Dallas Buyers Club – end of a chapter?

The Dallas Buyers Club application appears to have drawn to an end, and with it another chapter in rights holders’ attempts to respond to file sharing.

In December 2015, Justice Perram of the Federal Court rejected a further attempt to obtain customer details, after previously requiring undertakings and a bond before preliminary discovery would be ordered (see our post on the earlier decision here). The applicants (of which Dallas Buyers Club LLC claims to hold rights to the Dallas Buyers Club film) again sought to lift the stay on the preliminary discovery order to permit them to write to account holders (suspected of sharing the film). DBC sought to demand from these account holders amounts including a hypothetical non-exclusive licence fee and additional (punitive) damages. Justice Perram identified a number of issues and rejected the attempt to re-ventilate a number of issues previously canvassed. One of these issues, the attempt to demand additional damages, is explored below.

Justice Perram made a guillotine order, by which the entire proceeding would be dismissed if DBC did not make a further application by 11 February 2016. That deadline has now passed and accordingly the proceeding has been dismissed. The legal advisers for DBC are reported in multiple sources to have stated that DBC is no longer pursuing the application.

The December decision can be read online here: Dallas Buyers Club LLC v iiNet Limited (No 5) [2015] FCA 1437.

What happens next?

The Dallas Buyers Club application was just a small chapter in rights holder responses to online copyright infringement. It was confined to a limited application for preliminary discovery, and did not involve any actual claim for damages against particular alleged infringers, with Justice Perram emphasising that it was “not Ben-Hur” (and see our previous post on the nature of preliminary discovery here). At this stage, all that was sought was the contact details of account holders in order to send letters of demand. While DBC are not prevented from pursuing any particular account holder for damages if they can be identified, the preliminary discovery application was brought because of the considerable difficulty faced by rights holders in identifying account holders without ISP data.

Applications for preliminary discovery to obtain customer details may still be brought by other rights holders. Justice Perram was prepared to order preliminary discovery in principle, but on the basis of his Honour’s reasons for rejecting the first proposed letters (particularly on the issue of which heads of damage were permissible and impermissible – see our post here), the decision to seek preliminary discovery may now be driven by the allowable demands. Justice Perram found that it was at least plausible for DBC to claim the cost of purchasing a copy of the film and damages arising from the cost to DBC of obtaining the details of account holders (and see our discussion of additional damages below).

Rights holders may still consider it worthwhile to pursue such preliminary discovery claims, in particular, if they are based locally. DBC, which had no presence in Australia, faced the additional hurdle of having been required to pay a bond to the court to secure the undertaking to use the information obtained to demand only the permissible heads of damages.

Preliminary discovery will therefore continue to be of interest alongside emerging areas such as website blocking.

The potential for additional damages

As the cost of a permanent copy of a film and a share of the costs of a preliminary discovery application are likely to be minimal, rights holders may seek to demand damages beyond these basic costs from alleged infringers. In the December application, DBC sought to again demand additional damages under the relevant provisions of the Copyright Act in its proposed letters. In previously determining this head of damage to be impermissible, Justice Perram had rejected DBC’s proposed consideration of other films which the account holder was alleged to have downloaded in calculating the additional damages to be sought, and DBC now said that its other arguments in support of additional damages had been overlooked.

Justice Perram considered whether the matter could be revisited as a matter of procedural entitlement, and reviewed his Honour’s previous reasons which explored the issue of additional damages. Justice Perram had previously indicated that it was “plausible” that additional damages could be sought against particular alleged infringers as a deterrent. DBC now provided the court with specific figures on the additional damages which might be sought.

Ultimately Justice Perram refused to allow demands for additional damages to be made and concluded that DBC would be unable to particularise the facts, matters and circumstances that were alleged to give rise to additional damages, including the extent of infringement by account holders. The data collected by DBC demonstrated only that a particular IP address was involved in downloading a piece of the film. A discussion of the software used and the method of data collection was included in the reasons for the original decision in April 2015 (and see our post on that decision here). The nature of the protocol is such that files are broken down into small pieces which are shared individually. Justice Perram did not permit DBC to demand additional damages on the basis that without more data, DBC would be unable to show sufficient infringement (beyond mere pieces) which might justify additional damages.

The court’s reasons suggest that with adequate data concerning a particular account holder, the inclusion of a demand for additional damages might be permitted in a letter. Rights holders considering preliminary discovery should carefully consider the system of data collection and ensure that they are able to particularise any claim for additional damages.