Member Article

In Roadshow Films Pty Ltd v iiNet Limited (No 3), Justice Cowdroy considered whether iiNet Limited (iiNet), the third largest internet service provider (ISP) in Australia, should be held liable for infringement of copyright by its subscribers, on the basis that iiNet had authorised those infringements.

Proceedings were brought against iiNet by 34 applicants comprising many of the major film studios and their exclusive licensees in Australia (applicants). Reportedly the first judicial decision in the world considering ISPs' authorisation liability, the case has consequently attracted widespread international attention.

Universities providing internet facilities to students and staff, which can be used by them to infringe copyright, should be aware of the decision and its ramifications.

In the United States, industry bodies such as the Recording Industry Association of America have pressured universities and colleges to take action to prevent copyright infringement by students using university facilities, particularly the unauthorised downloading of music and films. Copyright infringement notices have been sent to universities relating to the activities of their students. New regulations under the Higher Education Opportunity Act of 2008 will soon come into effect, requiring universities and colleges to develop plans that deter the unauthorised distribution of copyright material by students. The regulations also require universities to provide an annual statement to students regarding the institution's policy on copyright infringement.

The scope of the authorisation of copyright infringement doctrine, particularly in relation to the downloading of copyright material from the internet, therefore potentially impacts upon Australian universities.

Background to case

Acting on behalf of the applicants, the Australian Federation Against Copyright Theft (AFACT) gathered evidence of copyright infringement by iiNet users occurring by means of the BitTorrent protocol – a highly efficient way for users to distribute and share large quantities of data over the internet. Evidence presented to (and accepted by) the court showed that the infringements related to various films and TV shows owned by the applicants.

AFACT sent the information gathered by its investigations to iiNet. It wanted iiNet to send warnings to infringing users, and then suspend or terminate those users' internet service if they persisted in their activities. Additionally it suggested that iiNet block certain BitTorrent-related websites. iiNet refused to take either of those actions.

The key issue

Having found that iiNet users engaged in primary infringement, the key issue became that of authorisation of copyright infringement. Specifically, the court had to decide whether an ISP such as iiNet can be said to have authorised the infringing acts of its users if those users – without licence – download films and TV shows which enjoy copyright protection.

The decision on authorisation

The court held that although iiNet knew infringements were occurring and did not act to stop them, iiNet did not authorise copyright infringement by its users. There were three reasons for this:

1. In order to have authorised infringement, there is a threshold requirement that the authoriser must have provided the 'means' by which the infringement can be committed. Importantly, the mere provision of facilities that can be used to infringe copyright will not necessarily constitute authorisation.
   
   The court held that it was 'obvious' that iiNet's provision of internet access was a necessary precondition for the infringements which occurred. However, there were other necessary preconditions required to bring about infringement (for example, having a computer and an operating system). Conversely, the use of BitTorrent was not just a precondition to the infringement; it was the very 'means' by which the applicants' copyright was infringed. That is, the infringing users had to install a BitTorrent client, and seek out the .torrent files themselves. But in doing so, they were provided with no assistance from iiNet, nor could iiNet either monitor them or prevent them from doing so.
   
   The court distinguished the earlier internet-related cases of Cooper v Universal Music and Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (Kazaa), on the basis that the respondents in those cases provided the 'means' by which copyright infringement occurred. In Cooper, this was the hosting of Mr Cooper's website (which the court there found was used overwhelmingly for the purpose of copyright infringement). In Kazaa, it was file sharing software (which the court found was predominantly used as the means to infringe copyright).
   
   The court also distinguished University of New South Wales v Moorhouse, in which the university was held to have authorised the infringement of copyright in a book, part of which was copied by a student using a coin-operated photocopier in the university's library. Although in Moorhouse the photocopier was held to be the 'means' by which copyright was infringed, Justice Cowdroy stated this was due to the particular circumstances of that case – namely the location of the photocopier in a library containing copyright works capable of photocopy reproduction. The provision of the photocopier alone would not have justified a finding that the university had authorised copyright infringement.
   
   By contrast to each of these three earlier cases, the court here held the internet can be used to virtually any end, and its mere provision by iiNet was not an invitation to use iiNet's facilities to infringe copyright.
   
