Australia will host its first lawsuit involving ‘cloud storage’ in the Federal Court on December 19 this year, with the AFL and NRL seeking a permanent ban on Optus copying, recording or replaying their games over its TV Now Service. [1]

The internet-based TV Now service allows users to record and store free-to-air TV programs on Optus’ computer servers (an example of cloud storage) and view them within 30 days using a web browser. However, Telstra recently agreed to pay in excess of $150 million for exclusive rights to stream the sporting events live on the internet and is concerned that TV Now will allow Optus customers to watch the games online with very little delay, thus de-valuing its exclusive rights.

Telstra, the AFL and the NRL are reportedly seeking unspecified damages from Optus, including the profits Optus has made from the service since it was launched in July this year. [2] Optus filed a pre-emptive strike – a claim for protection against infringement notices from the sporting bodies – in August, and the AFL, NRL and Telstra have now filed cross-claims.

Optus' defence is likely to centre on amendments to the Copyright Act introduced in 2006, which allow private individuals to record TV programs to watch at a later time without infringing copyright. The relevant argument will be that individual Optus consumers are doing the recording (through software downloaded to receive the TV Now service), not Optus, so that no infringement is occurring. The counter argument by the sporting bodies and Telstra is likely to be that the programs are being stored on Optus equipment and distributed by Optus for trade, thus cancelling out the personal use defence. The court’s decision is likely to set a precedent in Australian copyright law.

Not surprisingly, the legal parameters of cloud storage services are also being mapped out in Europe and the US. As reported in the Council’s August News Service, a US court handed down a split decision in a copyright case involving cloud storage service MP3Tunes and EMI Music Group on August 22. While the court ruled that MP3Tunes had infringed copyright in relation to certain specific works, it also found that for the most part, the service was protected by the US safe harbour rules of the Digital Millennium Copyright Act. In addition to relying on these safe harbor provisions for its defence, MP3Tunes also raised questions about whether the storage and streaming of files owned by users needed permission from rights holders in the first place.

A recent report in the US publication Politico [2] noted that content providers are currently lobbying Congress to make sure that web-based cloud storage isn’t used to facilitate illegal trade in copyright materials: “Content makers are careful to say they don’t want to encourage lawmakers to crack down on the cyberlocker technology, but they are focused on stopping infringing behaviour that occurs on file-sharing services…

“The issue has also caught the eye of the US Copyright Office, which both the Senate and House judiciary committee have consulted in crafting their anti-piracy bills. Maria Pallante, the head of the Copyright Office, acknowledges that tackling infringing cyberlockers presents ‘some really difficult questions’ when it comes to copyright law.” [3]

[1] Sydney Morning Herald at: http://www.smh.com.au/entertainment/tv-and-radio/afl-takes-optus-to-court-over-rights-20110926-1ktnr.html

[2-3] Politico (21/9/11) at: http://www.politico.com/news/stories/0911/64053.html