The move comes just days after the Internet Industry Association announced plans to develop an industry code in order to help ISPs figure out their rights and responsibilities when it comes to copyright infringement.
Minter Ellison partner and copyright law expert Charles Alexander says these incidents are possibly a reaction to the latest Federal Court decision.
While iiNet won its first battle in court, and a subsequent appeal from the Australian Federation Against Copyright Theft was dismissed, it has lost some support along the way.
The second decision saw three Federal Court judges point out that while iiNet may not technically be liable for its customers' infringements, it nevertheless displayed a somewhat arrogant demeanour during the investigation process.
"They might think it's better to try and do something they can live with, because there is a risk for both parties in any litigation. They could get a worse decision, or a better decision, it's a chance on both sides."
"The judges didn't seem too happy about it, particularly justice Emmett. It's not as clear cut, because you have three different decisions," Alexander says.
This revelation may have prompted iiNet to start investigating ways it could self-regulate the industry, thereby avoiding a costly and lengthy legal battle. The new discussion paper outlines what it calls the "iiNet Model" for dealing with copyright theft.
iiNet says the current "Hollywood Solution" of using detectives, warnings and then orders to cut that customer off from the internet is "unattractive and unsatisfactory".
Instead, it proposes a plan which involves seven major steps:
1. A content owner carries out their own detective work and identifies offending computers.
2. The proposed independent body will determine if that evidence meets a particular test for moving forward
3. IP addresses are then provided to the independent body who can identify the issuing ISP, and then ask that ISP for contact details.
4. The independent body can then issues notices to the account holder, stating they have been detected making unauthorised copies available. This would include warnings of consequences.
5. Records of notices are then kept, and modified for repeat infringers. Sanctions could be issued, which may include fines or court changes.
6. Consumers who believe they have been wrongly accused can appeal the notice with the independent body.
7. Those customers who believe their internet is being used by another party, such as a neighbour using their wireless internet, can speak with their ISP for help.
iiNet argues that "by inserting an independent body into the process, it appears to iiNet that many, if not all, of the concerns of content owners, ISPs, the government and the community can be addressed".
The discussion paper also points out that while it may be important for the Government to give out fines for infringements, there are still other options available.
The company says a more appropriate system would be that the size of the fine would be contingent on the severity of the copyright infringement.
"As with speeding fines, a low level infringement might attract a limited penalty, but then can ramp up to more serious penalties, depending on the level of infringement."
Infringements can be ranked as minor (say, single instances), major (say multiple instances of different files) or serious (at a commercial level). Each level having prescribed penalties.
The company adds that it does not believe the termination of access for a household, or even a business, "is ever appropriate or proportional".
iiNet managing director Michael Malone added in a statement the discussion paper highlights the company's policy that copyright infringement is a serious matter that needs to be dealt with properly.
However, he also says major studios need to realise that more people are accessing content online and they will be discouraged from illegal downloading if they can access high-quality material at a competitive price.
"A more effective approach would be for the studios to make their content more readily and cheaply available online."
While AFACT is still within the 28-day window during which it can apply to appeal the case to the High Court, analysts suspect the industry is rushing to create a regulatory system of its own in order to avoid a judicial ruling.
AFACT may be supportive of such measures – it has said before that it does not want to be suing individuals in order to uphold copyright rules.
Both AFACT and the Federal Department of Communications were contacted this morning regarding iiNet's discussion paper, but no reply was available before publication.
It seems other industry bodies are taking notice. Last week, the Internet Industry Association released a statement saying it would get to work on developing an industry code for ISPs.
"The iiNet case has provided us with welcome guidance on where responsibilities should begin and end, but falls short in defining reasonable steps intermediaries should take in responding to allegations of infringement by their users. The Code will address this gap."
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