Industry describes hyperlink ruling 'significant.'

The Australian Federal Court yesterday (July 14) found a Web site guilty of copyright infringement for posting hyperlinks to other sites offering illegal MP3 downloads. The decision also found the site's host Internet service provider liable for damages.

Lawyers for Stephen Cooper, a one-time policeman who ran the Brisbane-based site mp3s4free, argued that he was not guilty of copyright infringement because his site had not hosted the material.

Justice Brian Tamberlin, however, found that linking to other sites aided their illegal distribution. The decision is a first for Australia.

Tamberlin also found the other four defendants guilty of copyright infringement. They were Sydney-based ISP ComCen Internet Services; its parent E-Talk Communications; its director Liam Francis Bal; and an employee Chris Takoushis, who provided advice to Cooper on running his site. ComCen claimed it was unaware of illegal infringements, and that it was unable to control the behavior of its subscribers.

Tamberlin stated Bal and Takoushis, "could have taken the step of taking down the Web site. Instead, they took no steps to prevent the acts of infringement."

The five were sued by Universal Music Australia and 31 other Australian and global companies. The labels claimed that in the year before legal proceedings began in October 2003, seven million people visited mp3s4free. They also claimed that Bal and Takoushis aided and abetted Cooper in order to increase advertising revenues.

Michael Kerin, GM of the Music Industry Piracy Investigations unit, confirmed that the music industry will pursue all five defendants for damages. MIPI began investigating Cooper in November 2002.

Kerin called the win "significant" and "possibly a world first." He added, "It sends a message to ISPs they can't hide behind technology when it comes to their liability."

Under the Australian/United States Free Trade Agreement -- which came into effect on Jan. 1 -- ISPs have four safe harbors when it comes to liability in hosting infringing websites. This case was decided on the basis of the law as it existed before the FTA.