The Federal Court has ruled that Perth-based internet service provider iiNet did not encourage or participate in copyright violations by allowing users to download pirated files over its networks.
The move is a blow to the Australian Federation Against Copyright Theft, representing several entertainment companies including 20th Century Fox and Roadshow Entertainment, which alleged iiNet had allowed users to download files of films and television shows, and subsequently infringed copyright.
In a decision that will thrill Australia’s ISP community, Justice Cowdroy found that “iiNet simply cannot be seen as sanctioning, approving or countenancing copyright infringement. The requisite element of favouring infringement on the evidence simply does not exist.”
"iiNet is not responsible if an iiNet user uses that system to bring about copyright infringement ... the law recognises no positive obligation on any person to protect the copyright of another," he said, in a summary of the 200-page ruling.
He also said that copyright violations occurred as a result of the use of BitTorrent technology, not the internet, and that iiNet had no control over BitTorrent systems. Additionally, ISPs had no legal provision to introduce a scheme cutting off users due to copyright violations.
iiNet managing director Michael Malone has said at a press conference it is the job of ISPs “to move content and packets from point A to point B”, and not to catch offenders.
He also said he believes these entertainment companies can look to the music industry as an example, which has embraced digital distribution and as a result has experienced increased profits.
The company also said in an official statement it has never encouraged breaches of the law, including copyright infringements.
"Today's judgment is a vindication of that and the allegations against us have been proven to be unfounded. iiNet has always been, and will continue to be, a good corporate citizen and an even better copyright citizen."
"From our perspective today marks the end of the matter and we will continue to get on with the business. We will continue to provide Australians with the access to fast and cheap broadband with innovative new services and products."
AFACT argued in the case that the company had a responsibility to stop these users from downloading copyrighted files because these infringements were happening on iiNet’s networks. However, Cowdroy said the “mere provision of access to internet is not the means to infringement”.
The fact that piracy was prominent on the company’s networks, and that the company did not directly stop them, "does not necessitate or compel a finding of authorisation, just because it is felt there is something that must be done”.
Additionally, the judgement found that ISPs, including iiNet, provide a legitimate facility which is not necessarily designed to infringe copyright.
“It is only by means of the application of the BitTorrent system that copyright infringements are enabled, although it must be recognised that the BitTorrent system can be used for legitimate purposes as well.”
Cowdroy also noted the widespread attention the case has received, “both within the legal community and the general public”.
“So much so that I understand this is the first Australian trial to be Twittered or Tweeted. I granted approval for this to occur in view of the public interest in the proceeding, and it seems rather fitting for a copyright trial involving the internet.”
The case, which was the first of its kind in the world, had the potential to severely impact the internet industry and internet providers by mandating they disconnect users who have been proven to download illegal materials.
A judgement against iiNet would have fundamentally changed how the internet works, how ISPs operate and what users can be held liable for online.
An early statement from lobby group Electronic Frontiers Australia has said the decision provides certainly for ISPs in Australia.
“It also seems that more generally, this has important ramifications for innovation in Australia; in contrast with Kazaa, if you provide facilities that assist in infringement, but do not have control and do not act in bad faith, you will not be liable for secondary copyright infringement.”
Kazaa was a popular file-sharing program shut down by the Federal Court after it ruled the application assisted users in sharing copyrighted files.
The recent iiNet case spanned eight weeks over October and November last year, with a variety of company executives, internet experts and even AFACT investigators taking the stand to give evidence
Cowdroy dismissed the case, and ordered it to pay iiNet’s legal costs.
Australian Federation Against Copyright Theft Executive Director Neil Gane said he was disappointed by the Court’s decision.
“Today’s decision is set back for the 50,000 Australians employed in the film industry. But we believe this decision was based on a technical finding centred on the court’s interpretation of the how infringement’s occur and the ISPs ability to control them."
“We are 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."
“We will now take the time to review the decision before making further comment on next steps,” he said.
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