy the exclusive right of authorizing any communication to the public of their works". The agreed statement concerning Art 8 relevantly provides:
"It is understood that the mere provision of physical facilities for enabling or making a communication does not in itself amount to communication within the meaning of this Treaty or the Berne Convention."

The 2000 amendments can usefully be summarised as follows:
.Sections 31, 85, 86 and 87 were all amended to add a new right, comprised in copyright in works and subject matter other than works, to communicate the work, sound recording, cinematograph film or television or sound broadcast to the public. The new right replaced the rights to broadcast and to transmit to subscribers to a diffusion service. Those rights had been overtaken by the availability of access to the internet. Section 10 was amended to include a definition of "communicate", as set out above.
.Section 101 was amended (as was s 36, in Pt III) to include a new sub‑s (1A) to codify at least partially common law developments in relation to authorisation.
.Section 22(6) was inserted (as, later, was s 22(6A)[17]), effectively exempting ISPs from direct liability for communication of copyright material[18].
.Section 112E was inserted (as was s 39B, in Pt III), implementing the agreed statement in relation to Art 8 of the WIPO Copyright Treaty.
[17]A clarifying provision introduced by Sched 7 to the Copyright Amendment Act 2006 (Cth).
[18]Cf Telstra Corporation Ltd v Australasian Performing Right Association Ltd (1997) 191 CLR 140.
This statutory framework was subsequently added to:
.Sections 116AA to 116AJ, the "safe harbour" provisions, which correspond with cognate provisions in the United States[19], were introduced into Pt V (headed "Remedies and offences") by the US Free Trade Agreement Implementation Act 2004 (Cth) and the Copyright Legislation Amendment Act 2004 (Cth). Sections 116AB and 101(1A)(c) refer to industry codes. Regulation 20B of the Copyright Regulations 1969 (Cth) provides for the development of industry codes intended to represent a "consensus of copyright owners and carriage service providers".
.Sub-sections (5), (6), (7) and (8) of s 115, which were inserted into Pt V by Sched 4 to the Copyright Amendment Act 2006 (Cth), specify certain matters for courts to take into account when determining appropriate relief for electronic infringement on a commercial scale.
[19]The Digital Millennium Copyright Act 1998 (US) introduced a new §512 to Title 17 (Copyrights) of the United States Code. Sections 116AC, 116AD, 116AE and 116AF of the Copyright Act correspond with §§512(a), 512(b), 512(c) and 512(d), respectively. The legislation was not directed to peer-to-peer file sharing: Recording Industry Association of America Inc v Verizon Internet Services Inc 351 F 3d 1229 at 1237-1238 (2003).
The 2000 amendments predated the release of the BitTorrent system. Their evident purpose was to respond to new communications technology by attempting to strike a balance between conflicting policy considerations. Access to internet technology is fostered by ss 22(6), 22(6A), 112E and 39B, and the "safe harbour" provisions, ss 116AA to 116AJ; the rights of copyright owners are enhanced by relevant amendments to ss 10, 31, 85, 86 and 87; the statutory clarification of the concept of authorisation in s 101(1A) is balanced against ss 22(6) and 112E. All three of those last‑mentioned provisions can apply to a third party intermediary between copyright owners and copyright infringers (such as an ISP) although, as noted correctly by the primary judge (Cowdroy J), s 112E appears to provide protection where none is required[20].
Factual background
[20]Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 263 ALR 215 at 339 [574]. See also Ficsor, "Copyright for the Digital Era: The WIPO 'Internet' Treaties", (1997) 21 Columbia-VLA Journal of Law & the Arts 197 at 214.
Contractual relationship with iiNet's customers
iiNet provides internet access to its customers under the terms of its Customer Relationship Agreement ("CRA"), which provides that an iiNet customer is responsible for the use of the customer's internet access by any other person. In October 2008, the CRA relevantly provided as follows[21]:
[21]The case was conducted on the basis that versions of the CRA which applied at all relevant times were not materially different.
"Comply with all laws
4.1In using the Service, you must comply with all laws and all directions by a Regulatory Authority and reasonable directions by us.
Prohibited Uses
4.2You must not use, or attempt to use, the Service:
(a)to commit an offence or to infringe another person's rights;
…
(e)for illegal purpose or practices;
or allow anybody else to do so.
…
Cancellation or suspension by us
…
14.2We may, without liability, immediately cancel, suspend or restrict the supply of the Service to you if:
…
(b)you breach a material term (other than a breach which separately gives rise to rights under this clause 14.2) and that breach is not capable of remedy;
(c)you breach a material term (other than a breach which separately gives rise to rights under this clause 14.2) and, where that breach is capable of remedy, you do not remedy that breach within 14 days after we give you notice requiring you to do so;
…
(i)you breach clause 4 … or otherwise misuse the Service;
(j)we reasonably suspect fraud or other illegal conduct by you or any other person in connection with the Service;
…
14.3If we suspend the Service under clause 14.2, then we may later cancel the Service for the same or a different reason."
Notices alleging infringement by iiNet customers
AFACT is an organisation which represents owners and exclusive licensees of copyright in films and television programs, including the appellants. From August 2007, AFACT employed a company called DtecNet Software APS ("DtecNet") to gather evidence of alleged copyright infringement by Australian internet users. From June 2008, DtecNet narrowed its investigations to target the use of the BitTorrent system by customers of four Australian ISPs, one of which was iiNet. DtecNet used a computer program ("the DtecNet Agent") to gather evidence that iiNet customers had used the BitTorrent system to download and share the appellants' films.
