Australia: Recent Developments in Australian Copyright Law - iiNet, Telstra, Optus TV Now and PPCA

Last Updated: 31 March 2012
Article by Hamish Fraser, Oliver Smith and Michael Stojanovic

1. Background

Four key decisions, three of which involve interpretations of the Copyright Act 1968, and one which looks into the Broadcasting Services Act 1992, show that the development of online and computerised content has raised some interesting questions about the future of copyright in online content, computer-created works, and the broadcast of television and radio online. In summary:

  1. The iiNet decision, now on appeal to the High Court, has clarified that ISPs are not responsible for authorising the illegal downloading of content, yet also suggests that they have a responsibility to ensure that their users are reprimanded for using their services for such purposes.
  2. The Telstra Phone Directories decision suggests that material generated by a computer does not attract copyright, which raises some noteworthy questions about the future of computer-created works.
  3. The Optus TV Now decision suggests that a service that mimics a VCR or DVR by allowing a user to download a broadcast onto a service provider's server, and then stream it onto a personal device, does not infringe copyright.
  4. The decision in PPCA implies that a licence to broadcast music over radio is also a licence to broadcast it online, as the dominant form of the service is still a broadcast service.

2. iiNet Decision

(a) Decision at First Instance

The Roadshow Films Pty Ltd v iiNet Limited (No. 3) [2010] FCA 24 ("iiNet Decision") is a Federal Court decision that considered whether an internet service provider (ISP) is responsible for users who use their services to download copyright material. The iiNet Decision has now moved its way through to the High Court, where the first hearing commenced in December of last year.

iiNet is the third largest ISP in Australia, and it became clear that some iiNet customers used the service to download copyright material, including films, using the BitTorrent system. The Australian Federation Against Copyright Theft ("AFACT") represented 34 applicants that owned copyright in a wide variety of films. Together they compiled evidence of a large number of their films having been downloaded illegally through iiNet, infringing their copyright.

Although the iiNet Decision considered a number of key questions, the case was decided on only one: did iiNet 'authorise' the infringement of copyright in the applicant's films?

Section 101 of the Copyright Act 1968 (the "Act") provides that a person who authorises an act of copyright infringement is held to have infringed copyright themselves. The Court looked at the BitTorrent system iiNet customers used to download films, and considered whether or not, through providing the internet services, iiNet had authorised copyright infringement. Despite finding that iiNet users had clearly infringed copyright, the Court found that there was no link between the customer's infringement and iiNet authorising such infringement, distinguishing the facts from the case of University of New South Wales v Moorhouse [1975] 133 CLR1 ("Moorhouse"), in which a university was held to have authorised copyright infringement by providing a photocopier in a library in order to let students copy pages from the books held in the library.

It was clear that iiNet had general knowledge of copyright infringement that was committed by iiNet users, yet despite this, it did not stop customers from doing any of the infringing acts. However, this didn't matter, because the Court held that the 'means' by which the copyright was infringed was through an iiNet user's use of the BitTorrent system. Implicitly, this suggested that an ISP could not be held liable for copyright infringement because an ISP does not directly provide the 'means' through which copyright can be infringed.

(b) Appeal to the Full Bench of the Federal Court

AFACT appealed to the full Federal Court in Roadshow Films Pty Ltd v iiNet Ltd [2011] FCAFC 23 ("iiNet Appeal"). The appeal found that the primary Judge's method of approaching the issue of authorisation was incorrect in implying that an ISP could not be found to authorise copyright infringement. The appeal Court found that authorisation was primarily determined by provisions under s101(1A) of the Act, where authorisation is based on:

  • Power of iiNet to prevent infringement
  • Nature of relationship between iiNet and the customer
  • Reasonable steps iiNet took to prevent infringement

The Court first considered whether it was relevant that iiNet had the power to stop the infringing behaviour by cutting off a user's internet service entirely. Despite the Judge in the first iiNet Decision finding that use of this power was unreasonable, given the "very broadness of the uses of the internet" [at 412], the full Court in the iiNet Appeal found that the power was not unreasonable. However, to use such a power, iiNet would need to be provided with sufficient evidence of the infringement by AFACT.

Emmett J and Nicholas J held that there was no authorisation by iiNet, as the infringement allegations presented to it by AFACT were not sufficient for iiNet to act on them, and it was not reasonable to expect iiNet to undertake the sort of effort required to review and analyse infringement allegations by AFACT. However,Nicholas J did note that a refusal by an ISP to act on infringement allegations on behalf of a copyright owner may imply authorisation [at 781].

