iiNet, Authorisation and the Nature of the Relationship under 101(1A)(b)
Exposure draft for comment 6 September 2011.
The Full Court’s analysis of section 101(1A)(b) in iiNet is difficult to align with the words of the section. That analysis ignores the relationships considered in existing case law. The analysis does not allow an explanation of previous cases, inconsistently with the proposition that section 101(1A) codifies existing law.
Section 101(1A)(b) requires that the primary infringer be identified. If they are not identified, it is not possible for the court to consider the nature of any relationship between them and the alleged infringer. As the court has no discretion to ignore this consideration, a court ought not find authorization.
Imagine you are attending at a concert and standing next to another apparent concert goer who was making a video recording of the live performance. You notice that the person is wearing a T-shirt which reads “I am infringing copyright by making a reproduction of this performance”. Would section 101(1A) make you an infringer? Surely you have a “power” to do something (you could stand in front of or otherwise obstruct the lens) and a “relationship” with the person doing the act (the relationship being that you are standing beside them). If you did nothing would your indifference reach such a degree as to amount to an authorization? I think it ought not to, and it ought not to based on what the words “the nature of any relationship” in section 101(1A)(b). In this post I make some comments on the interpretation of section 101(1A)(b), primarily in the context of the Full Court’s decision in iiNet.
Are the section 101(1A) paragraphs mandatory?
Based on the requirement that certain matters “must be taken into account” by a court in determining whether an authorization has occurred, the court at first instance was criticised for not giving section 101(1A) pride of place in the analysis of authorization. In effect, the trial judge’s approach was argued to be presupposing the outcome of the section 101(1A) consideration:
The unavoidable inference is that the trial judge considered the matters specified by s 101(1A) of the Copyright Act (that is, in determining whether or not a person has authorised any act comprised in a copyright) within and by reference to the conclusion already reached (that iiNet had not authorised the infringements of copyright) and as a result of applying a test not specified by the statute (the means of infringement test).
per Jagot J at paragraph 370.
An approach which reads the “must be taken into account” wording literally poses its own problems. On first blush this would mean that, for example, even if the court had determined that a given person had no relationship under paragraph (b) – the court would still be required to consider the existence of a power and whether any other reasonable steps were taken (similarly a consideration of paragraph (c) if there was neither power nor relationship found). If not, then the consideration of (for example) the power would be “within and by reference to the conclusion already reached” (that there was no relationship at all between the alleged authorizer and the primary infringer). It is difficult to believe that the Parliament was intending to mandate a separate inquiry into each of these factors independent of the surrounding circumstances.
Moreover, if it is the case that such an independent inquiry is mandated then s 101(1A) requires that a court take into account “(b) the nature of any relationship existing between the person and the person who did the act concerned;”. Parsing the words of paragraph (b) into its parts requires:
- the consideration of “the nature of” something;
- that something is “any relationship existing between” two persons;
- the first of those persons is “the person [who is alleged to have authorised an act]“; and
- the second of those persons is “the person who did the act concerned”.
Neither of the iiNet decisions appears to have done each of these parts.
The Nature of the Relationship
The Full Court discussed section 101(1A)(b) in the following terms:
There is a direct contractual relationship between iiNet and each of its customers. There is also a non-contractual, more distant, relationship between iiNet and iiNet users who are not actually parties to the customer relationship agreement. There is nothing in s 101(1A) that requires that there be a commercial interest on the part of the alleged authoriser in having the acts of infringement continue. iiNet provided the service by use of which infringing acts were occurring. iiNet had the contractual obligation to provide the service and its customer had the contractual obligation that the service not be used to infringe. That relationship was both contractual and technical.
Thus, iiNet had the capacity to control the use of its services by its customers and to take steps to prevent acts of infringement by the use of services provided to them. In some circumstances, iiNet did in fact exercise control over the provision of its services. The presence of such provisions amounted to a degree of power to prevent further acts of infringement that was significant, for the purposes of s 101(1A)(a). That power arose from the relationship between iiNet and its customers under the customer relationship agreements, the nature of which is significant for the purposes of s 101(1A)(b).
per Emmett J at paragraphs 192, 193
As the trial judge found, there was a contractual relationship between iiNet and its customers and a “non-contractual and more distant relationship” between iiNet and other users of a customer’s account (at ). As to the latter, cll 4.2 and 4.3 of the CRA holds customers responsible for allowing others to use the service. Such a user must be taken to use the service subject to the same terms and conditions as the account holder. As noted, for these reasons, and given iiNet’s willingness in other contexts to treat the customer as responsible for all use of the service, no material distinction can be drawn between customers and users.
