Yesterday’s Federal Court ruling that Optus customers are able to view sporting matches minutes after they are streamed live without breaching copyright is a landmark decision that alters our understanding of copyright law, and has significant implications for the AFL’s broadcasting rights deal.

The ruling, by Justice Steven Rares in the Optus v Telstra, AFL and NRL copyright case, finds that computers (including tablets such as the iPad) and mobile devices such as iPhones and smartphones are now the modern equivalent of the video cassette recorder.

Individuals are now able to record free-to-air broadcasts onto their computer or mobile device and watch the broadcast moments after the original broadcast - which in many cases will be live - without breaching copyright.

Justice Rares found that Optus customers, rather than Optus, had made the recordings of the live or pre-recorded free to air AFL and NRL games using the TV Now service. Optus customers were then able to watch the game at a time convenient to them, potentially a few minutes after the original broadcast.

Under the Australian Copyright Act, individuals are able to make:

“a cinematograph film or sound recording of a broadcast solely for the private or domestic use by watching or listening to the material broadcast at a time more convenient than the time when the broadcast is made.”

What the Optus customers did using the TV Now service is known as “time shifting”. The Act does not state a time period such as a day or hour that must be observed before time shifting can occur. So the fact that in this case, the time shifting occurred within a few minutes of the original broadcast is not a factor under copyright law.

Given that the Federal Court has found that there has been no copyright breach by Optus customers in their use of the TV Now service to record and view live or pre-recorded free to air AFL and NRL games, this activity can continue.

The Court’s finding (if it is upheld by the Full Court of the Federal Court) could de-value broadcast and media rights for sporting events. For sporting organisations that heavily rely on media and television for income this could place them at financial risk.

For the AFL, the value of its five-year $1.25 billion broadcasting media deal with the Seven Network, Foxtel and Telstra could be reduced - particularly if Telstra attempts and succeeds in voiding the agreement for exclusive rights to the internet and mobile services of AFL games, worth over $150m. It has further implications for future deals.

The big losers will be the football clubs and the players. Potentially, the AFL will attempt to re-negotiate with the AFL Players Association in regards to the collective bargaining agreement. Clubs could also be placed in financial risk if their funding was to be reduced.

The decision for Telstra means it has potentially over-valued the rights for exclusive uses of the internet and mobile services of the AFL, given that based on this ruling, the mobile services to AFL games are not the exclusive rights of Telstra and their customers.

Obviously, Optus is the big winner with potential increases in customers to their News TV service and revenue from data charges as a result of the recordings of the broadcast videos.

But this is not likely to be the end of the issue. Expect the AFL, NRL and Telstra to lobby the Australian Government for changes to the Copyright Act, which is currently being reviewed.

This review, announced last October will examine “whether the exceptions [such as time and format shifting] in the Copyright Act are adequate and appropriate in the digital environment”.

A leave to appeal to the Full Court of the Federal Court has been granted. The AFL, NRL and Telstra have all indicated that they will be appealing. So stay tuned.