Australia: Pirates 1 - Dallas Buyers Club 0: The battle has been won, but what about the war?

Last Updated: 2 March 2016
Article by Gene Goodsell

February 11, 2016 was the date by which Dallas Buyers Club (DBC) had to either make an application or file for leave to appeal to the Full Court of the Federal Court. The date has now come and gone, and at least 4,726 illegal downloaders are presumably sighing a breath of collective relief (although most will probably and predictably don the 'I-told-you-so' response, if anyone cares to ask).

That's right - DBC's legal team has confirmed that there will be no appeal from Perram J's Federal Court decision in December 2015. In a saga totalling five Federal Court hearings dating back to October 2014, the proceedings fuelled the debate over peer-to-peer downloading sites and their relationship to copyright infringement.

It is no secret that the Australian Government has historically struggled to find a legislative balance between protecting copyright owners and respecting consumer interests, and the slippery concept behind Torrent websites has only made this task all the more difficult ( we have previously noted the controversy surrounding the Copyright Amendment (Online Infringement) Act and its site-blocking powers). It should come as no surprise then that there were a lot of stakeholders to this question of copyright infringement nervously watching the DBC saga unfold, namely copyright holders, such as film studios and record labels, Internet Service Providers (ISPs) and, of course, the punters downloading the material.

However, has the decision by DBC - essentially conceding defeat by not appealing - really brought any closure to the question of piracy? In our opinion, such an implication could not be further from the truth. On the contrary, the battle was only won because of the circumstances of the case, and copyright holders will no doubt live to fight another (circumstantially different) day.

Let us briefly consider the crucial points that underlined Perram J's decision, and which circumstances would need to change in order for any future matters to be decided differently.

DBC identified a substantial number of IP addresses as having downloaded their film. The ISPs that these IP addresses operated through were then listed. As the owners of copyright in the film, DBC then sought a court order compelling the ISPs to divulge the names and physical addresses of the persons linked to each of these accounts.

Importantly, it seems that the Perram J had every intention of allowing DBC's request, albeit with some reasonable conditions. One of the main concerns was that of potential 'speculative invoicing', a practice whereby copyright holders have intimidated individuals into paying an amount substantially more than what is actually owed by threatening legal action. As it turned out, DBC themselves had been engaging in speculative invoicing in a number of other countries. So, one could conclude that conditions protecting the account holders from being speculatively invoiced by DBC were, on balance, reasonable. It was decided that DBC should provide the court with the letter they would send out to the account holders.

The draft letter that DBC ended up submitting attempted to make four claims for:

  1. the cost of the purchase price of the film;
  2. the uploading activities of the account holders;
  3. further damages for downloading infringements not related to DBC; and
  4. court costs.

Ultimately, the Court told DBC only 1) and 4) were valid. Further to this, as DBC had no physical presence in Australia, the Court required a $600,000 bond as a way of securing punishment for contempt should DBC not comply with these undertakings.

In the proceeding hearing, instead of complying with these requests from the Court, DBC reverted with an alternative letter which attempted to claim for:

  1. an amount reflecting the 'fair and reasonable licence fee' that DBC would have charged for a worldwide, non-exclusive distribution licence for the film; and
  2. further punitive damages pursuant to s115(4) of the Copyright Act.

DBC also sought to have the bond reduced from $600,000 to $60,000. All three of these submissions were categorically rejected, leading to a dismissal of DBC's application, with costs, and DBC had until February 11 to make any further submissions. Failure to do so would lead the proceedings being dismissed in their entirety. Which brings us to today.

So, it is not particularly difficult to see that this decision has not set any ground-breaking precedent. Sure, in a factually similar case (especially one dealing with the prospect of speculative invoicing), one could envisage similar reasoning by the Court. However, the reality is that the Court was prepared to order the ISPs to divulge the account holder information, albeit conditionally.

Moving forward, copyright holders will likely hold a greater chance of success in the following circumstances:

  • If they are Australian companies. A local presence will avoid the need for a substantial bond in the instance where punishment for contempt is required. This will surely factor into any decision to take such a matter to Court.
  • If they are reasonable with their claims. DBC may very well have been able to have their requests allowed had they stuck with claiming the cost of the purchase price and court costs.

The morale of the story? Don't be greedy! Whilst the Courts should not be seen as being lenient towards piracy, the debate over online copyright infringement is surely not assisted by copyright owners trying to squeeze disproportionate amounts of damages out of downloaders. A measured approach by copyright holders which only seeks compensation for the sale price of the downloaded material and court costs will likely be a much more successful (and amicable) case before the Court.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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