Roadshow Films Pty Ltd v iiNet Ltd
[2011] FCAFC 23
•24 February 2011
FEDERAL COURT OF AUSTRALIA
Roadshow Films Pty Limited v iiNet Limited [2011] FCAFC 23
Citation: Roadshow Films Pty Limited v iiNet Limited [2011] FCAFC 23 Appeal from: Roadshow Films Pty Ltd v iiNet Limited (No. 3) [2010] FCA 24 Parties: ROADSHOW FILMS PTY LIMITED (ACN 100 746 870) and PARTIES IN ATTACHED SCHEDULE 1 v IINET LIMITED (ACN 068 628 937) File number: NSD 179 of 2010 Judges: EMMETT, JAGOT AND NICHOLAS JJ Date of judgment: 24 February 2011 Catchwords: INTELLECTUAL PROPERTY – authorisation of copyright infringement – copyright infringement notices served on internet service provider (ISP) alleging that users of ISP’s network were infringing copyright in cinematographic films by making them available online and electronically transmitting them to the public– whether ISP authorised copyright infringement – whether ISP had power to prevent infringement – whether ISP took reasonable steps to prevent or avoid infringement – consideration of other factors relevant to authorisation – knowledge of infringement – encouragement of infringement – inactivity and indifference to infringement – whether ISP sanctioned, approved or countenanced infringement – whether s 112E of the Copyright Act 1968 (Cth) prevented ISP from being found to have authorised infringement
INTELLECTUAL PROPERTY – acts of primary infringement – whether users of ISP’s network infringed copyright in cinematographic films by making them available online or electronically transmitting them to the public – whether the whole or a substantial part of any such cinematographic film was electronically transmitted – whether individual users committed multiple acts of infringement in relation to any such cinematographic film by making it available online and electronically transmitting it.
INTELLECTUAL PROPERTY – whether Telecommunications Act 1997 (Cth) compelled a finding that ISP could not reasonably be expected to issue warning notices to customers or suspend or terminate their accounts on the basis of the copyright infringement notices because the disclosure or use of information contained in them or business records of the ISP to which it would need to have regard for that purpose was prohibited by law.
INTELLECTUAL PROPERTY – ‘safe harbour’ provisions – whether ISP complied with relevant provisions of Division 2AA of Part V of the Copyright Act 1968 (Cth)
Legislation: Copyright Act 1968 (Cth) ss 10, 13, 14(1), 22(6), 22(6A), 31, 39A, 39B, 86, 101, 101(1A), 112E, 115, 116AA, 116AB, 116AC, 116AG and 116AH
Copyright Amendment (Digital Agenda) Act 2000 (Cth) s 3
Copyright Regulations 1969 reg 20B, Schedule 10
Criminal Code Act 1995 (Cth) s 137.2
Federal Court Rules O 13 r 3A and O 52 r 14AATelecommunications Act 1997 (Cth) ss 276, 279, 280, 289 and 290
Cases cited: Adelaide Corporation v Australasian Performing Right Association Ltd (1928) 40 CLR 481
ASIC v Citigroup Global Markets Australia Pty Limited (No.3) [2007] FCA 393
Australasian Performing Right Association Limited v Jain (1990) 26 FCR 53
Australasian Performing Right Association Ltd v Metro on George Pty Ltd (2004) 210 ALR 244
Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 176 CLR 480
Canadian Pacific Tobacco Company Limited v Stapleton (1952) 86 CLR 1
CBS Incorporation v Ames Records and Tapes Ltd [1982] Ch 91
CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013
Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25
Cooper v Universal Music Australia Pty Ltd (2006) 156 FCR 380
Falcon v Famous Players Film Co [1926] 2 KB 474
Fox v Percy (2003) 214 CLR 118
IceTV Pty Limited v Nine Network Australia Pty Limited (2009) 239 CLR 458
Levy v State of Victoria (1997) 189 CLR 579
Morton-Norwich Products Inc v Intercen Ltd [1978] RPC 501
Nationwide News Pty Ltd v Copyright Agency Limited (1996) 65 FCR 399
Network Ten Pty Limited v TCN Channel Nine Pty Limited (2004) 218 CLR 273
Performing Right Society Ltd v Cyril Theatrical Syndicate Ltd [1924] 1 KB 1
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Roadshow Films Pty Ltd v iiNet Pty Ltd(No 3) (2010) 263 ALR 215
Sharman Networks Ltd v Universal Music Australia Pty Ltd (2006) 155 FCR 291
Sony Corporation of America v Universal City Studios Inc (1984) 464 US 417
Telstra Corporation Ltd v Australasian Performing Right Association Ltd (1997) 191 CLR 140
The Queen v Crabbe (1985) 156 CLR 464
Universal Music Australia Pty Ltd & Ors v Sharman License Holdings Ltd (2005) 220 ALR 1
Universal Music Australia Pty Ltd v Cooper (2005) 150 FCR 1
University of New South Wales v Moorhouse (1975) 133 CLR 1WEA International Inc v Hanimex CorporationLtd (1987) 17 FCR 274
Date of hearing: 2, 3, 4 and 5 August 2010 Date of last submissions: 8 September 2010 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 807 Counsel for the Appellant: D.K. Catterns QC, J.M. Hennessy and C. Dimitriadis Solicitor for the Appellant: Gilbert + Tobin Counsel for the Respondent: R. Cobden SC, R.P.L. Lancaster SC and N.R. Murray Solicitor for the Respondent: Herbert Geer Lawyers Counsel for the Media, Entertainment and Arts Alliance & the Screen Actors Guild: M. Hall Solicitor for the Media, Entertainment and Arts Alliance & the Screen Actors Guild: Banki Haddock Fiora Counsel for APRA: M. Leeming SC Solicitor for APRA: Banki Haddock Fiora
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD179 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: ROADSHOW FILMS PTY LIMITED (ACN 100 746 870)
First AppellantTHE PARTIES IN THE ATTACHED SCHEDULE 1
Second Appellant to Thirty-Fourth Appellant
AND: IINET LIMITED (ACN 068 628 937)
Respondent
JUDGES:
EMMETT, JAGOT AND NICHOLAS JJ
DATE OF ORDER:
24 FEBRUARY 2011
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The parties bring in short minutes of proposed directions concerning any argument as to costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD179 of 2010
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: ROADSHOW FILMS PTY LIMITED (ACN 100 746 870)
First AppellantTHE PARTIES IN THE ATTACHED SCHEDULE 1
Second Appellant to Thirty-Fourth AppellantAND: IINET LIMITED (ACN 068 628 937)
RESPONDENT
JUDGES:
EMMETT, JAGOT AND NICHOLAS JJ
DATE:
24 FEBRUARY 2011
PLACE:
SYDNEY
EMMETT J
REASONS FOR JUDGMENT
INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [1]
THE RELEVANT STATUTORY PROVISIONS........ ........ ........ ........ ........ ........ ........ ........ ..... [4]
RELEVANT LEGAL PRINCIPLES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [18]
THE TECHNICAL AND FACTUAL BACKGROUND........ ........ ........ ........ ........ ........ ........ . [35]
The Internet........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [36]
The BitTorrent System........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [46]
Evidence of Primary Infringement........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [64]
iiNet’s Arrangements with its Customers........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [70]
iiNet’s Conduct in Preventing Infringements........ ........ ........ ........ ........ ........ ........ ........ ........ ... [81]
iiNet's Knowledge of Infringements - the Infringement Notices........ ........ ........ ........ ........ ....... [89]THE CLAIMS OF THE COPYRIGHT OWNERS........ ........ ........ ........ ........ ........ ........ ....... [111]
THE ISSUES........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [112]
Primary Infringement........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [114]
Authorisation........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [116]
Part 13 of the Telco Act........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [118]
Section 112E of the Copyright Act........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [119]
The Safe Harbour Provisions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [120]
CONCLUSIONS OF THE PRIMARY JUDGE........ ........ ........ ........ ........ ........ ........ ........ .... [121]
Primary Infringement........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [122]
Authorisation........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [126]
The Telco Act........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [134]
Section 112E........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [135]
The Safe Harbour Provisions........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [136]
INTERVENTION BY OTHER PARTIES........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [137]
Application by APRA........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [140]
Application by MEAA and the Guild........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [142]
Whether intervention should be permitted........ ........ ........ ........ ........ ........ ........ ........ ........ .... [146]
PRIMARY INFRINGEMENT........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [149]
Making Available Online........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [151]
Electronic Transmission........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [159]
AUTHORISATION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [171]
Authorisation Under s 101........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [173]
Section 101(1A)........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [178]
Sections 101(1A)(a) and (b)........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [181]
Section 101 (1A)(c)........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [195]
Section 112E........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [212]
Part 13 of the Telco Act........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [229]
Section 279........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [236]
Section 280........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [242]
Section 289........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [244]
Section 290........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [252]
Conclusion as to Authorisation........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [255]
APPLICATION OF SAFE HARBOUR PROVISIONS........ ........ ........ ........ ........ ........ ....... [258]
CONCLUSION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [273]
INTRODUCTION
One or other of the appellants (together the Copyright Owners) is the owner of copyright in one or more of a number of cinematograph films (the Films). The respondent, iiNet Limited (iiNet), is a carriage service provider. That is to say, iiNet provides its customers with access to the internet. It is common ground that, by use of the internet access services provided to its customers by iiNet, the Copyright Owners’ copyright in the Films has been infringed, although there is a dispute as to the precise characterisation of the infringements. The Copyright Owners claim that iiNet has authorised the acts of infringement done by the use of its services. Accordingly, they claim, iiNet itself has infringed their copyrights.
The Copyright Owners commenced a proceeding in the Court seeking relief against iiNet in respect of the alleged infringement by iiNet. A judge of the Court concluded that there was no infringement by iiNet and dismissed the proceeding with costs. The Copyright Owners have now appealed from those orders, saying that the primary judge erred in a number of respects. iiNet has filed notice of contention seeking to support the orders made by the primary judge on other grounds.
The appeal raises issues under the Copyright Act 1968 (Cth) (the Copyright Act) and the Telecommunications Act 1997 (Cth) (the Telco Act) that are of some significance and complexity. It is common ground that iiNet is a carriage service provider within the meaning of the Copyright Act and the Telco Act. Before stating the issues and explaining the somewhat complex technical and factual background against which the issues must be considered, it is desirable to say something about the relevant provisions of the Copyright Act and the Telco Act.
