The decision handed down today by the Full Court of the Federal Court of Australia in the “iiNet Appeal” ( Roadshow Films Pty Limited v iiNet Limited [2011] FCAFC 23 (24 February 2011) – online here) is very important in securing the rights of internet users to due process in relation to allegations of copyright infringement and also in protecting Internet Service Providers (including Government departments, Schools, Universities and coffee shops) from liability for any copyright infringements by users of the service.

While the case may still be appealed to the High Court, the majority decision of the Full Court to reject the copyright owners’ assertion that ISPs “authorise” copyright infringement by not blocking peer-to-peer traffic is a landmark for Australian law and a valuable precedent for other countries’ ISPs faced with the same question.

The judgment is not a free pass for ISPs. The Court said that the actual infringing acts of the users of the Internet service could be closely examined to establish whether an authorisation existed on the facts – in this case, not established but theoretically possible. Justice Nicholas was especially critical of iiNet’s “repeat infringer” policy, noting that the ISP hadn’t really tried to stop alleged infringers. Justice Jagot noted that the ISPs hadn’t achieved an industry code to trigger “safe harbour” protections and in the event that an authorisation of infringement was proved then ISPs would not have the benefit of those protections in the Copyright Act. Justice Jagot would have allowed the appeal on the facts and asserted that there was no factual difference between iiNet's role and other infringement cases.

However, the other two judges were satisfied that the “means” of copyright infringement by the users of an ISP service was BitTorrent, not “the Internet” - in the words of the original judgement,

For the abovementioned reasons, the court finds that it is not the respondent, but rather it is the use of the BitTorrent system as a whole which is the “means” by which the applicants’ copyright has been infringed. The respondent’s internet service, by itself, did not result in copyright infringement. It is correct that, absent such service, the infringements could not have taken place. But it is equally true that more was required to effect the infringements, being the BitTorrent system over which the respondent had no control.

EFA congratulates iiNet on an important win, and compliments the company for putting up a strong defence against copyright owners in a context where – worldwide – Internet companies and legislators have buckled under industry pressure.

Electronic Frontiers Australia (EFA) today urged skepticism about claims that piracy is costing thousands of jobs in Australia.

The Australian Federation Against Copyright Theft (AFACT) yesterday released a study,"Economic consequences of movie piracy", purporting to show that movie downloading is costing the economy over a billion dollars each year.

"We question many of the assumptions underlying this report," said EFA Chair Colin Jacobs. "The industry has a habit of crying wolf with these sorts of numbers, trying to drum up support for tougher laws. But there are many factors they don't take into account. Treating downloads as lost economic activity is flawed, and downloaders are actually some of the entertainment industry's best customers. The study also ignores the effects to the wider economy of money being spent elsewhere at Australian-owned businesses."

EFA also questions the industry's ongoing strategy of trying to defend their old business model without adapting to the realities of the digital age.

"Instead of waging war against their customers - and trying to get government help to do so - the movie industry should focus on improving its own offering, and give customers a better alternative to the peer-to-peer networks," said Jacobs. "History shows that customers are happy to pay a fair price for a good product and a good service."

EFA has provided further analysis on its web site at efa.org.au.

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The Australian Federation Against Copyright Theft (AFACT) yesterday released a report entitled "Economic consequences of movie piracy", which purports to show that illegal downloading is costing the Australian economy $1.37 billion every year. That is an alarming sum - or rather it would be, if we could take it at face value. The copyright industry is well known for offering up gargantuan figures that don't hold up under real scrutiny.

We encourage a skeptical reading of this report, and in particular, we note:

1. The assumption that 45% of downloads equal lost sales is unproven and insufficient evidence is provided to support it. The survey method cited is better than assuming 100% of downloads are lost sales, but there is better analysis in other studies - for example this piece by Lawrence Lessig. If the study was correct, sales of DVDs and attendance at cinemas would be much more reduced than the reported industry figures. In fact, the movie industry is making record profits.

