The Unsolved Problem of Online Infringement

The new-found celebrity status of Kim Dotcom and his lavish lifestyle, arrest and multiple bail hearings have, if nothing else, focused the spotlight on the ongoing dilemma of how to deal with online infringement of IP rights.

So have the recent US bills − SOPA (Stop Online Piracy Act) and PIPA (Protect IP Act). SOPA is principally aimed at torrent hub sites which provide illegal downloads but are largely outside the reach of US companies and enforcement agencies. The 1998 Digital Millennium Copyright Act (DCMA) prevents online infringement in the US, with ISPs being protected, provided they respond to a "takedown notice" from a copyright holder and remove illegal content. However, the problem is that if the content is provided by an overseas service, as many of the big players are, the DMCA is less effective.

SOPA proposes to permit content owners to require US-based ISPs to stop providing their services to operators like The Pirate Bay and Kim Dotcom’s Megaupload site (even though he says it does not reproduce or copy material and is more like YouTube), thereby effectively choking their operation. The concern that ISPs have raised is that they could be found liable for the activities of their users. The SOPA bill requires ISPs to set up a process through which interested parties can notify them that one of their customers is an internet site involved in unlawful downloads, thereby obliging the ISP to cut off services to the target site within five days. ISPs would also be required to block access to sites that law enforcement officials identify as pirate sites.

The US is thus attempting to address the problem with legislation. The US government has been criticised in some quarters for being overly zealous in seeking to protect IP. I would suggest, however, that it is not easy to find the right balance between creators of content and powerful information aggregators/brokers and providers of social networks such as Google and Facebook.

Whatever one's views might be, what is clear is that the US government is genuinely concerned about this issue. For example, in his recent annual State of Union address, President Obama announced a new Trade Enforcement Unit that includes anti-piracy and anti-counterfeiting capabilities as part of its drive to tackle counterfeit or unsafe goods crossing its borders. This follows Secretary of State Hillary Clinton’s recent explanation that there is no contradiction in the strong enforcement of IP rights and efforts to ensure freedom of expression on the internet.

New Zealand has attempted to address the problem to some extent with the recent Copyright Infringing File Sharing provisions, by providing its own "takedown notice" procedure, accompanied by a limited civil remedy for unauthorised file-sharing activities. On the other hand, in Australia the attention is currently fixed on the highly anticipated Australian High Court decision in Roadshow Films Pty Limited v iiNet Limited [2011] HCATrans 210 (12 August 2011).

In December 2011 the Court heard an appeal against a Full Federal Court decision. A decision is expected any time now.

For those interested, a transcript of the High Court application for special leave is available online at

The central issue is when an ISP should be liable for authorisation of online infringement through the activities of its customers. The action was brought by a group of large film studios against the ISP iiNet, alleging infringement of copyright. The appellants contend that the Full Federal Court approached the issue of authorisation incorrectly and was wrong to find that iiNet did not authorise its customers’ copyright infringements. Also in issue is just how much knowledge an ISP needs to have. In this regard, the Court is expected to decide and clarify whether the industry notification procedure and iiNet’s responses were adequate under the circumstances.

Unfortunately, important as this decision is, it is unlikely to resolve all outstanding issues in this difficult area. I expect that the murky line between legal enablement/facilitation and unlawful aiding and abetting/authorisation will remain and require determination on a case-by-case basis.

Clive Elliott is the convener of the Law Society’s Intellectual Property Committee and a member of the management board of the Intellectual Property Society of Australia and New Zealand. A registered patent attorney, barrister and arbitrator, he is a past co-chair of the International Bar Association’s Intellectual Property and Entertainment Law Committee and a past council member of the IBA’s Legal Practice Division.

This article was published in LawTalk 789, 17 February 2011, page 17.