THE RELEVANT STATUTORY PROVISIONS
Under s 86 of the Copyright Act, copyright, in relation to a cinematograph film, is the exclusive right to do all or any of the following acts:
·to make a copy of the film;
·to cause the film, in so far as it consists of visual images, to be seen in public, or, in so far as it consists of sounds, to be heard in public; and
·to communicate the film to the public.
Under s 10, communicate means, relevantly in relation to a cinematograph film:
·make the film available online, or
·electronically transmit the film.
Under s 22(6) and s 22(6A), a communication is taken to have been made by the person responsible for determining the content of the communication. However, a person is not responsible for determining the content of a communication merely because the person takes one or more steps for the purpose of gaining access to what is made available online by someone else or receiving the electronic transmission of which the communication consists. For example, a person is not responsible for determining the content of the communication to that person of a web page merely because the person clicks on a link to gain access to the page.
Under s 101(1) of the Copyright Act, a person infringes the copyright subsisting in a cinematograph film if the person does an act comprised in the copyright without the consent of the owner of the copyright. Further, copyright subsisting in relation to a cinematograph film is infringed by a person who authorises the doing in Australia of any act comprised in the copyright. Section 101(1A) relevantly provides that, in determining, for the purpose of
s 101(1), whether or not a person has authorised the doing in Australia of any act comprised in a copyright in relation to a cinematograph film, the following matters must be taken into account:
(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; and
(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.
Those three matters are not the only matters that may be taken into account.
Under s 112E of the Copyright Act, a 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, relevantly, a cinematograph film merely because another person uses the facilities so provided to do something the right to do which is included in the copyright. The word communication in s 112E has a meaning that corresponds with the definition of communicate in s 10. Thus, s 112E qualifies the operation of s 101(1A) when it is necessary to determine whether a person has authorised the copying in Australia of a film, in circumstances where the relevant copying involves the making available online, or the electronic transmission of, the film by way of facilities provided by that person. Such a person is not taken to have authorised the infringement merely because another person uses the facilities provided by the first person to achieve the making of a copy.
Division 2AA of Part V of the Copyright Act, which consists of ss 116AA to 116AJ (the Safe Harbour Provisions), imposes limitations on the remedies available against carriage service providers for infringement of copyright. The Safe Harbour Provisions were inserted into the Copyright Act by the US Free Trade Agreement Implementation Act 2004 (Cth) (the US Free Trade Act). The purpose of the Safe Harbour Provisions is to limit the remedies that are available against a carriage service provider for infringements of copyright that relate to the carrying out of certain online activities by the carriage service provider.
Under s 116AC, a carriage service provider carries out a Category A activity by, relevantly, providing facilities or services for transmitting, routing or providing connections for a cinematograph film, or the intermediate and transient storage of a cinematograph film in the course of transmission, routing or provision of connections. Section 116AG(3) relevantly provides that, for an infringement of copyright that occurs in the course of the carrying out of a Category A activity, the relief that the Court may grant against a carriage service provider is limited to one or more of the following:
·an order requiring the carriage service provider to take reasonable steps to disable access to an online location outside Australia; and
·an order requiring the carriage service provider to terminate a specified account.
In deciding whether to make an order of the kind referred to in s 116AG(3), the Court must have regard to:
·the harm that has been caused to the owner of the copyright,
·the burden that the making of the order will place on the carriage service provider,
·the technical feasibility of complying with the order,
·the effectiveness of the order, and
·whether some other comparably effective order would be less burdensome.
The Court may also have regard to other matters that the Court considers relevant.
However, under s 116AG(1), before the limitations in s 116AG(3) apply, a carriage service provider must satisfy certain conditions. Relevantly, the conditions for category A activities of carriage service providers are set out in the table in s 116AH(1). The first condition in the table in s 116AH(1) is that the carriage service provider must adopt and reasonably implement a policy (Termination Policy) that provides for termination, in appropriate circumstances, of the accounts of repeat infringers.
Another condition is that, 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 used to protect and identify copyright material. Under s 116AB, an industry code is one that meets any prescribed requirements and is registered under the Telco Act or one developed in accordance with the Copyright Regulations 1969 (Cth) (the Regulations). Section 116AH(2) provides that nothing in those 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 that is the subject of an industry code. It is common ground that, at relevant times, there was no relevant industry code in force.
iiNet also relies, if necessary, on the provisions of Part 13 of the Telco Act as constituting an answer to any obligation to take steps to prevent an alleged infringement of copyright by its customers. Part 13, which includes ss 270 to 310 inclusive, deals with the protection of communications. Under Part 13, a carriage service provider must protect the confidentiality of information that relates to:
·the contents of communications that have been, or are being, carried by the carriage service provider,
· carriage services supplied by the carriage service provider, and
· the affairs or personal particulars of other persons.
To that end, s 276(1) relevantly provides that a service carriage provider must not disclose or use any information or document that:
(a)relates to:
·the contents or substance of a communication that has been carried by the carriage service provider,
·carriage services provided, or intended to be supplied, to another person by the carriage service provider, or
· the affairs or personal particulars of another person, and
(b)comes to the knowledge or into the possession of the carriage service provider in connection with the carriage service provider’s business as a carriage service provider.
Section 276(3) provides that a person who contravenes s 276(1) is guilty of an offence. However, Division 3 of Part 13, which consists of ss 279 to 294 inclusive, provides for exceptions to the prohibition in s 276. Four provisions are relied on by the Copyright Owners.
The first is s 279(1), which provides that s 276 does not prohibit a disclosure or use by a person of information or a document if:
· the person is an employee of a carriage service provider, and
·the disclosure or use is made in the performance of the person’s duties as such an employee.
Second, under s 280(1), s 276 does not prohibit a disclosure or use of information or a document if, relevantly, the disclosure or use is required or authorised by or under law. Third, under s 289, s 276 does not prohibit a disclosure or use by a person of information or a document if:
·the information or document relates to the affairs or personal particulars of another person, and
·the other person, relevantly, has consented to the disclosure or use, as the case requires, in the circumstances concerned.
Finally, under s 290, s 276 does not prohibit a disclosure or use by a person if:
·the information or document relates to the context or substance of a communication made by another person, and
·having regard to all the relevant circumstances, it might reasonably be expected that the sender and recipient of the communication would have consented to the disclosure or use, if they had been aware of the disclosure or use.
RELEVANT LEGAL PRINCIPLES
Section 101(1A) was inserted into the Copyright Act by the Copyright Amendment (Digital Agenda) Act 2000 (Cth) (the Digital Agenda Act). Section 112E was also inserted into the Copyright Act by the Digital Agenda Act. The Digital Agenda Act also inserted into s 10 of the Copyright Act the definition of communicate.
The objects of the Digital Agenda Act, as stated in s 3, included the following:
·to ensure the efficient operation of relevant industries in the online environment;
·to promote certainty for information technology industries that are investing in and providing online access to copyright material;
·to provide reasonable access and certainty for internet users of copyright material online; and
·to ensure the promotion of new technologies.
However, the Digital Agenda Act did not disclose a legislative intention to alter the meaning of the word authorises in the context of the Copyright Act.
Section 101(1A) recognises that an element of judgment is involved in determining whether one person has, for the purposes of s 101(1), authorised another to do a particular act. Section 101(1A) discloses an intention to guard the process by which the judgment is reached as to whether a person authorises the doing in Australia of an act comprised in the copyright. The decision maker must have regard to the matters identified in s 101(1A), which have particular relevance where the alleged act of infringement has occurred online (see Cooper v Universal Music Pty Ltd (2006) 156 FCR 380 (Cooper’s Case) at [19] and [20]).
Section 101(1A) was introduced with an object of providing a practical enforcement regime for copyright owners in the online environment (see Cooper’s Case at [135]). Accordingly, the question of authorisation must be determined primarily by reference to s 101(1A). The appropriate starting point, therefore, is to have regard to the matters referred to in that provision (see Cooper’s Case at [28]).
The inclusion of the three matters referred to in s 101(1A) was intended to codify certain principles in relation to authorisation that then existed at common law. That inclusion was intended to provide a degree of certainty about the steps that should be taken in order to avoid liability for authorising infringements.
The language of s 101(1A) is reminiscent of language to be found in the reasons of the High Court in University of New South Wales v Moorhouse (1975) 133 CLR 1 (Moorhouse). Accordingly, the principles propounded in Moorhouse must be taken to have been given attention by the Parliament when enacting s 101(1A). It is therefore important to have regard to those principles.
The word authorise, when used in s 101, has its dictionary meaning of sanction, approve or countenance. There is no reason to understand the phrase sanction, approve or countenance as importing an element of official approval. Express or formal permission or active conduct indicating approval is not essential to constitute authorisation with s 101(1) (see WEA International Inc v Hanimex Corporation Ltd (1987) 17 FCR 274 (Hanimex) at 286). Official approval is fundamentally different from the concept of countenancing.
Authorise can also mean permit, since the words authorise and permit are often treated as synonymous. However, a person cannot be said to authorise an infringement of copyright unless that person has some power to prevent it. Nevertheless, express or formal permission or sanction or active conduct indicating approval is not essential to constitute an authorisation. Inactivity or indifference, exhibited by acts of commission or omission, may reach a degree from which an authorisation or permission may be inferred, although the word authorise connotes a mental element. It cannot be inferred, from mere inactivity by a person, that the person had authorised something to be done, if the person neither knew, nor had reason to suspect, that the act might be done. Indifference or omission will not be permission unless the party sought to be made liable, amongst other things, knows, or has reason to know or believe, that the particular act in the copyright will or may be done (see Moorhouse at 12-13).
A person who has under that person’s control the means by which an infringement of copyright may be committed and who makes that means available to another person, knowing, or having reason to suspect, that the means is likely to be used for the purpose of committing an infringement and who omits to take reasonable steps to limit use of the means to legitimate purposes, authorises any infringement that results from the use of that means. There will be authorisation where the person sought to be made liable knows or has reason to suspect that a class or category of acts in the copyright might be done (see Moorhouse at 13).