In essence, the DtecNet Agent is a BitTorrent client with an additional function – at the same time that it receives and shares pieces of a file, it gathers and records information about the peers in the swarm who are also receiving and sharing the pieces of that file. By using only .torrent files associated with the appellants' films (identified as such by hash values) and connecting only to peers with a public IP address that matched an IP address which had been sold to iiNet, DtecNet claimed that it was able to identify instances of copyright infringement by iiNet customers.
On 2 July 2008, the Executive Director of AFACT, Mr Neil Gane, sent iiNet the first of what would be many letters entitled "Notice of Infringement of Copyright" ("the AFACT notices"). The letter alleged infringement by customers of iiNet of the appellants' copyright in "movies and television shows" through the use of the BitTorrent system. The alleged infringements were said to involve "communication to the public of unauthorised copies of the motion pictures and television shows shared with other internet users via BitTorrent".
Attached to the letter was a spreadsheet said to contain the information relevant to infringing activities of iiNet customers occurring between 23 June 2008 and 29 June 2008.
The letter alleged that the attached spreadsheet showed that individual iiNet customers were involved in multiple infringements of copyright, and went on to state that iiNet's failure to prevent the alleged infringements from occurring "may constitute authorisation of copyright infringement by iiNet". iiNet was asked to "[p]revent the Identified iiNet Customers from continuing to infringe".
AFACT sent iiNet a second notice on 9 July 2008, including an almost identical letter relating to the period 30 June 2008 to 6 July 2008 and a corresponding spreadsheet. On 16 July 2008, AFACT sent iiNet a third notice, this time also enclosing three DVDs. These DVDs contained the spreadsheets attached to the earlier notices, as well as additional information said to be the underlying data gathered by DtecNet in its investigations.
AFACT sent iiNet a notice in similar terms (enclosing the same type of information) every week until August 2009. The AFACT notices did not contain information about how the data in the spreadsheets had been gathered, or how the DtecNet Agent operated. Responses by iiNet to the AFACT notices raised three issues: the desirability of AFACT referring its allegations to appropriate authorities; iiNet's inability to understand AFACT's data; and the insufficiency of an identification of an IP address to pinpoint a particular user of internet access provided by iiNet.
In the period 2008-2009, iiNet had approximately 490,000 customers, and was the third largest ISP in Australia. In the end, iiNet did not suspend or terminate any customer account in response to allegations of copyright infringement in the AFACT notices. It can be noted that, in responding to particular management or internet abuse issues (such as customers spamming or not paying bills), iiNet did, in some cases, suspend or terminate customer accounts. However, the taking of those steps did not depend upon the accuracy of information provided by others.
When first sued, iiNet issued media releases on 20 November 2008 and 17 December 2008 asserting that it did not support or encourage any infringement of the appellants' copyright. iiNet also asserted in the media releases that it was for law enforcement agencies rather than iiNet to respond to the appellants' complaints about copyright infringement and that, in the absence of proof of the alleged infringements, iiNet was not prepared to disconnect any customer's internet service.
In addition to relevant clauses in the CRA, iiNet had other measures in place which it claims were designed to prevent or discourage copyright infringement by users of its internet services. These included a notice on iiNet's website which warned that the hosting or posting of illegal copyright material would constitute a breach of the CRA, and that such a breach may result in the suspension or termination of a customer's internet access. iiNet also provided and published an email address, facsimile number and postal address to which copyright owners could send copyright notices in accordance with the "safe harbour" provisions of the Copyright Act. Further, iiNet provided a service known as "Freezone", which allowed users of iiNet's internet services to download or stream a range of licensed, non-infringing material including films, sport, television programs, games, music and online radio stations.
By mid‑2008, more than half the usage of iiNet's internet services by its customers (measured by volume) was represented by BitTorrent file sharing, and it was common knowledge that the BitTorrent system was used for infringing activities – although not solely for such.
Proceedings below
In the course of discovery in the proceedings before Cowdroy J, iiNet was provided with data from DtecNet which enabled iiNet to identify the accounts of 20 iiNet customers alleged in the AFACT notices to have repeatedly infringed the copyright in the appellants' films ("the R20 accounts"). Further, after the filing of expert reports which explained the DtecNet methodology, iiNet did not dispute the primary infringements by iiNet customers alleged in the spreadsheets attached to the AFACT notices between 23 June 2008 and 9 August 2009[22].
[22]Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 263 ALR 215 at 272 [275].
In concluding that iiNet did not authorise its customers' infringing acts, Cowdroy J did not have regard to the matters in s 101(1A). At the forefront of his Honour's reasoning was the fact that the BitTorrent system was the "means" of infringement, rather than iiNet's provision of access to the internet. His Honour observed that the evidence showed that iiNet had no connection with, or control over, the BitTorrent system[23]. Consequently, it could not be said to be incumbent upon iiNet to stop the infringements. The issue of a warning and the termination of customer accounts on the basis of the AFACT notices would not be a reasonable step to prevent or avoid infringements and would not constitute a relevant power to prevent infringements, his Honour held[24].
[23]Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 263 ALR 215 at 301 [404], 302 [407].
[24]Roadshow Films Pty Ltd v iiNet Ltd (No 3) (2010) 263 ALR 215 at 309 [436].
All members of the Full Court found that the statutory test for authorisation had not been applied correctly by his Honour. All agreed that a matter necessary to be taken into account in connection with s 101(1A) in this case was whether the exercise of any power on the part of iiNet to prevent acts of infringement was reasonable[25].
[25]Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285 at 326-327 [179]-[180], 328 [188]-[189] per Emmett J, 381 [399] per Jagot J, 447 [713] per Nicholas J.
