Copyright a little cloudy around the edges

Articles Written by Christine Ecob (Partner)

This article discusses the implications of the Federal Court decision in the case brought by Optus against the NRL and the AFL in relation to Optus' "TV Now" service. The Federal Court found that Optus could continue with its "TV Now" service as the recording and transmission of the matches fell within the "time-shifting" exception in the Copyright Act. This was on the basis that it was the Optus customer who was responsible for the recording of an AFL or NRL match and then the streaming of that recording to the same customer for his/her own personal use. The case has significant implications for cloud-based service providers and for the owners of rights in relation to TV and radio content.

Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 2) [2012] FCA 34

In a landmark ruling the Federal Court of Australia found Singtel Optus did not breach the AFL's and NFL's copyright by enabling its customers to record and view matches via its new TV Now service on computers and mobile phones.   Singtel Optus did not have licences that entitled it to broadcast the matches live.  Telstra had an exclusive licence from each of the AFL and NFL covering the broadcast of live matches both online and on mobile devices.  It was reported that Telstra had paid the AFL $153 million for the rights the AFL granted for 5 years. 

Why didn't the AFL and NFL succeed in preventing Optus from allowing its customers to watch the matches with only a 2 minute delay via its TV Now service?  It was because the judge found that it was Optus' customers who were recording and then watching the broadcast on an individual basis for their own personal use and they were covered by "time–shifting" defence in the Copyright Act.  While technically this decision is only an interlocutory one deciding on the seven principal legal issues agreed by the parties, it clearly has significant implications for copyright owners and cloud based service providers.

Background

In July 2011 Singtel Optus and its subsidiary Optus Mobile Pty Ltd launched a new service called 'TV Now'. The service enables users to record free to air television programs, including Australian Football League (AFL) and National Rugby League (NRL) games and play them back on computers or mobile phones with only a slight delay. Optus' complex recording system enables its users to record a free to air program by clicking the "record" button for a program in Optus' electronic program guide. The program guide is available on Optus' homepage or mobile application and can be accessed by its private, as well as small to medium business customers. Optus' equipment then records the chosen program individually for each user in four different formats, namely one each for PC's, Apple, Android and 3G devices. The four copies of each broadcast are stored in Optus' NAS (network attached storage) computer in its data centre and when a user clicks on the "play" button the data centre starts streaming the copy of the program in the appropriate format to the device the customer is using. The streamed data is not downloaded to the users' device and the user can only view the copy for 30 days following the time of the original broadcast. Users with Apple IPad or IPhone devices can watch a recorded program "almost live" with a delay of only two minutes to the commencement of the actual free to air broadcast. On the other compatible devices the recorded programs can only be viewed after the broadcast has finished.

The 'TV Now' service resulted in complaints from the AFL, NRL and Telstra (Telstra has an exclusive license from the AFL and NRL to exploit free to air broadcasts of AFL and NFL games on the internet and mobile telephony). Optus received a letter of demand from the AFL and the NFL claiming that Optus' 'TV Now' service infringed their copyright in broadcasts of the matches.

Singtel Optus began proceedings claiming that the AFL and the NRL had made unjustified threats against it. AFL and NRL argued that Optus had breached their copyright in the recorded broadcasts through its 'TV Now' service.

The court's findings

Justice Steven Rares found in favour of Optus by ruling that Optus' 'TV Now' service is effectively the same as an individual recording TV programs on home video and digital recorders for his/her personal use and therefore does not constitute an infringement of copyright.

The Copyright Act 1968provides an exception in section 111 that allows a person to make a film, or copy, or recording of a broadcast solely for his or her private and domestic use by watching or listening to the material broadcast at a time more convenient than the time when the broadcast is made. Section 111 is known as the 'time-shifting' provision and was introduced in 2006 through the Copyright Amendment Act 2006in order to facilitate the rapid changes occurring in the digital television and radio service industry.   

Justice Rares found that even though Optus provided all the necessary technology for making, keeping and playing the recording it was the user who made the copy of the program and not Optus. Justice Rares found that by clicking the "record" button the user was the one who was responsible for the creation of the copies.  He noted that if the user did not click "record" no recording would ever be brought into existence.  The Judge concluded that the individual users made the recordings for their private and domestic use so that they could watch them at a more convenient time (even if they started to watch the recording only minutes after the live broadcast started). 

Another key issue that has been decided by the Court is that by streaming the recording to a user's device Optus did not "communicate" the copy "to the public". The Copyright Actstates that a "communication" is taken to "have been made by the person responsible for determining the content of the communication". Justice Rares decided that the 'TV Now' service operated to make the user the person solely responsible for determining the content of any communication when he or she clicked on the 'play' button.   

Implications

The final implications of this case are not yet clear.  The Federal Court decision relates to the specific issues agreed by the parties.  The Full Federal Court, comprised of Justices Finn, Emmett and Bennett, will hear an appeal against the decision on those issues on 14 and 15 March 2012.

The Full Court's decision will be particularly significant for both copyright owners and cloud-based service providers.  For holders of rights in relation to TV and radio content the decision has the power to significantly diminish the value of their rights and to threaten future internet and mobile device licensing deals.   For cloud-based service providers the case may mean an opportunity to expand their offerings to customers to include a greater range of television and radio content. 

Given the high stakes in this matter a special leave application to the High Court is likely to follow the Full Federal Court's decision, no matter what the result.  In addition, the Australian Law Reform Commission is due to receive shortly terms of reference for a inquiry into whether the exceptions in the Copyright Act(including the time-shifting provision) are adequate and appropriate in the digital age.  Any recommendations for legislative change in the report the ALRC ultimately produces may address issues raised in this case.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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