The Federal Court in Australia has just dismissed the movie industry’s appeal against last year’s judgment which found that internet service provider iiNet did not authorize the copyright infringements of its file-sharing customers.

This is a landmark decision by the Australian judges, as the establishment of an ISPs responsibility for (illegal) activities of their customers would have had unprecedented ramifications around the world.

Represented by anti-piracy group AFACT, nearly three dozen Hollywood and local entertainment studios took iiNet to court in 2008. In a 2009 trial the ISP was accused of doing nothing to stop its customers downloading films and TV shows but in February 2010 the Federal Court decided that iiNet was not responsible for their activities. An appeal was filed later that year and today the decision was handed down.

The Court recognised that the rights of movie companies had been infringed but could not rule in their favor, as the ISP cannot be held liable for the infringing acts.

This ruling is without doubt controversial. The Federal judges did not reach a unanimous decision and acknowledge that there are many sides to this issue: “Even though the Copyright Owners are not entitled to the relief claimed in this proceeding, it does not follow that that is an end of the matter. It is clear that the questions raised in the proceeding are ongoing,” the ruling reads. “It does not necessarily follow from the failure of the present proceeding that circumstances could not exist whereby an ISP might in the future be held to have authorised primary acts of infringement.”

AFACT claimed that iiNet could have sent out warnings about the illegal nature of the shared files, or suspend customer accounts based on the information that was provided by the entertainment companies. Apparently, the judges found these measures to be an unreasonable burden on the ISP. It would involve researching a lot of data.

iiNet chief executive Michael Malone said he was “relieved” at the outcome. “Our original contention was upheld that we don’t believe we ever authorised or did anything to encourage customers to breach copyright,” he said. Malone does not believe proceedings like these will help the creative sector to combat piracy. “Let’s make the content available legitimately so customers can get access to it, and let’s find a better way to be able to police those who don’t do the right thing.” Malone went on to state that the overall problem of deciding to what extent ISPs can be held liable will have to be solved by the government.

AFACT boss Neil Gane was clearly disappointed at the decision. “It cannot be right that, in effect, the ISP, who has the power to prevent copyright infringement online and admitted they were taking place, does not share the responsibility to stop them,” he said. “Copyright infringement now goes on unabated on the Internet.”

It is widely believed that the case will now proceed to Australia’s High Court “We will be taking our time now to examine the judgment in detail and consider all of our options.” Mr. Gane said.

Sources: Federal Court of Australia - Sydney;  TorrentFreak;  SmartCompany.com.au;