Authorisation
As explained in the reasons of Gummow and Hayne JJ[26], the concept of authorisation in copyright law has a long history in Australia and has existed since the Copyright Act 1905 (Cth)[27]. That Act was repealed by s 4 of the Copyright Act 1912 (Cth), which adopted the Copyright Act 1911 (UK) ("the Imperial Act")[28] as applying in Australia. Section 1(2) of the Imperial Act included in a copyright owner's statutory monopoly a right "to authorise" any of the sole rights constituting that monopoly, and it came to be recognised that authorisation of infringement was a separate statutory tort, distinct from primary infringement[29]. That amendment enlarged the copyright owner's protection in circumstances where the liability of a person for "causing" an infringement (a formulation found in prior legislation) had been construed as limited to situations involving employment and agency[30].
[26]At [105].
[27]Sections 13, 14 and 34. See WEA International Inc v Hanimex Corporation Ltd (1987) 17 FCR 274 at 282.
[28]Which itself followed the Revised Berne Convention of 1908.
[29]See Ash v Hutchinson and Co (Publishers) Ltd [1936] Ch 489.
[30]Easton, Copinger's Law of Copyright, 5th ed (1915) at 136.
Relevant cases
In Evans v E Hulton & Co Ltd[31], Tomlin J relied on the Oxford English Dictionary's definition of "authorise" in connection with the authorisation of acts, "[t]o give formal approval to; to sanction; to approve; to countenance"[32]. His Honour did so in apparent rejection of counsel's contention that authorisation under the Imperial Act did not enlarge the copyright owner's protection in respect of infringement beyond employment and agency (as under the prior law). Tomlin J concluded that the scope of authorisation could not be so narrow[33]. That appears to be the first reference, in the context of authorisation of infringement, to synonyms to be found in the dictionary. The synonyms have been mentioned in numerous subsequent cases concerned with authorisation both in the United Kingdom and in Australia. However, in concluding that a defendant who sold a manuscript authorised its printing and publication, Tomlin J relied on an obiter dictum of Buckley LJ in Monckton v Pathé Frères Pathephone Ltd[34]:
"The seller of a record authorizes … the use of the record, and such user will be a performance of the musical work."
[31][1923-28] MacG Cop Cas 51.
[32][1923-28] MacG Cop Cas 51 at 59-60.
[33][1923-28] MacG Cop Cas 51 at 59-60.
[34][1914] 1 KB 395 at 403.
In Falcon v Famous Players Film Co[35], whilst the members of the Court of Appeal affirmed a judgment below that the defendants had infringed copyright in a play by authorising a theatre proprietor to perform the play, two differing approaches to the meaning of "authorise" emerged. Bankes LJ referred to Evans v E Hulton & Co Ltd and Monckton v Pathé Frères Pathephone Ltd, and then said[36]:
"in the opinion of those learned judges ['authorise'] is to be understood in its ordinary dictionary sense of 'sanction, approve, and countenance'."
That cumulative approach to the synonyms differed from the approach of Tomlin J.
[35][1926] 2 KB 474.
[36][1926] 2 KB 474 at 491.
Atkin LJ referred to the same cases after stating[37]:
"it appears to me that to 'authorize' means to grant or purport to grant to a third person the right to do the act complained of, whether the intention is that the grantee shall do the act on his own account, or only on account of the grantor".
[37][1926] 2 KB 474 at 499.
The approach of Atkin LJ was applied by the House of Lords in CBS Songs Ltd v Amstrad Consumer Electronics plc[38]. Lord Templeman (with whom the other Law Lords agreed) found that the defendants (sellers of hi‑fi systems which included facilities for tape recording) did not "sanction, approve or countenance" infringing use of these systems and went on to say that, by the sale of the products, the defendants "conferred on the purchaser the power to copy but did not grant or purport to grant the right to copy"[39].
[38][1988] AC 1013.
[39][1988] AC 1013 at 1054.
Infringement under the Imperial Act included not only authorising the doing of an act within the copyright without the owner's consent (s 2(1)), but also permitting a theatre or place of entertainment to be used for the performance in public of a copyright work (s 2(3)). A managing director of a theatre company was sued in respect of both forms of infringement in Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd[40]. In that case, Bankes LJ stated that both forms of infringement might be inferred "from acts which fall short of being direct and positive", and went so far as to say that "indifference, exhibited by acts of commission or omission, may reach a degree from which authorization or permission may be inferred"[41].
[40][1924] 1 KB 1.
[41][1924] 1 KB 1 at 9.
By way of contrast, Adelaide Corporation v Australasian Performing Right Association Ltd[42] ("Adelaide Corporation") was concerned only with s 2(3) of the Imperial Act. Isaacs J (in the minority) saw s 2(3) as a "necessary complement" to s 2(1), and said that he understood the word "authorise" in the Imperial Act to import the sense of "sanction, approve and countenance"[43]. Higgins J (in the majority) appeared to agree, without expressly differentiating between the act of authorising and the act of permitting infringing conduct[44]. Higgins J went on to consider statements made by Atkin LJ in Berton v Alliance Economic Investment Co Ltd[45]. In that case, Atkin LJ said that "permit", in the context of a covenant in a lease, could mean "to abstain from taking reasonable steps to prevent the act where it is within a man's power to prevent it", although "sympathy" or even "assistance" with an act was not equivalent to permitting it to occur[46]. Higgins J considered that, for authorisation of infringement to be made out, there must be a direct power to prevent a specific act, such as a specific infringement of copyright, and not a power which would indirectly achieve that result only by putting an end to a relationship, such as that between lessor and lessee[47]. The other judges constituting the majority, Gavan Duffy and Starke JJ, said: "[p]ermission to do an act involves some power or authority to control the act to be done"[48]; they also agreed that indifference does not necessarily establish permission to infringe[49].
