Footy broadcasts online: the saga of Optus v Telstra

Sports broadcasts are big business. As many readers will know, there are two main football codes in Australia. 'Aussie Rules' (sometimes referred to as 'aerial ping pong' due to the football going up and down the ground via long, high kicks) is played by 18 players on an oval grass field or modified cricket ground and is governed by the the Australian Football League (AFL). 'Rugby League' (a modified version of rugby union) is played by two teams of 13 players on a rectangular grass field and is governed by the National Rugby League (NRL). The AFL and the NRL own the copyright in broadcasts made on free-to-air television of games played between the teams in their respective competitions. Both the AFL and NRL have granted exclusive licences to Telstra (the largest media and communications company in Australia) to exploit footage of matches by communicating them to the public or or via the internet and mobile telephony enabled devices.

In July 2011, Optus (the second largest media and communications company in Australia) began offering a new service called 'TV Now' in July 2011 to its private, as well as small to medium-sized business, customers in Sydney, Melbourne, Brisbane, Adelaide and Perth. The 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. Optus had established a complex recording system to operate the TV Now service. The user of the TV Now service could select a program from an electronic program guide and click 'record'. Unknown to the user, Optus’s technology then caused a set of four unique recordings to be made of the program its user had selected, for the sole use of that person (ie one each for PCs, Apple, Android, and 3G devices). These copies were then stored in at Optus’ computer data storage centre. When a user clicked 'play', Optus’s data storage centre streamed the copy of the program in the appropriate format to that device so that the user can watch it. Users with Apple iPads or iPhones could watch a program selected for recording 'almost live' (that is, within about two minutes of the commencement of the actual free to air broadcast). Users with other compatible devices (PCs, Android and 3G devices) could only watch a recorded program after the broadcast had finished. Users of any compatible devices could view the recording within 30 days of the original broadcast. Importantly, the streamed copy is not downloaded to the users’ device.

Not surprisingly, the AFL, NRL and Telstra were none too happy about Optus's TV Now service. The AFL and NRL claimed that the TV Now service infringed their copyright in broadcasts in a number of AFL and NRL games. They also said that they would seek an injunction against Optus, to restrain it from continuing to provide its TV Now service. Optus commenced proceedings in the Federal Court of Australia, claiming that the AFL and NRL had made unjustified threats of infringement against it within the meaning of section 202 of the Copyright Act 1968 (Cth) ('the Act'). The Court later added Telstra as a party to assert similar claims to the AFL and NRL as exclusive licensee.

Did Optus, through the operation of its TV Now service, infringe the copyright interests of the AFL, NRL and Telstra (the 'Rightholders') in the free to air broadcasts of some live and filmed AFL and NRL games played in September and October 2011?

The Rightholders alleged that Optus made cinematograph films within the meaning of section 10(1) of the Act which infringed their copyright interests in the free to air broadcasts of some live and pre-recorded AFL and NRL games. The Rightholders further alleged that Optus later communicated the recordings or copies to users of the TV Now service when they viewed these on their compatible devices.

Optus contended that the users, rather than it, had made the films or copies and played them without any infringement of copyright because of the exception for private and domestic recording in section 111 of the Act. That section provides that a person can make a film, or copy, or recording of a broadcast solely for their private and domestic use by watching or listening to the material broadcast at a time more convenient than when the broadcast was made. If the person does make a copy in those circumstances, then the making of the recording will not infringe copyright in the broadcast.

Rares J delivered his judgment last week: Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 2) [2012] FCA 34 . The parties agreed that there were seven issues for him to decide:

1. Who performed the acts involved in recording the NRL broadcasts, AFL broadcasts and AFL films (collectively 'the Copyright Works') for the operation of the TV Now service?

2. Does section 111 mean that the recording was not an infringement of copyright? If section 111(2) does not apply, is Optus liable for copyright infringement by way of authorisation?

3. When the recording was viewed, who did the acts of electronically transmitting the Copyright Works?

4. When recordings were streamed to a user, was this a communication 'to the public'?

5. Did Optus make the Copyright Works available online?

6. If the answer to 5 is 'yes', was this to the public?

7. Is the digital file comprising the NRL footage streamed to users an 'article' within the meaning of section 103 or an 'article or thing' within the meaning of section 111(3)(d) and, if so, was it distributed for the purpose of trade? (This issue was pressed only by the NRL).

Question 1: Who did the recording?

Rares J found (at [63]) that the user made each recording of a broadcast by clicking on the 'record' button on their compatible device. He explained that this was because the user was solely responsible for the creation of those films. They decided whether to make the films and only they had the means of being able to view them. If the user did not click 'record', no films would be brought into existence that they could play back later. In that regard, the service that TV Now offered its users was substantially similar to the position where a person used a VCR, DVR or similar device to copy a television broadcast. Even though Optus provided all the significant technology for making, keeping and playing the recording, Rares J considered that in substance this was no different to a person using equipment or technology in their home or elsewhere to copy or record a broadcast.

