Can Conroy really afford to legislate against the ISPs? Kohler

Communications Minister Stephen Conroy will have to use pinpoint legislation if he wants to override the judgement in the iiNet copyright case without shooting his own foot: one of the many companies that were let off the hook by Mr Justice Cowdroy yesterday was the government’s own NBN Company.

iiNet’s share price went up 11 per cent after it was found not responsible for copyright infringement by its customers. The value of the government’s NBN would have gone up by at least that much as well.

The judgement has removed a major risk hanging over the NBN’s future – that it will be held responsible for copyright piracy over its fibre and sued for billions by movie and record producers.

Central to the movie studios’ case in Roadshow Films Pty Ltd v iiNet Ltd was that by providing the means for copyright infringement, iiNet was “authorising” it. Such a case would equally apply to the NBN, but the judge completely rejected that proposition.

It’s true that the NBN won’t be a retail ISP like iiNet, but it will definitely provide the means for copyright infringement. In fact it could be argued that the main reason we need the NBN in the first place is the explosion of piracy and porn: that’s what the vast majority broadband traffic is used for and what broadband retailers who will rent the government’s NBN will make a lot of their money from.

iiNet, by the way, has been an enthusiastic supporter of the NBN and indicated it will switch its business over to it as soon as possible.

So the government is now responsible both for selling piracy and porn and for legislating against them. It has tackled porn already with some of the most draconian anti-ISP regulations anywhere in the world – Senator Conroy is world-famous as an internet censor in the mould of President Hu Jintao of China following the announcement in December of mandatory ISP-level filtering of pornographic content.

Will he do the same with piracy as he did with porn – that is, hold the ISPs responsible in law?

His mutterings on the subject so far have suggested he will. He has shown plenty of sympathy for the studios throughout the case and has said he hopes it settles the issue once and for all. Last year he even described iiNet’s defence as “something out of a Yes Minister episode”, after which the managing director of iiNet, Michael Malone, furiously threatened to sue him.

Yesterday the man who ran the case for Roadshow and Hollywood, Neil Gane of the Australian Federation Against Copyright Theft, said in a statement: “We are confident that the government does not intend a policy outcome where rampant copyright infringement is allowed to continue unaddressed and unabated via the iiNet network.”

Meanwhile Telstra, which has formalised the “terms of engagement” for its participation in the government’s NBN welcomed Justice Cowdroy’s decision as providing legal clarity. Senator Conroy merely said he was studying the judgement and would say something later.

Perhaps his legislative drafters will be able to come up with an arrow of a bill that will pick out ISPs like iiNet in the crowd of those who are benefiting from piracy, while missing wholesalers like the NBN, but it is hard, at this stage, to imagine how.

And if the Hollywood studios are willing to run an expensive case against a $300 million Perth company like iiNet, how much more likely are they to go after a national government with bottomless pockets?

But until Senator Conroy decides which side of his conflict of interest to go with, that’s something Mike Quigley and his team at the NBN don’t have to worry about.

It was always going to be a stretch to hold ISPs responsible for copyright piracy by their customers – worth a try, perhaps, but not worth appealing the judgement in my view.

The movie studios tried to make a case that, in the words of Justice Cowdroy: “…bandwidth, downloading or quota usage by iiNet users could be considered synonymous with copyright infringing behaviour.”

In his evidence, Michael Malone accepted that “more than half by volume at least” of iiNet’s traffic was represented by BitTorrent downloads. He also accepted that a “significant proportion” of this was material which infringes copyright.

The trouble is that everyone is guessing, which is anathema to courts. The judge said in his judgement: “There is simply no evidence before this Court of the extent of BitTorrent traffic which involves infringing material and, more importantly, what proportion of that traffic involves material infringing the copyright of the applicants.”

He concluded: “The internet can be used to virtually any end…The Court takes judicial notice of the fact that the internet is increasingly the means by which the news is disseminated and created.

“While the Court expressly does not characterise access to the internet as akin to a ‘human right’, as the Constitutional Council of France has recently, one does not need to consider access to the internet to be a ‘human right’ to appreciate its central role in almost all aspects of modern life, and, consequently, to appreciate that its mere provision could not possibly justify a finding that it was the ‘means’ of copyright infringement.

“Indeed, it is this very broadness of the uses of the internet which provides a clear distinguishing factor to other cases where authorisation was found.”

It means the owners of copyright material have to do things: give their customers what they want, and directly and individually sue those who infringe. The problem is there are millions of them, and none has any money, so the first of those two things is the key.

To that end, Hulu was launched in 2007 in partnership with several studios and TV networks to provide an official ad-supported, free-to-air video streaming service. It has apparently resulted in a 20 per cent reduction in piracy.

At this stage it is not available outside the United States; in Australia only the ABC is doing it – through its iView service.

It might have been better for Roadshow et al to spend the time and money they’ve wasted suing iiNet on building an Australian version of Hulu instead, giving people what they clearly want: movies and TV shows over the internet.

This article first appeared on Business Spectator.