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The Federal Court of Australia has dismissed a case from the movie industry which argued that ISPs must take action against file-swappers, based on allegations of infringement from copyright holders. The case against ISP iiNet was an appeal of the original judgment in the matter, which also went against rightsholders.The appeal, considered by three judges, is remarkably long—and thorough. (It includes sentences like, "Computers operate by means of binary code. A bit is either a zero or a one. A byte is 8 bits. A kilobyte is 1,024 bytes, a megabyte is 1,024 kilobytes and a gigabyte is 1,024 megabytes.")In 2008, the Australian Federation Against Copyright Theft (AFACT) hired a monitoring company to scan BitTorrent networks for infringement. The company compiled a list of iiNet IP addresses sharing copyrighted films and then sent the list on to iiNet, demanding that it take action against subscribers using those IP addresses.Leroy Parkinson of iiNet replied. "The response was by way of e-mail, the language and tone of which can fairly be characterized as dismissive," said the court. "After acknowledging receipt of the Infringement Notices, Mr Parkinson said that iiNet was very concerned about the allegations and suggested that AFACT promptly direct its allegations to 'the appropriate authorities.' He then referred to the enclosed spreadsheets containing IP Addresses, dates, time and other details, which, he said, were not explained and some of which iiNet did not understand."AFACT replied in kind, trying to help Parkinson "understand." A few days later, Parkinson replied once more. "Mr. Parkinson’s e-mail of 12 August 2008 reiterated that an IP Address, date and time did not identify a person, and asserted that iiNet could not possibly know the identity of the person who was using any given service associated with that IP Address. Mr Parkinson pointed out that the service could be a shared or community terminal, such as at a school, a library, an internet café or a WiFi hotspot. He said that it may not be a computer in the sole use of an individual. Mr Parkinson asked who, in any of the material provided, had been identified by AFACT as the person to whom iiNet should direct the allegation of copyright infringement."Translation: call the police, not us. (iiNet said that it had, in fact, forwarded all such complaints to the state police.)Instead, Roadshow Films, whose movies were being shared, sued iiNet on the grounds that the ISP was authorizing copyright infringement and not taking the necessary steps to curtail it. Two hearings on the matter have now been held, and both have rejected the rightsholder position; ISPs do no have an automatic duty to sanction subscribers upon receipt of allegations against them.Jo BlowDuring the first trial, iiNet CEO Michael Malone was asked whether iiNet had ever terminated a subscriber for repeat infringement. No, said Malone, it had not, because "no one had been found [by a judge] to infringe copyright"; all iiNet had were mere allegations of wrongdoing. The studios' lawyer then asked Malone if this was some kind of "joke" response. As the trial judge noted, "The respondent’s policy was not a joke, and its conduct was entirely consistent with the policy as outlined even though it may not have been the kind of policy that the applicants anticipated."Malone then irritated the studios further with his comment that iiNet was simply not prepared to act on infringement notices received from just any "Jo Blow." The studios' response was priceless: "The applicants submit that they, being the major film studios, could not possibly be considered ‘Jo Blow’ when copyright infringement of their films is under consideration."Malone said in a statement after the new ruling that movie companies' best defense against piracy was more legitimate outlets for content. "We urge the Australian film industry to address the growing demand for studio content to be delivered in a timely and cost effective manner to consumers and we remain eager to work with them to make this material available legitimately," he said.Electronic Frontiers Australia congratulated iiNet and "compliments the company for putting up a strong defense against copyright owners in a context where—worldwide—Internet companies and legislators have buckled under industry pressure."The new ruling doesn't give ISPs total freedom to ignore what's happening on and through their networks, however. The court made clear, in future cases, it is possible an ISP could be found to have "authorized" infringement based on the specific facts of a case. "It does not necessarily follow from the failure of the present proceeding that circumstances could not exist whereby iiNet might in the future be held to have authorized primary acts of infringement on the part of users of the services provided to its customers under its customer service agreements," said the chief judge.