On 7 April 2015, Justice Perram of the Australian Federal Court delivered his judgment in the case of Dallas Buyers Club LLC v iiNet Limited. Dallas Buyers Club LLC (DBC) had applied to the Court for a “preliminary discovery” order to force iiNet, Dodo, Amnet and a number of other internet service providers (ISPs) to disclose a total of 4,726 names and contact details of account holders whose internet accounts DBC alleges have been used to infringe the copyright in the film Dallas Buyers Club (Film). Thomson Geer acted for the ISPs.
Justice Perram ordered the ISPs to provide preliminary discovery to DBC of the names and addresses of the specified account holders but limited the use that DBC is permitted to make of the information. He also proposes to vet the standard letter that DBC will be permitted to send to account holders to ensure that DBC does not engage in “speculative invoicing”, as it has done in other countries. Perram J had been given evidence of very aggressive letters sent by DBC’s lawyer in the United States to identified account holders suggesting that they were liable for substantial damages for copyright infringement and offering to settle for a smaller sum which was still very much greater than DBC might actually have recovered in any actual court case. Perram J noted that this practice might be illegal in Australia.
Finally, and importantly for the ISPs, DBC will be required to pay the ISPs costs of the court case and the operational costs that they incur in complying with the preliminary discovery order.
Following are some important points that emerge from this case that will interest ISPs and rights holders.
- The case does not “open the floodgates” for rights holders to take action against individuals who illegally download films and other copyright material. Rights holders will still need to obtain court orders on a case by case basis requiring ISPs to hand over account holder details.
- The threshold for a successful preliminary discovery order is low (much lower than proving an infringement claim). A rights holder needs to provide the court with sufficient evidence that the copyright infringement case would have some prospect of succeeding – that it is “a real case which is not fanciful”. They don’t need to prove that infringement has actually occurred in order to obtain a preliminary discovery order.
- DBC was able to meet this test because it provided the court with written evidence which included:
– the IP addresses from which the Film allegedly had been shared with others using BitTorrent;
– evidence linking the IP addresses to accounts held by one or other of the ISPs; and
– expert evidence of the reliability of the software used to identify the IP addresses.
- The rights holder also must satisfy the court that it is either the owner, or the exclusive licensee (under a written agreement), of the copyright in the work that has been infringed. If they cannot do this, they will not have the necessary “standing” to commence copyright infringement proceedings or apply for preliminary discovery. DBC had some difficulty with this step during the hearing but the court ultimately accepted that either it or its parent, Voltage Pictures LLC, had standing.
- This means that rights holders should make sure that they have clear evidence of the chain of title in the copyright in works for which they may wish to take infringement action. It is also important to make sure that this evidence is in a form that is admissible as evidence in Australian courts. A certificate of ownership that DBC put forward was not accepted by the court because it was not properly worded in accordance with Australian law.
- The ISPs in this case will have to disclose to DBC the name and address of each of the specified account holders. Rights holders are not entitled to access email addresses or phone numbers of account holders under the preliminary discovery rule that applied in this case.
- An ISP that discloses account holder information to a rights holder without a court order will contravene privacy legislation unless the account holders have consented to the disclosure. Justice Perram noted the seriousness of the privacy issues and indicated that he will impose privacy obligations on DBC limiting its use of the account holder information provided to it.
- ISPs will not be in breach of their privacy obligations by electing not to oppose a preliminary discovery application. This means that a more cost effective approach for rights holders (especially considering the ruling on costs in this case) would be to work with ISPs to agree on conditions for discovery ahead of filing an application. Thomson Geer is well placed to assist with this.
- ISPs should be confident that rights holders will be required to pay their costs of responding to an application for preliminary discovery as well as the ISPs’ operational costs in complying with discovery orders that are granted.
- An ISP that does not respond to an application for preliminary discovery runs the risk that orders will be made against it in its absence that may not be as favourable as those obtained in this case.
- Normally, an application for preliminary discovery should be a simple process with no cross-examination of witnesses. The DBC case was unusual because some witnesses were called to give oral evidence and were cross-examined.
- One effect of the judgment in this case will be to cast doubt on the legality of speculative invoicing by rights holders in Australia. The eventual orders that Justice Perram makes on the form of the standard letter that he will permit DBC to send to account holders will provide guidance for rights holders.
- There is another context in which preliminary discovery may be available under the Federal Court Rules. Sometimes a rights holder may have a reasonable belief that it has a case against an identified alleged infringer, but doesn’t have sufficient information to decide whether or not to commence proceedings. If the rights holder reasonably believes that the alleged infringer has control of documents that are directly relevant and would assist the rights holder in making the decision, the rights holder can apply to have those documents discovered to it.
Thomson Geer is happy to provide more detailed briefings to organisations and individuals who consider that they may be affected by the ramifications of the judgment in this case. Should you have any queries, please contact:
Graham Phillips | firstname.lastname@example.org | +61 3 9641 8639
Paul Noonan | email@example.com | +61 3 9641 8603