Pinnacle Films

The Federal Court of Australia has ordered Australian internet service provider iiNet to hand over details of customers alleged to have pirated the film "Dallas Buyers Club" through torrenting software, in a landmark case for the regulation of piracy in Australia.

After a long-running legal battle over "preliminary discovery" of internet users' personal information, Justice Perram found in favour of Dallas Buyers Club LLC, agreeing that the rights holders should be able to obtain customer information matching the IP addresses of users torrenting the Oscar-winning film.

However, in handing down his judgement that preliminary discovery should be granted, Justice Perram said "there should be orders maintaining the privacy of the [customer] information provided." In addition, Perram stipulated that the content and form of any letter sent to iiNet customers alleged to have infringed copyright on the film must "first be submitted...for approval." This last stipulation may be a precaution against the alleged in dealing with piracy.

The news comes at a busy time in Australian copyright reform, just two months after Australian ISPs and content rights holders released a draft industry code for tackling piracy across the country. The code, which was developed at the request of the Federal Government, outlined a three-strikes policy requiring ISPs to send escalating copyright infringement notices to their customers at the request of rights holders.

Australia's Attorney-General George Brandis also introduced new site-blocking legislation to Federal Parliament in March as part of a piracy crackdown. If passed, the laws would allow rights holders to seek a court injunction requiring ISPs to block overseas websites that are deemed to "facilitate" piracy.

Today's news is a big win for Dallas Buyers Club LLC, the company behind the film, as well as rights holders seeking to crack down on individual internet users caught pirating content online. While iiNet had long fought to keep its customer details under lock and key, the ISP will now be forced to hand over its customer information, potentially opening the door for individuals to face further legal action.

The legal battle so far

As part of its "preliminary discovery" case, Dallas Buyers Club LLC applied to the Federal Court to obtain the personal details of customers linked to 4,726 IP addresses that allegedly participated in torrent swarms -- a group of users all participating in the sharing of a file. The IP addresses were allocated to iiNet as well as a number of other smaller ISPs.

In response to the initial legal action, iiNet said it "would never disclose customer details to a third party, such as movie studio, unless ordered to do so by a court" and would fight the preliminary discovery attempts.

A large part of the case hinged on evidence provided by DBC's expert witnesses, which the rights holder said proved that iiNet users were sharing the film online.

Dallas Buyers Club used a German program known as MaverickEye to detect IP addresses in torrent swarms between April 2 and May 27, 2014. According to an affidavit signed by expert witness and MaverickEye employee Daniel Macek, the software "mimics a user willing to act as a source of data," though "no actual transfer takes place." Once a file seeder -- someone sharing the file with other users -- is detected and a "sub-piece" of the film is received, the connection is terminated and the seeder's IP address, city and ISP is logged with a time stamp.

However, during cross-examination, counsel for iiNet pointed out that MaverickEye did not target those who only downloaded the film (known as torrent "leechers") and only detected a "sliver" of the downloaded file rather than a full copy of the film.

iiNet also cast doubt over DBC's witness, saying he only worked part-time at MaverickEye, that his affidavit was not written by him, and that he only had a "general" understanding of how the software functioned. Further, iiNet said there was no proof that MaverickEye's processes were "being done in a scientific and accurate way."

With Dallas Buyers Club LLC going to court to get personal information in order to pursue individual copyright infringers, the company was also forced to defend its history of dealing with pirates. A witness from Voltage Pictures, the company that claims copyright over "Dallas Buyers Club," said the company employed "no scare tactics" in sending infringement notices to internet users and that news stories about the company going after vulnerable people in court would "ruin" Voltage.

In and out of court

However, Dallas Buyers Club is no stranger to the courts. The distributor behind the film, Voltage Pictures, has pursued copyright infringement cases in the United States and Europe, winning a $14,000 settlement in the state of Oregon, and allegedly sending out letters of demand to pirates in Denmark.

Similarly, it's not the first time iiNet has been targeted by rights holders, with a landmark case against Village Roadshow ultimately coming down in favour of the ISP.

In 2008, 34 film studios including Village Roadshow, Warner Bros and Universal, began legal proceedings against iiNet saying it failed to take reasonable steps to prevent its customers from pirating the studios' films. The Australian Federation Against Copyright Theft tracked infringing IP addresses and sent warning notices to iiNet, which AFACT alleged the ISP ignored.

The case was dismissed in 2010, with the presiding judge ruling that "the mere provision of access to the internet is not an authorisation of infringement." AFACT appealed the decision twice, but both the Federal Court and the High Court of Australia ruled in favour of iiNet.

The response to the judgement

Counsel for Dallas Buyers Club has welcomed today's decision. Michael Bradley, managing partner at Marque Lawyers and instructing solicitor on the case, also welcomed the judge's decision to review the content and form of any letters or notices that Dallas Buyers Club sends to alleged copyright infringers, saying this oversight "should overcome anyone's concerns".

He also noted that it was "really not very exceptional" that a private company should be able to gain access to personal information of more than 4,000 individual internet users.

"Obviously in terms of scale it's significant but, in principal, this kind of thing is not at all exceptional in legal process," he said. "It happens all the time."

While Bradley would not speculate on Dallas Buyers Club's next move, he said there were a number of courses of action available, including issuing legal proceedings against individuals to claim damages for copyright infringement. Without setting a figure for damages, Bradley said a court could take several factors into account when setting the figure, including economic losses, "flagrancy, volume and frequency of infringement [and] prior conduct" of the infringer. However, he said claims Dallas Buyers Club would make similar claims to those pursued overseas were merely "speculation".

For its part, iiNet also welcomed the "positive result", saying the legal process had shed light on the practices of some rights holders in targeting individuals with threatening letters to demand damages for piracy -- a process known as "speculative invoicing".

"By going through the process we've been able to ensure that our customers will be treated fairly and won't be subjected to the bullying that we have seen happen elsewhere," said iiNet CEO David Buckingham.

"Letters issued by the rights holders will be reviewed by the Judge to ensure they are not threatening -- providing a significant safeguard for our customers. As a result, the ruling will put a major dent in the process and business case behind speculative invoicing, since the financial returns could be outweighed by the costs of legal action."

Update, April 7 at 4:30 p.m. AEST: Included comments from Dallas Buyers Club's lawyers.

Update, April 8 at 10:40 a.m. AEST: Included comments from iiNet.