As the demand for immediate online content increases exponentially, Australian copyright law faces its biggest challenge yet. Briana Everett reports

Promoted by Lawyers Weekly • 24 March 2011 • Big Law

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As the demand for immediate online content increases exponentially, Australian copyright law faces its biggest challenge yet. Briana Everett reports

As the first Australian case in which the copyright authorisation provisions have been tested against an ISP, the iiNet battle against Hollywood has highlighted the need for clarity and guidance within copyright law, resulting in further calls for legislative change and codification.

The iiNet case attracted worldwide attention as both copyright owners and ISPs waited, amid an atmosphere of uncertainty, for some clarity regarding their rights and obligations.

Last month, after a long battle that began in 2008, ISPs once again emerged as the winners in the latest appeal decision. The full court of the Federal Court ruled in favour of iiNet, dismissing Roadshow Films' appeal against a finding by Justice Cowdroy that iiNet had not authorised copyright infringement.

In a split decision of 2-1, the majority held a different view as to what constitutes authorisation, disagreeing with Justice Cowdroy's finding that ISPs do not provide the means of infringement.

"What the case did show is where the content providers have taken steps to provide verified data and have agreed to do other things such as contribute to the costs of enforcement, then ISPs need to put in place systems to deal with infringement. There is a clear obligation on ISPs to at least put in place some systems," says Herbert Geer partner and iiNet's representative, Graham Phillips.

While the decision delivered some clear signposts for ISPs in relation to what constitutes authorisation, the Federal Court decision failed to remove all uncertainty. "The fact that the Federal Court was split is an indication of the complexity of the area of the law and the uncertainty that exists today. It's not black and white. These are matters of judgement and turn on the particular facts," says Clayton Utz senior associate Timothy Webb.

The industry reaction

In response to the iiNet decision, the Internet Industry Association (IIA) announced this month that it would start work immediately on an industry code of practice for internet intermediaries including ISPs and search, hosting and social media providers.

"Having closely reviewed the recent decision of the Full Federal Court, we've concluded it's both necessary and appropriate to develop a code of practice to give a wider range of internet intermediaries greater certainty around their legal rights and obligations," says IIA chief executive Peter Coroneos.

"The iiNet case has provided us with welcome guidance on where responsibilities should begin and end, but falls short in defining reasonable steps intermediaries should take in responding to allegations of infringement by their users. The code will address this gap."

According to Phillips, both iiNet and the Australian Federation Against Copyright Theft have called for a greater focus on solving these copyright issues outside of court. "There needs to be more focus on putting in place regulations, putting things in code and having negotiations to solve things outside the court process," he says.

But according to Gilchrist, a code will not be sufficient to remove the uncertainty. "I think it's an interesting way to approach it. It would be helpful for the participants in that part of the industry, but I suppose industry players will just need to be aware that even if they come up with a code, the courts are still going to look at [each case] from a legal position and make their own decision," she says. "Compliance with the code isn't going to be sufficient."

Alternatively, iiNet has suggested the creation of an independent body to manage allegations of copyright infringement. "iiNet has developed a model which addresses ISP concerns but one that we think remains attractive to all participants, including the sustainable strategy of an impartial referee for the resolution of disputes and the issue of penalties for offenders," says iiNet chief executive Michael Malone.

iiNet has recommended the independent body be established along with a penalty system, including a graduate scale of demerit points, fines, shaping or court action for serious repeat offenders.

"I think it's obviously creating a bureaucracy but I can see that it's an option and obviously the argument of keeping it out of court," says Gilchrist. "I suppose I would just be a little bit suspicious. It's about balancing interests. Why would an independent body be in the Hollywood studios' interest?"

While calls are being made for codification and an independent body, industry members say legislative reform is imperative. In February this year, Attorney-General Robert McClelland addressed Australia's future direction in copyright law, saying: "Legislative reform in this area is challenging because of the speed of technological developments - there is a risk that legislative solutions can lag behind reality and the marketplace.

"But while it is a difficult task, and quite impossible to achieve a perfect balance between competing interests, it is nonetheless important that as a government we continually examine the areas of copyright that are ripe for reform," he adds.

Advocating industry dialogue on the issue as the best way forward, McClelland says the Government would look closely at the outcomes of industry discussions.

Agreeing that legislative reform is required, Gilchrist emphasises that a balance must be struck between the interests of ISPs and content owners. "Legislative change could get to the position of protecting ISPs more, or at least make it clearer where they will be protected and where they won't. So I think there is going to be, or there already is, active lobbying of the Government from not just the ISPs' perspective but also the copyright owners' perspective," she says. "I think it's going to be really interesting how the Government tries to balance those interests."

With the ongoing tension between ISPs and copyright owners, the government faces an uphill battle to attain that balance, while also achieving reform that is in line with the technological advances and increasing demands of internet users.

The availability issue

While the industry has recognised the need for legislative reform to address online copyright infringement, there have been additional calls from industry members such as iiNet for better availability of content.

"We urge the Australian film industry to address the growing demand for studio content to be delivered in a timely and cost-effective manner to consumers, and we remain eager to work with them to make this material available legitimately," says Malone.

As users' expectations of unlimited access to content continue to grow exponentially, content providers must now develop commercially viable ways of capturing their market and encourage users to access their work through authorised means.

"The Hollywood studios can't always use the stick [to enforce their rights]. What's going to be the carrot to get people to get users to go directly to them? With the younger generation, who have always done everything via the internet, how do you capture that market and do they have to accept a lower revenue?" asks Gilchrist.

The IIA has also called for the development of new business models that allow internet users in Australia to access to a wider range of legal, affordable content. "Market failure remains a core contributor to the infringement problem. If users have access to more and better content - when, where and in the form they choose to consume it - and at a realistic price, we're quite confident the motivation for infringement will decline," says Coroneos.

"Internet users need attractive, lawful alternatives if we are to see positive behavioural change. There's no reason why Australia shouldn't be leading the way here."

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