Optus loses TV Now appeal

The full bench of the Federal Court has ruled today that Optus and its customers jointly make recordings for the Optus TV Now service, and, as such, Optus is in breach of the Copyright Act.

Optus TV Now, first announced in July, 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 PC. The court's view is that the app is not covered by time-shifting provisions in the Copyright Act, because it is Optus, or Optus and the customer jointly, making the recordings.

"Optus could be said to be the maker in that the service it offered to, and did, supply a subscriber was to make and to make available to that person a recording of the football match he or she selected. Alternatively, Optus and the subscriber could be said to be the maker for Copyright Act purposes, as they acted in concert for the purpose of making a recording of the particular broadcast which the subscriber required to be made and of which he or she initiated the automated process by which copies were produced," the court's judgment said.

The court said that Optus cannot, either as the maker alone or as the joint maker with the subscriber, claim to be exempted under the copyright provisions, because it is not considered to be for "private or domestic use".

The National Rugby League (NRL) had claimed last year, after Optus launched the TV Now app, that it infringed on its copyright.

Optus pre-emptively took the NRL to court, seeking to show that TV Now does not infringe on the rights of the sporting code. Optus stated that the user is making the recording to watch at a time more convenient to them, which is allowed under 2004 provisions in the Copyright Act.

Telstra and the Australian Football League (AFL) joined the case, as both were concerned that the app calls into question the $153 million deal that they signed together to give Telstra exclusive mobile broadcasting rights for the AFL.

Late last year, Justice Steven Rares ruled in Optus' favour, saying that the act of recording initiates when the user hits the record button on the TV Now app, which he said is no different to the act of recording using a VCR or a digital video recorder.

In March, the NRL appealed the decision, arguing before Justices Arthur Emmett, Annabelle Bennett and Paul Flinn that Rares erred when he ruled that it is the user, and not Optus, who initiates TV recordings in its TV Now app, pointing to the four copies that Optus makes for each recording. The NRL argued that the user making the recording is likely "wholly ignorant" of the fact that when they press record, four different files are made, to ensure that the user can view the recording on iPhones, Android devices, computers and other 3G mobile devices.

In response, Optus argued that it merely provides the instructions to a user for how to record the TV broadcasts that they want, and ultimately the user makes the recording based on that instruction.

Optus' general manager of corporate and government affairs Clare Gill said that Optus is disappointed with the decision, but will comply with the ruling.

"We are currently reviewing the decision and considering all options available, including appeal," Gill said. "We intend to keep leading the market with innovative and differentiated digital services."

Telstra said the judgment was a great result for "everyone who cares about the financial health of Australian sport".

"It ensures that sports bodies, and Australian content owners more generally, are able to receive a fair return from their property," the company said in a statement, adding that the decision would allow rights holders to invest in improving the quality of their content.

AFL CEO Andrew Demetriou said on the AFL's news site that the court made the right decision.

"It's a great win ... It's a sensible decision for all sports that relies on this funding, which is re-invested into facilities, grounds and the code," Demetriou said.

Demetriou said Optus must now suspend recording broadcasted AFL matches through the TV Now app.

Comments on the judgment from the NRL is being sought.

Updated at 10:23am, 27 April 2012: Added comment from Optus and the AFL.