The case progressed in the Federal Court today, with iiNet barrister Richard Cobden continuing with his closing submissions.

As detailed earlier in the case, after AFACT sent many thousands of copyright infringement notices to iiNet, the ISP responded by sending them to the police. Cobden defended that decision today, claiming that the notices could constitute evidence of copyright crimes.

While the studios had earlier insisted that they would never sanction unlawful investigation methods, ITNews quotes Cobden as saying that in gathering that evidence, it was likely the investigators themselves had also committed offenses, breaching section 132AJ(1) of the Copyright Act.

The barrister said that both investigators committed primary acts of infringement online, and while AFACT had earlier claimed that iiNet users burned copyright material onto DVDs after downloading it, in fact the only evidence of that being done relates to the copies made by AFACT investigators.

Continuing to attack the evidence provided by AFACT and its anti-piracy partner DtecNet, Cobden returned to an earlier assertion that DtecNet investigators did not behave as normal BitTorrent users would. Regular users would allow their torrent client to connect to any peers, but DtecNet filtered out any that weren’t issued with iiNet IP addresses.

ARN quotes Cobden as saying this action was “foolish” as it slowed download times to several days. As we heard earlier in the case, this led to investigators counting the same infringement more than once.

Last week, Cobden argued that AFACT hadn’t provided any evidence that iiNet customers had engaged in copyright infringement as they were only sharing small parts of files (such is the nature of BitTorrent), rather than the “substantial” parts, as required under the law. In order to prove his point, Cobden went on to cite an earlier copyright case.

In 2002, Australian TV station Channel 9 sued Channel 10 citing infringement under the Copyright Act 1968. Channel 10 had broadcast short sections of Channel 9 programs The Today Show, Who Wants to be a Millionaire, Days of Our Lives and Sale of the New Century in their television show called The Panel. The view was that of the 11 segments played, only 3 were long enough to constitute infringement.

As anti-piracy tracking companies such as DtecNet only record an instance of alleged copyright infringement timed to a single second, Cobden is arguing that there is no evidence to prove any “substantial” part of any movie was shared by iiNet users.

Cobden went on to insist that in order to confirm that evidence of infringement provided by AFACT was indeed accurate (before passing notices to their customers), it would be necessary for the ISP to breach copyright.

“If one wanted to check the DtecNet evidence and see on a range of IP addresses supplied by iiNet that infringing material was online, the only way to do it would be to use the BitTorrent client like DtecNet did, construct the parameters of the IP address range, locate the file and compare it to details in the spreadsheets,” said Cobden, as quoted by ITNews.

Cobden said that if iiNet passed unproven infringement notices to its customers, it would face problems if the account holder disputed the claims. After all, iiNet had only AFACT’s word that an infringement had been carried out, but absolutely no proof or other information to have a meaningful discussion on the issue.

It is likely that Cobden will finish his closing submissions next Tuesday 24th. The Internet Industry Association’s application to become a ‘friend of the court’ will be heard on the afternoon of that day, bringing the original date forward by two days.

The case will then end either next Wednesday or Thursday, but readers are advised not to hold their breath for the verdict – it could take several months to arrive.

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The case continued in the Federal Court, with iiNet barrister Richard Cobden beginning his closing submissions.

Referring to the allegations by AFACT that it detected around 97,000 instances of copyright infringement carried out by iiNet subscribers, Cobden said that there was actually only sufficient evidence to prove that a single subscriber had carried out any. That individual was the mole planted by AFACT and DtecNet to carry out deliberate ‘infringements’ on behalf of the plaintiffs.

iiNet’s protection under Safe Harbor provisions which limit a carrier’s liability under the Copyright Act remained intact, since no infringer had been identified other than AFACT’s own investigator. Since he was authorized by the plaintiffs, he committed no offenses and could not even be accurately categorized as an infringer. On this basis, iiNet did not disconnect him.

Cobden admitted that AFACT’s method of counting infringements indicated that it’s possible that from a sample of 20 iiNet users, on average they could have downloaded two to three movies each in the reported monitoring period of 59 weeks.

“It’s clear from the accounts that ultimately the [infringing] activity is likely to account for a very modest percentage of that user’s activity [and] a very modest percentage of their quota,” said Cobden as reported by ITNews.

Cobden went on to say that this didn’t amount to the “dramatic” amounts of infringement alleged by AFACT, so there was no evidence that this activity drove the uptake of iiNet high-bandwidth accounts from which the ISP profited.

Disconnecting users on such limited numbers of infringements shown on the sample accounts would have been a disproportionate response, he added.

The iiNet barrister also spoke in detail on iiNet’s privacy responsibilities under Section 112E of Australia’s Telecommunications Act, which he said undermined AFACT’s claims that by not complying with its requests it authorized the infringing activities of its subscribers. Detailed information on this key aspect of iiNet’s defense can be found here.

iiNet was never legally obliged to deal with AFACT infringement notices, Cobden told the court, noting that the law concerning copyright “authorization” does not require any ISP to suspend or terminate a customer’s account.

Cobden attacked allegations by AFACT that iiNet’s business model relies on illegal file-sharing, saying that the anti-piracy outfit had a distorted view of the world.

“In many ways the applicants look at everything that iiNet does entirely through the prism of their own concern for copyright infringement,” he said, noting that the company had been in business for many years and had simply kept up with offerings from its rivals Telstra and Optus.

“Once you take that prism away and look at it in terms of business and keeping up-to-date with technologies, and keeping its customers happy, almost every document, internal document, takes on an entirely different reflection,” he added, as quoted by ZDNet.

Cobden said there was zero evidence to back up AFACT allegations that iiNet users burned downloaded material onto CDs and DVDs and distributed them. This, he said, significantly decreased the number of copyright infringements claimed by AFACT.

iiNet’s legal team will continue with their closing submissions next week.

