In a definitive defeat for film studios—and in a first case of its kind worldwide—Australia's Federal Court has ruled that ISPs have no obligation to act on copyright infringement notices or to disconnect subscribers after receiving multiple letters. If copyright holders want justice for illegal file-sharing, they need to start by targeting the right people: those who committed the infringement.

The ruling handed down today by Judge J. Cowdroy aims to be nothing less than magisterial: in 200 pages, it examines the issue from every possible angle because of the "obvious importance of these proceedings to the law of copyright both in this country and possibly overseas."

It concerns iiNet, the third largest ISP in Australia, which was sued in 2008 by a group of movie studios—many of them American—for not doing enough to stop copyright infringement. Letters sent to iiNet were treated as allegations rather than facts and were therefore not acted upon; iiNet instead sent the letters on to the police, saying that it would not act unless a court first ruled that actual infringement had occurred.

This infuriated the movie studios, who demanded that iiNet cut off subscribers alleged to be repeat infringers. The question before the court was whether iiNet "authorized" copyright infringement on behalf of its users, and media interest in the case was intense.

In his ruling, the judge noted that the case "attracted widespread interest both here in Australia and abroad, and 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 judge's ruling amounted to a strong defense of the "mere conduit" safe harbor that many nations grant ISPs, so long as they don't encourage infringement or have actual awareness that it is occurring. Two hundred pages on the topic might sound soporific, but take heart before we dive into the legal logic; this is a judge not afraid to try his hand at "being interesting." Here, for instance, is his description of BitTorrent:

To use the rather colourful imagery that internet piracy conjures up in a highly imperfect analogy, the file being shared in the swarm is the treasure, the BitTorrent client is the ship, the .torrent file is the treasure map, The Pirate Bay provides treasure maps free of charge and the tracker is the wise old man that needs to be consulted to understand the treasure map.

So buckle up; it's going to be an interesting ride.

The investigation



The Australian Federation Against Copyright Theft (AFACT) spearheaded the case, hiring investigators to troll BitTorrent for movies belonging to a coalition of studios. One simple way of doing this was simply to search MiniNova (based in the Netherlands) for movies, but modify the uTorrent client software to filter IP addresses so that it would only connect to those belonging to iiNet.

Investigators collected the IP addresses of those sharing the movies and began forwarding them to iiNet. The studios wanted the ISP to forward the letters to subscribers. When a subscriber received two or three such letters, iiNet should suspend service. If more letters arrived after the suspension was revoked, the subscribers should be booted from the 'Net. And, in addition, the studios "suggested that iiNet should block certain websites."

This is hardly the sort of thing an ISP is going to do to its customers voluntarily. But did iiNet have a legal duty here? Australian copyright law, like the DMCA in the US, requires ISPs to have some policy in place for terminating the access of repeat copyright infringers.

Who is Jo Blow?

iiNet CEO Michael Malone was questioned about this at the trial over "three days of gruelling and unnecessarily hostile cross-examination" by studio lawyers. (This must have really been something to watch, because the judge goes out of his way to mention later that the questioning was "intemperate.")

Malone said that iiNet had a policy to terminate subscribers, but that it applied only to "infringement," not to "alleged infringement." As the judge summarized the testimony, "If a Court ordered a subscriber account be terminated or if a Court found that a subscriber of the respondent infringed copyright or a subscriber admitted infringement, the respondent would terminate that subscriber's account."

This fits with what Malone said back in 2008, when he told ComputerWorld Australia, "We have been passing on all those complaints directly on to the state police—who are in our building. They send us a list of IP addresses and say 'this IP address was involved in a breach on this date.' We look at that say, 'Well, what do you want us to do with this? We can't release the person’s details to you on the basis of an allegation and we can't go and kick the customer off on the basis of an allegation from someone else.' So we say, 'You are alleging the person has broken the law; we're passing it to the police. Let them deal with it.'"

Had anyone been terminated under the policy? No, said Malone, they had not, because "no one had been found to infringe copyright" by this standard. The studios' lawyer then asked Malone if this was some kind of "joke" response. As the judge notes, "The respondent’s policy was not a joke, and its conduct was entirely consistent with the policy as outlined even though it may not have been the kind of policy that the applicants anticipated."

Malone really irritated the studios with a further comment that iiNet was simply not prepared to act on infringement notices received from just any "Jo Blow." The studios' response is priceless: "The applicants submit that they, being the major film studios, could not possibly be considered ‘Jo Blow’ when copyright infringement of their films is under consideration."

As Malone indicated in a December 13, 2008 forum post, the issue should be handled by the relevant authorities; he had no wish to start acting like a private copyright cop. "With the evidence that AFACT has, I’m betting that a magistrate will happily issue an order for us to disclose the account holder’s identity for under $50. AFACT can then directly contact the customer, warn them, raid them, or sue them. Whatever the action, it will then be overseen by the independent legal system."

The judge agreed, saying that the law "recognises no positive obligation on any person to protect the copyright of another. The law only recognises a prohibition on the doing of copyright acts without the licence of the copyright owner or exclusive licensee, or the authorisation of those acts."