On 4 February 2010 the Australian Federal Court dismissed a
claim by a multi-national alliance of motion picture and recording
industry companies, represented by the Australian Federation
Against Copyright Theft (AFACT), that iiNet, Australia's third
largest internet service provider, had authorised copyright
infringement by failing to stop its customers from using the
otherwise legitimate BitTorrent file sharing software system to
download copyrighted movies.
AFACT had collected evidence showing that iiNet's customers
were using the BitTorrent system to download copyrighted movies.
BitTorrent is free software that allows a user to easily share
video and audio files with other internet users using peer-to-peer
networking. AFACT wrote to iiNet to inform it of this copyright
infringement and asked it to take steps to prevent its customers
from downloading the movies. The measures sought by AFACT included
requiring iiNet to cancel its infringing customers'
subscriptions and to block certain websites. iiNet refused. The
Court was satisfied that the conduct of iiNet's individual
customers in downloading the movies amounted to copyright
infringement. However, the critical issue was whether iiNet
authorised the copyright infringement of these iiNet customers by
failing to take any steps to stop that infringing conduct.
Under the Australian Copyright Act, persons who
authorise the infringement of copyright are treated as if they
themselves infringed copyright directly. In deciding whether there
has been authorisation under the Act, the Court must consider the
extent of the person's power to prevent the doing of the
infringing act, the nature of the relationship existing between the
person and the person who did the act, and whether the person took
reasonable steps to prevent or avoid the doing of the act.
The Court noted that, whilst iiNet knew of the infringements, it
did not authorise them. The Court distinguished providing the
'means of infringement', such as a webpage dedicated to
peer-to-peer file sharing or a series of photocopying machines
which could amount to authorisation, from merely providing the
pre-condition to infringement. Merely providing access to the
internet did not amount to providing the 'means of
infringement'. The 'means of infringement' in this
instance was the use of the BitTorrent system. iiNet had no control
over it and was not responsible for operating it. The various
measures AFACT asked iiNet to undertake were not relevant
'powers' to prevent the doing of the infringing act, nor
were they 'reasonable steps' that needed to be taken to
This is a significant development in the judicial review of
instances of internet copyright piracy. Previous Australian
decisions, like Universal Music Australia Pty Ltd v Cooper and
Kazaa, were cases in which the authorisers provided the means
for copyright infringement. However, the Court distinguished the
situation with iiNet, where the mere provision of access to the
internet was not the means of infringement, and where iiNet had no
control over the BitTorrent system or its operation.
The outcome of the iiNet case has been the subject of much
nervous speculation by ISPs. Had iiNet been held to have authorised
infringement, it would have allowed the entertainment industry to
focus on the major ISPs to achieve broad enforcement measures,
rather than making many single claims against individual copyright
infringers. The potential cost to ISPs of establishing effective
measures to prevent such infringement is high. This could have led
to many smaller ISPs going under. Whilst the Court recognised the
legitimate interests of the industry to prevent what it
acknowledged was large scale infringement through use of the
BitTorrent system, this interest does not make ISPs responsible for
protecting and enforcing their rights in this context.
On 25 February 2010, AFACT lodged an appeal against that ruling,
sparking another potentially lengthy round of court action. It is
understood that AFACT's Notice of Appeal contains 15 grounds
for appeal and is expected to be heard later this year. The grounds
have not yet been made publicly available but AFACT has indicated
in a statement that it views the Federal Court's decision as
rendering the "safe harbour regime ineffective" for ISPs.
Given the scale of ongoing infringement and the amount of lost
revenue at stake, it was widely expected that an appeal would be
launched. We will provide a further update once the appeal is heard
and judgment is handed down in this important case for the internet
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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The issue of recording telephone calls was recently considered in the Federal Court in Furnari v Ziegert  FCA 1080.
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