30 May 2012

Optus vs Footy

by Matt Rubinstein at 3:39 pm

NotNow

Section 111 of the Copyright Act 1968 now provides that there is no breach of copyright where: 

a person makes a cinematograph film or sound recording of a broadcast solely for private and domestic use by watching or listening to the material broadcast at a time more convenient than the time when the broadcast is made.

This defence was introduced in 2006, almost thirty years after the first video cassette recorders arrived in Australia and we all started taping things off TV. I well remember the anguish of having to go to bed before the traditional Sunday night screening of Raiders of the Lost Ark was finished, tempered somewhat by the knowledge that my parents would tape the end for me, little suspecting that we were all involved in a criminal conspiracy that wouldn’t be legitimised for decades. I’m sure nobody ever got arrested or even investigated for that kind of personal time-shifting, but its continuing illegality long epitomised the inconsistency between copyright law and actual human behaviour, and the 2006 amendments were necessary to give the regime any kind of legitimacy. 

But give ’em 11.22 potrzebies and they’ll take 945.67 smoots, as they say, and in July 2011 Australia’s second telco Optus took advantage of the newish defence to offer its “TV Now” service, which allowed subscribers to make recordings of free-to-air broadcasts on Optus’s servers and then watch them at a more convenient time—such as two minutes later on their Optus mobile phones. When applied to televised Australian Football League fixtures, this service differed by only two minutes from the service Telstra recently paid the AFL $150 million for the privilege of providing.

So Telstra, the AFL and the NRL—who hoped to raise its own $150 million or more in the next round of rights negotiations—all sued Optus in the Federal Court, and in February the Hon Steven David Rares surprised everyone by deciding that the Optus service was indeed exempted by section 111, since customers were essentially using Optus as their own giant VCR in the sky to make convenient recordings exactly as the section intended. There was a lot of technical detail about how the recordings were made and accessed, but the real point of Rares J’s judgment was that it didn’t much matter how the recording was made, as long as you made it for your own private and domestic convenience. Section 111 clearly applies to flashy digital video recorders as well as creaky VHS and Betamax machines; why shouldn’t it also apply to cloud services? Does it make any difference that you’re renting these services from Optus rather than buying your own hardware from Harvey Norman? Justice Rares didn’t think so.

The matter was quickly appealed, and in late April three other Federal Court judges expressed a good deal of gratitude to Justice Rares for laying all the groundwork and explaining everything so clearly, but they wasted no time in overturning just about all of his findings. Crucially, the appeal court found that subscribers to the TV Now service weren’t the ones making the recordings, or weren’t the only ones: Optus was at least partly involved in copying the valuable football broadcasts, and it since it wasn’t doing so for private or domestic purposes the section 111 defence didn’t apply.

This is a perfectly reasonable conclusion that probably best serves the intentions of the 2006 amendments, if they’d thought about it: there’s an instinctive difference between a human person recording something from their own TV in their own home and a corporation setting up farms of recording, transcoding and playout equipment to sell a service that other corporations have to pay millions for. There was no way Australia’s largest carrier and the owners of its most valuable broadcast properties were going to stand for that, and there’s little doubt that the legislature would have amended section 111 to close the loophole if the original decision had held up. 

And yet there’s an appealing fearlessness in Rares J’s decision, which looks past what the enacting parliament thought it was doing and considers what it was actually, if inadvertently, doing—providing a defence for private recordings no matter how you choose to make them, and whether or not that might make someone else’s multimillion-dollar investments worthless. It’s the kind of utopian vision not often seen in the Federal Court, and calls into question the very wisdom of spending $150 million on “exclusive” Internet streaming rights in the first place—as if the Internet were just another commercial delivery platform, instead of the place where we live and transact more and more of our lives. 

In law school my jurisprudence professor used to argue that a proper interpretation of the Australian Constitution would eventually result in the abolition of the States, since section 92 guarantees absolute freedom of trade, commerce and intercourse between the States, and that covers just about everything humans do; and section 117 prohibits discrimination between residents of different states, suggesting one law for everybody. The framers of the Constitution would have been appalled by that interpretation: they wanted (or thought they wanted) to maintain strong and independent States in a limited federation. But people don’t always fully understand the magnitude of their ideas: it’s for later generations to see confused beginnings through to their logical conclusions. 

I can’t help feeling that something on a smaller scale is happening here: the new section 111 of the Copyright Act may turn out to have profound implications for the way we deal with broadcasts and on the commercial value we attribute to them. There’s too much at stake right now for the section to be followed to its logical and perhaps inevitable conclusion—just like there are still States—but it’s kind of thrilling to catch a glimpse of what may very well be the future. 

All this reminds me of the first article I worked on after I became a lawyer in 1997: an evaluation of the legal issues surrounding sports broadcasting rights and the way they were packaged and sold. All this was before the Internet had much of an impact on most people’s lives: it was long before Facebook and Twitter, at the very dawn of Google itself, and everyone thought that web portals were the future. Everything has changed on the Internet, and remarkably little has changed on the broadcasting side of things. But it might be changing now.

Optus has vowed to appeal the latest decision to the High Court, to the disgust of the AFL and the delight of copyright-law rubberneckers like me. I’d be surprised if we saw the kind of left-field insight that Justice Rares came up with, but you never know. This could be the beginning of something.

One Response to “Optus vs Footy”

  1. Alastair Says:

    Interesting stuff. Sounds like a decision which just begs to be routed around with some imaginative use of technology. I don’t see why a hosted service offering is necessarily out of the question here. Let’s say Optus (or whomever) sells the rental of your own personal DVR at a data centre somewhere. Maybe it’s a physical device similar to something which would sit underneath a TV. Maybe it’s a virtual device assembled from whatever pooled componentry is available at the time you want to record the big game. Or some combination; you rent a physical DVB-T decoder, and its output is directed to some storage cloud. You could almost adjust the physical/virtual slider here based on the prevailing opinions of the judiciary with very little to no impact on the customers.

    Of course the AFL could do itself a favour and set up an internet video site and sell the subscriptions to it, just like MLB or NHL does here in the US. Might make more than $150M, assuming the bandwidth was there for the punters to access it with….

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