Entertainment Law

The “Dallas Buyers Club” Saga Continues...

The case of Dallas Buyers Club LLC v iiNet Limited being heard in the Federal Circuit Court of Australia was handed down in May 2015. The court ordered iiNet to provide Dallas Buyers Club LLC (“DBC”) with account holder details of those who downloaded the film by way of preliminary discovery. Although this order was made and the court concluded that DBC had a right to sue those who had been sharing the film in copyright infringement, this order was stayed. The court required that DBC provide to the Court a copy of the letters it was proposing to send to account holders as a precondition to DBC obtaining their details in order to prevent any ‘speculative invoicing’ (that is, the practice of sending a letter demanding a large sum to the copyright infringer in the hope they will pay sum demanded rather than contest the amount).

The rationale for the Court’s refusal to provide DBC with access to information in the first instance is for the consideration of the consumers. The Court held that although the DBC, as the rights holder of the film, had a right to obtain relief against iiNet, they could not use that right to “break windows”. While the Court indicated that DBC was entitled to preliminary discovery, the Court was not going to open the flood gates until it saw the proposed correspondence and until the Court was satisfied with this correspondence.

The written submission outlining monetary demand prepared by DBC was referred to by iiNet as amounting to ‘speculative invoicing’. DBC was claiming from each of the 4,726 account holders four amounts, being:

  • the cost of a single copy of the film that had been authentically downloaded;
  • an amount for damages relating to the costs of obtaining user details;
  • a claim for an amount based on each person who had accessed the uploaded film;
  • a claim for punitive damages in relation to how many copies of non-DBC copyrighted works had been downloaded by each infringer.

The Court determined that it was reasonable for DBC to claim in respect of the first two items, but not the third or fourth.  In its judgment handed down on 14 August 2015, the Court held that the third and fourth items went beyond what DBC was entitled to claim from account holders.  The Court specifically said in its judgment that it would lift the stay if the Court received DBC’s written undertaking only to use the account holder’s information for the purpose of recovering from account holders the retail price of a single copy of the film together with coverage costs related to obtaining individual account details. The Court’s key rationale is making this determination was to uphold the public interest in the finality of litigation (Perram J in Dallas Buyers Club LLC v iiNet Limited (No 5) [2015] FCA 1437 at [6]).

On 16 December 2015, Perram J dismissed DBC’s application to be granted access to the details of 472 account holders (10% of the infringing downloaders). In Perram J’s view, the proposed correspondence submitted by DBC was not in line with the requirements that had been set out in the earlier August 2015 judgment. Again, DBC demanded a figure equal to a licence fee had the film been properly distributed together with punitive damages. Perram J rejected DBC’s argument that those downloaders who were going to share the Film over the BitTorrent network would have avoided infringement by approaching DBC to negotiate a distribution arrangement in return for a licence fee. Perram J said this argument was “absurd” and not to be taken seriously and that if such an argument arose in this court he was assured it would be summarily dismissed.

Perram J has said that he would not allow arguments that had previously been dismissed in the Court’s August judgment that to be revisited without any new material. Perram J dismissed the application with costs in favour of iiNet on 16 December 2015, and made a self-executing order which means that unless new material for the application is made by DBC, the case will be dismissed in its entirety at noon on February 11 2016.

The judgment does not signify that the Australian courts will tolerate piracy, but rather that they will not allow rights holders to overreach in demanding disproportionate damages from infringing users.

As Perram J suggests, whilst it is obvious that people using BitTorrent to copy the Film without DBC’s permission are breaching its copyright, this does not mean that courts should grant access to infringing users’ information for the purposes of throwing stones at their windows.