Dallas Thieves Club – the harbinger of Australian anti-piracy law

On Tuesday 7 April 2015, Justice Nye Perram of the Federal Court of Australia handed down a landmark judgment which could change enforcement of copyright privacy forever. His Honour has compelled a number of internet service providers, including iiNet (the ISPs), to release the names and postal addresses of 4,726 of their customers whose IP addresses were used to illegally download the film Dallas Buyers Club. If the ISPs do not appeal the decision and the judgment stands, it will set a precedent that may encourage copyright holders to seek similar orders when looking to sue consumers for similar copyright infringement.

Dallas Buyers LLC and their parent company Voltage Productions LLC (together, Dallas Buyers), who own the copyright in the film, used software called ‘Maverik Monitor’ to trace the IP addresses of individuals who used BitTorrent networks to download the film. Dallas Buyers then applied to the Federal Court to compel the release of personal information of the account holders attached to those IP addresses.

Overseas, Dallas Buyers and other production companies have used such personal information to deliver what are known as ‘speculative invoices’ – threatening letters to the account holder, asserting that they are liable for a significant amount, but offering to settle for a much smaller amount (although still arguably more than what would be recoverable if they actually sued). In the United States, such “settlement fees” were known to reach up to US$7,000.

In this case, Perram J rejected the ISPs’ long litany of arguments and ultimately allowed Dallas Buyers’ application, albeit on two important conditions:

  1. The account holders’ personal information was only to be used to recover compensation for copyright infringement, and could not be disclosed for any other purpose; and
  2. A draft of any letter they proposed to send to those account holders would have to first be submitted to Perram J for his review.

Those two checks are critical safeguards against Dallas Buyers’ ability to pursue the account holders for compensation in any way they see fit. The first was a matter of privacy; the second was to prevent speculative invoicing. With respect to the latter condition, Perram J followed the examples set by his peers in the UK and Canadian courts. His express purpose in doing so was to minimise the possibility of vulnerable individuals being frightened into paying a large settlement fee, after having received a menacing letter apparently resulting from court orders.

It is yet to be seen what form the Dallas Buyers correspondence might take, however under Perram J’s supervision they may only be permitted to seek compensation for their actual loss, which could be as little as the cost of the DVD or legal online purchase.

Moreover, if the letters do demand some sort of monetary compensation, if the account holder refuses to pay and if Dallas Buyers elect to sue, they will need to overcome a further and perhaps more significant hurdle: they will need to prove that the account holder of the IP address is the same person that illegally downloaded the film.

There are of course a number of possible scenarios in which they would not be the same person, and at that point the ‘Maverik Monitor’ software ceases to assist because it only traced the IP address of the account holder, and not the device onto which it was downloaded.

The expense that Dallas Buyers would incur in attempting to prove that fact in the course of litigation would far outstrip the amount they could potentially recover. Nevertheless that might not prevent them from making an example of someone as a deterrent for the wider public.

The judgement narrowly preceded the Communications Alliance, a lobby group for the telecommunication industry, submitting its Copyright Notice Scheme Code 2015 (the Code) to the Australian Communications and Media Authority for approval on Wednesday afternoon. The Code creates a ‘three-strikes’ system whereby copyright holders can trace illegal downloading using similar methods to Dallas Buyers, then compel the ISPs to issue warning letters to the relevant account holders. Three strikes in any twelve month period will allow the copyright holders to obtain the account holder’s personal information from the ISPs so that they can identify them for potential legal action. It is currently unknown if or when the Code will be approved.

If you receive an infringement letter from an ISP or production company, we strongly urge you to seek independent legal advice. At this juncture, steps must be taken with the utmost caution – the law in this regard is untested in Australia, and the courts are yet to determine how to appropriately balance the rights the copyright owners against the rights of individual consumers.

To read the full judgment click here.