iiNet has slammed the Australian Federation Against Copyright Theft (AFACT) for squandering time and money that could have been spent exploring legitimate online content distribution solutions.
AFACT, which represented 34 high-profile movie studios, initiated legal proceedings against the Perth-based ISP in November 2008 on grounds that iiNet allegedly authorised movie piracy activities by its customers through inaction. iiNet argued ISPs were not obligated to police the Internet and was ultimately awarded a victory in the Federal Court.
In iiNet’s half-yearly results ending December 31, 2009, the ISP indicated $5.8 million was spent fighting the court case launched by AFACT. Insurance covered $2m of the legal cost.
The Federal Court ordered AFACT to foot iiNet’s legal bill but with an imminent appeal set to delay the payout, the ISP may not see the money for some time. iiNet CEO, Michael Malone, saw the entire case as “pointless” and disapproved the use of litigation to combat piracy in Australia.
“The disappointing thing for us is we feel like we’ve wasted a year when we should have spent the time and money [on developing a content distribution model],” he said. “If we spent $6 million on this, how much have the studios spent? You would have to imagine given 34 studios were involved, their legal cost would have far exceeded ours.”
“We could have spent $10-15 million onto establishing some legal and legitimate online resources.”
Malone used the example of iiNet’s Freezone, the company’s online content portal, to highlight opportunities presented by legal content distribution via the Internet.
According to the CEO, Freezone accounts for 11 per cent of total volume downloaded by iiNet’s customer base; higher than any single source.
“The obvious questions from investors is ‘does anyone actually use it?'” he said. “We look at that and think that demonstrates if you can get this content online, customers will use it.”
A directions hearing will be held on February 25, where it is expected AFACT will appeal the original verdict. The group had not responded to requests for comment at the time of publication.