FEDERAL COURT OF AUSTRALIA

Dallas Buyers Club LLC v iiNet Limited (No 5) [2015] FCA 1437
Citation:

Dallas Buyers Club LLC v iiNet Limited (No 5) [2015]

FCA 1437

Parties:

DALLAS BUYERS CLUB LLC and VOLTAGE

PICTURES LLC v IINET LIMITED, INTERNODE
PTY LTD, AMDET BROADBANK PTY LTD, DODO
SERVICES PTY LTD, ADAM INTERNET PTY LTD
and WIDEBAND NETWRORKS PTY LTD

File number:

NSD 1051 of 2014

Judge:

PERRAM J

Date of judgment:

16 December 2015

Catchwords:

PRACTICE AND PROCEDURE abuse of process

consideration of ability of a party to re-litigate interlocutory
matters whether arguments put previously properly
considered whether case now sought to be put materially
different whether adjournment application should be
allowed to permit additional evidence to be adduced

Legislation:

Copyright Act 1968 (Cth) s 115

Federal Court Rules 2011 (Cth) rr 7.22, 39.05(c)

Cases cited:

Aktas v Westpac Banking Corporation (No 2) (2010) 241

CLR 570 cited
Aristocrat Technologies Australia Pty Ltd v DAP Services
(Kempsey) Pty Ltd (in liq) (2007) 157 FCR 564 cited
Australian Competition and Consumer Commission v
Adata (Vic) Pty Ltd (No 2) [2015] FCA 272 cited
Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 cited
Brimaud v Honeysett Instant Print Pty Ltd (1988) 217 ALR
44 applied
Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317
cited
Dallas Buyers Club LLC v iiNet Limited (No 4) [2015]
FCA 838 cited
Hooper v Kirella Pty Ltd (1999) 96 FCR 1 cited
Roadshow Films Pty Ltd v iiNet Ltd (No 2) (2012) 248 CLR
42 cited
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 323
ALR 1 cited
Winnebago Industries Inc v Knott Investments Pty Ltd
(No 4) [2015] FCA 1327 cited

-2-

Date of hearing:

9 December 2015

Place:

Sydney

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

55

Counsel for the Prospective

Applicants:

Mr I Jackman SC

Solicitor for the Prospective

Applicants:

Marque Lawyers

Counsel for the Respondents:

Mr RPL Lancaster SC and Mr C Burgess

Solicitor for the

Respondents:

Thomson Geer Lawyers

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
BETWEEN:

NSD 1051 of 2014

DALLAS BUYERS CLUB LLC
First Prospective Applicant
VOLTAGE PICTURES LLC
Second Prospective Applicant

AND:

IINET LIMITED
First Respondent
INTERNODE PTY LTD
Second Respondent
AMNET BROADBAND PTY LTD
Third Respondent
DODO SERVICES PTY LTD
Fourth Respondent
ADAM INTERNET PTY LTD
Fifth Respondent
WIDEBAND NETWORKS PTY LTD
Sixth Respondent

JUDGE:

PERRAM J

DATE OF ORDER:

16 DECEMBER 2015

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.

The prospective applicants application of 23 September 2015 be dismissed with

costs.

2.

Unless further application be made by the prospective applicants beforehand, dismiss

the proceeding in its entirety at noon on Thursday 11 February 2016.

Note:

Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
BETWEEN:

NSD 1051 of 2014

DALLAS BUYERS CLUB LLC
First Prospective Applicant
VOLTAGE PICTURES LLC
Second Prospective Applicant

AND:

IINET LIMITED
First Respondent
INTERNODE PTY LTD
Second Respondent
AMNET BROADBAND PTY LTD
Third Respondent
DODO SERVICES PTY LTD
Fourth Respondent
ADAM INTERNET PTY LTD
Fifth Respondent
WIDEBAND NETWORKS PTY LTD
Sixth Respondent

JUDGE:

PERRAM J

DATE:

16 DECEMBER 2015

PLACE:

