The judge was keen to protect consumers from so-called “speculative invoicing”, where copyright owners send offers to settle claims for grossly disproportionate amounts. These demands can be extortionate: the letters typically threaten consumers with an expensive lawsuit if they don’t pay up.
Voltage Pictures has already been heavily criticised internationally for its speculative invoicing practices. It has filed massive copyright infringement suits in the US — including one naming nearly 25,000 defendants for infringing copyright in its previous film, The Hurt Locker.
The goal of these lawsuits is not necessarily to actually prove infringement in court, but to convince defendants to settle out of court, usually for sums of more than $2000.
The United States’ system is open to this kind of copyright trolling, because under US law, copyright owners do not have to prove that they have actually suffered any loss from the infringement. They can ask the court to award any amount from $750 up to $150,000.
In Australia, unlike in the US, copyright owners are only entitled to an amount that is proportionate to the fee a consumer should have paid. Only in cases of flagrant copyright infringement are courts allowed to award higher damages to either punish consumers or deter others from infringing.
Speculative invoicing pressures consumers to settle for amounts that can be wildly disproportionate to the harm they have caused. It’s an unfair practice that abuses the legal system.
It also causes real problems for consumers who are wrongly accused and face the difficult choice between an expensive legal battle or simply paying up to make the problem go away.