The Dallas Ransom Club?

In April I reported on Justice Perram’s decision in a preliminary discovery fight in the Federal Court of Australia, that led to the decision allowing Dallas Buyers Club LLC access to the details of those customers of iiNet, and some smaller ISPs, Internode, Amnet, Dodo, Adam and Wideband, who allegedly downloaded a copy of the movie using BitTorrent, a peer-to-peer file sharing network.

However, Justice Perram was circumspect about the process of Dallas Buyers Club following up the matter with customers, given their previous practice of ‘speculative invoicing’. In the US, settlements paid by alleged infringers to the Dallas Buyers Club have been reportedly around $US3,500. Consequently, Justice Perram made it a condition that the letter the company proposed to send out to the alleged pirates must first be submitted to the court for review and approval.

A proposed draft letter to customers and a related telephone script has now been submitted to the court. Very helpfully Mashable had leaked copies of those drafts, which seem to indicate Dallas Buyers Club may not yet have given up trying to squeeze as much money out of each alleged infringer as possible.

The letter runs over eight pages and contains a significant amount of legalistic language, including a page and a half devoted to the relevant provisions of the Copyright Act 1968 (Cth) and what damages the company may be entitled to in the event of a proven infringement.

Nowhere does the letter explain the evidentiary difficulties Dallas Buyers Club could face in court to establish a number of aspects of its infringement claim and its entitlement to damages. For example, Maverickeye, the service engaged by Dallas Buyers Club to identify alleged infringers, identified the internet protocol addresses of people who were allegedly taking part in BitTorrenting the movie during a two-month period. However, our understanding is that they did not specifically identify how much of the movie was downloaded or shared back by each alleged infringer.

This means that unless an alleged infringer fessed up voluntarily, and admitted how much of the movie they actually downloaded, and how many times they may have shared it back to BitTorrent, Dallas Buyers Club would have an uphill battle in court to offer evidentiary support in that regard. Nevertheless, the threat of further legal action against individual alleged infringers if they refuse to cooperate with the process, and the possibility of being exposed to extensive legal costs, may just be an effective enough blunt instrument to beat them into submission, even in circumstances where they may have a legitimate defence. And that is why the method which is now being put forward by Dallas Buyers Club in the form of these draft documents is ‘speculative invoicing’ by the backdoor, and should not be allowed.

As I explained in April, ‘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.

The documents leaked by Mashable indicate Dallas Buyers Club is proposing to ask each alleged infringer a range of curious questions, including whether they are employed, if so, on what basis, and how much they earn.

This approach should be a red light to Justice Perram who previously accepted there are valid concerns about the likelihood of ‘speculative pricing’ by Dallas Buyers Club. He also noted in his April judgment that:

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.

The quantum of any payment required to be made by alleged infringers should not be dependent on how much they earn or ‘worth’. Such a ‘method of calculation’ is very likely to lead to ‘speculative invoicing’ rather than compensating Dallas Buyers Club for their actual loss. In many cases that loss would consist only of the cost of a single viewing of the movie, and nothing more.

As I noted back in April, if you receive ‘the letter’, the first thing to remember is to stay calm and remind yourself that the letter itself is not ‘proof’ of copyright violation. It is an allegation 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 final content of the letter and your individual circumstances.

In a related story, last night the Australian Senate passed Australia’s new anti-piracy, website-blocking laws, the Copyright Amendment (Online Infringement) Bill 2015, which will enable copyright owners to seek an order from the Federal Court of Australia for blocking access to websites offering their content for free. Under the new laws, if a copyright owner can demonstrate that the ‘primary purpose’ of a website is to infringe, or facilitate the infringement of, copyright and the court consequently grants an injunction, Australian internet providers will be required to take reasonable steps to disable access to the infringing website.

Critics, including Dr Matthew Rimmer, an associate professor at the ANU College of Law, say the bill was ill-conceived, poorly drafted and rushed.