Stunning blow for Dallas Buyers Club in copyright case

ISP subscribers' details are safe for now

ISPs will for now not be compelled to hand over the details of customers alleged to have illicitly downloaded the movie Dallas Buyers Club.

In a dramatic twist, a Federal Court judge has for the time being stayed an attempt by the rights holders of Dallas Buyers Club to compel a group of ISPs, including iiNet, Dodo and Internode, to hand over the details of alleged downloaders.

Although the judge's decision does not rule out Dallas Buyers Club LLC being able to contact downloaders in the future, the grounds on which it is able to seek a financial settlement have been severely pared back by today's ruling.

Dallas Buyers Club LLC had intended to contact downloaders and offer them the chance to reach a financial settlement with the studio, in return for it promising to not take court action against them for copyright infringement.

Today's ruling sets an important precedent against the practice of so-called 'speculative invoicing': The attempt by rights holders to obtain significant sums of money by threatening potential lawsuits.

The ruling effectively means that movie studios wishing to be compensated for the impact of piracy potentially will only be able to seek only the cost of a copy of the film illicitly download and the cost of contacting the downloaders.

Earlier this year Justice Perram granted the application for preliminary discovery. However, before ISPs were forced to hand over customer details, the judge put a stay on the order until the court was satisfied that DBC would not engage in speculative invoicing.

Perram scrutinised the draft letter that DBC proposed to send to alleged downloaders and the methodology that the company proposed to use to devise financial settlements.

"The purpose of the stay and the Court’s consideration of the correspondence was to ensure that DBC did not engage in what the respondent ISPs referred to as ‘speculative invoicing’," Perram's ruling today stated.

"DBC has now sought to lift the stay and has proffered to the Court several versions of what it proposes to say to the account holders, together with an undertaking only to communicate in those terms," Perram ruled.

"I have concluded that what DBC proposes ought not be permitted."

Perram's judgement acknowledged that DBC LLC may have a right to sue people who downloaded Dallas Buyers Club illicitly.

"In cases such as the present, that inquiry will devolve into an examination of whether the individual monetary demands which are proposed to be made could plausibly be sued for," the ruling states.

"If they could not, then it would not be a proper exercise of the discretion [permitted to the court] to permit release of the account holders’ information."

Justice Perram today ruled that DBC LLC would not be able to seek money from downloaders using two of the four elements of the formula the movie studio had devised for proposed settlements.

DBC has "not rushed to make its positions clear" on the amounts it would demand from account holders. The letter drafted by DBC and a draft phone script for recipients of the letter who contacted DBC to settle did not include any indication of the amounts either, the ruling notes.

The judge declined to publish for confidentiality reasons the figures DBC proffered in regards to potential financial settlements.

He said that the studio indicated the amount it would seek from downloaders would be based on the cost of a copy of the film and a claim for damages arising from the cost to DBC from obtaining an infringer's details.

However, DBC also wanted to take into account the number other films illicitly downloaded by a subscriber, including those to which DBC does not hold the rights, when calculating a proposed settlement. In addition from uploaders it wanted a sum based on the cost of obtaining a commercial distribution licence for the film.

"DBC submitted that it was entitled to obtain a one-off licence fee from each uploader on the basis that each was engaged in the widespread distribution of the film," Perram's judgement states.

"It is not trespassing on DBC’s legitimate confidentiality concerns to say that the sum sought by DBC in relation to this head of damages was substantial," the judgement states.

DBC submitted that users who distributed the film over BitTorrent might have in other circumstances sought a distribution licence to do so — a proposition "so surreal as not to be taken seriously" the judgement states.

In the absence of an appeal by DBC, the judge said he would lift the stay if DBC undertook to only contact downloaders in relation to paying the cost of legally obtaining a copy of the film and a portion of the costs involved in contacting downloaders and lodge a $600,000 security to ensure they abide by the decision.

Today's ruling met with a positive reception from iiNet's CEO.

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