Optus wins TV-recording case

update Optus has emerged victorious in its battle against the Australian Football League (AFL) and the National Rugby League (NRL) sporting codes over its TV Now digital TV-recording app.

Optus TV Now, first announced in July last year, allows customers to use Optus' storage cloud to schedule, record and playback free-to-air digital TV on 15 channels from a 3G mobile or a PC. All subscribers get a basic 45 minutes of free storage per month, while customers can buy five hours for $6.99 or 20 hours for $9.99 per month.

It is understood that the recording is delayed by two minutes from the live broadcast.

The AFL and the NRL were not too pleased about the program, as it brought into question a five-year $153 million deal that the AFL had in place with Telstra to provide streaming video of live matches to mobiles, and it also limited the NRL's ability to sign a similar deal. Optus made a pre-emptive strike in September, starting a case that tried to prove that the two sporting bodies can't sue for breach of copyright because of a clause in the Copyright Act 1968. The football organisations have made counterclaims, and Telstra also joined the case.

After two days of hearings late last year, and a lengthy deliberation over the Christmas break, Justice Steven Rares ruled today that Optus had not infringed on the copyright of the sporting codes.

He broke his judgment into three categories:

• Whether it was Optus or the user making the recording when the user clicked the "record" button on his or her compatible device
• If the user made the recordings, whether it would fall under section 111 of the Copyright Act that allows users to make recordings for personal viewing at a time more convenient
• When the user clicked "play" on a recording, whether it was Optus or the user making the transmission of that recording, and whether it was copyright infringed.

Rares ruled that the user makes the recording.

"I consider that this result was substantially similar to the position where a person used a video-cassette recorder, digital-video recorder or similar device to copy a television broadcast," he said.

"Even though Optus provided all the significant technology for making, keeping or playing the recording [it is] no different to a person using equipment or technology in his or her home or elsewhere to copy or record a broadcast"

When the user made this recording, Rares found that it did not infringe on copyright, because it was being recorded for a time more convenient to the user, even if it was only delayed by two minutes.

"I found that such a recording or film was made by the user to watch it at a time he or she considered to be more convenient than the time broadcast, even if by only minutes," he said.

There are still a number of issues to be resolved, Rares noted, including whether Optus' streaming service for iPhones infringes on copyright, since the company creates and stores six temporary files of 10 seconds each at all times, regardless of whether anyone is watching.

The case has been adjourned until Friday 3 February, for the parties to agree to formal orders. The AFL and the NRL have been ordered to pay costs.

Rares allowed leave to appeal during the first hearing; however, the sporting codes have yet to announce whether they intend to challenge the ruling.

Optus general manager of Government and Corporate Affairs Clare Gill welcomed the ruling today.

"Optus is extremely pleased with today's decision. Optus is about choice and convenience, and this product is a personal recording device. The 2006 amendment [to the Copyright Act] had intended for this type of innovation. Optus is about innovation," she said.

Telstra said it was considering the judgment at this stage.

"We believe protecting content rights is in the interest of Telstra, the sporting bodies and sports fans who benefit from the investments that flow from broadcast rights," he said. "We now intend to go away, review today's judgement and consider all options."

NRL CEO David Gallop said that an appeal of the ruling is likely.

"The decision is very likely to be appealed. It is a major concern as it clearly has the capacity to devalue the ability of the sports to sell exclusive rights," Gallop said in a statement.

Updated at 4:36pm, 1 February 2011: added NRL comment