Life (and fun) for illegal movie downloaders has become a little more difficult since the much publicised recent decision in the Federal Court, in favour of the rights owners of the popular Hollywood film “The Dallas Buyers Club” (Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317).

This recent development in the war against online piracy has seen rights-holders win a decisive first battle with the Federal Court finding it can order Internet Service Providers (ISP’s) to turn over internet addresses of their customers to the film studio.

Dallas Buyers Club LLC and its parent company Voltage Pictures LLC applied for preliminary discovery to require iiNet and five other internet service providers to turn over the IP addresses of persons who had illegally downloaded the movie “Dallas Buyers Club”.

Voltage Pictures LLC gave evidence that they had identified 4,726 unique IP addresses from which the film was shared online.

The legal reasoning from both parties, can be summarised fairly concisely as such:

1. The movie studio claimed that the downloading of ‘slivers’ of the film; in other words, tiny bits of film collected from numerous other downloaders (seeders) and packaged together to form a complete motion picture was a breach of the rights held by the motion picture’s owners and therefore, essentially theft …or digital theft
2. The ISP’s conversely claimed that because only many tiny portions of the film were singularly downloaded from numerous other seeders, no substantial reproduction was had occurred and therefore, no infringement of rights ought to be found.

Poked in the eye by a sliver

Justice Perram of the Federal Court accepted that each of the slivers comprising the illegal download may be very small.

He did not accept however, that the end users could not have infringed the film’s copyright because no substantial reproduction had occurred.

Justice Perram found that a single sliver being uploaded was consistent with a number of different scenarios:

1. the end user had a whole entire copy of the film and had made it available to other users on file sharing programs and sites;
2. the end user is in the process of downloading the film and the sliver is being shared from the portion he or she has downloaded so far;
3. the end user has partially downloaded the film but stopped the process midway; or
4. the end user has managed to download a single sliver and is sharing it.

I say tomato, you say potato

The ISPs put forward eight reasons why the Court’s should NOT use its discretion to give preliminary discovery to the movie studio:

1. only a single sliver of the film was shared from each IP address and therefore whatever infringement of copyright was involved it was minor;
2. it was unlikely therefore that any case would be brought against an infringer as the value of each copied film was less than $10 and it was not plausible to think that the applicants would seek to recover such funds;
3. there was no realistic chance of obtaining an injunction either because all that was shown was a sliver of the film or because there was no demonstrated risk of repetition;
4. the applicant had failed to undertake adequate monitoring which could have revealed serious infringers;
5. there was evidence to suggest that the applicants were going to engage in speculative invoicing of those persons whose details were provided and require a payment in excess of what actually might be recovered should proceedings be commenced;
6. the ISPs were subject to privacy obligations with respect to their customers;
7. the Federal Government has required that the industry formulate an industry code dealing with the issue of internet privacy and the Court should wait until that code is in place; and
8. the preliminary discovery process was being used as a tool of investigation rather than identification.

Unfortunately for the ISP’s (and for thousands of movie buffs downloading material in their parents’ basement) none of the above reasons were sufficiently persuasive to the judge.

What the Judge says, the Judge means

Justice Perram, in finding for the film studio, made the following interesting comments and observations:

1. That it was not beyond the realm of possibility that damages of a sufficient size could be awarded where there was an appropriately serious case. What the rights holders had in mind was not frivolous, and the ISPs argument did not give sufficient weight to the rights-holders’ genuine rights, expressly recognised by statute.
2. Confidentiality and privacy could be dealt with by imposing restrictions on the use to which the information provided could be put by:-  seeking to identify end users using file sharing sites to download the film;- suing end users for infringement;- negotiating with end users regarding their liability for infringement.

Speculative invoicing

There was evidence that the film studio in the United States had sent very aggressive letters indicating to the identified account holder (the illegal downloaders) that a liability for substantial damages existed and offering to settle for a smaller (but still large) sum.

While the film studio said it would not do the same here in Australia, the legality of speculative invoicing remains unclear under our laws, so Justice Perram thought it appropriate to impose conditions to prevent this practice.

Where to from here, my dear

Justice Perram has orders that:

1. the ISPs divulge the names and physical addresses of the identified customers (but not the email addresses, as he found that the Federal Court Rules did not give him the authority to do so);
2. the information obtained only be used for the purpose of recovering compensation for the alleged infringements and be subject to strict privacy obligations;
3. that he be provided with a draft of any letter intended to be sent to account holders.

In essence, these orders may enable the movie studio to trace downloads to a particular IP address, although not an email address.

On the surface, the ‘exercise’ of finding out the identities of the 4,756 IP addresses concerned is likely to be very expensive and ultimately unlikely to yield significant damages from the downloaders.

However, this significant legal and more importantly, public relation victory, will likely have a significant deterrent effect, and may well spell the beginning of the end for the widespread practice of downloading the latest movies and tv series.

“Communications Alliance Draft Code of Practice” AKA here comes the cavalry

Significantly, on 8 April 2015, one day after the judgment, the Communications Alliance released its draft Code of Practice designed to deal with online copyright infringement.

Under the proposed Code, if a copyright rights-holder detects unauthorised sharing of its works, it can notify the ISP associated with the relevant IP address. The ISP will then be able to issue an “initial notice” stating that the activity detected indicates an infringement of copyright and providing information about how to locate non infringing content.

If the account holder goes on to receive three notices within 12 months, the “ISPs will, on the request of a Rights Holder, facilitate an expedited preliminary discovery process…”. In other words (or in human being English), the rights holder will be allowed to take action against the illegal downloader.

What action is likely to be taken or ultimately how successful any eventual action is likely to be, appears to be a very remote proposition, but as mentioned above, the momentum created by the public relation effect may in the end be far more important to the rights holders than any individual judgment in their favour.

For further information about this article, the case in question or if you want to discuss your legal issue, call Calvados + Woolf Lawyers on 07 3252 9933 or email reception@calvadoswoolf.com.au