The word authorise in s 101 is not limited to the authorising of an agent by a principal to do an act in the copyright of material. Where there is such an authority, the act of the agent is the act of the principal and thus the principal may be said to do the act comprised in the copyright. However, authorisation is wider than authority. It has a wide meaning that, in cases of permission or invitation, is apt to apply both where an express permission or invitation is extended to do an act comprised in copyright and where such a permission or invitation may be implied. Where a general permission or invitation may be implied, it is unnecessary that the authorising party have knowledge that a particular act comprised in the copyright will be done (see Moorhouse at 21).
The manufacture and sale of a device that has lawful uses will not constitute authorisation of the infringement of copyright, even if the manufacturer or seller knows that there is a likelihood that the device will be used for an infringing purpose, so long as the manufacturer or seller has no control over the purchaser’s use of that device (see Australian Tape Manufacturers Association Ltd v Commonwealth (1993) 177 CLR 480 at 498). Thus, a person does not authorise infringement merely because the person knows that another person might infringe copyright and takes no step to prevent infringement. Mere knowledge that a breach of copyright is likely to occur does not necessarily amount to authorisation, even if the person having that knowledge could take steps to prevent infringement (see Nationwide News Pty Ltd v Copyright Agency Limited (1996) 65 FCR 399 at 422 and 424).
On the other hand, where a website, in substance, constitutes an invitation to use hyperlinks provided on the website in order that sound recordings can be downloaded from other websites and a principal purpose of the first website is to enable infringing copies of the sound recordings to be made, there is an implicit, and possibly an explicit, unqualified invitation to use the website to infringe copyright in the sound recordings. That invitation, when it is taken up, accounts to authorisation (see Cooper’s Case at [152]).
The language of s 112E of the Copyright Act presupposes that a person who merely provides facilities for making a communication might be taken to have authorised an infringement of copyright in a cinematograph film effected by the use of the facility. Absent s 112E, a mere provider of facilities for making communications would be regarded as having authorised copyright infringements effected by the use of those facilities. Section 112E has the effect of expressly limiting the authorisation liability of persons who provide facilities for the making of, or facilitating the making of, communications (see Cooper’s Case at [32] and [39]).
Before s 112E will be applicable, there must be a person providing facilities for making or facilitating the making of a communication. However, if the most that can be said is that a person has provided facilities that another person has used to infringe copyright, that first person is not to be taken to have authorised the infringement. Nevertheless, s 112E does not preclude the possibility that a person who attracts the benefit of the section may be held, for other reasons, to be an authoriser. Whether there are other reasons depends on the matters referred to in s 101(1A) and any other relevant matters (see Cooper’s Case at [168]). Section 112E may provide a defence for a person who does no more than provide the facilities that are used to infringe copyright.
It is not necessary, in order to have a relevant power within s 101(1A)(a), that a person must have power, at the time of doing of each relevant act comprised in a copyright, to prevent the act being done. A person’s power to prevent the doing of an act comprised in a copyright includes the person’s power not to facilitate the doing of that act by, for example, making available to the public a technical capacity calculated to lead to the doing of that act. It is relevant if a person who provides a facility for obtaining access to a website chooses to establish and maintain that facility in a form that does not give that person power immediately to prevent, or immediately to restrict, users of the facility from obtaining access, by means of the facility, to other websites for the purpose of copying material in which copyright subsists. A person has power to prevent the copying of copyright material within the meaning of s 101(1A)(a) if the person is responsible for creating and maintaining a facility whereby the copying can be effected and facilitated (see Cooper’s Case at [41]-[42]).
Indifference, exhibited by acts of commission or omission, may reach a degree from which authorisation or commission may be inferred (Performing Right Society Limited v Cyril Theatrical Syndicate Limited (1924) 1 KB 1 at 9). The question is whether the alleged infringer has exhibited such inactivity and indifference as will support a finding of permission. There will be authorisation by a person who decides to ignore the rights of the owner of copyright and to allow a situation to develop and to continue in which the alleged authoriser must have known that the copyright was likely to be infringed (see Australian Performing Right Association Limited v Jain (1990) 26 FCR 53 (Jain) at 61).
While mere inactivity or indifference may be insufficient, particularly where there is no knowledge or reason to suspect that infringement might occur, inactivity or indifference, coupled with other factors, may support an inference of authorisation. It may not be that every act that amounts to the countenancing of something is an authorisation. Matters of degree are involved (see Cooper’s Case at [38]).
THE TECHNICAL AND FACTUAL BACKGROUND
It is necessary to say something about the technical background against which the issues in the appeal arise. It will then be necessary to describe the relevant acts of infringement before describing the extent of iiNet’s knowledge of those acts and the action taken by iiNet in response to that knowledge.
The Internet
Not every computer using the internet is connected directly to every other computer using the internet. Rather, each computer is linked to other computers, which in turn are connected to other computers, and so on. Hence, the internet is fairly described as a network of networks of computers.
For computers to be able to communicate with each other, they must use the same language. That process is facilitated by sets of rules for computers, which are referred to as protocols. Two computers that obey the relevant protocols will be able to communicate with each other. One of the primary protocols by which communication is effected between computers is the Internet Protocol.
Computers operate by means of binary code. A bit is either a zero or a one. A byte is 8 bits. A kilobyte is 1,024 bytes, a megabyte is 1,024 kilobytes and a gigabyte is 1,024 megabytes.
Data sent by means of the Internet Protocol is broken up into small packets, consisting of less that half a megabyte. Each packet contains a header consisting of information identifying the address from which the packet is sent and the address to which the packet is to be sent. The packet itself contains the relevant data. The Internet Protocol allocates addresses to the sending and receiving computers and then sends the packets of data from one address to the other. Such addresses are referred to as IP Addresses. An IP Address is a number rendered in binary code. To make an IP Address readable, it is converted into a number consisting of four groups of three digits, each group separated by a full stop.
IP Addresses are sold in blocks to carriage service providers such as iiNet, who then allocate them to their customers to enable their customers to connect to the internet and communicate with other computers. The identity of the carriage service provider to which particular IP Addresses have been allocated is public information.
Carriage service providers connect their customers to the internet by means of physical infrastructures. The customer’s connection to the infrastructure is by way of a modem, which will often be provided to the customer by the carriage service provider. The customer’s modem may communicate with the carriage service provider’s infrastructure by telephone lines or cables or by wireless transmission. The carriage service provider’s infrastructure enables it to communicate with any modem within Australia. iiNet operates facilities that allow many connections to be aggregated together at an iiNet data centre. iiNet has a connection from its data centre in Sydney to the rest of the world by means of undersea optical fibre cables. By those facilities, iiNet is able to provide connections from each customer’s modem to modems of its other customers and of customers of other service providers throughout the world.
A router is a device that splits the internet connection provided to a particular modem. Splitting the connection will enable two or more computers to have access to the internet by use of the same modem. A router also allows two or more computers to communicate with each other, thereby creating a network. Thus, a single internet connection will be made to a modem. Data passing through that modem will be passed either directly to a single computer or to a router. If to a router then the router will distribute data to the computers that are connected to that router, either by way of a cable or by wireless transmission.
Each computer connected to a router is assigned an IP Address by the router in the same form as that used for the internet. However, such IP Addresses are known only to the computers attached to that network and are not publicly available. In particular, the IP Address of a particular computer is not transmitted to the internet. Only the address of the modem is transmitted to the internet. Because all of the computers within a particular network receive data through the relevant router, only one public IP Address is allocated by the carriage service provider to the modem to which the router is connected. The IP Address of the modem, which is public, is the only address seen by other computers on the internet.
Thus, the location of a connection to the internet by means of the public IP Address will be known publicly. However, a public IP Address does not necessarily relate to a specific computer but will relate to the modem to which that computer is connected. There may be connected to that modem just one computer or a router to which any number of computers may be connected to form a network. It is only computers within that network, receiving data from the router, that will know the identity of other computers in that network.
The IP Addresses provided to most of iiNet’s domestic customers for access to the internet are not fixed, but change over time. That is to say domestic IP Addresses are described as being dynamic. On the other hand, business customers are mostly provided with a fixed or static IP Address.
The BitTorrent System
There are various schemes operating on the internet for the decentralised distribution of data across the internet, usually described as file sharing. One of those schemes is the BitTorrent System. The BitTorrent System operates on a peer to peer basis, whereby all of the computers seeking particular data participate in the distribution of that data. . A group of computers sharing a particular file is known as a swarm. Each computer within a swarm is known as a peer.
The BitTorrent System has a number of constituent parts. The constituent parts of the BitTorrent System include the BitTorrent Protocol, the BitTorrent Client software and the Tracker. Those constituent parts work together to enable access to the ultimate file sought to be shared. In the present context, the file to be shared will be one of the Films.
The BitTorrent Protocol specifies what needs to be done to implement file sharing by means of the BitTorrent System. A file extension specifies the particular purpose of a particular file. The BitTorrent Protocol uses a .torrent file extension. A .torrent file does not contain underlying data. Rather it contains the name of a file of interest, the size of the file and other information relating to the data in question
BitTorrent Client software is a computer programme that allows a person to access groups of computers sharing a particular .torrent file. There are several BitTorrent Client programmes available. Different programmes may have different graphic user interfaces and have different features. However, each BitTorrent Client programme operates in the same basic way insofar as it must comply with the requirements of the BitTorrent Protocol in order to function. In order to fulfil its role, BitTorrent Client must be provided with information from a .torrent file.
The BitTorrent Protocol breaks up large files into smaller pieces, in a way similar to that in which data is transferred across the internet by means of packets. The size of the pieces into which the BitTorrent Protocol breaks a file varies. Cinematograph film files are often divided into pieces consisting of 512 kilobytes. Such pieces will usually be larger than packets.
The pieces into which the BitTorrent Protocol breaks up files are shared between the individual peers in a swarm. Over time, pieces are requested and received by the BitTorrent Client programme from other peers and are ultimately assembled together into a file that consists of the whole of the original file. In order to ensure that each piece is received correctly, and that the data is not corrupted, the BitTorrent Client programme consults hash values for each piece.