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The case continued in the Federal Court, with AFACT continuing to make its closing submissions, marked by further attempts by barrister Tony Bannon to ruin the credibility of key iiNet witnesses Michael Malone and Steve Dalby.

Referring yet again to iiNet CEO Michael Malone’s earlier and multiple assertions that his company could not disconnect subscribers on mere allegations from a 3rd party, Bannon pointed that Malone had earlier referred to the evidence collected by anti-piracy tracking company DtecNet in a more positive light.

“But when asked the question in cross-examination, the truth is they regarded the notifications as compelling evidence,” said Bannon according to ITNews.

Based on what Bannon tried to insist was a contradiction, that “compelling” and “mere allegations” were incompatible when referring to the same material, Bannon asked the judge to disregard iiNet’s evidence.

Although earlier information about DtecNet’s methods were revealed in a closed-court session, CW reports that the anti-piracy company operated by downloading a portion of a file from iiNet subscribers while recording the IP address, the time of the transfer and the date, the protocol, the client id and a hash value.

Reiterating his earlier claims, Bannon insisted that chief regulatory officer Steve Dalby had deliberately exaggerated his claimed lack of understanding of BitTorrent and the infringement notices sent to iiNet by DtecNet. While Dalby had said that he had waited for AFACT to send more information, in fact internal iiNet email evidence showed that Dalby had discouraged further investigation, he said.

Bannon went on to state that companies like iiNet benefit greatly from illicit file-sharing, since the activity consumes a lot of bandwidth – the commodity the ISP sells to its customers.

Referring to an iiNet press release from late 2008 where the company said it would defend the court case, Bannon said the ISP had stated it could not disconnect a customer on a simple allegation. This, he said, amounted to assuring customers of their safety when carrying out illicit file-sharing.

Earlier in the case, iiNet claimed to have taken “reasonable steps” to deal with infringement on its network, an assertion roundly criticized by Bannon. The AFACT barrister said that iiNet has a technique to limit a subscriber’s access to the Internet if they don’t pay their bills, so this could easily be applied when an allegation of illicit file-sharing is provided by his client.

Bannon also said that since Westnet, the company iiNet had earlier acquired, already had a system in place to notify infringers, it was a “nonsense” to say that iiNet hadn’t got the facilities to deal with AFACT notices.

Bannon went on to tell the court that iiNet’s participation in discussions 4 years ago with the Internet Industry Association to create a code of conduct to deal with copyright infringement allegations, also did not constitute “reasonable steps”, since it didn’t address the “day to day” problems. Furthermore, he said that the overall plan by the ISPs was to aim at “doing nothing”.

Going on to strengthen his claim that iiNet “authorized and encouraged” the infringements of its customers, and in the face of iiNet failing to carry out any actions that could be described as “reasonable steps”, Bannon asserted that this meant that the ISP effectively allowed its subscribers to do whatever they liked on their Internet connection.

The case continues.

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The case continued in the Federal Court, with AFACT making its closing submissions and tearing into iiNet witnesses CEO Michael Malone and chief regulatory officer Steve Dalby.

The film industry, represented by chief barrister Tony Bannon, labeled Malone’s evidence as “incredible”, “evasive” and unreliable. Bannon said iiNet gave nothing but excuses for not acting on such notices and that Malone’s assertion that copyright laws should should be changed or an industry code introduced before he could act on infringement notices were “extreme”.

Since only Malone and Dalby appeared for cross-examination on behalf of iiNet, Bannon took the opportunity to criticize the company for not putting forward other staff from the company, who, Bannon claimed, would be better placed to answer the questions during the trial.

Bannon said this had put Malone and Dalby in the position of providing evidence on matters they knew nothing about, citing the pair’s lack of BitTorrent knowledge as a prime example.

“To put forward these two gentleman as the extent of familiarity of BitTorrent in the company is an entirely inaccurate picture of a company which plainly has a mass of technical expertise,” said Bannon, as reported by ITNews.

“It beggars belief that a company which paints itself as an Internet pioneer doesn’t have a level of knowledge within that company that knows exactly how the BitTorrent client works,” he added.

On an earlier claim where the iiNet CEO claimed to understand the BitTorrent protocol by not the operation of a torrent client, Bannon said it was a nonsense, to which insult to injury was added when it was revealed that iiNet operated its own BitTorrent tracker.

Bannon said it was clear to him that the only individuals in the court who claimed to know little to nothing about torrents were Malone and Dalby, but in reality the company understood the system perfectly well. Its motive for this stance, he said, was so that the company could distance itself from the accusations of authorizing the copyright infringements of their customers.

Bannon also heavily criticized Dalby’s evidence when he claimed to have the company’s policy on taking action only against repeat infringers “in his head”, insisting that no such policy exists.

iiNet is also asking the court to find its own terms and conditions both unenforceable and unreasonable, said Bannon as quoted by CW.

Although iiNet has asserted time and again in the case, that if a court ruled that someone had infringed copyright the ISP would disconnect them, the AFACT barrister said that iiNet’s own terms alone gave them the right to disconnect copyright infringers, and dismissed the ISP’s claims that the clause was unenforceable.

AFACT claims that iiNet engaged in secondary acts of infringement when it failed to stop its subscribers sharing illicit files on their network, citing the legal principles established in the 1975 case known as University of NSW v Moorhouse, details of which can be found here.

According to another report, the case could run over into a fifth week to 19th November and beyond to allow enough time for iiNet lawyers to prepare the company’s closing submissions.

The case continues.

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The case continued Friday in the Federal Court, with iiNet’s chief regulatory officer, Steve Dalby, taking the stand following his first appearance Thursday afternoon.

Yesterday, Dalby recalled having difficulty in understanding some of the terminology utilized by AFACT in the infringement notice spreadsheets it submitted to iiNet.

Dalby told AFACT barrister Tony Bannon that iiNet had told AFACT there was an issue with some items being unclear in the spreadsheets.

“There was no legend associated with this spreadsheet. I had to make an assumption. We asked AFACT for more information,” ITNews quotes Dalby as saying.