Jagot J disagreed, and held that iiNet had authorised infringement, finding that the AFACT notices did provide enough information to support iiNet terminating a user's account.

Of particular significance was the full Federal Court's decision regarding the safe harbour provisions in the Copyright Act. The primary Judge found that iiNet had satisfied provisions giving it 'safe harbour' from copyright infringement under s116AH of the Act, by having an appropriate notification and enforcement mechanism in place to terminate repeat copyright infringers. The Full Federal Court rejected the primary Judge's finding that the safe harbour provisions applied to iiNet.

The safe harbour provisions provide specifically for an infringement 'policy' that the ISP must implement when dealing with users who infringe copyright by using their service. The policy must essentially be a clear process of warning, suspending and then terminating a repeat infringer from the service.

The Court found that the iiNet provisions were insufficient, as customers were not made aware of such a policy, and the implementation process was unknown and not clear:

"...considering the issue internally does not amount to the implementation of a policy. iiNet had no processes in place that resemble a policy." [iiNet Appeal at 272]

Despite this , as it was held that there was no finding of authorisation by iiNet, the safe harbour finding was irrelevant to the iiNet case.

It's clear that there are significant hurdles for copyright owners to show that an ISP has authorised copyright infringement. However, the appeal decision suggests that ISPs need to be wary of circumstances where they may imply authorisation. The burden lies on an ISP's repeat infringer policy to protect the ISP from being held liable for copyright infringement.

Emmett J also suggested a number of obligations on copyright owners to give ISPs enough information to pursue and implement an infringer policy. As a minimum it would seem that copyright owners need to provide:

  • Specific information about the alleged infringement, and steps requested to deal with it;
  • Information that is specific enough so that ISP can verify allegations of the infringement;
  • Undertaking to reimburse ISP for reasonable costs associated with verifying; and
  • Indemnity for any liability incurred by mistakenly terminating a service.

AFACT was granted leave to appeal the decision to the High Court, with the first hearing commencing last December. We are awaiting the judgement.

3. Telstra Phone Directories

Telstra Corporation Ltd and Another v Phone Directories Company Pty Ltd and Others [2010] FCAFC 149 (the "Telstra Decision") was a full Federal Court decision that revisited the question of copyright in compilations. Phone Directories had published a directory that was a copy of Telstra's phone directory. Telstra claimed that it was the owner of the copyright in the phone directories, and accordingly Phone Directories had infringed Telstra's copyright.

The Telstra Decision departed from the well known decision in Telstra Corporation Limited v Desktop Marketing Systems Pty Ltd [2001] FCA 612 ("Desktop Marketing"), which on the facts bore a striking similarity to the Telstra Decision. No doubt the Federal Court's reasoning was affected by the High Court's decision in IceTV Pty Limited v Nine Network Australia Pty Limited [2009] HCA 14 ("IceTV"), which made it clear that Desktop Marketing was to be 'treated with caution'. The full Federal Court in the Telstra Decision therefore went to great lengths to distinguish Desktop Marketing, and reached a very different conclusion on the facts.

The Telstra Decision is an appeal from an earlier decision by Gordon J, in which it was decided that Telstra had no copyright in the phone directories. The appeal upheld the trial Judge's decision that no copyright subsisted in the phone directories. This is in contrast with the Desktop Marketing decision, which, 10 years earlier reached the opposite conclusion.

The Court found that Telstra's compilation had been created primarily by a computer. Essentially, the computer system used by Telstra compiled and created a database of entries that was formatted to become pages in a phone directory. The creation of these pages was overseen by humans, just as the computer system had been built by humans. Importantly, however, it was held that the humans had no substantive input into compiling the information into material form:

"...the creation of the material form of the directories was carried out by a computer program overseen by persons who had no substantive input into those forms." [Telstra Decision at 101]

The Telstra Decision relied heavily on IceTV, in which it was confirmed that the focus of copyright is on the reduction into material form by an author. The Court found that copyright in the phone directories would only have subsisted if the "reduction of the work into material form" had been done by a human. In Telstra's case, this reduction was done by a computer, and therefore copyright was not seen to subsist in the work.

