The Responsibility of ISPS for online Piracy

 

Moo Ker Wei provides an overview of recent court decisions in the United Kingdom and Australia

 

The roles and obligations of internet service providers (“ISPs”) in relation to online piracy have been a subject of great uncertainty and debate. In the past year, ISPs in the United Kingdom and Australia have been taken to court by copyright owners to compel the ISPs to block their users’ access to copyright infringing websites, specifically those involved in illegitimate file sharing and downloading. This has led to some significant rulings by the courts in both jurisdictions.

In this article, we will examine the recent decisions from the afore-mentioned jurisdictions and the obligations of ISPs in Malaysia in relation to online copyright infringement.

 

UNITED KINGDOM: THE NEWZBIN, NEWZBIN2 AND PIRATE BAY CASE

The Newzbin case

In Twentieth Century Fox Corp Ltd & Ors v Newzbin Ltd [2011] EWHC 1981 (Ch), six film production companies and studios filed a lawsuit against Newzbin Ltd, the owner and operator of a website called Newzbin. The website was accused of infringing the claimants’ copyright by providing its users access to films, music, games and books on an internet system called Usenet.

The High Court ruled in favour of the claimants, holding Newzbin Ltd liable for (i) authorising copyright infringement by its users; (ii) acting as a joint tortfeasor in procuring users to commit copyright infringement; and (iii) making copyrighted materials available to users. The Court granted an injunction to restrain Newzbin Ltd from infringing the claimants’ copyright.

Newzbin Ltd was subsequently wound up and its website ceased operations. Soon thereafter, a website emerged at the same web address operating under the name “Newzbin2”, but in a similar manner as Newzbin. However, the operator’s identity was unknown.

The claimants then pursued an action under section 97A of the Copyright, Designs and Patents Act 1988 (“CDPA”) against the ISP, British Telecommunications plc (“BT”), seeking an order to compel BT to remove or disable network access to Newzbin2.

 

The Newzbin2 Case

Twentieth Century Fox Corp Ltd & Ors v British Telecommunications plc [2011] EWHC 1981 (Ch) was the first case to test section 97A of the CDPA. The provision, an implementation of Article 8(3) of European Parliament and Council Directive 2001/29/EC, empowers the High Court to issue an injunction against a service provider where that service provider has actual knowledge of another person using their service to infringe copyright.

BT argued that their subscribers used the services of Newzbin2, and not BT’s, to infringe copyright. BT contended it was merely a provider of internet access, and it was Newzbin2’s services that allowed users to download materials from the site. The Court disagreed with BT and ruled that BT’s users were using BT’s services as much as Newzbin2’s in their downloading activities.

In respect of the element of “actual knowledge”, the High Court rejected BT’s contentions and held that it was not essential to prove that the ISP had actual knowledge of a specific infringement of a specific copyright work by a specific individual. The Court further held that it was sufficient to show that the ISP had actual knowledge that one or more persons were using its service to infringe copyright.

The Court awarded judgment in favour of the claimants and granted an injunction ordering BT to block its users’ access to Newzbin2.

 

The Pirate Bay case

Following the groundbreaking decision of the High Court in Newzbin, it did not take long for members of the music recording industry to follow suit with Dramatico Entertainment & Ors v British Sky Broadcasting Ltd [2012] EWHC 268 (Ch). Injunctions were sought by record companies against multiple ISPs, including BT. The targeted infringer in this case was The Pirate Bay (“TPB”), a website accused of facilitating illegitimate file sharing by their users on a peer-to-peer (“P2P”) network.

P2P, as the name implies, is a file-sharing network that operates by users sharing or exchanging data or files directly from each other’s computers. This is distinct from downloading data from a hosting website, such as Newzbin2.

In order to download the desired material, a P2P user has to first obtain a corresponding “torrent file” or “seed” which contains information to enable the user to track and locate other users sharing the desired file. Once the other users are identified, the downloader may then begin to download the data from these users. Downloaders of data on a P2P network also act as uploaders at the same time, i.e. as data is being downloaded on a computer, it is automatically uploaded and shared from the computer with other P2P users.

In this case, TPB serves a P2P network called “BitTorrent”. TPB catalogued, indexed and arranged torrent files for all types of content, including audio and visual materials, thus making it easier for users to search for torrent files of materials that they sought to download.