[42](1928) 40 CLR 481; [1928] HCA 10.
[43](1928) 40 CLR 481 at 489.
[44](1928) 40 CLR 481 at 497.
[45][1922] 1 KB 742.
[46][1922] 1 KB 742 at 759.
[47](1928) 40 CLR 481 at 499.
[48](1928) 40 CLR 481 at 503.
[49](1928) 40 CLR 481 at 504-505.

In Moorhouse[50], a copyright owner of a literary work, a collection of short stories published under the title The Americans, Baby, alleged that a university was required to take positive steps to stop primary copyright infringement by library users photocopying library books on a photocopier located in the university library. It was contended that the university was indifferent to the occurrence of infringements through the use of the photocopier and had posted an inadequate notice concerning copyright infringement.
[50](1975) 133 CLR 1.
Jacobs J (with whom McTiernan ACJ agreed) spoke of the meaning of authorisation by reference to the dictionary sense of "sanction, approve, countenance"[51]. His Honour went on to find that an implied invitation to infringe could constitute authorisation despite the absence of knowledge of any actual act of infringement[52]. His Honour also found that providing a photocopier in a library was an unqualified invitation to users of the library which sufficiently caused the primary infringer to do the infringing acts comprised in the copyright[53].
[51](1975) 133 CLR 1 at 20.
[52](1975) 133 CLR 1 at 21.
[53](1975) 133 CLR 1 at 23.
Gibbs J likewise accepted as the meaning of authorise the dictionary sense, referred to in Adelaide Corporation, of "sanction, approve, countenance"[54]. His Honour then cited passages from that case to support the proposition that "[a] person cannot be said to authorize an infringement of copyright unless [the person] has some power to prevent it"[55]. His Honour went on to say[56]:
"a person who has under his control the means by which an infringement of copyright may be committed – such as a photocopying machine – and who makes it available to other persons, knowing, or having reason to suspect, that it is likely to be used for the purpose of committing an infringement, and omitting to take reasonable steps to limit its use to legitimate purposes, would authorize any infringement that resulted from its use."
[54](1975) 133 CLR 1 at 12.
[55](1975) 133 CLR 1 at 12.
[56](1975) 133 CLR 1 at 13.
The derivation of the text of s 101(1A) – and in particular pars (a) and (c) – from these statements of Gibbs J is clear enough and, as already mentioned, this was acknowledged in relevant extrinsic material[57]. The effect of the Moorhouse decision on libraries was overcome by the introduction to the Copyright Act of s 39A[58]. Part VB of the Copyright Act (ss 135ZB-135ZZH) was subsequently introduced by the Copyright Amendment Act 1989 (Cth), instituting a system for the payment of equitable remuneration in respect of the copying of copyright works in educational and other institutions. Further, sub‑ss (1A) and (1B) were added to s 40, exempting fair dealing for the purposes of research or study from copyright infringement.
[57]At [22].
[58]See Copyright Amendment Act 1980 (Cth), s 6. Section 39A provides that, if a notice of a particular size is affixed in proximity to a machine (including a computer), neither the body administering the library or archives, nor the officer in charge, shall be taken to have authorised the making of an infringing copy on such a machine by reason only that the infringing copy was made on the machine. See also Copyright Regulations 1969 (Cth), reg 4B and Sched 3.
Australian Tape Manufacturers Association Ltd v The Commonwealth[59] ("Tape Manufacturers") concerned the constitutional validity of a compulsory levy[60] imposed on vendors of blank cassette tapes. Citing Gibbs J in Moorhouse, among other cases, Mason CJ, Brennan, Deane and Gaudron JJ said[61]:
"The sale of a blank tape does not constitute an authorization by the vendor to infringe copyright. That is principally because the vendor has no control over the ultimate use of the blank tape".
Their Honours went on to say[62]:
"manufacture and sale of articles such as blank tapes or video recorders, which have lawful uses, do not constitute authorization of infringement of copyright, even if the manufacturer or vendor knows that there is a likelihood that the articles will be used for an infringing purpose such as home taping of sound recordings, so long as the manufacturer or vendor has no control over the purchaser's use of the article".
[59](1993) 176 CLR 480; [1993] HCA 10.
[60]The compulsory levy at issue, referred to in s 135ZZN as a "blank tape royalty", had been introduced by the Copyright Amendment Act 1989 (Cth) as part of a new Pt VC, headed "Use of blank tapes for private and domestic copying".
[61](1993) 176 CLR 480 at 497.
[62](1993) 176 CLR 480 at 498.
In 2000, a new Pt VC (ss 135ZZI-135ZZZE), headed "Retransmission of free-to-air broadcasts", was introduced by the Copyright Amendment (Digital Agenda) Act 2000 (Cth). The new Pt VC instituted a scheme for the payment of equitable remuneration in respect of retransmission of free-to-air broadcasts, including cinematograph films subject to copyright[63].
Submissions
[63]However, this scheme does not apply to retransmissions which take place over the internet.
Appellants
The appellants have brought no legal action against any individual user of the internet services provided by iiNet for any primary infringements of copyright under either s 86(a) or s 86(c), and it did not appear to be in contention that it would be somewhat impractical to do so[64]. The present proceedings do not cover those responsible for providing the BitTorrent system. No party doubted that the rationale for the separate tort of authorisation is economic – namely, cost‑efficient enforcement of the rights of a copyright owner.
