iiNet wins landmark legal case

04/02/2010 - 08:27

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Shares in internet provider iiNet surged after it today won a drawn-out legal battle against Hollywood movie studios over illegal downloads.

Shares in internet provider iiNet surged after it today won a drawn-out legal battle against Hollywood movie studios over illegal downloads.

The company said it forked out over $4 million of its own money to defend the landmark case, but is now determined to move ahead with new product releases and focus on its service delivery.

The Federal Court in Sydney handed iiNet a resounding victory in a case brought by a consortium of 34 movie studios, headed by Village Roadshow and including News Ltd's Twentieth Century Fox and the Seven Network.

The applicants had sought to prove iiNet failed to take steps to stop illegal file-sharing by customers, and breached copyright itself by storing the data and transmitting it through its system.

In a judgment that may secure the future for all internet service providers (ISPs), Justice Dennis Cowdroy ruled it was "impossible" to hold iiNet responsible for what its customers did online.

Shares in iiNet were placed in a trading halt ahead of the judgment, and rose significantly when trading resumed at noon.

By the close of the market its shares were up 22 cents, or 11.11 per cent, at $2.20.

Ecstatic with the result, chief executive Michael Malone and other senior executives exchanged high-fives with iiNet staff when they returned to their Sydney office after the judgment.

Speaking to the media, Mr Malone was keen to focus on the future, saying the judgment marked the end of the matter as far as iiNet was concerned.

"What this is showing is the way we've been conducting our business is lawful, what we have been doing is not wrong," Mr Malone said.

"But I think we've probably wasted a year now. We and the internet industry, and the rights holders, could have been working together to find better models.

"Copyright violations don't benefit iiNet at all. We would much prefer to be working with the studios to find some way to be able to make video legitimately available to users. We think that's the best way to tackle piracy on the internet."

The internet provider had spent about $4 million in defending the case above what insurance covered, he said.

Justice Cowdroy has recommended the consortium of studios pay for iiNet's court costs.

The Australian Federation Against Copyright Theft (AFACT) has not ruled out an appeal of the judgment.

The junior telco has been one of the industry's strongest performers in recent times, posting a 29 per cent rise in annual net profit to $25.6 million in 2008/09 despite the economic downturn.

It will deliver its first half results for the current financial year later this month.

 

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