This article was first published in the Lexis Nexis Internet Law Bulletin July 2015 Vol 18 No 4
- The convergence earlier this year of legislative reforms, a court decision, a new industry code and a plethora of new commercial offerings has changed the landscape of audio visual content piracy via internet file sharing.
- While the legal drivers are interesting and some legislation has yet to be enacted, let alone put into practice, they are not likely to be the catalyst for change.
- Change in most consumer behaviour is likely to come from the long awaited new services providing Australian consumers with timely, economical and convenient access to audio-visual entertainment content, as has been the case in other jurisdictions for some time.
The recent Dallas Buyers Club case has sparked controversial debate as to the scope and effectiveness of legislative reform in Australian internet piracy law. It is an undeniable fact that online copyright infringement in Australia is a challenging problem for rights holders. The issue, however, is determining the best method to tackle this epidemic. Despite the recent legislative reforms that have seen the passing and commencement of both the Copyright Amendment (Online Infringement) Act 2015 and the Telecommunications (Interception and Access) Amendment (Data Retention) Act 2015, such measures may be potentially counterintuitive to effective enforcement. The maxim “a society in decline is a society that has too many laws” is often attributed to Confucius. With the plethora of new services such as Netflix, Stan and Presto streamlining and legalising the process of accessing audio visual entertainment content, there will be a natural inclination for Australians to stay within the bounds of piracy legislation, as has arguably already been the result of the introduction of music streaming services such as Spotify and Pandora.
Ultimately, greater access to streaming services will exert greater influence over conquering piracy than the legislative framework. This article suggests that the future landscape of piracy regulation will see “tradition and culture transcend the law” (a saying which has also been attributed to Confucius), leaving the precedent set by the Dallas Buyers Club case a mere footnote, and the legislative actions and industry code (as usual in the case of internet law), too little, too late.
Flaws in legislative mechanisms
While legislative reforms have sought to eliminate the problem of online piracy in Australia, there are significant issues that simply cannot be addressed by the legal or regulatory framework. The decline of illegal downloading and file sharing of audio and audio visual content is possible in the future, but it is unlikely to be as a result of government reforms like the Copyright Amendment (Online Infringement) Bill 2015 recently passed by both Houses.
As a result of the passing of the Bill, websites that are notoriously used for facilitating copyright infringement activity can, at the application of rights holders, be the subject of blocking orders, requiring internet service providers to block access to those sites by their customers.
This tactic is not new to legislative reform, mainly modeled after the United Kingdom and Europe. The landmark UK case, Twentieth Century Fox Film Corp v British Telecommunications plc (BT) posed persuasive objections to the effectiveness of site blocking orders. Essentially, BT argued that internet users could simply use proxy servers and other mechanisms to override website blocking.
Furthermore, the various sites could shift to different locations on the internet, or dissipate and regenerate again in a different form to continue its operations and ultimately avoid the site blocking injunctions. The futility of site blocking injunctions was notably described by Australian consumer rights organisation, CHOICE, as “whacking moles”. In other words the ease of circumvention is likely to nullify the effectiveness of site blocking orders, should this legislation be enacted.
The Telecommunications (Interception and Access) Amendment (Data Retention) Act 2015 (Data Retention Act)
The recent enactment of the Data Retention Act has attracted the media spotlight and wider policy discussions. Essentially it requires telecommunications companies to retain customers’ telephone and computer metadata for two years.
The types of data collected include telephone numbers, length of telephone calls, email addresses and the time messages are sent. Not included in this suite of information are the contents of telephone calls, emails or internet browsing history.
In relation to online copyright infringement, conceivably this legislative reform could open the gateway for copyright owners providing evidentiary grounds by which to bring legal action against alleged internet piracy offenders. The Act, however, does not come without robust scrutiny. Strong concerns have been voiced in regard to the threat to privacy as it enables enforcement agencies to access and drastically intrude upon:
habits of everyday life, permanent or temporary places of residence, daily or other movements, the activities carried out, the social relationships of those persons and the social environments frequented by them.
Moreover, Parliament has explicitly stated that the overriding objective of the Data Retention Act is to thwart terrorism and prevent serious crimes. Utilising the mandatory data retention regime to open litigious disputes about online downloading and piracy does not seem to align with such objectives. As matters stand the overall purpose of mandatory data retention is unclear and blanket mandatory data retention has not been demonstrated as “reasonable, necessary or proportionate by the government”.
