Rumblings from the copyright cloud

Does storing content in the cloud make a cloud service provider or its users liable for copyright infringement?

Credit: Optus

That is the central question dividing Australia’s two biggest telcos, Optus and Telstra, as they face off in a legal battle over multi-million dollar rights to stream matches from Australia’s largest sporting codes over the internet.

In litigation spanning four individual cases, the Federal Court will be asked to consider whether the Optus TV Now service - a cloud storage service designed to record and stream free-to-air television - infringes the copyright in those broadcasts.

The outcome of these cases may have significant implications for providers of cloud services.

Optus TV Now service

The TV Now service, launched in July this year, allows Optus mobile customers to record and watch free-to-air television on their smartphones.

“With TV Now, you can record and watch TV on your Optus 3G compatible phone and enjoy the convenience of your favourite shows when you're on the go,” Optus promises.

In practice, Optus customers use the service to record a free-to-air broadcast onto the telco’s cloud servers. Users can then play back that recording at some point in a 30-day window through a web browser or their mobile.

Optus customers are eligible for 45 minutes of free storage each month but can extend this up to 20 hours per month with tiered pricing plans.

An obvious use of the TV Now service, and the centre of allegations in recent court cases, is the potential use to record and later “catch up” with football events.

Why the conflict?

The two sporting leagues involved in the case, the National Rugby League (NRL) and the Australian Football League (AFL), own the copyright in the TV broadcasts of their respective matches, which they don’t distribute lightly.

Telstra paid $153 million for the exclusive rights to broadcast AFL matches over the internet this year, making it no surprise when Telstra executives threatened to walk away if its competitor’s service was permitted to continue.

Optus was first to initiate Federal Court proceedings on the matter, asking the court to declare the leagues’ threats unjustified under section 202(1) of the Copyright Act.

As expected, the NRL, AFL and Telstra have all brought cross-claims against Optus and Optus Mobile, claiming the TV Now service infringes copyright.

In cases being heard this month, copyright owners are likely to argue that recording and storing TV broadcasts on Optus’ cloud infrastructure infringes the exclusive right to make a copy, and that streaming back those broadcasts infringes the exclusive right to electronically “communicate to the public”. 

They are also likely to argue that Optus makes the unauthorised copy and communicates that copy to the public. Alternatively, as AFACT has argued against iiNet, Optus authorises its TV Now customers to do the same.

US precedents

According to a briefing paper on the case by Helen Clarke and Kirsty Watkins from law firm Corrs Chambers Westgarth, recent US case law suggests a positive outlook for cloud service providers, at least in the United States.

The Optus v NRL case will determine whether Australian courts will adopt or reject the US approach.

The case also provides an opportunity for the court to decide whether existing copyright law promotes or protects cloud-based services, given their increasing popularity and social utility.

The use of consumer cloud storage services, such as Apple’s iCloud, is becoming as natural as using local storage devices like personal video recorders and network drives.

But the broad, distributive nature of the internet on 3G or wireless networks is capable of undermining business deals that were the norm before such technology was available. 

The Corrs briefing observes that in the cloud computing environment, there are two “actors” at play: a cloud service provider (Optus) and an end user (Optus’ customer).

The presence of two actors makes important copyright questions, such as who does the “copying” and who does the “streaming”, more difficult.

To avoid copyright liability on the streaming aspect, Optus is likely to argue that, as there is a separate stream for each Optus customer, any electronic communication is to the individual customer and not “to the public” at large.

“Time-shifting” defence

The Corrs authors also note that the “time-shifting” defence could become another important aspect of the case.

That defence, in section 111 of the Copyright Act, absolves those who makes a copy of TV broadcast “solely for private and domestic use” by watching or listening to the broadcast at a more convenient time.

Optus is likely to argue that the TV Now service is no different from its customers recording the free-to-air TV broadcasts on their own PVRs, which would fall within the scope of the “time-shifting” defence. The only difference is the TV content is stored in the cloud, not on a local device.

Copyright safe harbours cloudy

Optus, like other Australian carriers and ISPs, enjoys the protection of what are known as the “safe harbour provisions” in Part V Division 2AA of the Copyright Act.  These provisions protect carriers from copyright infringement provided they meet certain conditions. 

Under these provisions, even if the court finds Optus liable for copyright infringement, the company may get away with having to shut down the service but not pay monetary damages.

However, because the safe harbour provisions are limited to “carriage service providers”, not all cloud service providers would be eligible for this protection.

The Australian Government is considering amendments to safe harbour provisions, extending those protections to all online service providers.

In absence of those protections, however, a judgment in Optus’ current legal battle could set a precedent for local and international cloud providers.

Corrs Chambers Westgarth partner Helen Clarke and lawyer Wen H. Wu contributed to this article.