In April 2011 Telstra bought the exclusive right to broadcast AFL games over the internet and the mobile telephone network for $153M. Yesterday, a decision of Justice Rares in the Federal Court may mean that Telstra paid far too much.
The decision concerned the Optus TV Now service which allowed Optus customers who subscribe to the service to record the (amongst any free to air TV) AFL games and watch them with as little as a 2 minute delay. Optus has not paid AFL or any rights holders to offer the service.
Justice Rares decision is essentially that the TV Now service provides the same service as that of a personal video recorder (or PVR such as Tivo or Foxtel IQ). Currently the Copyright Act allows individuals to record free to air television on their own video recorder for personal use to watch at a more convenient time.
Significantly Justice Rares found that the customer, not Optus, had "made" the recording, even though the recording was stored in Optus' servers. The Court rejected Telstra's argument that Optus had made the recording for their own commercial benefit.
His Honour commented that even a 2 minute time shift could be more convenient for the customer and that no copyright violation occurred when the customer played the recording.
This decision is interesting not just because it has the dramatic effect of devaluing the rights purchased by Telstra but also that it seems to be prepared to look objectively at the virtualisation of the PVR into an online environment and treat it as the same conduct by the end user and may see a rush of other providers offering similar services.
Leave to appeal to the full Court of the Federal Court has already been granted and an appeal seems likely.
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