This was distinguished from the facts in Desktop Marketing, in which the reduction into material form was done mostly by individuals. Although Desktop Marketing didn't answer the question of authorship directly, it focused more on the idea that significant labour and expense involved in the collection of the information could give rise to copyright. However, as noted above, IceTV indicated that this reasoning was to be treated with caution [IceTV at 134].

It was decided that whilst humans were controlling the software collating the information, and reducing it into a material form, "their control was over a process of automation and they did not shape or direct the material form themselves." [Telstra Decision at 119] As such, there was no way that the directories could have an author (a human author), and therefore there was no copyright in them.

This led the Court to conclude that:

"...the performance by a computer of functions ordinarily performed by human authors will mean that copyright does not subsist in the work thus created."[Telstra Decision at 118]

It is not a stretch to envision a future where computers become increasingly engaged in the process of creating works that would, had humans performed exactly the same process, be protected under the Act. Substantively, these works may bear all resemblance to the creative process that humans engage in, when creating literary works, or matters other than works such as sound recordings. Yet this decision suggests that these works will only be subject to copyright protection if they involve substantive human input.

This conclusion leads to some interesting questions about authorship in works created by computers. Does this decision mean that creation by a computer of a virtual reality (as in a computer game), in which humans have only contributed to the framework, has no attached copyright? As computers become increasingly 'human' in their behaviour, does this leave a hole in copyright law that should be plugged? Finally, for such works as the directories in the Telstra Decision or works that may be created by computers in the future, who will get the benefit of the works if no copyright can be found to subsist in them?

4. Optus TV Now

Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 2) [2012] FCA 34 (the "Optus Decision") surrounds a service created by Optus called 'TV Now'. The TV Now service lets users record and then view free to air television programs at the touch of a button.

The programs, which in this case were AFL and NRL games, can be recorded and played back on compatible devices, such as 3G, Apple, Android devices and PCs. The recordings, however, are not made or stored on the user's device. They are made and stored in a data centre operated by Optus, and then streamed (but not downloaded) to the device.

For some users, this meant that they were able to watch the programs after the recording had been completed. For users with Apple devices, however, the recorded program could be streamed to the user's device with only a two minute delay from the free to air program, giving the user the ability to watch a live broadcast 'almost live'.

Optus commenced proceedings, claiming that the AFL and NRL had made threats against it, relating to the TV Now service. The AFL and NRL claimed that the service breached the provisions of the Act, because it made copies of cinematograph films, being the AFL and NRL game broadcasts. They claimed that Optus had communicated copies of the films to the public.

Telstra was also included as a party alongside the AFL and NRL, as they hold an exclusive licence from the AFL and NRL to display the broadcasts on their internet and mobile sites.

The parties agreed that there were seven key issues for determination in the case:

  1. Who did the acts involved in recording the copyright works?
  2. Was recording the films an infringement of copyright?
  3. Does Optus communicate the film when the user plays it?
  4. When recordings were streamed to a user, was this a communication to the public?
  5. Did Optus make the copyright works available online?
  6. If yes, was this to the public?
  7. Is the digital file streamed to a user an "article" or an "article or thing"?[at 45]

Rares J found in favour of Optus on all seven issues, deciding that Optus did not breach copyright in allowing users to stream and view the recordings on their devices. Rares J relied heavily on s111 of the Act, in which a film made of a broadcast, for private and domestic use, does not infringe copyright:

Recording broadcasts for replaying at more convenient time
(1) This section applies if a person makes a cinematograph film or sound recording of a broadcast solely for 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.

Making the film or recording does not infringe copyright
(2) The making of the film or recording does not infringe copyright in the broadcast or in any work or other subject-matter included in the broadcast.

Rares J likened the users recording and viewing the programs using the Optus TV Now service to a person recording a program on their VCR or DVR at home. The fact that the service behaved like personal VCR or DVR, in that it made a copy for each individual user on the server, which was then streamed (and not downloaded) to their device allowed Rares J to find that Optus and Optus users did not infringe copyright in the AFL and NFL broadcasts.

The AFL has filed a notice of appeal to the full Federal Court. The appeal is set down for hearing on April 18, and until the outcome is known, the decision by Rares J raises a number of interesting issues with regards to the legality of streaming content, how it can be provided to users and the future integrity of exclusive rights deals for mobile and online content.