SYDNEY
REASONS FOR JUDGMENT

Introduction
1

Dallas Buyers Club LLC and Voltage Pictures LLC (together DBC) apply to lift the stay of
Order 1 made on 6 May 2015. By Order 1, I had granted DBC preliminary discovery against
the ISPs:

see Dallas Buyers Club LLC v iiNet Limited [2015] FCA 317 (the April

Judgment). In Dallas Buyers Club LLC v iiNet Limited (No 4) [2015] FCA 838 (the August
Judgment), I indicated that I would lift that stay if DBC undertook that any letter of demand
sent by it to an account holder demanded no more than:

-2(a)

the retail price of a purchased copy of the Film; and

(b)

a proportion of DBCs unrecoverable costs associated with obtaining the account

holders details.

I also required DBC to lodge with the Court a bond of $600,000 to secure its obedience to its
undertaking as to the demands it would make of account holders before I would release the
account holders information. I did this since it has no assets within the jurisdiction which
could be forfeited if it breached its undertaking.

DBC has now applied to lift the stay of Order 1 again. In doing so, it does not proffer the
undertakings specified in the August Judgment. It wishes, in particular, to be permitted to
write to account holders demanding now in addition:
(a)

a sum representing the fair and reasonable licence fee that DBC would charge for
granting a non-exclusive worldwide licence to distribute the Film; and

(b)

additional (i.e. punitive) damages under s 115(4) of the Copyright Act 1968 (Cth)
(the Act).

DBC also sought to be permitted to lodge a reduced bond of only $60,000.

The issues which now arise for determination are:

The Revisitation Issue. The first respondent (iiNet) submitted that the issues which DBC
sought now to ventilate had already been decided in the August Judgment. The public interest
in the finality of litigation meant that DBC should not be permitted to seek to lift the stay in
respect of arguments it had already lost.

The Licence Fee Issue.

At the hearing of the application determined by the August

Judgment, DBC had argued that it was entitled to recover from each infringer damages
calculated by reference to the notional licence fee that DBC would have charged for the nonexclusive right to distribute the Film over the BitTorrent network. I held that this required a
factual inquiry into what each infringer would have done, applying earlier decisions of the
Court to that effect. I then concluded that I did not think plausible, as a matter of fact, the
idea that BitTorrent users would ever have approached DBC for a non-exclusive distribution
licence as a sensible alternative to downloading the Film unlawfully.

On the present

application, DBC has now sought to contest the correctness of my conclusion, as a matter of
law, that the inquiry involved was, indeed, a factual one. It now submitted, on the basis of a

-3judgment delivered on 2 December 2015 by Yates J in Winnebago Industries Inc v Knott

Investments Pty Ltd (No 4) [2015] FCA 1327 (Winnebago) that the correct position was that
it was not necessary to prove that the infringer would have sought a hypothetical distribution
licence. The question on the present hearing was whether I should permit that argument now
to be raised.
8

The Additional Damages Issue. In the August Judgment, I dealt with, and rejected, an
argument that DBC should be permitted to demand from account holders additional (or
punitive) damages under s 115(4) of the Act. It submitted that I had not fully dealt with its
submissions in relation to s 115(4) in the August Judgment. It now invited me to do so,
although on the present application it advanced specified sums which it should be permitted
to demand which it omitted to do at the previous hearing (apart from passing references in
worked examples).

The Electronic Commercial Infringement Issue. Section 115(5)-(8) of the Act deal with
electronic commercial infringement and, as I noted in the August Judgment, do appear very
much to be directed precisely at peer-to-peer file sharing. At the previous hearing, DBC did
make some submissions about these provisions but did not identify any sum it wished to
demand under them. Because no specific sum was sought to be approved as a reasonable
demand, I rejected the argument. DBC now pursued the same point but this time articulated
figures it wished to demand.

