The Hollywood studio behind Dallas Buyers Club has suffered a major setback in its fight to make thousands of Australians pay for pirating its film.
In a case that is being seen as a landmark win for privacy and consumer rights, the Federal Court ruled Dallas Buyers Club LLC and Voltage Pictures LLC must pay a $600,000 bond before they can receive the names and addresses of internet users who illegally downloaded their movie.
In April, the company won the right to seek monetary compensation from more than 4700 Australian downloaders using six internet service providers: iiNet, Internode, Dodo, Amnet, Adam Internet and Wideband Networks.
However the court said on Friday that while Dallas Buyers Club could sue users for infringing copyright, it did not have a right to engage in "speculative invoicing".
Speculative invoicing is where the rights-holder sends letters to accused pirates demanding money payments to avoid being sued for copyright infringement.
The court also ruled that if the company sent letters to the downloaders, it could only charge them for the cost of owning a legitimate copy of the film, and associated legal fees, not for damages based on the user's uploads and downloads on BitTorrent.
Due to the nature of such file-sharing sites, Judge Nye Perram said forcing the users to pay a proposed licence fee for torrenting was "so surreal as to not be taken seriously" and that the number of copyright infringements would be "astronomical".
He also dismissed the company's claim to receive additional damages because users had downloaded other films.
The ruling blows a hole in the mountain of damages the filmmaker had hoped to recover from illegal downloaders, but the action is part of a series of civil suits the company has launched in several countries.
The company's Australian lawyer, Michael Bradley, told AAP his client will consider if it can proceed with the $600,000 bond agreement to recover its losses.
"We weren't expecting that outcome and we're now considering our options," Mr Bradley told AAP.
"It's quite a complex judgment, and a surprising one from our perspective.
"One of the things our client will have to consider is where it leads in terms of the practicality of pursuing infringement claims, and the degree to which it can practically be able to recover its losses," he said.
