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By: Andrew Nicholson, Esq.
Mullins Lawyers
Brisbane, Australia

What did we learn from Dallas Buyers Club v iiNet?

The decisions handed down in Dallas Buyers Club v iiNet in April and again last week have a number of take home messages, both for those who hold IP rights and for those who engage in copying or infringement of those rights.

Preliminary discovery

There has never been so much interest in an application brought prior to commencement of formal proceedings. However, as the application was for the disclosure of the identity of people who Dallas Buyers Club (the rights holders) wanted to sue – it garnered a lot of attention, which was not limited to the 4726 individuals whose details were sought.

Online Identity

Despite all of the warnings which we receive about our interactions online, the majority of people apparently still hold the view that they will be ok (and not subject to scrutiny) when engaging via the internet.

Perhaps the 32 million account holders of Ashley Madison (“the most famous website for discreet encounters between married individuals”), whose personal details, passwords and credit card information have reportedly been leaked to the “dark web” this week, would now disagree

That said, the Court was very clear that although it was prepared to allow disclosure of user details to the Dallas Buyers Club, it recognised the privacy of the individuals involved and, those details were only to be used for the purposes of the Court proceedings.

Guidance on Copying

Torrent site users have previously suggested that they are not infringing copyright where they upload or download a “sliver” (or a number of “slivers”) of a whole work/film/song. Although this was only a preliminary discovery application and that matter was not (required to be) decided, Justice Perram made clear his view that “I do not regard as fanciful the proposition that end-users sharing movies online using Bit Torrent are infringing the copyright in those movies. Indeed, if there is anything fanciful about this, it is the proposition that they are not”.

Speculative Invoicing and dead cats

There had been much concern that Dallas Buyers Club would issue demands to the 4726 to settle claims for “grossly disproportionate amounts”, which is a more common practice in the USA where the link between infringement and loss is not the same as under Australian Law. To protect against that, the Judge said that “whilst satisfied, in principle, that [Dallas Buyers Club] was entitled to preliminary discovery, the Court was not going to open the sluice gates until it saw the proposed correspondence and until [Dallas Buyers Club] satisfied the Court that it was that approved correspondence, and not something else, such as a dead cat, that [Dallas Buyers Club] was going to send to account holders”.

What is the loss?

The rights holders asserted that they should be entitled to four different components of damages. Of those four, the Judge accepted that they ought to be entitled to recover:

  1. what they would have paid had they not downloaded using Bit Torrent. That may be one of the cost of buying, renting or seeing the film in a cinema (or perhaps nothing if “true pirates and sailing under the Jolly Roger”); and
  2. a portion of the legal costs of the rights holder in pursuing the application (which could have been more substantial).

Interestingly, the Judge refused the rights holder’s claims for:

  1. an amount of each “sliver” which a user uploaded to Bit Torrent (which could be calculated as a one-off licence fee). The Judge considered it “fanciful” that a user would “avoid an infringement by approaching [Dallas Buyers Club] to negotiate a distribution agreement in return for a licence fee” to gain permission to upload the Bit Torrent; and
  2. punitive damages under the Copyright Act.

The handcuff

While the details of the 4726 are to be provided to Dallas Buyers Club, Justice Perram’s way of ensuring that there would be no speculative invoicing was to first require an undertaking that they will only use the information in relation to a claim for (a) and (b) above AND to require the payment of a bond of $600,000. If a speculative invoice is issued (claiming (c) or (d) above) then the bond will be forfeited.

Where to from here

The Copyright Amendment (Online Infringement) Bill, which encapsulates Malcolm Turnbull’s three strikes policy, is still making its way through Parliament. At the same time Australian ISP’s are close to agreeing to a new Industry Code which will make it easier for rights holders to track down infringers.

The law will undoubtedly continue to evolve in this area and those who are sailing the seven seas of the internet (particularly under the Jolly Roger) should continue to take care.

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