28 April 2012


In National Rugby League Investments Pty Limited v Singtel Optus Pty Ltd [2012] FCAFC 59 the Full Court of the Federal Court of Australia has overturned the decision by Rares J in Singtel Optus Pty Ltd v National Rugby League Investments Pty Ltd (No 2) [2012] FCA 34, concerned with the liability of Australian telco Optus for copyright infringement in relation to the TV Now service.

That service enabled  subscribers (householders and small businesses)  to record free to air television programmes (notably football matches) for viewing - ie play back -  on the subscriber’s compatible Optus mobile device or personal computer at a time chosen by the subscriber. In essence,  the service allowed consumers on a grand scale to engage in the timeshifting permitted under s 111 of  the Copyright Act 1968 (Cth), ie using a domestic video recorder or other device to record a free to air broadcast for later viewing on a noncommercial basis at a more convenient time.  Optus in effect provided subscribers with a recorder 'in the cloud'.

In the decision that was appealed the Australian Football League as part of its national Australian Rules competition had granted to Telstra (the dominant telco and main competitor of Optus) an exclusive licence to communicate to the public, by means of the internet and mobile devices, free to air television broadcasts of its football matches. The League and Telstra have copyright interests in the free-to-air broadcasts of live and filmed AFL and NRL football games recorded for Optus subscribers using the TV Now system.

The FCAFC considered two primary questions -
  • who, for the purposes of the Copyright Act 1968 (Cth) was the maker of the film, sound recording or copy when a film (or copy) and a sound recording (or copy) of a television broadcast of one of the matches were made as part of the TV Now service? Was it Optus or the subscriber (or both of them jointly)?
  • If Optus’ act in making the recording would "otherwise constitute an infringement of the copyright of AFL, NRL or Telstra, can Optus invoke what we would inaccurately, but conveniently, call the “private and domestic use” defence of s 111 of the Act"?
Rares J earlier this year held that the maker was the subscriber. On appeal the Federal Court reached a different conclusion, holding that the maker was Optus or, in the alternative, Optus and the subscriber. The FCAFC stated that
It is unnecessary for present purposes to express a definitive view as between the two. 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. In other words, they were jointly and severally responsible for the act of copying. That is our preferred view.
Rares J did not have to consider the second question, given his conclusion regarding the first question. The FCAFC held that
Optus cannot either as maker alone or as a maker with a subscriber bring itself within the scope of the s 111 exception on its proper construction.
It concluded [at 89] that -
There is nothing in the language, or the provenance, of s 111 to suggest that it was intended to cover commercial copying on behalf of individuals. Moreover, the natural meaning of the section is that the person who makes the copy is the person whose purpose is to use it as prescribed by s 111(1). Optus may well be said to have copied programmes so that otherscan use the recorded programme for the purpose envisaged by s 111. Optus, though, makes no use itself of the copies as it frankly concedes. It merely stores them for 30 days. And its purpose in providing its service – and, hence in making copies of programmes for subscribers – is to derive such market advantage in the digital TV industry as its commercial exploitation can provide. Optus cannot invoke the s 111 exception.
At 58 through 64 it stated that there are several reasons for rejecting the proposition that only the subscriber was the maker for s 101, hence s 111, purposes -
First, the meaning given “make” is, in our view, a contrived one. ... The OED definition with its emphasis on producing a “material thing” is an apt one for the purposes of s 86(a) and s 87(a) and (b) – and hence for s 101(1) and s 111 of the Act. In saying this we do not discountenance the need for there to be a causative agency if a copy of a particular thing is to be made. The issue is not simply how something is made. It is by whom is it made. This, as will be seen, is of some importance when we come to consider whether copies were made by Optus and the subscriber jointly.
Second, the reason for rejecting the proposition that the subscriber alone is the maker relates to how the system itself works. This is better discussed when considering whether Optus itself is the maker. We merely note here that a subscriber’s clicking on a button labelled “record” may trigger a sequence of actions which result in copies of a selected programme being made, but it does not necessarily follow that the subscriber alone makes that copy. 