[64]See In re Aimster Copyright Litigation 334 F 3d 643 (2003) ("Aimster") at 645, where Judge Posner, citing Picker, "Copyright as entry policy: the case of digital distribution", (2002) 47 Antitrust Bulletin 423 at 442, referred to the possibility of copyright owners taking action against individual infringers as a "teaspoon solution to an ocean problem".
The appellants' complaint against iiNet is confined to alleging secondary infringement. The appellants contend that iiNet is liable for infringement of copyright in the appellants' films because it authorised users of its internet services to communicate those films to the public by making them available online to be downloaded by others through the use of the BitTorrent system, as prohibited by s 86(c).
In alleging the separate tort of authorisation, the appellants made it plain that their complaints were not complaints of contributory infringement; nor did they rely upon the principles applicable to joint tortfeasors. American authorities were referred to only as showing different approaches to dealing with the phenomenon of large-scale copyright infringements, occasioned by developments in communication technology including video recording[65] and peer-to-peer file sharing[66]. Accordingly, the appellants did not seek to show that iiNet had induced, incited or persuaded its customers to undertake acts of primary infringement.
[65]Sony Corporation of America v Universal City Studios Inc 464 US 417 (1984).
[66]Grokster 545 US 913 (2005).
The appellants relied on the second passage quoted above from the judgment of Gibbs J in Moorhouse[67]. The appellants equated the "control" referred to in that passage with the "power to prevent" referred to in s 101(1A)(a), and contended that iiNet's technical and contractual relationship with its customers gave it the indirect power to control the use of its services – that is, to prevent continuing primary infringements (through warnings, suspension of services and termination of contractual relations). That led to the submission that, once iiNet had received credible information of past infringements sufficient to raise a reasonable suspicion that such acts of infringement were continuing, failure to enforce the terms of the CRA (through warnings, suspension and termination) amounted, at the very least, to "countenancing" the primary infringements. Further, applying the language used by Jagot J in the Full Court, it was contended that iiNet's media releases amounted to "tacit approval" of the primary infringements[68].
[67](1975) 133 CLR 1 at 13.
[68]Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285 at 397 [477].
The appellants stated that, on any remitter to the Federal Court, they would seek injunctive relief to restrain iiNet from "continuing to provide internet services to each of [11 of the R20 accounts] without obtaining confirmation from the account holder … that each of the cinematograph films identified … in relation to that account has been removed from the BitTorrent system on that account". Accordingly (and consistently with the pleadings as amended from time to time), the appellants' case on authorisation ultimately was that iiNet could not avoid secondary infringement unless it implemented a system designed to achieve the removal of infringing material by iiNet customers from the BitTorrent clients on those customers' computers. The appellants did not identify any statutory warrant for the imposition of these obligations.
iiNet
iiNet's main contention was that the appellants' approach to s 101(1A) and the question of authorisation was inappropriately rigid. iiNet emphasised Jacobs J's statement in Moorhouse that "[i]t is a question of fact in each case what is the true inference to be drawn from the conduct of the person who is said to have authorized"[69], which was itself drawn from a passage in the judgment of Gavan Duffy and Starke JJ in Adelaide Corporation[70].
[69](1975) 133 CLR 1 at 21.
[70](1928) 40 CLR 481 at 504:
"Mere inactivity or failure to take some steps to prevent the performance of the work does not necessarily establish permission. Inactivity or 'indifference, exhibited by acts of commission or omission, may reach a degree from which an authorization or permission may be inferred. It is a question of fact in each case what is the true inference to be drawn from the conduct of the person who is said to have authorized the performance or permitted the use of a place of entertainment for the performance complained of' [citing Performing Right Society Ltd v Ciryl Theatrical Syndicate Ltd [1924] 1 KB 1 at 9 per Bankes LJ]."
iiNet contended that authorisation cannot be determined on the basis that particular factors – such as knowledge or a power to prevent – are either present or absent. Rather, iiNet relied on the language of s 101(1A) and emphasised that each of those factors is a matter of degree, and that a court must consider the extent to which each factor exists before determining whether a person's "inactivity or 'indifference, exhibited by acts of commission or omission, [has reached] a degree from which authorization … may be inferred'". iiNet also emphasised that questions of reasonableness ought to inform this process, and submitted that both Moorhouse and Adelaide Corporation leave room for legitimate inactivity or indifference. The facts in Moorhouse were said to be distinguishable because the university was responsible for the library, the books on its shelves and the photocopier, whereas iiNet is responsible for the provision of internet services but has no involvement in, or control over, the BitTorrent system.
iiNet further submitted that, when all of the relevant factors are considered, it cannot be inferred from iiNet's inactivity or indifference that it authorised its customers' infringing acts. In particular, iiNet relied on the fact that it has no direct control over its customers' acts (only the ability to suspend or terminate their internet access completely). Further, iiNet argued that its ability to implement a system of warnings, suspension and termination depended on it first undertaking the complex and costly task of reviewing and analysing the allegations in the AFACT notices. That task raised questions – of expense and effort, and of the possible risks (as a proxy for copyright owners) of exposure to contractual liability to customers if the information in the AFACT notices turned out to be inaccurate. Such matters were said to bear on the reasonableness of taking no steps to warn its customers after receipt of the AFACT notices.
