Essay on Liabilities of Internet Service Providers

This essay was completed by Trevor B Roydhouse BJuris, LLB
for the LAWS9977/1031 Information Technology Law LLM course
at the University of New South Wales Faculty of Law in Session 1, 1998

Introduction

This essay briefly outlines the circumstances in which Internet Service Providers (ISPs) might incur liability for content prepared by others and communications sent by others using the ISPs' communications infrastructure. The essay then examines the liabilities imposed on Internet Service Providers for breaches of the copyright and defamation laws in relation the content and communications. Finally, the essay considers whether a uniform approach should be taken by both these areas of law to the liabilities which are imposed on ISPs.

How ISP liability arises

An ISP's liability for content prepared by others and for communications sent by others will arise from the services which the ISP provides to its customers and to third parties. In particular an ISP may provide any one or more of the following services:

an electronic mail (email) server which enables customers and third parties to send and receive email;
a newsgroups server which enables customers and third parties to send and receive email in topical forums in which other interested Internet users also participate;
a List server which enables customers and third parties to subscribe to a mailing list on a particular topic using email;
a World Wide Web (WWW) server which enables customers to publish web pages and third parties to view them;
a File Transfer Protocol (FTP) server which enables customers to publish electronic files and third parties to retrieve them; and
an Internet Relay Chat (IRC) server which enables customers and third parties to chat with other Internet users in real time.

Thus an ISP may breach the Australian Copyright Act or the various State defamation laws where a customer or third party uses the ISP's communications infrastructure to send or post copyright or defamatory material:

in an email message;
to a newsgroup;^FN1
to a mailing list;
on a WWW server;
in a file on an FTP server; and
via an IRC server.

The basis of ISP liability for copyright infringement

Under the Copyright Act 1968, the exclusive right to do an act comprised in the copyright of material also includes the exclusive right to authorise another person to do such an act.^FN2 The authorisation of a person to do an act comprised in copyright, without the licence of the copyright owner, is an infringement of copyright.^FN3 Thus, an ISP's potential liability for copyright infringement in relation to material prepared by other people generally depends on whether the ISP has authorised the copyright infringements of those who are making use of its communications infrastructure.

It has been established that the word "authorise" in the context of copyright legislation means to "sanction, approve or countenance".^FN4 While a person cannot be said to have authorised a copyright infringement unless he has some power to prevent it,^FN5 inactivity or indifference may reach a degree from which an authorisation may be inferred.^FN6

In the leading Australian case on authorisation, University of New South Wales v. Moorhouse & Anor,^FN7 a graduate of the university used one of its self-service library photocopiers to make infringing copies from a book. The High Court decided that the university had authorised the copyright infringement by making an unqualified invitation to its library users to exercise the rights comprised in the copyright of the copyright owner. Gibbs J. noted that the word "authorise" connoted a mental element so that it could not be inferred that a person had, by mere inactivity, authorised something to be done if he neither knew nor had reason to suspect that the act might be done.^FN8 Jacobs J., with whom McTiernan ACJ. agreed, noted that where a general permission or invitation may be implied, it is clearly unnecessary to that the authorising party have knowledge that a particular act comprised in the copyright will be done.^FN9

In reaching his decision, Gibbs J. noted that the university:

had under its control the means by which a copyright infringement might be committed (the photocopiers);
made the means available to other persons knowing, or having reason to suspect, that it was likely to be used for the purpose of committing a copyright infringement; and
omitted to take reasonable steps to limit the use of the means to legitimate purposes.

Applying these criteria to an ISP, the ISP: (1) has under its control the means by which a copyright infringement might be committed (its communications infrastructure) and (2) makes the means available to other persons knowing, or having reason to suspect, that it is likely to be used for the purposes of committing a copyright infringement. However, in considering whether an ISP has taken reasonable steps to limit the use of its communications infrastructure to legitimate purposes, it is important to distinguish between two groups of people who may use that infrastructure: its own customers and the customers of other ISPs.

In the case of its own customers, an ISP could take reasonable steps to limit the use of its infrastructure to legitimate purposes by including terms and conditions in its contract for the supply of its services to its customers. It is interesting to note that ISPs, including Telstra's Big Pond, do not do this to any real extent, preferring instead to prohibit the use of their services for any illegal activities and to seek an indemnity from their customers for the use of their services.^FN10

However, in the case of the customers of other ISPs, it is submitted that there are no reasonable steps which the ISP could take to limit the use of its infrastructure to legitimate purposes. Thus, it is questionable whether the level of control which an ISP can exercise over the customers of other ISPs is sufficient to prevent any copyright infringements. The case may well be different where the ISP is notified of the existence of the copyright infringement, for example for material posted to a newsgroup. In such a case, the ISP has sufficient control to remove the offending material and institute the means to prevent it from recurring.^FN11

The legacy of Telstra v. APRA: Strict liability?

