The draft anti-piracy code prepared by the internet industry is already bogged down with no timeline on when it might be approved.

The code is often referred to as a ‘three strikes’ scheme, as internet users suspected of piracy will receive three warnings that gradually escalate in their severity.

Users could face legal action if they have three strikes against their IP address in a 12-month period.

The draft code was submitted by the Communications Alliance to the Australian Communications and Media Authority (ACMA) in early April.

The submission was made within hours of the expiry of a four-month deadline given by the Government to industry to come up with the code – or else have one forced upon them.

At the time, Communications Alliance CEO John Stanton praised all involved for drafting the code “in record time”.

However, he noted that “there are still some commercial details, including elements of the scheme funding arrangements, to be finalised and the finished product must meet the approval of the ACMA”.

What became clear in the latest Senate Estimates is that approval of the code is contingent on the finalisation of those commercial details.

No finalisation, no code.

“At the time the code was presented, Communications Alliance indicated that there were some outstanding matters still to be agreed with rights holders, and it’s really only when a landing on those matters is reached that we’ll be in a position to make a proper assessment of the code, how it works, its costs and benefits,” Jennifer McNeill, general manager of ACMA’s content, consumer and citizen division, told Senate Estimates.

“We’re waiting on that. And there are a few other outstanding issues that we’re working through with Communications Alliance at the moment.”

McNeill said that in addition to funding, she understood internet service providers (ISPs) were still in discussion with rights holders to come to an agreement on indemnity – effectively ensuring Australia’s 70 largest ISPs were not held responsible for the alleged actions of their users.

Prominent intellectual property lawyer Peter Moon has previously noted the absence of detail on indemnity in earlier drafts of the code.

“It’s really only once the Authority has a sense of how those will work that it will be in a position to make a proper assessment of how the code will operate,” McNeill said.

“I might add that those questions of costs and benefits also feed into the requirement that any code registration process be accompanied by a regulation impact statement. We can’t do a regulation impact statement without that information.”

McNeill said the ACMA was also talking to the Communications Alliance about undisclosed “drafting and enforceability matters”.

Also holding up ACMA’s approval of the anti-piracy code are “residual concerns” held by Privacy Commissioner Timothy Pilgrim, who has written to the ACMA.

In response to questions by Greens Senator Scott Ludlam, McNeill said she wouldn’t describe approval of the code as “being completely out of [the ACMA’s] hands.”

But she couldn’t provide any indication on when the outstanding matters might be resolved, or when the code might be approved and put into use.

“I think it would be premature to speculate at the moment,” she said.

A problem for ISPs?

The bogging down of the code potentially presents problems for the internet industry.

The Government warned late last year that if the process was to fail, it would “create a binding industry code under the Copyright Act”.

The industry has previously attempted to create a similar code, only to see discussions reach an impasse in 2012.

Meanwhile, rights holders are starting to have success in pursuing alleged pirates through Australia’s court system.

The owners of the film Dallas Buyers Club have won the right to customer details for almost 5000 alleged infringers using internet services from iiNet, Dodo and other ISPs.

The rights holders now plan to expand their investigation to customers of other ISPs and have initiated similar action in other jurisdictions worldwide, providing a model for other aggrieved content owners to follow.