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Copyright infringement – Slipping through the iiNet

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Copyright is a powerful form of intellectual property right.  Where a finding of copyright infringement is made, the Court has the ability to award exemplary or punitive damages in light of the particular circumstances (see Ugg story).  As a result, infringement of copyright can result in the payment of significant compensation to the copyright owner of the infringed work.

iiNet Limited (“iiNet”) is Australia’s third-largest Internet Service Provider (“ISP”).  iiNet provides internet access to over 490,000 users, which enables them to download, copy, publish, disseminate etc available copyright works.

The major motion picture studios in both Australia and the United States brought copyright infringement proceedings against iiNet claiming that iiNet had authorised the alleged copyright infringement actions of iiNet users.  As per the Copyright Act 1968 (Cth) (“the Act”), a person who authorises the infringement of copyright is treated as if they themselves infringed the copyright directly.

In dismissing the proceedings, the Court found that iiNet had not authorised the infringement of the applicants’ copyright as:

  • iiNet had provided its users with facilities to access the internet.  This facility, by itself, did not result in copyright infringement and iiNet had not invited its users to access its facilities to infringe the applicants’ copyright.  Instead, the ‘means’ of infringement was through the deliberate use of a third party protocol and software system (“Bit Torrent”).  iiNet had no power over any aspect of BitTorrent
  • iiNet did not act in a the manner considered by the Act to be an ‘authorisation’.  For example, iiNet had a customer relationship agreement “CRA”) with each user.  Although the CRA may be terminated or suspended on a finding of copyright infringement, such a finding is made by the Court following complex analysis of individual circumstances.  iiNet could not terminate or suspend a user’s account before such a finding was made.  As iiNet did not have the ‘power to prevent’ the alleged copyright infringement before the Court’s finding in each individual circumstance, iiNet had not ‘authorised’ the infringement
  • iiNet had not ‘sanctioned, approved or countenanced copyright infringement’ and had done ‘no more’ than to provide an internet service to its users.

The result of this proceeding will disappoint the applicants, and the decision is likely to be appealed.  The applicants are likely to ramp-up their activities in directly pursuing select individuals undertaking allegedly infringing actions, and the Government may legislate to address gaps in the Act identified in the judgement.

The decision does have far reaching implications not just for ISPs but for anyone providing an online service which permits end users to communicate and share content.  What needs to be understood is just because iiNet was able to avoid responsibility for copyright infringement in this instance it does not mean that the same will instantly apply to others.

If you provide a service that allows users to communicate or share online content, you may wish to consider putting in place business practices and procedures to ensure that you are not held responsible for your end user’s copyright infringement.  The steps which you may take could include:

  • Refraining from taking positive steps to encourage copyright infringement.  For example, refrain from creating, hosting or otherwise making available a website, software, internet service or any other means which encourages or turns a blind eye to potential copyright infringement
  • Reviewing the terms and conditions of your user agreements – particularly aspects relating to your rights to terminate or suspend such agreements where allegations of copyright infringement are made
  • Reviewing your policies and procedures for responding to allegations of copyright infringement.  Considerations should include industry practice, media relations, and publications
  • Depending on the type of online business you operate, reviewing whether the “safe harbour” provisions of the Act (which apply to certain types of internet providers) may apply to your business.  In certain circumstances these provisions deem that the providers of certain communications services will not be held responsible for copyright infringement merely as a result of providing the service.

In light of the decision in iiNet, such steps may help you to ‘slip through the (ii)Net’ and reduce your likelihood of being held responsible for authorising the copyright infringement actions of your internet service users.  Mason Sier Turnbull has experience in assisting its clients to address these issues. Please contact an Intellectual Property lawyer for further information.

Authors: Noelene Treloar and Darren Sommers