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Sunday, 6 May 2012

Footy broadcasts online (again): the saga of Optus v Telstra No 2


While resting her injured hind paw in a mountain of pillows, this Kat could have done with some Aussie footie on TV (go the Pies! and go the Knights!).  As it turns out, the closest which should could get was the sports broadcast saga involving Australian football codes and rival telecommunications companies: National Rugby League Investments Pty Limited v Singtel Optus Pty Ltd [2012] FCAFC 59 (27 April 2012).

As readers will recall the Australian Football League (AFL) and the National Rugby League (NRL) had granted telecommunications company Telstra an exclusive licence to communicate to the public, by means of the internet and mobile telephony enabled devices, free to air television broadcasts of football matches conducted by them. Optus offered a subscription service 'TV Now' which allowed a subscriber to have free to air television programmes recorded as and when broadcast and then played back at the time (or times) of the subscriber’s choosing on the subscriber’s compatible Optus mobile device or personal computer. The system which permits such 'time-shifting' of programme viewing requires the copying and storing of each television broadcast recorded for a subscriber. The AFL, NRL and Telstra claimed that Optus' TV Now service infringed their copyright interests.

The matter came before Rares J in the Federal Court who concluded that the Optus TV Now service did not infringe copyright in the broadcasts of the AFL and NRL games in the particular ways that the rightholders had alleged. See previous KatPost here.

It came as no surprise that the AFL, NRL and Telstra appealed the decision to the Full Federal Court. The appeal was heard by Finn, Emmett and Bennett JJ in mid March 2012 and judgment was given at the end of April 2012.

Issues

1. Who made the copy?
The Full Court stated the issue as follows: when a cinematograph film (or copy) and a sound recording (or copy) were made when a television broadcast of one of the AFL or NRL matches was recorded for a subscriber, who, for the purposes of the Copyright Act 1968 (Cth) was the maker of that film, sound recording or copy? Was it Optus or the subscriber (or both of them jointly)?

Rares J at first instance answered that it was the subscriber because they pressed the 'record' button. The Full Court disagreed, considering this a too simplistic view of the contractual arrangement between Optus and its subscribers.

In their Honour's view (at [79]), each cinematograph film and sound recording of the broadcasts and copies of the films was brought into existence after a subscriber had clicked the 'record' button on that subscriber’s Optus compatible device. However, the Optus system itself had been designed in a such way that made Optus the 'main performer of the act of [copying]' (at [60]) so that its position was so central that it could not be disregarded in determining who made the copy. 

Optus could be said to be the maker in that the service it offered to, and did, supply a subscriber was to make and to make available to that person a recording of the football match he or she selected. Alternatively Optus and the subscriber could be said to be the maker as they acted in concert for the purpose of making a recording of the particular broadcast which the subscriber required to be made and of which he or she initiated the automated process by which copies were produced. The Full Court considered it unnecessary for present purposes to express a definitive view as between the two options.

2. If Optus made the copy, did a defence apply?
The Full Court stated the issue as follows: if Optus’ act in making such a film would otherwise constitute an infringement of the copyright of AFL, NRL or Telstra, can Optus invoke the 'private and domestic use' defence of section 111 of the Copyright Act 1968?

Rares J did not have to make a ruling on this issue given that his answer to the first question was that the subscriber made the copy.

For the Full Court, the issue here was whether the defence provided by section 111 applied only to the maker of the cinematograph film or sound recording or whether it could extend to a person who makes the copy not for his or her own 'private and domestic use', but the cinematograph film or sound recording was nonetheless made for such use by another. In their Honour's view (at [89]), there was nothing in the language, or the provenance, of section 111 to suggest that it was intended to cover commercial copying on behalf of individuals.

If Optus alone made the copies, it cannot rely on section 111 (at [89]). Optus may have copied programmes so that others can use the recorded programme for the purpose envisaged by section 111. However, Optus makes no use itself of the copies itself: it merely stores them for 30 days. Further, its reasons for providing the service of making copies of programmes for subscribers is to derive such market advantage in the digital TV industry as its commercial exploitation can provide.

If both Optus and the subscriber made the copies for that subscriber, then their Honours were of the view (at [92]) that a similar result ensues but for somewhat different reasons. But for the operation of section 111, both Optus and the subscriber would be jointly and severally liable for doing the acts comprised in the copyright of the respective owners. Each could be sued as the maker of the copy without joinder of the other. For present purposes, their Honours assumed that the subscriber in making his or her copies did so for the purposes prescribed by section 111. If the subscriber was sued as a maker of the copies made to provide the programme he or she selected, that person could rely on section 111. However, they stated (at [93]) that section 111 offered no solace to Optus. Optus was severally liable as the person who did the acts of copying and that liability was not a secondary one dependent upon the primary liability of the subscriber.

Comment
This Kat could not find any comments on the decision from the AFL, NRL or Telstra, but assumes that they would state that the Full Court got it right. Optus on the other hand, published this notice on the Optus TV Now homepage:
The Optus TV Now service has been suspended indefinitely as a result of the Federal Court's decision on Friday 27 April 2012.
When we launched the Optus TV Now service we were confident it was within the law. While we are reviewing the impact of today's court decision we regret to inform you we are unable to offer the Optus TV Now service at this time. We sincerely apologise for having to withdraw this service as a result of the judgment. Customers will not incur any further charges once the service has been suspended.
We remain committed to ensuring Australians have access to the latest technologies. We will continue to offer innovative digital solutions now and into the future.
The IPKat thinks that it will be inevitable that this decision will be appealed to the High Court, given the money at stake by both parties.

Merpel considers this to be yet another round in the conflict between the electronic equipment industry and the entertainment industry, perhaps best described as the one 'where the living room meets the cloud'.  With many home entertainment devices relying on cloud-based service providers and infrastructure, could such a decision by the Full Court be said to stifle innovation?  Or does the decision of the Full Court leave the door open to Optus to develop different technology which achieves the same result for consumers but does not infringe the Copyright Act?

1 comment:

Andy J said...

My guess is that the next 'business model' for this kind of service will involve a form of home recording device (possibly available for hire), somewhat like Sky+ which will reside in the domestic user's home. The user will be able to set it to record from a mobile handset, and the device will be able to stream the recorded program to his mobile device at a later time. This would certainly overcome the 'Optus' third party dimension in this case. To my way of thinking it would probably be legal under both Australian and UK current law, and possibly under US law also given the arguments behind the Aereo case.

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