iiNet v AFACT: Federal Court dismisses appeal

Updated: Case likely to head to High Court as appeal as dismissed

The Federal Court today dismissed an appeal by Australian Federation Against Copyright Theft (AFACT) in its claim that Perth-based internet service provider iiNet had infringed on the copyrights of the film studios the body represents.

In a judgement hearing chaired by only one of the presiding judges, Justice Arthur Robert Emmett declared the full bench of judges had decided to dismiss the appeal and set a further hearing to determine costs on 11 March.

iiNet chief executive, Michael Malone, told media gathered at the court that he was relieved o n the decision.

“Our original intention was upheld,” he said. “We don’t believe that we have authorised breach of copyright or done anything to encourage customers to breach copyright.

“All of this legal action hasn’t one customer from downloading anywhere in Australia. I’d hope the rights holders will now see this is not getting them where they want to go, and they’ll return now back to the table and say ‘let’s find a better way’. We’ve wasted two years now and it hasn’t done anything to address this problem.”

However, the decision does not appear to have been unanimous.

Justices Emmett and Victor Nicholas both agreed to dismiss the appeal, while Justice Jayne Jagot favoured AFACT’s case overall. In the full judgement released by the Federal Court today, Justice Jagot found AFACT had effectively proved iiNet had authorised the copyright infringements and could not rely on either safe harbour provisions of the Copyright Act or those in the Telecommunications Act, both of which relied upon heavily by the ISP’s legal counsel as a defence. She also ordered AFACT be awarded costs of the appeal.

Justice Nicholas had also disagreed with Justice Emmett “in significant respects” but found the appeal should be dismissed.

It is widely expected that AFACT will further appeal the hearing in the High Court, though in a doorstop interview following the judgement, the body’s executive director, Neil Gane, said time would be taken to make a decision on further steps.

“It is too early to comment on the details of the decision or any next steps apart from saying that we will be taking our time now to examine the judgement in detail and consider all of our options,” he said.

Court rules stipulate AFACT must lodge an appeal within 28 days of the judgement.

Despite the appeal’s dismissal, Justice Emmett conceded in presenting the judgement that AFACT had been successful "in a number of respects" during the appeal hearing. In his judgement, Justice Emmett said questions raised in the proceeding were ongoing and that in future service providers could be found to authorise copyright infringement under existing provisions of the Copyright Act.

“It does not necessarily follow from the failure of the present proceeding that circumstances could not exist whereby iiNet might in the future be held to have authorised primary acts of infringement on the part of users of the services provided to its customers under its customer service agreements,” he said.

In its half-yearly financial report last week, iiNet indicated it had spent $6.5 million in legal costs fighting the case, which began in 2008, with $500,000 of those costs having been spent during the appeal hearing in August last year. Some $2 million has been recouped through insurance.

Gane would not reveal how much had been spent by film studios involved in the case, but said it was a substantial amount that covered not only court costs but those costs lost through ongoing piracy. A study released by AFACT last week indicated the Australian economy lost $1.37 billion in the year to June 2010 due to piracy.

Malone said iiNet could not be sure what, if any, other costs could be recouped until the next hearing on 11 March.

iiNet resumed trading on the ASX later this afternoon, following request for a halt prior to the judgement today.

Check out Computerworld Australia's full coverage of the iiNet v AFACT case.

Follow James Hutchinson on Twitter: @j_hutch

Follow Computerworld Australia on Twitter: @ComputerworldAU

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