13 Sep 2012

Optus TV Now copyright case: High Court refuses to play, but ALRC will pick up the ball

by Geoff Hoffman, Mary Still

The High Court will not hear the Optus TV Now appeal on copyright infringement, leaving the important issue of whether the time-shifting exception will be extended to cloud storage platforms to be considered by the Australian Law Reform Commission.

The High Court's decision last Friday not to hear Optus' appeal in the TV Now case might bring the legal proceedings in this particular matter to an end, but the copyright issue at its heart is still very much of major concern to rights-holders and technology providers alike, and especially to cloud computing providers.

A brief recap: what was the Optus TV Now case about?

Optus' TV Now service allowed subscribers to nominate free to air TV programs to be recorded. These recordings were stored on Optus' cloud storage platform, and customers could stream the recorded programs to any one of four compatible devices.

This being Australia, it was expected that many customers would use the service to record and view games from the Australian Football League and National Rugby League. The two leagues had however granted Telstra the exclusive internet and mobile rights to these games.

The Full Federal Court held that Optus' service did not fall within the time-shifting exception in section 111 of Copyright Act 1968 (Cth), because the section protected only an individual's recording for private or domestic use. The Court held that Optus' role in making the copy – ie. in capturing the broadcast and then embodying its images and sounds in the hard disk – was so pervasive that the copy was not made by the subscriber alone, and thus Optus had infringed copyright.

How does the Optus TV Now decision affect other services, including cloud computing?

This is a serious blow for such services.

And it isn't a problem that is about to go away anytime soon, given the importance of the sector, the need for content, and, as the vice-president of corporate and regulatory affairs at Optus, David Epstein, put it, "people are increasingly wanting to watch TV when they want, where they want and on what they want. But the law as it stands imposes an arbitrary distinction between technologies.”

The decision has implications well beyond the service provided by Optus. The Full Federal Court was minded to state that different relationships (between individuals and technology service providers) and differing technologies may yield different conclusions on the "who makes the copy" question. So while the question has been answered for services operating in the same way as the Optus service, the fact that section 111 has been found not to be technology-neutral leaves open the question of what other technological solutions will fall in or out of the exception.

What is the ALRC looking at?

In its Issues Paper for its inquiry into Copyright and the Digital Economy, the ALRC looks at whether a technology-neutral approach should be introduced, that is, "whatever users may do using technology in their own home, they should be able to do using technology stored remotely."

From the perspective of cloud computing service providers, this would be close to ideal; from that of a rights-holder, this would raise the same concerns as the plaintiffs had in the Optus' TV Now case – a significant risk to royalty streams.

The ALRC is also considering the current status of the types of technical functions noted above. Are they captured by the existing exceptions in the Copyright Act for the making of temporary reproductions or not?

One matter however that it will not be looking at is whether there should be so-called safe harbours for companies that provide cloud computing services, which were the subject of a public consultation paper issued by the Commonwealth Attorney-General in October 2011 (the Government is yet to reveal the results of that consultation, or its next steps).

Where to now?

At a macro-level, the latest buzz words in industry – cloud computing, social media, IPTV, mobile innovation and data analytics – all point to one thing, increased connectivity and data usage.

This is a force that is not waiting for the law, but is racing ahead in the hope that the law will catch up.

The fact that one of these services again needed to reach the door of the High Court before the parties had certainty regarding the legality of their activities, is another demonstration of the challenges this legal uncertainty poses for businesses.

Having said that, the ALRC inquiry and others, such as the Convergence Review, may eventually offer some useful ways forward so that Australia can have a Copyright Act and broadcasting and telecommunications industry that work in tandem, and not out of synch.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.