Sonia Borella.
Two of Australia’s top media and entertainment lawyers – Sonia Borella and Dan Pearce from national law firm Holding Redlich – explore two recent developments in combating piracy.
Rights holders have been active recently in taking steps to counter unauthorised downloading of their films. We catch up on the final outcome in the Dallas Buyer’s Club claim, and review the first claim under the recently introduced anti-piracy legislation.
Enforcing rights in copyright material has its obstacles but compensation is not unattainable – lessons from the Dallas Buyers Club case
The owners of the film “Dallas Buyers Club” have not proceeded with their claim for payments in connection with the unauthorised downloading of the program, but the action is still an important case for rights owners.
By way of background, in October 2014, a preliminary discovery application was filed in the Federal Court of Australia (Court) by the rights holders in the film Dallas Buyers Club (Film), naming six Australian ISPs as respondents.
The purpose of the application was to obtain the details of customers associated with 4,726 IP addresses that were used to download and share copies of the Film using the peer-to-peer file-sharing service BitTorrent. The intention was to then issue letters of demand to those customers for the infringement of the copyright in the Film, seeking compensation.
On 7 April 2015, the Court delivered its decision on preliminary discovery in favour of the rights holders in the Film, and ordered that various ISPs, including members of the iiNet Group and Dodo, provide to Dallas Buyers Club LLC (or parent company Voltage Pictures LLC) the names and addresses of customers who are alleged to have used BitTorrent to share the Film.
But the order was conditional – the communications to be sent to alleged infringers needed to first be approved by the Court in order to prevent “speculative invoicing” against alleged infringers without a proper legal basis.
Due to the nature of the preliminary proceedings, there was no decision as to whether copyright in the Film had been infringed, but the Court did “not regard as fanciful the proposition that end-users sharing movies on-line using BitTorrent are infringing the copyright in those movies”.
The ISPs claimed in opposing the discovery that naming individual users would be economically pointless, as the compensation for the infringement would be in the order of $15.00. Representatives of Voltage Pictures LLC reportedly said that bringing proceedings against alleged infringers has value beyond the compensation recovered.
Further, in the case of multiple downloaders, the Court said it must be considered at least plausible that a copyright owner may be able to obtain aggravated damages under section 115(4) of the Copyright Act 1968 (Cth). The ability to obtain aggravated damages exists partly because of the need to provide deterrence.
The rights holders in the Film proposed to demand of the alleged infringers a sum including:
a) the cost of legitimately purchasing the Film;
b) a licensing fee relating to each infringer’s uploading activities;
c) punitive damages, based on the alleged infringers other illegal downloading activity; and
d) a claim for damages, for the costs incurred by the rights holders in the Film in bringing the application.
On 14 August 2015 the Court handed down its decision, which imposed certain limitations on and requirements of the rights holders in the Film.
Of particular concern to the Court was whether the payment demands by the rights holders were reasonable in a copyright infringement context.
The Court found that it was reasonable to demand the sum equal to the cost of purchasing the Film, given that sharing the Film online was undoubtedly copyright infringement, and reasonable compensation would be equivalent to the cost for the alleged infringer to have seen the Film legitimately.
The Court also found that the rights holders in the Film had expended significant resources and legal costs in obtaining the infringing IP addresses, and therefore that the claim for damages was also reasonable.
The Court did not regard the demands for sums equal to a licensing fee and punitive damages as reasonable.
The Court concluded that it would only order the ISPs to hand over the customer details sought if the rights holders in the Film provided the Court with a written undertaking that they will restrict the demands to those which the Court has ruled as permissible.
The Court also ordered that this undertaking be secured by the lodging of a $600,000 bond.
The rights holders in the Film then said the bond amount they would pay would only be in the amount of $60,000 for access to 472 names initially, and that the costs sought would only be for an individual licence fee as well as damages for legal costs incurred.
The Court then gave the rights holders until February 2016 to appeal the Decision, after which time the proceedings would be terminated.
The drawn out battle came to an anti-climactic end when the rights holders in the Film decided not to proceed any further, and failed to lodge an appeal within the time limit imposed by the Court.
The rights owners in the Film had to overcome several obstacles, but fell at the final hurdle. They had the capacity to claim compensation for the permissible demands, including the purchase price of the
Film and the costs expended in obtaining the IP addresses.
However, at their election, the matter did not progress any further, which begs the question as to whether, for copyright owners, these sorts of applications can be brought cost effectively.
This case has a lesson for infringers in putting them on notice and acting as a potential deterrent.
It also provides a roadmap of sorts for copyright owners as to the best way to approach these sorts of situations, including an indication as to the types of restrictive undertakings a court may impose to prevent things like speculative invoicing taking place.
It would seem that if copyright owners are prepared to act in accordance with any condition the court may impose, that their enforcing of their intellectual property rights and the process involved in holding infringers to account for online piracy is now more transparent following this decision.
Australian Government passes Bill aimed at reducing instances of online piracy, but is legislation the answer?
In June 2015, the Australian Government passed the Copyright Amendment (Online Infringement) Bill 2015 (Bill), the purpose of which is to prevent unauthorised access to certain websites, including the
BitTorrent website, The Pirate Bay, and to ultimately reduce instances of copyright infringement.
For rights holders such as film and television production companies, the Bill provides a legal avenue to protect their rights, through an application being made to the Court for an order requiring ISPs to block access to websites.
Importantly, the website in question accessed by alleged infringers must have the principal purpose of copyright infringement.
While this may act as a deterrent for online piracy, it will not of itself prevent illegal downloaders from continuing to download from the websites in question. Further, in practice, the individual activity of the downloader will only be changed once the Court orders that the ISP take reasonable steps to block the website in question, following an initial application to the Court by the rights holder.
Although not necessarily a complete solution to the problem of online piracy in Australia, the Bill is a step in the right direction, and provides rights holders with a legal avenue available to protect their original copyright material.
Village Roadshow (Village) is amongst the first to utilise the newly introduced anti-piracy legislation, in recently filing an application with the Court for an order to be made to compel the ISP in question to block piracy website, SolarMovie. The basis of the claim is that this website’s primary purpose is the facilitation of copyright infringement. Although these types of claims have been successful in other overseas jurisdictions, this is a test case for the Australian anti-piracy laws, and it will be interesting to see whether Village will be successful in holding the operators of the infringing website accountable for the damage they are causing to its industry.
Dan Pearce.
Where to from here?
The combination of increased avenues for Australian consumers to access television and film content legally, together with the implementation of new deterrent legislation, and possibly more cases like Dallas Buyers Club tackling this issue, will hopefully go some way to reducing the number of instances of online piracy in Australia.