Australian Internet service provider iiNet has won its court battle against several Hollywood studios. Justice Dennis Cowdroy today announced that iiNet was not responsible for the infringements of its subscribers when they shared copyright material using BitTorrent. The Australian Pirate Party has welcomed the decision.

The Federal Court has today ruled in favor of Aussie ISP iiNet following a copyright infringement case instigated by AFACT, the Australian Federation Against Copyright Theft.

Last year several studios including Village Roadshow, Universal Pictures, Warner Bros Entertainment, Paramount Pictures, Sony Pictures Entertainment, Twentieth Century Fox Film Corporation, Disney Enterprises, Inc. and the Seven Network took legal action against iiNet, claiming that the ISP did nothing to stop its customers from sharing copyright media via BitTorrent.

The ISP refuted the claim with a multi-layered defense, which was heard then adjourned in November 2009.

Passing his verdict today, Justice Cowdroy ruled that while the studio’s copyrights had indeed been infringed upon, iiNet did not authorize the copyright infringing activities of its subscribers and therefore the ISP could not be held responsible.

Notably, Justice Cowdroy said that iiNet had no control over BitTorrent networks and the ISP was covered under so-called “safe harbor” provisions.

“It is impossible to conclude that iiNet has authorised copyright infringement … [iiNet] did not have relevant power to prevent infringements occurring,” Justice Cowdroy said in his judgment.

AFACT had insisited during the original court case that iiNet should forward copyright infringement warnings to its customers on behalf of AFACT members, but the judge ruled that this was not the way copyright infringements should be handled.

Electronic Frontiers Australia said the outcome of the case was the “application of common sense” and Pirate Party Australia also welcomed the decision.

“This is a good decision by Justice Cowdroy, and reflects that there is no legal basis or obligation for any ISP to act in the interest of copyright holders, or to expect that they should disconnect any entity upon allegation of infringement without judicial oversight and due process,” said Rodney Serkowski, Party Secretary.

“Essentially an ISP should be considered similar to the postal service – they simply carry data in the form of packets, and that communication should be considered private,” he added.

In a statement, iiNet said it had “never supported or encouraged breaches of the law, including infringement of the Copyright Act of the Telecommunications Act,” adding that the company had always been a “good corporate citizen and an even better copyright citizen.”

After the huge distraction of this prolonged legal battle, iiNet said it would now like to get on with business, adding that it looks forward to working with the entertainment industry to make content available legally to reduce illicit file-sharing.

AFACT executive director, Neil Gane, said his group was extremely disappointed with the Court’s ruling.

“Today’s decision is a set back for the 50,000 Australians employed in the film industry,” he said in a statement.

“But we believe this decision was based on a technical finding centered on the Court’s interpretation of the how infringements occur and the ISPs’ ability to control them. We are confident that the Government does not intend a policy outcome where rampant copyright infringement is allowed to continue unaddressed and unabated via the iiNet network,” he added.

AFACT will have to pay all of iiNet’s substantial legal costs. Thus far, the group has declined to confirm whether it will appeal the Court’s decision.