The Fanatix sports clip sharing case – would it apply in Australia?

A UK court has found that an app whose makers planned to  “disrupt the $40 billion global sports media rights market” infringed copyright in sports broadcasts. The England & Wales Cricket Board and its host broadcaster Sky, were not impressed by the app’s sports video sharing function, and sued.

The case, England & Wales Cricket Board Ltd v Tixdaq [2016] EWHC 575, has important implications for digital sports rights licensing and for apps based on unlicensed video sharing.

It also raises the question, considered below, of how an Australian court might view such an app.

A killer app

The Fanatix app was advertised on the UK Apple App Store as:

“Capture, Caption. Share! Create 8 second sports news snippets. Caption with Attitude. Share sports video with millions of fans”.

The Fanatix app works by letting fans “point their mobiles at their TV screens, and capture the moment that matters most to them, adding their own comments as they do”….. The clips can then be replayed in near live time by other fans worldwide for free.

The app maker acknowledged it would push legal boundaries. Instead of licensing rights to the clips, the app would principally rely on the “reporting current events” free exception under UK copyright law. (It also relied on a safe harbour intermediary host defence not discussed here).

To fit within the exception, the app required fans to add commentary to their clips, which most did, and attribute the broadcaster, which some did not. Further restrictions were added in later versions, such as 24 hour expiry of clips and a limit on how much video a user could see or upload within certain periods.

But not legal in the UK

These steps however, were not enough. The court found that the taking of 8 second clips of key highlights of sports events was a “substantial” taking which would infringe the applicants’ copyright unless an exception applied. The most relevant exception was the “reporting current events” in section 30(2) of the UK Copyright Designs and Patent Act.  The key requirements of this exception are:

  • Purpose of the use of copyright material is for “reporting current events”
  • Only a “fair” amount may be used; and
  • Requirement to attribute the copyright owner.

“Reporting current events”

The court gave a relatively wide interpretation to the term “reporting current events” to include “citizen journalism” on social media, and not merely reporting by traditional media outlets. Unfortunately for the defendants, Arnold J considered that the primary purpose of the app was sharing of highlights from sports events. While noting that the commercial nature of the venture was not of itself determinative, his Honour found that the defendant’s objective was “purely commercial rather than genuinely informatory”.

“Fair” amount

While finding against the defendants on purpose, Arnold J made some comments about the issue of fairness. His Honour dismissed the defendants’ argument that the use was harmless as it “whet the fans’ appetite” for the licensed product. Instead, he accepted evidence that the high volume of near live clips offered free on the Fanatix app were affecting sales of the host broadcaster’s licensed tv subscription packages, and that future rights deals by the ECB were being threatened by the “possibility the defendants might be able to offer clips via the App for free”.

He did not consider relevant the fact that the local industry code between broadcasters enabled news access to footage by non-rightsholders in linear news services.

Accordingly, the use of the clips was not fair.

Attribution

His honour held that in accordance with settled law, the attribution requirement was satisfied by the inclusion of the broadcaster logo. However, it was noted that in some cases the broadcasters’ logo was not included in the screen capture, and those were infringing uses.

Are these kinds of apps legal in Australia?

The question of what is a substantial taking of copyright material (in this case, 8 second highlights of important match events that viewers considered worth sharing) is likely to be decided in similar terms under Australian law. It is therefore likely that such a case brought in an Australian court would turn on the issue of whether a fair dealing exception to infringement applies.

The general equivalent to the UK “reporting current events” exception under Australian copyright law is the fair dealing exception for “reporting the news” in section 103B of the Australian Copyright Act.

The attribution question would likely get the same result as in the UK. However, the questions of what is “reporting the news” and what is “fair” may come out a little differently.

“Reporting the news”

While there are some differences in wording between the Australian and UK sections, the relatively broad construction of “reporting current events” in the Fanatix case is generally consistent with Australian courts’ interpretation of “news reporting”.

Australian law on what constitutes “news reporting” may even be broader, as evidenced by findings in the “Panel” case concerning a comedy show. It’s therefore possible that an Australian court might accept a “reporting the news” argument concerning a well designed video sharing app tailored to this defence.

“Fairness”

A key determining factor in fair dealing cases is the court’s conception of the market that the copyright owner should legitimately control before the fair dealing exception can cut in, and how far that protected market extends into new areas of licensing which the owner is not yet exploiting.

Unlike Australian law, UK law is now subject to the EU Information Society Directive. Without going into complexities, the Directive seems to have influenced the Fanatix case to give greater weight to the economic impact of the app on the applicant’s market. In the Fanatix case Arnold J dismissed the defendant’s claim that the use was fair because it addressed an existing market failure in licensing by the applicants – namely that the applicants had failed to offer a standalone clip service for cricket fans. He noted the potential impact of the Fanatix app on future digital rights negotiations.

In contrast, the only reported Australian case on fair dealing and digital sports rights, Telstra v Premier Media Group, saw the court take a less sympathetic approach to the applicant’s market impact concerns and give weight to the public interest in sport news. In this case, Telstra, the licensee of digital highlight rights in NRL matches, sought orders to prevent the defendant from supplying video clips of up to two minutes, with accompanying voiceover commentary, of NRL match highlights compilations to online services. Telstra had paid a premium for these rights, and claimed that their value was being devalued by the defendant’s activities. Telstra sought orders to limit the duration and availability of clips to what it considered a “fair” amount.

In rejecting Telstra’s application, the court referred to the fact that Telstra had, or should have, factored news access by third parties into its calculations for buying the rights. He also mentioned that the Australian public had “come to expect” sport news to be delivered to them.

While only an interlocutory hearing, this 2007 case since seems to have confirmed that there is scope for digital news services using sports clips under fair dealing in the Australian market, provided such usage is not excessive. The fact that there has been no reported case since suggests that the parameters of what is fair are reasonably well accepted, at least among established industry players. However, the Telstra case concerned a relatively conventional news service, not a user generated video sharing app. Rightsholders are not as relaxed about these apps, and it seems at some point that further litigation will test the limits.

What next?

While at first blush the Fanatix decision looks like a win for rightsholders seeking to protect emerging digital licensing markets, the court indicated that the line between reporting and sharing had been hard to draw. The decision still leaves quite a lot of scope for those who may wish to design a “genuinely informatory” unlicensed sports video sharing service.

If such an app were to be tested in court here, the outcome is uncertain. The UK decision is not binding on Australian courts. Arguably, there were factors in the Fanatix case, such as the high volume of the videos shared, which would have been just as problematic in an Australian court. But at first glance it seems that a more carefully designed video sharing app may fare better here under fair dealing laws that it would in the UK.

It is not yet known if the Fanatix decision will be appealed. Meanwhile, it will give food for thought to app developers, sports codes and rights-holders around the world.

 

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