ISP iiNet acted on takedown notices for copyright material hosted by customers on its systems or networks without being legally required to do so, the Federal Court heard today, calling into question a key part of the ISP's defence in a civil suit launched by representatives of the film industry.
iiNet chief Michael Malone's consistent position over the past few days was that iiNet would not act on notices of alleged 'Category A' activity on its network unless it was legally obligated.
Category A activities are those where the ISP is the transmission conduit for infringing activity.
But under cross-examination, Malone confirmed that iiNet acted on takedown notices on "primarily Category C" activities.
Category C activities are those where a carriage service provider such as an ISP "stores copyright material on their systems or networks", according to the Attorney-General's department.
The film industry's senior counsel Tony Bannon SC put to Malone today that he [Malone] "understood it was optional for an ISP to act on a takedown notice [related to Category C activity]".
"No, I did not understand," Malone alleged.
"There's no legal requirement but if you do act on it, you get the benefit of safe harbour provisions [of the Copyright Act]," Bannon continued.
Safe harbour provisions limit an ISP's liability in cases of copyright infringement, if the ISP meets certain conditions. The provisions were added to the Copyright Act in 2005.
"Yes, we would be potentially liable for the publication of the copyright material unless we [acted on the takedown notices]," Malone alleged.
"So you act on the takedown notice to take benefit of the safe harbour," Bannon continued.
"But you're not legally obliged to act. [There isn't] a statutory obligation to act.
"You decide in your own interests," Bannon put to Malone.
"I did not understand that. I thought we'd be liable," Malone replied.
"I didn't understand it to be optional but I know we do get the benefit of the safe harbour provision."
Bannon put to Malone that iiNet's course of action with respect to a Category C activity was "no different to the decision-making process of an ISP" when they received a Category A notice.
"This is quite different," Malone said.
"[In Category C] we have the evidence of the apparently infringing material sitting in front of us. The customer has a right of appeal as well if they say the allegation isn't correct, and then we step out of the process [if that's the case]."
"But neither involves a court order," Bannon pressed.
"Again I didn't believe [acting on Category C takedown notices] was optional," Malone alleged.
Yesterday afternoon, Malone stated that he would not disconnect a customer over an alleged Category A infringement without a court order "or other form of legislative instrument or a code registered with the Australian Communications and Media Authority."
"[A code] which equally doesn't exist and which you're not prepared to agree to if it involves passing on infringement notices?" Bannon asked.
"Without third party review [yes]," Malone said.
"Is your point you won't act until a term of the Copyright Act is enacted that says ISPs must act on a notice which fulfils certain characteristics," Bannon asked Malone a day earlier on Tuesday.
"I wouldn't restrict it to the Copyright Act," Malone stated.
"It has to be some sort of legislation?" Bannon asked.
"Or a supporting regulation," Malone alleged.
"We'll comply with any court order or any other legislative instruments."
Malone's cross-examination is now complete.
The case continues.