Question 2: Was recording the films an infringement of copyright?

No. Rares J was satisfied (at [85]) that when users clicked the 'record' button, they did not infringe the rightholders’ copyright in the broadcasts of the AFL and NRL games because of section 111(1) and (2) of the Act. That was because the evidence (at [74]) suggested that individual users watching a broadcast or film of a football game or television program, on their mobile device or PC would only be doing so for personal pleasure or interest. Indeed, Rares J noted (at [75]) that the users agreed with the terms and conditions of the TV Now service that limited their use of it to a non-infringing use that complied with the purposes in section 111(1).

As noted above, one feature of the Apple devices is that they permit a person to view a film of a broadcast 'near live'. This additional feature did not alter Rares J's above finding. He stated (at [81]) that if a person can watch a broadcast 'near live', away from a television, that may enable them to do something else. For Rares J, watching such a broadcast at a more convenient time, even if only by minutes, was still consistent with the definition of 'private and domestic use'.

Questions 3 and 5: Did Optus communicate the film when the user plays it?

No. Rares J (at [90]) was of the opinion that the user was responsible for any such communication made to their device by seeking to play the program that they had earlier selected for recording. This was because the TV Now service operated so as to make the user the person responsible for determining the content of any communication to them of a recorded program when they made a 'play' request. The user must click 'play' if any communication, by way of an electronic transmission, of the film to them is to occur.

Further, Rares J observed (at [91]) that the situation of a user of the TV Now service clicking 'play' was 'quite unlike' that of a person browsing the internet who was unaware or uncertain of what content may be delivered by clicking on a link. The user of the TV Now service had previously determined that the content of what they caused to be recorded would be the program that they had selected. By seeking to play it, the user determined that their device would display the recording just as if they had inserted a video cassette or DVD into a VCR or DVD player and pressed 'play'.

Questions 4 and 6: Was the communication to the public?

No. Rares J was of the opinion (at [105]) that no communication 'to the public' could occur if the user made the recording they communicate by clicking the 'play' button, 'solely for private and domestic use by watching or listening to the material broadcast at a time more convenient then the time when the broadcast is made' within the meaning of section 111. Rares J further observed (at [106]) that the fact that the user may be with one or more other persons, such as family members or friends, when the communication is received will not, ordinarily, convert its private and domestic nature to being that of a communication 'to the public'.

Question 7: Was the digital file streamed to a user an 'article' or 'article or thing'?

No. According to Rares J (at [110]), infringement of these sections could only occur if the making of the article (that is, the recording) constituted an infringement of copyright. In Rares J's view, both when the user made the recording and when he or she made the communication of it, no infringement occurred. It followed that Optus could not infringe any of the NRL’s rights under these sections because no infringement of the NRL’s copyright occurred by the streaming of the recording to a user in the format compatible with the device on which that user had clicked the 'play' button.

Decision


Accordingly, Rares J decided (at [113]) that Optus’s TV Now service did not infringe copyright in the broadcasts of the AFL and NRL games in the particular ways that the rightholders alleged.

However, some other issues may still need to be resolved. These include whether Optus infringes copyright because the technology used to make a recording in the format suitable for certain Apple devices via QuickTime creates and stores six temporary files of 10 seconds duration every minute, and then deletes the first 10 second file as the latest one is added one minute later. They parties agreed that, as a consequence, the issue of whether Optus has established its claims of unjustified threats under section 202 of the Act cannot be determined finally until the discrete issue concerning the QuickTime Streaming is resolved.

Comment

This Kat doubts that Rares J's decision will be the final word on this issue. He notes that the parties agreed at the hearing that leave to appeal to the Full Federal Court should be granted to any unsuccessful party without it having to make a formal application for leave to appeal from what was, technically, an interlocutory order.

AFL chief operating officer Gillon McLachlan was disappointed at the decision. He stated: 'We maintain that the Optus action is a breach of copyright ... However, we are only in the pre-season of this issue - it is highly likely we will appeal.'

NRL boss David Gallop expressed similar sentiments and said that the decision was 'very likely' to be appealed. He stated: 'It is a major concern as it clearly has the capacity to devalue the ability of the sports to sell exclusive rights'.

Telstra spokesman Craig Middleton also did not rule out an appeal. He said: 'This is an early stage. We believe that protecting content rights is in the interest of Telstra, the sporting codes and sporting fans who ultimately benefit from the investments that flow from broadcast rights'.

Not surprisingly, Optus spokeswoman Clare Gill said that the company is extremely pleased with decision. She said:

'For us it's always been about free-to-air television, recording it and playing it back at a time more convenient, that's how we developed the product. It was not category-specific in anything to do with the categories of television, whether it be light entertainment, documentaries, news or sport. Optus is committed to delivering choice and convenience to Australians and the result of the TV Now court proceedings is a major win for consumers, innovation and the law'.

The IPKat dares to ask: have the rights holders been wronged by Rares J's decision?