Background
Last year Optus launched its TV Now service, a cloud-based service enabling subscribers to record free-to-air television programs onto Optus' servers, and minutes later, stream their recordings onto compatible internet enabled devices.
Sporting-rights holders, the Australian Football League (AFL) and National Rugby League (NRL), which own the copyright in broadcasts made up of football and rugby games in these competitions, along with Telstra, who recently acquired an exclusive licence from these organisations to exploit this copyright through the internet and on mobile devices, sought to restrain Optus' broadcast of their games using the TV Now service.
These parties argued that Optus infringed their copyright and, alternatively, made unauthorised communications of the recordings "to the public". Optus claimed that it was the subscribers that made the recordings, and that those subscribers could rely on an exception in the Copyright Act 1968 (Cth) which allows for recording broadcasts for "private or domestic use".
Optus won at first instance, but lost the appeal before the Full Federal Court, which delivered its judgment on Friday 27 April 2012.
Decision at first instance
The judgment at first instance1, handed down on 1 February 2012, found in favour of Optus. In making his finding, Justice Rares considered three key issues.
Who made the copy of the recording?
Justice Rares found that that "a person needs to employ technical equipment to make a film of a broadcast" and that the Optus TV Now service was "substantially no different from a VCR or DVR". Considering the Optus TV Now service from a subscriber's point of view as well as at a technical level, Justice Rares found that when the subscriber clicked the "record" button on his or her compatible device, it was solely the subscriber that did the act that constituted recording the copyright work, albeit onto Optus' servers.
Can the maker of the recording rely on the "private and domestic use" exception in the Copyright Act?
Justice Rares found that the subscriber, in making the recording, could rely on the "time-shifting" exception in section 111 of the Copyright Act. Justice Rares stated that "[c]opying for private and domestic use is so much a commonplace that it is not difficult to infer that a user who made a film, by clicking 'record', was doing so for such a use". Justice Rares found that the subscriber's purpose in making the recording was to watch the recording "at a time more convenient than the time when the broadcast was made" (even if only by a few minutes).
Was the broadcast "communicated to the public"?
In response to the alternative argument put forward by the respondents that Optus, in communicating the broadcast to the public, infringed the respondents' respective copyright interests, Justice Rares held that it was the subscriber, and not Optus, that was responsible for "communicating" the recording to themselves. Accordingly, the recording was not communicated "to the public".
Decision on appeal
Justices Finn, Emmett and Bennett upheld the appeal by Telstra, the AFL and the NRL and found that Optus had infringed their respective copyright interests.2
Who made the copy of the recording?
The Full Federal Court found that the maker of the cinematograph film and sound recording was Optus or, in the alternative, Optus and the subscriber together.
The Court found that Optus' role in the making of a copy (by capturing the broadcast and then embodying its images and sounds in the hard disk) was so pervasive that, even though entirely automated, it could not be disregarded. The Court found that Optus' conduct was sufficiently close and causal to the illegal copying that it trespassed on the exclusive domain of the copyright owners.
The Court also recognised that the copying process required the involvement of both Optus and the subscriber and "they could both properly be said to be jointly and severally responsible for the act of making the copies". While the Court held that it was not strictly necessary to determine whether Optus alone was, or Optus and the subscriber were, the maker(s) of the copies, the Court's preferred view was that Optus and the subscriber, acting together, were the makers of the copies.
Can the maker of the recording rely on the "private and domestic use" exception in the Copyright Act?
As a "maker" of the cinematograph film, Optus could not rely on the "private and domestic" use exception to copyright infringement under section 111 of the Copyright Act. The Court held that there was nothing in the language of section 111 to suggest that it was intended to cover commercial copying on behalf of individuals.
Was the broadcast "communicated to the public"?
In light of the finding of copyright infringement above, the Court did not have to consider whether Optus had also communicated the broadcast to the public.
Implications
This decision will lead to much debate in both the information technology and intellectual property spheres as to the impact of the decision for providers of services that use the cloud. While the Court attempted to confine the decision to its facts as much as was possible, there is a clear message to those providers of cloud services that the amendments to the Copyright Act do not necessarily provide them with the protections that they may have thought existed after the Justice Rares decision at first instance.
This case has serious implications regarding mobile telephony and internet-based broadcast rights and is likely to be appealed to the High Court. We will keep you updated as this matter progresses.
Footnotes1 Singtel Optus Pty Ltd v National Rugby
League Investments Pty Ltd (No 2) [2012] FCA 34
2 National Rugby League Investments Pty Limited v
Singtel Optus Pty Ltd [2012] FCAFC 59 (27 April
2012)
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