In addition to cases of authorisation, an ISP may be subject to strict liability for any copyright infringement committed by its customers even though it had no way of knowing such an infringement had occurred and no chance of preventing it from happening. It is submitted that this is the legacy of the decision by the High Court in Telstra Corporation Limited v. Australasian Performing Right Association Limited.^FN12

In the Telstra case, a majority of the High Court decided that Telstra had infringed the diffusion right by transmitting to its customers music on hold originating from third parties over its communications infrastructure using conventional telephones. Thus, it is arguable that where an ISP transmits copyright material originating from third parties over its communications infrastructure to its customers, it too infringes the diffusion right in the material.^FN13 Indeed, after this decision was handed down, APRA sued OzEmail ^FN14 for payment from it for musical works transmitted over its communications infrastructure by its customers.^FN15

Proposed Government Reform

The Federal Attorney-General has stated that the Government has made a decision to limit the liability of telecommunications carriers and ISPs, in certain circumstances, for copyright infringements by others on their physical facilities.^FN16 However, the exact nature of this limitation and the circumstances in which it applies will not be known until the draft legislation is released.

The basis of ISP liability for defamation

A person who repeats or republishes defamatory material is liable as if he had been the original publisher of the material.^FN17 An ISP is therefore potentially liable for defamatory material prepared by other people and transmitted over its communications infrastructure as a republisher of that material.

Republication of defamatory material occurs where:^FN18

the original publisher made the republication himself or authorised another to do it;
a third person was under a moral obligation to repeat the material; or
the repetition was the natural and probable consequence of the original publication.

Defence of innocent dissemination

Liability for unintended defamation not preventable by the exercise of due care devolves only on those primary participants in the publication such as the writer, newspaper company or its owner.^FN19 Persons who are not concerned with the reproduction but play the more subordinate role of mere distributors like newsagents,^FN20 booksellers,^FN21 libraries ^FN22 and printers using new technology ^FN23 may avoid this liability if they can establish the defence of "innocent dissemination" of the defamatory material.

It is submitted that an ISP plays the subordinate role of a mere distributor and may therefore take advantage of the defence of innocent dissemination provided it can show that:^FN24

it had no knowledge of the defamatory material which it published;
it had no reason to suppose that the material it published contained defamatory material; and
it was not negligent in not knowing that the material it published contained defamatory material.

In Thompson v. Australian Capital Television Pty Ltd & Ors,^FN25 the High Court acknowledged that there was no reason in principle why a mere distributor of electronic material should not be able to rely on the defence of innocent dissemination if the circumstances permitted.^FN26 However, in that case the Court found that the TV station, which broadcast a live program by relay from another TV station, had failed to make out the defence because it had the ability to control and supervise the material it televised and the nature of a live program carried with it a high risk of defamatory statements being made.

In the case of an ISP it is arguable that the large volume of email and news postings mean that it does not have the practical ability to control and supervise all the material which is transmitted over its communications infrastructure. However, it is also arguable that in the cases of certain notorious Internet news groups (eg alt.flame),^FN27 an ISP must be taken to be aware of the often defamatory nature of the postings and therefore may not be able to avail itself of the defence of innocent dissemination unless it can establish that there is no realistic way in which it could monitor such postings.

An ISP is also in an unenviable position should it try to monitor the material which passes over its communications infrastructure. The very act of trying to monitor the material may place the ISP in the position where it cannot argue it was not negligent in not knowing that defamatory material was published over its communications infrastructure.

Statutory defence of innocent publication

A person who is innocent in the sense that he did not know of the circumstances which might make the matter defamatory is exonerated in New South Wales and Tasmania where he makes an offer of amends by publishing a reasonable correction and apology.^FN28

ISP liability where notified of defamatory material

A person can also be responsible for defamation by failing to take affirmative steps to prevent its publication by someone else.^FN29 Thus, even in cases where an ISP is able to establish the defence of innocent dissemination, an ISP may still be liable for the defamatory material remaining on its service if it does not take steps to remove the defamatory material within a reasonable time once it becomes aware of it.^FN30 By knowingly permitting a defamatory statement to remain after having a reasonable opportunity to remove it, the person in control of the communications infrastructure becomes liable for its republication if the inference can be drawn that he has made himself responsible for its continued presence on the service unless its removal is impossible or very difficult.^FN31

Copyright and defamation laws: The differing liabilities

The basis of the liability imposed on ISPs under the copyright law for infringement of copyright occasioned by content prepared by others, and by communications sent by others, using the ISPs' communications infrastructure remains unclear. Until the APRA case^FN32 it seemed clear that the liability was based on the ISP authorising the copyright infringement, generally by having failed to take reasonable action to prevent it. However, it is now arguable that copyright infringement in these circumstances rests not on knowledge or the reasonableness of the actions taken by the ISP to prevent potential infringements, but on strict liability.

