What are the key issues in round two of iiNet’s copyright fight? A SmartCompany Q&A

Australia’s big copyright fight is on again. In a Federal Court appeal that starts this morning, the Australian Federation Against Copyright Theft will once again attempt to prove iiNet committed copyright infringement by refusing to shut down pirates’ accounts.

The appeal comes about six months after the internet industry celebrated when the Federal Court ruled iiNet is not responsible for the actions of its users just because it is providing them with an internet connection.

But AFACT wants the decision overturned.

There’s a lot riding on this case, with the legal, information technology, entertainment and internet industries all eager to see how the judgement will affect the way they do business.

With so much going on, here’s a special SmartCompany Q&A to explain the issue.

Who are all the big players here?

The Australian Federation Against Copyright Theft is actually a representative group of over 30 entertainment groups, including giant Hollywood studios like Paramount and Warner Brothers, along with local networks like Seven.

This group is suing internet service provider iiNet, saying that the ISP is infringing copyright by not preventing its customers downloading illegal copies of films and television shows.

iiNet says this is ridiculous and it shouldn’t be forced to act as police, given that it already cooperates with Federal Police on infringement issues.

The case went before the Federal Court late last year, and in February decided that iiNet was in the clear. Justice Cowdroy ruled that just because iiNet provides internet services doesn’t actually mean it approves of what its users are doing, and therefore isn’t responsible.

“It is impossible to conclude that iiNet has authorised copyright infringement… (it) did not have relevant power to prevent infringements occurring,” Cowdroy said in his ruling.

Now, AFACT is appealing that decision.

So what’s different this time?

It’s a bit complicated. AFACT is appealing 15 different points of the original case, mostly concerning technical matters.

But AFACT is essentially saying, once again, that iiNet is liable for copyright infringement, that it should have done more to stop users’ committing these acts and it has the ability to identify and shut down individual accounts.

AFACT is also pointing to Provision 101 (1A) of the Privacy Act, which states a Judge mast take into account three provisions – the extent of a person’s power to prevent the infringement, the nature of the relationship between the infringer and iiNet, and whether iiNet took any other steps to avoid committing a privacy breach.

Other points of appeal include AFACT seeking information on why staff with more technical knowledge at iiNet were not called on to give evidence, and it will seek clarification on the actual number of infringements used in the case.

This was actually a pretty serious point in the orginal case. AFACT claimed it had over 100,000 copyright infringements on record, but iiNet said this was overblown because of a flawed counting method.

And just last week, a number of unions decided to get involved, including the American Screen Actors’ Guild and the Media and Entertainment Arts Alliance. AFACT says artists and content creators are the victims here, being robbed of their rightful revenue.

“By allowing internet companies like iiNet to turn a blind eye to copyright theft, the decision harms not just the studios that produce and distribute movies, but also Australia’s creative community and all those whose livelihoods depend on a vibrant entertainment industry,” AFACT said in a statement last year.

What has iiNet got to defend themselves?

Apart from the original judgement, which states iiNet isn’t fully liable for what its users do with their own services, the Perth-based ISP has a few points on its side.

The biggest defence here is the use of “safe harbour” laws. These provisions require ISPs to terminate accounts of repeat infringers, but gaps in legislation mean iiNet doesn’t have to actually negotiate with the rights holders directly unless they have court orders.

AFACT did actually provide iiNet with internet addresses, but not court orders. As a result, iiNet says it would actually be breaching the Telecommunications and Privacy acts by acting on that information.

Of course, AFACT is taking serious issue with this and says iiNet wouldn’t be doing anything of the sort.

Apart from this interesting loophole, iiNet can rely on the original Federal Court ruling which made a clear difference between providing the internet connection for pirates, and actually providing them a service through which to download illegal material.

Cowdroy said a downloading service like Kazaa, which was ordered to be shut down by the Federal Court due to copyright infringements, is providing the direct method of downloading material. iiNet, on the other hand, only connects users to the internet.

But why is iiNet appealing if it won?

There are a couple of technicalities here about the company’s knowledge of copyright infringements, and a ruling about when iiNet could actually contact users directly. However, these aren’t likely to have a major effect on the case and are more clarifications than pillars of its defence.

It all sounds very technical, so why is this case such a big deal?

This case is huge and has the potential to completely reshape the internet industry. If AFACT wins, then ISPs will likely be found responsible for what their users download illegally, and as a result, will need to shut down pirates’ accounts.

We’re talking about a lot of users here. Internet piracy is rampant in Australia, especially for content like films and television shows, which we often receive later than other countries like the United States and Britain.

And imagine the ramifications for businesses. It’s one thing getting a notice at home that your 15-year old has been downloading movies, but what happens when you find out your employees have been using BitTorrent technology to copy films on company time, and your connection could be severed as a result?

The legal, information technology and entertainment industries are watching this case extremely closely – and you should be too.

Who’s more likely to win?

At this point, it’s impossible to tell. Although iiNet has a major advantage given it already won the first case, AFACT still has some solid points about piracy – it’s extremely rampant in Australia and people are losing good money over it.

AFACT says users are downloading pirated material constantly, and that BitTorrent technology is helping. In fact, a new study commissioned by AFACT recently found about 90% of BitTorrent use is actually taken up for downloading illegal material.

On the other hand, iiNet says the entertainment industry needs to adapt to new models to survive in the digital age. It points to content providers like Hulu in the US, which streams television shows on the internet for free with advertising, as soon as those shows are broadcast.

The fact iiNet is even offering these types of services, in partnership with some content providers, could even strengthen its case.

The Federal Court hearing will last until Thursday, and will be held before Justices Emmett, Jagot and Nicholas.