A Federal Court judge has ordered several Australian internet service providers, including iiNet, to hand over to a film studio the identities of thousands of account holders whose internet connections were allegedly used to share without authorisation the Dallas Buyers Club movie.
In a landmark judgment delivered on Tuesday afternoon, Justice Nye Perram ruled in favour of Dallas Buyers Club LLC's "preliminary discovery" application requesting that the ISPs disclose the identities of people it alleges shared the movie online.
In addition to iiNet, ISPs Dodo, Internode, Amnet Broadband, Adam Internet and Wideband Networks will also be required to hand over customer details.
It was unclear on Tuesday whether iiNet and the other ISPs would appeal the decision before the Full Court of the Federal Court. They will have 28 days to do so.
"It's a good outcome, we got the result we were seeking," Michael Bradley, a lawyer representing Dallas Buyers Club in the case, said outside the court.
The ruling means about 4700 Australian internet account holders whose service was used to share Dallas Buyers Club on the internet from as early as May 2013 are soon likely to receive legal letters from Dallas Buyers Club LLC's Australian lawyers threatening legal action.
This occurred in the US, where legal action was threatened against account holders claiming they were liable for damages of up to $US150,000 ($196,656) in court unless settlement fees of up to $US7000 ($9171) were paid. This practice is commonly referred to as "speculative invoicing".
But in a win for iiNet and the other Australian ISPs, Justice Perram ordered that any letters sent to alleged illicit pirates must first be seen by him. He said this would "prevent speculative invoicing", which under Australian may not be lawful.
"Whether speculative invoicing is a lawful practice in Australia is not necessarily an easy matter to assess," Justice Perram said, before stating that it may constitute misleading and deceptive conduct as well as unconscionable conduct.
The judge also ordered that the privacy of individuals should be protected, meaning Dallas Buyers Club cannot disclose the identities of alleged pirates.
Justice Perram foreshadowed he would order that Dallas Buyers Club pay the ISPs' legal costs, as well as the costs of searching for documents identifying alleged pirates.
iiNet chief David Buckingham said he was pleased with the result and some of the protections the judge put in place for consumers, despite the fact they can still be identified and sued as a result of the judgment.
"By going through the process we've been able to ensure that our customers will be treated fairly and won't be subjected to the bullying that we have seen happen elsewhere," Mr Buckingham said.
The case, heard by Justice Perram over three days in February, centred on whether Dallas Buyers Club LLC should be given access to details of internet account holders whose connections it alleges were used to share its movie using peer-to-peer file sharing software such as BitTorrent.
The details to be handed over include names and residential addresses of those whose connections were allegedly used to share the film.
During the case, Michael Wickstrom, vice president of royalties and music administration at Voltage Pictures, the parent company of Dallas Buyers Club LLC, objected to iiNet providing examples of the speculative invoicing letters sent in similar US cases, stating that in Australia the format of the letters would be different.
The letters sent to Australians would be made so that they complied with local laws, he said.
But Mr Wickstrom and Dallas Buyers Club LLC's lawyer did not provide examples of what the letters would look like here.
"I would give [Australian lawyers] some examples to say 'Is this sufficient for Australia or does it need to be changed?' " he said.
Mr Wickstrom also said the company would not sue or attempt settlement with an autistic child, people who were handicapped, welfare cases, or people who have mental issues.
To uncover the alleged pirates, Dallas Buyers Club LLC, through Voltage Pictures, tasked German-based pirate-hunting firm Maverick Eye UG to identify those who were sharing the movie online.
Maverick Eye joined torrent "swarms" that were sharing Dallas Buyers Club and then tasked its software to log the Internet Protocol (IP) addresses of those who distributed the movie without authorisation and in breach of copyright laws. A total of 4726 IP addresses were identified.
Dallas Buyers Club LLC then contacted iiNet and other ISPs, asking them to divulge customer details associated with those IP addresses without a court order — but the ISPs refused.
It then sought to have the ISPs disclose customer details in the Federal Court through the preliminary discovery application process, which is often used by parties to a case where the identity of the person or company they want to take legal action against is unknown but can be discoverable through a third-party.
But iiNet sought to challenge the request on grounds it would lead to speculative invoicing, whereby alleged infringers are sent letters of demand seeking significant sums for infringement. These letters often threaten court action and point to high monetary penalties if sums are not paid.
"We are concerned that our customers will be unfairly targeted to settle any claims out of court using [this] practice," iiNet said in a blog post about the legal action last year.
The ISP also argued that customers could be incorrectly identified as alleged infringers if details of the account holder were revealed. For example, the relevant IP address could have originated from a person in a shared household where someone other than the account holder infringed copyright, it said.
iiNet also argued it wanted to fight the matter because Australian courts had never tested a case like this one before.
Now that the judge has ordered iiNet and other ISPs to hand over the details, it opens the floodgates for other rights holders to do the same thing - track who is sharing their content on the internet and then get courts to order the handing over of the identities of suspected pirates.
But whether other rights holders do this remains to be seen.
The judgment comes as the Abbott government begins cracking down on internet piracy.
Just two weeks ago it introduced a website-blocking bill into parliament that has since been sent to a parliamentary committee for scrutiny. The bill allows rights holders to apply to a judge for an injunction that would require ISPs to block access to "online locations" overseas that facilitate copyright infringement.
The government has also asked ISPs and rights holders to come to an agreement by this Wednesday on a code to tackle online piracy which must involve sending alleged copyright infringement notices to consumers.
More relevantly, it includes a process for "facilitated discovery" to assist rights holders in taking direct copyright infringement action against a subscriber after an agreed number of alleged infringement notices are sent.
Tuesday's judgment is likely to guide how future discovery applications are made.
A similar case involving Dallas Buyers Club and Brisbane-based data centre and wholesale broadband provider iseek communications will have a directions hearing on April 14, where it's expected, according to tech publication ZDNet, there won't be a challenge by iseek to divulge details.
