Internet Broadcast Rights face the ‘Cloud’ of Uncertainty.
By Roshan Gopalakrishna
Case Review: Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 2)  FCA 34
Justice Steven Rares of the Federal Court of Australia in Sydney has held that Singtel Optus Pty Ltd’s (Optus) TV Now service, which enabled subscribers to record free to air television broadcasts within their home postcode on Optus’ servers and then stream the content on to their mobile devices with a two minute delay from the live television broadcast, did not infringe copyright in the broadcasts of the AFL and NRL games.
The Australian Football League (AFL) is the highest level of professional competition for Australian Rules Football. Through the AFL Commission, the AFL also serves as the sport’s governing body, and is responsible for controlling the Laws of the Game. The AFL is the most attended sporting league in Australia and is second only to cricket in terms of television viewership. Broadcast rights for the AFL are shared between 4 entities, including Telstra, which pays $A1.253 Billion to the AFL. Telstra has been granted the right to broadcast one live match per week via Internet Protocol Television and on the Telstra Mobile service, for $A 153 million over five years.
The National Rugby League (NRL) organises the ‘Telstra Premiership’ (due to a $90 million six year naming rights deal between the National Rugby League and Telstra Corporation), which is regarded as the championship in the world. It is the single most viewed and attended rugby football competition in the world. Under the terms of the sponsorship agreement between the NRL and Telstra, Telstra receives exclusive ‘new media’ rights to NRL matches. Replays of all NRL games are available to Telstra customers on its Next G and 3G mobile services as well as BigPond broadband services 24 hours after matches finish. It effectively gives Telstra a monopoly over rugby league in the new technology area – with the exception of the planned mobile TV technology..
The AFL and NRL own the copyright in broadcasts made on free to air television of games played between teams in their respective competitions. Telstra, Australia’s largest mobile services operator has an exclusive licence from the AFL and NRL to exploit free to air broadcasts of live and pre-recorded AFL and NRL games on the internet and mobile telephony.SingTel Optus Pty Limited is the second largest telecommunications company in Australia, and is a wholly owned subsidiary of Singapore Telecommunications.
In July 2011, Optus began offering a new service, TV Now, (Service) to its private, small business and medium business customers. The Service enabled users to record free to air television programs, including AFL and NRL games, and play them back on any one of four compatible devices, viz, PCs, Apple devices, Android devices and 3G devices.
Optus had setup a complex recording system to operate the Service. Any user of the Service could click the “record” button for a program in the Service’s electronic program guide. Optus’ system would then record the program individually, for each user, in four different formats, for each of the compatible devices mentioned above. Thus, the system made four copies of each broadcast for every user. These copies were stored in Optus’ network attached storage computer in its data centre. The user could view the recording in the 30 days following the time of the original broadcast by clicking “play” on a compatible device, following which the Optus’ data centre would stream the copy of the program in the appropriate format. However, it is pertinent to note that in no event was the recording downloaded to the users’ device. In particular, users with Apple devices could watch a program selected for recording “almost live”, within two minutes of the commencement of the actual free to air broadcast. Users with other compatible devices could only watch a recorded program after the broadcast had finished.
Optus initiated legal proceedings against the AFL and NRL on the ground that they had made unjustified threats against it, within the meaning of section 202 of the Copyright Act, 1968 (Cth) (“Act”). Section 202 of the Act enables a person aggrieved by groundless threats of legal proceedings in relation to copyright infringement to bring an action against the party making such threats, to obtain a declaration to the effect that the threats are unjustifiable, an injunction against the continuance of the threats, and recover such damages (if any) as sustained, unless the party alleging infringement of copyright satisfies the court that the acts in respect of which the action or proceeding was threatened constituted, or, if done, would constitute, an infringement of copyright.
The AFL and NRL claimed that the Service infringed their copyright in the broadcast of AFL and NRL matches and sought to restrain Optus from continuing the Service. The Federal Court added Telstra as a party as it was an exclusive licensee. The crux of the matter, therefore, was whether, by operating Service, Optus infringed the copyright interests of the AFL, NRL and Telstra in the free to air broadcasts of some live and pre- recorded AFL and NRL games.