   
   
2. His Honour held that even if iiNet had provided the 'means' by which infringement occurred, it did not authorise infringement as:
   
   (a) it did not have the power to prevent the infringements occurring. As iiNet did not control any aspect of the BitTorrent system, the only relevant power was to warn users or suspend or terminate their accounts, or perhaps block particular websites. However, the court considered there to be inadequate evidence before it as to the scope and effectiveness of such mechanisms. In relation to the suspension or termination of user accounts, the court found that in the absence of judicial consideration of each account holder's infringement, it would be unreasonable for iiNet to do so,
   
   (b) the mere existence of a contractual relationship between iiNet and its users is not sufficient to authorise infringement, as there was simply no sufficient nexus between iiNet's profitability and commercial interests on the one hand, and the infringing activity on the other,
   
   (c) there was insufficient evidence before the court of reasonable steps that could have been taken and, in particular, insufficient evidence that iiNet could have effectively blocked particular websites or that the applicants (through the AFACT notices) had made it sufficiently clear that this should occur, and
   
   (d) although iiNet had knowledge of infringement, mere knowledge – as well as the power to prevent – is not (of itself) authorisation, for all of the reasons discussed above.
   
   
   
3. Finally, iiNet did not 'sanction, approve, countenance' the infringements of iiNet users. His Honour held that these words require that the authoriser must have officially approved or favoured what is said to be authorised. He found there was no evidence that iiNet approved or favoured infringing activities; rather, iiNet did no more than provide an internet service to its users.

Unfortunately, it is not clear from His Honour's reasons whether the applicants would have succeeded if, for example, they had proven elements (1) and (2) above, but not element (3).

Other aspects of the decision

Although the court found in favour of iiNet on the basis that it had not authorised copyright, it nevertheless considered certain other issues:

1. iiNet had argued that it was prohibited from acting on the notices received from AFACT on the basis of certain privacy-related provisions under the Telecommunications Act 1997. The court held that there were two particular exceptions under the Act which would have enabled iiNet to disclose and use the AFACT information.
   
    
   
2. The court held that the section 112E defence to copyright infringement has been deprived of meaningful operation by previous decisions of the Full Federal Court. The defence provides that a person who provides facilities for making or facilitating communications is not taken to have authorised infringement merely because another person uses those facilities to do something the right of which is included in the copyright. As iiNet had knowledge of infringements by users, those decisions meant that their use involved 'something more' than mere use of facilities. iiNet could therefore not rely on section 112E as a defence.
   
   
   
3. Finally, the court found that iiNet would have satisfied the requirements of the safe harbour provisions under Division 2AA of Part V of the Copyright Act, on the basis that it adopted and reasonably implemented a repeat infringer policy.

Impact of the decision

The decision reverses a prevailing trend in Australian copyright law in more recent times – the steady expansion of the authorisation infringement doctrine. By distinguishing a line of previous cases and confining them to their facts, Justice Cowdroy has arguably circumscribed the reach of this doctrine.

Strongly influencing the court was what it called the 'central role' played by the internet in all aspects of modern life, citing as examples email, social networking, VOIP, online banking and entertainment, online media, and games. Moreover, perhaps adverting to the internet's use in reporting the tumultuous events in the Middle East last June, the court took 'judicial notice' of the fact that the internet is increasingly the means by which news is 'disseminated and created'. Because of this 'central role', the court held that mere provision of the internet 'could not possibly justify' a finding that it was the 'means' of copyright infringement.

The applicants have appealed the decision to the Full Federal Court, with a further appeal to the High Court likely to follow. Copyright industry groups will also increase their lobbying efforts to achieve a legislative solution to copyright infringement occurring on the internet. This was foreshadowed in a media release by AFACT immediately following the decision, which stated that it is ‘confident that the Government does not intend a policy outcome where rampant copyright infringement is allowed to continue unaddressed and unabated via the iiNet network’.

Pending the outcome of the Full Federal Court appeal (and any subsequent appeal to the High Court), the decision should provide some comfort to universities in relation to their activities as carriage service providers (if any) and providers of large computer networks for the use of staff and students. By analogy with Justice Cowdroy's reasoning, if a university merely provides internet access to its students and those facilities are used to download copyright materials, the university should not be found to have provided the 'means' for those students to infringe copyright and accordingly should not, without more, be found to have authorised copyright infringement.

However if a university does something more than merely provide internet facilities, it may fall outside the scope of protection described by Justice Cowdroy and be found to have provided the 'means' of copyright infringement. (This could for example occur if a university knowingly allows a student to host a site on its network that contains, or even links to, copyright infringing material, or allows its network to be used for the storage of infringing material.) Universities therefore still need to be vigilant in addressing inappropriate activity on their networks, including taking appropriate action those who use their networks to infringe copyright, so as to reduce the risk of being found to be authorising copyright infringement.