Piracy comes home to roost but when will the ‘Australia tax’ do the same?

I will order the ISPs to divulge the names and physical addresses of the customers associated in their records with each of the 4,726 IP addresses. I will impose upon the applicants a condition that this information only be used for the purposes of recovering compensation for the infringements and is not otherwise to be disclosed without the leave of this Court. I will also impose a condition on the applicants that they are to submit to me a draft of any letter they propose to send to account holders associated with the IP addresses which have been identified. The applicants will pay the costs of the proceedings.
Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317

CourtHouseFeatureWith those words Justice Perram may have ended the ‘golden era’ of Australian piracy. Although at least one technology journalist at ZDNet thinks that the ruling will not deter illegal downloads.

The case revolved around a preliminary discovery application, in which Dallas Buyers Club LLC and its parent, Voltage Pictures LLC, demanded that iiNet, and a number of other small internet service providers (ISPs), hand over the details of 4,726 customers, whose Internet Protocol (IP) addresses were identified by experts as having participated in sharing* the movie Dallas Buyers Club online, using BitTorrent, a peer-to-peer file sharing network. Dallas Buyers Club avoided targeting the customers of any of the major Australian ISPs such as Telstra, Optus or TPG.

It is important to note that the court has not considered the question whether any of the customers in question have actually infringed copyright, noting that an application for preliminary discovery:

… is a procedure to identify putative respondents. It is not a procedure for working out how good those claims are, other than in the sense of eliminating plainly frivolous exercises. But it is very far from apparent that the current exercise is frivolous. It may be true that for single instances of infringement the damages are likely to be modest and quite possibly limited to the foregone licence fee that would have been paid had the film been lawfully downloaded, although quaere whether this is so where the film had been shared because it was not available in the Australian market at all.
(emphasis added)

iiNet resisted the application on a variety of grounds including, among other things, that:

  • the evidence put forward to identify the infringing IP addresses was not sufficient; and
  • the claim against any putative respondent was speculative and the pre-conditions which must exist before the court is permitted to order preliminary discovery have not been satisfied.

The court rejected iiNet’s arguments and, in a decision hailed by many as a copyright landmark in Australia, ordered that preliminary discovery be given subject to certain conditions, including privacy obligations and further oversight by the court over the letter proposed to be sent to the alleged pirates. In addition to iiNet, some smaller ISPs, Internode, Amnet, Dodo, Adam and Wideband, will also be required to hand over customer details. It remains to be seen whether the ISPs will appeal the decision.

I cannot, and wouldn’t wish to, justify illegal downloads and copyright violations by Australians, although I do wonder whether the temptation would have got the better of me at times if I wasn’t a lawyer …

The fact is that I vehemently disagree with the movie and television industry’s insistence on ‘regions‘ in an age of globalisation, which they are otherwise more than happy to exploit.

Australia has been notoriously neglected and exploited by the movie and television industry and the high rates of alleged piracy by Australians is an unsurprising real-world result of that approach. We have already lived through this same story with the music industry, which had to be dragged into the 21st century, kicking and screaming.

As Choice, Australia’s leading consumer advocacy group highlighted, their research indicates that Australians pirate only because they believe that the prices they are being charged are unfair and would otherwise be prepared to pay for their entertainment.

The so-called ‘Australia tax‘ has been the subject of much derision and the businesses involved are yet to offer an acceptable explanation about why Australians are being charged excessive premiums for the same digital content, compared to consumers elsewhere in the world.

The Dallas Buyers Club case is a legal victory for the industry but it remains to be seen how the process will be managed both commercially and legally once they have access to the details of the alleged pirates.

Given the court noted that ‘damages are likely to be modest’, and expressed a strong desire to ensure that the copyright owner does not engage in ‘speculative invoicing’, the case may become an expensive and largely ineffective exercise for Dallas Buyers Club.

There is clear caution in the orders of Justice Perram. No doubt having seen evidence of past copyright enforcement overreaches in foreign jurisdictions by both the music and movie industry, Justice Perram made it a condition that the letter proposed to be sent to the alleged pirates be submitted for his review, to avoid speculative invoicing.

Speculative invoicing is the practice of sending a letter to customers demanding a large sum of money, but offering to settle for a smaller sum which is still very much in excess of what might actually be recovered in any lawsuit.

In respect of speculative invoicing Justice Perram noted that:

… there is no doubt that Voltage has done this in the past. There were a number of instances put before me of Voltage having written, in the United States, very aggressive letters indicating to the identified account holder a liability for substantial damages and offering to settle for a smaller (but still large) sum.

Whether speculative invoicing is a lawful practice in Australia is not necessarily an easy matter to assess. Representing to a consumer that they have a liability which they do not may well be misleading and deceptive conduct within the meaning of s 18 of the Australian Consumer Law and it may be equally misleading to represent to someone that their potential liability is much higher than it could ever realistically be. There may also be something to be said for the idea that speculative invoicing might be a species of unconscionable conduct within one or other of s 21 of the Australian Consumer Law or s 12CB of the Australian Securities and Investments Commission Act 2001 (Cth).

Having regard to the likely identity of many account holders and their potential vulnerability to what may appear to be abusive practices I propose to impose conditions on the applicants that will prevent speculative invoicing.

If you are one of the 4,726 customers identified by Dallas Buyers Club, at some point in the near future you may receive a letter, thankfully judiciously vetted by Justice Perram. It remains to be seen what position will be taken in that communication but, in light of the court’s comments, it is unlikely to be as outrageous as similar letters in foreign jurisdictions.

If you receive such a letter, the first thing to remember is to stay calm and remind yourself that the letter itself will not be ‘proof’ of copyright violation, but rather an allegation that you breached copyright. Consequently, what steps you might take, such as seeking legal advice and exploring what defences may be available to you, will depend on the content of the letter and your individual circumstances.

The one unqualified advice I would give you is to stop downloading and sharing using services designed to circumvent copyright laws. Firstly, because doing so is a breach of copyright laws and secondly, because the movie industry has much deeper pockets and better lawyers than you do.

* It has been noted that the technology used by the German company Maverickeye UG, engaged by Dallas Buyers Club to identify persons of interest, would not have been able to detect downloads and only the IP addresses of those who also uploaded (ie. shared) the movie would have been captured. Consequently, if you only downloaded the movie and didn’t share it, your are likely to be in the clear … for now.
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