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Hollywood Studios Lose Australia Lawsuit Over Downloads

Walt Disney Co. (DIS) and Viacom Inc. (VIAB)’s Paramount Pictures are among Hollywood’s biggest movie studios that lost a piracy lawsuit in Australia as the country’s top court upheld rulings that a local Internet provider wasn’t responsible for customers illegally downloading films.

Iinet Ltd., based in Perth, didn’t authorize the infringement when customers illegally downloaded pirated copies of movies, the High Court of Australia ruled, according to a summary of the decision released on the court’s website.

Village Roadshow Ltd. (VRL)’s Roadshow Films led the companies trying to stop iiNet customers from using BitTorrent software to illegally download copyrighted films, in a precedent-setting case for Internet providers in Australia. The studios were appealing earlier court decisions vindicating iiNet (IIN), and seeking damages that they said could include royalties on illegally downloaded movies.

“It was a case where the motion picture studios wanted to expand the scope of what it means to authorize an infringement,” John Swinson, an intellectual property lawyer at King & Wood Mallesons in Brisbane, said following today’s ruling. “This leaves the movie studios with one less option” to pursue infringement.

King & Wood Mallesons wasn’t involved in the iiNet case, Swinson said.

Shares Rise

IiNet shares, which resumed trading after a halt ahead of today’s judgment, gained 3 percent, the most since Jan. 10, to A$3.12 at the close on the Australian Stock Exchange. The benchmark S&P/ASX200 index declined 0.1 percent.

The Australian government agreed to review the Copyright Act after Singtel Optus Ltd. was cleared by a judge of wrongdoing in letting its customers watch downloads of Australian Football League and National Rugby League games on mobile devices, sometimes within minutes of the live action on free-to-air television.

Jill McKeough, dean of law at the University of Technology Sydney, heads the Australian Law Reform Commission undertaking the review to determine if the legislation needs changing.

Issues of copyright should be dealt with through legislation, rather than the courts, Swinson said.

Tony Bannon, a lawyer representing the film studios, cited a case of an iiNet customer downloading a copy of “Pineapple Express” in 2008, which could be identified from the BitTorrent application information. Iinet failed to warn its customers that downloading unauthorized content was illegal, Bannon told the five-member High Court panel at a Dec. 1 hearing.

No Warning

“Without providing a warning of some form, they are authorizing,” Bannon said, referring to the Internet provider.

IiNet takes a lot of steps to encourage people to use legitimate content, Richard Cobden, the company’s lawyer, told the court at the same hearing.

“People conceivably do not mind spending a little bit of money,” Cobden said. “If the thing is available as an authentic item, they will download it.”

The Internet provider has an agreement with Apple Inc.’s iTunes, for example, that lets customers download films without affecting their monthly download allowance, Cobden said.

An appeal court last year upheld Justice Dennis Cowdroy’s 2010 verdict that iiNet wasn’t liable.

‘Never Supported’

The High Court judgment supported the company’s position and proved the studios’ claims were unfounded, iiNet Chief Executive Officer Michael Malone said today.

“Iinet has never supported or encouraged unauthorized sharing or file downloading,” Malone said in an e-mailed statement.

Also appealing were Time Warner Inc. (TWX)’s Warner Bros. Entertainment Inc., Twentieth Century Fox Film Corp., a unit of News Corp. (NWSA), and 30 other entities who owned or had exclusive licenses to commercially released films.

A proposal by the film studios to force Internet providers to monitor customers’ usage and cut them off for illegally downloading copyrighted material was both too narrow and too broad, Swinson said.

It was too narrow because users could switch providers and continue to download and too broad because it could penalize customers whose children may inadvertently download material, he said.

“It’s overkill and ineffective,” Swinson said.

The case is Roadshow Films Pty. Ltd. v iiNet Ltd.2011/HCATrans 323, High Court of Australia (Canberra.)

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net

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