In a 2:1 judgment, the full bench of the Federal Court held iiNet not liable for acts of copyright infringement committed by users of its internet service. But the court left open in its judgment the possibility that, in different circumstances, an ISP may be held liable for authorisation of their users' infringements, according to law firm Freehills, and therefore have to do something about it. Senior associate at law firm Middletons, Troy Gurnett, who specilises in intellectual property, said that Justice Arthur Emmett, who was lead judge in the case, had "in effect spelt out for the copyright owners [in his judgment] what they will need to do next time". "Some people are describing [the judgment] almost like a scheme, other people are describing it as a cheat sheet," he said. Litigation lawyer and specialist in intellectual property and technology law at Clayton Utz, John Fairbairn, said that although last Thursday's judgment ruled in favour of iiNet, the film industry was given a very clear way going forward to stop Australians from downloading movies and music illegally via their ISP. "As it stands, [the judgment] opens the way for copyright owners ... to improve the quality of the notices they provide to ISPs and also potentially put in place a regime where they'll agree to meet [the ISP's] costs [to act on the notices]," Mr Fairbairn said. "And if they meet those requirements, an ISP may then come under an obligation to either send warning notices to those users [who download illegally] or to terminate the accounts of users that are repeat infringers." Litigation lawyer and also a specialist in intellectual property and technology law at Freehills, Campbell Thompson, said that there was "a lot" in the judgment which was "positive for copyright owners".

"The judgments provide guidance on the circumstances in which ISPs will be liable for authorising copyright infringement," Mr Thompson said. In a nutshell, this means an ISP such as Telstra, Optus or iiNet, among others, could easily be compelled by copyright owners to warn their customers about copyright infringements alleged to have occurred using a customers' connection - and if the ISP continues to receive notices, terminate the customer's service. "As of [the day before the judgment] the law was that the ISP really had no obligation to take any steps to interfere in the activities of its users if it was acting merely as an ISP and if it had no other relationship with that consumer other than it was a user of those ISP services," said Clayton Utz's John Fairburn. "So what this decision does is it unwinds that to some extent and says 'Well no, you've got to look at the individual facts and in this case ISPs do have the power to prevent the infringements by terminating accounts or by sending warning notices'. It all depends on the degree of knowledge that [the ISPs] have and even though we have three judgments there is consensus on that point," he said. Where the judges differed was on what was required to give iiNet the level of knowledge to actually take steps against users who infringed on film and music studio's copyright, Mr Fairburn said.

He said one judge believed that the existing notices were sufficient, whereas "[the other two] judges thought that they weren't". Fairburn said in his judgment, the lead judge, Justice Arthur Emmett, set out "what [AFACT] would need to do for [Justice Arthur Emmett] to consider there was an obligation to take steps and that includes unequivocal and cogent evidence of the infringement and some form of undertaking to reimburse the ISP for the costs of taking those steps and to indemnify it in the event termination of that users' account was unlawful". Before the litigation began against iiNet, AFACT had been sending iiNet a list of customer IP addresses it had collated using a firm called DtecNet that would monitor (using the internet) iiNet users who were allegedly sharing or downloading unauthorised films using the BitTorrent protocol. BitTorrent, according to the company that maintains it, is a protocol that allows internet users to download files quickly by allowing people downloading the file to upload (distribute) parts of it at the same time. An IP address is assigned by an ISP to its customers and can be used to identify them if cross matched with records. AFACT had been sending copyright infringement notices to iiNet with those IP addresses, alleging certain customers had infringed on their members' copyright using BitTorrent.

However, Justice Arthur Emmett said in his judgment that "mere assertion by an entity such as AFACT, with whatever particulars of the assertion that may be provided, would not, of itself, constitute unequivocal and cogent evidence of the doing of acts of infringement". What would was spelt out in his judgment. "Information as to the way in which the material supporting the allegations was derived, that was adequate to enable iiNet to verify the accuracy of the allegations, may suffice," he said. "Verification on oath as to the precise steps that were adopted in order to obtain or discern the relevant information may suffice but may not be necessary." In a letter to iiNet before the litigation, AFACT said that it could contact each of its customers, could warn them against infringement and could impose sanctions if they continued to infringe copyright using iiNet's network, despite the warnings. In terms of what sanctions AFACT were after is unknown. Middletons' Troy Gurnett said that he believed what AFACT were after was "a series of warnings but ultimately they are looking for the ISPs to either suspend or terminate their users' services". He said that this would give more meaning to "the copyright owner’s war against internet piracy".

"I think that’s what they are looking for; they’re looking for either suspension or termination ultimately for repeat infringers," Mr Gurnett said. But iiNet formed the view that it would not accept “the responsibility of judge and jury in order to impose arbitrary and disproportionate penalties purely on the allegations of AFACT”. Shortly after forming this view it was taken to court by AFACT. "Losing the case wasn’t all doom and gloom for the copyright owners," Middletons' Troy Gurnett said. "They have been given some very strong clues about what they need to do in order to progress their fight against internet piracy." Given this, Freehils' Campbell Thompson predicted "a fresh round of [infringement] notices" would be sent from AFACT [to ISPs]". The notices would now likely carry the information listed in the judgment "cheat sheet" Middletons' Troy Gurnett referred to. In a recent opinion piece on this website, David Brennan, an associate professor at Melbourne University, said the film companies may consider their lost appeal a win on its own "and if so there will not be a further appeal to the High Court", which they have 28 days from when the judgment was handed down to do so.

In a statement, iiNet said that "if AFACT or anyone else puts forward a workable proposal we are of course prepared to examine it". AFACT executive director, Neil Gane, said he agreed "the judgment certainly paved the way for ISPs to be held accountable for online infringement". On the matter of termination or suspension of internet users, Gane said AFACT had "never stated that termination is reasonable or unreasonable", despite asking ISP iiNet to impose sanctions, without naming what they might be. This reporter is on Twitter: @bengrubb