The verdict is out in the case of numerous media/entertainment companies versus an ISP over in australia.

The entertainment companies wanted a ruling that an ISP is responsible for the actions of their customers - so they sued an ISP for "allowing copyright infringement to occur".

Now, we can't have that. If someone breaks copyright then they should be responsible for their own actions, not their ISP, not the mail service, not the maker of the fax machine, not the people who built a photo sharing website.

Commonsense prevailed, and the judge ruled in favour of the ISP. The entertainment companies now must pay the ISPs legal costs.

I've picked some of that commonsense from within the judge's ruling:

In summary, in this proceeding, the key question is: Did iiNet authorise copyright infringement? The Court answers such question in the negative for three reasons: first because the copyright infringements occurred as a result of the use of the BitTorrent system, not the user of the internet, and the respondent did not create and does not control the BitTorrent system; second because the respondent did not have a relevant power to prevent those infringements occurring; and third because the respondent did not sanction, approve or countenance copyright infringement.

On the incorrect use of the word "theft" to describe copyright infringment:

As an aside, the Court notes that AFACT, the organisation which the applicants use to aid in enforcement of their copyright, itself blurs the distinction between tortuous copyright infringement and criminal acts involving copyright, as seen in its name: Australian Federation Against Copyright _Theft_.

yup, copyright infringment is copyright infringement. Theft is something else. There are many illegal actions that deprive others of income, such as crashing a car into their work vehicle; blocking the entrance to their shop; slander; violence; - many actions that can cause someone to lose income, but that doesn't magically make their actions equal to theft. It's illegal, but theft is a different crime. The language we use to describe copyright infringement is important. We should not let extremist frame the debate in incorrect language. They're not thieves, they're not pirates, they're "copyright infringers".

Scenarios where I firmly believe that copyright infringement is not wrong include: Copying a movie you own on DVD to your ipod touch to view on a long plane flight later; Quoting from a text book to prove a technical point; Circumventing copying restrictions so the visually imparied can access a text/artwork; Backing up your ebook collection;

AFACT is the Australian version of NZFACT, the group who lobby for draconian laws in NZ

The judge also comments on AFACT's unwillingness to even stand behind the accuracy of their accusations in infringement notices, yet they demand ISPs act on them:

The AFACT notifications are not statutory declarations, nor do they have any statutory basis. At no point did [AFACT director Neil Gane] swear to the truth of the allegations contained in such Notices. At no point does he state that he personally had taken reasonable steps to ensure that the information and statements in the notice were true and accurate.

These folks want ISPs to cut off their customer's internet access, based on accusations that they're unwilling to even declare as accurate. This illustrates one big reasons why ISPs are uncomfortable with these "three strikes" laws. Who is liable when the accusations are wrong? The ISP can see you're downloading some data, how are they to know it is a piece of Sony music without permission, or a recording of your nephew playing violin? If they get it wrong, what next? or an even better question: since when was it okay for your ISP to spy on your internet traffic? Is someone's copyright enforcement really more important than everyone's privacy?

New Zealand's own APRA believes that "Without the content industries, the internet would be empty.".
The judge in the iiNet case comments on this claim:

T]he claim made throughout these proceedings that bandwidth usage or downloading is somehow necessarily, predominantly or even significantly copyright infringing, is simply not established on the evidence. The Court finds the applicants’ attempt to cast a pall over internet usage, such that it is assumed to be infringing, unless otherwise shown, is unjustified.

This is echoed in the comment from Sony CEO that nothing good has ever come from the internet

Quote from AFACT directory Neil Gane

"[W]e believe this decision was based on a technical finding centred on the court's interpretation of how infringements occur and the ISP's ability to control them."

and response from Boingboing:

Ah yes, technical findings, as in, technically, your theory that ISPs have a duty to spy on all their users and shut down anything that you don't like was technically incorrect, because it is a technically insane idea.

via:
http://creativefreedom.org.nz/story.html?id=462
http://www.boingboing.net/2010/02/03/awesomely-awesome-au.html
http://robertcorr.com/2010/02/afact-v-iinet/
http://techdirt.com/articles/20090720/0233385600.shtml