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iiNet's copyright victory in round one cost $5.7 million

In February 2010 there have been two significant copyright decisions. The first is Roadshow Films Pty Ltd v iiNet Limited (No. 3) [2010] FCA 24. This first instance Federal Court of Australia decision went against the copyright claimants, 34 companies involved largely in film production funding and distribution.

In November 2008 they sued iiNet Ltd which claims the third largest number of clients for ISP services after Telstra and Optus. This followed a five month investigation by Australian Federation Against Copyright Theft ("AFACT") which was the lead representative for the 34 applicants. The round one hearing ran for 20 days.

At this time no appeal has been filed, but one is likely. That will be round two. [Update 25 Feb: An appeal has now been filed.]

p2p_gaveliiNet was successful in its argument that it had not authorised the breach of copyright. There was evidence that some iiNet customers used a peer to peer software system, namely BitTorrent, to download films without licence or permission. The court found that iiNet provides a "legitimate communication facility", one that is "neither intended nor designed to authorise infringement", and that it is only by ISP customer use of the BitTorrent System that copyright infringements took place.

The decision has very great implications for the extent of the notion of authorising the breach of copyright under provisions of the Copyright Act 1968 (Cth). The outcome differs from the results in a line of major copyright cases involving peer to peer software which have favoured copyright claimants (eg Kazaa and Cooper).

telstralogoThe second major copyright decision in February 2010 also went against the copyright claimant. It is Telstra Corporation Limited v Phone Directories Company Pty Ltd [2010] FCA 44 (8 February 2010).

Again this was a first instance Federal Court decision. It highlights the significance of the unanimous High Court judgement in IceTV Pty Limited v Nine Network Australia Pty Limited [2009] HCA 14. The copyright claimants (Telstra and Sensis) lost against a small phone directories company which was alleged to have reproduced phone directories owned by Sensis.

The decision is on appeal to the full Federal Court.

If the decision stands it will have very significant implications for claims to there being copyright in Australia in certain types of compilations, in particular certain directories and computer databases.

There are also implications for other types of compilations in which copyright has been recognised for decades, eg alphabetical lists of transport facilities and timetables, stock exchange prices and lists of fixtures for the AFL and other sports.

Whatever the ultimate outcome of the case, it will not alter basic practical legal guidance which copyright claimants should follow.

Legal costs

Finally, what did the victory of iiNet cost it? That's a complex question for four reasons. iiNet did not win on all grounds, the 34 applicants dropped parts of their claim before or during the hearing, iiNet received an insurance payout, and AFACT will challenge iiNet's full claim in court this week.

Yesterday iiNet's released accounts for the six months to 31 December 2009 state its revenue at $A205m, statutory NPAT, $A12.1m, and statutory EBITDA $A33.6m. Stuart Corner of iTWire provides this report on legal costs:

"iiNet said that, net of receipts provided by insurance cover it spent $A3.8m defending the copyright case, $A2.7m post tax. However the court's judgement, unless appealed, will see the movie studios' body AFACT having to pay iiNet's legal fees. Daniel Blair, an analyst with Southern Cross Equities, said, that subject to an appeal being lodged "We expect IIN to recoup $A2-3m of these costs from AFACT."

The full legal bill of iiNet was $A5.7m but reduced to $A3.8m after iiNet's insurance payout. Znet reports that "AFACT has stated its intention to retrieve costs for portions of the case which iiNet had either conceded during the court battle or had been rejected by [Justice] Cowdroy."

Still on Australian copyright decisions in February 2010, the Larrikin Music Publishing Pty Ltd v EMI Songs Australia Pty Limited [2010] FCA 29 (4 February 2010) decision though attracting international media attention is probably most interesting on the yet undecided question of what will be the scale of the damages the court ultimately awards, not the fact that the court found a breach of copyright.


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