Questions
The appeal can be determined by asking interrelated questions informed by s 101(1A). Did iiNet have a power to prevent the primary infringements and, if so, what was the extent of that power (s 101(1A)(a))? Did reasonable steps to prevent those infringements (after receipt of the AFACT notices) include warnings and subsequent suspension or termination of the accounts of all customers identified as infringing the appellants' copyrights (s 101(1A)(c)), if such customers failed to cease communicating infringing material using the BitTorrent system? How does the relationship between iiNet and its customers (s 101(1A)(b)) bear on each of those questions? It will be observed that these are largely questions of fact and the ultimate question of whether iiNet authorised the infringements will be an inference to be drawn from those facts[71].
[71]Adelaide Corporation (1928) 40 CLR 481 at 504 per Gavan Duffy and Starke JJ.
Before turning to those questions, some general observations as to matters of fact need to be reiterated. Access to the internet can be used for diverse purposes, including viewing websites, downloading or streaming non-infringing content, sending and receiving emails, social networking, accessing online media and games, and making voice over IP telephone calls. The BitTorrent system is also capable of being used for non‑infringing purposes.
iiNet's power to prevent primary infringements
Technical power
It is important to note that iiNet has no involvement with any part of the BitTorrent system and therefore has no power to control or alter any aspect of the BitTorrent system, including the BitTorrent client. Further, iiNet is not a host of infringing material, or of websites which make available .torrent files relating to infringing material[72]. iiNet does not assist its customers to locate BitTorrent clients or .torrent files by any indexing service or database entries[73]. It cannot monitor the steps taken by users of its internet services under the BitTorrent system, it cannot directly prevent users of its internet services from downloading a BitTorrent client or .torrent files, and it cannot identify specific films to which users of its internet services seek access. Once infringing material is stored on a customer's computer iiNet cannot take down or remove that material, and cannot filter or block the communication of that material over its internet service. Nor has iiNet any power to prevent its customers from using other internet services – and, as noted earlier, several users of an internet service may share an IP address. Whilst the relationship between iiNet and its customers involves the provision of technology, iiNet had no direct technical power at its disposal to prevent a customer from using the BitTorrent system to download the appellants' films on that customer's computer with the result that the appellants' films were made available online in breach of s 86(c).
[72]Cf Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380 ("Cooper") at 392 [61]-[65] per Branson J, 413 [157] per Kenny J.
[73]Cf Kazaa (2005) 220 ALR 1; Aimster 334 F 3d 643 (2003); Twentieth Century Fox Film Corp v Newzbin Ltd [2010] FSR 21.
Contractual power
Under the CRA, iiNet contracted to give its customers access to the internet (which carried with it power to use the internet for infringing or non‑infringing purposes) on the basis (set out in cll 4.2(a) and (e) of the CRA) that iiNet was not thereby purporting to grant to the customer any right to use the internet to infringe another person's rights, or for illegal purposes.
Because the CRA, in its terms, indicated iiNet's express, formal and positive disapproval of using access to the internet for infringing or illegal purposes, the appellants were driven to rely on the notion that iiNet's inactivity (after receipt of the AFACT notices) amounted at least to "countenancing" acts of primary infringement.
"Countenance" is a long‑established English word[74] which, unsurprisingly, has numerous forms and a number of meanings which encompass expressing support, including moral support or encouragement[75]. In both the United Kingdom and Canada, it has been observed that some of the meanings of "countenance" are not co‑extensive with "authorise"[76]. Such meanings are remote from the reality of authorisation which the statute contemplates. The argument highlights the danger in placing reliance on one of the synonyms for "authorise" to be found in a dictionary. Whilst resort to such meanings may have been necessary in the past, attention is now directed in the first place to s 101(1A). That provision is intended to inform the drawing of an inference of authorisation by reference to the facts and circumstances there identified, and recourse must be had to it. That is an express requirement.
[74]The Oxford English Dictionary, 2nd ed (1989), vol 3 at 1016-1017.
[75]The Oxford English Dictionary, 2nd ed (1989), vol 3 at 1017.
[76]Amstrad Consumer Electronics plc v The British Phonographic Industry Ltd [1986] FSR 159 at 207 per Lawton LJ, approved in CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013 at 1055 per Lord Templeman. See also CCH Canadian Ltd v Law Society of Upper Canada [2004] 1 SCR 339 at 361 [38].
Even it if were possible to be satisfied that iiNet's inactivity after receipt of the AFACT notices, and its subsequent media releases, "supported" or "encouraged" its customers to continue to make certain films available online, s 101(1A) (construed with both s 22(6) and s 112E) makes it plain that that would not be enough to make iiNet a secondary infringer. An alleged authoriser must have a power to prevent the primary infringements[77]. Australasian Performing Right Association Ltd v Jain[78], Tape Manufacturers[79], Kazaa[80] and Cooper[81] all confirm that there must be such a power to prevent. So much had been recognised earlier, in any event, in Adelaide Corporation[82] and Moorhouse[83].
[77]WEA International Inc v Hanimex Corporation Ltd (1987) 17 FCR 274 at 286-288.
[78](1990) 26 FCR 53.
[79](1993) 176 CLR 480.
[80](2005) 220 ALR 1.
[81](2006) 156 FCR 380.
[82](1928) 40 CLR 481 at 498-499 per Higgins J, 503, 505 per Gavan Duffy and Starke JJ.
[83](1975) 133 CLR 1 at 12 per Gibbs J.
As explained, the extent of iiNet's power was limited. It had no direct power to prevent the primary infringements and could only ensure that result indirectly by terminating the contractual relationship it had with its customers.
Reasonable steps
The nature of the internet, the BitTorrent system, and the absence of any industry code of practice adhered to by all ISPs are all factors which are relevant to the statutory task of assessing whether iiNet took reasonable steps to prevent or avoid the primary infringements, given its indirect power to do so.