Under the contract iiNet provided its customers with the required equipment (if requested) and made its technology available so that, by a computer, its customer (or user) could connect to the internet. The contract was commercial in nature. iiNet is in the business of providing and making money from internet services. As noted, the trial judge was not satisfied that iiNet benefited from use of the internet infringing copyright in contrast to non-infringing use (at -). That does not change the fact, however, that iiNet’s relationship with its customers is commercial for the purpose of iiNet making a profit from providing its customers with internet access. It also does not change the fact that iiNet knew that about half of all of the traffic on iiNet’s service (in terms of quota or megabytes) is via BitTorrent and a substantial proportion of BitTorrent traffic involves the infringement of copyright.
The contractual relationship also provided iiNet with the right to collect and use personal information (as defined) of the customer (and thus, by necessary implication, the user as well) for administering and managing the services (cl 12.3(d)). Such administration and management must extend to ensuring that the customer (and user) comply with the terms of the CRA, including the terms prohibiting use so as to infringe another’s rights or for illegal purposes or practices or to allow anybody else to do so (cl 4.2 (a) and (e)). In the event of breach or even a reasonable suspicion of illegal or anticipated illegal conduct, the CRA ensured that iiNet may, without liability, cancel, suspend or restrict the supply of the service (cl 14.2(b), (i), (j), (l) and (n)). Restricting download speeds or “shaping” would thus be permitted under cl 14.2 of the CRA.
per Jagot J at paragraph 428-430
The second matter which s 101(1A)(b) requires the Court to take into account is the nature of the relationship between the respondent and the person who did the act concerned.
The relationship between the respondent and its subscribers is one pursuant to which the respondent, in return for what will usually be fixed monthly fees, provides the connectivity which enables users to access the internet. The relevant relationship for the purposes of s 101(1A)(b) may or may not be contractual depending upon whether the person who committed the act of infringement is one of the respondent’s subscribers. If he or she is a subscriber, then the relationship is one that is governed by the terms of the CRA. Even if the relationship is not contractual, in the sense that the user of the service is not the subscriber, then it is, in any event, closely akin to contractual in that the user’s right to use the respondent’s service could never rise any higher than that of the subscriber.
Clause 4.2 of the CRA provides (inter alia) that the subscriber must not use, or allow anyone else to use, the respondent’s service to infringe another person’s rights (sub-para (a)) or for any illegal purpose or practice (sub-para (e)). Hence, the contractual arrangements pursuant to which the respondent makes its services available to its subscribers expressly forbid the subscriber from engaging in, or allowing any other person to engage in, any of the acts of copyright infringement which the respondent is alleged to have authorised.
per Nicholas J at 726-728
The Full Court’s discussion of the relationship element provides cause for concern. First, the high level at which they approach the consideration of the “nature of any relationship” seems to only allow for two such natures – “contractual” and “technical” or “contractual” and “non contractual” (this, presumably, has been influenced by the adoption, by the judge at first instance, of “contractual” and “non contractual” per Cowdroy at paragraph 447, which, in turn appears to be based on the defendant’s pleadings per Cowdroy at paragraph 30). In the example given at the start of this post where you are standing beside a primary infringer, this analysis would find you to have a “non contractual” relationship with the person who did the act concerned.
If a burglar, prior to stealing a computer (primed with infringing subject matter and peer to peer software) from an iiNet customer, turns it on to see that the computer works (thus “making available”) can it really be said that that burglar has a “technical” or “non-contractual” relationship with iiNet? If they do have a “relationship” with iiNet, do they have a “relationship” with the iiNet customer from whom it is to be stolen (who surely has the “power” (by way of their property in the chattel) to prevent its being turned on)? What if the burglar was an iiNet customer for their own internet service at home? Could it seriously be argued that the nature of this accident of contractual relationship is required to considered under paragraph (b)? The better view would be that there is no relationship existing between the burglar and iiNet within the meaning of paragraph (b). Just as, for example, the electricity utility referred to in Jagot J’s judgment (at paragraph 384) ought not to be thought of as having a “technical” or “non-contractual” relationship with a primary infringer when that primary infringer uses electricity to power the computer through which the infringement occurs. Rather, there is no “relationship” within the meaning of section 101(1A)(b).
If distinctions such as “contractual/non contractual” or “commercial/not commercial” are the options open, it is hard to determine what effect the identification of “the nature of any relationship” could possibly have on a finding of authorization. Nothing seems to turn on the difference between a “contractual” and “technical” relationship in the judgment, nor is it easy to see how anything could so turn. To the extent the paragraph (b) consideration serves any purpose in the judgment, it is to support the finding of a power (which has already been found under paragraph (a)). However, this then is a subsection (a) accounting not one under paragraph (b) which requires taking into account “the nature of the relationship”. The adoption of “contractual/technical” or “contractual/non-contractual” seems to make paragraph (b) something of a string of dead letters. It is difficult to see how the presence or absence of a contractual relationship is relevant. How could the buyer/seller cases be explained?
