In a spectacular setback for Voltage Pictures and Dallas Buyers Club LLC, Justice Nye Perram today denied them permission to send letters to people they were accusing of having downloaded the movie Dallas Buyers Club illegaly.

At a previous court hearing, Justice Perram had required that the Dallas Buyers Club present the letters that were going to be sent to the 4,726 alleged downloaders, along with any scripts that they were going to use in telephone conversations following up from those letters.

Justice Perram was not able to reveal the contents of the letters that were presented to him but said that they were based on making four possible claims when assessing the total amount:

1. The cost of the actual purchase of the film rather than a rental price
2. A license fee for the “distribution” of the film from people who had uploaded it to others
3. Additional damages for how many other movies and TV programmes the downloaders had downloaded in addition to Dallas Buyers Club
4. The costs of gaining access to the downloader’s details from the ISPs

Whilst Justice Perram agreed that the Dallas Buyers Club potentially could claim for points [1] and [4], he did not agree that they would be able to ask for the cost of a distribution license or for damages for other copyrighted content that had nothing to do with the movie in question.

Perram was basically acting to ensure that Dallas Buyers Club were actually going to specify what they wanted the accused downloaders to pay and not engage in “speculative invoicing”, the practice of presenting the possibility of a larger fine in the hope that they can coerce a much higher agreed settlement. As Perram said in the ruling:

“the Court was not going to open the sluice gates until it saw the proposed correspondence and until DBC satisfied the Court that it was that approved correspondence, and not something else, such as a dead cat, that DBC was going to send to account holders.”

Perram left the door open for the Dallas Buyers Club to modify the letter they were going to send to the downloaders based on only asking for compensation for the purchase of the film and the costs of gaining access to the downloader’s details. He added however that because the claimants had no presence in Australia, they would have to lodge a bond of $600,000 with the court to ensure that they didn’t subsequently add anything else in the letter.

He went further to also rule that if Dallas Buyers Club chose to take an individual to court, they would need to do it in his court and not in the Federal Circuit Court.

The potential accused people in this case should be sending letters of thanks to Justice Perram and to the lawyers of the ISPs for stopping a practice which would have opened the floodgates for predatory companies seeking to make money from consumers under the guise of the law. If Dallas Buyers Club had simply issued fined that compensated them for the cost of the movie and for administration, not only would they have succeeded but actually a large number of people would have likely paid.

But that wasn’t what Voltage Pictures wanted to achieve because this was a money making exercise for them and the lawyers involved.

The case hasn’t resolved a set of questions that surround the nature of copyright infringement through the use of BitTorrent. It is still not clear that courts would be able to make a realistic determination of the full impact of uploading parts of a movie rather than the whole. Any judgement in this case would have to be based on the actual quantity of the file that was uploaded and then a cost associated with that rather than the basing it on the number of people who received a portion of the file.

It is unlikely that this will be the last we have heard from Voltage pictures but the bar has now been set very much higher for people who want to use the courts to make significant amounts of money using speculative invoicing in Australia.