Footy and phones: High Court of Australia rejects the Optus appeal

Last Friday morning, the High Court of Australia refused to grant Optus leave to appeal the Federal Court decision which effectively put an end to its pseudo-broadcast of AFL matches through its TV Now software.

The refusal marks the end of a controversial string of litigation, which at one point featured AFL boss, Andrew Demetriou, famously labelling the telco a “disgrace”.  So what was it that got the AFL, the NRL and Telstra so fired up?

We’re breaching your copyright, “Now”

TV Now was an online service that allowed you to record and playback free to air broadcasts.  The service operated with a “time-shift”, such that users could record footy matches, and watch them just a few minutes after the live broadcast.  It was available through computers, iPhones, iPads, Android mobile devices and most 3G smart phones.

Ordinarily, if a company like Optus broadcasts a copyrighted program, such as an AFL match, it amounts to a breach of copyright.  Optus, of course, did not have the rights to broadcast AFL or NRL matches.

However under section 111 of the Copyright Act 1968 (Cth) (Copyright Act), a recording of a broadcast does not infringe copyright if it is made solely for private and domestic use, so that it can be watched at a more convenient time.

The thrust of Optus’ argument was that TV Now did not provide a broadcast – it was a system that allowed the user to make a recording for private or domestic use.

Federal Court of Australia decision

Optus’ arguments were rejected in April this year, as the Full Court of the Federal Court of Australia handed down National Rugby League Pty Ltd v Singtel Optus Pty Ltd (2012) 95 IPR 321.

Central to the Court’s decision was the issue of who was the “maker” of the copy for the purposes of the Copyright Act.

It was held that the maker of the recording was either Optus or Optus and the subscriber, acting in concert.  In either event, Optus would be responsible for the act of copying, and so responsible for breach of copyright under the Copyright Act.

Optus was unable to rely on section 111 of the Copyright Act.  In reaching its view, the Court had regard to the ”clear and limited legislative purpose” of the section¹ and put simply, concluded that Optus did not possess the requisite legislative purpose to enable it to avail itself of the section.

Relevantly, section 111 requires the maker of the recording to have the purpose of using the recording themselves for private or domestic use.  Optus’ purpose was clearly to make for commercial gain a recording for others for their private and domestic use.  One might draw an analogy to the black market burning of DVDs.  A person selling unauthorised copies of films on DVDs at a market intends that customers buy the DVDs for their personal use.  These activities obviously demonstrate a breach of copyright and there appears to be no good reason why the activity Optus sought to embark upon should be exempted from sanction.  After all, both activities have the potential to deprive the owners or licensees of copyright, in such copied materials, of earnings from the commercial exploitation of those materials.

The Full Court of the Federal Court with resounding clarity, made it clear that section 111 of the Copyright Act was not intended to allow an enterprise to commercially exploit the copyrighted material of a third party with impunity and without the need to obtain the copyright holder’s permission or pay them adequate recompense. 

Accordingly, if the Full Court of the Federal Court’s decision signalled the death knell for TV Now, then the High Court’s refusal last Friday to grant special leave was the final nail in its proverbial coffin, consigning TV Now to an historical graveyard.  Its ongoing significance now appears to be confined to being an exemplar to intellectual property law students and practitioners as to how the Copyright Act should be construed so as to give efficacy to the legislature’s intention of balancing the competing interests of copyright owners and private and domestic users of copyrighted material.

Lavan Legal comment

With the introduction of its TV Now service, Optus effectively sought to divert customers away from its competitor, Telstra.  If Optus was permitted to operate the service, it would significantly undermine the value of the exclusive rights acquired by Telstra.  The Copyright Act operates to protect those rights, so entities such as the AFL and NRL can rely on selling the broadcast rights to their games for revenue.

With the proliferation of mobile technologies with the capability of receiving video transmissions, the Federal Court decision is an important authority.  By preserving the exclusivity of mobile broadcast rights, the Court ensured that those rights remain valuable.

Disclaimer – the information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.