The AFL, NRL and Telstra alleged Optus infringed their copyright when Optus’ equipment made cinematograph films, (i.e., copies or films) of the broadcasts of the games. In addition, the AFL, NRL and Telstra also alleged that Optus later communicated the recordings or copies AFL/NRL games to users of the Service when they viewed these on their compatible devices.
Optus contended that, in fact, it was each user of the Service, rather than Optus, that recorded, or made the recording of any program, and played it without any infringement of copyright. Optus based its argument on an exception in section 111 of the Act. In brief, the exception allows a person to make a film, or copy, or recording of a broadcast solely for personal, private and domestic viewing, by watching or listening to the material broadcast at a time more convenient than the time when the broadcast is made. If the person does make a copy in those circumstances, then the making of the recording is deemed not to infringe copyright in the broadcast.
All parties to the litigation agreed, and the Court ordered, that the following seven principal legal issues on the application of Act to the Service should be decided to clarify the position of each party, if possible, before the commencement of the 2012 football season (appended below each issue is the court’s holding on the point):
1. Whether it was Optus, the user of the Service or both that performed the acts involved in recording the NRL/AFL broadcasts and AFL films (collectively ‘ Works’) for the operation of the Service?
Justice Rares found that, despite the fact that Optus provided the technology for making, storing and viewing the recording, as the user of the Service made the recording of a broadcast through the ‘record’ button on the user’s device it was the user that was solely responsible for the creation of the recording. The use of the Service was substantially similar to instances wherein a person used a recording device such as a VCR to copy broadcast.
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?
Justice Rares held that that when users clicked the ‘record’ button on their devices, they did not infringe the AFL, NRL or Telstra’s copyright in the broadcasts of the AFL and NRL games. An important issue here, however, was that users of Apple devices could view their recording of the broadcast with a two minute delay from the live broadcast. The evidence produced by Optus however suggested that individual users would record and view a football game or any other television program only for personal pleasure or interest. In addition, users agreed to the terms and conditions of the Service that limited their use of the Service to non-infringing use that complied with section 111 of the Act. Justice Rares was of the opinion that 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’.
3. When the recording was viewed, whether it was Optus, the user of the Service or both that committed the act of electronically transmitting the Works?
Justice Rares was of the opinion that each user was responsible for any communication made to such user’s device by seeking to play the program that the user had earlier selected for recording. The Service operated to make the user responsible for determining the content of any communication of a recorded program when the user requested that the recording be played on the user’s device.
4. When recordings were streamed to a user, was this a communication ‘to the public’?
Justice Rares held that no communication ‘to the public’ could occur if the user made the recording ‘solely for private and domestic use’ by later proceeding to watch or listen to the broadcast at a time more convenient than the time when the broadcast is made.
5. Did Optus make the Works available online?
Justice Rares observed that any instance of a user of the Service streaming the recorded content on the user’s device was different from a person browsing the internet, who could be unaware or uncertain of what content may be presented by clicking on a link. The users of the Service were able to previously determine that the content they caused to be recorded would be the program that they had selected by clicking the ‘play’ button on their device.
6. If the answer to 5 is ‘yes’, was this to the public?
Justice Rares observed 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’.
7. In addition, only the NRL sought clarity on whether 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?.
Finally, Justice Rares determined that any infringement of these sections could only occur if the making of the recording amounted to an infringement of copyright. No infringement of copyright would occur when the user made the recording and when he or she made the communication of it. Further, Optus could not be held to have infringed 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.
Accordingly, Justice Rares held that the Service did not infringe copyright in the broadcasts of the AFL and NRL games in the particular manner that the AFL, NRL and Telstra had alleged.
The AFL, NRL and Telstra have appealed Justice Rares’ decision before the full bench of the Federal Court of Appeal in Sydney. The decision in the case puts into perspective the value of internet broadcasting rights and its impact on the ability of rights holders to exploit the value of their intellectual property. While mobile broadband and 3G penetration make steady progress in India, the sale of internet broadcast rights for sports events is picking up momentum and in the context of the ever-blurring lines between the internet and television it could be just a matter of time before Indian courts are faced with similar questions.
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