Posted by Lucy McGovern
Technology has brought a wealth of issues for copyright owners. An issue presently facing film makers is online streaming and the operations of US company, Zediva.
Zediva is at the centre of a furore fuelled by its online service through which customers can stream films at bargain basement prices. The question at the heart of the debate is – Does streaming a movie for a fee differ from renting a movie from the local video store?
Zediva
Zediva operates by buying numerous DVD copies of new release movies and 'renting' those movies online to paying customers. For a mere $1.99, customers can rent a physical disk and DVD player. The movie is then streamed across the internet enabling the customer to watch it online, provided that no other customer is watching the same physical movie at the same time. For example, if Zediva has purchased 20 copies of a film, only 20 people will be able to watch that film at a time.
Zediva has not acquired licences from the relevant copyright owners of the films for the right to provide this service. Rather, Zediva claims it operates under an exception to copyright infringement in the US called the 'first sale' doctrine (First Sale Doctrine). The First Sale Doctrine allows a purchaser of a legal copy of a copyrighted work to lawfully sell, lend or give that copy away. Whilst there is no direct equivalent in Australia, in a similar manner in Australia a person is able to rent a DVD of a film without infringing copyright (the Australian position is discussed in further detail below). On this basis, Zediva argues that it is simply a DVD rental service.
Zediva's business model appears to be the logical progression from the traditional video rental store, and the newer 'Netflix' (which is a DVD rental service which mails DVDs out to paying customers). However, the key difference between Zediva's service and that of its predecessors is the use of streaming over the internet. Whether or not this catapults Zediva's operations into the realm of a 'public performance' of a copyright work (being one of the exclusive rights of the copyright owner) will be resolved in the courts.
Filing suit
In June, major studios Warner Bros, Disney, Columbia, 20th Century Fox, Paramount and Universal sued Zediva for alleged copyright infringement, saying that Zediva's comparison to a traditional rental store was 'disingenuous' (Warner Bros. Entertainment Inc., et al v. WTV Systems, Inc. et al, 11-CV-02817 (CDCA, April 4, 2011)). In the words of the film studios, '[R]ental stores do not transmit performances of movies to the public "over the internet using streaming technologies."'
Counting against Zediva is the early case of Columbia Pictures Industries v Redd Horne 749 F.2nd 154 (3d Cir. 1984). In this case, a video store rented booths at the back of its store for a fee. Customers could select a film and an employee of the video store would play the customer's selected movie in the rented booth. The court there held that the video stores' activities amounted to a public performance and that the First Sale Doctrine had no application.
Zediva has focused attention on cases such as Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F. 3d 121 (2nd Cir. 2008) (Cablevision). In that case, customers were able to store films in 'cloud' servers and access the television shows at a later time. The court found that the recording and playing back of these programs did not constitute copyright infringement as each customer recorded their own unique and distinct copy of the show. However, Cablevision is shaky ground for Zediva to rely upon in light of Zediva's use of only one copy of the films which is watched successively by paying customers. At least on this basis, Zediva faces an uphill battle.
The Australian position
But would Zediva fare any better under Australian law?
In Australia, the owner of copyright in a film doesn't have an exclusive right to rent a DVD of that film, but does have the exclusive right to publically perform the film and to communicate the film to the public (that is, making a film available online or electronically transmitting it). Had the film studios brought such an action against Zediva in Australia, one of the key issues would be– did Zediva infringe the film owners' communication right?
Under Australian common law, a private setting does not, per se, evidence that the communication was not made 'to the public'. The High Court case of Telstra Corporation Ltd v Australasian Performing Right Association Ltd (1997) 191 CLR 140, makes clear that a communication in a closed setting may nevertheless be a communication to the public if the communication occurs in a commercial context. The 'copyright owner's public' concept recognises that an audience is more appropriately to be seen as a section of the public where a work is performed in a commercial setting. The court applied this concept in Rank Film Production Ltd v Colin S. Dodds [1983] 2 NSWLR 553 at 559. There, the court held that a motel infringed copyright by playing movies in the motel rooms for its guests, as the service was open to the paying public. Relevantly, the size of the audience and the privacy of the surroundings were not decisive of whether the communication was 'to the public'.
It is unlikely that restricting access to a film (by allowing only one viewer at a time watch the film) would not be enough to save Zediva in the Australian courts.
Fighting back
Whether or not the film studios win in the US courts, they are already fighting back in more ways than one. To counter business models such as Zediva, film studios have begun their own online distribution services. For example, Warner Bros has recently trialled a paid streaming service through Facebook. This area will certainly be one to watch.
Partner: Charles Alexander
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