Yesterday, Justice Perram of the Federal Court of Australia handed down the latest judgment in the Dallas Buyers Club copyright infringement dispute in Dallas Buyers Club LLC v iiNet Limited (No 4)  FCA 838.
This latest judgment is a major setback for Dallas Buyers Club, and it may bring an end to their pursuit of the alleged copyright infringers.
I will not defend those who infringe copyright, but I do recognise there are reasonable explanations of why people in Australia download content from the internet in breach of copyright. Sadly, Dallas Buyers Club is part of the problem. The legal proceedings being pursued by Dallas Buyers Club is not a practical long-term solution for the underlying causes of infringement.
Research has consistently shown Australians are frustrated by the outdated distribution system of movie and television entertainment. The problem is not very complex, and its main causes are easily identifiable:
- often there are still significant delays in content being made available to the Australian market;
- the availability of content to stream in Australia is patchy at best; and
- Australians often pay more for services that are inferior compared to offerings overseas – this phenomenon is so prevalent we even gave it a name, the ‘Australia tax’.
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Although first reported as a victory for copyright owners, Dallas Buyers Club had struggled from the outset with a Judge concerned about their well-known practice of speculative invoicing, a concept alien to an Australian sense of justice, and contrary to our laws related to the award of damages.
Justice Perram had made it clear Dallas Buyers Club would not be allowed to engage in speculative invoicing in Australia. Consequently, he ordered a stay on the details of alleged infringers being handed over, subject to his approval of the letter proposed to be sent to them.
In June Dallas Buyers Club submitted their proposed draft documents to Justice Perram, which were promptly leaked. The Vue Post, having seen a copy of the draft documents, opined the approach taken in those documents would ‘be a red light to Justice Perram who previously accepted there are valid concerns about the likelihood of ‘speculative pricing’ by Dallas Buyers Club.’
The documents leaked indicated Dallas Buyers Club was 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 – sounding like preparations for speculative invoicing.
Subsequently, Dallas Buyers Club applied for the stay to be lifted, which brings us to yesterday’s decision.
In reviewing the materials submitted, Justice Perram identified two impermissible and untenable damages claims in the proposed Dallas Buyers Club letter to alleged infringers. Justice Perram provided the following summary of the heads of damages sought:
(a) a claim for the cost of an actual purchase of a single copy of the Film for each copy of the Film downloaded. This is quite a bit more than the cost of renting a copy of the Film on a 48 hour basis from a platform such as iTunes. Here DBC’s argument is quite clear: the copy that has ended up on the infringers’ hard drives is not a 48 hour rental copy but a permanent one;
(b) a claim for an amount relating to each infringers’ uploading activities. Here DBC suggested that the number of uploads was potentially very large given the way BitTorrent operates, with each user sharing the Film with other users by means of transfers of slivers across the network. DBC submitted that it was entitled to obtain a one-off licence fee from each uploader on the basis that each was engaged in the widespread distribution of the film. It is not trespassing on DBC’s legitimate confidentiality concerns to say that the sum sought by DBC in relation to this head of damages was substantial;
(c) a claim for additional damages under s 115(4) (i.e. punitive damages) depending on how many copies of other copyrighted works had been downloaded by each infringer; and
(d) a claim for damages arising from the amount of money it has cost DBC to obtain each infringer’s name.
Justice Perram found items (b) and (c) untenable and noted the powers of the Federal Court do ‘not extend to facilitating court cases or negotiating positions lacking legal substance. Claims (b) and (c) are untenable claims and are outside the proper ambit of the power.’
In respect of item (b) Justice Perram stated that the ‘idea that any court would assess DBC’s damages on the basis that BitTorrent users who were going to share the Film over the BitTorrent network would have avoided infringement by approaching DBC to negotiate a distribution arrangement in return for a licence fee is so surreal as not to be taken seriously. If such a claim were made in a proceeding for copyright infringement in this Court I am satisfied that it would be dismissed summarily without trial under s 31A(2) of the Federal Court of Australia Act 1976 (Cth) as a case having no reasonable prospects of success.’
In respect of item (c) he observed the wording of s115 of the Copyright Act 1968 (Cth) ‘is inconsistent with it being used to calculate damages on the basis of infringements other than the one the downloader is being sued for. It does not permit recourse to other acts of infringement of other people’s copyright. Such a claim would be summarily dismissed.’
Justice Perram refused to lift the stay. However, he said he would do so if Dallas Buyers Club gives an undertaking it will not include in its letter the damages claims found impermissible, and pays $600,000 bond into court as security over that undertaking.
Needless to say, removing these two major heads of damages, which will significantly reduce the amount of money Dallas Buyers Club could recover, coupled with the $600,000 security bond they would be required to pay before being able to get access to the details of the alleged infringers, could very well bring the saga to a conclusion.
It remains to be seen whether Dallas Buyers Club will continue to pursue the alleged infringers as a matter of principle. Alternatively, they may make a commercial decision to cut their losses and walk away.
Hopefully this decision will encourage copyright holders to revisit their outdated distribution model and take tangible steps to join their customers in the 21st century by providing timely and convenient methods for accessing reasonably priced paid online content, rather than trying to extract money through litigation, speculative invoicing and other coercive methods.
Such an approach is also supported by the government’s own recent copyright infringement research which found:
- only 21% of those surveyed indicated they would be encouraged to stop infringing copyright by receiving a letter from their internet service provider threatening a suspension of their account;
- however, 36% indicated they would be less likely to infringe if the content was made available as soon as it was released elsewhere, 38% if legal content was more readily available, and 39% if there was a reduction in price.