Dallas Buyers Club – Court to order the (conditional) disclosure of customer details following allegations of copyright infringement

On 7 April, Justice Perram of the Federal Court of Australia found that iiNet and five other ISPs should provide the names and addresses associated with 4,716 IP addresses to Dallas Buyers Club and Voltage Pictures. Dallas Buyers Club and Voltage (with rights in the movie, Dallas Buyers Club) had alleged that the IP addresses had been used to infringe copyright in Dallas Buyer Club, the Oscar-award winning movie. However, Justice Perram imposed two conditions upon the use of the customer information, namely that the privacy of those customers must be protected and that any letters to be sent to those customers must be first approved by the Court.

The decision can be read online here: Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317

What is preliminary discovery?

To understand the decision, it is first important to take a step back and understand the nature of the proceeding, which is one of preliminary discovery:

Preliminary discovery is a court process by which a person (a “prospective applicant”) can obtain particular documents or information to facilitate the commencement of proceedings.   There are two types of preliminary discovery:

  • under the first type (rule 7.23), the person seeks information that will enable it to decide whether they have a right to obtain legal relief and to decide whether to start a proceeding against another person.
  • under the second type (rule 7.22), a person believes that they have a right to legal relief, but does not know the details of the respondent. That person can seek information from a third party that can help ascertain the description of the prospective respondent.

The Dallas Buyers Club case is in the second category: Dallas Buyers Club and Voltage Pictures said that they had identified 4,726 IP addresses from which their film was shared online using BitTorrent, and that this was a copyright infringement. However, they could not identify the individuals by way of their IP address and believed that the ISPs could identify the relevant account holder.   If the account holder was not the person who infringed copyright, the account holder could assist in identifying the actual infringer.

Why was preliminary discovery ordered?

To be successful in an application for preliminary discovery, the rights holders had to satisfy the court that:

  • they reasonably believe that they may have a right to obtain relief against a “prospective respondent”;
  • they cannot identify the prospective respondent; and
  • the ISPs know or are likely to know the description of the respondent, or have control of a document that would help to ascertain the prospective respondent’s description.

It is worth noting that this “prospective respondent” is not iiNet or any other ISP. Justice Perram also found that it is not necessarily the customer that is identified: it is the person who allegedly infringed copyright. For an order for preliminary discovery, it was enough if the identification of the customer assists in identification of the actual person who had shared the film; the customer may be able to assist to identify the actual wrongdoer.

Justice Perram found that the rights holders were entitled to Preliminary Discovery:

  • The evidence on the detection of alleged infringements using the “Maverik Monitor” software was sufficient to show there was a real possibility that the IP addresses had been utilised by end users who were breaching copyright by making the film available online using Bit Torrent.
  • iiNet unsuccessfully argued that there could be no copyright infringement.   While only a “sliver” of a film was shared by each account holder (due to the nature of bit Torrent transfers), this provided enough evidence for a preliminary discovery application that there was copyright infringement. In particular, the issue is whether the end-user might be involved in making the film available online. This decision is not a finding that there was copyright infringement, but a decision that the contemplated suit had some prospect of succeeding.
  • While there was some confusion over the ownership of the film, both Dallas Buyers Club and Voltage Pictures had a reasonable beliefthat they might have a claim or copyright infringement and were able to apply for preliminary discovery.
  • Justice Perram rejected an argument that it was unlikely any real case would be brought against infringers (given the value of each film was around $10). His Honour stated that preliminary discovery was not a process to work out how good claims are, noting that it may be plausible to obtain aggravated damages, which recognises the need to provide deterrence.

What do the conditions on the use of customer details mean?

While the rights holders were entitled to Preliminary Discovery of customer details, Justice Perram imposed some novel conditions upon the use that could be made of those details.

First, since it was important to protect the privacy of customers, the customer details should be protected. Without leave of the court, they can only be used for recovering compensation, specifically, to identify end-users, sue end users and negotiate with end-users regarding their liability for infringement.

The second condition was that the rights holders must submit to the Court a draft of any letter they propose to send to account holders associated with the IP addresses. Justice Perram found that there was “no doubt” that Voltage Pictures had engaged in “speculative invoicing” in the past other countries. This consisted of very aggressive letters indicating that the account holder was liable for substantial damages and offering to settle for a smaller sum. While an employee of Voltage gave evidence that this would not be happening in Australia, Justice Perram proposed to impose the condition on the rights holders to prevent speculative invoicing.   This condition was similar to conditions imposed in by Courts in the UK and Canada in similar circumstances.

Wider Context

There has been a great deal of media attention on this case (as was noted by Justice Perram). The decision comes at an interesting time of development for copyright law and online piracy:

  • On 8 April (one day after the Dallas Buyers Club decision), the Communications Alliance published the Copyright Notice Scheme Code 2015, a code of practice, designed to help drive down the rate of online copyright infringement by the introduction a notice scheme.
  • On 26 March 2015, the Copyright Amendment (Online Infringement) Bill was introduced into Parliament, which propose a new provision to enable the Federal Court to order that ISPs block access to overseas websites with the primary purpose of infringing copyright.