Read the judgment in full here iiNet chief executive, Michael Malone, said the case had so far cost his company $6.5 million. "All this legal action hasn't stopped one customer from [illegally] downloading in Australia," Mr Malone said said outside court this afternoon. “We urge the Australian film industry to address the growing demand for studio content to be delivered in a timely and cost effective manner to consumers and we remain eager to work with them to make this material available legitimately," he said in a statement. The Australian Federation Against Copyright Theft, or AFACT, which is representing the movie studios but is not a party to the case, was appealing against Justice Dennis Cowdroy's decision on Febuary 4, 2010, which found an ISP was not liable for the downloading habits of its customers. AFACT executive director, Neil Gane, who has been speaking to the media on behalf of the film industry for the case, said that "this was a case where [iiNet] admitted to tens of thousands of copyright infringements [occurring] on its network". He questioned why they didn't "have to lift its finger to prevent them".

Justice Emmett scheduled a directions hearing on costs for March 11. Despite the decision handed down this afternoon, it is widely expected the film industry will appeal to the High Court. A Notice of Appeal must be filed within 28 days. iiNet, which claims to be Australia's second largest DSL provider, yesterday afternoon informed the sharemarket that a decision on the appeal would be made today. This morning, the company went into a trading halt, presumably so it could inform the market of the trial outcome before any decisions were made by shareholders. "We're very pleased that the very sensible decision has been upheld on appeal and we hope the copyright industry's war on Australian internet users will be blunted by this decision," said Colin Jacobs of the online users' lobby group Electronic Frontiers Australia. Greens communications spokesman Scott Ludlam congratulated iiNet on its win, saying the ISP was "the first one to end up in the crosshairs" and had been essentially running arguments on behalf of the whole internet industry.

While the government has said it would consider new anti-piracy legislation if iiNet won its case, Senator Ludlam said he did not believe ISPs should be liable for what customers do on their networks. He compared the issue to Australia Post "opening up every envelope to check and see if there's a burnt CD in there". "It's not even so much whether you think piracy is a good thing or not; it's more where does the liability rest and I tend to agree with the arguments that iiNet put that the service provider is not the gatekeeper," Senator Ludlam said. Communications Minister Stephen Conroy's spokeswoman said that the government would "carefully analyse the decision and the policy implications for copyright and the digital economy" before considering whether online anti-piracy measures were required "As AFACT may seek leave to appeal to the High Court it would be inappropriate for me to make any further comment on this matter," the spokeswoman said. Nick Hart, a senior consultant at Truman Hoyle Lawyers, said the Federal Court decision would not take the content or technology industries by surprise.

‘‘Although the next step is likely to be an application for special leave to appeal to the High Court, this decision will undoubtedly increase pressure on the Federal Government to pass laws to tackle illegal file sharing and piracy on the internet, as has occurred in New Zealand, France and the UK for example,’’ he said. AFACT recently claimed the film industry had lost $1.37 billion to movie piracy in a 12-month period. Electronic Frontiers Australia urged that people should apply some scepticism to the figure. In the original decision made by Justice Cowdroy in 2010, he found that iiNet did not authorise the copyright infringement of users on its network and had no obligation to target pirates on behalf of the studios. The studios appealed against the judgment, asserting Justice Cowdroy made errors in his interpretation and application of the law. The appeal was heard over four days, beginning on August 2 last year. The suit against iiNet was filed in November 2008 by a group of the biggest Hollywood studios including Village Roadshow, Universal Pictures, Warner Bros, Paramount Pictures, Sony Pictures Entertainment, 20th Century Fox and Disney, as well as the Seven Network.

Mr Malone was present for the appeal decision as was AFACT executive director Neil Gane. AFACT claimed iiNet was liable for "authorising" copyright infringement on its network because it did not warn or disconnect offending customers when repeatedly notified of the infringements by the movie studios. Separately, Communications Minister Stephen Conroy was criticised in 2009 for comments he made on the case, when he called iiNet's defence "stunning". "I saw iiNet's defence in court under oath ... they had no idea their customers were downloading illegally music or movies. Stunning defence, stunning defence," Senator Conroy said at the time. "I thought a defence in terms of 'we had no idea' ... belongs in a Yes Minister episode."

This reporter is on Twitter: @bengrubb