What is the legal argument at the heart of the AFACT vs iiNet case?

Rick Shera: AFACT, on behalf of 34 major film and TV companies, argued that the ISP iiNet, had authorised its customers to infringe copyright in a number of films and TV shows. Because authorising infringement is itself an infringement, AFACT argued that iiNet was also a copyright infringer.

The real question in the case was whether the fact that iiNet’s customers were file sharing unlicensed copies of films and TV shows over iiNet’s internet connections meant that iiNet had a responsibility to stop them doing so. If it did not do that AFACT said, it had effectively condoned that infringement and was liable itself.

iiNet argued that by forwarding the numerous allegations of infringement by customers that it received from AFACT, to the Australian Police, it had done all that was required of it and had not authhorised its customers to infringe – therefore, it itself had not infringed.

Full article: http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=10630103&pnum=0