Gummow and Hayne JJ comment that
The history of the [Copyright] Act since 1968 shows that the Parliament is more responsive to pressures for change to accommodate new circumstances than in the past. Those pressures are best resolved by legislative processes rather than by any extreme exercise in statutory interpretation by judicial decisions.The High Court dismissed an appeal by Roadshow and 33 other film and television companies from the decision of the Full Court of the Federal Court of Australia in Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285. The High Court held that iiNet, the respondent internet service provider (ISP), had not authorised the infringement by its customers of the appellants' copyright in commercially released films and television programs.
The appellants own or exclusively license the copyright in several thousand commercially released films and television programs. iiNet provides connectivity and hosting services to individuals and organisations. Its customers are parties to agreements that require iiNet's services not be used to infringe others' rights or for illegal purposes.
The appellants alleged that users of iiNet's services infringed copyright in the appellants' films by making those available online using the BitTorrent peer-to-peer file sharing tool. The Australian Federation Against Copyright Theft (AFACT), acting for the appellants, accordingly served notices on iiNet alleging the infringement and requiring iiNet to take action to prevent continuation of the infringement. iiNet took no action in response to the notices. In media releases at that time it asserted that it was for law enforcement agencies rather than the ISP to respond to the appellants' complaints about copyright infringement. It also indicated that, in the absence of proof of the alleged infringements, iiNet was not prepared to discontinue service to any customer over the claimed infringements.
The appellants have brought no legal action against any individual iiNet customers for any primary infringements of copyright under s 86(a) or s 86(c) of the Copyright Act 1968 (Cth). As the High Court noted, "it did not appear to be in contention that it would be somewhat impractical to do so". The Court went on to comment that
The present proceedings do not cover those responsible for providing the BitTorrent system. No party doubted that the rationale for the separate tort of authorisation is economic – namely, cost-efficient enforcement of the rights of a copyright owner.
The appellants' complaint against iiNet is confined to alleging secondary infringement. The appellants contend that iiNet is liable for infringement of copyright in the appellants' films because it authorised users of its internet services to communicate those films to the public by making them available online to be downloaded by others through the use of the BitTorrent system, as prohibited by s 86(c).In the Federal Court at first instance, Cowdroy J in Roadshow Films Pty Ltd v iiNet Limited (No. 3)  FCA 24 held - as discussed here - that iiNet had not authorised of copyright infringement by its customers. The appellants appealed to the Full Court, which by majority in Roadshow Films Pty Ltd v iiNet Ltd (2011) 194 FCR 285, dismissed the appeal.
Roadshow and the other appellants were granted special leave to appeal to the High Court. They argued that the majority of the Full Court had not correctly applied ss 101(1) and 101(1A) of the Copyright Act 1968 (Cth), ie provisions concerned with authorising an act comprised in a copyright (absent the licence of the copyright owner) and identifying matters that must be taken into account in determining whether a person has authorised such an act.
The film interests argued that iiNet had the power to prevent its customers from infringing copyright. That power involved issuing warnings and suspending or terminating customer accounts. The appellants argued that the AFACT notices provided credible information of past infringements by iiNet's customers sufficient to raise a reasonable suspicion that infringements were continuing. Once iiNet had received that information the ISP's failure to take action (eg suspend a customer's access) amounted to authorisation of its customers' infringements.
The High Court unanimously dismissed the appeal.
The Court observed that iiNet had no direct technical power to prevent its customers from using the BitTorrent system to infringe copyright in the appellants' films. Instead, the extent of iiNet's power to prevent customers from infringing copyright was limited to an indirect power to terminate its contractual relationship with its customers.
Gummow and Hayne JJ stated [at 111-112] that -
The appellants' case, in essence, is that iiNet "authorised" the Scheduled Infringements, and it did so by "standing by" and "allowing [this] to happen without doing anything about it". As noted above, these primary infringements are the making available online of the appellants' films. So long as the films are retained online they are "[made] available online" within the meaning of the definition of "communicate" in s 10(1) of the Act.
The appellants submit that these primary infringements are authorised by iiNet, notwithstanding that as the ISP: (i) iiNet had no power to modify the BitTorrent software; (ii) iiNet itself could not take down the infringing material because it was not acting as host; and (iii) there was no "common design" as was found with respect to the Kazaa file sharing system, and it followed from the findings of Cowdroy J that iiNet had no intention or desire to see any primary infringement of the appellants' copyrights. Further, s 112E of the Act states:
They went on to conclude [at 135-139] that -"A person (including a carrier or carriage service provider) who provides facilities for making, or facilitating the making of, a communication is not taken to have authorised any infringement of copyright in an audio-visual item merely because another person uses the facilities so provided to do something the right to do which is included in the copyright." (emphasis added)
Section 101(1A) is so drawn as to take an act of primary infringement and ask whether or not a person has authorised that act of primary infringement.
In answering that question there will be "matters" that must be taken into account. These include, but are not confined to, the matters identified in pars (a), (b) and (c). Was there any relationship that existed between the primary infringer and the (alleged) secondary infringer? If so, what was its nature (par (b))? Did the secondary infringer have power to prevent the primary infringement; if so, what was the extent of that power (par (a))? Other than the exercise of that power, did the secondary infringer take any reasonable steps to prevent the primary infringement, or to avoid the commission of that infringement (par (c))? In answering these questions an ISP is not to be taken to have authorised primary infringement of a cinematograph film "merely because" it has provided facilities for making it available online to a user who is the primary infringer (s 112E).
As indicated earlier in these reasons, the power of iiNet as an ISP with respect to the use of facilities provided to subscribers was limited by the nature of their commercial relationship; iiNet could not control the choice of its subscribers and other users to utilise the BitTorrent software, nor could iiNet modify the BitTorrent software or take down the appellants' films which were made available online.
At all material times iiNet had many thousands of account holders. Was it a reasonable step to require of iiNet that it monitor continually the activities of IP addresses to provide precise details of primary infringements that had been committed, and then take further steps to forestall further infringements? Warnings might or might not have that effect. Evidence was lacking of likely behaviour in that respect by users of ISP facilities. Further, with respect to the AFACT Notices, was it reasonable to expect iiNet to issue warnings or to suspend or terminate the contracts of customers when AFACT had not fully disclosed the methods used to obtain the information in the AFACT Notices? Those methods were disclosed only by the provision of expert evidence during the preparation of the case for trial.
In truth, the only indisputably practical course of action would be an exercise of contractual power to switch off and terminate further activity on suspect accounts. But this would not merely avoid further infringement; it would deny to the iiNet customers non-infringing uses of the iiNet facilities. And, in any event, in the absence of an effective protocol binding ISPs (and there is no such protocol) the iiNet subscribers whose agreements were cancelled by iiNet would be free to take their business to another ISP. The Court held that the information in the AFACT notices, as and when they were served, did not provide iiNet with a reasonable basis for sending warning notices to individual customers containing threats to suspend or terminate those customers' accounts.The Court accordingly held that iiNet's inactivity after receiving the AFACT notices did not allow the Court to infer that the ISP had authorised any act of infringement by iiNet's customers of copyright in the appellants' films.