In what is being billed as iiNet versus Hollywood, the Australian internet service provider has come out an apparent winner after the High Court dismissed a copyright infringement case brought by industry movie studios.

The case was a final appeal by the industry in its attempts to crack down on internet users infringing copyright by using BitTorrent to download movies.

Nicolas Suzor, lecturer, Faculty of Law at Queensland University of Technology, explains the decision and what it means.

What’s the background to today’s decision?

This decision is the culmination of the last few years of litigation by the Australian Federation against Copyright Theft (AFACT), in conjunction with 34 movie studios. They sought to argue that iiNet, which is Australia’s second largest internet service provider, was liable for copyright infringement when its users used their home internet connections to download and upload movies using the BitTorrent protocol.

The High Court has found in line with the lower level court decisions that iiNet was not responsible for the actions of its users. The evidence before the court was that iiNet hadn’t done anything beyond providing the internet connection. The High Court found in order to be liable something more is required - iiNet cannot be liable for merely being inactive in response to allegations of infringement of copyright made by AFACT. Importantly, the High Court ruled that it would not be reasonable to expect iiNet to disconnect the accounts of its users solely on the allegations of infringement provided by AFACT.

What are the implications of this decision? Other internet service providers will no doubt be watching with great interest.

It’s a very important decision worldwide. We’ve only seen a few of these decisions so far. There was one in the Irish High courts where the Irish ISP Eircom was found liable for infringement on its network.

This decision in Australia is the most considered decision that we have seen in common law countries. It represents the next iteration of an attempt by copyright owners to enlist the aid of internet service providers to police infringement on the internet.

Over the past 15 years, copyright owners have had trouble using litigation to deter copyright infringement. They started off targeting companies like Napster and Kazaa, who were clearly encouraging the infringement of copyright by developing peer-to-peer file sharing networks that were designed to allow people to share copyrighted materials.

Then those technologies started to become decentralised and the copyright owners found they could not sue the developers of technologies like BitTorrent because they are such widely used general-purpose protocols, and they couldn’t sue end users because it tends to be terribly expensive, terribly unpopular, unfair and, realistically, quite ineffective.

So most recently, they have been trying to impose a duty on domestic ISPs to police infringement on the network. This approach is attractive because ISPs are quite big targets and, by imposing regulation at that point, they can potentially have quite a strong flow-on effect on the ability to control what users are actually doing.

This is quite an important decision worldwide because a lot of different countries are trying to look for different ways to target infringement and trying to sort out the principles on which ISPs should and should not be required to police what is on their network.

France had a quite controversial three strikes regime, which was struck down by the Constitutional Court and, in the end, was recast as a more limited and legitimate judicial regime. Both the UK and NZ have also introduced controversial “graduated response” regimes, where users will be progressively warned and potentially have their internet accounts terminated when they are found to have infringed copyright. The US has not gone so far, but the major ISPs have agreed with copyright owners to introduce some form of private notification scheme.

What about here in Australia?

Here in Australia this was seen as a test case to see if ISPs already have a duty to police Australian internet users under the law. It was quite ambitious in that the duty to terminate is not explicit under Australian law. The questions was whether or not ISPs that did nothing more than provide a connection could be liable. If they were, that would impose on them an obligation to do something about copyright infringement - although AFACT was never quite clear on what exactly it expected ISPs to do.

So what will the next move be from copyright owners?

I think two things may happen. This decision provides a good deal of certainty to Australian ISPs under current law, so copyright owners will likely increase pressure on policy makers to develop a new legislative regime. Copyright owners are still looking for a way that they can enlist the help of intermediaries such as ISPs to police copyright infringements, although such regimes are often highly controversial. It is unclear at this stage whether the federal government will entertain copyright industry demands for a three-strikes or similar system in Australia, particularly in the face of strong public opposition worldwide. At any rate, little is expected to change before the Australian Law Reform Commission completes its review of the copyright system near the end of 2013.

We are also starting see the emergence of an acknowledgement by copyright owners that it is important to develop business models which provide consumers with cheap, high quality and fast access to entertainment and other copyright material. The one thing that has worked in last 15 years is increasing access: models like iTunes, Amazon’s Kindle, and Netflix have been able to successfully provide a legitimate and convenient alternative to infringing filesharing.