Telco giants tackle one another over internet broadcasting rights to the footy

by The FindLaw Team

In case you missed it the Federal Court of Australia (FCA) delivered one of the more significant judgments relating to intellectual property of recent times in the matter of Singtel Optus Pty Ltd (Optus) v National Rugby League Investments Pty Ltd (No 2) [2012] FCA 34. The judgment handed down by Rares J sent reverberations throughout the industry due to the magnitude of the decision and sure, some readers may deem the language used so far as a tad bit hyperbolic, but the judgment in the FCA cannot be underestimated because it threw a spanner in the works regarding Telstra’s reported $153 million contract with the AFL to exclusively broadcast games on the internet. It should also be added, that Telstra also holds exclusive internet broadcast rights with the NRL, and needless to say, the stakes were, and are, very high.

Background to the case

Optus began proceedings against the AFL, NRL and Telstra (the rightholders) alleging that the rightholders had made unjustified “[g]roundless threats of legal proceedings in relation to copyright infringement” as stated in s 202 of the Copyright Act (the Act). Alternatively, the rightholders alleged that the applicants, meaning Optus, infringed their copyright by broadcasting a number of AFL and NRL games during September and October 2011, and had sought to restrain Optus from broadcasting games via Optus‘ TV Now’ service.

What is ‘TV Now’?

Optus began a service called ‘TV Now’ in the middle of 2011, offering private customers, as well as small to medium sized businesses, the ability to record free to air programs either on PCs, tablets and mobile devices after the downloading and installation of the appropriate app – which would then allow users to view the program for 30 days after the recording. However, we should note, that users do not ‘download’ the program in the traditional sense of the word, but rather when a user ‘records’ a program and presses the ‘play’ button, it would be streamed to the appropriate device from Optus.

Users of the TV Now service are given the ability to select a program to record via an electronic guide and some of the programming options included AFL and NRL games. Additionally, users of either Apple iPhone or iPad devices were able to watch programs recorded within two minutes of the free to air broadcast, whilst for other platforms, the ability to view the recorded program was possible only after the conclusion of the free to air broadcast.

The legal issues

The central question in regards to this matter was whether Optus had infringed on the copyright of the rightholders by broadcasting AFL and NRL games on the TV Now service. In response, the rightholders alleged that Optus’ equipment made cinematograph films (copies of films) in their broadcasting of games within the meaning of the Act, therefore, infringing on the copyright of the rightholders.

Optus also argued in response to the issues put forward by the rightholders, that the user were the ones doing the actual recording, and relied on the s 111 exemptions of the Act which makes an allowance for a person to make a film, or copy, or record a broadcast solely for their personal private and domestic use at a time in which is most convenient for them.

However, we should add, that the s 111 exemptions do not apply if an article embodying the film or recording is:

• sold; or
• let for hire; or
• by way of trade offered or exposed for sale or hire; or
• distributed for the purpose of trade or otherwise; or
• used for causing the film or recording to be seen or heard in public; or
• used for broadcasting the film or recording.

As an interesting aside, s 111(4) of the Act, permits a person to lend the article or thing to a family member, or a member of a person’s household, if the use of the article or thing, is for private and domestic use.

The legal questions needed to be answered

Rares J had to make a decision on the following questions:

“ 1. Whether, when the user clicked the “record” button on his or her compatible device, Optus or the user of its TV Now service made the recordings (or copies) of the broadcast that was stored in Optus’ NAS computer in its data centre.

2. If the user made those recordings (or copies), did s 111(1) and (2) of the Act apply so that the recordings were not infringements of the rightholders’ copyright?

3. When the user clicked the “play” button to view a recording, that he or she had caused to be made utilising the TV Now service, did Optus or the user cause one or more different infringements of the rightholders’ copyright to occur when the recording was streamed to the user’s compatible device in the appropriate format?  That issue concerned whether Optus, or the user, electronically transmitted the recording, or made it available online, to the public by streaming it to the user.”

The decision

Ultimately, Rares J found in favour of Optus with his Honour ruling:

• the user made a recording on their device by clicking on the ‘record’ button, which is substantially similar to when a person uses a DVR (or a VCR for the old fashioned) to record a television broadcast;
• when a user clicked the ‘record’ button, they did not infringe on the copyright of the rightholders due to the s 111(1) and (2) exemptions within the Act, with his Honour determining that the evidence suggested that the user recorded a program solely for their private and domestic use – even in instances where they watched the program within two minutes of its commencement on free to air television;
• Rares J decided that the TV Now service did not infringe on the copyright of the rightholders, because it was the user by clicking ‘play’, was the one who is ultimately responsible for the electronic transmission, or making available online their recording. Furthermore, only the user had the ability to invite any other person to watch the program, and his Honour did not consider these people to be “the public”.

The proceedings have been adjourned to 3 February 2012 allowing the rightholders to appeal the decision of Rares J to the Full Court of the FCA.

Needless to say this is just the ‘pre-season’ to the ‘grand final’. Pardon our puns.    



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