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Post-iiNet ISPs may celebrate, but hosts should fret

iiNet’s win isn’t a blanket immunity

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While ISPs and carriers are justified in tossing their hats skywards after iiNet’s win over rights-owners in the High Court, the decision doesn’t confer a blanket immunity over the whole IT sector.

To understand why this is so, it’s necessary to understand the basis on which the High Court made its decision.

Since 2008, the studios have been trying to establish that iiNet “authorised” the activities of customers who were using BitTorrent to pass around infringing files. The studios’ argument was that they sent iiNet notices of its customers’ activities (which established, in their opinion, that iiNet knew what was going on); that iiNet, knowing what was happening, declined to act against its users (for example, by warning them to cease infringing or face suspension or disconnection); and that iiNet had the power to act.

These, taken together, meant that iiNet was “authorising” what was going on – so the studios argued.

The High Court didn’t agree: it decided that iiNet’s power was limited (it could act against a customer, but that customer could simply open an account with somebody else); that the AFACT notices were insufficient to establish what was going on (which deals with the extent of iiNet’s alleged knowledge of what was going on); and that iiNet could not launch investigations based on the AFACT notices without risking becoming a secondary infringer.

The court decided these factors meant it could not decide that iiNet had “authorised” the infringements, and dismissed the appeal.

All of this, as I said, is good news for the ISP and carrier market. However, another part of the court’s reasoning might be troubling for sectors like hosting companies and cloud service providers.

Such organisations, it can easily be argued, have a more intimate relationship with their customers’ data.

For example, iiNet has no direct way to know (a) what software I choose to install on my home computer (including BitTorrent), (b) whether I am using software I have installed in an infringing way, and (c) whether I am storing a copy of an infringing file and making it available to others (an IP address, the High Court noted, doesn’t identify which user behind that address is committing the infringement).

A hosting company has much greater knowledge about all three of these – and it owns the computer.

Hence, I suggest, an accuser can say to the hosting company: “Your customer X is storing a movie, and allowing other people to download that file. We want you to stop this from happening.”

Roadshow Films Pty Ltd v iiNet Ltd doesn’t protect the hosting company the way it protects ISPs and carriers.

Let’s look briefly as some of the judges’ remarks (paraphrased for brevity).

“This appeal can be determined by asking interrelated questions informed by [Section 101, 1A of the Copyright Act],” the High Court decided, with the questions being:

1. Did iiNet have a power to prevent the primary infringements and, if so, what was the extent of that power? (The answer, in the iiNet case, is “no”).

2. In iiNet’s case, can warnings, suspension and/or termination of customer accounts be considered “reasonable steps” to prevent infringements? (The answer, in the iiNet case, is “no”).

Both of these questions, I would argue, have a different answer in the case of the hosting company or cloud service provider.

1. The hosting company’s “power to prevent” is much greater than an ISP’s: the ISP can’t, for example, demand that a customer remove a file from their computer; the hosting company, which owns the space the customer is using, can.

2. The hosting company’s greater “power to prevent” would almost certainly make the steps AFACT demanded much more “reasonable” than when demanded of an ISP.

ISPs have welcomed the “certainty” the decision gives them, but certainty cuts two ways. For other players in the IT industry, the decision makes it certain that they might have to learn to police their users. ®

The smart choice: opportunity from uncertainty

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