Bannon then criticized Dalby for not being specific and expecting AFACT to guess at which terms were not understood, but Dalby pointed out that he expected AFACT to contact the ISP for clarification.

Further discussion took place on the issue of IP addresses and how iiNet allocates them to customers. Time and again, Dalby explained that IP addresses are allocated to a customer account and they do not necessarily represent any particular computer that the customer may use.

In what is becoming a recurring theme, today Dalby told the court that iiNet had no intention of forwarding AFACT’s copyright infringement notices to its customers purely on their allegations.

“Our position was that we should not be doing AFACT’s work,” said Dalby. “If we had received authorization by way of court order, that would have changed our position.”

AFACT went on to tender a draft e-security code of practice from the Internet Industry Association (IIA) created earlier this year. It proposes that in future, ISPs could contact, and maybe even disconnect subscribers, who have malware-ridden computers which negatively affect networks. Despite Justice Cowdroy indicating that its relevance was peripheral to the case and wouldn’t but much use when he comes to make his decision, it was allowed.

Dalby said he believed that iiNet had not been involved in the draft and he was personally unfamiliar with it. CW reports that he had been quoted on the issue in the media, but Dalby said that it was a regular occurrence for the press to call him to comment on issues he was not yet familiar with, and in this particular case his comments were “neutral and non-committal”.

In September we reported that Australia’s Internet Industry Association (IIA) felt it had something to offer these court proceedings. IIA applied to be amicus curiae, a ‘friend of the court’, but AFACT objected, insisting the group would not be impartial and would favor iiNet.

The decision on whether this will be allowed or not has been delayed until next week.

In an indication that AFACT still objects to an IIA appearance, Bannon said that “….there’s a conceivable possibility they don’t want to add anything other than to say ‘hear, hear’,” apparently to the amusement of the court.

AFACT barristers are scheduled to make their closing statements next Monday afternoon.

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The case continued Thursday in the Federal Court, with iiNet CEO Michael Malone taking the stand for the fourth consecutive day, and possibly his last.

Not unusually for a copyright trial involving BitTorrent, the issue of The Pirate Bay was raised.

Yesterday AFACT barrister Tony Bannon incorrectly suggested that iiNet’s very own BitTorrent tracker’s functionality had been taken down, later to discover that in fact the court’s network blocked BitTorrent transfers.

Bannon indicated that he would like to be able to give a courtroom demonstration of The Pirate Bay Thursday, and the judge agreed that it would be possible to lift the block so he could do so.

According to ITNews, Bannon was today true to his word.

After the demo, Bannon enquired of Malone whether iiNet had a desire for its subscribers to be able to access the world’s largest tracker, “…when the only purpose it serves is providing a way to download unauthorized copies of films?”

This question was met with objection from iiNet barrister Richard Cobden, who argued that customer “desire” was irrelevant to the case. The judge, Justice Cowdroy, was also keen to discover the relevance.

Bannon then became the latest in a long line of movie and music industry lawyers to reveal that should his clients win the case, they will take legal action to have not only the world’s largest tracker blocked from iiNet’s customers, but other similar sites.

He also revealed that around 50% of the alleged copyright infringements in the case came courtesy of The Pirate Bay.

Then Bannon attempted to show that by allowing its customers to access The Pirate Bay, iiNet effectively sanctioned and authorized their infringing activities.

“We seek Mr Malone’s position as to whether or not his customers should have access to sites such as this,” said Bannon.

However, after legal argument, Bannon withdrew the question.

Malone did, however, concede that iiNet had taken no steps to block The Pirate Bay, but qualified this by indicating that the company didn’t possess the means to do so. Bannon asked if it was technically possible and Malone replied that he could achieve a primitive block with additional equipment, but even that could be easily circumvented

“To completely and conclusively block access to The Pirate Bay, I believe it to be beyond our technical capability or of any ISP,” replied Malone.

Asked by Cobden if iiNet had ever blocked any web sites, Malone said the company had not.

This technical inability led to iiNet pulling out of the Australian government’s filtering trials, reports ComputerWorld. Malone has been an outspoken critic of the filtering scheme, labeling it “fundamentally flawed” and saying his company would only participate in the trials to prove that filtering would fail.

The case continues.

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The case continued Wednesday in the Federal Court, with iiNet CEO Michael Malone taking the stand for the third consecutive day.

Again AFACT barrister Tony Bannon tried to portray iiNet as an encourager of copyright infringement on its network, by referring to iiNet marketing where the ISP measures bandwidth in terms of how much music or TV episodes people can download. Malone said the company did this simply to give a customer an easier barometer by which to measure their consumption.

When questioned on the music aspect, Malone said the company referred to legal downloads, such as those from iTunes. Bannon countered by saying this could not be the case, since iiNet did not count downloads from iTunes towards a customer’s bandwidth quota.

According to iTWire, a welcome email from iiNet to new customers ended with, “Thanks for choosing iiNet. Happy downloading.”

By drawing attention to the above ponts, AFACT hopes to show that iiNet encouraged infringements, thereby losing its safe habor protection as a carrier.

CW reports that AFACT presented press articles regarding the levels of BitTorrent transfers on the Internet, in the context of actions taken by ISPs in order to limit P2P traffic.

In one article, Malone had said that BitTorrent transfers accounted for around 50% of all Internet traffic and admitted in court that BitTorrent had been used on iiNet’s network since it became available. He went on to agree that while much of this traffic involved the transfer of movies and TV shows, he didn’t feel that “..every young person in Australia is downloading illegally using BitTorrent.”

One exchange apparently raised a laugh in the courtroom when Bannon accused Malone of attracting heavy-usage customers in order to boost iiNet profits.

“I would prefer [those customers] go to someone else and let someone else be sued,” said Malone.

“And you’re happy to take their money in the meantime?” Bannon asked.

“Yes,” he replied.

