The Full Federal Court has overturned the decision of Justice Rares delivered on 1 February 2012 which legitimised the time shifting recording technology used by Optus' "TV Now" service. TV Now allowed Optus subscribers to record and watch free to air television coverage on their mobile and other devices.
The three judges of the Full Court (Finn, Emmett and Bennett JJ) unanimously found in favour of the National Rugby League (NRL), Australian Football League (AFL) and Telstra which had claimed that their copyright in TV sporting broadcasts had been infringed by Optus.
In doing so, the Full Court has restored the value of digital rights arrangements licensed by sporting bodies, in the case of NRL and AFL, currently to Telstra, worth hundreds of millions of dollars. Only one week after the High Court of Australia determined that the ISP iiNet is not liable for infringing copies made of films by its customers, the decision is a significant victory for copyright owners in the conflict described by the Court as one "between the electronic equipment industry and the entertainment industry".
The NRL and AFL own the copyright in the broadcasts of free to air television matches played in their respective competitions. Telstra is the exclusive licensee of broadcasts of the footage for communicating the broadcasts to the public via the internet or mobile phone devices.
The Optus TV Now service allows its subscribers to record certain free to air television programs, including sports broadcasts and to play them back at another time on their mobile devices, PC's or tablet devices. In the case of Apple devices, playback can begin within as little as two minutes after recording of the event has commenced.
When a subscriber presses "record" on the Optus TV Now electronic programming guide, Optus records and stores "in the cloud" four separate versions of the chosen program, to be streamed to the subscribers relevant device when they later hit "play".
The case was originally commenced by Optus itself, claiming that the NRL and AFL had made unjustified threats of copyright infringement against it in relation to the Optus TV Now service. The sporting bodies, as well as Telstra, defended the action with a cross claim to the effect that the TV Now service infringed their copyright in the TV broadcasts. The case largely concerned the operation of section 111 of the Copyright Act 1968, colloquially known as the "private and domestic use defence", which provides that:
- 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.
- 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.
Decision of the trial judge
The trial judge, Rares J, found that:
- It was the subscriber and not Optus who made the recordings (or copies) of the broadcast which are stored on Optus' computer, in the cloud. Rares J relied heavily on an analogy between the Optus TV Now service and DVRs and VCRs, finding that all three devices worked similarly, in that they worked by way of instructions given to them by the subscriber, who should therefore be considered the maker of the recording.
- The exception in section 111 of the Copyright Act applied to such recordings so as to provide an exception to copyright infringement. Rares J in particular found that section 111 provided no limit on what was contemplated by the words "a more convenient time", holding that a delay of as little as two minutes in the case of Apple devices fell within the terms of that section.
- No other infringement was committed by either Optus or the subscriber by way of "communicating" the recording "to the public". His Honour found that it was the subscriber who made any such communication, but did so only to herself or himself, who is not the "public".
Judgment on appeal
Whilst noting the difficulty of the task faced by Rares J and their gratitude for his Honour's distillation of very complicated technology, the Full Court reached a different conclusion on the first two of the issues summarised above and did not need to decide the third.
Their judgment considered two questions:
- Who "makes" the copy of the television broadcast on the Optus TV Now service? Was it Optus, the subscriber or both of them jointly?
- If Optus was the maker, can it rely on the section 111 "private and domestic use" defence?
In answering the first question, the Full Court rejected the analogy adopted by Rares J and found that the copy of the television broadcast was in fact made by Optus alone or Optus and the subscriber jointly. The Court noted, however, that the question was not easily answered given the sophisticated automated technology involved.
The Full Court found that:
- The copy was brought into existence when the subscriber pressed "record" on the TV Now service but was not made by the subscriber alone.
- Optus had solicited the subscriber to utilise its service and it had also designed and maintained a sophisticated system which can effectuate the making of recordings wanted for viewing by the subscriber.
- Optus is the one which "captures, copies, stores and makes available for reward" the program for later viewing.
- Optus at all times possessed, owned and controlled the physical copies made until deleting them after 30 days.
On this basis, the Full Court found that Optus was at least one of the makers of the copies. The Full Court's preferred view, without needing to determine it, was that the copies made on the TV Now service were made by Optus and its subscribers acting together, for which they would each be jointly and severally liable.
To answer the second question, the Full Court was obliged to construe s 111 in order to determine whether that provision prescribes a person (or class of persons) who can be the maker or viewer of the recording made. In the Court's view, the natural meaning of the section is that the person who makes the copy is the same person who wishes to use it for a s111 purpose.
Contrary to suggestions made in the first instance judgment, the Full Court decided that there was nothing in the language of the provision which could suggest that it was intended to apply to commercial copying on behalf of individuals. The Full Court further strongly rejected the suggestion that they should decide differently by interpreting the provision with a "technologically neutral" gloss or by attempting to inform itself of the legislative policy behind the provision.
Accordingly, whilst a subscriber is entitled to rely on the s111 defence, Optus cannot do so as its purpose in making the recordings is not for its private or domestic use.
The assistance of Melissa Corbutt, Solicitor, of Addisons in the preparation of this article is noted and greatly appreciated
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