AFACT v iiNet: Michael Malone grilled on copyright breach policy

ISP CEO takes the stand as the case resumes at the Federal Court of Australia

iiNet chief executive officer, Michael Malone kicked off iiNet’s case as the first witness in its legal battle with the Australian Federation Against Copyright Theft (AFACT) in the Federal Court today.

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.

Malone told the court that as a utility provider, iiNet had no way of checking whether its customers were committing this type of behaviour, but confirmed the customer who is the subject of the 12 breach notices was and is still an iiNet customer.

On oath, Malone admitted that iiNet has not taken steps to terminate the customer’s broadband contract nor could it not confirm whether the customer was still using iiNet’s broadband service to commit further copyright infringements.

Questioned on whether iiNet’s refusal to terminate the customer’s contract and its policy not to forward copyright infringement notices to its customers is a tactical ploy to uphold iiNet’s “bargaining position”, Malone hit back saying that such actions would create an imbalance between copyright holders and users of copyright.

When grilled about iiNet’s user policy, Malone admitted that while he was not aware of all the policies of the various companies under the group, he was informed that Westnet had a policy of forwarding emails to Westnet customers notifying them of copyright infringement. He told the court that on notice of this particular Westnet policy, he requested that Westnet no longer send out these types of emails to its customers because “they were not line with iiNet policy”.

On being called to answer question regarding correspondence emails with Westnet senior officials on this issue, Malone answered that Westnet’s policy had been in operation before its acquisition and that he had never made an inquiry as to the operation of this policy.

Malone’s answer opened the floor for the prosecution to question the “seriousness” to which he accepts and performs his role as director of iiNet. In avoiding direct questions about his duties as iiNet director and his knowledge of Westnet’s policy, Bannon SC asked Malone, “Why are you fencing with the court?”

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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Tags iiNetAustralian Federation Against Copyright Theft (AFACT)AFACT v iiNetFederal Court of Australia

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