Gradual steps towards online copyright infringement reform

In brief

Telecommunications industry body the Communications Alliance has released a draft industry code that would introduce a copyright infringement notice scheme for internet service providers. The scheme is an incremental development of existing telecommunications and copyright regulation that seeks to allow rights holders to better use existing legal avenues to defend their rights without fundamentally altering the liability of internet service providers. Partner Andrew Wiseman, Senior Associate Matt Vitins and Lawyer Ben Murphy report.

The catalyst

The Notice Scheme has been developed at the request of the Attorney-General and the Minister for Communications. The ministers sent a joint letter to industry leaders on 10 December 2014 requiring them to develop an industry code by 8 April 2015 in order to avoid the Government preparing its own code. This request for an industry response came after the Federal Government withdrew its 2014 proposals for legislative reforms to the Copyright Act 1968 (Cth), in the face of criticism from both ISPs and rights holders.

This first draft of an industry-led Notice Scheme has been prepared by a Communications Alliance working committee made up primarily of telecommunications industry players, including Australia's three largest ISPs. Rights holder organisations, including APRA AMCOS, Free TV Australia and Music Rights Australia, have also had input, together with consumer groups the Australian Communications Consumer Action Network (ACCAN) and the Internet Society of Australia. The Notice Scheme draws upon similar notice and response systems in New Zealand, South Korea, France, the United Kingdom and the United States of America.

Dramatis personae

The Notice Scheme will apply to all ISPs that provide residential fixed internet access services to a yet-to-be-defined minimum number of users. Consequently all individuals who have a fixed residential internet account with eligible ISPs will be subject to the notice scheme (Account Holders). The draft Notice Scheme does not apply to business and commercial plans, which make up more than 20 per cent of internet subscription in Australia¹ or to wireless or mobile internet connections.

The Notice Scheme is available to Rights Holders who:

• are listed in a register of Rights Holders and contributes to the funding of the Notice Scheme;
• have independently audited capability to detect online copyright infringements, identify corresponding IP addresses, and generate infringement reports; and
• indemnify ISPs for actions taken in accordance with the Notice Scheme.

In addition to these players, the Notice Scheme proposes the creation of a Copyright Information Panel (CIP) to manage the Notice Scheme. The CIP would be established jointly by Right Holders, ISPs and ACCAN and would be responsible for:

• managing and promoting the Notice Scheme;
• maintaining registers of Rights Holders and eligible ISPs; and
• appointing independent bodies to certify Rights Holder compliance, adjudicate Account Holder disputes and assess the effectiveness of the Notice Scheme.

What does the notice scheme do?

The Notice Scheme does not create or alter any cause of action under the Copyright Act. Unlike systems in the USA and South Korea, there is no direct consequence to Account Holders for receiving notices under the Notice Scheme and ISPs will not be required to throttle or suspend services to their Account Holders. Unlike the system in New Zealand, the Notice Scheme does not create any alternative dispute resolution mechanism and still requires Rights Holders to enforce their rights through the courts.

The Notice Scheme instead focuses on notices educating Account Holders as to the fact of their breach, the consequences of such a breach and that a Rights Holder has detected their actions. Rights Holders receive the ability to indirectly inform users of detected infringement, and secure ISP cooperation in identifying repeat infringers and commencing proceedings against them.

When finalised, the Notice Scheme will be registered by the Australian Communications and Media Authority (ACMA) under the Telecommunications Act 1997 (Cth) and the ACMA will have the power to direct ISPs to comply. The Notice Scheme will also interact with the Copyright Act, and ISPs will be able to rely on compliance with the Notice Scheme to demonstrate that they did not authorise their Account Holders' breaches of copyright.

How does the notice scheme work?

If a Rights Holder detects online activity it considers to be an infringement of its rights in a copyright work and is able to identify the IP address of the service used in that infringement, it may send an infringement report to the ISP to which that IP address is allocated.

When provided with an infringement report by a Rights Holder, an ISP must use reasonable steps to match the IP address in the infringement report to an Account Holder. If it finds a match, it must send an 'Education Notice' to that Account Holder by email. If the ISP is provided with a second infringement report in relation to the same Account Holder more than 14 days, but less than 12 months, after the ISP issued an Education Notice, the ISP must send a follow up 'Warning Notice'. If an ISP receives a third infringement report in relation to the same Account Holder more than14 days after the issue of the Warning Notice and within 12 months of the issue of an Education Notice, the ISP must send the account holder a 'Final Notice' and seek acknowledgement of the Final Notice, either by sending the notice through registered post, posting popup notifications or using another acknowledgement measure approved by the CIP. Each notice must contain prescribed information, including the identity of the complaining Rights Holder and the claimed infringement.

An Account Holder may challenge any notice by sending a challenge notice to an adjudication panel organised by the CIP. Challenges may only be lodged after an Account Holder has received a Final Notice and must be lodged within 28 days of the issue of a Final Notice, although the Account Holder may at this point challenge an earlier Education or Warning Notice. A challenge will cost $25, which will be refundable if the challenge is successful.

If a Final Notice is sent to an Account Holder and not successfully challenged, the Account Holder's IP address will be included on an ISP's 'Final Notice List' for 24 months. Rights Holders may request this Final Notice List from an ISP and use it to lodge an application with a court or tribunal for preliminary discovery to obtain access to the Account Holder's identity. ISPs must assist such an application and, if ordered by a court, disclose to the Rights Holder details of the Account Holder's identity and notices provided to them.

Once a Rights Holder has identified an Account Holder, the Notice Scheme has no further work to do. It does not provide any additional or alternative methods for Rights Holders to enforce their rights. Rights Holders are left to pursue a settlement or action under the Copyright Act as they would now, although with additional evidence of notices provided to the Account Holder under the Notice Scheme.

Next steps

The draft Notice Scheme has been published ahead of the Federal Government's April deadline to allow interested parties to submit comments to the Communications Alliance. The Communications Alliance will also use this time to resolve a number of outstanding issues, including:

• the form of the indemnity to be provided by Rights Holders to ISPs; and
• the payment and apportionment of costs for the notice scheme and the CIP. This remains a crucial issue with the potential to undermine the scheme, as has been the case in New Zealand.

If these issues can be resolved, a revised draft will be submitted to the ACMA for approval and registration under the Telecommunications Act. The draft provides for the Notice Scheme to commence by 1 September 2015. The Notice Scheme will then be evaluated after 18 months by the CIP and the Federal Government to determine its effectiveness and whether further reform is need.

Comment

The draft Notice Scheme is not particularly ambitious in comparison to similar schemes around the world, but represents an important step forward in adapting the Australian regulatory system to the reality of online copyright infringement. Consensus on broader copyright reform between Rights Holders and ISPs was always going to be difficult to reach, particularly in the short time period given by the Federal Government. It is promising that the Communications Alliance has been able to achieve a coherent, consensus industry code, with feedback from all relevant stakeholders, even if there are some issues to be resolved.

Ultimately no single system or reform can resolve the problem of online copyright infringement. The Notice System does, however, represent a positive step that will likely reduce copyright infringement and simplify enforcement by Rights Holders. Further steps may be need to be taken by industry and Government, but, for now, the Notice Scheme represents a low-risk step in the right direction.