Yet again, Bannon raised the issue of iiNet’s failure to forward AFACT copyright infringement allegations to its customers. However, an email presented from the Internet Industry Association’s Peter Coroneos, indicated that he was concerned that doing so could lead to an assumption that ISPs are responsible for the actions of their customers.

In the email exchange with Malone, Coroneos said it would be preferable and advantageous for all involved if the content owners could provide some legal alternatives.

After Bannon showed the court documentation showing policies in place at rival ISPs to deal with allegations of copyright infringement, Malone again confirmed that iiNet has no formal policy on how to deal with these type of allegations, noting that the company had yet to be presented with evidence of what he described as a “repeat infringer”.

Earlier in the case, Malone had defined a repeat infringer as one who had been proven as such by a court, but Bannon mocked Malone, asking if the iiNet CEO had just heard what he’d said and would he like to think about the question again for a moment.

Malone said he didn’t and Bannon accused him of treating the proceedings as a game.

The case continues tomorrow.

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Continuing first from yesterday’s proceedings, ITnews reported an exchange between iiNet CEO Michael Malone and movie industry barrister Tony Bannon, over Malone’s understanding of BitTorrent.

Malone told the court that while he had an understanding of the protocol, he had never used uTorrent, the client used earlier by Bannon to give the court a technical demonstration. Bannon’s demo used iiNet’s own tracker (an installation of RivetTracker) which it has used to distributed several press releases which all relate to the trial.

It is difficult to see where Bannon was going with his questioning, but it began with an admittance by Malone that the torrent files were intended to be used by people with access to a BitTorrent client. Malone then denied that the releases were specifically targeted at iiNet customers, noting that anyone can access them

Under further questioning regarding the inclusion of a note in the torrent files dialogue box indicating the files were non-pirated, Malone reiterated that while he had an understanding of the BitTorrent protocol, he did not have experience of the client used by Bannon

Then, with an apparent deafness towards Malone’s perfectly clear response, and demonstrating an apparent ignorance between a BitTorrent client and the BitTorrent protocol, Bannon sought to press Malone into admitting to his 400,000 customers that he didn’t understand BitTorrent.

Again, Malone stated that he didn’t know how to put a comment on a torrent file, but Bannon persisted in trying to get Malone to admit that he knows how uTorrent 1.8.4 works, but Malone said he’d never used it. There could, however, be people in iiNet who had, he conceded.

Bannon then said that in the last 24 hours the torrent file functionality for the press releases had been removed. Malone said that if it had, he certainly hadn’t requested it, asking Bannon how he was attempting to access the Internet, suggesting that a firewall in the court was stopping the transfer.

TorrentFreak’s checks show a single seeder on each torrent and each one worked absolutely perfectly.

Moving on to iiNet’s handling of copyright infringement allegations, iTWire reports that Bannon tried to paint a picture that iiNet’s policy of forwarding AFACT notices to the police was little more than a cynical attempt to pretend that they were dealing with them, when in fact they were not.

For the umpteenth time in this case, Malone said that he was under no obligation to act on mere allegations from AFACT which were not backed up by a court order.

“AFACT was telling us to disconnect customers without further ado,” said Malone. “The question is, what should we do when confronted with illegal activity? And our response is, report it to the proper authorities.”

While iiNet said it had always been policy to forward the notices to the police, ITWire notes that evidence emerged that the company had sent notifications twice, although there was no indication of how many infringement notices were in each batch.

Yesterday Malone said that the evidence provided by tracking company DtecNet’s investigation was “compelling” and should be reviewed by a third party and the courts. In the face of this statement, Bannon asked Malone why he had not taken action based on AFACT’s allegations.

“This is a right,” said Malone, “not an obligation of iiNet.”

These days arguments in favor of anti-piracy action seem almost incomplete with the obligatory reference to child pornography, as we heard in yesterday’s propaganda piece from CBS. This case is no different.

Bannon put it to Malone that if the evidence provided was “compelling” and Malone had received “compelling evidence” that an iiNet customer was accessing child porn, would the company allow the user to do so “day after day?”

Of course, any allegations of this nature would involve the police, and the police or the courts would do the investigation, get the proper paperwork and order iiNet to comply, which they naturally would. Malone said that on mere AFACT allegations of civil infringement (as apposed to an infinitely more serious and jailable criminal offense), such action would not be permitted.

Bannone then pressured Malone to admit that “…you’re happy to tell your customers this from the witness box,” that iiNet will not disconnect subscribers for infringing copyright.

At this point one has to wonder if Bannon is deaf or just plain stubborn. It is absolutely crystal clear to anyone following these proceedings that yes, iiNet will disconnect customers for copyright infringement, providing there has been due process and a court has ruled that disconnection is appropriate.

The case continues tomorrow.

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Today, iiNet CEO Michael Malone was questioned at length over dealings he had with Westnet, another ISP which was acquired by his company for AUS $81 million in May 2008.

Westnet had developed an automated system to pass on infringement notices from copyright holders to its customers, a process which Malone earlier described as “making more work for no benefit,” and was said to be scathing in defense of due process and consumer rights.

“Taking the opposing argument, a random third party is lodging an unsubstantiated accusation against a customer and you’re passing it on?” wrote Malone in an email to Westnet, continuing, “Your current approach is doing damage to the industry and iiNet’s position on this matter.”

According to itNews, today Malone admitted he had “hit the roof” when he had discovered Westnet’s policy on infringement notices.

When any company acquires another there is often a need to standardize procedures and policies, and with iiNet and Westnet the position was no different. Malone said that whenever he found differences in policies between the two companies he took steps to bring those of Westnet into line with those at iiNet. He also stated that he was unaware that Westnet had failed to follow his instructions and adopt iiNet group policy following the acquisition.

One of the reasons he sought to change the Westnet policy, he said, was to bring the company into line with the position held by the Internet Industry Association on the issue.

