Today the Australian Federation Against Copyright Theft lost the next stage of its ongoing legal war with Internet Service Provider iiNet. The High Court dismissed AFACT's appeal against an earlier decision that iiNet had not "authorised" copyright infringement by its customers.

The case has been running since late 2008. With Australia's ISPs distracted by the internet filtering debate, seven movie houses joined forces to launch a surprise legal attack on iiNet. AFACT king hit iiNet from behind in a move designed to strike fear into the hearts of Australia's ISPs. At the time it looked as if AFACT was hoping to deliver iiNet's head on a silver platter to pave the way for Australia's mandatory ISP-level content filtering (which in turn offered AFACT's best chance of forcing ISPs to enforce copyright law).

Later it became clear that the Motion Picture Association of America was driving AFACT's legal attacks on iiNet, bringing in Village Roadshow and the Seven Network to avoid the impression of US bullying, according to US diplomatic cables released by Wikileaks.

Today the puppet has some bad news for its master, but this fight is far from over. Having failed in its attack on iiNet, don't expect AFACT to go back to busting shonky DVD sellers at weekend markets. It's just going to change its tactics.

You might hear threats that the copyright police will start raiding lounge rooms, but former AFACT head Adrianne Pecotic is on record as saying its only interested in chasing those who release pirate copies of movies, not people sitting at home downloading them. US efforts to prosecute individuals turned into a PR nightmare, which AFACT surely doesn't want to see repeated in Australia. In today's press conference AFACT said that copyright law has failed to keep pace with online. It won't target end users but it's time for the government to act. The next phase has already begun.

Expect AFACT to step up its backroom lobbying, targeting anti-piracy negotiations happening behind closed doors. A Federal government review of Australian copyright law is coming next year. Meanwhile the government's mandatory filter plans aren't dead, just on the backburner as the NBN takes the spotlight. On top of this you've got backroom deals such as the Anti-Counterfeiting Trade Agreement and the Stop Online Piracy Act. The recent strike against Megaupload is perhaps but a taste of what's to come.

If the copyright police can't win people's hearts and minds, they're simply going to bomb the internet back into the stone age.