By DLA Piper UK LLP and DLA Piper Scotland LLP
In a victory for rights owners, the National Rugby League (NRL), the Australian Football League (AFL) and the Telstra Corporation (Telstra) have succeeded in their appeal to the Full Federal Court of Australia against Singtel Optus (Optus).
Background
Optus, a leading provider of mobile phones and competitor to Telstra, devised a subscription service called TV Now, which permitted its subscribers to have free to air television programmes recorded as and when the programmes were broadcast and then play them back at a later time on a compatible Optus mobile device.
Optus designed the TV Now recording system to ensure that the recording of programmes was initiated by subscribers. If a user wished to record a programme, the user would initiate the recording by clicking the “record” button for that programme in the service’s electronic program guide. The system would then record the program in four different formats (i.e. one each for PCs, Apple, Android, and 3G devices) which resulted in four copies of each broadcast for every user of the TV Now service who clicked “record”. All four copies were stored in Optus’ data centre which allowed subscribers to view the recording at a later time and on the particular device of their choice. Subscribers had a 30 day period following the original broadcast in which to view the recording.
The AFL and NRL claimed the TV Now service infringed their copyright in the broadcasts of the games in their respective leagues. Both the AFL and NRL granted exclusive licences to Telstra (Optus’ main competitor in the mobile communications market) to exploit the television broadcast of their games. The TV Now service clearly undermined the value of Telstra’s rights deals by providing an unauthorised on-demand “replay package”.
In its defence, Optus argued that there was no copyright infringement since the copying was done by the consumer and not Optus. Accordingly, the TV Now system complied with the ‘time shifting’ exception under Section 111 of the Australian Copyright Act 1968 (Cth) (the Copyright Act). Section 111 permits a person to make a recording of a broadcast, solely for private and domestic use, so that he or she can watch the programme at a later, more convenient time.
First instance
At first instance, a single judge of the Federal Court, Justice Rares, agreed with Optus and held that the TV Now system did not infringe copyright. Even though Optus was providing the technology that facilitated the recording, Justice Rares held that it was ultimately the subscribers, not Optus, who made the recordings when they initiated the recording by clicking the ‘record’ button on their mobile devices. Justice Rares accepted that subscribers made the recordings for personal use and therefore would be entitled to rely on the time shifting exception in section 111.
In short, Justice Rares considered that the TV Now system was no different from a person using a PVR at home to record a program and view it at a later, more convenient time. Consequently neither the NRL, AFL or Telstra had any basis on which to prevent Optus from undermining their rights, so an appeal was inevitable.
Questions to decide
On appeal, the Full Federal Court had two questions to consider:
1. When subscribers used the TV Now system to record a program, who, for the purposes of the Copyright Act, was the maker of the copy?
2. If Optus’ act in making such a copy would otherwise constitute an infringement of the copyright of the AFL, NRL or Telstra, could Optus rely on the “time shifting” exception under section 111 of the Copyright Act?
What did the court decide?
On the first question, the full Federal Court formed alternate views as to who was the maker of the recording. It held that that ‘maker’ of the copy was either Optus acting alone or, its preferred view, the copy was made by Optus and the subscriber jointly.
Given Optus’ considerable investment in its TV Now service, the Court found that, not only had Optus solicited subscribers, it had also designed and maintained a sophisticated system that was the “main performer” in making recordings of programs. Because of this, and the nature of the contractual arrangements with its subscribers, the Court accepted that Optus must either be the maker of the copies acting on its own or, since the actual recordings were instigated by the subscriber, Optus and its subscribers could both be responsible for making the copies.
The Court was not persuaded that Optus was merely making the TV Now service available to users so that users could copy a broadcast and view it at a later time. Rather, the Court found that Optus, in offering the TV Now service, was more akin to ‘a commercial photocopier which copies copyright material provided to it for copying by it’.
On the second question, having found that Optus was either the sole maker or joint maker of the recorded program, Optus could not rely on the time shifting exception. There was nothing in the Copyright Act to suggest that this defence was intended to cover commercial copying on behalf of individuals, even if the individuals only use the copies for domestic purposes.
Implications of the decision
In arriving at its conclusion, the Federal Court acknowledged that its interpretation of the Copyright Act could be viewed as inconsistent with the principle of technological neutrality. However, the Court decided that it was not its role to interpret the Copyright Act in order ‘to secure an assumed legislative desire for such neutrality’.
As a final remark, the Court accepted ‘that different relationships and differing technologies may well yield different conclusions to the “who makes the copy?” question’.
The implications of this comment are far reaching. While this decision prevents Optus from providing the TV Now service in its current form, it remains open for Optus, and other service providers, to devise different technology to achieve the same result for consumers without infringing the Copyright Act. This means that the victory for the AFL, the NRL and the other rights holders may be short lived.
Optus has indicated that it will appeal to the High Court of Australia and subject to the High Court accepting that there are sufficient grounds, it remains to be seen if it will endorse the decision of the lower courts.
The UK position
The legal position in the UK is similar to that in Australia. The question of “who makes the copy” will, ultimately, be a question of fact. It is perhaps inevitable that technological and contractual arrangements will be devised such that a court will determine that that the domestic user is the person effecting the copying, rather that the service provider.
However, in order to escape performing an infringing act, the domestic user must fall within the UK version of the time-shifting defence. The UK defence is worded more narrowly than its Australian equivalent. In addition to the copy having to be for private and domestic use, it must also be made “in domestic premises”. This would seem to require some form of PVR in the user’s home, which is obviously something that those in the position of Optus are currently seeking to avoid and indeed replace.
In many ways, this whole issue is entirely analogous to the issues faced in the online space, all the way back to the infringements by Napster, EasyInternetCafe and now Newzbin, Pirate Bay and those ISPs that allow access to these sites. It is becoming increasingly clear that where individual users are committing infringing acts, and where the large scale of those acts would not be possible without a central hub which is clearly designed or operated in a way to enable or facilitate copyright infringement, UK courts are willing to intervene at each stage of the chain, from user, to the operator of the “hub” right through to those in the position of the ISP hosting the hub.
So, what does this mean for the service provider in the UK? At present, therefore, it seems as if the cards are stacked firmly against any potential provider of a UK-based equivalent to TV Now. That said, it will be interesting to monitor the impact of the Government-initiated, independent review of how the current IP framework supports growth and innovation. This review (led by Professor Ian Hargreaves) specifically advocated reconsidering the private copying defences – the UK Government has recently concluded a consultation process and will publish an analysis of its findings by mid-June this year. As the TV Now case in Australia has demonstrated, this issue is one that could have serious consequences for rights holders and authorised broadcasters alike- best to to keep a watching brief.