Cross-examining Malone on iiNet’s role in providing a broadband service which enabled users to share movies using BitTorrent, senior counsel Tony Bannon for the movie industry referred to infringement notices sent to iiNet for the Sony movie, Pineapple Express.

According to CW, Malone responded that as a mere service provider, iiNet had no way of knowing if any of its customers were engaged in copyright infringement, but could confirm that the individual who allegedly committed the breaches was still an iiNet customer.

The company was not aware, however, if the customer continued to breach copyright.

The case continues tomorrow.

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After AFACT dropped the claim that iiNet was a primary infringer by caching copyright works on their servers, according to ZDNet the case will now examine a sample of 20 iiNet customer accounts.

Earlier in the case, AFACT submitted evidence that it claimed showed around 95,000 breaches of the studios’ copyrights by iiNet subscribers. iiNet barrister Richard Lancaster cross-examined AFACT lawyer Michael Williams on techniques used by AFACT’s investigators to count these alleged breaches of copyright.

The recording of these claimed breaches were described by iiNet lawyer Richard Cobden during day two of the trial as a “novel composition and adventurous” and “a dramatic extension of the application of the law”. He then went on to describe AFACT’s claims of 94,942 infringements as “artificially inflated by a contrived process”.

It was then revealed in court that AFACT had probably counted some of the same infringements more than once – if it checked in the morning for infringements and then again in the afternoon, if the same infringement on an individual’s computer was still ongoing, AFACT counted it as yet another infringement, not a single extended one.

Another process AFACT used to record alleged breaches of copyright breach was by using a Reverse DNS Lookup – a process used to determine a domain name associated with a an IP address by using the Domain Name System (DNS) available on the Internet.

iiNet’s lawyer Richard Lancaster said this was not a reliable method since DNS records were often out of date. Lawyer for AFACT Michael Williams agreed this method was “not 100 per cent reliable”.

While re-addressing the possibility that AFACT was relying on evidence which artificially inflated the number of alleged infringements, following cross-examination both AFACT and iiNet conceded that technical issues can cause iiNet subscribers to leave and then reconnect to the network, resulting in the same iiNet users being allocated multiple IP addresses during an online session. If AFACT was tracking these particular users, it would then identify each IP address as a separate infringement, which would inflate their claims on numbers of infringements.

Of course, the accuracy of such evidence is important, since any damages awarded for, say, 50,000 breaches, would be substantially less than 95,000 breaches.

“If the judge finds further down the track that iiNet is guilty of the claims AFACT is making – which I don’t believe they will – because they are seeking damages, the number of offences does matter in terms of the final decision on what the damages will be,” an iiNet spokesman told ARN.

Today’s proceedings bring an end to the first two weeks of hearings in the case. It will resume November 2nd.

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Today iiNet’s lawyers cross-examined representatives from 20th Century Fox, Disney, Warner and Paramount via video link.

After being accused earlier in the trial of having deals in place with BitTorrent Inc, ZDNet reports that Paramount admitted it had a deal with the company for it to prevent illegal copies of its movies being shared via its BitTorrent software. However, this seems more likely to be a filter applied to search results on the BitTorrent.com site, rather than any obstruction in the software itself. Any notion that BitTorrent Inc spied or spies on users of its software in order to restrict their activities would be a disaster for the company.

Paramount could not confirm if the deal prevented piracy or not but acknowledged that it ran from October 6 2006 until October 6 2008, and had now expired. Paramount had an option to extend it for a further year, but did not.

As mentioned in our earlier coverage, iiNet lawyers suggested that the publishing of studio logos (including that of Paramount) on the BitTorrent.com website could have caused some confusion for potential BitTorrent downloaders.

However, according to a report, Paramount could be set to lodge a formal complaint with BitTorrent Inc over what it described as “unauthorized use” of its logo. This development seems to be somewhat of a cheap shot by Paramount. Their logo has been on the BitTorrent.com site for a very long time (and remains there today) so the ‘revelation’ in court that it exists there should hardly come as a surprise – they were business partners after all.

iiNet lawyers put it to 20th Century Fox anti-piracy boss Ronald Wheeler that making material available online helped to reduce piracy. While he could not confirm that immediately, he did say that because content is available online, it counters the argument that the only way to obtain the content is illegally.

Warner representative David Kaplan confirmed that his company also had a deal with BitTorrent Inc but although he couldn’t be certain, he felt the deal had expired since the MPA hadn’t kept him updated about it.

iiNet lawyers also produced a document which was alleged to be license agreement between Warner and the defunct Wurld Media, to distribute content via P2P. While Kaplan admitted the deal was now dead, he confirmed the authenticity of the document.

A further interesting development came after AFACT chief Neil Gane admitted that his organization’s investigative techniques – hiring someone to pretend to be a regular iiNet customer in order to engage in file-sharing of copyright works with other iiNet customers – could be construed as copyright infringement in itself.

In last week’s court sessions, iiNet lawyers put it to Gane that AFACT could have been involved in condoning copyright infringement, referring to the actions mentioned in the previous paragraph.

Gane admitted that there would have been occasions where AFACT’s own investigators had undertaken an activity which had been described by iiNet lawyers as “an infringement of copyright”.

“And that’s something you will tolerate happening at your own premises?” said iiNet lawyer Richard Cobden.

“It’s an investigative technique,” Gane replied

The case continues.

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After Justice Cowdroy allowed several documents to be used in court yesterday which were used by iiNet’s legal team to cross-examine AFACT witnesses, senior counsel Tony Bannon for the movie industry said he wants to subpoena the Internet Industry Association (IIA) for documents it says relates to meetings held with ISPs in 2006/2007 on how to handle p2p copyright infringement.

The documents are required for further cross-examination of witnesses. Earlier IIA had applied to be a friend of the court, an application to which AFACT objected.

Also revealed in court today is that iiNet is on the brink of launching an online kids entertainment service. Nothing particularly unusual about that, until one learns of iiNet’s business partner – TV company Village Roadshow, one of the litigants in the case. The content will be free to view and iiNet won’t even count the bandwidth its customers use on these downloads.

