AFL appeal in Optus copyright case

The National Rugby League and Australian Football League will continue their fight to protect a multi-million-dollar TV rights deal, despite losing a court battle to prevent Optus broadcasting matches online.

In a landmark ruling on Wednesday, the Federal Court found Optus did not breach copyright by broadcasting matches via its new TV Now service.

Telstra holds exclusive internet broadcast rights for both the AFL and NRL, with its latest $153 million deal with the AFL covering the 2012 to 2016 seasons.

The value of that deal and all other exclusive internet sports broadcast licences could now be under threat following Justice Steven Rares' decision.

He found Optus' TV Now, which enables users to record matches to watch later on their smartphones and PCs, was effectively the same as recording matches on home video and digital recorders.

The AFL and NRL claimed the Optus service infringed their copyright by making copies of the match broadcasts and later communicating the copies to users of the service.

But Optus argued its users recorded the broadcasts, not Optus itself.

Under an exception in the Copyright Act, a person is allowed to make a copy of a broadcast solely for their personal use at a time more convenient than when a broadcast is made.

Justice Rares found TV Now users had themselves made the recording of the matches, similar to when a person used a video or digital recorder.

He also found the recordings were being made for private and domestic use and that users were responsible for making available the recording, not Optus.

"Accordingly, I decided that Optus' TV Now service did not infringe copyright in the broadcasts of the AFL and NRL games in the particular ways that the rightholders alleged," Justice Rares said in the judgement.

The NRL and AFL said they were likely to appeal the decision.

"We maintain that the Optus action is a breach of copyright," AFL chief operating officer Gillon McLachlan said.

"However, we are only in the pre-season of this issue."

NRL director of media and communications John Brady said the court's decision was of major concern as it threatened the very nature of exclusive rights.

"The decision is very likely to be appealed," he said.

"It is a major concern as it clearly has the capacity to devalue the ability of the sports to sell exclusive rights."

Telstra said it was "considering all options".

"We believe that protecting content rights is in the interest of Telstra, the sporting codes and sporting fans who ultimately benefit from the investments that flow from broadcast rights," Telstra spokesperson Craig Middleton said.

Mr Middleton denied reports that Telstra would tear up a $153 million contract with the AFL if it lost the Federal Court case.

Optus launched the TV Now service in July 2011, allowing users to record free-to-air programs including NRL and AFL matches and play them back on a computer or smartphone.

The finding could have major ramifications for the sporting and media industries as it could potentially devalue internet sporting broadcast rights.

The AFL, NRL and Telstra were ordered to pay Optus' legal costs.

Justice Rares still has to decide on other issues in the case, as some Apple devices store files that contain sections of the match broadcasts, and that could constitute a breach of copyright.