The Federal Court Full Court in Cooper v Universal Music Australia Pty Ltd [2006]
FCAFC 187 has rejected an appeal by a website owner and an ISP against findings of infringement of copyright of sound recordings by the operation of a website (MP3s4FREE) which linked to mp3
recordings but allowed an appeal by the ISP employee who provided technical assistance
from time to time in relation to the establishment and operation of the website.

In Universal Music Australia Pty Ltd v Cooper [2005] FCA 972 the trial Judge found Cooper (the website owner) "permitted or approved, and thereby
authorized, the copyright infringement by internet users who access his website
and also by the owners or operators of the remote websites from which the
infringing recordings were downloaded."

In relation to Mr Cooper the sole issue
for the Full Court’s determination was the true meaning of the term
‘authorize’ in s 13(2) of the Act and the related term
‘authorizes’ in s 101(1) of the Act and whether providing a
website with hypertext links (hyperlinks) constituted authorisation.

Judge Branson rejected Cooper’s appeal:

"41…The evidence leads to the
inexorable inference that it was the deliberate choice of Mr Cooper to
establish and maintain his website in a form which did not give him the power
immediately to prevent, or immediately to restrict, internet users from using
links on his website to access remote websites for the purpose of copying sound
recordings in which copyright subsisted. 

42 I conclude that, within the meaning of s 101(1A)(a), Mr Cooper had
power to prevent the copying in Australia of copyright sound recordings via his
website.  He had that power because he was responsible for creating and
maintaining his MP3s4FREE website.  As stated above, the principal content of
the website comprised links to other websites and files contained on other
servers.  Senior counsel for Mr Cooper conceded that, in effect, the
overwhelming majority of the files listed on the website were the subject of
copyright.  The website was structured so that when a user clicked on a link to
a specific music file a copy of that file was transmitted directly to the
user’s computer. 

43 It is immaterial, in my view, that Mr Cooper’s website
operated automatically in the sense that, although he could edit links on the
site, he did not control the usual way in which links were added to the site.
The evidence also leads to the inexorable inference that it was the deliberate
choice of Mr Cooper to establish his website in a way which allowed the
automatic addition of hyperlinks. 

44 I also conclude that, within the meaning of s 101(1A)(a), Mr Cooper
had power to prevent the communication of copyright sound recordings to the
public in Australia via his website.  Again he had that power because he was
responsible for creating and maintaining his MP3s4FREE website with the
characteristics referred to above…

52 Having taken into account the matters identified above, and the name of
his website, I conclude that Mr Cooper infringed the Record
Companies’ respective copyrights in sound recordings by in Australia
authorizing internet users to do acts comprised in those copyrights, namely make
copies of the sound recordings.  I also conclude that Mr Cooper infringed
the Record Companies’ respective copyright in sound recordings by
authorizing operators of remote websites to communicate those sound recordings
to the public in Australia."

In rejecting the ISP’s appeal, Judge Branson said:

"64 E-Talk could have, but did not, take reasonable steps to prevent or avoid
the doing of the acts of infringement (s 101(1A)(c)).  Rather than
withdrawing hosting of Mr Cooper’s website, or otherwise placing
pressure on Mr Cooper to stop his website being used for the predominant
purpose of copyright infringements, E-Talk sought to achieve a commercial
advantage from advertising on Mr Cooper’s website."

The employee’s appeal was allowed on the basis of a lack of evidence that he had power to prevent Mr Cooper’s conduct.

UPDATE: detailed analysis from Kim Weatherall