Australian ISPs Ordered to Hand Over Customer Details in P2P Copyright Action

Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317

In November 2014, IP Law Watch reported on attempts by the rights holder of the film Dallas Buyers Club to compel Australian ISPs to disclose the identities of BitTorrent users who allegedly shared copies of the film.

On 7 April 2015, Justice Perram of the Federal Court of Australia ruled in favour of Dallas Buyers Club LLC and Voltage Pictures LLC, ordering six ISPs to disclose the details of 4,726 customers.

The judgment has been widely reported in the Australian media as a landmark decision and a game changer in the battle regarding online piracy.  In fact, the kind of order granted by Justice Perram is far from revolutionary.  For many years, civil procedure rules at both state and federal levels have enabled a party to seek orders requiring a third party to produce documents or give evidence as to the identity of a prospective respondent.  There are decisions going back as far as the 1970s in which this kind of preliminary discovery order has been granted (see for example Exley v Wyong Shire Council (10 December 1976, Master Allen, unreported) and Stewart v Miller [1979] 2 NSWLR 128).

The requirements for obtaining a preliminary discovery order of this nature are not onerous.  The prospective applicant is not required to establish a prima facie case or even each element of the relevant causes of action giving rise to the relief sought against the prospective respondent.  The prospective applicant need only show it “reasonably believes it may have a right to relief”.

There were two novel aspects of the application in the Dallas Buyers Club case:

1. This is the first occasion in Australia that major litigation has been pursued in respect of individual peer-to-peer file sharers. This is primarily because it is an uneconomical exercise.  Preliminary discovery applications are expensive and a prospective applicant must ordinarily pay the costs of such an application.  As it turns out, this case was no different and Justice Perram ordered the rights owners in Dallas Buyers Club to pay the ISPs costs (in addition to the rights owners having to pay their own costs).  These costs will be over one hundred thousand Australian dollars just for this application.

Assuming a party obtained customer details linked to a particular IP address at a particular point in time, proving that a particular person used that account to engage in copyright infringement is an evidentiary hurdle.  Attempts to take action against individual file sharers based on IP addresses have led to some very embarrassing results in other jurisdictions, such as targeting a deceased 83 year old great-grandmother.

If liability is proven, only nominal damages are likely to be awarded. As we previously noted, under Australian copyright law, damages are likely to be limited to the copyright owner’s lost licence fee.  Although exemplary or ‘additional’ damages are available in Australia, these are discretionary and are unlikely to be awarded in cases involving only private or domestic copying.

2. The other unique aspect of this case was the basis upon which the ISPs opposed the application. The ISPs argued that it was unlikely that any real case would be brought against the alleged infringers and that customer information was, in fact, being sought in order to target the users with speculative invoices.  That is, the applicants would write to the account holders demanding a large sum of money and offering to settle for a smaller sum which was still very much in excess of what might actually be recovered in any actual suit.

Justice Perram expressed doubts whether this practice would be lawful in Australia.  In order to address concerns that account holders were potentially vulnerable to abuse, His Honour proposed a novel solution, requiring the applicants to submit for the Court’s approval a draft of any letter of demand to be sent to account holders.

Speculative invoicing is only profitable for rights holders if a certain percentage of alleged infringers submit to extravagant demands for payment. It is highly unlikely the Court would allow a letter to take a form that would produce such a result.  Accordingly, what has been reported as a victory for rights holders could be a somewhat pyrrhic one.