TV not now - Optus' TV Now service held to infringe copyright

April has been a busy month for important, technology-related judgments.

On 3 April, the ACCC won its appeal against Google in relation to Google's adwords scheme, and Google was found to have engaged in misleading and deceptive conduct [1].

On 20 April, iiNet triumphed over "Hollywood" in the High Court because its conduct was held not to constitute authorisation of the infringements of copyright carried out by its customers [2].

Then, on 27 April, Optus was judged to have infringed the NRL, AFL and Telstra's copyright in broadcasts of NRL and AFL football games through its TV Now subscription service [3].

The issue

Optus introduced a new TV subscription service called "TV Now". This service allowed customers to have free to air programmes recorded so that they could play them back at a more convenient time on their compatible Optus mobile device or computer.

The customer could log in to the TV Now service, select the programmes to be recorded, and then have those programmes streamed to their mobile device or computer when they wished to watch them.

The TV Now service recorded the programmes chosen by the customer and made four different copies of those programmes to ensure that there was a copy compatible with each type of device the customer may wish to watch the programme on.

This case was brought against Optus by the NRL, AFL and Telstra (the Rights Holders). They claimed that the recording of the programmes by Optus for playback by the customer amounted to an infringement in the copyright in the free-to-air broadcasts of live and filmed NRL and AFL football games. The NRL and AFL had granted to Telstra an exclusive licence to communicate them to the public over the internet or through mobile devices (and for which, for AFL games, it has been reported that Telstra paid the AFL over $150m).  

From a PR perspective, this infringement was framed as having the potential to destroy the value of broadcast rights in Australia, and put in jeopardy essential revenue streams.

The Federal Court at first instance had found in favour of Optus. It determined that it was the Optus customer, and not Optus, that made the copy of the broadcast, so there was no infringement of copyright by Optus.

The appeal

The Rights Holders appealed the primary judge's decision to the Full Court of the Federal Court, and the Full Court came to a different conclusion.

The Full Court identified two primary questions that needed to be determined.

The first was, who makes the copy of the programme through the TV Now service?

The primary judge decided that it was Optus' customer, because it was the customer that initiated the recording process. The Full Court, however, determined that the maker was either Optus, or Optus and the customer together. Whilst it was the customer who triggered the sequence of actions which resulted in copies of the programme being made, the TV Now service was designed in a way that made Optus the main performer of the copying. Optus captured the broadcast and embodied it on a hard disk, for access at a later time by the customer. As the Court succinctly put it:

"Without the subscriber's involvement, nothing would be created; without Optus' involvement nothing would be copied. They needed to act in concert to produce - they each have contributed to - a commonly desired outcome”.

The second question was, if Optus did infringe the copyright of the Rights Holders, could it rely on the Copyright Act's "time shifting" exception? 

The "time shifting" exception is set out in s.111 Copyright Act 1968 (Cth). It allows a person to record a broadcast solely for private or domestic use, so that they can watch the material at a more convenient time. Without this exception, the recording would amount to an act of copyright infringement.

The Full Court determined that Optus could not invoke this exception. It may have copied the programmes so others could use the recorded programme for the purpose envisaged by this exception, but Optus itself made no use of the copies. Further, there is nothing to suggest that this exception was intended to cover commercial copying on behalf of individuals. 

Whilst an Optus customer may be able to rely on this exception, Optus could not. Optus had infringed the Rights Holders' copyright.

What now?

Optus has suspended the TV Now service pending further developments. The fierce competition in the mobile telecommunications market would suggest that Optus will seek special leave to appeal this decision to the High Court.

The Full Court made it clear that this decision was based on its specific facts, and that "different relationships and differing technologies" may have resulted in a different answer to the question of who makes the copy. This potentially opens the way for the TV Now service, or other such services, to be designed in a manner that would place the making of the copies squarely into the hands of the customer.

The tension between technology and rights holders will no doubt continue to be played out in the courts, as the legislation struggles to keep up with developments in technology. The Full Court acknowledged the difficulty of taking a technologically neutral interpretation of the law. It also stressed that its job was simply to apply the law and wording of the Copyright Act as it stands, and not construct its own policy and interpretation around these words: if public policy desires a different outcome then the legislation will need to change to give effect to that outcome.