Conventionally, the efficacy of warnings to infringers from owners (or licensees) of copyright derives from, and is reinforced by, the potential for successful injunctive proceedings, including interim relief, coupled with an award of damages or an account of profits, and an order for costs against a proven infringer. Whether a non‑responsive infringer is continuing to infringe after receipt of a warning notice from a copyright owner may often be checked with relative ease if infringing material is in the public market place.
Termination of an iiNet account with a customer who has infringed will assuredly prevent the continuation of a specific act of communicating a film online using a particular .torrent file on a particular computer. Regrettably, however, on receiving a threat of such termination, it is possible for a customer to engage another ISP for access to the internet on that computer or access the internet on another computer using a different ISP. Whilst any new infringement would be just as serious as the specific primary infringements about which the appellants complain, this circumstance shows the limitations on iiNet's power to command a response from its customers, or to prevent continuing infringements by them.

The appellants rely upon the notion of "countenancing" to encompass acts or omissions which are less precise or explicit than those involved in "sanctioning" or "approving". But in considering Moorhouse, and the adoption by Jacobs J of the statement by Bankes LJ in Ciryl, it should be emphasised that the University controlled access not only to the coin or token operated photocopying machines in a room close to the library but also to the book copied by Mr Paul Brennan and the premises containing the library and the machines.
The relief granted by this Court in Moorhouse was limited to a declaration that the University on a particular date had authorised the doing by Mr Brennan of the act of reproducing a particular literary work in a material form and thereby had infringed the copyright in that work of the respondents[153]. In Australian Tape Manufacturers Association Ltd v The Commonwealth[154], Mason CJ, Brennan, Deane and Gaudron JJ described as critical to the decision in Moorhouse the power of the University to control what was done by way of copying; the University not only had failed to take steps to prevent infringement but had provided potential infringers with both copyright material and the use of its machines by which copies of the copyright material could be made. Their Honours referred in that regard to a passage in the reasons of Jacobs J, and distinguished the case before them as follows[155]:
"manufacture and sale of articles such as blank tapes or video recorders, which have lawful uses, do not constitute authorization of infringement of copyright, even if the manufacturer or vendor knows that there is a likelihood that the articles will be used for an infringing purpose such as home taping of sound recordings, so long as the manufacturer or vendor has no control over the purchaser's use of the article".
[153](1975) 133 CLR 1 at 25.
[154](1993) 176 CLR 480 at 498; [1993] HCA 10.
[155](1993) 176 CLR 480 at 498.
The 2000 Act
An immediate response to Moorhouse and the use of copying machines installed in libraries and archives was the addition to the Act of s 39A. This was done by s 6 of the Copyright Amendment Act 1980 (Cth). The new s 39A provided that in certain circumstances neither the body administering the library or archives, nor the officer in charge, were to be taken to have authorised the making of an infringing copy "by reason only" that it was made on a machine installed there.
Thereafter, the Copyright Amendment Act 1989 (Cth) included Pt VB (ss 135ZB‑135ZZH), headed "Copying of Works Etc by Educational and Other Institutions", added to the jurisdiction of the Copyright Tribunal to determine equitable remuneration (ss 153C, 153D), and amended the provision in s 40 respecting fair dealing for the purpose of research or study.
A further element of complexity for this appeal has been provided by an addition to s 101 of the Act apparently made as some further and general legislative response to Moorhouse. The introduction of the Copyright Amendment (Digital Agenda) Act 2000 (Cth) ("the 2000 Act") just preceded the advent of BitTorrent. The 2000 Act added sub‑s (1A) both to s 36, dealing with infringement of copyright in works, and to s 101, dealing with infringement of copyright in other subject matter. The 2000 Act also added s 112E and s 86(c), with supporting definitions.
Section 101(1A) reads:
"In determining, for the purposes of subsection (1), whether or not a person has authorised the doing in Australia of any act comprised in a copyright subsisting by virtue of this Part without the licence of the owner of the copyright, 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 existing between the person and the person who did the act concerned;
(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."
Conclusions
Section 101(1A) is so drawn as to take an act of primary infringement and ask whether or not a person has authorised that act of primary infringement. In answering that question there will be "matters" that must be taken into account. These include, but are not confined to, the matters identified in pars (a), (b) and (c). Was there any relationship that existed between the primary infringer and the (alleged) secondary infringer? If so, what was its nature (par (b))? Did the secondary infringer have power to prevent the primary infringement; if so, what was the extent of that power (par (a))? Other than the exercise of that power, did the secondary infringer take any reasonable steps to prevent the primary infringement, or to avoid the commission of that infringement (par (c))?
In answering these questions an ISP is not to be taken to have authorised primary infringement of a cinematograph film "merely because" it has provided facilities for making it available online to a user who is the primary infringer (s 112E).
As indicated earlier in these reasons[156], the power of iiNet as an ISP with respect to the use of facilities provided to subscribers was limited by the nature of their commercial relationship; iiNet could not control the choice of its subscribers and other users to utilise the BitTorrent software, nor could iiNet modify the BitTorrent software or take down the appellants' films which were made available online.
[156]At [110].
At all material times iiNet had many thousands of account holders. Was it a reasonable step to require of iiNet that it monitor continually the activities of IP addresses to provide precise details of primary infringements that had been committed, and then take further steps to forestall further infringements? Warnings might or might not have that effect. Evidence was lacking of likely behaviour in that respect by users of ISP facilities. Further, with respect to the AFACT Notices, was it reasonable to expect iiNet to issue warnings or to suspend or terminate the contracts of customers when AFACT had not fully disclosed the methods used to obtain the information in the AFACT Notices? Those methods were disclosed only by the provision of expert evidence during the preparation of the case for trial[157].
