In a landmark ruling a year ago, the court had found it was impossible to hold iiNet responsible for its users illegally downloading movies and television shows.
The studios heard in the Federal Court that it had lost its appeal.
In the initial case, the studios had tried to prove iiNet not only failed to take steps to stop illegal file-sharing by customers but breached copyright itself by storing the data and transmitting it through its system.
iiNet Chief executive Michael Malone said outside court he was “very relieved” about the outcome.
“Our original contention was upheld that we don’t believe we ever authorised or did anything to encourage customers to breach copyright,” he told reporters.
“We’ve won at the lower court, we’ve won at the Federal court now in the appeal, but all this legal action hasn’t stopped one customer from downloading anywhere in Australia.
“Same as we said last time, invite the rights holders back, let’s make the content available legally and legitimately so customers can get access to it, and let’s find a better way to be
able to police those who don’t do the right thing.”
He said there needed to be a lot more clarity on what was expected of carriage services providers in terms of copyright laws.
“Ultimately this is only going to be resolved by the government stepping in and giving clarity on the situation,” he said.
The executive director of the Australian Federation Against Copyright Theft (AFACT), Neil Gane, said iiNet had admitted to tens of thousands of copyright infringements.
“It cannot be right that, in effect, the ISP (internet service provider), who has the power to prevent copyright infringement online and admitted they were taking place, does not share the responsibility to stop them,” Mr Gane told reporters outside court.
“Copyright infringement now goes on unabated on the internet. “We take heart however, that Justice (Jayne) Jagot found for us and that Justice (Arthur) Emmett said that we were successful on many grounds.
“We will be taking our time now to examine the judgment in detail and consider all of our options.
” In his judgment dismissing the appeal, Justice John Nicholas said iiNet accepted that it had general knowledge of copyright infringement committed by its users.
But, as the primary judge had also observed, “it would be difficult for the company to act on knowledge of such a general kind with a view to preventing or avoiding copyright infringements by people using its network.
“This is because the respondent would have no means of knowing who had used its facilities to infringe copyright unless that knowledge was provided to it by third parties,” Justice Nicholas said.
Village Roadshow had submitted that notices issued by AFACT provided iiNet with all it needed to know to issue warnings to its subscribers and, if appropriate, terminate or suspend the accounts used to infringe copyright.
“I do not think that is correct,” Justice Nicholas said.
He continued that iiNet had “hundreds of thousands of customers and that each day it receives hundreds of notices issued by or on behalf of copyright owners”.
“I do not think the respondent could reasonably be expected to issue warnings, or to terminate or suspend particular accounts, in reliance upon any such notice in circumstances where it has been told nothing at all about the methods used to obtain the information which led to the issue of the notice,” Justice Nicholas said.
“Nor should it be up to the respondent to seek out this information from a copyright owner who chooses not to provide it in the first place.”