Small and medium businesses could be affected by the landmark copyright case that is set to begin in the Federal Court today between iiNet, the country's third largest ISP, and a number of media giants.
The case follows weeks of preparation by the two parties, with the Australian Federation Against Copyright Theft claiming iiNet has committed a copyright violation by allegedly allowing users to download illegal materials.
But Minter Ellison partner Charles Alexander, who specialises in intellectual copyright law, says that if AFACT is successful, both ISPs and other small businesses would be affected.
"What this means is that if the case is successful, internet providers would have to change their practices to take measures that prevent infringing materials being carried on their networks. That could change the face of the industry and how these companies work."
"One of the things that is contended by a number of ISPs is that if this case is successful, they would be forced to suspend accounts, including business accounts, if they identify copyrighted materials being downloaded by one person on that network. There is a possibility that could occur."
AFACT, which represents large media companies including Warner Brothers, 20th Century Fox, Paramount and Sony Pictures Entertainment, is taking action against iiNet for allegedly allowing users to download copyrighted material and failing to take "reasonable steps" to stop them.
The copyrighted material refers to alleged illegal downloads of films and television shows. AFACT is hoping for a court decision whereby iiNet will be forced to identify anddisconnect users who have been found downloading copyrighted materials.
"iiNet's own evidence shows that it has made a conscious decision in this regard, weighing in the balance the fact of infringement of the applications' rights as against its own profits; it sided with the latter," AFACT stated in an outline submitted to the court last week.
"Through its inactivity and indifference, iiNet has in every relevant sense permitted a situation to develop and continue where users of its internet services are free to engage in infringements of the applicants' copyright."
"[iiNet] has also encouraged heavy users of its network to upgrade their services, thereby increasing profits. In other words, iiNet has allowed a widespread culture of infringement to become entrenched."
iiNet managing director Michael Malone said in a statement he is confident of the company's position, and that he will "vigorously defend" the allegations put forward by the Australian Federation against Copyright Theft.
"iiNet has never in any way supported or encouraged breaches of the law, including infringement of the Copyright Act," he said. "We do not, and never have supported, encouraged or authorised illegal sharing or downloading of files in breach of copyright laws."
"I am very confident that we will be vindicated and these allegations will be dismissed as unfounded, untrue and unproven."
AFACT is expected to use examples of popular films as specific evidence of downloaded files, including The Dark Knight and films from the Harry Potter franchise. It also claims iiNet was negligent in allowing users to pirate the films through peer-to-peer and BitTorrent networks, and thus "authorised" the activity.
But in court briefings last week, iiNet's lawyer Herbert Geer said this argument requires "a considerable development of the law to and an unwarranted meaning of 'authorise' established by many years of judicial consideration".
iiNet also plans to argue that disconnecting users who had been identified as allegedly downloading copyrighted materials would be in breach of the Telecommunications Act.
The case is set to be heard over October and November.
