Two significant developments have occurred this week in Australia which seek to address the vexed issue of the protection of the intellectual property rights in the online environment. The first is the decision in the case of Dallas Buyers Club LLC v iiNet Limited  FCA 317 (“Dallas Buyers Club Decision“) and the second is the finalization of an Industry Code to Combat Internet Piracy
Dallas Buyers Club Decision
Dallas Buyers Club LLC (“Dallas“) and Voltage Pictures LLC (“Voltage“) (together the “Applicants“) have succeeded in an application against six Australian ISPs (“Respondents“) for preliminary discovery pursuant to r.22 of the Federal Court Rules 2011 (Cth) (“FCR“) to obtain the details of 4, 726 unique IP addresses that allegedly shared the film, Dallas Buyers Club online. Dallas alleged that the people that engaged in this activity infringed the Applicant’s copyright pursuant to the Copyright Act 1968 (Cth) (“Copyright Act“). Further, the Applicants alleged that are not aware of the identity of the 4, 726 unique IP addresses. However, they had evidence that the Respondents supplied those IP addresses and could identify the relevant account holder associated with each IP address.
The Applicants conceded that the account holders are not necessarily the person alleged to have infringed their copyright, but that the account holders may well be able to help them to identify the actual infringers. In essence, the Court held that the Respondents must divulge the names and physical addresses of the customers associated with the 4, 726 IP addresses. Perram J found that there is a “real possibility” that the IP addresses identified by Maverick Monitor (software that is able to identify the IP addresses which are sharing a given file using BitTorrent, together with the identity of the relevant ISP) were being utilised by the end-users who were breaching copyright in the film by making it available for sharing on-line.
The issue as to who held copyright in the film was canvassed extensively. In essence, Perram J held that Dallas owned the copyright on release of the film and that a Distribution Licence Agreement which was entered into (which the court found could operate as either a licence or assignment) either did or did not operate as an assignment of the copyright to Picture Perfect. If it did operate as an assignment, Dallas cannot sue. If it did not, Dallas can sue. However, regardless of that outcome, Voltage can sue for infringement. In light of the fact that it is “reasonably arguable” that Dallas owns the copyright and may thus also have a right to sue for infringement, the Court held that they are authorised to seek preliminary discovery.
Perram J held that in order to obtain an order for preliminary discovery pursuant to r.22 of the FCR, it is necessary for the applicants to satisfy the Court that they may have a right to obtain relief against a prospective respondent, that they cannot identify the prospective respondent and that the ISPs know or are likely to know the identity of that person or have a document which reveals it. The Court held that both Voltage and Dallas may have a claim and are therefore eligible applicants, as Voltage can sue for infringement and it is reasonably arguable that Dallas may also be able to sue.
There was an argument by the Respondents that they would not have information that could help to ascertain potential respondents (people who allegedly infringed the copyright) because the ISPs could only identify the account holders, and there was no guarantee that the account holders were the persons that shared the film using BitTorrent. Relying on NSW Court of Appeal authority, Perram J rejected that argument, finding that it is sufficient to ascertain the identity and whereabouts of the account holder as that may provide information as to the whereabouts and identity of the person actually infringing the copyright (assuming they are not the same person).
Perram J ultimately found that the requirements pursuant to r.22 of the FCR had been satisfied and that the issue was then whether or not an order pursuant to that provision should be made. The Respondents made a number of arguments as to why the Court ought to exercise their discretion not to order preliminary discovery. For instance, they argued that it would be economically pointless for the applicants to sue individual BitTorrent users. This argument was rejected, with Perram J entertaining the possibility that aggravated damages for the purpose of deterrence could be awarded against those individual BitTorrent users found to be in breach of the Copyright Act. Additionally, there was an issue as to the “speculative invoicing” (aggressive letters indicating that the identified account holder is liable for substantial damages, but offering to settle for a smaller but still large sum) that would likely result from an order for preliminary discovery. Perram J stated that it was not “an easy matter to assess” as to whether speculative invoicing was legal. In any event, in order to countervail against that concern, Perram J imposed the condition that draft letters making a claim against individual BitTorrent users must be first provided to him. The Respondents also raised privacy concerns as to the disclosing of the identity of the relevant account holders. In order to accommodate the privacy rights of those people, Perram J held that the information as to their identity and whereabouts would be limited to only seeking to identify end-users using BitTorrent to download the film, suing end-users for infringement and negotiating with end-users regarding their liability for infringement.
The matter was listed for further directions on 21 April 2015 to determine the form of the orders. The case ultimately concerned whether or not the court should order preliminary discovery and does determine any potential liability of the users of the IP addresses that have been alleged to infringe the copyright of the Applicants.
Copyright Notice Scheme Code 2015
In the meantime, the Australian Communication and Media Authority (“ACMA“) will now consider whether or not it should register the Copyright Notice Scheme Code 2015(“Code“), which will apply to 70 Australian ISPs, published by the Communications Alliance. The Code implements a Copyright Notice Scheme (“Scheme“). Residential fixed internet users who infringe copyright will be subject to an escalating series of infringement notices, which will also include educational material that is designed to encourage users to lawfully obtain material. There are safeguards incorporated into the Scheme, allowing account holders in certain circumstances to have the allegations made against them independently reviewed. The Code also provides that where an account holder receives 3 notices under the Scheme within a 12 month period and where a copyright owner or an exclusive licensee of copyright work files an application for preliminary discovery in court seeking access to the account holder’s details, ISPs must act reasonably to facilitate and assist in relation to the application. The Code is not affected by the Dallas Buyers Club Decision.
In the event that the Code is registered by the ACMA, it will effectively has the force of law.
For further information, please contact:
Hamish Fraser, Bird & Bird