In Australia, an ISP prevails in long-running copyright dispute

The ISP iiNet did not authorize copyright infringement on its network, the High Court rules

A long-running lawsuit against Australia's second-largest ISP has ended in a defeat for the entertainment industry, which sought to hold the ISP liable for copyright infringement on its network.

The ISP, iiNet, was sued in 2008 by 34 entertainment companies, including Paramount Pictures, Warner Bros. and Disney, for allegedly failing to stop peer-to-peer file sharing of their copyright material.

Australia's High Court, which released the decision on its website Friday, found that iiNet did not "authorize" the copyright infringement by its users. The High Court's decision is final, meaning the entertainment industry can't appeal.

iiNet said in a statement that the judgment shows the company never encouraged file sharing. The company said it would work with the film industry to make licensed digital content available.

The Australian Federation Against Copyright Theft (AFACT) said the decision showed "failure of copyright law to keep pace with the online environment" and pointed to a need for stronger copyright laws.

The entertainment industry sought to prove that iiNet had authorized the infringement by failing to react to warning notices sent by AFACT. In February 2010, the Federal Court ruled that iiNet did not meet the test for authorization, even though the ISP had not used legal and technical measures available to it to try and stop the infringement.

The Federal Court also found AFACT's notices were not detailed enough to show infringement that required iiNet to take action. The case was then appealed to the High Court.

The entertainment industry wanted iiNet to send its customers a warning to delete infringing content made available on BitTorrent, and if the file was still online after a week, to cut off the customer's Internet connection.

The goal of the entertainment industry in Australia was to establish "three-strikes" rules like those in countries such as France, New Zealand and South Korea, where repeat infringers are warned and eventually disconnected.

Anne Flahvin, media and communications counsel for Policy Australia, a legal and policy consultancy, said the ruling now sets "a very high bar" for copyright owners to meet in order to spur ISPs into anti-piracy actions, even more than three-strikes laws in other jurisdictions.

In light of the ruling, the entertainment industry may look to the government to pass new legislation, Flahvin said. ISPs are under less pressure now to negotiate with entertainment companies but may not want to see new anti-piracy legislation, she said.

"I think the main battlefront will also shift now to political pressure on the government," Flahvin said.

iiNet, which had about 641,000 broadband DSL customers last August, said on its website it has "never condoned or encouraged copyright infringements -- but we don't accept that threatening or disconnecting customers is the solution to infringements."

According to court documents, iiNet knew that half of the traffic on its network was data transmitted using BitTorrent, a peer-to-peer file sharing protocol, and that a substantial portion of that traffic infringed copyright. A "torrent" is a small information file used with a file-sharing application that enables content to be distributed among many users.

Australia has a "safe harbor" provision modelled after the U.S. Digital Millennium Copyright Act, where service providers are not liable for copyright infringement under certain conditions, such as if the material has been made available by another party other than the service provider.

In its terms and conditions, iiNet warns customers that it will terminate Internet access for those who repeatedly infringe copyright. But the copyright owners contended iiNet's implementation of that policy wasn't vigorous enough for it to be protected by the safe harbor protections.

One of the precedents cited by the entertainment industry was a 1975 High Court decision involving the University of New South Wales' library, whose photocopier was used to copy "The Americans, Baby," a book by the author Frank Moorehouse.

Moorehouse joined a suit filed by the Australian Copyright Council. A court found that the university had authorized the copyright infringement by failing to stop people using a photocopier in its library to infringe. Universities now have signs by photocopiers warning that people should not reproduce more than 10 percent of a works' content.

Send news tips and comments to jeremy_kirk@idg.com

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