The decision suggests that an entity can offer a 'streaming' service to users by providing them with a means to record live broadcasts. The user does not require his or her own recording technology:

"Section 111(1) does not require the person who makes the film to have any particular relationship, such as ownership, to the equipment by which [the recording] is made." [Optus Decision at 58]

The fact that there is minimal delay is also considered irrelevant:

"The meaning of the expression "a time more convenient than the time when the broadcast is made" [...] does not preclude watching a film "near live" if the viewer finds that to be more convenient." [at 80]

This decision suggests that that no copyright infringement occurs when an online site is established that can 'stream' broadcast content with minimal delay by providing space for users to personally record programs on servers or databases that the site has set up.

The decision suggests that arrangements between content providers for exclusive rights could be threatened. The value of an exclusive licence to display broadcasts online and exploit the benefits of being the exclusive rights-holder are undermined if any entity can provide services for their users to record and watch the same programs with minimal delay. Telstra has not yet suggested that it intends to change any of the exclusive rights arrangements it has with the AFL and the NRL, so this may be a theoretical, rather than a practical issue.

Another consideration is that we may soon see services offered that can stream content that has been 'stripped' of advertisements. If a service was set up to record a whole broadcast, but then allow a user to 'skip' through advertisement blocks, there may be wider implications for the way people end up watching broadcast content in the future. The ease and popularity of such a service may be damaging for content that relies on traditional advertising models.

5. PPCA Decision

The Phonographic Performance Company of Australia Ltd v Commercial Radio Australia Ltd (2012) FCA 93 (the "PPCA Decision") is a decision by Foster J in the Federal Court that suggests a service providing a radio broadcast that is also simultaneously streamed over the internet is still a broadcasting service within the meaning of the Broadcasting Services Act 1992 (Cth) (the "Broadcasting Act").

The Phonographic Performance Company of Australia Ltd ("PPCA") is a non-government organisation that provides licences to Australian businesses to play recorded music in public, and Commercial Radio Australia ("CRA") is a national industry body that represents commercial radio broadcasters.

PPCA alleged that CRA had breached their licence agreement by streaming radio programs over the internet. CRA contended that program delivery over the internet was within the scope of the licence as it was part of the definition of 'broadcasting services' under the licence.

The licence agreement between the two parties provided that the definition of 'broadcast' was as defined in the Copyright Act 1968. The definition of 'broadcast' in the Copyright Act is with reference to the definition of 'broadcasting service' under the Broadcasting Act, which defines a 'broadcasting service' under s6(1) as:

"broadcasting service means a service that delivers television programs or radio programs to persons having equipment appropriate for receiving that service..."

What complicated the issue, however, was a ministerial determination in 2000 to amend the definition of a 'broadcasting service' to specifically exclude audio and video streaming over the internet. The ministerial determination provided that:

"The following class of service does not fall within the definition [of s6(1) of the Broadcasting Act]:

a service that makes available television programs or radio programs using the internet, other than a service that delivers television programs or radio programs using the broadcasting services band."

The PPCA submitted that broadcasting over the internet was not part of the licence agreement, as it was not a 'broadcasting service' as clarified by the ministerial determination. However, Foster J carefully pointed toward the exception from the 'internet exclusion' of a 'service that delivers television or radio programs using the broadcast services bands' [at 127].

The question then arises: what if a service is predominantly concerned with broadcasting over broadcast services bands (as in a radio station), but then also streams the broadcast over the internet?

Foster J concluded that the idea of a 'service' when used to define 'broadcasting service' under the Broadcasting Act means all of the business activity that is carried on by the service provider:

"The concept of a service [...] carries with it the notion of all that is required to produce the end product – the identity of the service provider and all of the processes, equipment and know-how which is brought to bear in the delivery of the radio programs made available by that service." [at 115]

This suggests that the concept of a service is defined broader than the entities, or the means, by which that service is provided. The exclusion of a service that makes a radio program available over the internet did not apply, because it was primarily a service that delivers the radio program using the broadcast services bands. Therefore it was held that the definition of 'broadcasting service' encompassed the delivery of radio programs over the internet.

The Court also made note of the way the broadcast was transmitted. The fact that it went through a transmitter that 'split' the signal between radio frequency broadcasts on FM and AM, and internet streaming was relevant to show that the primary focus of the service was as a broadcasting service. This suggests that a service setup to stream only via the internet would not be considered a broadcasting service for the purposes of the Act.

6. Conclusion

Australian copyright law in an on-line environment appears to be in a state of flux. The decisions discussed above demonstrate that the future of computerised and online content is under close scrutiny, but it seems that there is a growing willingness of the courts to support the changes of a fast-moving online world.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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