Oz ISP, employee and principal held liable for copyright breaches
Money well spent
Analysis Another day another copyright battle! Australia’s Federal Court has handed down its decision in Universal Music Australia v Cooper (the ComCen case). While no final orders has been made, Justice Brian Tamberlin found for the recording industry applicants on all counts, in what has been described by the recording industry as a “major blow against piracy".
Following an investigation by Music Industry Piracy Investigations (MIPI) into the website www.mp3s4free.net, Universal Music Australia and 30 other companies, including seven international companies, commenced proceedings against the alleged registrant of the mp3s4free.net domain name, Mr Stephen Cooper, and the internet service provider (ISP), E-Talk Communications (trading as ComCen Internet Services). Proceedings were also commenced against an employee and principal of ComCen.
MIPI proclaimed that this case was “a world first”, being an action not only against an MP3 website, but also against an ISP which provided website access to users, thereby allowing them download unauthorised sound recordings from the site. According to MIPI, “the website (was)... one of the largest of its kind ... in the year preceding the commencement of legal proceedings, approximately seven million people visited the website, resulting in over 100 million hits to the website".
The case is significant because it was the first time the recording industry had accused an ISP of direct involvement in music piracy by allowing its infrastructure to be used for file-trading activities. ComCen unsuccessfully claimed that it was not liable for any copyright infringements because it didn’t host any MP3 recordings on their servers. Further, it claimed that it was not aware of any infringing behaviour associated with the mp3s4free.net website, and was in no position to control the behaviour of their subscribers. The judge rejected these claims.
The court accepted MIPI’s claims that Cooper’s website provided hyperlinks to external websites, which allowed individuals to engage in the unauthorised downloading of sound recordings. The court held that Cooper had “permitted or approved” and thereby authorized the copyright infringement by internet users who accessed the mp3s4free.net website. The court also found that the respondents engaged in misleading and deceptive conduct under section 52 the Trade Practices Act by making false claims about the legitimacy of the MP3 files available through the website, and the rights of consumers to legally download the files.
The website was “user friendly and attractive” and “visitors could readily select from a variety of catalogues of popular sound recordings for download.” The website used an extract from the ARIA charts to demonstrate that many of the latest hit singles were available to users.
Peer to peer, or peerless?
This decision may not necessarily affect the Australian peer to peer cases currently going forward including the Kazaa case, where the parties are awaiting a judement, and the Swiftel (Perth) ISP BitTorrent case, which will be heard later in 2005. In the ComCen case users could download from a centralised server. Although the respondents didn’t host the files, the evidence indicated that these downloads could have been switched off by the respondents if they had wanted to do so. The hyperlinks could have simply been disabled. However, Kazaa, BitTorrent and other P2P systems can’t be simply turned off. There is no overriding master switch. They are decentralised systems. There simply isn’t the same level of centralised control as exists with sites like mp3s4free.
The court held that in the ComCen case, Mr Cooper had "sufficient control of his own website to take steps to prevent the infringement". Another point of difference is that Mp3s4free apparently existed for one reason only – to allow consumers to download music for free of charge and free of restrictions. While infringement is a substantial problem on P2P networks let’s not forget that there are many legitimate uses of P2P networks. P2P networks are used to trade public domain content, licensed content like music and films in return for the payment of a fee, or free the personal content, like blogs and other private writing.
Any long term value in the judgment?
Despite the decision in their favour, the recording industry’s celebrations may be fleeting. On January 1, 2005 the Australian/US Free Trade Agreement (FTA) took effect. Under the FTA so-called “safe harbour” provisions were inserted into the Copyright Act. The effect of these amendments was to provide a defence for internet service providers excluded liability for damages for copyright infringement upon certain conditions".
The FTA provisions create four safe harbours for carriage service providers. These cover the transmission, caching, hosting and referencing of infringing materials. Eligibility for safe harbour protection is depends on fulfilling certain obligations including in same, cases the removal of content stored or cached material, or the termination of customer accounts.
This case was decided on the basis of the law as it existed prior to the FTA amendments, so this case may not be a useful precedent with respect to ISP conduct after January 1, 2005.
The position of ISPs may further be further complicated by the forthcoming ISP’s Code of Conduct  which the Internet Association of Australia (IIA) has been working on with copyright holders. According to the IIA , it is moving to finalise an industry code of practice “for ISPs, webhosts and other 'carriage service providers' in relation to copyright in online content". Such a code may include the principles for the issue of takedown notices and related matters.
32 months and counting
The ComCen case has had a lengthy and expensive looking history. This case commenced with the execution of Anton Piller orders made by Justice Emmett on October 17, 2003. The Anton Piller raids were conducted by the recording industry. The execution of the Anton Piller order followed a MIPI investigation which had commenced in November 2002. In effect, nearly three years of work, time and effort has gone into this court case.
Anton Piller raids involve the execution of civil search and seizure warrants by private enforcement units, and have been used by the recording industry in other leading cases, including the current Kazaa case. Anton Piller raids have been described by some critics as “excessive and heavy handed".
Since 2003 the parties have been to court with respect to this matter numerous times. For example, the case proceeded from October 25 to 29, 2004, and from February 7 to 11, 2005. In a related hearing, in January 2005 the Federal Court allowed MIPI to continue its search of Comcen's computers and servers after it was alleged that the ISP refused to let forensic investigators gain access to its facilities.
During the course of proceedings, the applicants and respondents were represented by a QC, two SCs, nine barristers and four firms of solicitors. The costs associated with these proceedings were probably very high. How much money was spent in this case? And do the record companies consider it money well spent, considering the recent legislative changes.
Daniel and the recording industry
Initially, Mr Cooper the first of the respondents was unrepresented, and in the judgment his honour thanked counsel for stepping in to assist Mr Cooper in what was “a complex case.
With only eight employees ComCen was certainly no Telstra or Optus (Australia’s two largest ISPs). The ISP operated out of Camperdown, a small suburb not far from the centre of Sydney, while Mr Cooper was based in Queensland. It is likely that a case against a small ISP was viewed by the recording industry as its best opportunity to push for a test case with a satisfactory result. The respondents also lost the public relations war, which seems to becoming increasingly important in modern copyright infringement cases.
The decision in the ComCen case appears to raise more questions than it answers, especially for ISPs.
- What is the current legal position of Australian ISPs with respect to the conduct of their subscribers?
- What is the current legal position of Australian ISP employees and managers with respect to the conduct of ISP subscribers?
- Do Australian ISPs have a duty of care to ensure that their subscribers do not contravene the Copyright Act?
- If so, does this duty of care extend to other forms of illegal conduct?
- What about the privacy of ISP subscribers?
- Will ISP subscribers have to vet the contents of their website in advance, in order to satisfy their ISP that no legislation has been infringed?
- Will personal subscribers have to submit their “blogs” to their ISPs in advance in order to satisfy their ISP that the blog does not contain any defamatory statements which could result in ISP liability?
The case has been decided, but the law is certainly not settled. With clenched teeth and shaking heads, we wait for the next one ... ®
Alex Malik is a lawyer, music industry commentator, and academic researcher at the University of Technology in Sydney. From 1997 to 2000 he was a Senior Legal Officer at the Australian Communications Authority, based in Canberra. From 2000 to 2002 Malik's was ARIA's Legal Counsel. In 2001 Malik participated in the Consultative Forum of the Copyright Law Review Committee examining Copyright and Contract, representing ARIA, PPCA and IFPI. Malik is currently undertaking a PHD in law, with a specialisation in copyright law in the digital age. He can be contacted at Alex.Malik@student.uts.edu.au