Australian Judge Explains Why Three Strikes Isn't Reasonable
Wednesday February 03, 2010
Australian Internet users are today celebrating a landmark decision in which an Australian court ruled against the film industry in their lawsuit against iiNET, Australia's third largest ISP.  The industry had asked the court to hold the ISP liable for infringing BitTorrent activities of its users.  The court soundly rejected that demand, holding that the ISP could not be seen to have authorized the infringement.

While the authorization analysis is unquestionably the foundation of the decision, there is a detailed, must-read section on subscriber termination schemes, better known as three strikes and you're out (paragraphs 425-442).  In it, Justice Dennis Cowdroy explains why such schemes are far more complicated than is often claimed and are simply not reasonable in many circumstances. 

First, Justice Cowdroy confronts claims that ISPs terminate subscribers for non-payment of accounts, so why not for copyright infringement:

 Regardless of the actual quality of the evidence gathering of DtecNet, copyright infringement is not a straight ‘yes’ or ‘no’ question. The Court has had to examine a very significant quantity of technical and legal detail over dozens of pages in this judgment in order to determine whether iiNet users, and how often iiNet users, infringe copyright by use of the BitTorrent system. The respondent had no such guidance before these proceedings came to be heard. The respondent apparently did not properly understand how the evidence of infringements underlying the AFACT Notices was gathered. The respondent was understandably reluctant to allege copyright infringement and terminate based on that allegation. However, the reasonableness of terminating subscribers on the basis of non-payment of fees does not dictate that warning and termination on the basis of AFACT Notices was equally reasonable. Unlike an allegation of copyright infringement, the respondent did not need a third party to provide evidence that its subscribers had not paid their fees before taking action to terminate an account for such reason.

After rejecting claims that Australian copyright law envisages termination as part of that law's safe harbour provisions, Justice Cowdroy turns to claims that ISPs have the technical capability to cut off access:

One need only consider the lengthy, complex and necessary deliberations of the Court upon the question of primary infringement to appreciate that the nature of copyright infringements within the BitTorrent system, and the concept of ‘repeat infringer’, are not self-evident. It is highly problematic to conclude that such issues ought to be decided by a party, such as the respondent, rather than a court. Copyright infringement is not a simple issue. Such problems as identified are not insurmountable, but they do weigh against a finding that the respondent could conclusively decide that infringement had occurred and that it had the relevant power to prevent by warning, suspension or termination of subscriber accounts, even if it had the technical capability to do so. Even if feasible, such a scheme would likely lead to significant expense incurred by the respondent, as was alluded to by Mr Malone in his second affidavit. Of course significant expense was likely to have been incurred by the respondents in Kazaa, but that was in the context of those respondents having provided the ‘means’ of infringement. The respondent has not done so in these proceedings, and thus the expense and complexity of the imposition of responsibility for a notice and termination scheme on them manifestly militates against the conclusion that such scheme is a relevant power to prevent.

All of these leads to an unambiguous conclusion from the Court:

The Court does not consider that warning and termination of subscriber accounts on the basis of AFACT Notices is a reasonable step, and further, that it would constitute a relevant power to prevent the infringements occurring. The respondent did not create the ‘means’ to infringe copyright. It was the constituent parts of the BitTorrent system which has given rise to the infringements. Consequently, it cannot be incumbent upon the respondent to stop the infringements. Even if it was incumbent upon the respondent, that does not lead to the conclusion that it was a reasonable step for it to take action.

...

Obviously termination of the subscriber accounts would constitute a step that would prevent the person or persons from infringing (at least with that ISP), but it would also prevent that person or persons from using the internet for all the non-infringing uses to which the internet may be put and to which they have contracted with the respondent and provided consideration. Given that Wilcox J had no desire to order the respondents in Kazaa to shut down their system where he found the predominant use was to infringe copyright, it would seem that termination of accounts in the circumstances of unproven and sporadic use, at least absent judicial consideration of the extent of the infringement on each account, would be unreasonable. The words of Higgins J in Adelaide Corporation are apposite. While termination of accounts would stop the infringement, it would do much more and in the circumstances it would not be reasonable. Consequently, warning and termination/suspension does not relevantly constitute a power to prevent infringement on the part of the respondent.

When combined with today's reports that Australia has opposed three strikes as part of the ACTA talks, there is considerable good news on the copyright front coming from down under.