10

The Bond Issue. In the August Judgment, I indicated that I would require the lodging of a
$600,000 bond as a condition of my lifting the stay of the preliminary discovery order. At
that time, DBC was seeking access to over 4,000 IP addresses. It now narrowed its focus to
a set of account holders of only the first respondent, iiNet. This set represented roughly 10%
of the total number of account holders whose details were sought in the original claim. DBC
submitted that the bond should be correspondingly reduced.
First Issue: Revisiting the August Judgment

11

It is well-established that there is a public interest in the finality of litigation. Consequently,

in ordinary trial proceedings the judgment of the Court brings to an end the parties dispute.
Subject to minor, presently immaterial, exceptions, the judgment affords to every party to it a
defence to any further action by means of the plea of res judicata. The rights and obligations
which existed before the judgment cease to exist and are replaced by the rights and

-4obligations generated by the judgment itself: see, e.g., Tomlinson v Ramsey Food Processing
Pty Ltd (2015) 323 ALR 1 at 6-7 [20] (HC).
12

These proceedings, however, are not ordinary trial proceedings. An action for preliminary
discovery is not about the final rights of the parties and upon the disposition of such a
proceeding the legal position of no party is altered. Consequently, the consistent view in this
Court is that preliminary discovery orders are interlocutory in nature: Hooper v Kirella Pty
Ltd (1999) 96 FCR 1 at 4 [4] (FC). They remain, therefore, permanently exposed to the risk
of alteration or even revocation. So much flows from r 39.05(c) of the Federal Court Rules
2011 (Cth), which provides:
39.05 Varying or setting aside judgment or order after it has been entered
The Court may vary or set aside a judgment or order after it has been entered if:

(c)
it is interlocutory

13

Thus it is true to say, at least as a matter of theory, that interlocutory orders of the present
kind do not create res judicata or issue estoppels such as would be, in themselves, a complete
answer to any attempt to re-litigate an action.

14

There is, however, a related principle which circumscribes the ability of a party to re-litigate
interlocutory matters after they have been thoroughly determined. It is the concept of abuse
of process. McLelland CJ in Eq explained the principle in Brimaud v Honeysett Instant Print
Pty Ltd (1988) 217 ALR 44 at 46-47 (Honeysett) in these terms:
In the present case I am dealing with an interlocutory order of a substantive nature
made after a contested hearing in contemplation that it would operate until the final
disposition of the proceedings. In such a case the ordinary rule of practice is that an
application to set aside, vary or discharge the order must be founded on a material
change of circumstances since the original application was heard, or the discovery of
new material which could not reasonably have been put before the court on the
hearing of the original application: see Woods v Sheriff of Queensland (1895) 6 QLJ
163 at 164-5; Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 447-8;
Chanel Ltd v F W Woolworth & Co [1981] 1 All ER 745; [1981] 1 WLR 485; Adam
P Brown Male Fashions v Philip Morris (1981) 148 CLR 170 at 177-8; 35 ALR 625
at 629-30; Butt v Butt [1987] 1 WLR 1351 at 1353; Gordano Building Contractors
Ltd v Burgess [1988] 1 WLR 890 at 894.

15

There is a debate as to the juridical nature of the question this gives rise to. Some Courts
have thought the rule one of practice; others have seen it as involving a component of
discretion. The debate is very usefully traced, with respect, by Reeves J in Australian

-5Competition and Consumer Commission v Adata (Vic) Pty Ltd (No 2) [2015] FCA 272 at [8][44]. It is not necessary to resolve that debate in the present circumstances. Whether as a
rule of practice or as a matter of discretion, I do not propose to permit DBC to revisit what
was determined in the August Judgment unless I am satisfied that there has either been a
material change in circumstances or new material has been discovered which could not
reasonably have been put before the Court on the previous occasion. I am also willing to
revisit the August Judgment to the extent that it be shown that I failed to deal with some
aspect of DBCs case which could have a material impact on the outcome of the proceeding.
16

I turn then to the issue of licence fee damages.

Second Issue: Licence Fee Damages

17

This part of the case relates to the uploading of the Film by BitTorrent users, rather than the
downloading of the Film. In both situations, what is legally involved is DBCs contention
that it is entitled to seek damages from BitTorrent infringers under s 115(2) of the Act. It
provides:
115 Actions for infringement

(2)

18

Subject to this Act, the relief that a court may grant in an action for an
infringement of copyright includes an injunction (subject to such terms, if
any, as the court thinks fit) and either damages or an account of profits.

