The court upheld the February 2010 decision of Justice Cowdroy in the proceedings brought against iiNet by the Australian Federation Against Copyright Theft (AFACT).

The essence of the decision is that by failing to act upon demands of AFACT to take action against iiNet’s account holders who had engaged in unlawful filing sharing, iiNet was not considered to have ‘authorised’ the breach, and therefore was not liable,” Mr Lambrick says.

“It is now clear that ISPs do not have a positive duty to cooperate with content owners in the policing of file sharing.”

The decision will have significant consequences for creative industries which are concerned about loss of revenue through file sharing. Proceedings were instituted by AFACT as a result of its inability to reach agreement with the internet industry for the policing of file sharing.

“Today’s decision means that there is now no pressure on the internet industry to implement a code of conduct with content owners, and in this regard the legal proceedings backfired against AFACT spectacularly.”

It is likely that AFACT will seek to appeal to the High Court, but it may not obtain leave to appeal given that it has now lost the case twice in the lower courts.

It is also very likely that AFACT and other content owners will now pressure the Federal Government to take action and implement legislation similar to legislation implemented in the United Kingdom and France which requires ISPs to cooperate with content owners.

“The Government should exercise care to ensure that any such legislation does not stifle internet activity or impose further costs,” Mr Lambrick said.

“A heavy-handed approach by Government may also result in downloaders adopting ‘safer’ methods of accessing content through technology such as content streaming, usenet news groups and the use of darknets.”