Optus customers will be able to watch AFL and NRL football matches on mobile devices, despite Telstra paying $153 million for exclusive broadcast rights.
The Federal Court has found Optus' TV Now service did not infringe the copyright by allowing users to record and later view AFL and NRL football matches on a mobile device at a later time.
In a judgment anticipated by media companies and cloud providers alike, Justice Steven Rares found the service itself did not infringe copyright "in the particular ways that the rightholders alleged".
The football codes were ordered to pay Optus' legal costs, with formal proceedings and further directions adjourned until this Friday.
The judgment will save Optus' TV Now service, launched in July last year, from cancellation.
In dealing with three specific legal arguments on which the parties sought clarification, Justice Rares found the user - rather than Optus - made the recordings of free-to-air broadcasts when using the service.
The service, though based in Optus' data centres and held by the telco for later viewing, was "substantially similar to the position where a person used a video cassette recorder, digital video recorder or similar device to copy a television broadcast", Justice Rares said in his judgment [summary available].
"Even though Optus provided all the significant technology for making, keeping and playing the recording, I considered that in substance this was no different to a person using equipment or technology in his or her home or elsewhere to copy or record a broadcast," he said.
Users of the service, alike, did not infringe the broadcasters' copyright, as their use of the service fell within the time-shifting exception of the Copyright Act, allowing consumers to record a broadcast for later viewing of their choosing in private.
Though the recording could be watched with friends over one of the devices supported by TV Now, Justice Rares found this did not constitute a public viewing.
An Optus spokeswoman said the decision today had upheld the 2006 amendment to the Act allowing that exemption.
"Optus is extremely pleased with today's court decision," she said.
"The court has upheld a consumer's right to record free to air television and play it back at a time that is convenient."
The judgment is a blow to Telstra, which paid $153 million for exclusive broadcast rights for AFL matches over the internet.
"We believe protecting content rights is in the interest of Telstra, the sporting bodies and sports fans who benefit from the investments that flow from broadcast rights," a Telstra spokesman said this afternoon.
"We now intend to go away, review today’s judgement and consider all options."
Leave has been granted for a Federal Court appeal.
The decision is equally important for cloud providers fretting over the storage and use of material they host but do not own the copyright to.
Justice Rares pointed out that a decision would have to be made in future on whether Optus infringed copyright by using Quicktime Streaming technology to serve the recording to users of the iPhone or iPad.