Before deciding whether injunctions should be granted against the ISPs, the High Court considered whether P2P users, and the operators of TPB, had respectively infringed the claimants’ copyright. The Court was of the view that P2P users, acting both as downloaders and uploaders of data, infringed the claimants’ copyright by copying and making copyrighted materials available to other P2P users. Referring to the Newzbin case, the Court also concluded that the operators of TPB were liable for the tort of authorising copyright infringement and as joint tortfeasor for inducing, inciting or persuading its users to commit infringement of copyright.

Having established copyright infringement, the High Court on 27 April 2012 granted injunctions and ordered five of the ISP defendants to block access to TPB. BT was not included in this order as it had been granted more time by the Court to respond to the order to block TPB.

 

AUSTRALIA: ROADSHOW FILMS v IINET

In Australia, the High Court of Australia arrived at a different conclusion in Roadshow Films Pty Ltd & Ors v iiNet Limited [2012] HCA 16.

The claimants were owners or licensees of copyright in films and television programmes. The defendant was iiNet Ltd, an ISP in Australia. The claimants had previously issued notices to iiNet demanding that warnings be given to P2P users who infringed the claimants’ copyright, or that these users’ accounts be suspended or terminated. iiNet refused to comply. Hence the lawsuit was filed.

The claimants relied essentially on section 101 of the Australian Copyright Act 1968. The provision prescribes that copyright is infringed by a person who, not being the owner of the copyright, does or authorises any act comprised in the copyright of a work. It was the claimants’ position that iiNet had authorised its users to infringe the claimants’ copyright by failing to terminate the account of its copyright infringing users, specifically the P2P users.

On 20 April 2012, by a unanimous decision, the apex court in Australia found that iiNet did not authorise its users to infringe the claimants’ copyright. The Court took into consideration the fact that iiNet, as an ISP, did not possess the technical power to prevent its users from infringing copyright, such as taking down or removing infringing material stored on a user’s computer, or to filter or block the communication of that material over its internet service. It only had the contractual ability to suspend or terminate users’ accounts, and the mere failure of iiNet to do so did not amount to authorisation.

The Court also determined that the allegations of infringement in warning notices issued by the claimants to iiNet were not supported by adequate information to justify iiNet taking actions to warn or suspend the infringing users’ accounts.

 

COMMENTARY

The different lines of decision of the English and Australian courts reflected in the above cases may be attributed to the fact that the Australian Copyright Act 1968 does not appear to have a provision that is similar to section 97A of the CDPA, which allows the courts to grant injunctions against ISPs.

The English courts may have felt more compelled to come down hard on the ISPs owing to the force of section 97A and the relevant EU directives. The Australian claimants on the other hand had to base their claims against ISPs on the traditional grounds of copyright infringement, i.e. to prove that a particular ISP had authorised the infringing activities by its users. Section 97A of the CDPA, in comparison, appears to set a lower threshold that only requires a claimant to show that the ISP had actual knowledge that its services were being used for copyright infringement.

It remains to be seen whether the Malaysian courts will allow injunctions of such nature to be granted against Malaysian ISPs. On this note, it is worth mentioning section 43H, which came into effect on 1 March 2012 along with a raft of other amendments to the Copyright Act 1987.

Section 43H empowers a copyright owner to notify an ISP of any infringing materials and to require such materials to be removed or that access to it be disabled by the ISP. However, the provider of the removed material is equally given the right to serve a counter-notification on the ISP. Upon receipt of the counter-notification, the ISP is required to restore the material or access to it within ten days, unless the issuer of the notification informs the ISP within the ten-day period that an action has been filed for an injunction to restrain the issuer of the counter-notification from infringing his copyright.

It would appear that section 43H has limited force against infringers due to its being an administrative measure. It is unlikely that section 43H will be sufficient to form the basis for an injunction to be issued against a Malaysian ISP unless it refuses to comply with the take-down notification issued by a copyright owner.

As with Australia, Malaysia does not have a provision which is similar to section 97A of the CDPA within its statutory framework. This further limits the possibility of the Malaysian courts adopting an aggressive stance against ISPs without statutory reform.

 

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