A hash value is a means of converting a large amount of data into a smaller value. It is a mathematical function of its input, in that an identical input equals an identical hash. Accordingly, a hash can fulfil the function of an identifier of data. The input comes from the data of the file being shared as a whole or as a piece of that file. The hash value for each piece is referred to as a piece hash. A .torrent file contains the details of the piece hashes of all the individual pieces of the file in question.
When the BitTorrent Client programme 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 programme knows that the piece is the correct piece and was correctly received. If it is not, it is discarded and the requested piece is sought again.
A file hash is the mathematical function of the data of the underlying file as a whole being shared in a swarm. A particular swarm may be sharing one file or a number of files. The file hash applies to what is being shared as a whole, and serves as a mechanism of identifying what file is in each swarm. The file hash can be used to show that a particular swarm is sharing a particular file, which is a cinematograph film. Any copy of such a file with the same file hash will be the same as any other copy with that file hash.
Another constituent part of the BitTorrent System is the Tracker, which is a computer programme on a server made available for contact by users by means of a Universal Resource Locater, or web address (URL). The URL is found in the .torrent file. The Tracker monitors the particular swarm to which it is attached and monitors the IP Addresses of peers in the swarm. The BitTorrent Client programme, when provided with the location of the Tracker by the .torrent file, contacts the Tracker to request the IP Addresses of peers in the swarm. The Tracker then provides that information to the BitTorrent Client programme. That allows the BitTorrent Client programme to contact those peers directly, by their IP Addresses, and request pieces of the file from them and to share pieces of the file with them.
Many websites make .torrent files available for download. Such websites have a search function that enables a search to be made for a particular file. Not all .torrent files relate to copyright material. However, some websites openly offer copyright material, including the Films.
Several steps are required to enable a person to obtain access to one of the Films by means of the BitTorrent System. First, it is necessary to download a BitTorrent Client programme. Next, .torrent files related to the Films are downloaded from websites on the internet. The .torrent files are then opened in the BitTorrent Client programme. A connection with the internet must be maintained for so long as it takes to download all of the pieces that make up the .torrent file for the Film. The time necessary for the downloading process will depend upon the size of the Film file, the number of peers in the swarm and the speed of the internet connections of those peers.
The BitTorrent System enables efficient distribution of data, because each peer is connected to many other peers, the film file is split into many small pieces and peers download pieces from other peers as well as uploading pieces to other peers. The logic of the BitTorrent Protocol operates so as to ensure that the rarest piece in a swarm is the first to be sought, thereby averaging out the availability of pieces and minimising blockage or bottlenecks, which might occur if there were certain pieces of the Film file requested by many peers.
The BitTorrent System can be contrasted with traditional client/server models. With such models, if there are many clients, the server must provide the data to all of the clients. That means that, given a fixed amount of capacity to provide data, the capacity has to be shared among all of the clients seeking the same file. Thus, the more people that seek a particular file, the longer it will take for each person to receive that file. With the BitTorrent System, the more people wanting a file, and therefore the bigger the swarm, the faster each individual peer receives the file.
Where a customer of a carriage service provider seeks to obtain a particular Film file, the customer will first download the .torrent file for that Film. The .torrent file will be opened in the BitTorrent Client programme. Upon opening the file, the BitTorrent Client programme will contact the Tracker, seeking details about the swarm sharing that file, including the IP Addresses of peers in that swarm. Once the BitTorrent Client programme has the addresses, it can contact those peers directly. All of the peers can then communicate directly.
The customer seeking the Film file would initially not have any pieces of the Film file but the BitTorrent Client programme will know, because of the .torrent file, all of the pieces it needs to obtain, together with the piece hashes of those pieces. The BitTorrent Client programme will query the peers to which it is connected, in order to ascertain which pieces of the Film file those peers have. Some peers may have the whole of the Film file, in which case all pieces will be available. Other peers may have less than the whole Film file, because they are in the process of downloading. However, those peers will still be able to share the pieces that they have already downloaded.
After the Tracker has been interrogated, the BitTorrent Client programme can determine which pieces are the rarest and will therefore request those. Pieces are not downloaded in sequence but the rarest is downloaded first and they are all assembled together later. The BitTorrent Client programme will request a particular piece from another peer who is known to have it. That peer must decide whether or not to share. Generally, the only reason why a peer would refuse to share a piece would be that it has too many other peers connected to it. If the peer decides to share the piece in question, it will transmit the piece to the requesting peer’s computer. The BitTorrent Client programme will check the piece by means of the piece hash and, if the check is positive, the piece will be accepted. Once that piece is received, the BitTorrent Client programme can transmit that piece to other peers that request it. The process occurs rapidly, with multiple peers and multiple pieces. It is entirely automatic.
Over time, the BitTorrent Client programme will receive all of the pieces, which will be assembled together into the complete Film file. At that point, the customer who has the full Film file will be able to share the whole file with the swarm. The BitTorrent Client programme will share the file with the swarm until such time as that programme is closed on the particular computer or the .torrent file is removed from the programme. If the .torrent file is not removed and the BitTorrent Client programme is reopened, the programme will continue to share the file with the swarm.
Evidence of Primary Infringement
The Australian Federation Against Copyright Theft (AFACT) is an organisation set up for the purposes of assisting its members in relation to infringement of their copyrights. Its members include all of the Copyright Owners and other companies engaged in the film production industry. The members of AFACT provide funds and determine what investigations and activities will be undertaken by AFACT.
From August 2007, AFACT used the services of DtecNet Software APS (DtecNet) to collect information concerning alleged copyright infringement by internet users in Australia. Between September 2007 and June 2008, DtecNet investigated 190 Australian service providers in relation to different types of file sharing protocols, including the BitTorrent Protocol. It then narrowed its investigations to the BitTorrent Protocol and targeted four Australian service providers, including iiNet.
In June 2008, AFACT instructed DtecNet to prepare reports regarding copyright infringements by customers of iiNet using the BitTorrent System. It did so in the form of spreadsheets, which it provided to AFACT. The data in the spreadsheets recorded infringements in respect of one or more of the Films over a period of time by the use of individual iiNet customer accounts.
An employee of DtecNet would identify a .torrent file of interest, based on information supplied by the Copyright Owners or by AFACT. DtecNet would then employ a programme known as DtecNet Agent, which is a BitTorrent Client programme, to open that .torrent file. By doing so, DtecNet Agent, as with any other BitTorrent Client programme, was able to query the Tracker, connect peers to the swarm and download pieces from those peers. DtecNet Agent employed an IP filter to ensure that it only connected to IP addresses of customers of iiNet. Initially, DtecNet Agent downloaded one complete copy of each of the Films being investigated. DtecNet employees viewed the copy to ensure that it corresponded with one of the Films. That process established that a particular file hash corresponded with one of the Films.
DtecNet Agent then reconnected to the IP address of an iiNet customer at whose IP address a copy of the file or parts of the file of that Film had been available and downloaded a piece of that file from that IP address. It then matched the piece downloaded with the piece hash through the hash checking process described above. DtecNet Agent then recorded information referable to the peer from which it had downloaded that piece of the file. DtecNet Agent only downloaded one piece from each IP address and then disconnected from that IP address. DtecNet Agent downloaded a new piece from the same IP address every 24 hours.
DtecNet Agent created a running log of every activity, which included every single request sent between computers and every packet of data exchanged between those computers. Accordingly, every aspect of the connection and download was recorded and logged by DtecNet Agent. All the information received by DtecNet Agent was recorded and stored on DtecNet’s servers. A DtecNet employee then prepared a report containing some or all of the information recorded by DtecNet Agent and set out that information in spreadsheets, which it provided to AFACT.
iiNet’s Arrangements with its Customers
The ability of iiNet to derive a profit from its business depends largely upon the control or reduction of variable costs. One of the significant variable costs to iiNet in running its business is the cost of acquiring bandwidth from telecommunication companies so that iiNet can provide internet services to its customers. As a general rule, as usage increases, the cost to iiNet increases. Accordingly, an increase in the average usage is reflected in increased cost in the purchase of bandwidth for subsequent periods. When a customer’s usage reaches about 50 percent of the customer’s quota, iiNet’s margin begins to be eroded by the cost of providing that bandwidth and by other costs.
Accordingly, it is in the interests of iiNet to ensure that usage by its customers is low in comparison to the quotas provided for in the plans of those customers. iiNet’s costs are reduced and its profits increased if its customers do not use all of the quota allocated to them. iiNet’s costs are also reduced if customers do not download data from overseas websites. iiNet says, therefore, that it is not in its interest for customers to download infringing material from overseas websites by use of the BitTorrent System.
iiNet provides services to its customers under one or other of its broadband plans. Each broadband plan has a fixed price for a fixed download quota per month. That is to say, a customer on a plan who downloads the whole of the quota allocated to the plan pays the same as a customer on the same plan who downloads none or a small part of the quota. All of the activity by a customer using a service under an internet account, such as viewing a web page, is counted against the quota for that customer’s plan.
Further, the services provided by iiNet to its customers are used for many functions other than downloading material from websites. For example, services provided by iiNet can be used for email, for social networking, for online media and gaming, for voice over internet protocol and for the operation of virtual private networks. Thus, iiNet customers who have infringed copyright are not necessarily using the iiNet service solely for that purpose. It may be that the infringing acts represent only a very small proportion of the total usage of a service provided to a customer by iiNet. Indeed, there are significant activities of iiNet customers that do not involve any infringement of copyright of the Copyright Owners or of any other copyright.
iiNet’s customer relationship agreement contains the terms of the arrangement between iiNet and its customer. The customer relationship agreement sets out the standard terms and conditions on which iiNet supplies services and products to its customers. It contains:
· the general terms, which apply to all services and to all customers,
·a service description, which sets out iiNet’s standard service description for each particular service,
·a pricing schedule, which specifies iiNet’s rate plans, pricing and charges for its service, and
· a fair use policy, which applies to particular services and customers.
Clause 1.1 provides that, if there is any inconsistency between any of the terms of the customer relationship agreement, the order of precedence will be the service description, the general terms and the pricing schedule.
Clause 1.3 provides that iiNet may need to change the customer relationship agreement from time to time and that that may be done without the agreement of the customer. If iiNet reasonably considers that a change to any term of the customer relationship agreement is likely to benefit the customer, or have a neutral impact on the customer, iiNet is entitled to make the change immediately and is not required to tell the customer. However, if iiNet makes any change that will be detrimental to the customer, iiNet must notify the customer at least 21 working days before the proposed change takes effect. If iiNet makes any change that has more than a minor detrimental impact on the customer, the customer may cancel the service without incurring any charges other than usage based charges incurred up to the date of cancellation.
