A copyright decision in Australia’s Federal Court on 1 February over Optus’ “TV Now” service is attracting renewed attention to the ongoing debate over the legal status of format-shifting television programmes and other copyright works. Our earlier article from December summarises the facts and key issues in the case, Singtel Optus v National Rugby League Investments. The Optus dispute has the potential to significantly affect how consumers are able to access video, films and music, particularly in countries such as New Zealand and the UK that, like Australia, have copyright laws that explicitly permit consumers to record works for the purposes of time-shifting. The Court’s recent decision is significant, but is likely only the first of several rounds in a longer legal battle over TV Now and similar technologies.

The Australian Court's Decision

The Court held that TV Now, a service that records TV programmes from Australian free-to-air networks for playback on internet-connected and mobile devices, does not infringe the copyrights to telecasts of sports events. Unlike traditional digital video recorders and VCRs that store video files on household set-top boxes, TV Now stores files remotely in data centres operated by Optus. Each time an individual subscriber asks to record a TV programme, the data centre records four separate copies of that programme (to accommodate four different types of possible end-user devices - PC, Apple iOS, Android and wireless 3G). Once recorded, subscribers can stream the programme via the internet or cellular networks for personal viewing on any compatible device.

Justice Rares' legal analysis focused on two operational details of TV Now's recording process: (1) Optus creates recordings only of those programmes specifically requested by a consumer, and (2) Optus records a separate copy for each consumer who requests the same programme. Relying on the recent RecordTV case from Singapore and the Cartoon Network case in the US involving similar technology, the Court found that the TV Now service was "substantively no different from a VCR or DVR" because it created separate copies for each consumer. The Court held that individual consumers, and not Optus, are the parties who actually "make copies" and "communicate copies" of the programmes within the meaning of Australian copyright law, and therefore the TV Now service was protected by the time-shifting exception of s111 of the Australian Copyright Act 1968. Relying on the statutory language and legislative history, the Court broadly interpreted the time-shifting exception to also include format-shifting, permitting the TV Now service to record and reformat TV programmes for delivery via the internet, wireless and other technologies.

How New Zealand Law Compares

Like Australia and Singapore, New Zealand law contains a specific exemption permitting consumers to record TV and radio programming for the purpose of time-shifting (s84 of the Copyright Act 1994). Supporters of a broad format-shifting exception will argue that New Zealand should apply s84 in the same manner that Australian and Singapore courts have interpreted similar language in their copyright laws, and that the time-shifting exception includes the right to copy video, films and music for personal use on any type of device.

However, as mentioned in our earlier article, New Zealand law contains a potentially important difference from Australian law - New Zealand's Copyright Act 1994 includes a specific format-shifting exception, s81A. Section 81A applies only to sound recordings, and does not apply to TV programmes or other copyright works. Copyright owners will contend that when Parliament enacted this provision in 2008, it intended to authorise consumers to format-shift only sound recordings, and to prohibit format-shifting of other types of copyright works. In support of this interpretation, the Commerce Committee's commentary on the bill stated that:

"Some submitters were concerned that new section 81A is limited to sound recordings only. We do not believe that an extension of the provision to other works such as films would be justified under the Berne Convention for the Protection of Literary and Artistic Works, of which New Zealand is a member. Furthermore, we consider that format-shifting of music for private and domestic use is widespread, while format-shifting of other types of copyrighted works is not. We therefore do not recommend extending the exception in new section 81A."  

On the other hand, format-shifting advocates can be expected to claim that extrinsic comments and legislative history have little value in interpreting the meaning of the Copyright Act, and that s81A does not affect whether or not particular activities fall within the scope of the completely separate time-shifting exception of s84.

Potential Impact

The Optus decision and s81A of the New Zealand Copyright Act may influence several countries currently in the process of addressing format-shifting under their copyright laws. Almost immediately after the Court's decision, the major Australian sports leagues began lobbying the government for amendments to the Australian Copyright Act, claiming that Justice Rares' decision threatened media rights licences worth hundreds of millions of dollars (for example, the Australian Football League's deal with Telstra for exclusive online and mobile rights is worth A$153 million over 5 years). The nature of these proposed amendments are being discussed, and a format-shifting exception limited to a narrow category of works, perhaps based on New Zealand's s81A, is certainly one possibility.

The UK and Canada were already considering adding specific format-shifting exceptions to their copyright laws prior to the Optus decision. Existing UK law includes an exemption permitting time-shifting of TV and radio programming, and in late 2011 the government announced its intention to propose a broader private-copying exemption that would permit format-shifting and apply "to any type of copyright work [and] to any type of device or medium." Similarly, the Copyright Modernization Act currently before the Canadian Parliament includes an exception for format-shifting, which is not limited to sound recordings. The Optus decision may cause British and Canadian lawmakers and copyright owners to review these proposals in more detail.

Although the Optus case arose in the context of sports events, it may have an equal, and perhaps even greater, impact on entertainment and other TV programming. The relevant statutory provisions do not distinguish sports telecasts from other types of programming, and the Court's interpretation of the law would apply equally to telecasts of films, dramas or other shows. DVRs, VCRs and on-demand services have demonstrated that consumers are more likely to use delayed-viewing options to watch entertainment shows, and less likely to record sporting events, which consumers prefer to view live.

One potential limitation that should be noted is that TV Now's content includes only programmes recorded from free-to-air channels, and does not include any pay-TV networks. The Court's decision does not discuss why Optus limited its content to free-to-air programming. One likely possibility is that in order to access pay-TV programming, Optus would have had to enter into subscription agreements with Australian satellite or cable TV providers - these agreements are likely to contain contractual restrictions prohibiting customers such as Optus from accessing or recording content for any commercial purposes.

Conclusion

Justice Rares’ decision has focused renewed international attention on an already-controversial issue of copyright law, but is unlikely to finally resolve the TV Now dispute.  For companies such as Optus, the expense and risks of litigating uncertain legal issues are a necessary cost of launching products that challenge the established commercial landscape, and require a commitment to remain engaged through the appellate process and potential legislative changes.   The case has been appealed to the full Federal Court, the major sports leagues are already lobbying the Australian government for changes to the Copyright Act, and Canada, the UK and other countries are considering amending their laws to clarify the status of format-shifting.  We will continue to follow these developments, as copyright laws face the constant struggle of trying to play catch-up with rapidly evolving technology, innovative business models and changing consumer behavior.