2. It can't be ignored that downloads have an advertising effect both on the product downloaded and future releases. To the extent sales may be lost, these must be offset against other gains from advertising.

3. Gross revenue is not the relevant metric, due to variables such as investment in capital, distribution and costs of sales. Many of the movies downloaded may not have been available to view or buy in Australia. Profit is the metric of importance, but this is never studied.

4. Flow-on effects to other industries are wholly speculative, and lost tax on profits assumes the entities pay Australian company tax on sales pro-rata to revenue, which is not intuitive or evidenced. It also assumes that money not spent on movies is lost to the economy, instead of helping to create jobs in other sectors.

5. Peer to peer file sharing is merely the latest in a sequence of technologies since the 19th century which have been claimed to be the ruin of the creative arts. See chapter 15 "Piracy" by Adrian Johns (University of Chicago Press 2009) - the copyright owners said the same thing about copies of sheet music, tape recorders, every iteration of personal recording system and indeed public radio. However, "home piracy" acts not only as a loss to industry but also as a boon to distribution, bypassing censorship and limitations on sales by official outlets.

6. The report suffers, as have other industry-funded studies, from "GIGO". With an assumption that "downloads = losses" unproven, all conclusions estimating the size of the loss are equally unproven. What if a vibrant sharing culture increases total sales for media respected as quality by consumers, but reduces sales of hyped media? (Research has shown that the biggest downloaders in fact spend more on entertainment than non-downloaders.)

7. The call-to-action of this report is obviously to "crack down on piracy", shifting the cost of file-sharing from the industry to the taxpayer via increased law-enforcement. No industry, let alone the foreign-dominated entertainment industry, deserves a free ride for its business model. If instead, the industry noted that the report says 55% of downloads created a market for sales, much of which is unsatisfied due to current restrictive trade practices, then its future profitability would be in its own hands.

8. Repeated studies have demonstrated that the entertainment industry vies for money and commitment of time with all other forms of entertainment. The Internet, computer games and mobile telecommunication applications take "eyeballs and dollars" away from DVD and CD sales, but also sports arenas, sales of board games and printed works. Magazines are also suffering from a reduced value proposition with the Internet, and some forms of entertainment and some businesses in the industry will no doubt find it difficult to remain vibrant. Change is consumer-driven, and it's futile for the industry to try to hold fast to a business model and methods of content distribution which are dying with or without fierce law enforcement of copyrights.

We presume that the release of this report is a precursor to a renewed campaign for tougher penalties against file-sharing in Australia, such as a mandatory "three strikes" scheme to remove families from the internet completely. If so, Electronic Frontiers Australia will fight for the rights of Australian Internet users threatened by such a legislative over-reaction.

We urge the movie industry to cease waging war on its best customers, and instead focus on providing a more compelling offering to the public. The best way to ensure future profitability is to make quality entertainment available in an easy-to-use form, free from cumbersome rights-restricting controls, and at a reasonable price.

In January last year, U.S. Secretary of State Hillary Clinton gave a landmark speech entitled "Remarks on Internet Freedom". The speech was noteworthy for its clear and unambiguous rejection of all forms of censorship and network control. Coming on the heels of Iran's presidential elections and Chinese cyber-attacks, it seemed the U.S. was drawing a principled line in the sand. They put their money where there mouths were, allocating millions in funding for projects to help the citizens of the world to circumvent government controls on freedom of speech.

Yesterday Secretary Clinton revisited that theme, announcing the creation of an Office of the Coordinator for Cyber Issues and pledging a further $25 million for tools to combat censorship. However, while we heard another eloquent defence of the principle of freedom of speech in the online world, this foray is receiving a markedly cooler reception.