[157](2011) 194 FCR 285 at 457.
In truth, the only indisputably practical course of action would be an exercise of contractual power to switch off and terminate further activity on suspect accounts. But this would not merely avoid further infringement; it would deny to the iiNet customers non‑infringing uses of the iiNet facilities. And, in any event, in the absence of an effective protocol binding ISPs (and there is no such protocol) the iiNet subscribers whose agreements were cancelled by iiNet would be free to take their business to another ISP.
In her dissenting reasons Jagot J concluded that iiNet had "moved beyond mere indifference to at least tacit approval of [the] primary infringements"[158]. Her Honour relied particularly upon a press release by iiNet by which it "ensured [that] its customers knew that their accounts would not be terminated ... unless AFACT could prove in court the alleged copyright infringements"[159].
[158](2011) 194 FCR 285 at 397.
[159](2011) 194 FCR 285 at 397.
The press release was issued by iiNet on the day the litigation by the appellants was instituted, 20 November 2008. It was available for download from its website. The release referred to the intention of iiNet to defend the action and expressed the view that the AFACT Notices were not sufficient to require it to disconnect users of the iiNet service. The significance of the press release was overstated by her Honour.
The "key facts" as to the "indifference" of iiNet upon which the appellants relied in this Court were four in number. They were: (i) the provision by iiNet of the internet connections, a necessary but insufficient step for the acts of primary infringement; (ii) the technical ability of iiNet to control the use of its service and its contractual ability to issue warnings and suspend or terminate accounts; (iii) the evidence provided by the AFACT Notices given before and after suit; and (iv) the absence of action by iiNet in response to the AFACT Notices.
These matters, taken together, do not establish a case of authorisation of those primary infringements which are the Scheduled Infringements in respect of the authorisation of which the appellants seek relief in this Court. The progression urged by the appellants from the evidence, to "indifference", to "countenancing", and so to "authorisation", is too long a march.
The facts of this case are well removed from those which in Moorhouse led Jacobs J[160] to adopt what had been said on the subject of indifference by Bankes LJ in Ciryl[161]. The rhetorical question with reference to what had been said by Bankes LJ, which Whitford J posed in CBS Inc v Ames Records & Tapes Ltd[162], may be asked here:
"Is this again a case of the indifference of somebody who did not consider it his business to interfere, who had no desire to see another person's copyright infringed, but whose view was that copyright and infringement were matters in this case not for him, but for the owners of the copyright? It must be recalled that the most important matter to bear in mind is the circumstances established in evidence in each case."
[160](1975) 133 CLR 1 at 21.
[161][1924] 1 KB 1 at 9.
[162][1982] Ch 91 at 112.
The position of iiNet also differs significantly from that of the respondent company director in Australasian Performing Right Association Ltd v Jain[163]. He was effectively the chief executive officer at the hotel owned by the company where there had been unlicensed performances of musical works. The Full Federal Court said of the respondent that it "was within his power to control what was occurring [but] he did nothing at all"; and that he had "countenanced" the infringements[164].
[163](1990) 26 FCR 53.
[164](1990) 26 FCR 53 at 61. The Full Court expressed no view on the alternative argument that the respondent was a joint tortfeasor with his company.
The present case is not one where the conduct of the respondent's business was such that the primary infringements utilising BitTorrent were "bound" to happen in the sense apparent in Evans v E Hulton & Co Ltd[165], and discussed earlier in these reasons[166]. Further, iiNet only in an attenuated sense had power to "control" the primary infringements utilising BitTorrent. It was not unreasonable for iiNet to take the view that it need not act upon the incomplete allegations of primary infringements in the AFACT Notices without further investigation which it should not be required itself to undertake, at its peril of committing secondary infringement.
[165][1923‑28] MacG Cop Cas 51 at 60.
[166]At [121].
Accordingly, the appeal should be dismissed.
Further matters
This makes it unnecessary to enter upon two further matters. The first is the reliance by iiNet upon requirements of Pt 13 Div 2 (ss 276‑278) of the Telco Act as an answer to the authorisation case presented against it. It was contended by iiNet that these provisions would have prohibited it from taking action in reliance on the AFACT Notices, for example, by warning, or by suspending or terminating the accounts of its subscribers. The second matter is the application in iiNet's favour of the "safe harbour" provisions in Pt V Div 2AA (ss 116AA‑116AJ) of the Act. The term "safe harbour" was coined to describe the operation of the system established in 1998 by United States legislation[167]. Like the differently constructed Australian system, this does not determine issues of liability, but limits relief against "service providers" who fall within a "safe harbour" specified in the legislation.
[167]17 USCS §512. See Perfect 10 Inc v Cybernet Ventures Inc 213 F Supp 2d 1146 at 1174‑1182 (2002).
The case presented by iiNet on these two grounds failed in the Full Court. In this Court iiNet did not rely on the "safe harbour" provisions, and did not press by oral argument its notice of contention respecting the Telco Act.
Nor is it appropriate to consider the schemes enacted in the United Kingdom by the Digital Economy Act 2010 (UK) and in New Zealand by the Copyright (Infringing File Sharing) Amendment Act 2011 (NZ), to the provisions in which for payments by copyright owners to ISPs reference was made by counsel for the appellants, iiNet, and Alliance.
Order
The appeal should be dismissed with costs.