A look at the Copyright Act suggests the movie and TV industry have an unfortunately strong case against iiNet. PLUS: Read the court documents yourself.
As you probably know by now, iiNet has been sued by a number of movie studios and Channel 7 for allowing piracy to occur on its network — specifically BitTorrent piracy of movies and TV shows.
iiNet has argued that when the movie industry made complaints about user piracy on its network, it turned that information over to police, with the presumption that police would investigate.
iiNet chief Michael Malone has said that iiNet can't just disconnect someone's phone line because the movie industry makes an allegation that a user is pirating.
And, the ISP industry argues, it is protected by "safe harbour" provisions of the copyright act — ISPs are merely common carriers of traffic and the fight is between copyright holders and users.
All of these arguments sound, on the surface, pretty rational. And, frankly, we all want to believe them. Free and easy access to TV shows and movies is something none of us want to let go of.
Many of us feel that downloading TV shows is justified by how badly our TV networks chop and change episodes, cancel series' halfway through, delay episodes for months after their original air date, and quite simply don't even show some of the best TV programs produced around the world.
The justification for downloading ripped movies is murkier, since there's almost always a legal way to purchase a movie, and there are even increasingly good options for buying them in digital formats. But there are still no online stores that sell a wide range from all studios (unless you are prepared to sign up fraudulently to a US download store), and the variety of stupid DRM schemes used by Australian movie download stores means movies you buy online can't be easily played on your computer, TV and iPod.
The trouble with the law, though, is that it isn't commonsense, and although it should be, it often isn't in line with community expectations.
The movie industry isn't making an ambit claim by suing iiNet — it appears to be on reasonably solid legal ground. Here's three key arguments in iiNet's defence, debunked:
iiNet can't disconnect someone for an unproven allegation of piracy
Apparently iiNet wasn't just being sent those random emails that the US movie studios love to send out. The Australian movie industry was couriering iiNet documents as thick as phone books on individual cases of user piracy. Each set of documents included a DVD with gigabytes of data on each user's infringement. The standard of evidence was apparently the same as what the court accepted as proof of infringement in the successful Kazaa case.
The movie industry has apparently been monitoring iiNet customers' use of BitTorrent for the past five months (which is easy, because whenever you download anything using BitTorrent, your IP address is advertised on torrent trackers for the world to see.)
Secondly, the Copyright Act makes clear that an infringement doesn’t need to be proven first in order for an ISP to be liable for allowing it to happen. The group of movie studios suing iiNet are represented by the same lawyer (Michael Williams of Gilbert+Tobin) who sued Kazaa and won, and also successfully sued Stephen Cooper and his ISP E-Talk Communications for the MP3s4free.net website.
In those lawsuits, the industry didn't have to prove the copyright infringements were taking place before it sued the providers — the court accepted evidence during the cases of the infringements.
Unfortunately for iiNet, the law is angled in favour of copyright holders, not ISPs.
iiNet is not responsible for user piracy
Unfortunately that's not the case. iiNet may have felt it was divesting itself of legal responsibility by turning over complaints from the movie industry to police, but the users' piracy and the ISP's enablement of it are two separate offences.
Although the users' piracy may be investigated as a criminal matter by the police, the Copyright Act clearly states that an ISP is also responsible for allowing copyright infringement to take place on its network.
You see, the Copyright Act no longer deals with digital piracy in vague, general terms as it once did. Since Australia signed up to the US/Australia Fair Trade Agreement, the Australian Copyright Act had a big slab of the Digital Millenium Copyright Act (DMCA) inserted directly into it.
Check it out. Here's the index to the Copyright Act 1968. The section that deals with ISPs being absolved of blame if users pirate stuff on their networks is under " Limitation on remedies available against carriage service providers".
There are four scenarios where ISPs could be held liable for infringing copyright in the act (even if it was all done by users). These four scenarios also allow an ISP to escape damages claims if they do certain things -- covered in the next major section of this article. The four scenarios are:)
Category A: Transmitting, routing or providing connections for pirated material.)
Category B: Caches pirated material in an automatic store at the ISP.)
