ISP iiNet has successfully defended the Federal Court round of the case brought against it by AFACT, the Australian Federation Against Copyright Theft (representing a number of movie studios).
At the time of writing, AFACT had not indicated whether or not it intended to seek leave to appeal the decision.
In dismissing the case, Justice Cowdroy ordered AFACT pay costs to iiNet, including covering costs that were "thrown away" when AFACT abandoned its primary infringement claim against iiNet.
The judge said unequivocally that iiNet did not authorise the infringements that lay at the heart of AFACT's case, "first because the copyright infringements occurred directly as a result of the use of the BitTorrent system, not the use of the Internet, and the respondent did not create and does not control the BitTorrent system; second because the respondent did not have a relevant power to prevent those infringements occurring; and third because the respondent did not sanction, approve or countenance copyright infringement".
An interesting and important aspect of the judgement is buried some way into the judgement.
In paragraphs 431 and 432 of the judgement, Justice Cowdroy looks at how the law currently stands in relation to the termination of accounts, since AFACT has argued (and in general, content owners around the world have argued) in favour of account termination as a sanction that should be applied to people who use Internet accounts to infringe
While noting that this case did not test "safe harbour" provisions in the Copyright Act, Justice Cowdrey makes two important remarks. First, he says that "failure to comply with safe harbour provisions" does not imply that anybody therefore authorises a copyright infringement.
Second, he emphasises that the courts still have a role in determining whether an account should be terminated. As the law now stands, accounts can be terminated "in appropriate circumstances" - but those circumstances are not defined in the legislation. Justice Cowdroy draws the conclusion that "If 'appropriate circumstances' are found to exist only when a Court finds someone to have infringed copyright, then the respondent's termination of an account for a reason which did not satisfy that requirement would expressly not be reasonable."
In other words: since copyright infringement can only be proven in a court, account termination is only reasonable after a court has made a decision. The music and movie industries' stance, that ISPs should suspend accounts based on accusations against subscribers, is not endorsed in this judgement or supported in current legislation.
Another important aspect of the judgement can be found in paragraph 492: "There is no legal obligation or duty on any person to protect the copyright of a third party ... merely being indifferent or inactive in the knowledge that copyright infringement is occurring cannot possibly constitute authorisation."
Also important is the lengthy discussion of "safe harbour" in the judgement.
The concept of safe harbour is easy to describe, but legally difficult to define in detail. Part of this difficulty is that such definitions as exist are complex; the other part is because as Justice Cowdroy noted there is a lack of definition in Australia (which led him to seek extensive input from definitions and case-law in America).
However, there are some key points in the judgement which I believe are important, and rather than quote from the judgement, I take the liberty of paraphrase: it's reasonable that a high standard of proof is required before ISPs terminate customer accounts, and that carriage service providers are right to take a cautious attitude to allegations of copyright infringement. AFACT's notifications, the judge said, "are not statutory declarations, nor do they have any statutory basis", nor could AFACT's own evidence-gathering on its own be regarded as independent verification that infringement had taken place.
This is bad news for AFACT, which has already issued a press release containing a veiled threat to lobby the government for legislative change, because the job of lobbying for a "three strikes" policy just got more difficult.
By explicitly examining the safe harbour question, and by setting out why customer termination should require a high standard of proof, this judgement sets a precedent that could inform a future judge ruling on a "three strikes" law.
If the law leaves terminations to a test of reasonableness, then this would form part of the precedent any intelligent respondent would use in defending accusations.
But what's the choice? To get past this case (ignoring what happens in case of an appeal), the government would instead need to explicitly set out a test of evidence in the legislation.
That's a high-risk strategy. In creating a "three strikes" law that ignores Justice Cowdroy's attitude to a "high standard of proof", the government would have to demonstrate that it wasn't unduly influenced by an industry lobby.
In the build-up towards an election, putting a controversial law into the legislative program is risky enough. The public reaction to a three-strikes law that degrades the standard of proof discussed by Justice Cowdroy - for example, that accepts accusation as sufficient to justify disconnection - could be too great a risk.
In any case, it's unlikely that the government would move ahead of any appeal, and given the proximity of the election and the vagaries of court schedules, the government is not likely to try and change the law this year.
But lobbying and legislative proposals are certain. This was a battle; the war is still to come.