Third, analogies are not necessarily helpful in this setting because they both divert attention from what the TV Now system has been designed to do and pre-suppose what is the function (albeit automated) it performs in the ongoing Optus-subscriber relationship. To anticipate matters, we consider that the system itself has been designed in a way that makes Optus the “main performer of the act of [copying]” ...
Fourth, there is some division between federal courts in the United States as how properly to differentiate between “direct” and “contributory” liability for copyright infringement where automated technologies are employed to make copies of copyright material ... In distinguishing the two forms of liability – a distinction which is of no concern to this Court in these appeals – the “volitional conduct” concept (and as well, the analogies with photocopier use by third parties and use of VCRs and DVRs) have been deployed. ... Whatever utility the volitional conduct concept has in distinguishing the two forms of infringement (given the need to do so in US jurisprudence), its adoption in this country would, in our view, require a gloss to be put on the word “make” in s 86(a) and s 87(a) and (b) of the Act. The need for so doing is not apparent to us, the more so because we have our own legislative and common law devices for imposing liability on third persons who are implicated or join in the infringing acts of another as, for example, by authorising the doing of such acts: Copyright Act s 101(1) and (1A) or by acting in concert with another to infringe copyright in pursuit of a common design: see eg Aristocrat Technologies Australia Pty Ltd v Global Gaming Supplies Pty Ltd at [620]-[624]; and see below (iv) Optus and the subscriber jointly?
It equally is not apparent to us why a person who designs and operates a wholly automated copying system ought as of course not be treated as a “maker” of an infringing copy where the system itself is configured designedly so as to respond to a third party command to make that copy: see generally the criticism of Cartoon Networkin Ginsburg, at 15-18.
The FCAFC went on to consider whether the TV Now subscriber can nonetheless be said to have acted jointly with Optus in making the copies.
It is the case that no copies will be made of a programme unless the subscriber selects that programme to be recorded and communicates his or her confirmation of that selection to Optus, albeit by an electronic communication to its MACF servers. In at least this “but for” sense, the actions of the subscriber are causative of a recording later being made. Optus places emphasis on the necessity for that action of the subscriber, as well as the action of Optus, in setting up the system, in causing that recording to be made and, subsequently, causing the recording to be communicated to the subscriber. An Optus employee cannot press the record button. However, once that communication is made, the automated processes described by his Honour come into play – the server enters or creates a schedule ID in respect of the programme selected and the user’s unique identifying number in the user database; the recording controllers poll that database once a minute enquiring whether any users have scheduled the recording of any programme due to be broadcast at the time of polling; when the poll so identifies that the user’s selection is due to be broadcast, the MACF server informs the recording controllers which then cause four recordings to be made on the NAS hard disk – ie the timing of the recording coincides with Optus’ recording controller causing the recording to be made, rather than when the subscriber communicates its selection to Optus. 
Accepting as we do the appropriateness of the OED definition for the purposes of s 86, s 87 and s 101, we consider that Optus’ role in the making of a copy – ie in capturing the broadcast and then in embodying its images and sounds in the hard disk – is so pervasive that, even though entirely automated, it cannot be disregarded when the “person” who does the act of copying is to be identified. The system performs the very functions for which it was created by Optus. Even if one were to require volitional conduct proximate to the copying, Optus’ creating and keeping in constant readiness the TV Now system would satisfy that requirement. It should also be emphasised that the recording is made by reason of Optus’ system remaining “up” and available to implement the subscriber’s request at the time when its recording controllers poll the user database and receive a response indicating that a recording has been requested. What Optus actually does has –
a nexus sufficiently close and causal to the illegal copying that one could conclude that the machine owner ... trespassed on the exclusive domain of the copyright owners: CoStar Group Inc v LoopNet Inc [2004] USCA4 133; 373 F3d 544 at 550 (4th Circ. 2004). ...
