Australian court holds ‘safe harbour’ for ISPs

March 2010

Internet, all areas

Australia’s Federal Court has ruled that Internet Service Providers cannot be held liable for copyright infringements committed by their subscribers, dealing a blow to content owners in a closely-watched lawsuit against Australian Internet Service Provider iiNet. Justice Dennis Conroy found that whilst it was shown that iiNet had knowledge that its customers were committing copyright infringement, this knowledge did not equate to “authorizing” the activities ruling “While I find that iiNet had knowledge of infringements occurring, and did not act to stop them, such findings do not necessitate a finding of authorisation. I find that iiNet did not authorise the infringements of copyright of the iiNet users”. The case was brought by AFACT (the Australian Federation Against Copyright Theft) on behalf of a consortium of film and TV companies and centred on the ISP’s liability for illegal file-sharing committed by its customers. AFACT had asked for damages and wanted iiNet to be forced to disconnect any customers it knew were illegally sharing music online. The ISP had refused to forward file-sharing warning notices to its subscribers on behalf of the studios, saying they violated privacy provisions in Australian law. Instead, iiNet had taken to forwarding the notices from copyright holders to the police, along with its own terms and conditions showing it prohibited copyright infringement.

In France, South Korea, New Zealand and Taiwan ‘three strikes’ laws are already in place and in the UK a similar regime is planned as part of the new Digital Economy Bill which Culture Secretary Ben Bradshaw believes will become law before the next election. That said, controversy still surrounds the role of ISPs and mobile companies in regulating their customer’s illegal activities, and in the UK Talk Talk’s boss Charles Dunstone has said he might fight the three-strikes law in court if his lobbying efforts to stop the anti-piracy system becoming law fails.

In all the countries where the new system is in place it has been brought in by the legislature but significantly the US has no such system. What the US does have is the decision in A&M Records, Inc. v. Napster, Inc (2001) where the United States Court of Appeals for the Ninth Circuit agreed that the  defendant, the peer-to-peer file-sharing service Napster, could be held liable for contributory infringement and vicarious infringement of the plaintiffs’ copyrights and the decision of the Supreme Court held in MGM v Grokster (2005) which held that that those who induce infringement are liable for the resulting acts of infringement by third parties – “We hold that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”

In Australia it seems that the content industries were hoping that a successful civil action, against an internet provider over the issue would set an important precedent – which the legislature could then formalize.  There was, of course, no guarantee that the claim would succeed and it hasn’t. In the UK the BPI have been hesitant to take a civil law action against the organisers of the Oink file sharing service, accepting a case would probably have to go to the Supreme Court for a final ruling. Indeed precedents from jurisdictions around the world are mixed.  In the UK itself, criminal charges against Oink founder Alan Ellis failed in the Crown Court and a prosecution of TV Link’s organisers Dave Rock and David Overton was thrown out by a Judge Ticehurst in Crown Court who allowed a ‘mere conduit’ (E-commerce Regulations 2002) defence and ruled that allegations under the Copyright Designs and Patents Act failed because there was no evidence that TV-Links made available to the public the films and shows they linked to. A recent claim by the IFPI against Baidu in China for providing links to infringing sites failed in the Beijing No. 1 Intermediate People’s Court. In Norway in Bonnier Amigo Music Norway AS v Telenor Telecom Solutions AS, the District Court of Asker og Baerum was asked if ISP Telenor should block customer access to The Pirate Bay but held that an internet service provider was not liable as a contributory copyright infringer, since its role is not an “unlawful contributive” one, contributing in a “merely physical” manner only.

Conversely, back in 2005 the Higher Regional Court in Munich, in an action against, upheld the Munich court of first instance which had ruled that creating a link to another website which offered the illegal Slysoft software for download could lead to prosecution for complicity; in 2008 a Danish court ruled in favor of the IFPI, and ordered the ISP Tele2/Telenor to block all access to The Pirate Bay although this decision is being appealed to the Danish Supreme Court;  in 2009 a court in Holland ruled that access to the Pirate Bay should be blocked to all domestic internet users in an action brought by anti-piracy organisation BREINagainst The Pirate Bay.

Perhaps the January 2010 decision of the Italian Supreme Court illustrates just how difficult the issue is for the courts – here the court reversed its own decision and upheld the Court of Bergamo’s decision of 2008 saying that ISPs in the country must block access to The Pirate Bay, finding that sites that offer torrent files that link to copyrighted material are illegal. Now a Belgian appeals court is referring the question of whether ISPs should be compelled to filter file sharing traffic on their networks to the European Court of Justice and one can only hope that some sort of definitive ruling will come out of this. Belgian copyright society SABAM sued Internet service provider Tiscali (now Scarlet) several years ago, asking a court to force Tiscali to use a filter to screen out file-sharing traffic. This decision was then reversed after confusion over the purported effectives the filter. The Brussels Court of Appeal now has referred the matter to the European Court of Justice with some critical questions about how courts should deal with the tensions between content owners, infringers and ISPs and other intermediaries (see

AFACT and iiNet had both presented their arguments in court last October and a ruling on the matter was not expected until later this year but the decision was fast tracked. Following the court hearings last Autumn, iiNet’s CEO Michael Malone told reporters he was confident his company would win the case, saying: “We do not, and never have supported, encouraged or authorised illegal sharing or downloading of files in breach of the copyright laws”.

In light of iiNet’s win, it is likely the Australian government will now give some time to reviewing copyright rules, which might result in a three-strikes system being introduced in all events – something content owners would surely prefer to a court precedent – although I imagine Australian ISPs and mobile companies will be just as vocal as Dunstone has been in the UK, telling reporters that if the Digital Economy Bill does become law his company will refuse to send out warning letters and will consider “all options” for challenging three-strikes through the courts saying “I think there is a problem if an industry thinks its business model will be saved by legislation. While the music industry focuses on getting these laws through, it won’t be concentrating on reinventing its business – which it obviously needs to do as its model is out of date. Its customers have gone on strike and turned to piracy because the old model doesn’t work. There is no need to pursue this letter-sending and disconnection policy, when [record companies] can just individually prosecute people who have violated copyright rules”.

With Google announcing a new 1 gigabyte per second service optical fibre network in the USA, enabling users to download a high definition feature film in a few minutes (or for rural clinics to send 3D medical images over the networks) and President Obama promising $7.2 billion (£4.6 billion) for broadband infrastructure in the US, this topic is just going to get more and more interesting – and the decisions of the courts and legislation by governments will be critical in underpinning (or undermining) the future business models for record, film, TV and games companies as well as ISPs, mobile companies and other intermediaries.
On authorising copyright infringement (UK) see   (CDV v Gamecock [2010])
A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (Ninth Circuit, 2001)
MGM Studios, IncvGrokster, Ltd. 545 U.S. 913 (2005)
And read this interesting blog from Chris Cooke (Business Editor at the CMU Daily) and for more comment see

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