- The Full Federal Court has overturned the trial judge's decision in the Optus TV Now case, involving a service whereby Optus customers could have TV broadcasts recorded and played back later on mobile devices (National Rugby League Investments Pty Ltd v Singtel Optus Pty Ltd  FCAFC 59). The primary judge had held that the person making the copy of the television broadcast was the subscriber, and that the subscriber could rely on the time-shifting exception under s 111 of the Copyright Act.
- The Full Court found that either Optus and the subscriber acting in concert were, or Optus alone was, responsible for the act of making the copy of the television broadcast in the TV Now service (with its preference being that both Optus and the subscriber were responsible).
- The Full Court held that Optus could not rely on the "time shifting" defence to copyright infringement under s 111 of the Copyright Act.
- The Full Court acknowledged that the questions raised in the case were difficult and uncertain and were made the more so because of the sophisticated technology in play and the degree of automation in the system.
Background to proceedings - Widespread Concern over the Optus TV Now service
Optus provided a subscription service called "TV Now", allowing subscribers to use an electronic program guide (EPG) to record for playback selected free to air TV broadcasts onto computers, 3G mobile phones, iPhones and iPads, and Android mobile devices. Four copies of the selected broadcast material were made by Optus when the subscriber selected a program. Those copies were then accessible for playback by the subscriber for 30 days.
Optus had devised a system that would allow subscribers to the service to instruct Optus to record terrestrial broadcasts of TV programs, and then have those recordings replayed to their mobile phones and computers. Of greatest concern was the ability of TV Now subscribers who used Apple devices to replay the broadcasts of NRL and AFL football matches in near real time.
The NRL and AFL strongly objected to the service, given its potential impact on their ability to license the transmission of their football matches through separate media channels for maximum commercial return. The right to show the football matches on the internet and on mobile phones has been licensed separately from the right to broadcast such matches to traditional TVs. Telstra, who had reportedly paid $135 million for the exclusive right to show AFL games online and on mobile phones, also strongly objected.
Optus did not hold any licence from Telstra or the football codes to transmit the content, and did not pay rights holders for the content which it was recording and re-transmitting to its customers.
Rather, Optus relied on the "time shifting" exemption in the Copyright Act, which allows people to record TV for the purpose of watching it at a more convenient time. The issue in the case was whether the wording of this exemption, originally introduced to provide protection for people recording TV onto VCRs at home, should be interpreted to cover large scale third party copying and re-transmission services like that offered by Optus.
The case was of obvious concern to all sporting bodies that hold enormous value in the right to license the broadcasting of their matches, particularly live games. But other content providers, particularly those who license live content such as concerts or events, could also be adversely affected by a decline in the value of their digital rights, if broadcast material could be re-transmitted digitally to mobile phones near live for no additional licence fee.
First round to Optus
Who made the copy?
As to who made the copy, the exemption allowed a person to record a broadcast for their private and domestic use to watch at a more convenient time. Opponents of the Optus TV Now service argued that in this case the recording was not being made by that person, but by Optus, and the copying therefore fell outside the exemption.
The Court found that despite the copying process taking place externally, using third party copying technology, because the individual subscriber initiated the copying, or caused the copy to be made, they were solely responsible for the creation of the copy. Clicking on the program to record in the EPG was the act of making the copy. Since the user made the copy rather than Optus, provided the other requirements were met, the copying was covered by the exemption. The Court said the process was analogous, or no different in substance, to a user making a copy at home on a VCR or DVR.
Communicating the Copy
The second issue was who communicated the copy of the recording. The time shifting exemption does not refer to the communication of a program, just the recording of it. Opponents of the service argued that even if the recording was permissible, the communication of the recording back from Optus to the subscriber's mobile phone, was an infringing communication to the public, and did not fall within the exemption.
Again, the Court found that when the TV programs were communicated from Optus' server to the subscriber's mobile phone or computer, it was the subscriber themselves who was responsible for communicating the programs to her/himself. Because they made the recording and communicated it to themselves, it could not be said that there was an infringing communication to "the public".
Justice Rares, no doubt aware of the importance of the case, the impact on rights holders and the timing of the football season, acted swiftly in hearing the case and handing down his decision. His Honour even granted the parties leave to appeal from his decision before it was handed down.
The implication of Justice Rares' decision was to significantly devalue the rights that content owners held which would allow them to separately licence for online media.
Second round to rights holders
The appeal by the NRL, the AFL and Telstra against the decision was expedited by the Full Court of the Federal Court. The appeal was heard in March by Justices Finn, Emmett and Bennett who handed down their decision on 27 April 2012.
The Full Court unanimously overturned the earlier decision, and reached a very different legal conclusion as to who made the copy and how the time shifting exemption applied to the Optus TV Now service. They rejected the Optus arguments and found for the NRL, the AFL and Telstra on a number of the significant issues, leaving open some other issues in the appeal, such as the status of the communication of the copy.
Optus made, or helped make, the copy
The central issue dealt with by the Court was again, who made the copy when a broadcast program was copied through the Optus TV Now service – the subscriber who gave the instruction, or Optus, or both of them.
The Optus opponents argued that the Optus service was not analogous to a DVR, that Optus designed, maintained and automated the copying system, and that Optus performed the last act necessary for making the copy, as well as making four copies rather than one. In response, Optus argued it merely provided the service and the functionality, and the user caused the copy to be made.
On the issue of who made the copy, the Full Court looked not only at who had caused the copy to be made, but importantly, also at who created or produced the physical copy. They saw the subscriber as instigating the copying, but Optus as effecting it. The copy is only made with the concerted efforts of both.
The Court also looked at how the system worked to make the copy, after the subscriber triggered the process that resulted in the copying. Optus retained possession, ownership and control of the physical copies which had been made on its hard disc. In the Court's view, someone designing and operating a wholly automated copying system, configured to respond to third party commands, could still be acting as the maker of the copy.
In this case, the Full Court saw Optus' role as so pervasive, that even though entirely automated, it could not be disregarded as making the copy. Optus was not merely "making available its system to another who uses it to copy a broadcast", like making a photocopier available. Rather, in this case, Optus "captures, copies, stores and makes available for reward, a programme for later viewing by another". The outcome was a finding that either Optus alone made the recording, as the provider of a service offering to make copies of selected broadcasts, or alternatively, the Court's preferred view, that Optus and the subscriber were acting in concert to make the recording, and were jointly the makers of the recording.
Time shifting exemption confined
Once Optus was held to be either the maker of the recording, or one of them, the next issue was whether the time shifting exemption could only apply to a person making a copy for their own use, or whether it could extend to Optus, on the basis that it was making the copy for the private and domestic use of its subscriber.
The Court looked back to the history of the time shifting provisions when introduced in 2006. The provision originally applied only to copying done in domestic premises, but subsequent amendments removed that restriction.
Nevertheless, the Court took the view that the time shifting exemption was intended to cover private copying, done by individuals, and was not intended to cover commercial copying on behalf of individuals.
The Court said the natural meaning of the section was that the person who made the copy was to be the person who was going to use it. Optus was copying for others to use, and as a result, did not fall within the exemption. Optus' aim was also to derive commercial advantage, not to watch the material at a more convenient time.
A goal kicked
The Full Court's decision represents a win for all rights holders – not only the football codes. It ensures that the value rights holders have in the exclusive right to communicate broadcast content over the internet and to mobile phones will be protected. If the decision stands, without significant legislative change, commercial service providers will no longer be able to rely on the time shifting exemption to offer commercial copying services without licenses from rights holders.
Any application for special leave to appeal to the High Court of Australia must be filed by Optus by 25 May 2012.