By clause 4.1, the customer must, in using the service, comply with all laws and all directions by any government or statutory body or authority and any reasonable directions by iiNet. Under clause 4.2, the customer must not use, or attempt to use, the customer’s service to commit an offence or to infringe another persons rights or for illegal purpose or practices and must not allow anybody else to do so. The customer is responsible for, and must pay for, any use of the service, including where unauthorised use has arisen out of a negligent or wrongful act or omission on the part of the customer.
Clause 14.2 provides that iiNet may, without liability, immediately cancel, suspend or restrict the supply of the service to the customer if the customer breaches a material term and that breach is not capable of remedy. In addition, iiNet may also cancel, suspend or restrict the supply of the service if the customer breaches a material term, the breach is capable of remedy and the customer does not remedy the breach within 14 days after iiNet gives notice to the customer requiring the customer to do so. iiNet may also cancel, suspend or restrict the supply of the service if the customer breaches clause 4 or otherwise misuses the service or if iiNet reasonably suspects fraud or other illegal conduct by the customer, or any other person, in connection with the service.
iiNet provides a service, known as Freezone, whereby its customers may download or stream licensed material. A large quantity and a wide range of material is available by way of Freezone, including films, sport, television programs, games, music and online radio stations. In order to provide that material, iiNet has entered into arrangements with major suppliers and distributors of licensed material. iiNet customers are also able to download content purchased from the online Apple iTunes store by way of Freezone, as well as rent films from iTunes and watch previews of films online. A large number of iiNet customers use the Freezone service. The customers pay for the downloads and no infringement of copyright is involved.
Customers of iiNet automatically receive access to the Freezone service at no additional charge when they enter into a plan with iiNet. Material downloaded or streamed through Freezone is not counted towards the customer’s quota. iiNet undertakes a number of steps to encourage its customers to use the Freezone service, by promoting it on its website, through newsletters and by media releases. The Freezone service encourages customers to download and stream material legitimately. That benefits iiNet, the owners of copyright material and customers.
Apart from the Freezone service, almost any other activity, including viewing a web page, is counted against a customer’s quota. If a customer exceeds the quota, the speed at which that customer can download data is significantly reduced. The purpose of that reduction is to avoid the problem of large unexpected bills for high usage by a customer over quota. Accordingly, there is a strong incentive for customers not to exceed their quotas. However, even if a customer exceeds the quota, and the download speed is reduced, the customer can still download or stream material from the Freezone site at normal speeds.
iiNet’s Conduct in Preventing Infringements
iiNet points to a number of steps that it says that it has taken in the past to discourage infringing acts by the use of its services as follows: Specifically, iiNet provides its services to its customers on the terms and conditions of the customer relationship agreement, which requires the customer to comply with all laws, and requires the customer not to use the iiNet service to infringe another persons rights or for illegal purposes or practices. Customer service representatives have, in communications with iiNet customers and other users, communicated iiNet’s policy that iiNet does not support the BitTorrent System or other Peer to Peer file sharing protocols.
iiNet published a web page that states, amongst other things, that the hosting or posting of illegal copyright material using an iiNet service constitutes a breach of the customer relationship agreement and that such a breach may result in the suspension or termination of service without notice to the customer. The warning refers specifically to clauses 4.1 and 4.2 of the customer relationship agreement.
iiNet has provided facilities to Copyright Owners to notify iiNet of allegations of copyright infringement by setting up email addresses for the purpose of receiving emails regarding allegations of copyright infringement, by making available a facsimile number for Copyright Owners to send copyright notifications in accordance with the Copyright Act, by making available a postal address for Copyright Owners to send copyright notifications in accordance with the Copyright Act and by publishing a web page that publishes that email address, that facsimile number and that postal address. iiNet has put in place systems, processes and procedures for receiving and dealing with correspondence regarding alleged copyright infringement sent to those addresses and has not taken any steps to block or restrict Copyright Owners from collecting information about iiNet users and iiNet customers.
iiNet provides induction training to new employees, including a session on copyright and related issues and communicates to new employees that iiNet does not condone or support copyright infringement. Further, iiNet provides training to customer service representatives prior to their commencing to work in iiNet’s call centres. In addition, iiNet has made available to its staff articles and policies by way of its internal intranet including an article that states that it is very important to determine what customers are downloading.
iiNet points to its Freezone service, which provides iiNet customers with financial and other incentives that operate to facilitate and encourage users of the iiNet service to download or stream copyright material legitimately through the Freezone service. iiNet does not impose any quotas, limits or caps on the downloading or streaming of material through the Freezone service and if an iiNet customer exceeds the monthly quota and the download speed is slowed, Freezone material is still provided at standard speeds. On the other hand, once the customer exceeds the monthly quota, iiNet slows the download speed of a customer’s account.
iiNet works closely with law enforcement agencies, including the Australian Federal Police and the Australian Security Intelligence Organisation. In response to requests from such agencies, on a daily basis iiNet matches IP Addresses to information about its customers. iiNet’s internal procedures ensure that such requests for information comply with necessary statutory provisions. iiNet is reimbursed for complying with such requests for information.
From 2007, an organisation called Music Industry Piracy Investigations (MIPI) began corresponding with service providers in relation to an industry code of practice that would include a notice and disconnection policy in response to copyright infringement by use of the internet. In April 2007, the Internet Industry Association (IIA) wrote to MIPI, to the Australian Recording Industry Association (ARIA) and to AFACT, communicating the IIA board’s concerns in relation to the proposed notice and disconnection policy.
Finally, iiNet participated in the preparation of a submission on internet piracy provided to the Commonwealth Government in April 2008, saying that service providers will, and do, co-operate in any actions taken directly by the owners of copyright against file sharers. The submission said that the service providers do not approve, condone or authorise any person engaging in copyright infringement by any means and that the service providers have repeat infringer policies in place. The submission proposed a streamlined preliminary discovery process in the Federal Court or the Federal Magistrates Court, whereby an application for discovery by the owner of copyright could be made according to a pre-agreed protocol, in return for which the service providers would not oppose such an application. iiNet asserts that none of the proposals in the submission were agreed to.
iiNet’s Knowledge of Infringements – the Infringement Notices
On 2 May 2008, AFACT wrote to iiNet, saying that AFACT was acting on behalf of approximately 50,000 Australians directly impacted by copyright theft, and that members of AFACT and their related companies are either the owners or exclusive licensees of copyright in the majority of commercially released motion pictures, including movies and television shows. The letter asserted that there was a significant problem in Australia involving customers of Australian carriage service providers, including iiNet, infringing copyright in motion pictures produced and distributed by members of AFACT. The letter said that such infringements invariably occur through the use of peer to peer services, such as the BitTorrent System.
The letter of 2 May 2008 then asserted that iiNet had a significant number of customers who appeared to be engaging in infringing activity by transmitting or downloading in Australia copies of the Films without any licence from the Copyright Owners. The letter suggested that no action was being taken by iiNet to prevent or avoid such infringements taking place, despite iiNet being well placed to do so. The letter asserted that iiNet has the capacity and the contractual right to suspend or terminate the accounts of customers who were infringing the copyright of AFACT’s members. The letter also asserted that AFACT’s members were concerned by the current level of infringement occurring in Australia and the absence of appropriate and effective measures taken by carriage service providers such as iiNet. The letter invited the managing director of iiNet, Mr Michael Malone, to attend a meeting to discuss specific steps that iiNet might take in order to limit the infringement of copyright by its customers.
On 2 July 2008, AFACT wrote again to iiNet. The letter was the first of numerous communications notifying iiNet of particulars of alleged infringements of copyright by its customers (the Infringement Notices). In the Infringement Notice of 2 July 2008, AFACT repeated that it was investigating infringements of copyright in movies and television shows in Australia by customers of iiNet through the use of the BitTorrent Protocol and that information had been gathered about numerous such infringements of copyright by customers of iiNet. The letter asserted that those infringements involved the communication to the public of unauthorised copies of motion pictures and television shows, which were shared with other internet users by means of the BitTorrent System.
The Infringement Notice of 2 July 2008 asserted that the fact that iiNet customers continue to infringe the copyright of AFACT’s members in movies and television shows of the kind identified in the materials enclosed suggested that iiNet had taken no action to prevent those or similar infringements from taking place. AFACT then asserted that the failure to take any action to prevent infringements of copyright from occurring, in circumstances where iiNet knew that infringements were being committed by its customers, or would have reason to suspect that infringements were occurring, may constitute authorisation of copyright infringement by iiNet.
Importantly, a spreadsheet prepared by DtecNet was enclosed with the Infringement Notice of 2 July 2008 containing information of alleged infringing activities of identified iiNet customers that occurred between 23 June 2008 and 29 June 2008. The spreadsheet included the following information:
· The date and time that alleged infringements of copyright took place.
·The IP Address used by the identified iiNet customer at the time of each alleged infringement.
·The motion pictures and television shows in which copyright had allegedly been infringed, including many of the Films.
·The names of the Copyright Owners controlling the rights in the relevant motion pictures and television shows.
A compact disc containing an electronic version of material in the spreadsheet was also enclosed with the Infringement Notice of 2 July 2008.
The Infringement Notice of 2 July 2008 also attached extracts from iiNet’s standard customer relationship agreement. In particular, attention was drawn to the requirement, in clause 14.2 of the customer relationship agreement, that the customer must not use the service provided by iiNet:
·to commit an offence or to infringe another person’s rights,
·for illegal purpose or practices
Reference was also made to clause 4.2, whereby iiNet was authorised to cancel, suspend or restrict the supply of the service to the customer if:
·iiNet reasonably suspected fraud or other illegal conduct by the customer or any other person in connection with the service,
·iiNet was required by law to do so, in order to comply with an order, direction or request of an regulatory authority, an emergency services organisation or any other authority,
·the providing of the service to the customer may be illegal or iiNet anticipates that it may become illegal,
·there was excessive or unusual usage of the service, or
·iiNet was allowed to do so under another provision of the customer relationship agreement.
