ISPs facilitate piracy and should have to pay: Rights holders

As the Australian Federal Court hearing between music studios and internet service providers (ISPs) over the blocking of KickAss Torrents and its related proxy sites stretched into its second day, the rights holders argued that ISPs should bear the cost of compliance because their carriage service facilitates copyright infringement.

Telstra, Optus, TPG, and Foxtel spent the first day of the hearing arguing that they should be reimbursed for the costs associated with blocking access to foreign piracy websites.

However, on Wednesday, counsel representing the four music studios -- Universal Music Australia, Sony Music Entertainment Australia, Warner Music Australia, and J Albert & Son -- told Justice Burley that it is fair for the ISPs to bear the costs of complying with the blocking order because it is their business that provides a facility that is then used to infringe copyright.

ISPs are not "mere innocent bystanders", the rights holders said; they provide access to an online location that is "flagrantly" for the infringement of copyright. That makes ISPs "sufficiently proximate" to have to pay for their own expenses of blocking access to those websites, counsel for the music studios concluded.

Telstra claimed that ISPs are innocent respondents and have infringed no copyright. Rather, it is the online location, not the ISP, that facilitates copyright infringement, and the rights holders should therefore pay for the website blocks that protect their intellectual property.

Telstra said it would cost AU$795 in total to block the seven domain names associated with KickAss Torrents; by comparison, TPG cited a AU$750 compliance costs figure, and Optus and Foxtel adopted a AU$1,500 figure.

Calling the AU$1,500 amount an "appropriate and reasonable once-and-for-all figure", counsel for Foxtel Richard Lancaster said it covers the immediate costs of DNS blocking these seven sites, as well as incorporating some notion of sunk costs, future capital that may arise, and future blocking costs if there's a decision to add further websites to the blocking order.

TPG, which presented a compliance cost of AU$50 per domain name plus GST on Tuesday, was accused of plucking this figure from the air by counsel representing the music studios. "It's essentially arbitrary," they said, as illustrated by the conflicting numbers presented on Wednesday.

Agreeing with Telstra that it is the online location and not the ISP that facilitates infringement, counsel for TPG added that ISPs were recompensed for their compliance costs in the outcome of the Dallas Buyers Club case, and said the Federal Court should not decide costs differently just because KickAss Torrents is a foreign website.

Foxtel, walking what counsel for the music studios called an "extremely elegant" fine line, attempted to balance its interests as an ISP in this case with its stance as a rights holder in the other piracy site-blocking case between Foxtel/Roadshow and ISPs that is also currently facing Federal Court judgment.

Repeatedly stressing that its position in this case on rolling injunctions to block mirror sites and costs allocation are not representative of its stance on those matters in the Foxtel/Roadshow case, Lancaster said Foxtel has agreed "for reasons of practicalities" to go along with the positions of the other ISPs.

He did, however, also say that there is "enormous value in principle and practice" in the uniform treatment of ISPs on costs of compliance and legal costs, and while Foxtel would be content with no orders to be made in the other case, Lancaster stressed that one precedent should be set.

Optus emphasised the fact that if the Foxtel/Roadshow case had been decided already, it would not have had to make an appearance in the music studios' hearing, thus driving up its legal costs. In rare agreement, the music studios said the courts should not be clogged by fights about who should bear costs, with one precedent to determine the matter.

The case began in April, when the music studios filed a joint Federal Court application against ISPs in a bid to get them to block Kickass Torrents and its related proxy sites. The full list of respondents subject to the action involves TPG, Telstra, Optus, Foxtel, Virgin Mobile Australia, Vividwireless, Pacnet, Alphawest, and Uecomm.

In July, Burley J said the case would turn on whether Kickass Torrents is shut down for good following the arrest of the man allegedly running Kickass Torrents by the US Department of Justice (DoJ) earlier that month, and on the precedent set in the Foxtel/Roadshow case.

In the Foxtel/Roadshow case, ISPs Telstra, Optus, M2, and TPG argued in June that they should not have to bear the costs of compliance in implementing website blocks against torrenting sites The Pirate Bay, Torrentz, isoHunt, and TorrentHound and streaming site Solarmovie.

Costs were not determined prior to the passage of the Copyright Amendment (Online Infringement) Act 2015, which passed both houses of parliament in mid-2015 and allows rights holders to obtain a court order to block websites hosted overseas that are deemed to exist for the primary purpose of infringing or facilitating infringement of copyright under Section 115A.

Both cases are now awaiting judgment.