No appeal for Optus - the time-shifting exception does not extend beyond private individuals

Back in February, Ben blogged about Optus v Telstra, an Australian case in which concerned an app developed by Optus enabling users to record free-to-air TV broadcasts and to save them to Optus' cloud in order to view them later. Last week, the High Court of Australia decided not to hear Optus' appeal of the Full Federal Court ruling that the app infringes copyright, and this week Telstra has said that it welcomes the High Court's "positive" decision, saying that it "provides welcome clarity for cloud operators, while at the same time recognises the delicate balance of interests which copyright law seeks to protect."

Background

The National Rugby League (NRL) and the Australian Football League (AFL) had granted Australia's leading service provider, Telstra, exclusive multi-million dollar licences in respect of mobile broadcasting rights of their games.

In July 2011, Optus launched its TV Now service, which enabled users to record TV programs, including  NRL and AFL games, and to play them back at a time convenient to the user on any PC, Apple, Android or 3G device.

When a user clicked record on TV Now's electronic program guide, Optus made four copies of the relevant program, one for each of the possible viewing platforms. These copies were stored by Optus, and could then be streamed as convenient by the user on any one of the four types of devices.

NLR and AFL were of course concerned about the effect that the app could have on their exclusive licensing deal with Telstra. They claimed that the TV Now service infringed their copyright in broadcasts in a number of AFL and NRL games and said that they would seek an injunction against Optus. Optus therefore made a claim in the Federal Court of Australia that AFL and NRL had made unjustified threats of infringement under s.202 of the Copyright Act 1968 . The Court later added Telstra as a party to assert similar claims to AFL and NRL as exclusive licensee.

The Federal Court's decision

In February of this year the Full Federal Court held that Optus's TV Now service did not infringe copyright in the broadcasts of the AFL and NRL game, in the particular ways that the rightsholders alleged.

Rares J held that it was the users of the Optus service, rather than Optus itself, who made the copies of the broadcasts, when they selected a program from an electronic program guide and clicked 'record'. Further he held that when recordings were streamed to the user there was no communication to the public.

The Court went on to say however that other issues still needed to be resolved, including whether Optus infringed copyright because of temporary copies made during the streaming process.

The Full Federal Court's decision

AFL, NRL and Telstra subsequently appealed the decision to the Full Federal Court. The appeal was heard in March and judgment was handed down at the end of April 2012.

The Full Federal Court found that it was not the user alone who made a copy of the games recorded, rather it was either Optus who made the copy (on the basis that it provided the service enabling users to make recordings) or alternatively both Optus and the user made the copy (acting together: the user initiating the process by requesting the copy and Optus providing the means for making it). The Court's preferred view was that both Optus and the user were jointly and severally responsible for making the copy.

The Full Federal Court then went on to consider whether "what we would inaccurately, but conveniently, call the "private and domestic use" defence of s 111 of the Act" applied. The Federal Court had not had to consider this, given its answer to the first question. The Full Federal Court found that the exception did not apply because there was nothing in the language, or the provenance, of s.111 to suggest that it was intended to cover commercial copying on behalf of individuals.

Further Appeal

Last week, the High Court rejected a special leave application from Optus, seeking to overturn the Full Federal Court's decision. The Full Federal Court's decision therefore still stands and Optus remains liable for copies made as part of its TV Now service.

This case puts a platform operator firmly on the hook for providing a time-shifting service. The Full Federal Court found that while the s.111 (the time-shifting exception) was intended to allow private copying by individuals, it wasn't the place of the Courts to extend that exception beyond those confines. This is quite a turnaround from the pre-internet position where in the UK the provision of a tape recorder was not found to be authorising infringement (CBS v Amstrad), and in the US making copies of TV shows using Betamax videos was not infringing because it was fair use (SonyCorp v Universal City Studios).

Since the internet has facilitated copying courts seem more ready to find that platform providers participate in copying. The position in the US looks similar to that in Australia. In the UK, UKNova recently backed down after a C&D from FACT, and we await the CJEU's decision in ITV v TV CatchUp.

More to come from all of these!

There is an excellent update on the recent decision by Justice Rares in the Optus v Telstra case in the Federal Court of Australia by Catherine Lee on the IP Kat. Here the judge held that Optus’s TV Now service did not infringe copyright in the broadcasts of AFL and NRL (Australian Football Rules and Rugby League) games, in the particular ways that the rightholders alleged (including Telstra). The Optus service provided users with the ability to record free-to-air television programs, including AFL and NRL games, and play them back on any one of four compatible devices, namely, PCs, Apple devices, Android devices and 3G devices. Rares J held that it was the users of the Optus service who made 'recordings' of games when the user of the TV Now service selected a program from an electronic program guide and click 'record' - and that when recordings were streamed to the user there was no communication 'to the public'.

EMI is also in the news, having failed to get a summary judgement against the MP3 resale website ReDigi, meaning the case will now get a full court hearing which will examine the digital company's claim that it is possible that American copyright law allows consumers to resell MP3s as the ‘first sale’ doctine must to apply in the digital space as much as it applies to CDs and vinyl. Whilst Judge Richard Sullivan declined to accept a amicus curiae brief from web giant Google, he has decided that it would be inappropriate to find in EMI's favour without giving its claim full consideration, mainly because he didn't feel the major had proven "irreparable harm" in its initial legal papers.

Elsewhere the much heralded Black Sabbath reunion seems to have hit the rocks (at least partially) after drummer Bill Ward posted an open letter to fans on his website saying "At this time, I would love nothing more than to be able to proceed with the Black Sabbath album and tour. However, I am unable to continue unless a 'signable' contract is drawn up; a contract that reflects some dignity and respect toward me as an original member of the band". There's a lot more and you can read it here but at the time of writing it seems the band's new album, headline slot at the Download Festival and world tour will not include Ward.

And Warners are the latest of majors to face a class action from artistes demanding a large slice of royaties from digital sales. Sony and Universal are already facing claims over the way their digital royalties are calculated (with actions from artistes including The Allman Brothers, Cheap Trick, Rob Zombie, Whitesnake, Chuck D and the Estate of Rick James) and indeed Universal lost an action to FBT Productions (in the ‘Eminen’ case) which set a precedent that royalties for iTunes-style downloads should not be treated the same as selling CD singles or albums and should attract a higher payment – usually a share of the profits from licensing revenues - rather than a ‘per unit’ royalty based on dealer price used for physical product. Universal continues to insist the ruling in the FBT case is only relevant to the wording of that specific contract, and does not set a precedent, although the Supreme Court declined to hear their appeal. Warners are now facing an action from Sister Sledge and singer Ronee Blakely whose lawsuit claims: "Rather than paying its recording artists and producers the percentage of net receipts it received - and continues to receive - from digital content providers for 'licenses', Warner wrongfully treats each digital download as a 'sale' of a physical phonorecord ... which are governed by much lower royalty provisions than 'licenses' in Warner's standard recording agreements". Watch this space as this is a major battle between the labels and artistes fed up with a perceived meagre share of ongoing digital royalties, often compounded by the effect of 'royalty reducers' in standard record label contracs such as 'packaging' and 'breakage' deductions or 'new technology' deductions that further diminish the artiste's share.