The Dallas Buyers Club case
In October 2014, Dallas Buyers Club LLC filed an application to the Federal Court seeking a number of ISPs to disclose the contact details of 4,726 Australian users who illegally downloaded the film, Dallas Buyers Club. The applicants argued on the basis of copyright infringement, alleging that these IP addresses were linked to various instances of illegal downloading through file-sharing sites. Dallas Buyers Club LLC plans further legal action against other ISPs than those involved in this case. For their part, iiNet and M2 will not be appealing the decision, stating “We’re very happy with
Justice Perram’s judgment and his balanced approach to both the studio’s and consumers’ rights”.
Upon further interrogation of the Dallas Buyers Club case, it is argued that its precedence will not present strong deterrence from internet piracy due to differing damages calculations between US and Australian copyright matters. One of the defending ISPs, iiNet, failed to convince the court that it should not have to disclose the customer details of the alleged copyright infringers. Justice Nye Perram held that such customer details were not to be released to the public and required that any letters sent to the users had to be preliminarily approved by him.
Such judicial intervention is designed to prevent “speculative invoicing” which has already been deployed in US lawsuits. Essentially, the letters are sent to alleged online piracy offenders legally demanding the payment of thousands of dollars to settle or a threat of legal action. Penalties in the US, for instance, have been calculated to the sum of $675,000 for illegally down- loading thirty songs.
There is a significant generation of people who are entering adulthood now in Australia who have illegally downloaded films and other audio visual entertainment their whole lives, and no-one has sought to stop them or hold them to account in any way until now. Arguably, imposing a highly disproportionate fine is something Australian courts will try to avoid. It is unclear whether the letters in the present case will include similar demands.
However, under s 115 of the Copyright Act 1968 (Cth), damages are not payable if the defendant was not aware and had no reasonable grounds for suspecting that the act was a breach of copyright. The rights holder is only entitled to an account of profits. Exemplary dam- ages are only payable if the breach is both flagrant and intentional.
For this reason it is highly doubtful that the letters sent to the alleged infringers will contain substantial claims for damages, as has been the case in the US.
The “three strikes” scheme
The release of the draft “three strikes” anti-piracy scheme on the day after the judgment was handed down seamlessly rode the wave of publicity after the Dallas Buyers Club case decision. Copyright laws must strike a balance between competing interests and policy concerns.
Attempting to avoid legal reforms that would make ISPs liable for authorising user infringements, the telecoms industry submitted its Copyright Notice Scheme Industry Code 2015 to the Australian Communications and Media Authority for approval. The industry code is now due to start on 1 September. The “three strikes” scheme dictates that rights holders may provide ISPs with IP addresses that have allegedly infringed their copyright online. The relevant ISP is obliged to send the repeat infringer “education notices”.
Receiving three warning letters within a 12-month period entitles copyright owners to have the relevant ISP provide them with details of the account holder for the purposes of pursuing them for breach of copyright.
Lawmakers are hopeful that the cumulative effect of the Dallas Buyers Club decision, the new industry code and site blocking orders will stop internet piracy.
The power of online streaming services: the future market solution
Despite the surfeit of publicity garnered by the Dallas Buyers Club case coupled with the industry code and the legislative reforms discussed above, we argue that the influx of online streaming services is more likely to have a greater influence in deterring online audio visual piracy than all of these measures combined.
The introduction of Stan, Netflix, Presto and the like into the digital free-to-air and Pay TV market in Australia promises a dramatic improvement in consumer accessibility of online media content. These services offer Australian consumers an efficient and convenient service at a fixed reasonable price and it is reasonable to expect a huge uptake and corresponding decrease in piracy irrespective of any law reform or other legal precedents or other non-market based mechanisms.
In 2012, the average Netflix subscriber in the US used 40 hours of video per month, totaling the equivalent of around 20 movies at the cost of about $0.50 per film. With a growing 27 million subscribers, the convenience and usability of Netflix to household consumers have evidently led to reduced incentive to illegal downloading and file-sharing activity. Looking even further afield, it was notably found that the introduction of Spotify in Sweden substantially reduced music piracy by 25% between 2009–2011. International experiences in consumer behaviour point towards online streaming services playing a crucial role in diminishing file-sharing and copyright infringement activities by consumers in Australia.