At the hearing which led to the August Judgment, DBC advanced an argument under s 115(2)
in these explicit terms:
The Prospective Applicants contend that the infringers conduct amounts to a
distribution of DBC for which the infringer would ordinarily require a licence from
the Prospective Applicants. By reason of the infringers conduct in making DBC
available online for others to download without a licence to do so, the Prospective
Applicants have not received a licence fee and royalties which would have been
payable had a licence been granted. The Prospective Applicants seek a fair and
reasonable one-time licence fee from the infringers.

19

DBC submitted in writing on the present application that its case under s 115(2) had been
potentially broader than this might imply. I do not accept this. It was clear on the previous
occasion that the only damages claim pursued by DBC was on a licence fee basis. At [29][30] of its submissions on s 115(5)-(8) of the Act, DBC made this submission:
Economic Loss

-6-

29.

The Prospective Applicants intend to seek damages from infringers on

account of the loss suffered by reason of the illegal uploading of DBC: see
Methodology Submissions at [23]-[28].

30.

While the Prospective Applicants also consider that they are entitled to
damages on account of lost profits, they currently propose to recover
damages by way of a licence fee representing fair compensation for the
illegal distribution of DBC: see Methodology Submissions at [27]-[28]. The
Likely Infringements demonstrate the reasonableness of the licence fee of
$[XXX] proposed to be sought from infringers.

(emphasis added)
20

The italicised portion makes plain what DBCs case was. To the extent, therefore, that DBC
now submits that it has an entitlement to revisit the question s 115(2) damages because I had
left some elements of its argument unresolved in the August Judgment, I reject the
submission.

21

I did not apprehend, in any event, that the above matter was the principal focus of the
argument advanced by Mr Jackman SC for DBC. Rather, he sought to bring the position of
DBC within the exceptions articulated in Honeysett itself. This naturally required him to
identify a material change in circumstances since the August Judgment (or new material not
available at that time).

22

The focus of Mr Jackmans argument was on an aspect of my reasoning in the August

Judgment. At that time, I rejected DBCs argument that its s 115(2) damages case could be
quantified using a notional licence fee on the basis that the licence fee approach gave rise to a
factual debate. That factual debate was whether any BitTorrent infringers would have sought
to negotiate a worldwide non-exclusive distribution agreement with DBC to authorise their
uploading activities or whether infringers would have pursued other courses of action, for
example, whether instead they would have rented the Film and paid $4.99 for the pleasure.
On this factual question, I concluded that DBCs contention was wholly unrealistic; indeed, I
went so far as to describe it as surreal.

23

Mr Jackman now submitted that there had been a development on 2 December 2015 which
meant that my conclusion that what was involved was a factual inquiry was wrong, as a
matter of law. This development was the decision of Yates J in Winnebago. In a carefully
considered judgment, his Honour concluded that in a damages claim for passing off a
plaintiff did not need to prove that the infringer would have entered into a licensing

-7arrangement. Damages would instead be assessed on the basis that the infringing party
should pay for what it had taken and that the value of something taken without licence should
be the licence fee that would have been paid.
24

There is a Full Court authority that this principle does not apply in copyright cases, such as
the present: see Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd
(in liq) (2007) 157 FCR 564 at 569 (Aristocrat). There Black CJ and Jacobson J said (at
[27]-[29]):

25

27

However, a royalty does not provide the appropriate measure of damages

where the copyright owner would not have granted a licence: Columbia
Pictures Industries Inc v Luckins (1996) 34 IPR 504 at 509 (Tamberlin J);
Autodesk Australia Pty Ltd v Cheung (1990) 94 ALR 472 at 476-477 (Wilcox
J); Microsoft Corporation v Goodview Electronics Pty Ltd (2000) 49 IPR 578
at [55].

28

In the present case, Aristocrat did not seek to establish that it would have
granted a licence to Vidtech. The plain inference was that it would not have
been prepared to do so. A royalty does not therefore provide an appropriate
measure of damages.

