The previous trial, decided in February this year, was said by the Judge Cowdroy to be the first trial of its kind in the world, involving a suit against an ISP claiming alleged authorisation of copyright infringement by its users or subscribers, to proceed to hearing and judgment.

In Australian copyright law, a person who authorises the infringement of copyright is treated as if they themselves infringed copyright directly.

The 34 applicants who instituted the claim represent the major motion picture studios both in Australia and the United States. They brought the proceeding against iiNet, the third largest ISP in Australia.

AFACT investigated copyright infringements and sent the results to iiNet, with a demand that iiNet take action to stop them occurring. AFACT wanted iiNet to send a warning to the subscriber who was allegedly infringing. If that was unsuccessful, AFACT intended that iiNet suspend the internet service of that subscriber, and later even terminate the internet service as the ultimate sanction. In addition, or in the alternative, the applicants suggested that iiNet should block certain websites.

The critical issue in the proceeding was whether iiNet, by failing to take any steps to stop infringing conduct, authorised the copyright infringement of certain iiNet users. The court in February found that, while iiNet had knowledge of infringements occurring, and did not act to stop them, such findings did also not necessitate a finding of authorisation.

Justice Cowdroy found that iiNet “simply cannot be seen as sanctioning, approving or countenancing copyright infringement. The requisite element of favouring infringement on the evidence simply does not exist. The evidence establishes that iiNet has done no more than to provide an internet service to its users.”

He added that “the law recognises no positive obligation on any person to protect the copyright of another. The law only recognises a prohibition on the doing of copyright acts without the licence of the copyright owner or exclusive licensee, or the authorisation of those acts. In the circumstances outlined above, it is impossible to conclude that iiNet has authorised copyright infringement.”

The appeal this month seems to have solved little. AFACT said that iiNet had enough information (provided over a period by AFACT) of identified copyright infringements carried out by iiNet’s customers, to act to prevent those infringements.

However, iiNet argued, as previously, that it only provides a service to its customers, and is not able to punish them based on AFACT's information. It has, instead, sent AFACT’s notices to the police. It has also argued that, using customer information to act on the infringement notices as AFACT wished, would be a breach of their customers’ privacy.

Unless it was part of an internet users’ code with proper legal regulation, iiNet has also said that it would suffer competitively if it was to act as required by AFACT and have a policy of excluding customers found to have infringed on copyright.

Given the technical complexities of the case, the court has questioned whether it can be resolved by anything but commercial negotiation, and that it would have been better if the two sides had been able to find the means to achieve an out-of-court settlement.

The lead judge, Justice Emmett, said that he was aware, whatever was decided in the appeal, it would be unlikely to be the last judgement in the case. For example, if the court found again for iiNet, AFACT would probably return to the court at a later date to submit new infringement claims and restart proceedings against iiNet.

Having heard all the arguments, the court has therefore requested the two parties to provide a ‘roadmap’ of the real issues behind the case, setting out the ramifications of the possible decisions that could be made in favour or against either party.

The document is to be provided to the court by August 20. If satisfactory, the judges will reserve judgement, with an announcement to be made before the end of this year.