AFACT v iiNet: Malone says no legal ability to disconnect users (updated)

In its case against the Australian Federation Against Copyright Theft (AFACT) at the Federal Court of Australia iiNet CEO Michael Malone said despite “compelling evidence” suggesting users were downloading illicit files, such as child pornography, the ISP did not have the legal ability to disconnect users.

In today’s cross-examination, AFACT Barrister Tony Bannon SC asked whether in such a case iiNet would terminate their contract with a user. Malone said they would still have to refer it to a properly empowered authority.

The ISP's CEO also said that, in the case of civil offences like those alleged by the prosecution, iiNet’s ability to terminate a contract was a right, rather than an obligation.

“Why would we comply with things we don’t have to comply with?” he later said.

According to Malone, under the Copyright Act, Category A activities (that is, where the ISP only acts as a conduit, rather than storer of copyrighted information) do not require compliance and account termination on the part of the ISP, unlike other categories of infringement.

He also said that, under this category, they would legally not be able to act without reference to a higher authority, such as a court order.

The court also heard today that at no stage during initial correspondence between iiNet and rights holders in mid-2008 was an accusation of criminal offence made, because nothing was known about the size or possible commercial exploitation of the alleged copyright theft.

Yesterday in the witness box, Malone confirmed that he knew of the 5000 copyright breach notices iiNet received from AFACT concerning infringements from US copyright holders, including Universal Studios and Warner Bros, but admitted that he did not read each email notice “line by line”.

Referring to the 12 copyright infringement notices iiNet received for the movie, Pineapple Express for the period of November 2008 and August 2009, Studio Barrister, Tony Bannon SC cross-examined Malone on iiNet’s role in allowing its customers to commit copyright infringement in providing a broadband service that permits the download of films through BitTorrent.

The AFACT barrister, Tony Bannon today also showed iiNet CEO Michael Malone – who was in the stand for a second day – a blog post by head of rival Exetel, John Linton.

The case continues at the Federal Court this week.

The case so far:

The case started on October 6 but was adjourned by Justice Cowdrey so that Malone did not have to take the stand and then remain silent for two weeks until it resumed on November 2.

All evidence will be heard within the next two weeks, however Melbourne University Associate Professor of Law, Professor David Brennan, has said those interested should not expect a result for some time.

“Once the trial ends, it is highly likely that the court will reserve to take time to consider," Brennan told Computerworld. "In a case such as this, with both legal and commercial significance, it is likely that the period in which the court reserves to prepare its judgment will be measured in months rather than weeks.”

The case is expected to be taken to the High Court of Australia, regardless of who wins this round.

(Read some of the best posts from the first week and second week of the trial.)

In the first two weeks, AFACT, which represents over 30 film studios and TV broadcasters, introduced several witnesses including AFACT's expert witness, Nigel Carson, and representatives from four big film studios, Warner Bros, Paramount, Disney and Fox by video from Los Angeles.

Among many topics discussed the court heard the studios did have agreements in place with BitTorrent — the P2P network identified as being used by iiNet customers to share copyrighted files — but many of these had lapsed.

Paramount's Alfred Perry also revealed BitTorrent was not authorised to display the studio's logo. In iiNet's opening arguments, senior counsellor, Richard Cobden, said many of the studios had contracts with BitTorrent and their logos were displayed on its site.

The court heard the film studios had authorised AFACT or one of its representatives to become an iiNet customer and to download the studio's copyrighted files. AFACT denied authorisation was given. AFACT has previously said there were 94,942 iiNet customer copyright infringements in 59 weeks. iiNet has refuted this claim saying it is "artificially inflated”.

The case opening heard how an AFACT investigator had become an iiNet customer and was downloading copyrighted files. Documents witnessed by Computerworld revealed that iiNet staff were aware of the existence and identity of the customer.

Some of the legal issues at stake and the tactics employed by AFACT have their origins in a landmark copyright case involving the University of NSW library in 1975.

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