Late last month in National Rugby League Investments Pty Limited v Singtel Optus Pty Ltd[1] the Federal Court of Australia declared that the Optus personal video recorder service (which records and stores information on the instructions of a subscriber accessing the system online via "cloud computing" technology) infringed copyright in live broadcasts of National Rugby League (NRL) and Australian Football League (AFL) games.

To summarise, the key facts of the case are:

  • From mid-2011, the Optus TV Now service (TV Now) was offered by Singtel Optus Pty Ltd and Optus Mobile Pty Ltd (together Optus) to private customers and employees of small to medium businesses.
  • TV Now enabled subscribers to log on to the service and select a programme to record. The recorded programmes could then be played back at a chosen time on the subscriber's compatible Optus mobile device (3G mobile devices, Apple iPhones and iPads and Android devices) or personal computer.
  • In practice, this meant that the TV Now service made four recordings (one for each of the above devices) of the subscriber's selected programme, which were then stored for up to 30 days by Optus. When the subscriber logged on to view the programme, the TV Now service would identify the particular device selected by the subscriber to view the programme and transmit a stream of data compatible with that device from one of the four recordings held on the system.

Federal Court Appeal Decision

The two primary issues raised in the Federal Court Appeal can be stated as follows:

  • Who "makes" the copy? When a cinematograph film and a sound recording were made through the recording of a television broadcast of one of the AFL or NRM matches for a subscriber, who, for the purposes of the Copyright Act 1968 (Cth) (Act) was the maker of the film (or sound recording)? Was it Optus or the subscriber (or both of them jointly)?[2]
  • Does the s111 exception apply? If Optus' has made such a copy of a film (or sound recording)  and such act would otherwise constitute an infringement of the copyright of AFL, NRL or Telstra, can Optus invoke what we would inaccurately, but conveniently, call the "private and domestic use" defence of s111 of the Act?[3] The s111 exception to copyright infringement applies to a person who 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 more convenient time. This is also known as the "time shifting".

As discussed in our February 2012 article, Justice Rares, the judge of first instance, found that, in respect of the first question, the maker of the recording (or copy) was the subscriber because no copies were brought into existence unless the subscriber chose to record the broadcast. In doing so he drew the analogy that the making of a copy in this case was substantially no different from a standard VCR or DVR service. Optus therefore did not infringe copyright. His Honour did not have to consider the second question in light of his finding.

On appeal, the full Federal Court felt otherwise. In respect of the two issues on appeal:

  • Who "makes" the copy?  The Court held that Optus's role in making of a copy was so pervasive that, even though entirely automated, it cannot be disregarded when identifying the "person" who does the act of copying.[4] The Court went on to say that the Optus TV Now system "…captures, copies, stores and makes available for reward, a programme for later viewing by another…"[5]

Ultimately the Court held that the copies were made either solely by Opus, or alternatively jointly by Optus and the subscriber on the basis that "they needed to act in concert to produce…a commonly desired outcome".[6] If the copies were made jointly (which was the Court's preferred interpretation), then both parties were jointly and severally responsible for the act of making a copy.

  • Does the s111 exception apply? The Court held that, on its proper construction, Optus could not rely on the exception in s111 of the Copyright Act. Specifically, "there is nothing in the language or the provenance of s111 to suggest that it was intended to cover commercial copying on behalf of individuals."[7] In addition, Optus makes no use itself of the copies - it merely stores them for 30 days.  The Court went on to say that for Optus "its purpose in providing the service….is to derive such market advantage in the digital TV industry as its commercial exploitation can provide."[8]

Are storm clouds gathering for New Zealand?

New Zealand law contains a specific exemption permitting consumers to record TV and radio programming (called "communication works") for the purpose of time-shifting (s84 of the Copyright Act 1994). Section 84 permits the recording of a communication works for personal use by a person or member of that person's household for the purpose of watching the programme at a more convenient time. The recording cannot be kept for a time that is more than reasonably necessary to enable the individual to watch or listen to the programme.

New Zealand law also includes a specific format-shifting exception, s81A, which applies only to sound recordings (and therefore arguably no other copyright works). This exception also requires that the copy only be made for personal use or personal use of a member of the owner's household and only one copy can be made of the sound recording for each device owner by the owner of the sound recording.

The Australian Federal Court Appeal decision may bring further clarity to the interpretation of at least s84 of the New Zealand Copyright Act. If the decision is followed in New Zealand, then the time-shifting exception will not apply where the "maker" of the copy is acting in a commercial capacity, either solely or in conjunction with an individual consumer. Arguably, the legislation is clear on this point already, as it clearly specifies under s84(d) that the individual must have lawful access to the communication work at the time of making the recording and it must be for personal use only. Therefore, the impact on New Zealand will not be quite the same "gathering storm" that Australia is facing.

Optus to appeal to the High Court

Optus has decided to appeal the Federal Court's decision to the Australian High Court. It has recently filed for special leave to appeal the decision.

As stated previously, 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.