29

In any event, Aristocrat did not lead evidence that licences were granted to
users at any particular rate of royalty, let alone that which was claimed as a
royalty in the present case. In those circumstances, where the quantification
of royalties charged by a copyright owner is entirely within its own
knowledge, a court should not speculate as to what royalty might have been
foregone: Paramount Pictures Corporation v Hasluck (2006) 70 IPR 293; cf
Microsoft Corporation v Ezy Loans Pty Ltd (2004) 63 IPR 54 at [88].

Yates J distinguished Aristocrat because it was concerned with copyright rather than passing
off, a luxury which is not available to me. Mr Jackman sought to persuade me that Aristocrat
was a case on its own facts. It is certainly true that the dispositive reasoning appears to be at
[29]. There the Court rejected the copyright holders claim on this basis because it had not
proved what the relevant reasonable licence fee would have been.

26

In any event, I do not accept that the decision of Yates J constitutes a material change in
circumstances.

Winnebago is a passing off case.

It is true that Yates J distinguished

Aristocrat but those arguments were just as available to DBC at the previous hearing before
the August Judgment. I do not see that anything has materially changed.
27

Then there is the further problem, as Mr Jackman very properly accepted, that DBC currently
falls within the very evidentiary lacuna identified at [29] of Aristocrat; that is to say, DBC
has not led any evidence of what its reasonable licence fee might be. Without that critical

-8evidence the case fails for want of evidence (as it did in Aristocrat), even if one accepts the
legal principle for which Mr Jackman contends.
28

Recognising the difficulty which this generated for his argument, Mr Jackman eventually
sought a short adjournment of a few days to fill this lacuna. This was opposed by iiNet. I
refused the adjournment application. I did so for the following reasons.

29

First, there is no reason why DBC could not have led its evidence about what a reasonable
licence fee would have been at the earlier hearing. Indeed, even on the argument then being
propounded this evidence was essential.

30

Secondly, beyond the mere existence of the decision of Yates J on 2 December 2015, DBC
did not advance any explanation as to why this matter was not raised the first time it was
argued. I do not conclude that this involved a deliberate choice on the part of DBCs
advisors; I infer that it was simply overlooked.

31

Thirdly, contrary to the submissions of DBC, I do not accept that the evidence which will be
involved is likely to be straightforward. DBCs argument is that BitTorrent uploaders are
effectively distributing the film worldwide and should pay the fee it would charge for such a
licence. For this argument, it will be necessary to prove what DBCs worldwide licence fees
are. There are likely to be, so it seems to me, several difficult issues in assessing this. For
example, has DBC ever granted a non-exclusive distribution licence or are the licences it has
historically granted exclusive and geographical? If, as may be possible, DBC has not granted
licences on the same terms as the hypothetical BitTorrent licence notionally would be, how is
the fair rate of that licence fee to be determined? I do not raise these matters to suggest that
they have any particular answers, rather the point is to underscore how potentially complex
the inquiry may turn out to be.

32

Fourthly, it is difficult to see that, once the lid is lifted on that Pandoras Box, I could
legitimately prevent iiNet, as the respondent, from seeking itself to explore what a reasonable
licence fee might be. Taken together, these third and fourth matters suggest a real risk of
prolongation of the case and with it further delay in the cases resolution; prolongation
because there may well now be a trial within a trial on the issue of how DBC licenses the
Film; delay because the preparation involved will take time and inevitably push the hearing
into the new Law Term.

-933

Fifthly, it needs to be kept in mind that what is before the Court is a preliminary discovery
application, not Ben-Hur. The interests of justice are not served in comparatively modest
procedural litigation such as the instant case by permitting no stone to go unturned. The
enterprises of the parties must be kept proportionate to what they are arguing about.

34

In those circumstances, I refused the adjournment. The effect of that refusal is that the
situation which existed at the prior hearing (viz. that there was no evidence of what DBCs
reasonable licence fee was) continues to obtain. Even if I had accepted, therefore, that DBC
should now be permitted to raise this issue, it would have inevitably failed for the reason
given by Black CJ and Jacobson J in Aristocrat at [29].