The reason should be obvious to any reader of the news; the intervening year has seen Wikileaks spill Clinton's diplomatic secrets across the Internet and the world's newspapers, and has tested the United States' true commitment to free online speech. That commitment turned out to be quite conditional and equivocal. From official quarters condemnation of Wikileaks has been total, and in the rest of the world remarks about Assange ending up in Guantánamo Bay are still made only half-jokingly.

Clinton attempted to address that issue in her speech. She rightly claimed that governments sometimes have legitimate need for secrecy; implausibly compared the diplomatic cables to the secret location of nuclear materials; and wrongly labelled Wikileaks an act of theft, "as if it had been executed by smuggling papers in a briefcase". This wilfully mischaracterises Wikileaks' role in the leaks as publishers, not spies.

It's all well and good to claim a commitment to strive for openness in "maintaining a balance between what's public and what should... remain out of the public domain." But who will ensure the balance remains true, if not the media? If publishing leaks is to be considered larceny instead of free speech, then the public must turn to thieves to safeguard its interests when they conflict with the exigencies of political public relations.

Clinton was at pains to deny that the U.S. government was directly behind the actions of the credit card companies in cutting off Wikileaks' funding. Time will tell where the line between strong suggestions of criminality by politicians and official coercion may be drawn.

There's much to admire in Clinton's words both yesterday and last year, and they are in stark contrast to what we hear from our own government. The U.S. can still be a powerful force in pushing for an open internet for all the world's citizens. Unfortunately, this has been severely undermined by their double standard with regard to Wikileaks. Thanks to this hypocrisy, what once seemed principled now seems simply preachy.

The internet freedom business is doing a roaring trade these days. Things started picking up early last year with Hillary Clinton's landmark speech, "Remarks on internet Freedom," which equated an open internet with human rights and condemned state-sponsored censorship of the net.

Then came the revelations by Wikileaks, starting with the "Collateral Murder" video and escalating to the current batch of diplomatic cables. These leaks severely tested the commitment of governments around the world to the principles of free speech, but have provided an unprecedented lesson in the power of the net and journalism to act in the public interest. The people of the world have taken the lesson to heart.

The protests sweeping the Middle East have highlighted the importance of an open internet even more starkly. For better or worse, revolution in the 21st century almost by definition includes Twitter, Facebook and the rest of the internet's tools. They have proven more effective than a container-load of AK-47s could ever be, because they allow and promote an undeniable expression of the will of the people that robs the violence of repression of any legitimacy.

It's an exciting time for citizens everywhere. We are witnessing, and often participating in, movements that would have been impossible only a few years ago.

Amongst all of this our own government's response has been tepid, confused and contradictory. The response to Clinton's speech, as we have noted before, was cringeworthy in its brazen twisting of her words to support a pro-censorship agenda. The reaction to the Wikileaks developments should have been a principled stand on free speech and the rights of an Australian citizen, but turned into a posturing witch-hunt.

And today, Senator Conroy has was asked about the crisis in Egypt, where a desperate government cut internet access in order to hinder protestors. The minister in response declared his undying love for an Internet free of government control and assured us that such a thing could never happen in Australia.

"…Australia's a vibrant democracy, where the government doesn't control the internet..."

As blogger Michael Wyres notes here, the Minister has tied himself up in knots before, attempting to identify with online freedom of speech while spending most of his time defending the opposite.

Barring a superhuman capacity for doublethink, it's impossible to reconcile this statement with the Government's stated policy of internet censorship. A system that involves a secret, government-controlled blacklist of websites, even well-intentioned, definitely amounts to "government control of the internet".

If censoring and blocking isn't regulating or controlling the internet, what is? No doubt, the minister has no intention of censoring the web sites of protestors or anti-government activists, but he can't escape the fact that he is planning to put just such a tool into the hands of the government that succeeds his.

The double-standard does not suit our leaders well. If the government wishes to place Australia on the wrong side of history by going down the path of internet censorship, then have the courage to say so. Trying to do so while paying lip service to the ideals of free speech that censorship - by definition - contradicts, well, it's not fooling anybody.