AustralianIT notes that iiNet was due to announce the service in around a month’s time, but will now launch it this weekend.

A computer forensics investigator who was previously a key witness in the 2004 KaZaA trial, was called by iiNet’s legal team today. Nigel Carson, a key witness for AFACT, was questioned on whether an IP address alone is enough to identify an individual infringer.

Carson admitted that any ISP account could have multiple users in the same household and could have other unauthorized 3rd-party users if a wireless router was compromised.

He further admitted that to accurately identify a precise individual, a court order and police action could be required to interview account holders and other individuals living at the address.

The open court session was also closed for the continuing cross-examination of DtecNet’s CTO Kristian Lockegaard which began yesterday.

The case continues to the end of this week, where there will be a two week gap before the court reconvenes for a further two weeks.

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Today’s evidence included that given by anti-piracy tracking company DtecNet’s CTO Kristian Lokkegaard. The day ended in a closed court session where the inner workings of the company were discussed – if ever there needed to be something discussed completely in the open, this is it, but it wasn’t to be.

Lokkegaard’s cross-examination centered around the question of DtecNet’s operations. When the company tracked BitTorrent users, did it behave in a normal way, as a regular BitTorrent user would?

iiNet lawyer Richard Lancaster put it to Lokkegaard that his company deliberately filtered their connections to other BitTorrent users to ensure that only iiNet customers were tracked. Lokkegaard agreed with this assertion but couldn’t confirm if his company had also filtered by country.

Lancaster put it to Lokkegaard that an ordinary BitTorrent user would not filter IP addresses, but Lokkegaard said this was untrue, saying that users can filter out IP addresses that they don’t want to connect to.

“Users do that to avoid connecting to companies like ourselves. They will typically try to stay away from something that looks like a corporation because a lot of people would potentially suspect them of being a non-private user,” he said.

While there are techniques and software available to enable BitTorrent users to filter connections to other users – for example using a blocklist in conjunction with software such as Peer Guardian – it’s a bit of a stretch to say that “ordinary” BitTorrent users would take such measures.

Indeed, it would be extremely empowering for BitTorrent users to know the IP addresses that DtecNet operate their tracking systems from – to know those would render their entire operation useless, if “ordinary” users took such measures. But they most definitely do not – most “ordinary” users take no measures at all.

When pressed, however, Lokkegaard conceded that it would be unusual for BitTorrent users to take measures in order to only connect to peers on the same ISP.

The same could not be said about AFACT investigator Aaron Herps. When he was cross-examined it was put to him that he had employed an IP address filter which enabled him to connect to only iiNet IP addresses.

“Is that something an ordinary user of uTorrent would use?” said iiNet barrister Richard Cobden.

“Many users do, yes,” responded Herps.

But of course, he didn’t answer the question. While it is completely possible to only connect to BitTorrent users on a particular ISP, “ordinary users” absolutely do not do this. It would be entirely reasonable and true to state that “ordinary users” have no idea this is even possible.

Lokkegaard’s cross-examination will continue tomorrow.

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Yesterday the court heard from iiNet barrister Richard Cobden, who described how
several of the plaintiffs and members of the MPAA had previously entered into contracts with BitTorrent Inc, the source of the official BitTorrent software.

He said that the logos of these studios appeared on BitTorrent.com (placed directly under the ‘free download’ link for the official BitTorrent client) and also on Mininova.

This lead Cobden to declare that the studios “….have engaged, at least from the logos on BitTorrent Inc, in the promotion of BitTorrent, the vehicle for all infringement in this case.”

Today AFACT barrister Tony Bannon criticized iiNet for these claims, describing them as “an excellent example of iiNet’s intent to focus not on legally relevant and factually indisputable matters but to focus on the legally irrelevant.”

Bannon said that the claims show that iiNet wishes to give the court the impression that his clients encouraged the exact same copyright infringement they now complain about in this case, going on to call the claims “legally irrelevant” and noting that the contacts with BitTorrent.com were terminated last year.

While Bannon insisted the details of those contracts are confidential, he was prepared to reveal that they included terms which required BitTorrent Inc to filter out torrents from their search engine which linked to illicit copies of the studios’ movies. He also said that iiNet knew that the contracts had been terminated but had not relayed that fact to the court, or when it spoke to members of the media.

However, an iiNet spokesperson seemed unrepentant. “The fact is the logos are still on the BitTorrent sites and serves the argument we are making, which is a couple of clicks away from where the logos are, you can download things. Part of the argument we are making in relation to all that is when it comes to what are ‘reasonable steps’ for iiNet to take about illegal downloading when they are not even asking BitTorrent to do the same thing?”

Earlier this week, iiNet had presented information to the court which showed that its competitors – other ISPs operating in a similar manner – also did not give in to AFACT demands that they should disconnect their copyright-infringing customers, backing up claims that iiNet had been singled out by the movie industry.

Tony Bannon criticized iiNet for producing this evidence, describing it as meaningless and “….an attempt to take the case outside of the real issues.”

AFACT boss Neil Gane briefly appeared on the witness stand and was questioned by iiNet barrister Richard Cobden. The exchange ended in a dispute over what confidential material can or cannot be used in the case.

Judge Cowdroy will decide on the issue by next Monday when Neil Gane retakes the stand.

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Today a very interesting and somewhat unexpected angle to iiNet’s defense was revealed by the ISP’s barrister, Richard Cobden.

Earlier AFACT had insisted that iiNet did nothing to discourage its subscribers from downloading copyright material and therefore condoned their behavior, but it seems that the studios aren’t exactly blameless when it comes to encouraging the use of BitTorrent.

It now appears that the studios themselves were a source of potential confusion experienced by new BitTorrent users when they were trying to decide (if they were aware at all) what is ok to download and what is not when using the protocol.