35

In all of those circumstances, I do not accept that I should permit re-ventilation of the licence
fee issue.
Third Issue: Additional Damages under s 115(4)

36

At the earlier hearing, DBC had relied upon s 115(4) but without articulating any particular
amount it wished to demand (apart from passing references in some worked examples). In its
written submissions it identified a series of factors which it said would be relevant to the
assessment of such a claim but only as a set of general observations. These factors were:

the flagrancy of the infringement;

the need to deter similar infringements in the future by reference to general

deterrence;

specific deterrence of individual infringers;

the conduct of the infringer after being made aware of the conduct;

whether there had been conversion of the material from hardcopy form to soft copy
form; and

37

any benefit shown to have accrued to the infringer.

In relation to the issue of specific deterrence, DBC also submitted at the same time that it was
relevant to consider how many films other than the Film had been downloaded and uploaded
by the BitTorrent user involved. In the August Judgment, I rejected DBCs case on s 115(4)
because I did not accept that downloaders activities with respect to other films was a matter
relevant to s 115(4). DBC now submits that in doing so I overlooked the balance of its s

- 10 115(4) submissions. It submitted that only one of these had been related to the downloading
of other films and this was the issue of specific deterrence.
38

In its written submissions for the earlier hearing, DBC did not nominate any particular
approach to or metric by which these damages might be assessed. It did, however, provide
worked examples in which fluctuating figures were derived, based on the varying
circumstances of particular hypothetical account holders. However, insofar as the s 115(4)
damages were concerned, the only thing distinguishing the worked examples were
differences in the number of the other films downloaded. There is force, therefore, in iiNets
submission that, in fact, the downloading of other films formed the central feature of DBCs s
115(4) claim and that the August Judgment was complete in approaching the s 115(4) issue
on that basis.

39

I propose, however, to assume in DBCs favour that the August Judgment did not deal with
the entirety of its claims under s 115(4). If so, I can certainly address them now if they are
material to the outcome: see for example Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300
at 301-302 per Mason CJ; Aktas v Westpac Banking Corporation (No 2) (2010) 241 CLR 570
at 573 [6] per French CJ, Gummow and Hayne JJ.

40

The difficulty is that, assuming the issue in DBCs favour, this procedural entitlement does
not entitle DBC to broaden its case beyond what it actually advanced at the previous hearing.

41

On the present application, DBC advanced actual figures relating to its s 115(4) claim which
it did not previously do. Apart from that, iiNet submitted that I should not permit DBC to
make any demands for s 115(4) damages for two substantive reasons.

First, the legal

standard I had applied in the August Judgment to determine whether I would permit a
specified demand for damages to be made was to ask whether, if DBC had sued an account
holder for the sum proposed to be demanded, that suit would survive a summary dismissal
application (see, e.g., [23] and [33]). Secondly, bearing that test in mind, DBC is quite
unable to particularise any claim against an accountholder for s 115(4) damages because
there is nothing which presently points to any account holder having done anything to which
s 115(4) is directed. In that circumstance, iiNet submitted that DBC would be unable to
particularise any claim for additional damages and, in the absence of such particulars, the
case would be summarily dismissed.

- 11 42

On the other hand, DBC submitted that I had already concluded that the claim for s 115(4)
damages was plausible in the April Judgment where I held that preliminary discovery
should, in principle, be given.

43

This is literally true but when the full context of the remark is appreciated I do not think it
assists DBC. In the April Judgment the question was whether the preconditions for the
making of a preliminary discovery order had been satisfied under r 7.22 of the Federal Court
Rules 2011 (Cth). I concluded, contrary to the ISPs submissions, that they had been. One of
the arguments advanced by the ISPs was that the Court would not, as a matter of discretion,
order preliminary discovery for eight specified reasons. The second and fourth of these
reasons were:
(ii)

the trivial nature of the demonstrated infringements

(iv)

the applicants had failed to do adequate monitoring which could have

revealed serious infringers

To unpack that point a little: the software used by DBC did not detect how much
downloading actually was going on, only that the Film had been shared using BitTorrent
from a particular IP address. The ISPs contended that software was readily available which
would have measured the extent of the infringement as well. They pointed to the litigation in
Roadshow Films Pty Ltd v iiNet Ltd (No 2) (2012) 248 CLR 42 as an instance of the
deployment of such software.
44