By the Infringement Notice of 2 July 2008, AFACT required iiNet to take action as follows:
·Prevent the iiNet customers identified in the enclosed materials from continuing to infringe copyright in the motion pictures and television shows identified in the materials.
·Take any other action available under iiNet’s customer relationship agreement against the identified iiNet customers that was appropriate, having regard to their conduct to date.
AFACT requested iiNet to acknowledge receipt of the Infringement Notice and to confirm when that action had been taken.
On 9 July 2008, AFACT sent another Infringement Notice to iiNet in much the same terms as that of 2 July 2008. The Infringement Notice of 9 July 2008 enclosed a spreadsheet containing information relevant to infringing activities between further dates. The same information in relation to those infringements was provided as in the Infringement Notice of 2 July 2008. Further Infringement Notices, with relevant spreadsheets, were sent to iiNet on 16 July 2008 and 23 July 2008.
On 25 July 2008, Mr Leroy Parkinson, the credit manager of iiNet, responded to the Infringement Notices received up to that time. The response was by way of email, the language and tone of which can fairly be characterised as dismissive. After acknowledging receipt of the Infringement Notices, Mr Parkinson said that iiNet was very concerned about the allegations and suggested that AFACT promptly direct its allegations to “the appropriate authorities”. He then referred to the enclosed spreadsheets containing IP Addresses, dates, time and other details, which, he said, were not explained and some of which iiNet did not understand. Mr Parkinson also said that the Infringement Notices made defective references to “identified iiNet customers”, and that none of iiNet’s customers had, in fact, been identified. He also said that, in the enclosed spreadsheets, IP Addresses had been provided “as if they were synonymous with persons or legal entities”. He said that, on that basis, iiNet was unable to comply with AFACT’s requirements in any way. Mr Parkinson then went on to say that, to demonstrate iiNet’s support for the elimination of copyright infringement, iiNet had passed the Infringement Notices “to an appropriate law enforcement agency”, who was said to be better placed to assist AFACT in pursuing offenders. Mr Parkinson referred to the computer crime squad of the West Australian Police.
On 29 July 2008, AFACT wrote to iiNet again, referring to Mr Parkinson’s email of 25 July 2008. AFACT’s letter said that the Infringement Notices of 2, 9, 16 and 23 July 2008, with the enclosed spreadsheets, had provided iiNet with detailed information regarding infringements. The letter asserted that each IP Address listed in the spreadsheets was referable to a computer and to a customer account at the relevant date and time of the alleged infringements. The letter also said that iiNet had no shortage of technically qualified employees who should have no difficulty understanding the information provided in the spreadsheets. The letter asserted that, based on the information provided, iiNet would be able to identify very quickly the relevant customer accounts at the time the alleged infringements took place.
In response, Mr Parkinson sent a further email to AFACT on 12 August 2008. Mr Parkinson’s email of 12 August 2008 reiterated that an IP Address, date and time did not identify a person, and asserted that iiNet could not possibly know the identity of the person who was using any given service associated with that IP Address. Mr Parkinson pointed out that the service could be a shared or community terminal, such as at a school, a library, an internet café or a wi-fi hotspot. He said that it may not be a computer in the sole use of an individual. Mr Parkinson asked who, in any of the material provided, had been identified by AFACT as the person to whom iiNet should direct the allegation of copyright infringement.
Mr Parkinson’s email of 12 August 2008 went on to say that “the vigilante approach being promoted by AFACT” was rejected by iiNet and that the appropriate authorities for the prosecution of offenders and imposition of penalties were not internet service providers, and not AFACT. Mr Parkinson said that iiNet would not accept “the responsibility of judge and jury in order to impose arbitrary and disproportionate penalties purely on the allegations of AFACT”. He went on to point out that iiNet is not a law enforcement agency and that, if AFACT was not willing to invest its own resources to protect its members’ rights, using the correct channels available, iiNet was not going to do so. The email ended with an assertion that the Australian legal system provides an “arsenal of remedies to bring proceedings against alleged infringers” and that iiNet could not take any inappropriate action against customers as demanded by AFACT.
On 20 August 2008, AFACT replied to Mr Parkinson’s email of 12 August 2008. AFACT said that iiNet could have no doubt that identified customers were infringing copyright in motion pictures and television shows and that iiNet could identify the customer accounts in question, based on the information supplied by AFACT. AFACT said that, over a period of seven weeks, there had been over 5,702 separate instances of infringements of copyright notified to iiNet, including significant repeat infringements. The letter asserted that those infringements had taken place over iiNet’s network and could only continue to occur as long as iiNet provided access to customers who were engaging in infringing activity. AFACT asserted that, with that information, in addition to other information that iiNet already had, iiNet could take action to prevent the infringements from continuing. It said that iiNet could contact each of its customers, could warn them against infringement and could impose sanctions if they continued to infringe copyright using iiNet’s network, despite the warnings. The letter ended with the expression of hope that the position would change and that iiNet would take steps to prevent the infringements by its customers from continuing.
On 22 August 2008, AFACT sent another Infringement Notice, in the same terms as the earlier Infringement Notices, enclosing a spreadsheet relating to alleged infringements between 11 August 2008 and 17 August 2008. That prompted a further email from Mr Parkinson, reiterating that, if AFACT has a complaint of a crime, it should contact a law enforcement agency to pursue the matter.
The tone of iiNet’s communications was thus less than cooperative and less than frank in the approach demonstrated. While there is a basic truth in the disclaimer contained in Mr Parkinson’s communications, the communications fail to grapple with the complaint being made by AFACT. The basic proposition being advanced by iiNet was that it could not identify the particular individual who may have operated a computer that downloaded a particular Film by means of the BitTorrent System. In one sense that, is correct, in that from iiNet’s point of view, its customer is the operator of the modem that has an IP Address known to iiNet, albeit that the IP Address is a dynamic one, that changes from time to time. On the other hand, it was within iiNet’s capacity to identify which modem was being used for download of a particular Film on any particular occasion. iiNet could identify the customer to whom it has provided that modem.
Of course iiNet would have no means of knowing whether the modem was connected to a single computer or whether it was connected to a network of computers by way of a router. In that sense, iiNet could not know that any given individual was operating a particular computer for purposes of downloading Films by means of the BitTorrent System. However, iiNet would certainly be able to identify the customer whose IP Address was being used for the download of any Film identified in the spreadsheets provided to iiNet by AFACT.
The accuracy of the data contained in the spreadsheets produced by DtecNet, which were enclosed with the Infringement Notices, was not challenged by iiNet. iiNet accepts that the material supplied to it by AFACT, as explained by evidence from DtecNet before the primary judge, established that iiNet users had made available online to the public 100 percent of certain of the Films. iiNet conceded that thousands of infringements had occurred. However, iiNet’s position is that it was not until well after the commencement of the proceeding that it fully understood the information provided to it by AFACT.
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. 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 accounts (customer RC-08) was mentioned in the spreadsheets attached to twelve of the Infringement Notices. The first Infringement Notice that mentioned customer RC-08 was dated 28 November 2008. The Infringement Notice of 28 November 2008 showed that customer RC-08 had shared 100 percent of the Film “Pineapple Express”, the copyright of which is owned by one of the Copyright Owners. The Infringement Notice of 12 December 2008 also showed that customer RC-08 had shared 100 percent of “Twenty One” another of the Films. Copyright in that film is also owned by one of the Copyright Owners. Other Infringement Notices disclosed that RC-08 shared 100 percent of “Pineapple Express” on 37 other occasions. Customer RC-08 also shared 100 percent of “Twenty One” on one other occasion.
In my opinion the AFACT notices were not sufficient to provide the respondent with knowledge that its network was being utilized by users of particular accounts to infringe the appellants’ copyright in the identified films. I accept that they must have given the respondent reason to suspect that such infringements had occurred. However, knowing that specific acts of copyright infringement have occurred and merely suspecting that they have occurred are quite different things. In the circumstances of the present case, the difference is of considerable significance.
It is important to recall, as the primary judge found, that the respondent has hundreds of thousands of customers and that each day it receives hundreds of notices issued by or on behalf of copyright owners. I do not think the respondent could reasonably be expected to issue warnings, or to terminate or suspend particular accounts, in reliance upon any such notice in circumstances where it has been told nothing at all about the methods used to obtain the information which lead to the issue of the notice. Nor should it be up to the respondent to seek out this information from a copyright owner who chooses not to provide it in the first place.
The respondent was never told how DtecNet Agent operated until sometime after February 2009 when the appellants’ experts’ reports were served. Mr Malone’s evidence suggests that he first became aware of how DtecNet operated in April 2009 after an expert engaged on behalf of the respondent had considered those reports. It is true that the appellants’ amendments, to which I previously referred, were not made until May 2009. Nevertheless, I do not accept that knowledge acquired by the respondent by way of expert reports served prior to the trial could be used for the purpose of establishing that the respondent knew what the DtecNet’s methods were, or that they were reliable, or likely to be reliable, at least not in circumstances where, as I understand them, the experts’ reports were the subject of both express and implied confidentiality restrictions which would have prevented them from being used other than for the purposes of the proceeding.
The appellants also submitted that the respondent was “wilfully blind” to the matters disclosed in the AFACT notices which I take to mean that the respondent deliberately abstained from inquiring into those matters for fear of what the inquiry might reveal: Colbeam Palmer Ltd v Stock Affiliates Pty Ltd (1968) 122 CLR 25 at 33 per Windeyer J. In determining whether a person should be taken to know of facts on the ground that he or she was “wilfully blind” to them, it is necessary to look to the motivation behind the failure to make inquiry. In The Queen v Crabbe (1985) 156 CLR 464 at 470-471 the High Court approved the following statement by Professor Glanville Williams in Criminal Law: The General Part, 2nd ed. (1961) at 159:
A court can properly find wilful blindness only where it can almost be said that the defendant actually knew. He suspected the fact; he realised its probability; but he refrained from obtaining the final confirmation because he wanted in the event to be able to deny knowledge. This, and this alone, is wilful blindness. It requires in effect a finding that the defendant intended to cheat the administration of justice.
In the present case the explanation behind the respondent’s failure to make inquiry is much less sinister. Rightly or wrongly, it was the respondent’s view that it was not obliged to go to the effort and expense of making any inquiries in response to the AFACT notices. I do not think the concept of wilful blindness assists the appellants’ case.
