Key Points:

Proposed Copyright Act amendments attempt to address online piracy by requiring ISPs to take steps or potentially face liability for authorising infringement, and enabling rights holders to obtain court orders requiring ISPs to block access to pirate websites.

On 30 July 2014, the Australian Government released the Online Copyright Infringement Discussion Paper and is seeking public submissions on the draft proposals designed to address online copyright infringement.

The Discussion Paper outlines three separate proposals to amend the Copyright Act. It states that the Government wishes to establish a flexible framework that would allow for a wide variety of solutions, although such solutions must be in the interests of all – rights holders, internet service providers (ISPs) and consumers.

Submissions close on Monday, 1 September 2014.

Proposal 1: extended authorisation liability

Copyright can be infringed by a person who does an infringing act, or by a person who authorises the doing of an infringing act. In determining whether or not a person has authorised the doing of an infringing act, sections 36(1A) and 101(1A) of the Copyright Act specify three (non-exhaustive) matters that must be taken into account.

The first proposal in the Discussion Paper is to amend those matters:

the extent (if any) of the person's power to prevent the doing of the act concerned (no longer a separate element, but one of a number of relevant factors in determining whether "reasonable steps" were taken – see below)
the nature of any relationship existing between the person and the person who did the act concerned (no change)
whether the person took any reasonable steps to prevent or avoid the doing of the act, including whether the person complied with any relevant industry codes of practice

whether the person took any reasonable steps to prevent or avoid the doing of the act, having regard to:

  1. the extent (if any) of their power to prevent it;
  2. whether they complied with any relevant industry schemes or commercial arrangements;
  3. whether they complied with any prescribed measures in the Copyright Regulations; and
  4. any other relevant factors.

This proposal arises directly from the High Court's recent decision in Roadshow Films Pty Ltd v iiNet Limited [2012] HCA 16, which determined that iiNet was not liable for authorising the copyright infringements of its subscribers. The Court held that iiNet had only an indirect power to prevent a subscriber's primary infringement by terminating their contractual relationship, and that it was not reasonable for iiNet to send warning notices to customers containing threats to suspend or terminate their accounts. The effect of the decision was to severely limit the circumstances in which an ISP can be found liable for authorising an act by a subscriber that infringes copyright.

According to the Discussion Paper, "[t]he Government believes that even where an ISP does not have a direct power to prevent a person from doing a particular infringing act, there still may be reasonable steps that can be taken by the ISP to discourage or reduce online copyright infringement. Extending authorisation liability is essential to ensuring the existence of an effective legal framework that encourages industry cooperation and functions as originally intended ..."

The Government is looking to industry to reach agreement on appropriate industry schemes or commercial arrangements on what would constitute "reasonable steps" to be taken by ISPs.

Under the proposal, the Government would have the power to prescribe measures in the Copyright Regulations if effective industry schemes or commercial arrangements are not developed.

Proposal 2: extended injunctive relief

The second proposal is that the Copyright Act be amended to enable rights holders to apply to a court for an order against ISPs to block access to an internet site operated outside Australia. If adopted, the amendment would be limited to websites operated outside Australia as rights holders are not prevented from taking direct action against websites operated within Australia.

The Discussion Paper notes that a rights holder could list a number of ISPs as respondents to an application for injunctive relief. This would reduce the opportunity for people to evade the operation of such orders by switching ISPs. The websites would need to be blocked by carrier level ISPs at the wholesale level, ensuring that re-sellers would be unable to make blocked sites available to subscribers.

In granting an injunction requiring ISPs to block access to a particular website, the court would need to be satisfied that the dominant purpose of the website is to infringe copyright. The onus would be on the rights holders to establish this evidentiary threshold. The court would also be required to consider factors such as the rights of any person likely to be affected by the grant of an injunction, whether an injunction is a proportionate response, and the importance of freedom of expression.

Finally, rights holders would be required to meet any reasonable costs associated with an ISP giving effect to an order and to indemnify the ISP against any damages claimed by a third party.

Proposal 3: extended safe harbour scheme

The so-called "safe harbour" provisions of Division 2AA of Part V of the Copyright Act were introduced in 2005 and modelled on the US regime. They offer legal incentives for carriage service providers to cooperate with copyright owners in deterring infringement by users of their services.

In summary, if certain preconditions are satisfied, a court must not grant relief against a carriage service provider that consists of damages or an account of profits, additional damages or other monetary relief. Where authorisation liability is established and the safe harbour conditions are met, the only remedy available is injunctive relief.

The safe harbour scheme applies to four categories of relevant activity set out in sections 116AC to 116AF:

Category A: acting as a conduit for internet activities by providing facilities for transmitting, routing or providing connections for copyright material
Category B: caching through an automatic process
Category C: storing copyright material on a carriage service provider's systems or networks
Category D: referring users to an online location

However, adopting the definition of "carriage service provider" from the Telecommunications Act has meant that not all entities providing services that fall within the four categories of activity have been able to take advantage of the safe harbour scheme. This includes universities and online search engines.

To address this, the discussion paper proposes the Copyright Act be amended to extend the application of the safe harbour scheme to entities engaged in the activities set out in sections 116AC to 116AF. This would be achieved by removing the reference to "carriage service provider" and replacing it with a definition of "service provider", being any person who engages in activities defined in sections 116AC to 116AF.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.