The makers of Dallas Buyers Club have been dealt a blow in their attempt to extract payment from people alleged to have downloaded illegal copies of the movie. So what happens now?
Voltage Pictures, which owns Dallas Buyers Club, has been trying to identify over 4,700 iiNet subscribers who it alleges downloaded illicit copies of the movie. Earlier this year, the Federal Court agreed that iiNet should hand over subscriber details, but warned that any letter sent to account holders must first be approved by the court to protect consumers from abuse of the legal system.
In a win for consumer protection, the Federal Court has now rejected Voltage’s draft letters, criticising Voltage’s attempts to avoid explaining what fee it would demand.
Voltage had told the Court it would ask account holders for a settlement figure that included:
- the purchase price of a single legitimate copy of the film; plus
- another fee for sharing the film to other BitTorrent users (an extremely large amount that would be a multiple of the total number of people to whom the subscriber may have transmitted small parts of the film); plus
- a punishment for any other infringement of the copyright in any other, unrelated, content that subscribers admit to have illicitly downloaded; plus
- an amount that would cover the cost of tracking down users associated with infringing downloads.
The Court accepted that Voltage could ask for the costs of a single copy of the film and an appropriately proportioned fee to recover its legal costs so far.
But Justice Nye Perram rejected Voltage’s attempts to multiply these fees, potentially thousands of times, for every other user in the BitTorrent swarm. His Honour also rejected Voltage’s attempt to claim money for other infringements consumers may have admitted to.
Ultimately, Justice Perram refused to allow Voltage to send the letters in their current form. Voltage will still be allowed to send letters in the future, but only if it promises to limit the damages it is seeking to a more reasonable amount. It will have to back this promise up with a $600,000 bond payment to the court.
Consumers who have illicitly downloaded Dallas Buyers Club could still be liable for damages, but the figures requested are more likely to be closer to a hundred dollars than a few thousand. The exact amounts Voltage are prepared to settle for remain confidential for now.
The court fights back against ‘speculative invoicing’
The judge was keen to protect consumers from so-called “speculative invoicing”, where copyright owners send offers to settle claims for grossly disproportionate amounts. These demands can be extortionate: the letters typically threaten consumers with an expensive lawsuit if they don’t pay up.
Voltage Pictures has already been heavily criticised internationally for its speculative invoicing practices. It has filed massive copyright infringement suits in the US – including one naming nearly 25,000 defendants for infringing copyright in its previous film, The Hurt Locker.
The goal of these lawsuits is not necessarily to actually prove infringement in court, but to convince defendants to settle out of court, usually for sums of more than $2,000.
The United States' system is open to this kind of copyright trolling, because under US law, copyright owners do not have to prove that they have actually suffered any loss from the infringement. They can ask the court to award any amount from $750 up to $150,000.
In Australia, unlike in the US, copyright owners are only entitled to an amount that is proportionate to the fee a consumer should have paid. Only in cases of flagrant copyright infringement are courts allowed to award higher damages to either punish consumers or deter others from infringing.
Speculative invoicing pressures consumers to settle for amounts that can be wildly disproportionate to the harm they have caused. It’s an unfair practice that abuses the legal system.
It also causes real problems for consumers who are wrongly accused and face the difficult choice between an expensive legal battle or simply paying up to make the problem go away.
People, not criminals
For years now, we have seen some copyright owners demand exorbitant sums of money for downloads of music or movie files that would have cost $30 or less to legitimately purchase or hire.
In this case, Justice Perram refused to allow copyright owners to demand substantial sums of money based on completely imaginary scenarios where users would negotiate a licence to share the movie over BitTorrent. His Honour called this “so surreal as to not be taken seriously”, and said any claims for payment must be firmly grounded in reality.
In this decision, we see internet users being treated as actual people instead of assumed criminals. This is important. So long as users are painted as faceless pirates, it is easy to justify the excessive fees demanded by copyright plaintiffs. A more realistic vision of users as ordinary consumers means that copyright payments must be more realistic too.
Looking ahead to reform
This case sets an important precedent for the future. Australian ISPs are close to agreeing to a new Industry Code that will make it easier for copyright owners to track down alleged copyright infringers.
This decision means Australian courts will be careful to scrutinise future claims made by copyright owners seeking to identify internet users associated with infringing downloads. It means consumers are protected from extortionate demands made by copyright owners.
Hopefully, the decision will help copyright owners focus on finding ways to offer Australians with quick, convenient, and reasonably priced ways to pay for content, rather than seeking to make money through litigation.
Even Voltage admit that copyright infringement is less about consumers and more about outdated distribution models. In an interview on Triple J earlier this year, Michael Wickstrom, Vice President of royalties and music administration at Voltage Pictures, said:
[…] the problem starts with the US distributors, because they purchase it for the US and everything else is driven around the US release date. I feel that if all the distributors were granted a day and date release, this would not be happening.
When we can have realistic release dates, I don’t think that the piracy numbers will be as much.
Time and again, Australians have shown they are willing to pay for reasonably priced and accessible content. Copyright owners who try to extort money from downloaders are going about this the wrong way.
Nicolas Suzor is Senior Lecturer, Faculty of Law at Queensland University of Technology; Kylie Pappalardo is Associate Lecturer in the School of Law at Queensland University of Technology, and Suzannah Wood is Research Fellow, Intellectual Property and Innovation Law Research Program at Queensland University of Technology