By Rufina Cheung (Portfolio Lead – Commercial Law) of Wolters Kluwer
The court has decided what copyright owners can, and cannot, demand from infringing BitTorrent users in the Dallas Buyers Club case. The copyright owners can demand the purchase price of a copy of the downloaded film, and they can demand money to cover the cost of discovering the infringers’ identity. However, they cannot demand damages equating to a licence fee for uploading the film via BitTorrent, and they cannot demand additional damages based on the number of copies of other films that had been downloaded by each infringer. Interestingly, the court also suggested that infringers could be liable for further downstream infringements: Dallas Buyers Club LLC v iiNet Limited (No 4) (2015) AIPC ¶92-493;  FCA 838 (Dallas Buyers Club 4) at –, , , .
Other key points and practical implications of this case are as follows:
- Courts taking steps to prevent speculative invoicing: This case demonstrates that courts are willing to take a realistic approach to calculating the damages that can plausibly be sued for, and take robust steps to prevent speculative invoicing using identifying information obtained through preliminary discovery. For example, the court rejected a claim for licence fees as being based on a surreal scenario where the infringer would have sought permission to share the film over BitTorrent and paid a fee to do so: .
- Courts considering whether monetary demands could plausibly be sued for: Australian courts should not supervise proposed letters to potential infringers, except to impose conditions to safeguard privacy, and to refuse to order the release of identifying information for the purpose of making monetary demands which could not plausibly be sued for: , .
- Evidence of demands required: Evidence of proposed demands will be required upfront in applications for preliminary discovery in the future: .
- Large bond can be required from foreign copyright owners: If a foreign entity applies for preliminary discovery, the court will require it to give security for its undertaking that it will only use the identifying information for the specified purposes (eg a large $600,000 bond to ensure the foreign copyright owners only make permissible demands): –.
- Judge may stay on the case: A judge in a preliminary discovery application may require future legal proceedings to be brought before them: .
- Interaction with online piracy code: This case needs to be understood in the context of the proposed online piracy code. Under this code, residential fixed line internet consumers who have allegedly infringed copyright will receive an escalating series of infringement notices. If they receive three notices within 12 months and a copyright holder applies to the court for preliminary discovery seeking to find out their identity and contact details from an ISP, the ISP will need to act reasonably to assist the copyright holder’s application. However, the decision whether to grant preliminary discovery will still be made by the court. Therefore the Dallas Buyers Club cases will be partly overtaken by the “facilitated preliminary discovery” court process in the code, but they are still relevant. Once the notice scheme commences, copyright holders will probably use the notice scheme before applying for preliminary discovery. If the notice scheme is used, ISPs are unlikely to oppose the preliminary discovery application, and therefore cases will probably be smoother, faster and simpler. In light of the Dallas Buyers Club cases, it now seems more likely that the Federal Court or the Federal Circuit Court will still choose to impose privacy safeguards, and assess the demands that the copyright holders plan to make of internet customers, in future cases brought after the code commences.
On 8 April 2015, a “final” version of the code was submitted for registration by the Australian Communications and Media Authority (ACMA). However, agreement has not yet been reached on the issue of cost-sharing. Agreement is needed before the code and scheme can begin operating. If it is registered, the notice scheme will commence on 1 September 2015 (or earlier). The code is discussed further in 89-013 of CCH’s Australian Industrial and Intellectual Property service.
This case will be reported in CCH’s Australian Industrial & Intellectual Property service, and may be cited as Dallas Buyers Club LLC v iiNet Limited (No 4) (2015) AIPC ¶92-493;  FCA 838.
An extended version of this article was first published in CCH’s Australian Intellectual Property Law Tracker on Friday 14 August 2015.