“inactivity or indifference”
The appellants argued that the evidence before the primary judge revealed a level of inactivity and indifference on the part of the respondent towards copyright infringement by iiNet users that should have led his Honour to infer that the respondent authorised the primary acts of copyright infringement. There are a number of observations I would make concerning this argument.
First, the inactivity relied upon was the failure of the respondent to take steps to issue warnings and, if appropriate, terminate or suspend particular accounts in response to the AFACT notices. It was not suggested that the respondent was under any legal obligation to respond to the AFACT notices in this way. The question is whether its failure to do so supports the drawing of an inference that the respondent approved, sanctioned or countenanced the relevant acts of copyright infringement.
Secondly, the appellants sought to demonstrate that the respondent was indifferent to iiNet users acts of copyright infringement by reference to various internal communications between officers of the respondent including Mr Malone and Mr Dalby. While these communications were often expressed in colourful terms, they were mostly to the effect that the respondent was not required to act on the AFACT notices. These communications may reflect indifference of a kind, but the question is whether it is the indifference of someone who approves, sanctions or countenances other people’s acts of copyright infringement.
Thirdly, it is impossible to ignore his Honour’s acceptance of much of the evidence of Mr Malone and Mr Dalby who he essentially found to be honest and reliable witnesses. In particular, the primary judge accepted Mr Malone’s evidence that the respondent did not approve of iiNet users engaging in copyright infringement.
I have already referred to the appellants’ abandonment of the ground of appeal which directly challenged his Honour’s acceptance of Mr Malone’s evidence. Ultimately, the appellants never really confronted this evidence or his Honour’s acceptance of it beyond referring to his Honour’s observation that the words “approve, sanction, countenance” imply some form of “official approval or favour”. Yet Mr Malone’s evidence that the respondent did not approve of iiNet users infringing copyright was not the subject of any such qualification and there is no reason to think that the primary judge interpreted his evidence as though it was.
The primary judge also rejected any suggestion that the appellants “tacitly approved” of copyright infringement by iiNet users.
In Hanimex (17 FCR at 256) Gummow J referred to the decision of Whitford J in CBS Incorporation v Ames Records and Tapes Ltd [1982] Ch 91 which was another of the home taping cases. Whitford J, after referring to the judgment of Bankes LJ in Ciryl, said (at 112) in answer to a submission made by Mr Laddie QC in reliance upon (inter alia) the High Court’s decision in Moorhouse:
But of course the question so far as the point of indifference is concerned goes back really to what Bankes L.J. said about the matter. 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.
It follows from the findings of the primary judge that the position of the respondent did not reflect any intention or desire to see the appellants’ copyright infringed. Rather, it reflected a view, strongly held it would seem, that it was not the business of the respondent to be taking action against subscribers on the basis of allegations of copyright infringement contained in the AFACT notices. None of that is to say that the respondent’s view on the matter was necessarily correct. But it cannot be dismissed or discounted on the basis that it was either not genuinely held or not reasonably open.
Did the respondent sanction, approve or countenance copyright infringement?
This brings me to the critical question which is whether it should be inferred that the respondent sanctioned, approved or countenanced any of the primary acts of copyright infringement which have been found to have occurred.
I do not infer from the evidence that the respondent sanctioned or approved any such acts. I doubt that it is even open to me to do so in light of unchallenged findings of the primary judge. In my view, the appellants’ case comes down to whether it can be inferred from the evidence that the respondent countenanced copyright infringement by iiNet users.
In Jain the Full Court found that Mr Jain had “countenanced” the acts of copyright infringement that occurred at licensed premises occupied by a company of which he was a director and chief executive officer. The Court (Sheppard, Foster and Hill JJ) said (26 FCR at 61):
The judgment of the members of the High Court in the Moorhouse case establishes that one of the meanings of the word “authorise” in the context in which it is here used is “countenance”. It may be that not every act which amounts to the countenancing of something is an authorisation. Every case will depend upon its own facts. Matters of degree are involved. But the evidence in the present case reveals, in our opinion, a studied and deliberate course of action in which Mr Jain decided to ignore the appellant's rights and to allow a situation to develop and to continue in which he must have known that it was likely that the appellant's music would be played without any licence from it. It was within his power to control what was occurring be he did nothing at all. In those circumstances we have reached the conclusion that the appellant established that Mr Jain authorised the infringement of copyright in question …”
As the primary judge pointed out, “countenance” is sometimes defined to mean to sanction or favour, or to patronize or encourage. As I have said, I do not think the respondent’s conduct fits those descriptions. It is likely, however, that the Full Court in Jain had in mind some of the broader definitions of that word which can include “to tolerate” or “to permit”. These words are useful synonyms so long as it is recognised that the word “authorise” itself connotes a mental element involving the giving of a consent or permission of some kind or a carelessness from which such consent or permission may be inferred.
In Jain, it was the respondent’s decision to ignore the copyright owner’s rights that was central to the Full Court’s finding of authorisation. I do not think it is correct to say that the respondent in the present case ignored the appellants’ rights. The respondent was of the view that it was not required to act on the AFACT notices because they were based upon allegations that required further investigation which the respondent did not believe it was required to undertake. I do not infer from this that it was in the respondent’s mind to consent to or to permit copyright infringement by iiNet users using the respondent’s facilities.
I accept that a refusal by an ISP to act on infringement allegations made by or on behalf of a copyright owner may be evidence from which authorisation might be inferred. But that will only be so if the refusal is unreasonable. Whether or not a refusal is unreasonable must depend upon the circumstances in which it occurs including the nature and quality of the information upon which the ISP is requested to act by the copyright owner.
Questions frequently arise in the area of copyright law upon which minds might reasonably differ, particularly when it comes to issues of originality, substantiality and fair dealing. Unintended consequences may follow if adverse inferences are too readily drawn against ISPs who refuse, in good faith, to act on infringement notices received from copyright owners. In particular, there is a danger that ISPs might be driven to act on infringement notices out of a desire to avoid involvement in potentially expensive and uncertain copyright litigation rather than any well founded acceptance of the substance of copyright owners’ complaints.
My conclusion is that the respondent’s failure to take steps to issue warning notices or to terminate or suspend subscribers’ accounts in response to the allegations made in the AFACT notices was not unreasonable given the lack of information in the AFACT notices which I have previously discussed. The fact that the respondent may not have acted on the AFACT notices even if they had contained additional information is beside the point. Nor does the fact that the respondent was provided with additional information during the course of the proceeding affect my conclusion given the circumstances in which this occurred.
Section 112E
Like the primary judge, I find it difficult to see how a person who merely did what s 112E describes could ever be found liable for authorisation even in the absence of that section. Nevertheless, in Cooper Branson J (with whom French J agreed) said (156 FCR at [39]):
Additionally, … the introduction of s 112E into the Act suggests that, absent that section, a mere provider of facilities for making communications could have been held to have authorised copyright infringements effected by the use of those facilities. I do not accept, as Mr Cooper contended, that s 112E was introduced into the Act simply out of an abundance of caution. The supplementary explanatory memorandum for the Copyright Amendment (Digital Agenda) Bill 1999 (Cth) indicates otherwise by stating that the new s 112E:
‘has the effect of expressly limiting the authorisation liability of persons who provide facilities for the making of, or facilitating the making of, communications.’
Those observations were not necessary to the decision in Cooper.
With great respect to their Honours, I doubt that it is correct to say that the presence of s 112E suggests that, in its absence, a person who merely provides facilities for making communications could be held to have authorised copyright infringement effected by the use of those facilities. Nor do I think the supplementary explanatory memorandum referred to by Branson J gives rise to any such suggestion.
Section 112E was introduced into the Act by the Digital Agenda Act. It was an object of that Act to “promote certainty for communication and information technology industries that are investing in and providing online access to copyright materials”: s 3(b) Digital Agenda Act. It seems to me that s 112E puts beyond doubt what I think would have been reasonably clear in any event.
The primary judge referred to the legislative history of s 112E. His Honour noted (at [569]) that, contrary to observations made by Wilcox J in Universal Music Australia Pty Ltd & Ors v Sharman License Holdings Ltd (2005) 220 ALR 1 at [396]-[397], the legislative history suggested that s 112E was not to be understood as operating as a reversal of the High Court’s decision in Telstra. Wilcox J’s observations were picked up by Kenny J in Cooper at [168] where her Honour said:
In order for s 112E to apply, there must be a person providing facilities “for making, or facilitating the making of, a communication”. The appellants fall within this description. By force of s 112E, such a person is not to be taken to have authorised an infringement “merely because” another person uses the facilities in such a way as to infringe copyright. That is, if the most that can be said is that they have provided the facilities another person has used to infringe copyright, they are not to be taken to have authorised the infringement. As Wilcox J said in Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005) 65 IPR 289 at [396], “[s]o understood, s 112E operates as a legislative reversal of the High Court’s decision in Telstra Corporation Limited v Australasian Performing Right Association Limited (1997) 191 CLR 140”. As his Honour noted at [399], s 112E “does not preclude the possibility that a person who falls within the section may be held, for other reasons, to be an authoriser”. Whether there are “other reasons” depends on the matters identified in s 101(1A) and any other relevant matters.
The High Court’s decision in Telstra was not concerned with liability for authorisation. Rather, it was a case involving direct infringement under s 31(1)(iv) and (v) of Part III of the Act as it then stood. Since s 112E is by its terms concerned only with liability for authorisation, it is difficult to see how s 112E (or s 39B which is its Part III counterpart) could operate as a legislative reversal of the decision in Telstra.
The source of the confusion may be traced back to the Second Reading Speech for the Copyright Amendment (Digital Agenda) Bill 1999 (Hansard, 2 September 1999). The Attorney-General stated (at p 9750):
The provisions in the bill limit and clarify the liability of carriers and Internet service providers in relation to both direct and authorisation liability. The amendments also overcome the 1997 High Court decision of APRA v. Telstra in which Telstra, as a carrier, was held to be liable for the playing of music-on-hold by its subscribers to their clients, even though Telstra exercised no control in determining the content of the music played.