Courts Should be Looking to the Relationships in the Case Law
Would it not be more appropriate for the “relationship” factor to be addressed by reference to the existing relationships which have been discussed in the cases? In particular, with reference to the line of cases beginning with Cyril, which explained how the (then) new wording in the 1911 Copyright Act (UK) cast its net wider than the relationship of master and servant or principal and agent, but that it did not extend to the relationship between the managing director of an authorizing company and the employees of that company (Cyril). Observe also that authorization might be found where there was a seller and purchaser (Monckton, Hulton and Falcon). Mr Brennan in Moorhouse did not have a “technical” or “non contractual” relationship with the University of NSW. He was (presumably) using the library with the University’s permission and had served up to him a smorgasbord of copyrighted works beside a photocopier. The relationship was one of recipient of an “invitation” – an invitee . Had he been trespassing at the time of his infringement, arguably Moorhouse would have been decided differently (as any “invitation” by the University would, presumably, not extend to trespassers). If the wording of section 101(1A) was intended to “codify” the existing law (per Emmett J at paragraph 22), then the existing cases ought to be explicable in its terms. How is it that the relationship of manager of a corporation and certain employees of the same corporation was not sufficient in Cyril, but a “contractual” or even “non-contractual” relationship was sufficient for the Full Court in iiNet? Of course, even if section 101(1A) was not intended to codify the law, the relationships considered in the existing case law ought still be drawn upon in interpreting paragraph (b).
The “nature of the relationship” should turn on the same issue I argue it has turned on in earlier cases – whether there was a common understanding (as to the future acts of the primary infringer) between the authorizer and primary infringer sufficient to base a finding of authorization.
[Aside: In this respect Cowdroy J’s “means of infringement” test is appropriate in that it is a proxy for paragraph (b), expressing the nature of the relationship, much as the seller and buyers in Monckton etc. Having found that there is no relationship, a court would then be justified in not considering (contrary to the “must” wording) paragraphs (a) and (c) for the reasons above.]
“the person who did the act concerned”
Finally, the most notable aspect of all of the judgments is the failure to identify “the person who did the act concerned“. Rather, the court seems content to identify all infringers (Emmett J at paragraph 59, Jagot J at paragraphs 390 and 391, Nicholas J at paragraph 727) and deal with them in the aggregate. The words of paragraph (b) neither authorize nor permit this approach.
Consider the position if there had been only a single act of authorization alleged. How would a court approach the requirements of paragraph (b)? In particular, because a court must take the nature of the relationship into account, what is the court to do if “the person who did the act concerned” has not been identified? At one extreme we can consider the burglar mentioned above. As discussed, there would not seem to be any “relationship” here between iiNet and that hacker. At the less extreme end consider an innocent iiNet customer whose relative (or houseguest) is the primary infringer. Given that the “nature of the relationship” will (presumably) be different in each case (iiNet and the hacker, iiNet and the iiNet customer, and iiNet and the relative of the iiNet customer) identifying the primary infringer must be of some importance. Assuming that consideration of the paragraph (b) component is a mandatory requirement then, arguably, a court must not find an authorization to have occurred unless the primary infringer has been identified . It would not be sufficient for the court to enumerate and consider some possible relationship or relationships, the relationship must be “existing”. That a court considers multiple infringements does not allow it to adopt a lower standard of proof in relation to them.
Indeed, the word “existing” in paragraph (b) seems to imply that transient relationships (such as a “technical” relationship which might arise between a burglar and iiNet which are constituted only by the act of infringement) ought not be considered – another reason why the identity of the person is a crucial element of paragraph (b).
From the point of view of iiNet being told that an infringement is occurring through one of their customer’s accounts, to what extend can they assess their relationship with the “person who did the act concerned” if that person is not identified to them? Requiring iiNet to act of its own accord to determine the identity of that person is effectively shifting the burden of proof from the plaintiff to the defendant. If there are no clear words to this effect, a court ought not read in such a requirement.
By dealing with a number of possible authorizations in the aggregate, the Full Court does not seem to have fully addressed the requirements of paragraph (b). This is particularly so given that the court indicated that a person could be infringing merely by turning on a computer on which the relevant software became active as a result.
1: Or at least sufficiently identified and on the balance of probabilities in order for the court to identify, and then consider, “the nature of any relationship” between the alleged authorizer and the primary infringer.
2: Any “non-contractual relationship” which might be argued to arise from the act of using the photocopier (eg if the copyright works were not nearby) would be irrelevant in Moorhouse, which emphasised the situation of the works and the means of copying them (eg if Mr Brennan had brought with him his copy of The Americans, Baby to an isolated copier on the University grounds).