The basis of the liability imposed on ISPs under the defamation laws for publishing defamatory content prepared by others, and for communications sent by others, using the ISPs' communications infrastructure is that of strict liability, subject to the common law defence of innocent dissemination or the statutory defence of innocent publication which is available in some States. Like the authorisaton doctrine found in copyright law, the basis of these defamation defences is whether the ISP was a primary participant in, or authorised, the publication of the defamatory material as opposed to being a mere distributor or innocent party in the publication of the defamatory material. An ISP's liability for defamation in Australia is further complicated by the fact that, unlike the national copyright law, the law of defamation and the defences available vary from State to State.

Conclusion

It is submitted that the copyright and defamation laws should take a uniform approach to the liabilities imposed on ISPs for content prepared by others and for communications sent by others. In particular, the basis of an ISP's liability should not be strict but should make allowance for the ability of the ISP to take any effective or realistic action to prevent it once it becomes aware of any questionable material being transmitted over its communications infrastructure.

For example, where a person uses an ISP's communications infrastructure to breach the copyright law or the defamation laws, an ISP should be exempt from any primary liability for those breaches. However, an ISP should not be entitled to rely on this exemption if it fails to comply, within a reasonable time, with a request by the copyright owner or the defamed person to remove the offending material in circumstances where it is both possible and practicable to do so without incurring significant cost.

Footnotes:

FN1 An academic at the University of Western Australia was successfully sued (though the action was undefended) for two defamatory postings which he made to an Internet newsgroup: Rindos v. Hardwick, Supreme Court of Western Australia, Ipp J., 31 March 1994 (unreported).

FN2 sec 13(2).

FN3 sec 36(1), 101(1).

FN4 Adelaide Corporation v. Australasian Performing Right Association Limited (1928) 40 CLR 481 at p 489.

FN5 Ibid at pp 497-8, 503.

FN6 Ibid at p 504.

FN7 (1975) 133 CLR 1.

FN8 Ibid at pp 12-13.

FN9 Ibid at p 21.

FN10 See, for example, https://signup.bigpond.com/hsu_scripts/WEB_Signup.asp?A=57; http://www.acay.com.au/terms.html.

FN11 Of course, this is provided that the poster's email address remains the same so that the postings bearing that address can easily be identified and removed.

FN12 (1997) 146 ALR 649.

FN13 Copyright Act 1968, sec 26.

FN14 OzEmail is one of Australia's largest ISPs.

FN15 This action has been settled with OzEmail paying APRA an undisclosed sum. However, the settlement agreement, which other ISPs can join, only applies until 30 June 1999 or until new Commonwealth copyright legislation is proclaimed. Source: Press Release by OzEmail, 9 June 1998, at http://www.pressrelease.com.au/press_release.asp?action=view&prid=1274.

FN16 Copyright and the Internet: New Government reforms, speech by the Attorney-General, 30 April 1998, http://law.gov.au/articles/copyright_internet.html.

FN17 McCauley v. John Fairfax (1934) 34 SR (NSW) 339; Hepburn v. TCN Channel 9 [1983] 2 NSWLR 664.

FN18 Speight v. Gosnay (1891) 60 LJQB 231; Lynch v. Knight (1861) 9 HLC 577.

FN19 Levien v. Fox (1890) 11 LR (NSW) 414.

FN20 Emmens v. Pottle (1885) 16 QBD 354.

FN21 Bottomley v. Woolworth (1932) TLR 521.

FN22 Martin v. British Museum (1894) 10 TLR 338.

FN23 Thompson v. Australian Capital Television Pty Ltd & Ors (1996) 141 ALR 1.

FN24 Vizetelly v. Mudie's Select Library Limited [1900] 2 QB 170 at p 180.

FN25 (1996) 141 ALR 1.

FN26 Ibid at pp 10-11.

FN27 The alt.flame newsgroup was created as a legitimate forum for inflammatory messages, so that they would be kept out of the mainstream topic-oriented newsgroup forums.

FN28 Defamation Act 1974 (NSW), sec 36-45; Defamation Act 1957 (Tas), sec 17.

FN29 Byrne v. Dean [1937] 1 KB 818.

FN30 Urbanovich v. Drummoyne Municipal Council (1988) Aust Torts Reports 81-127.

FN31 Byrne v. Deane [1937] 1 KB 818, at p 838; Urbanovich v. Drummoyne Municipal Council (1988) Aust Torts Reports 81-127.

FN32 Supra.