Left out in the cold? Cloud service providers feel chill wind following Optus ruling

Last week the Full Federal Court (FFC) held that Optus’ TV Now service, which enabled consumers to record free-to-air TV to the cloud for playback on their personal devices, infringed copyright.

In doing so, it distinguished the cloud-based ‘TV Now’ service from VCRs and other personal video recorders (PVRs) in a manner that must have blown a chill wind through the offices of other cloud-based service providers in Australia.

In the case of VCRs and PVRs, recordings are considered to be made by the consumer, which can take advantage of the timeshifting exception in s111 of the Act. In the case of cloud-based video recording services however, which utilise remote PVRs, the FFC held that it’s the service provider who makes the recordings – and since they don’t do so for ‘private or domestic use’, they can’t avail themselves of the same exception.  

The Federal Court had previously decided that the Optus TV Now service was merely a system being made available to subscribers who use it to copy broadcasts.  However, the full Federal Court (FFC) overturned this conclusion, unanimously ruling that, in capturing, copying, storing and streaming the program back to the subscriber, Optus was the ‘main performer of the act of copying.’

Just about any online or digital activity involves making copies of copyright material into digital memory.  Although the FFC emphasised in closing that its findings were limited to the particular service provider-subscriber relationship of Optus and its subscribers, and the ‘nature and operation of the particular technology’ in question, the ‘particular technology’ in question is the cloud.

More specifically, the way in which many cloud-based services work: capturing, copying, storing and then streaming back content to users.

As Kim Weatherall points out in her 2011 paper, Internet Intermediaries and Copyright: An Australian Agenda for Reform, ‘owing to the way reproduction is defined in Australian copyright law, most of these copies…require permission from the copyright owner or an exception…even where equivalent actions offline (reading a book, listening to music – or in this case, recording to a VCR) involve no infringement.’ Thus, says Weatherall,

the reproduction right looms large as the ultimate leverage of rights holders to control virtually all aspects of how [internet intermediaries] run their businesses. Internet intermediaries are therefore likely to undertake many actions that fall within the reproduction right in Australia – and their users will too.’

In the Optus TV Now case, the right holders (the football codes) and exclusive licensee Telstra were able to successfully argue that Optus made the copies, rather than the consumer, because of the way in which the particular cloud-based service operated.

Even if the next service that provides consumers with the ability to record free-to-air TV to the cloud doesn’t involve the same contractual relationship as between Optus and their users (although it is hard to see how this would work) recording TV to the cloud inevitably involves an automated system making, storing and retransmitting digital copies to users.

Whether Optus appeals the full Federal Court decision is yet to be seen, but the Government will be looking closely at the implications of the scope of the reproduction right in the Copyright Act for other cloud based services.

Closely following the Optus TV Now decision, the Convergence Review final report released Monday this week recognises consumers are accessing content across their laptops, smartphones and tablets, and recommends that media and communications services available to Australians ‘reflect community standards and expectations of the Australian public’.

To many consumers, pressing record on their favourite free-to-air TV to the cloud and recording to the VCR is the same thing.

Outside of the current litigation, it’s questionable as to whether online access to free-to-air content, particularly premium content like football games, can be exclusively licensed to one provider within the spirit of the Convergence Review. The Convergence Review explicitly comments that:

‘access to premium content, such as first-release movies and live sport, can be vital to ensure the success of media platforms, including new and emerging platforms. Innovation, competition and positive consumer outcomes may be threatened where exclusive rights prevent such access.

Does it meet consumer expectations, if only Telstra customers are able to play back free-to-air footy games on their mobile phones? Akin to only purchasers of Sony VCRs having the ability to press record on their favourite footy? The decision seems to leave Australian consumers in the technological dark ages – limited to a box under their TV while people in other jurisdictions move on to more effective and efficient timeshifting technologies. This goes against the stated desire for technological neutrality emphasised at the time the timeshifting provision was enacted.

Recording free-to-air content for own private use is already an accepted consumer activity. While the technology may change, the lawfulness of the consumer activity shouldn’t.