As technological enhancements and cultural perceptions continue to transcend legal boundaries, a future wave of online piracy may present in the form of streaming of live events and concerts. The drastically increasing use of mobile phone live video streaming apps such as Meerkat and Periscope have opened further debates regarding their legality. The early stage of such technology reveals many legal unknowns and
ambiguities, and becomes more problematic if the activity becomes culturally mainstream over a period of years before any legal action is taken by rights holders to enforce their rights.
Australian consumers are the world’s leading offenders in terms of internet piracy. In 2010, an estimated $4.7 million internet users in Australia accessed online material illegally. It is widely recognised that online piracy of copyright content is a continuing challenge for our legal system.
While the Australian piracy landscape has seen aggressive legislative reforms take shape, it is ultimately argued that the real solution lies in the greater accessibility of online streaming services that have had proven success in diminishing online piracy in international jurisdictions.
While only time will tell, in a culture that is essentially compliant and law abiding such as ours, market- based solutions are best placed and most likely to effectively and fairly balance the competing interests of internet service providers, copyright holders, and consumers.
 Dallas Buyers Club LLC v iiNet Ltd (2015) 112 IPR 1;  FCA 317; BC201502294
 Kalina P, “Australia a World Leader in TV Piracy” The Sydney Morning Herald 26 June 2014 accessed 10 May 2015, available at www.smh.com.au.
 See Spotify, W Page Adventures in the Netherland: Spotify, piracy and the new Dutch experience July 2013, https:// press.spotify.com at 5.
 Copyright Amendment (Online Infringement) Bill 2015 (Cth).
 Twentieth Century Fox Film Corp v British Telecommunications plc  All ER (D) 275 (Jul);  EWHC 1981 (Ch) at  and Kino at 
 Farrell P, “Blocking Copyright-Infringing Websites Derided as Like ‘Whacking Moles’” The Guardian 10 September 2014 accessed 6 May 2015 available at www.theguardian.com.
 See, Kärntner Landesregierung (C-594/12) v Minister for Communications, Marine and Natural Resources (8 April 2014).
 Explanatory Memorandum, Telecommunications (Interception and Access) Amendment (Data Retention) Bill 2014, Item 5.
 The Law Council of Australia, “Law Council of Australia does not support mandatory data retention proposal” media release 1429 (3 December 2014) p 1.
 Grubb B “Dallas Buyers Club piracy case: ISPs want $108,000 before they hand over pirates’ identities” The Sydney Morning Herald May 2015 accessed 21 May 2015 available at www.smh.com.au.
 iiNet Media Press, “iiNet’s fight for customer’s rights v Dallas Buyers Club LLC” media release (7 April 2015) p 1.
 Dallas Buyers Club LLC v iiNet Ltd (No 3)  FCA 422; BC201503448.
 D Lasater “Comment: ‘Closing Pandora’s Box:’ Speculative Invoicing and Opportunism in File Sharing” (2011) 12(1) Wake Forest Journal of Business and Intellectual Property Law at 40.
 Sony BMG Music Entertainment v Tenenbaum, USCA, First Circuit, June 25, 2013.
 See, IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458; 254 ALR 386;  HCA 14; BC200902942 (IceTV). French CJ, Kiefel and Crennan JJ state at , “Copyright legislation strikes a balance of competing interests and competing policy considerations”.
 See Roadshow Films Pty Ltd v iiNet Ltd (2012) 248 CLR 42; 286 ALR 466;  HCA 16; BC201202230.
 Australian Commonwealth, Communications Alliance, Indus- try Code C653: 2015 Copyright Notice Scheme, Introductory Statement.
 Idato M, “Stan, Netflix, Presto set to reshape Australia’s Pay TV market” The Sydney Morning Herald 8 January 2015, accessed 7 May 2015 available at www.smh.com.au.
 Brennan S W, “The Netflix Effect: Product Availability and Piracy in the Film Industry”, The University of Georgia, 2012.
 Above, n 19.
 Above, n 3, at 7.
 Tovey J “Periscope and Meerkat, the apps where life is but a stream” The Sydney Morning Herald 12 April 2015, accessed 10 May 2015 available at www.smh.com.au.
 Ferror E “Impact of internet piracy on the Australian economy” Business software Alliance 23 March 2011, available at www.apo.org.au.
This article was co-authored by Vanessa Ip.