Optus TV Now suspended after NRL and AFL victorious on appeal

Optus TV Now suspended after NRL and AFL victorious on appeal

Optus TV Now suspended after NRL and AFL victorious on appeal

National Rugby League Investments Pty Limited v Singtel Optus Pty Ltd [2012] FCAFC 59

On 27 April 2012, the Full Federal Court of Australia delivered its eagerly awaited judgment concerning Optus’ cloud-based recording service, TV Now. The Federal Court has unanimously overturned Justice Rares’ decision, and found in favour of the National Rugby League (NRL), Australian Football League (AFL) and Telstra. The Court held that Optus’ TV Now service infringed the copyright in the live broadcasts of NRL and AFL games, by finding that Optus was at least partly responsible for making the recordings, and that the section 111 “time-shifting” exception to copyright infringement did not apply to it.

This decision has been welcomed by sporting leagues, following concerns that Justice Rares’ earlier decision might have devalued online and mobile phone broadcast rights for major sporting events. However, the decision provides little certainty for providers of new cloud-based technology as to what conduct, if any, is permitted under the current Australian Copyright Act.

The Optus TV Now service

Optus launched its TV Now service in July last year. It allows subscribers to the service to record television programmes and store the recordings (for up to 30 days) on remote Optus servers, which subscribers can later play back on their compatible mobile device or personal computer (PC). Subscribers with Apple devices can watch recordings “near live”, with a delay of as little as two minutes from the commencement of the actual free-to-air broadcast.

When subscribers select a programme to record using the TV Now service, equipment owned and operated by Optus makes four copies of the programme in four different formats, allowing subscribers to view recordings on any of the following devices: PCs, Apple devices, Android devices and 3G devices.

Optus initiated the proceedings in August last year, claiming the NRL and AFL had made unjustified threats of copyright infringement against it in relation to its TV Now service. The NRL, AFL and later Telstra (the exclusive licensee of the NRL and AFL broadcasts) (collectively, “the rights holders”) cross-claimed, alleging Optus had infringed the copyright in the live NRL and AFL broadcasts.

Under the Australian Copyright Act 1968 it is an infringement of copyright for a person other than the rights holder of a film or broadcast to make a copy of that film or broadcast and to “communicate it to the public”. However, section 111 of the Copyright Act permits a person to make a recording of a broadcast if it is for their personal and domestic use, for the purpose of watching it at a more convenient time (this is known as “time shifting”).

At first instance: Optus TV Now did not infringe copyright

In February this year, Justice Rares of the Federal Court found in favour of Optus, by finding that the subscriber was responsible for making the recordings when he or she clicked on the “record” button on their compatible device, as no copies would have been brought into existence unless the subscriber performed this action. In coming to this conclusion, His Honour considered the TV Now service to be “substantively no different from a VCR or DVR”.1

As Justice Rares found that the subscriber alone was the maker of the recordings, His Honour did not have to consider whether section 111 of the Copyright Act applied to Optus.

On appeal: Optus TV Now infringed copyright

The rights holders appealed against Justice Rares’ decision and in March the Full Federal Court (consisting of Justices Finn, Emmett and Bennett) heard those appeals. The two primary issues for determination were:

  1. Who made the recordings: Was it the subscriber, Optus or both of them jointly?
  2. If Optus was found to have made the recordings, did the section 111 “time-shifting” exception to copyright infringement apply to it?

Issue 1: Optus made the recordings

The Full Federal Court found that Optus was “manifestly involved” in the copying process as it not only owned and operated the system which made the recordings, but it also solicited subscribers to the service.2 In taking this “service provision” approach, the Court noted that the subscriber by selecting the programme to record and clicking the “record” button was “merely a pre-condition to be satisfied to activate Optus’ obligation to perform its service”.3

The Court considered Optus’ role in making a copy of the broadcast (i.e. capturing, copying, storing and making available for a reward) to be so pervasive, that despite the entire service being automated, Optus’ role could not be disregarded when determining the question of who was the “maker” of the copy.4

The Full Federal Court preferred the view that both Optus and the subscriber, acting in concert, were the makers of the recording5, as “without the subscriber’s involvement, nothing would be created [and] without Optus’ involvement nothing would be copied.”6 The subscriber was found to have instigated the copying process by clicking the “record” button, but Optus ultimately gave effect to it.

Issue 2: the section 111 “time-shifting” exception did not apply to Optus

The section 111 “time-shifting” exception of the Copyright Act applies to private and domestic use, and encompasses recording broadcasts, and watching recorded broadcasts inside and outside of a person’s home. However, the Court found that “there is nothing in the language… of s 111 to suggest that it was intended to cover commercial copying on behalf of individuals”.7 The Court held that Optus made the recordings for a commercial purpose to make a profit and as such it could not rely on section 111.

Wider Implications

This was the first time since the introduction in 2006 of section 111 into the Copyright Act that an Australian court has considered the scope of the “time shifting” exception to copyright infringement. The Court made it clear that the exception applies to individuals, to enable them to record broadcasts, as well as view and listen to recordings, inside and outside of their homes for private and domestic use. It does not apply to cover commercial copying on behalf of individuals. This potentially has broader implications for providers of cloud-based services that store copyright material on behalf of a paying consumer, and transmit it back to them at their request. However, as the Full Federal Court noted, “different relationships [between the service provider and user] and differing technologies may well yield different conclusions to the “who makes the copy” question.”8

This decision highlights the difficulty facing the Australian Government in the current fast paced digital environment, to draft legislation that is flexible and adaptive to new technologies (including those that are not even in contemplation at the time the legislation is drafted). The upcoming Australian Law Reform Commission (ALRC) review of the Copyright Act will include consideration of the adequacy and appropriateness of the existing legislation to deal with issues arising in the digital environment, including a review of the effectiveness of the “time-shifting” exception.9 It is expected that changes to the Australian copyright legislation will be explored in the near future.

What’s next for Optus?

In light of this decision, Optus has suspended the provision of its TV Now service. However, it recently applied to the Australian High Court for special leave to appeal this decision. We will keep you updated on the outcome.

Endnotes

  1. Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No.2) [2012] FCA 34 at [63].
  2. National Rugby League Investments Pty Limited v Singtel Optus Pty Ltd [2012] FCAFC 59 at 75.
  3. Ibid at 71.
  4. Ibid at 67.
  5. Ibid at 78.
  6. Ibid at 76.
  7. Ibid at 89.
  8. Ibid at 100.
  9. Hon. Nicola Roxon MP, ‘Professor McKeough to conduct ALRC copyright review’ (Press Release, 8 February 2012).