Put shortly Optus is not merely making available its system to another who uses it to copy a broadcast: cf CoStar Group Inc at 550. Rather it captures, copies, stores and makes available for reward, a programme for later viewing by another: cf New York Times Co Inc v Tasini [2001] USSC 59 (2001) 533 US 483 at 504; and see Ginsburg at 15-16.
The real issue in consequence is whether Optus alone does the act of copying or whether Optus and the subscriber are jointly and severally responsible for that act.
... The appellants’ preferred characterisation of the Optus-subscriber relationship was that it was one in which Optus undertook to provide recordings of such free-to-air television programmes as the subscriber required to be recorded from time to time, the programmes after recording to be available to be viewed at the time or times of the subscriber’s choosing on any one of four types of Optus compatible mobile phone or PC. It was, in short, a service for which Optus solicited subscribers and in which it was obliged to provide recordings for viewing of programmes the subscriber required to be recorded.
As the recording could only occur as and when the broadcast occurred of the programme sought but that programme itself had to be notified to Optus in advance, Optus established the wholly automated system, described above, which it so configured that the required recording did occur. If that part of the system embodied the steps taken by Optus to ensure that the required programme was recorded at the right time for the subscriber who required it, then the selection and notified confirmation by the subscriber of the programme required to be recorded could be said to be merely the necessary pre-condition to be satisfied to activate Optus’ obligation to perform its service. If this be correct, then Optus can properly be identified as the maker of the copies of the recording. As the AFL has put it, Optus’ data centre carries out the user’s instruction to record a programme; it records that programme. In other words, if analogies are helpful in this particular setting (which we doubt), Optus is to be analogised with a commercial photocopier which copies copyright material provided to it for copying by it.
 ... To view the matter in contractual terms, the terms and conditions of the Service are quite unyielding of any clear indication as to what actually is the true character of the parties relationship. Reference has already been made to the ambiguities, inaccuracies and colloquialism in formulae such as the system “allows you to record and store television shows”. The system is “for your individual and personal use”. Indeed the terms of the contract in this regard are in large measure unarticulated and must be inferred or implied if the agreement is to be given relevant content: cf Hawkins v Clayton (1988) 164 CLR 539 at 570-571. This said, it is more probable than not that a reasonable person, knowing the circumstances available to both parties, would characterise the relationship agreed between the parties (ie would infer or impute to them) that it was a contract by Optus to provide a service such as we have described above. ...
So one comes back to the question of construction raised by the word “make” and its application in the present setting. As we have indicated, Optus not only has solicited subscriber utilisation of its Service, it has also designed and maintained a sophisticated system which can effectuate the making of recordings wanted for viewing by subscribers. For s 101 purposes, it manifestly is involved directly in doing the act of copying. It counts as a maker of copies for the subscriber. Does the subscriber as well? 
If one focussed not only upon the automated service which is held out as able to produce, and which actually produces, the copies but also on the causative agency that is responsible for the copies being made at all, the need for a more complex characterisation is suggested. The subscriber, by selecting the programme to be copied and by confirming that it is to be copied, can properly be said to be the person who instigates the copying. Yet it is Optus which effects it. Without the concerted actions of both there would be no copy made of a football match for the subscriber. Without the subscriber’s involvement, nothing would be created; without Optus’ involvement nothing would be copied. They have needed to act in concert to produce – they each have contributed to – a commonly desired outcome. The subscriber’s contributing acts were envisaged by the contractual terms and conditions. How they were to be done were indicated by the prompts given on the Optus TV Now TV guide page. The common design – the production of the selected programme for transmission to the subscriber – informed the solicitation and the taking of a subscription by the subscriber; it was immanent in the service to be provided.
In consequence, they could both properly be said to be jointly and severally responsible for the act of making the copies.
While it is not strictly necessary for us to determine whether Optus alone is, or Optus and the subscriber are, the maker(s), our preferred view would be that both Optus and the subscriber, acting together, were the makers of the copies.