I rejected this argument in the April Judgment at [76]-[78] in these terms:

76

As to (ii) (the trivial nature of each sharing incident): it is, I think, important
to be clear about what is involved in an application under FCR 7.22. It is a
procedure to identify putative respondents. It is not a procedure for working
out how good those claims are, other than in the sense of eliminating plainly
frivolous exercises. But it is very far from apparent that the current exercise
is frivolous. It may be true that for single instances of infringement the
damages are likely to be modest and quite possibly limited to the foregone
licence fee that would have been paid had the film been lawfully
downloaded, although quaere whether this is so where the film had been
shared because it was not available in the Australian market at all.

77

Regardless, I am not persuaded that a suit by the copyright owner naming

individual BitTorrent users would be economically pointless. Further, in the
case of multiple downloaders it must be considered at least plausible that a
copyright owner may be able to obtain aggravated damages under s 115(4),
which provides:
(4)

Where, in an action under this section:

- 12 (a) an infringement of copyright is established; and

(b) the court is satisfied that it is proper to do so, having
regard to:
(i) the flagrancy of the infringement; and
(ia) the need to deter similar infringements of copyright;
and
(ib) the conduct of the defendant after the act
constituting the infringement or, if relevant, after the
defendant was informed that the defendant had
allegedly infringed the plaintiffs copyright; and
(ii) whether the infringement involved the conversion of a work
or other subject-matter from hardcopy or analog form into a
digital or other electronic machine-readable form; and
(iii) any benefit shown to have accrued to the defendant by
reason of the infringement; and
(iv) all other relevant matters;
the court may, in assessing damages for the infringement, award such
additional damages as it considers appropriate in the circumstances.

78

45

One aspect of this provision is the need to provide deterrence. It is not

beyond the realm of possibilities that damages of a sufficient size might be
awarded under this provision in an appropriately serious case in a bid to deter
people from the file sharing of films. There is no need to speculate on what
those damages might be. For present purposes, it is enough only to observe
that the ISPs submission that what the rights owners have in mind is
frivolous or de minimis is a submission which does not afford sufficient
weight to the genuine rights which here exist, and which are expressly
recognised by statute.

What I was saying was that I did not think that DBC should be precluded from preliminary
discovery (on the ostensible basis that the claims would all be modest) because it was in fact
plausible that in some cases additional damages under s 115(4) would be available.

46

This proposition is not the same as saying that claims for additional damages will be
plausible for each account holder. I do not accept, therefore, that what I said in the April
Judgment assists DBC.

47

At that point it becomes difficult to see that DBC could file a proceeding against an account
holder seeking damages under s 115(4) on the basis of what it presently knows. The first
question it would be asked, by way of a request for further and better particulars, would be to
state the facts, matters and circumstances alleged to give rise to DBCs entitlement to
additional damages. As matters presently stand, the only answer which DBC could give
would be that the account holder had been detected uploading a sliver of the Film. On that

- 13 basis, it seems inevitable that the s 115(4) claim would then be struck out. That being so, the
application of my reasoning in the August Judgment leads to the conclusion that I should not
permit DBC to make demands for sums of this kind.
48

I therefore accept iiNets submission about DBCs s 115(4) claims. Assuming in DBCs
favour that I should even entertain this argument, I would nevertheless reject it.
Fourth issue: Electronic Commercial Infringement

49

In its original submissions DBC said nothing about s 115(5)-(8) which deal with electronic
commercial infringement. These provide:
115 Actions for infringement
.
Consideration for relief for electronic commercial infringement
(5)

Subsection (6) applies to a court hearing an action for infringement of

copyright if the court is satisfied that:
(a)

the infringement (the proved infringement) occurred (whether as a

result of the doing of an act comprised in the copyright, the
authorising of the doing of such an act or the doing of another act);
and

(b)

the proved infringement involved a communication of a work or

other subjectmatter to the public; and

(c)

because the work or other subjectmatter was communicated to the

public, it is likely that there were other infringements (the likely
infringements) of the copyright by the defendant that the plaintiff did
not prove in the action; and

(d)

taken together, the proved infringement and likely infringements

were on a commercial scale.