Category C: Hosting pirated material provided by a user, on one of its servers or networks)
Category D: Publishing links to a site or service providing copyright material)
The movie industry says iiNet is guilty of category A and possibly B. It would be pretty hard to argue point A. iiNet (like every ISP in Australia) certainly does provide transmission and routing of pirated material.
On the second point (category B), the movie industry plans to look at whether iiNet is using a P2P caching technology it took out a patent for in 2001. In a broad sense, P2P caching technology allows ISPs to save bandwidth costs by storing files being traded over P2P networks so other users downloading them can suck the data from local ISP servers rather than the wider Internet. iiNet rather unwisely trumpets its P2P caching technology in its company history (below). However, the movie industry may not get much joy here -- a post on Whirlpool suggests iiNet's peer caching technology was a very rudimentary technology for older P2P networks like eDonkey and isn't currently in use.
iiNet is covered by "safe harbour" provisions
iiNet and other ISPs say even if piracy is occurring on their networks, they can't be held responsible anyway, because, legally, the Copyright Act gives them a "safe harbour" — they are simply common carriage providers, just like how Telstra can't be held responsible for someone picking up the phone and making a bomb threat.
Unfortunately, that isn't the case at all. The basic principle of the safe harbour provisions is that an ISP may avoid being hit with massive penalties in a lawsuit if it can demonstrate that it has done everything it can to stop the infringement. The Copyright Act specifies what an ISP must do — and handing over the problem to the police isn't one of them.
The Copyright Act sets out the conditions that must be met for a court to reduce the penalties on an ISP. Some of them include:
- An ISP has to have a policy that it will terminate the account of repeat copyright infringers. And it must execute on this policy and actually terminate users who pirate stuff.
- The ISP has to remove or disable access to pirated material once it becomes aware the material is infringing.
- The ISP may not benefit financially from piracy.
iiNet doesn't fare too well on these conditions. It has stated that although it has a policy of not condoning piracy, it can't just disconnect users' services if someone alleges they are doing it. The problem with this argument is twofold: first, the Copyright Act says they must both have a policy of disconnecting users, and act on it. Secondly, if piracy is happening, ISPs have to act on it when they're made aware of it, otherwise they can still be held liable for it if the piracy is proven in court later. Put simply, waiting for a court order doesn't help protect them legally.
On point two, if iiNet uses the P2P caching technology (which, as discussed above, looks unlikely) it is unlikely to be a giant store of Linux ISOs. The movie industry will presumably be looking for a legal avenue to take a close look at what exactly iiNet is caching locally, with the aim of proving iiNet stores a large amount of pirated stuff in its local P2P cache for download by users.
On point three, the movie industry no doubt plans to argue that iiNet benefits financially from piracy in the form of ongoing higher monthly subscription fees from users who need larger download allowances to support their online piracy. (iiNet has also made public statements about the proportion of its traffic that is P2P — and the movie industry will use those statements in evidence that iiNet users' appetite for traffic is driven by piracy). And, as a double whammy, iiNet states in its company history that its use of P2P caching technology allows it to reduce its upstream bandwidth costs down by caching P2P traffic locally. That's another profit generator which the movie industry will argue is related to piracy.
Whichever way you look at it, iiNet's legal footing doesn't look great. And note — none of the above is APC endorsing the movie industry's case. We're as frustrated as anyone by the movie and TV industry being dragged into the digital era kicking and screaming. But as this battle will have wide-reaching implications for all ISPs in Australia, understanding the legal facts, rather than conjecture and opinion will make or break online freedom.
UPDATE: All of the legal points discussed above, are, of course, subject to interpretation by the courts. Precedents created in the Cooper/E-Talk and Kazaa cases may be deemed by a court not relevant to this case. The entire case may come crumbling down for AFACT if a court feels it is stretching the principles of the Copyright Act. University of Queensland Law Lecturer Kimberlee Weatherall has looked at the potential weaknesses of the AFACT/iiNet case. It's strongly recommended reading. The case against iiNet.
View the court documents yourself
The statement of claim against iiNet (812KB PDF)
The notice of filing and hearing (816KB PDF)