Cobden told the court that several of the plaintiffs and members of the MPAA had previously entered into contracts with BitTorrent Inc, the source of the official BitTorrent software.

Furthermore, the logos of these studios appeared prominently on BitTorrent.com and also on Mininova, leading Cobden to declare that the studios “….have engaged, at least from the logo on BitTorrent Inc, in the promotion of BitTorrent, the vehicle for all infringement in this case.”

Cobden then went on to show how a user would go about obtaining the BitTorrent client, noting the above-mentioned logos were placed directly under the ‘free download’ link for the official BitTorrent client.

Once the client was downloaded, the user was then prompted to start searching the web for things to download, but despite the contracts between the studios’ and BitTorrent Inc, nowhere did it indicate that users should not download the studios material, said Cobden.

Downloads of pirate material could be found a couple of clicks away from the studios logos, he added, including links to Torrentz.com and Mininova. Furthermore, despite the agreements the studios had with BitTorrent.com, iiNet had no relationship with that or any other torrent site.

Cobden went on to say that while AFACT seemed only too happy to pressure iiNet to take action against alleged copyright infringers, it took no action against them directly, preferring the ISP to carry the costs of defending the studios’ copyrights instead.

He said that the studios had put forth ”exuberant rhetoric” in respect of the alleged infringements, but iiNet said it conducted itself in similar ways to its rivals Telstra and Optus – who it appears also took no action based on AFACT allegations.

Time and again AFACT has claimed that since iiNet took no action against its allegedly infringing subscribers, this was tantamount to condoning their illegal activities, but unfortunately for the anti-piracy group, this argument was quickly turned around on them by iiNet’s lawyer.

Since AFACT nor the studios took any legal action directly against alleged copyright infringers, they too must’ve condoned their copyright infringements.

The case continues.

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AFACT said that the email documents, which were seen by CW, show that the ISP could have done more to deal with the alleged infringements.

AFACT’s barrister, Tony Bannon, noted that iiNet training documents indicated that the ISP knew its customers were using P2P networks, which he said showed the the ISP knew what its customers were doing. Of course, just because iiNet knew the protocols or networks being used by its subscribers, it doesn’t necessarily follow that they knew the copyright status of material being transferred. Indeed, with BitTorrent, monitoring and identification (by, for example, using fingerprinting techniques) is almost impossible.

The emails, which were sent between iiNet CEO Michael Malone and bosses of another ISP, Westnet, which at the time was being acquired by iiNet, were said to contain discussions of how to deal with AFACT infringement notices.

According to ITnews, Malone asked how Westnet dealt with these infringement notices. Westnet had developed an automated system to pass on infringement notices to its customers, a process Malone described as “making more work for no benefit.”

While Westnet said it was “acting with conscience” when it passed the AFACT infringement notices on to customers, Malone was said to be scathing in defense of due process and consumer rights.

“Taking the opposing argument, a random third party is lodging an unsubstantiated accusation against a customer and you’re passing it on?” wrote Malone in an email, continuing, “Your current approach is doing damage to the industry and iiNet’s position on this matter.”

After AFACT ended its opening statements around lunchtime, the court heard those from iiNet.

Richard Cobden for the ISP characterized AFACT’s case as a “novel composition and adventurous” and “a dramatic extension of the application of the law”. He then went on to describe AFACT’s earlier allegations of 94,942 infringements as “artificially inflated by a contrived process”.

Cobden said that AFACT incorrectly counted these infringements. According to CW, AFACT counted the same infringements more than one – if it checked in the morning for infringements and then again in the afternoon, if the same infringement on an individual’s computer was still ongoing, AFACT counted it as another infringement, not a single extended one.

Tomorrow will see the end of iiNet’s opening arguments and then it will be AFACT’s turn to call its first witnesses.

This section of the case is scheduled to run for two weeks, then everyone will take a break for another two. The case will then conclude after a further two weeks of hearings.

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The studios – Village Roadshow, Universal Pictures, Warner Bros Entertainment, Paramount Pictures, Sony Pictures Entertainment, Twentieth Century Fox Film Corporation, Disney Enterprises, Inc. and the Seven Network (all under the umbrella of AFACT) – claim that iiNet knew about the copyright infringements of its subscribers, yet did nothing about them.

The case, officially known as Roadshow Films Pty Ltd ACN 100 746 870 & Ors v iiNet Ltd ACN 068 628 937, is particularly serious, since its outcome could determine if ISPs can be held liable for the infringing actions of its customers.

Earlier, AFACT investigators claimed to have recorded around 100,000 copyright infringements carried out by iiNet’s customers using BitTorrent.

For the benefit of the court proceedings, AFACT presented just under 30,000 sample infringements covering 86 copyright works, including two Batman movies, Spiderman 3, Happy Feet, Pirates of the Caribbean and TV shows The Simpsons, Family Guy, Bones and Heroes.

The Angelina Jolie movie Wanted was the title claimed to be most infringed by iiNet’s subscribers, with Will Smith’s Hancock coming in second place. Both clocked up more than 1,000 instances of alleged infringement.

“By making those films available in those 29,914 instances, iiNet customers invited any and every user of the freely available BitTorrent software program to download any and every part of those infringing copies,” said an AFACT lawyer. He then went on to speculate that the 29,914 figure would have to be multiplied many times to get the overall picture of the making available carried out by iiNet’s customers.

AFACT claimed that it had sent information about these infringements to the ISP and demanded that iiNet disconnect the culprits, but the ISP did nothing.

AFACT barrister Tony Bannon also said that iiNet failed to enforce its own user agreement, which includes a clause prohibiting its users from using the service for illegal activities.

Bannon went on to argue that iiNet benefits from piracy since illegal downloaders use a lot of bandwidth and the more they use, the more the ISP makes. He said that disconnecting them would mean that iiNet would lose a customer, something the ISP wishes to avoid, hence the lack of action.

