The government announced yesterday that it will require a mandatory industry code on internet service providers to establish a copyright notice scheme for file sharing, in which ISPs would establish schemes to deal with copyright infringers. The sector has until April to develop its own code in agreement with the copyright industry (an approach that has failed repeatedly before), or the government will simply impose one. Meanwhile, it will legislate an internet takedown scheme whereby the copyright industry can obtain a court order for the blocking of file-sharing sites. What does this mean for consumers?

Disconnection

Despite some of the claims I’ve seen made, disconnection of customer accounts is a possibility even if it is not a step set out in the notice scheme/industry code. Some ISPs may choose to slow speeds or disconnect customers who have received multiple notices as a risk-management strategy. If it takes these extra steps, an ISP is more likely to be found to have taken “reasonable steps” and therefore not be liable for authorisation under the Copyright Act (see s. 101(1A)). An ISP may also choose to disconnect customers as part of implementing its repeat infringer policy. If an ISP wants to get the benefit of the “safe harbours”, it needs to adopt and implement a repeat infringer policy under s 116AH). An ISP may also be asked by a rights holder to implement its repeat infringer policy or otherwise take action against its customers (as we saw in the litigation commenced by the movie studios against iiNet.)

This isn’t fear mongering. In the United States, Cox Communications was sued just last week for not terminating accounts of customers who had received multiple warning notices. A representative of copyright owners said  these subscribers were “repeat infringers”.

Data retention

To be able to send notices to their customers, ISPs will need to retain IP address logs and the notices to be able to send subsequent notices. Not all ISPs need to retain IP address logs for billing or other purposes. However, under the government’s data retention bill, one category of data that ISPs will (conveniently) be required to retain are IP address logs (source IP addresses).

Cost

How much is this all going to cost ISPs and ultimately consumers? No one wants to pay — not the rights holders, not our government, not ISPs and certainly not consumers. If a scheme were implemented where ISPs incurred costs, consumers would be in effect subsidising rights holder enforcement, as costs would be passed on in the form of higher charges.

For years, the rights holders have resisted models such as that in place in New Zealand, where they are required to pay a fee to ISPs for passing on notices. Indeed, the movie studios don’t even participate in the NZ scheme, as they say the fee should be a matter of pennies. It’s been a costly process for the communications sector in NZ.

The preferred cost model for rights holders is that in place in the US, where there is a voluntary “copyright alert scheme” with large communications companies bearing the considerable costs of reviewing notices, passing on notices, dealing with complaints and concerns from customers.

In Australia, the Telecommunications Industry Ombudsman has recently submitted that its jurisdiction should include hearing consumer complaints about such notices. The customer’s ISP bears significant fees each time a complaint is lodged with the TIO.

Speculative invoicing and copyright trolls

The proposals apparently also include some form of expedited preliminary discovery process. This is where a rights owner would seek subscriber details from an ISP so the rights owner knows who to sue or make a claim against (thus the need for data retention).

Will such a process lead to the rise of speculative invoicing or copyright trolls who issue “pay up or else” notices to consumers in Australia, like we’ve seen in the US and the UK? The demands in the US have been significant. In NZ, rights holders sought $4675 from a woman who they alleged had infringed on four separate occasions in respect to two different Rihanna tracks. (The cost of purchasing these songs online was $2.39).

Overseas experience

One common element the various warning or notice schemes (some more detail here) share is that they are not technology neutral. All focus on peer-to-peer file sharing. Last year, at the Fordham IP Conference Karen Thorland, global content protection counsel at the Motion Picture Association of America, in a talk titled “Piracy 2.0” claimed that streaming and download piracy were anticipated to surpass peer-to-peer use this year. This focus on the “torrents” may well accelerate the move to streaming and other methods of infringements, such as the use of cyber lockers, while others may use tunnelling or VPNs to mask their IP address to avoid detection by the rights holders.

Dr Rebecca Giblin of Monash University has undertaken a comprehensive and peer-reviewed study of “graduated warning” or “copyright alert” schemes. Relevantly, she concluded that the evidence that such schemes reduce infringement is extraordinarily thin, and there is little evidence that graduated warnings do anything to increase size of the legitimate market.

Peter Fray

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