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Tuesday, 22 December 2015

Costs be Damned: Dallas Buyers Club's Case Fails in Australia

Many have awaited the developments regarding the Dallas Buyers Club case in Australia [Katpost here], and they have finally been given some degree of closure just in time for Christmas. Due to the case's potential impact now and in the future for any online infringers, Justice Perram's inquiries into the content of the letter being sent to infringers and into sought damages were very important.

In Dallas Buyers Club LLC v iiNet Limited (No 5) [2015] FCA 1437 the claimant, seeking the disclosure of the details pertaining to individuals who had shared the movie Dallas Buyers Club in Australia, had to present specific information as to the content of the letter that would be sent to those individuals (so as to ensure no speculative invoicing tactics were used) and further arguments as to damages being recovered. Due to the near mountainous amount sought by the claimant, further arguments were heard on the issue, as well as others relating to the bond set by the Federal Court and the disputing of settled issues by DBC.

A victory for pirates, and a victory for us all?
The first issue that Justice Perram had to address was an appeal by the claimant to revisit his earlier decision from August. Discussing precedent briefly, he concluded that he could not do so, even though cases have addressed res judicata in terms of interlocutory decisions (and their lack of application to them under the Australian Federal Court Rules 2011). He did, however, reserve possible revisitation in the light of any new material that could have not been put forth under reasonable circumstances, or if it was shown that he failed to deal with some aspects of the claimant's case that would materially impact the case at hand.

The second issue dealt with the damages involving a 'licence fee' for those who shared the movie via the BitTorrent protocol, and as Justice Perram described its imposition as "...so surreal as not to be taken seriously" in earlier proceedings, one could imagine the point would be dismissed with little discussion. DBC argued that, although they had initially plead the inclusion of a licence fee on top of damages for lost profits, that Justice Perram had not dealt with them properly in the prior hearings, and therefore there would be material change in the circumstances surrounding this pleading (mainly in the form of the case of Winnebago Industries Inc v Knott Investments Pty Ltd (No 4) [2015] FCA 1327 where the Federal Court allowed a licence fee based on not whether the infringing party would have negotiated for a licence, but should have done so).

Justice Perram did not agree with DBC, and saw that the circumstances had not changed materially. DBC had not submitted any evidence as to what a reasonable licence fee would have been, nor did they advance any explanation as to the omission of the Winnebago case in their pleadings. Also, because of the lack of any historical evidence as to BitTorrent licences on DBC's part, Justice Perram decided that the threat of the prolonging of the case would be too big for him to allow DBC (and therefore iiNet in response) to add submissions on this fact. He, therefore, did not allow DBC to revisit the issue of a licence fee.

The third issue dealt with by Justice Perram related to damages under section 115(4) of the Copyright Act 1968, specifically the lack of a concrete figure for damages submitted by DBC. Having rejected their arguments under 115 in earlier proceedings, DBC wanted the judge to revisit this issue. He, again, rejected DBC's argument, largely on the basis of a lack of details on how damages would be calculated, and how many instances of a copy were downloaded from the users who shared the movie on BitTorrent (and, additionally, if damages could even be claimed by every individual sharing the movie).

And I would've gotten away with it too,
had it not been for those meddling ISPs!
The fourth issue was on the users' electronic commercial infringement under section 115(5) of the Copyright Act, and whether DBC, by their account, would be able to claim additional damages due to the commercial scale of the infringement by the users. Similarly to previous considerations, DBC had not submitted any figures on what it demanded, and what the proposed increase would be in damages for each individual. Also, as DBC had not brought forth an argument under 115(5), Justice Perram did not accept their explanations on why, and rejected any further considerations on the users' commercial infringement.

Finally, the fifth issue was on the bond set by the court and whether the stay on DBC's actions would be lifted. Justice Perram denied the lowering of the bond sum as well, since no material changes to the case had come about, and therefore a lower bond sum would not be required to be addressed.

To bring closure to the case Justice Perram dismissed the entire case with costs, desiring that "[s]ome finality must... be brought to these proceedings".

The Dallas Buyers Club case has been going on for some time, with extensive considerations on very nuanced aspects of enforcement by DBC, understandably so. Should copyright holders be given carte blanche on the logistics of their enforcement, and the amounts sought, the floodgates would be opened for a very American-style scheme of speculative invoicing. Justice Perram's concerns were rightfully upheld, and the dismissal of the proceedings will set a precedent for stricter, more expedited proceedings involving mass infringement of rights. Whether this development is fully negative on the rights holders' perspective [and this Kat would love to hear some thoughts from the other side, or even against Justice Perram's decision] is unknown to this Kat, but he for one does enjoy the pragmatism of the preceding judge. The matter is by no means over just yet, and with large amounts of money at stake, DBC will most likely appeal the decision.

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