5.2.1 The Arguments
89 The applicants submit that the respondents, as CSPs, should bear their own costs of complying with the orders for several reasons. First, they submit that the injunction is simply part of the regulatory regime in which they find themselves, and thus should be seen as a cost of "doing business". They cite s 313(2) of the Telecommunications Act, which provides that a carriage service intermediary must do its best to prevent telecommunications networks and facilities from being used in, or in relation to, the commission of offences against the laws of the Commonwealth or of the States and Territories. Section 115A of the Copyright Act is, the applicants submit, part of a broader regulatory regime in which the respondents find themselves. The applicants cite the decision of Arnold J in Twentieth Century Fox Film & Ors v British Telecommunications plc [2011] EWHC 2714 (Ch) (Twentieth Century Fox) at [32]:
BT [British Telecommunications] is a commercial enterprise which makes a profit from the provision of the services which the operators and users of Newzbin2 use to infringe the Studio's copyright. As such, the costs of implementing the order can be regarded as a cost of carrying on that business. It seems to me to be implicit in recital (59) of the Information Society Directive that the European legislature has chosen to impose that cost on the intermediary.
90 The applicants submit that whilst the legislative regime is different in the United Kingdom, the reasoning of Arnold J applies equally here and did not depend wholly on Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (Information Society Directive). Put another way, the applicants submitted that the respondents carry out a public function as licensed private persons in the same manner as a public utility. They provide a licensed facility and, whilst they do not authorise infringement, they provide a facility by which infringement occurs. This, they submit, is the principal reason why it is fair for them to pay for the costs of implementing a reasonable system.
91 Secondly, the applicants submit that the respondents will also benefit from the blocking of the online location. This is because they too are providers of licensed copyright content and, although the extent is unquantifiable, as a matter of impression (rather than mathematically) they accrue a benefit beyond that of mere bystanders or innocent third parties. In this context, each of the respondents provides paid services to customers by which they can access legitimate copyright content. Those services, which make licensed copyright content available to customers, are also undermined by copyright infringement facilitated by the online location and websites like it. The evidence shows that copyright content available from the respondents' digital distribution services is available on the KAT website for download. Further, the respondents have sought, and the applicants have agreed, to orders which allow for them to provide their own landing page (order 3) which provides an opportunity for a respondent to implement the orders and use the landing page to promote its own services.
92 Thirdly, the applicants submit that the costs of the implementation of the orders are de minimis. In the context of achieving a regime for blocking online locations which is intended to be efficient and economical, it is as a matter of policy better to avoid arguments about trivial costs, having regard to the inefficiencies of raising such arguments upon the bringing of each application. This approach accords with the approach adopted in the United Kingdom.
93 Fourthly, s 115A is silent on the question of payment of costs of implementation. Whilst the applicants accept that the Court has power to order such costs, they submit that a contrast might be drawn between this section and s 313 of the Telecommunications Act 1997 (Cth) (whereby CSPs may be required to provide assistance to the authorities), where s 314(2) provides that the costs of such assistance will be reimbursed to CSPs. The applicants submit that no similar provision is included in s 115A, 'though it easily could have been'.
94 The respondents advanced a range of arguments in support of their position, which is essentially that the applicants should pay some or all of their compliance costs.
95 Telstra submits that there are two reasons why the applicants should bear their costs of compliance. First, Telstra is an innocent party which has not infringed any of the applicants' rights. Secondly, an injunction is intended to serve the applicants' commercial interests. Each of those propositions (which counsel for Telstra dubbed the "innocence principle" and the "benefit principle") is, Telstra submits, evident from the wording of s 115A and the REM. Telstra submits that the usual position is that where there is an innocent party against whom coercive orders are sought, and those orders benefit another party, the practice of the Court is to require the applicant to pay the respondent's costs of compliance (and the costs of the proceedings); Dallas Buyers Club LLC v iiNet Limited (No 3) [2015] FCA 422; (2015) 327 ALR 695 at [11]. The position of Telstra is, it submits, analogous to that of a third party recipient of a freezing order or a subpoena, or the respondent in an application for preliminary discovery seeking the description of a prospective respondent. Each routinely involves orders that the applicant pay the innocent party's costs of compliance with the orders; Council of the City of Sydney v Goldspar Pty Ltd [2003] FCA 769 at [5]; Airways Corporation of New Zealand v Present Partners of Pricewaterhouse Coopers Legal [2002] NSWSC 521 at [12].
96 In this context, Telstra distinguished the reasoning of Arnold J in Twentieth Century Fox as arising from a different legislative heritage to that of s 115A, in that Article 8 and Recital 59 of the Information Society Directive evinced a general policy concerning CSPs which is not applicable under the Australian regime.
97 Optus adopted Telstra's arguments, and added reference to the decision of the House of Lords in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 (Norwich Pharmacal) to the list of cases where it might be said that the innocence principle and the benefit principle applied. It also submits that the Court of Appeal in the United Kingdom decision of Cartier International AG v British Sky Broadcasting Ltd [2016] EWCA Civ 658 supports its position, when one recognises that the outcome of that decision was influenced by the legislative heritage identified above.
98 TPG adopts the submissions of Optus and Telstra and further submitted that s 115A offered an alternative means by which a copyright owner could enforce its rights against an overseas online location. Had that location been in Australia, if the copyright owner desires to seek the identity of the online location operator, it most likely would have moved under Federal Court Rules 2011 (Cth) r 7.22 for preliminary discovery. In that circumstance, prevailing authority indicates that the applicant for discovery would have to pay compliance costs and legal costs. As a matter of principle, the position of the respondents is no different to that of a party who has received an application for preliminary discovery (or a Norwich Pharmacal order).
99 Foxtel is in a different position to the other respondents. It expressly does not adopt their submissions and affirms that its primary position is that there should be no order for compliance costs to be paid. Its alternative submission is that, in the event that the Court orders the payment of compliance costs, it should receive the benefit of that order.