The amendments which were intended to overcome the decision in Telstra appear to be those made to s 22 of the Act. This is confirmed by the Advisory Report on the Copyright Amendment Act (Digital Agenda) Bill 1999 of the House of Representatives Standing Committee on Legal and Constitutional Affairs (November 1999): see para 6.8 - 6.11 of the Advisory Report which expressly addresses the decision in Telstra in the context of proposed amendments to that section.
The enactment of s 39B and s 112E appears to have been prompted by the WIPO Copyright Treaty (December 1996). Article 8 provides that authors of literary and artistic works are to enjoy the exclusive right of authorising any communication to the public of their works. The agreed statement to Article 8 includes the following statement:
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.
While it is inaccurate to speak of s 39B and s 112E as giving effect to the agreed statement, they are certainly in the spirit of it. The existence of the agreed statement at the time of the enactment of s 39B and s 112E tends to confirm, in my view, that both provisions were introduced out of an abundance of caution.
Difficulties can arise in relation to the interpretation of s 112E if it is approached as though it is there to protect a person from liability for authorisation which might otherwise arise under s 101(1). First, it can encourage an overly expansive interpretation of s 101(1) which is inconsistent with basic concepts established in Moorhouse. Secondly, it tends to give rise to a variety of complicated questions as to what a person must do, know or suspect before he or she is deprived of the protection of s 112E.
I can illustrate the latter point in this way. Clearly, a provider of communication facilities who actively encourages their use for the purpose of copyright infringement will have done something more than merely provide the communication facilities used to infringe copyright. The same is true of a person who not only makes the communication facilities available, but who also supplies the copyright material which is infringed through the use of those facilities. It is clear from the Full Court’s decision in Cooper that s 112E would not apply to either of those situations.
However, the real problem arises in relation to knowledge. If a person makes communication facilities available knowing that they are to be used for the purpose of infringing copyright, can it be said that he or she has done something more than merely make communication facilities available? The Full Court’s decision in Cooper suggests so though in that case there was other conduct on the part of the ISP which contributed to the finding of authorisation made against the ISP. But what if the person makes communication facilities available not knowing, but merely suspecting, that they will at some stage be used in a manner that involves the infringement of copyright? That is likely to be true of most ISPs and many other persons in the business of providing communication facilities of various kinds. How is s 112E to operate in those circumstances assuming, of course, that the communication facilities made available by the ISP are later used in that manner?
There are no easy answers to these questions but they do not arise if s 112E is simply understood as making clear what I understand to be the true position under s 101(1) in any event, namely, it cannot be inferred that a person authorises copyright infringement merely because he or she provides another person with communication facilities used by the other person to infringe copyright.
Leaving aside the particular difficulties I have discussed, I agree with the analysis of s 112E adopted by the Full Court in Cooper.
If I had been satisfied that the respondent had approved, sanctioned or countenanced the acts of copyright infringement which have been found to have occurred, then I would have found the respondent liable for authorisation in spite of s 112E.
CONCLUSION ON AUTHORISATION
While I disagree with the primary judge’s reasoning in significant respects, I am nevertheless of the opinion that his Honour’s decision to dismiss the proceeding was correct. In my opinion the appeal should be dismissed. I agree with the order which Emmett J has proposed in relation to costs.
OTHER MATTERS
Telco Act
I agree with the reasons given by Jagot J for holding that that the AFACT notices, and the information which they contained, were not within the scope of s 276 of the Telco Act. I also agree with her Honour that the respondent’s customers consented to the disclosure and use of the score information and the rumba information for the purposes of administering and managing the services provided pursuant to the CRA and that the exception provided for in s 289 therefore applied to such information. To the extent that the respondent’s services were used by persons who were not customers, I would infer that they also consented to the disclosure and use of the score information and the rumba information for such purposes. In the absence of evidence to the contrary, I think this may reasonably be inferred given that such persons elected to use a service which they may be taken to have known was made available upon terms. Accordingly, if it had been necessary for me to decide the question, I would have held that s 276 of the Telco Act did not prevent the respondent from using the AFACT information, the score information or the rumba information for the purpose of issuing warnings or terminating, suspending or restricting the supply of a service in accordance with relevant provisions of the CRA.
Safe Harbour Provisions
If I had come to the conclusion that the respondent was liable for authorisation, I would have held that it had not satisfied the conditions necessary to obtain the benefit of the limitations upon the relief which may be granted against the respondent specified in s 116AG(3).
It is common ground that the respondent is a carriage service provider which is relevantly engaged in Category A activity as defined by s 116AC of the Act.
Accordingly, in order to attract the benefit of s 116AG(3), the respondent need only comply with the conditions applicable to Category A activity as set out in the table incorporated in s 116AH(1), namely, Item 1 (Conditions 1 and 2) and Item 2 (Conditions 1 and 2). It is common ground that the respondent satisfies Conditions 1 and 2 of Item 2 and that Condition 2 of Item 1 does not apply. That leaves only Condition 1 of Item 1. It provides:
The carriage service provider must adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the accounts of repeat infringers.
I have previously referred to the primary judge’s finding that the respondent had a repeat infringer policy within the meaning of this condition. I disagree with that finding. I do not think the respondent had a repeat infringer policy and I think his Honour erred in holding that it did.
The condition which the respondent must satisfy requires the respondent to have adopted a policy “that provides for termination, in appropriate circumstances, of the accounts of repeat infringers.” Nowhere in the Act or the Regulations are the expressions “repeat infringer” or “appropriate circumstances” defined. This may suggest that it was the legislature’s intention that carriage service providers engaging in Category A activity should be given considerable latitude in determining who is a repeat infringer for the purposes of such a policy and in what circumstances the account of a repeat infringer should be terminated. Even so, the language used to describe the relevant condition must be given some work to do. There must be a policy providing for the termination of “repeat infringers”. And the policy must provide for termination “in appropriate circumstances”.
Turning to the first of these requirements, the policy which the primary judge found to exist is not a policy that has anything at all to say about repeat infringers. It does not even indicate who is a repeat infringer for the purposes of the policy. Rather, it is concerned with the termination of the accounts of people who have been found by a court or other authority to have engaged in copyright infringement or who have admitted to having engaged in copyright infringement. The respondent’s policy, as found by the primary judge, provides that a subscriber will have his or her account terminated if found by a court or other authority to have infringed copyright even if he or she is found to have done so only once. This is not a policy which provides for the termination of the accounts of repeat infringers.
Nor do I accept that the respondent’s policy provides for the termination of subscriber accounts in “appropriate circumstances”. According to the respondent’s policy, at least in the terms found by the primary judge, the respondent is not even required to terminate the accounts of subscribers who the respondent is satisfied have knowingly and repeatedly engaged in copyright infringement on a commercial scale. The respondent’s policy provides for the termination of such an account only where such conduct has been the subject of an admission or a finding of a court or another authority. I do not see any rational basis for finding that the respondent’s policy is one that provides for termination in “appropriate circumstances” where it does not provide for termination in such a situation.
Leave to intervene
I agree with what Emmett J has said concerning the applications for leave to intervene.
I certify that the preceding two hundred and seventy-nine (279) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas. Associate:
Dated: 24 February 2011
SCHEDULE I – THE APPELLANTS
UNIVERSAL CITY STUDIOS LLLP
Second AppellantPARAMOUNT PICTURES CORPORATION
Third AppellantWARNER BROS. ENTERTAINMENT INC
Fourth AppellantDISNEY ENTERPRISES, INC
Fifth AppellantCOLUMBIA PICTURES INDUSTRIES, INC
Sixth AppellantTWENTIETH CENTURY FOX FILM CORPORATION
Seventh AppellantPARAMOUNT HOME ENTERTAINMENT (AUSTRALASIA) PTY LTD
(ACN 003 914 609)
Eighth AppellantBUENA VISTA HOME ENTERTAINMENT, INC
Ninth AppellantTWENTIETH CENTURY FOX FILM CORPORATION (AUSTRALIA) PTY LIMITED
(ACN 000 007 036)
Tenth AppellantUNIVERSAL PICTURES (AUSTRALASIA) PTY LTD (ACN 087 513 620)
Eleventh AppellantVILLAGE ROADSHOW FILMS (BVI) LTD
Twelfth AppellantUNIVERSAL PICTURES INTERNATIONAL B.V.
Thirteenth AppellantUNIVERSAL CITY STUDIOS PRODUCTIONS LLLP
Fourteenth AppellantRINGERIKE GMBH & CO KG
Fifteenth AppellantINTERNATIONALE FILMPRODUKTION BLACKBIRD VIERTE GMBH & CO KG
Sixteenth AppellantMDBF ZWEITE FILMGESELLSCHAFT MBH & CO KG
Seventeenth AppellantINTERNATIONALE FILMPRODUKTION RICHTER GMBH & CO KG
Eighteenth AppellantNBC STUDIOS, INC
Nineteenth AppellantDREAMWORKS FILMS L.L.C.
Twentieth AppellantWARNER BROS INTERNATIONAL TELEVISION DISTRIBUTION INC
Twenty-First AppellantTWENTIETH CENTURY FOX HOME ENTERTAINMENT INTERNATIONAL CORPORATION
Twenty-Second AppellantWARNER HOME VIDEO PTY LTD (ACN 002 939 808)
Twenty-Third AppellantPATALEX III PRODUCTIONS LIMITED
Twenty-Fourth AppellantLONELY FILM PRODUCTIONS GMBH & CO KG
Twenty-Fifth AppellantSONY PICTURES ANIMATION INC
Twenty-Sixth AppellantUNIVERSAL STUDIOS INTERNATIONAL B.V.
Twenty-Seventh AppellantSONY PICTURES HOME ENTERTAINMENT PTY LTD (ACN 002 489 554)
Twenty-Eighth AppellantGH ONE LLC
Twenty-Ninth AppellantGH THREE LLC
Thirtieth AppellantBEVERLY BLVD LLC
Thirty-First AppellantWARNER BROS ENTERTAINMENT AUSTRALIA PTY LTD
(ACN 003 773 411)
Thirty-Second AppellantTWENTIETH CENTURY FOX HOME ENTERTAINMENT LLC
Thirty-Third AppellantSEVEN NETWORK (OPERATIONS) LIMITED
(ACN 052 845 262)
Thirty-Fourth Appellant
36
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