A tale of two courts, two countries and two ISPs: iiNet and Cox

It is unusual to get cases in different jurisdictions with such similar facts that they allow us to directly compare the application of law in those jurisdictions. For copyright geeks, the comparison between the US case BMG Rights Management (US) LLC v Cox Communications, Inc and the Australian case Roadshow Films Pty Ltd v iiNet Limited[1] is therefore something to be savoured (both decisions attached below). ISPs in New Zealand and elsewhere have been watching these developments with interest.

Both cases involved:

  • ISPs (iiNet in Australia; Cox in the US).
  • ISP customers infringing copyright by downloading and uploading content using BitTorrent.
  • Rightsholders (Roadshow Films and others in Australia; BMG in the US) sending or using agents to send masses of notices to the ISPs identifying IP addresses allegedly being used to infringe.
  • ISPs handling the notices and generally dealing with the alleged infringers in a manner that they considered to be within the US DMCA or equivalent Australian safe harbour regime but which was argued by the rightsholders to be severely deficient. In Australia, iiNet sent the 20,000+ notices it received in a 12 month period to the Police but did nothing further. In the US, Cox had what is colloquially called a graduated response system which notified users with increasingly strong warnings before eventually limiting their internet access. Neither ISP permanently terminated the internet accounts of alleged repeat infringers.
  • ISP staff with dismissive attitudes to DMCA style notice and takedown regimes and the actions of rightsholders and their agents in pursuing users.
  • Neither ISP being able to rely on the safe harbour and therefore each case focusing on whether, in the absence of a safe harbour defence, the ISP was liable for copyright infringement in respect of the actions of its customers.

Despite these close similarities, iiNet was found not to have infringed copyright but Cox was. It would seem that the US courts now set a lower bar in terms of an ISP’s involvement in its customers’ infringement.

In the US, Cox indicates that an ISP will be liable where it is able, because of its ongoing relationship with its customers, to stop or limit infringement but does not do so where it knows or has reason to know that that infringement is taking place. Willful blindness alone is enough to give the ISP that knowledge and the ISP does not need to actively induce the infringement. This seems to take US law beyond the previously understood requirement that contributory liability for infringement required both knowledge and a material contribution to the infringement.

Conversely, for an Australian ISP to be liable, it must have “authorised” the infringement under section 101 of the Copyright Act 1968.

This means the ISP must have significant control of the means by which customers infringe and a degree of calculation in the provision of those means. It must somehow knowingly facilitate or condone the infringing activity. Cowdroy J found that iiNet did not provide or control the BitTorrent system. He also found that while iiNet did provide the very internet connectivity that enabled customers to infringe, and knew that wide scale infringement was taking place, iiNet’s acknowledged technical ability to turn off that connectivity was not the only consideration. The notices submitted on behalf of rightsholders were mere allegations and not proof of infringement. His Honour therefore found that acting on them to terminate internet connectivity would be unreasonable given the other non-infringing uses that an internet connection enables, and could potentially even expose iiNet to legal liability if such termination turned out to be invalid. In those circumstances, iiNet could not be said to be have authorised the infringements.

Reading both judgments one gets the distinct impression that Cowdroy J’s approach in iiNet stems from a concern that over-zealous enforcement of copyright in the digital environment can have unforeseen and unfair consequences. O’Grady J in Cox seems to have a very different, more rightsholder friendly, view, also seen in his willingness to accept at face value the notices issued by the notorious copyright agent, Rightscorp. Again, this contrasts markedly with the approach of another Australian court in the Dallas Buyers Club case, where the court refused to allow the rightsholder to frighten notice recipients into accepting unreasonable settlement demands set out in infringement notices, eventually leading to the collapse of the case.

In New Zealand, I would expect us to follow the iiNet line, which is the better approach in my view.

[1] Note, the attached decision is that of Cowdroy J in the Federal Court. The case eventually went to the highest Australian court, the High Court of Australia, where Cowdroy J’s decision was upheld, but it is his judgment which most clearly highlights the approach in Australia.

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