Federal Court orders Telstra Corporation Limited to release the identity of prospective copyright infringers – Siemens Industry Software Inc v Telstra Corporation Limited [2020] FCA 901

30 Jun Federal Court orders Telstra Corporation Limited to release the identity of prospective copyright infringers – Siemens Industry Software Inc v Telstra Corporation Limited [2020] FCA 901

Introduction

The Federal Court has ordered Telstra Corporation Limited (Telstra) to give discovery of documents relating to the identity  of registered Telstra account holders for specified IP addresses. Those account holders are believed to have infringed the copyright in Siemens NX software and the Solid Edge Software (Software). The Software is used for sophisticated computer assisted design and computer assisted manufacturing.

The decision is significant because it is the first time in Australia that a copyright owner of CAD CAM software has obtained an order for preliminary discovery against an ISP. The decision shows that the preliminary discovery mechanism in the Federal Court Rules can be used to identity a suspected infringer where only their IP address is known.

Case

In order to detect copyright infringement, Siemens has embedded an “automatic reporting function” (ARF), in each of the Software products. The ARF is capable of, inter alia, capturing the IP address of a computer connected to the internet while someone is using “cracked’ (unlicensed) Software.

Siemens received reports of unlicensed usage of the Software which involved 20  IP addresses. A publicly available search of each IP address resolved to Telstra. This meant that the person in fact using the cracked Software was probably a Telstra subscriber, whose identity would be known to Telstra by virtue of Telstra’s billing arrangements. No other identifying information was available.

Siemens sought a preliminary discovery order pursuant to regulation 7.22 of the Federal Court Rules 2011 (Cth) (FCR) against Telstra for the release of the account holders’ personal details.

The Federal Court found that Siemens satisfied r7.22 by establishing:-

1. it may have a right to obtain relief against a prospective respondent; and
2. it could not identify the prospective respondent and that Telstra knew or was likely to know the identity of that person, or have a document, which reveals it.

J Burley observed at [20]:

Siemens is not required to demonstrate the existence of a prima facie case; however, FCR r 7.22 is not to be used in favour of a person who intends to commence merely speculative proceedings, and so a material factor in the exercise of the Court’s discretion is the prospect of Siemens succeeding in proceedings against the alleged infringers: Hooper v Kirella Pty Ltd [1999] FCA 1584; 96 FCR 1 (Wilcox, Sackville and Katz JJ) at [33] and the cases cited therein

In satisfying itself as to Siemens’ prospects the Court had regard to the following matters:

1. evidence of Siemens ownership of the relevant copyright; in this regard Siemens was able to rely on the presumptions going to ownership and subsistence of copyright in ss1269A) (2) and 126B(2) concerning labels and marks and the presumptions in ss 126A(3) and 126B(3) concerning foreign certificates.
2. The evidence as to the operation of the ARF. In this regard, the Court found at [23] : “the ARF provides a logical basis upon which Siemens may consider it likely that when data is generated in an ARF report, a material reproduction of the asserted software has taken place without licence”

And at [24]:

it is reasonable to infer that the purpose of obtaining unauthorised access to otherwise secure (and unlicensed) portions of the asserted software is to enable a user to run those portions of the software without paying a licence fee for that access.

And at [25]:

In the circumstances outlined above, it would follow that by obtaining access to and then running the software, an alleged infringer makes an unauthorised reproduction of a substantial part (see s 14(1) of the Copyright Act) of the literary work represented by the object code in the asserted software.

The Court then considered whether Siemens was unable to ascertain the description of the prospective respondent from the material available to it, i.e., the IP address. The Court found that “description” was as defined in the Dictionary to the FCR and included the prospective applicant’s name and address.

The Court noted at [27]that:

Whilst FCR r 7.22 does not contain any express requirement that a prospective applicant have made reasonable enquiries, the authorities have taken that to be an implicit requirement: see John Bridgeman Limited v Dreamscape Networks FZ-LLC [2018] FCA 1279; 360 ALR 768 (Rangiah J) at [9].

And went on to find that the deployment of the ARF and the enquiries made of Telstra before commencing proceedings satisfied the requirement to make reasonable enquiries

The Court then found that Telstra was likely to have control of a document that would help ascertain the prospective respondents’ description – essentially based on uncontroversial evidence as to the need of an ISP to bill subscribers.

Finally, the Court addressed whether it should exercise its discretion to grant the order’s sought and commented at [30]:

Siemens has been alert to various considerations that were taken into account in Dallas Buyers Club (at [73] – [91]), and in particular to privacy concerns that arise from the protections afforded to persons under s 276(1)(a)(iv) of the Telecommunications Act 1997 (Cth) and Privacy Principle 6.1 of the Privacy Act 1988 (Cth), which limit the ability of Telstra to disclose personal particulars of other persons. Siemens draws attention to s 280(1)(b) and Privacy Principle 6.2(b) (respectively) of those Acts, which would permit Telstra to release such information if required to do so by the Court.

The Court also took into account that Siemens proposed a form of orders such that:

that the information be used only for the purpose of the recovery of compensation of infringement of copyright, including by: seeking to identify the end-users who have installed the asserted software; suing end-users for infringement of copyright in the asserted software; and negotiating with end-users regarding their liability for such infringement. Siemens has also offered an undertaking to the Court that it will not pursue any action against any individual who has not made commercial use of any of the asserted software products.[at 31]

Conclusion

The case provides a reliable road map for software developers whose “call home” technology only captures the IP address of the suspected infringer.

It shows that the concerns that bedevilled the applicant in the Dallas Buyers Club case (Dallas Buyers Club LLC v iiNet Limited (No 3) [2015] FCA 422; 327 ALR 695 (Perram J)) can be avoided where the evidence relied upon satisfies the Court that the technology in question is reliable and that any ensuing case is not merely speculative.