It’s always been somewhat of a mystery why AFACT chose to single out iiNet for legal action, particularly since all other ISPs in Australia have been operating on a similar basis. However, when iiNet made an earlier request to include as evidence how other ISPs responded to AFACT complaints, it was denied.

However, after Bannon gave a video presentation of AFACT’s investigator downloading Batman Begins using BitTorrent, Justice Cowdroy then asked if he could be shown other ISPs said to be facilitating file-sharing.

“Can you show me, Mr Bannon, how many other internet providers are providing the same sorts of information? What other ones right now are doing this?” he said, noting that that iiNet had appeared just four times.

Bannon could not recall the names of the other ISPs and the judge indicated he would be keen to see a live BitTorrent demonstration, rather than just a recorded demo.

The case continues. The defense will present its case later this week.

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AFACT’s position in the case – officially known as Roadshow Films Pty Ltd & Ors v iiNet Ltd – is that iiNet “failed to take reasonable steps, including enforcing its own terms and conditions, to prevent known unauthorized use of copies of the companies’ films and TV programs by iiNet’s customers via its network.”

AFACT previously demanded disconnection for those iiNet subscribers alleged to have infringed their copyrights by sharing material using BitTorrent. iiNet refused to comply and legal action against them followed.

In addition to AFACT’s assertion that iiNet committed secondary acts of infringement, i.e it is responsible for the copyright infringing actions of its subscribers (something it denies), AFACT had earlier claimed that iiNet engaged in primary infringement too.

Now, just days before the trial begins, AFACT has withdrawn this key part of its claim against iiNet.

The ridiculously optimistic primary infringement claim centered around AFACT’s assertion that iiNet cached the illicit content being shared by their file-sharing customers on their own network, which effectively turned the ISP into a distributor of copyright works. Of course, this is how all ISPs and indeed the Internet works – by simply copying digital data from one place to another.

A spokesman for iiNet told AustralianIT that the withdrawal indicated that AFACT’s legal team had earlier “fundamentally misunderstood” how an ISP works and had been “clutching at straws”.

Indeed, it is very difficult to disagree with this assessment, but AFACT remains upbeat.

“The authorization part of the case, which says iiNet failed to prevent online copyright theft of customers, has always been the main part of the case. The cache and conversion claims were always subsidiary,” said an AFACT spokesperson.

This isn’t the first time that AFACT has removed a key claim against iiNet. Earlier the anti-piracy group alleged iiNet was a primary copyright infringer and directly responsible when it refused to disconnect alleged pirates within its subscriber base. The allegation, know as “conversion”, is that iiNet interfered with the studio’s “right of possession”, a breach of their rights. It was later withdrawn.

The outcome of the case will be hugely significant in Australia. If AFACT wins, all ISPs in Australia could be held legally liable if they are made aware of copyright infringers on their network yet fail to take action against them.

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Now Australia’s Internet Industry Association (IIA) is set to request permission to join the fight.

IIA has more than 140 members and has applied to offer its expertise to the proceedings as amicus curiae (friend of the court), as explained by iiNet’s chief regulatory officer Steve Dalby;

“What an amicus is required to do is to provide information that is to the public interest that may or may not come out of the evidence provided by the parties.”

However, while iiNet has welcomed IIA getting involved, the same enthusiasm is not shared by AFACT. Since iiNet is a member of IIA, AFACT claims that it would be impossible for the industry association to be neutral on the issue.

AFACT went further with its accusations of non-impartiality by claiming that IIA had been working with iiNet on the background of the current case. However, according to the ARN report, iiNet denied that IIA had assisted with the case.

Dalby insists that IIA’s involvement in the case would not prove provide iiNet with an advantage and said that iiNet works with IIA and lots of other groups adding, “We would happily work with the movie industry if it was prepared to work with us to develop systems to distribute its products.”

The judge in the case will decide if IIA’s application will be accepted shortly and the trial itself will begin in less than a month on October 6th.

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Earlier we reported how AFACT had got an individual to sign up as an iiNet customer and commit a kind of ‘authorized copyright infringement’ in order to gather evidence on alleged pirates. AFACT then complained to iiNet of this individual’s ‘infringements’ but iiNet took no action against him, boosting the claims that the ISP knew about piracy, but did nothing about it.

Now, according to an iTNews report, iiNet has been ordered by Australia’s Federal Court to hand over the records of twenty ‘pirate’ customers. The information will include IP addresses allocated to these individuals and their “download histories” – it is far from clear what these records will consist of or how detailed they are.

The information will be used as evidence in the case, but fortunately for these twenty individuals, information which personally identifies them will be removed. The disclosures could’ve been even greater in number, since Steve Dalby from iiNet told iTnews that AFACT originally wanted the details from 300-400 customer accounts to be handed over.

An AFACT spokesman confirmed that several of the twenty accounts had been nominated by the anti-piracy group since these were tracked transferring material by their investigator.

Executive Director of AFACT Adrianne Pecotic commented, “We are confident that the sample of twenty accounts ordered by the Court to be provided by iiNet will be more than adequate to illustrate the infringing behaviour of iiNet’s subscribers.”

On the other side, iiNet has voiced concern that so far AFACT has refused to hand over documents which would reveal if it made copyright-related demands such as those outlined in this case to ISPs other than iiNet. Steve Dalby of iiNet said they were trying to work out why AFACT and its Hollywood paymasters had chosen to pick on one Australian ISP to take action.

“AFACT hasn’t told us what it is we didn’t do; they have simply said we didn’t take reasonable steps to stop copyright infringement on our network. What we’re trying to understand is what arrangements are defined as reasonable,” iiNet’s Dalby told iTnews.

“There are 400 ISPs operating in Australia. If we were expected to take specific actions that nobody else is required to undertake, we would argue that is quite unreasonable. So we are asking AFACT the question while under the confidentiality of the court – what agreements do you have with other ISPs?”

iNet will get their way on this request, as the court has ruled that the ISP can see any “form of demand” AFACT has served on other ISPs in Australia.

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