Justice Cowdroy of the Federal Court of Australia has just handed down judgment in Roadshow Films Pty Ltd v iiNet Ltd [2010] FCA 24 (iiNet Case), finding in favour of the respondent. As you’re probably aware, the iiNet Case centres on allegations of copyright infringement in connection with unauthorised downloads of films by iiNet’s subscribers using the BitTorrent protocol. The decision confirms the safe-harbours enjoyed by internet intermediaries that prevent them from having to police internet content and limits their responsibility for users’ conduct. Some huge ramifications for Australian service providers were avoided today. From his Honour’s summary reasons:

“iiNet is not responsible if an iiNet user uses [the BitTorrent] system to bring about copyright infringement … the law recognises no positive obligation on any person to protect the copyright of another”

I’ll post a more detailed analysis of the judgment once I’ve had time to digest it fully. For now, the essential points from his Honour’s reading of the summary (as liveblogged and twittered from Courtroom 18C) seem to be as follows:

• primary infringement: there were acts of primary copyright infringement taking place on iiNet’s network, by end users; however, these were not as numerous as the applicants alleged, and only consisted of a single intangible copy being made;
• landmark case: Cowdroy J was aware of the significance of the trial, the first of its kind in the world and ‘the first [Australian] trial to be Tweeted’;
• actual knowledge: iiNet did have actual knowledge of the primary infringements, but this was insufficient to ground authorisation liability;
• no authorisation liability: simply providing a ‘means of access to the Internet’ is not enough to authorise infringement, since iiNet has no effective control over its users’ conduct, could not prevent the acts of infringement, and did not approve of the infringement (it just provided a connection service);
• safe harbours: iiNet would have been entitled to rely on the safe harbours notwithstanding that it did not take action in response to the notices of alleged infringement; however, in the event, it did not need to;
• applicant’s claim fails: AFACT’s motion was dismissed with costs; and
• legitimate use: Cowdroy J expressly acknowledged that BitTorrent can be used for legitimate purposes.

Fittingly, iiNet CEO Mike Malone revealed the outcome on Twitter. Subject to what the full judgment actually says, iiNet (and Telstra, Optus, Internode and others) must collectively be breathing a sigh of relief right now. However, given that Senator Stephen Conroy has previously indicated that some from of regulatory intervention was likely in the event that iiNet prevailed, I wouldn’t rule out new legislation (or a ‘three strikes’ style industry code) in the future.

The case will almost certainly be appealed by the studios — I’ll update this post with the parties’ official comments shortly. Interestingly, iiNet’s shares have been placed in a voluntary trading halt until next Monday.

Update (10.26am): ah, this is why I love the internet. 30 minutes after judgment is handed down, an industrious attendee takes a blurry phonecam picture of the orders — perhaps borrowed from the bar table — and publishes it via Twitter. And here’s a transcription I made from here in Oxford:

[21] In summary, in this proceeding, the key question is: Did iiNet authorise copyright infringement? The Court answers such question in the negative for three reasons: first, because the copyright infringements occurred directly as a result of the use of the BitTorrent system, not the use of the internet, and the respondent did not create and does not control the BitTorrent system; second because the respondent did not have a relevant power to prevent those infringements occurring; and third because the respondent did not sanction, approve or countenance copyright infringement.

[22] I will now make my formal orders. For the reasons provided in the written judgment I make the following orders:

1. The Amended Application be dismissed.
2. Subject to Order 3 and 4, the Applicants pay the costs of the Respondent, including costs thrown away as a result of the Applicants’ abandoning the primary infringement claim against the Respondent. …

[23] I publish my reasons.

Cowdroy J
Sydney
4 February 2010

Update (10.44am): the ComCourts Portal just updated the file’s status to ‘Finalised — Dismissed’. Hopefully the judgment will be posted soon.

Update (10.54am): iiNet just posted a press release — rather demure in tone — ‘welcom[ing]’ the decision of the Federal Court, and more or less repeating Cowdroy J’s findings on liability. The reference to the Telecommunications Act is a little interesting; it all looks a little hastily prepared (and, one suspects, hastily reviewed by counsel). Nothing yet from AFACT.

We have never supported or encouraged breaches of the law, including infringement of the Copy Right Act [sic] of [sic] the Telecommunications Act. Today’s judgment is a vindication of that and the allegations against us have been proven to be unfounded …

So it has been business as usual for us and with the case now behind us we look forward to continuing to do what we do best — delivering innovative content and products and great customer service. … In relation to copyright holders, we conclude by again saying we do not and never have supported, encouraged or authorised illegal sharing or downloading of files in breach of the copyright laws.

Finally, we thank all those who have support [sic] us through this process, the iiNet staff, our loyal customers and investors, the internet industry and others and notably our legal team who worked tirelessly to achieve this important result today.

Update (11.42am): the judgment is now online at AustLii. I’ll read it in the morning and post some more specific comments.