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ISPs Asked to Pay for Indemnity in Music Lawsuit

From australia.internet.com

Australian Internet service providers (ISPs) are being offered a temporary reprieve from the threat of legal action to recover royalties for music files downloaded by Web users--but at a price.

The Internet Industry Association (IIA), the representative body for Australian ISPs, is urging that providers each pay a fee to stop the Australian Performing Rights Association (APRA), which collects music royalties to distribute to artists, from using the 1958 Copyright Act to sue them for copyright infringement.

"The Internet Industry Association strongly recommends that you join the settlement and contribute to the development of technical and legislative protection for the holders of intellectual property and the ISPs that provide access to it for their subscribers," said Peter Coroneous, executive director of the IIA, in an open letter to Australian ISPs.

The fee would be paid to OzEmail, one of Australia's largest independent ISPs, based on number of subscribers. The firm defended a legal action by APRA by negotiating a temporary settlement to pay an undisclosed amount of cash to APRA to delay its claims until new legislation was enacted to settle the situation.

OzEmail and APRA agreed to jointly lobby the Federal Government for a new Copyright Act that "does not attribute responsibility to ISPs for material that is available on the Internet, except in the case where the ISP is the content provider", the letter said.

The charge for ISPs would be equivalent to their IIA membership fee, which is based on the ISPs' revenue, ranging from $250 to $20,000. The fee has to be paid by the end of September, and only lasts until the end of next June or before that if covering legislation is enacted.

APRA used a precedent from a High Court test case it won against Telstra, the partly-privatised government telecommunications carrier, to take OzEmail to the Federal Court last year. It pressed its claim of charging $AUS1 per subscriber per annum as payment for music files downloaded.

In the Telstra lawsuit, dubbed the "music on hold" case, the High Court found that Telstra was breaking the Copyright Act by playing music over their telephone lines to customers waiting on hold, and were forced to pay APRA.

The OzEmail case, which would have cost the ISP $AUS200,000 per year if it had lost, already incurred $AUS50,000 in legal fees for the company. The IIA estimates that the liability for the entire ISP industry for music royalties might reach as high as $AUS800,000.

Many providers are not willing to pay, however, with one calling the scheme a protection racket, and likening it to extortion by Asian "triad" gangs. Industry mailing lists are buzzing with criticism of the plan, most of it from small providers.

Much of the conflict between the IIA and the small ISPs dates back to the merger of the Internet Industry Association of Australia (INTIAA) and the Australian Internet Association (AIA), which created the IIA in July last year.

The AIA, which counted 100 small ISPs of the estimated 450 total as members at the time, formed as an opposing representative body to INTIAA, which was seen as representing the big end of town.

The IIA is arguing the case directly with the ISPs, however, warning that the precedent from the Telstra case could be far more damaging than music royalties.

In the open letter, Coroneous said that ISPs could "find themselves liable for hosting sites that infringe copyright in whatever form or medium, not just music."

Coroneous also raised the possibility that if the average ISP was to be turned into a "virtual revenue collection agency," the Australian Tax Office might also put pressure on them to collect taxes.