(6)

The court may have regard to the likelihood of the likely infringements (as
well as the proved infringement) in deciding what relief to grant in the action.

(7)

In determining for the purposes of paragraph (5)(d) whether, taken together,

the proved infringement and the likely infringements were on a commercial
scale, the following matters are to be taken into account:
(a)

(b)
(8)

the volume and value of any articles that:

(i)

are infringing copies that constitute the proved infringement;

or

(ii)

assuming the likely infringements actually occurred, would

be infringing copies constituting those infringements;

any other relevant matter.

In subsection (7):
article includes a reproduction or copy of a work or other subjectmatter,

- 14 being a reproduction or copy in electronic form.

50

Notwithstanding that DBC did not rely upon these sections, they seemed to have something
to do with DBCs case. On 22 July 2015, I had my associate write to the parties asking them
to make submissions about their relevance. Such a submission was received from DBC. It
suggested that the provisions provided a principled basis for increasing a damages award but
did not seek to explain what the increase might be. In the August Judgment I disposed of the
case based on s 115(5)-(8) this way:

51

31

There are many uncertainties about these provisions but I do not think that
they presently need to be resolved. The parties had differing views about
whether the requirements of s 115(5)(c)-(d) could properly be seen as having
been satisfied in this case.

32

The matter can, I think, be resolved without becoming mired in that swamp.
The present application is concerned with what DBC can, or cannot, demand
of potential infringers. Assuming in their favour that these provisions are
enlivened the question then becomes what do they want? In particular, what
are they going to demand of account holders? DBC has made no submission
to me about how these damages might be calculated or what they will seek,
beyond asserting that these provisions lend further support to the
reasonableness of the figures sought in their proposed methodology. For
example, it may be that these provisions would justify the conclusion that the
Film was copied many thousands of times using BitTorrent and that
infringers are to be held liable for further downstream infringements. I have
no particular problem with such an analysis but DBC still has to explain what
it is going to demand of the people it writes to. Nothing has been submitted
to me on that topic. In those circumstances s 115(5)-(8) presently goes
nowhere.

On the present application, DBC now seeks to put forward actual figures to be demanded. It
was the absence of such articulated demands which caused the failure of the same argument
in the August Judgment. The explanation proffered by DBC in its written submissions as to
why this had not been done at the previous hearing appeared to be because it was said that I
had misapprehended the width of its case under s 115(2) and, in particular, that it was
pursuing damages under this provision on bases other than the licence fee approach. I reject
this argument: there was no such misapprehension; the only case run under s 115(2) was the
licence fee case. In any event, it is hard to see why, even if that were so, it would permit
DBC to get a second go on the separate question of s 115(5)-(8).
Fifth Issue: The Bond

52

It will follow from the above that I do not accept that DBC should be permitted to do
anything beyond what I indicated in the August Judgment. Since that is not what it is

- 15 proposing to do, I am not going to lift the stay. As a matter of logic this means that the
question of whether I should permit a lower bond to be posted because DBC now only
proposes to pursue the smaller class of iiNet customers does not arise.
Conclusion
53

The present application must be dismissed with costs. Some finality must now be brought to
these proceedings. What I will do is make a self-executing order which will terminate the
proceedings on Thursday 11 February 2016 at noon, unless DBC takes some step before then.

54

Substantial questions of principle are involved in a number of the decisions which I have
made in this case. I will indicate that I would be disposed to grant leave to appeal from all of
the orders made by me on 6 May 2015 and 14 August 2015.

55

I make the following orders:

1.

The prospective applicants application of 23 September 2015 be dismissed with

costs.

2.

Unless further application be made by the prospective applicants beforehand, dismiss

the proceeding in its entirety at noon on Thursday 11 February 2016.

I certify that the preceding fifty-five

(55) numbered paragraphs are a true
copy of the Reasons for Judgment
herein of the Honourable Justice
Perram.
Associate:

Dated:

16 December 2015