This morning the High Court of Australia rejected a special leave application from Optus seeking to overturn a ruling of the full Federal Court (FFC) that their cloud-based personal video recorder infringed copyright.

The Optus TV Now service in dispute (suspended since the full Federal Court judgment) enabled consumers to record free-to-air TV to the cloud to playback on their personal devices. From an end user perspective, the TV Now service functioned much like other PVRs and VCRs we're familiar with. The subscriber to the Optus service selected the program (from free-to-air TV) to record; they pressed the record button; and they played back the recording at a time more convenient to them. Our ability as consumers to record TV for private use was enshrined in 2006 in timeshifting provision section 111 of the Copyright Act.

The full Federal Court, however, had distinguished the Optus TV Now service from other PVRs in their judgment, finding that Optus (or Optus and the subscriber together) made the recording. As Optus wasn't making the recording for 'private or domestic use', they couldn't rely on the timeshifting exception. In a decision that rang alarm bells for other cloud service providers in Australia, the FFC ruled instead that in capturing, copying, storing and streaming the program back the subscriber, Optus was the 'main performer of the act of copying'.

By the full Federal Court's broad anaylsis, a swathe of companies offering cloud services in Australia could be infringing copyright in storing content originally uploaded to their servers by customers.  Necessary technical functions that enable users of cloud services to upload, store and retrieve back content (and therefore involve the inadvertent making of digital copies) are outside the scope of our copyright framework.  Since the full Federal Court's decision, other cloud-based service providers have closed up shop in Australia.

Today the High Court affirmed our copyright laws haven't kept pace with the cloud, with Gummow J saying that there was insufficient likelihood Optus would be successful in overturning the full Federal Court ruling -  that they were the 'maker' of the copy.

While the High Court's decision brings no joy for Optus, or the increasing amount of consumers in Australia accessing content through devices other than a TV, it does make the case for reform to our legislative framework to protect cloud services.

The Australian Law Reform Commission, currently undertaking an inquiry into Australian copyright exceptions and the digital economy,  specifically asks whether Australian copyright law is impeding the development or delivery of cloud computing services in their recently released Issues Paper. The Issues Paper highlights the full Federal Court's ruling against Optus as exposing new and emerging cloud computing services to liability for infringing copyright.

The High Court's decision not to grant special leave indicates that as presently drafted, our copyright exceptions do not support cloud computing as part of our investment in a digital economy. It makes a compelling argument for flexibility and technology neutrality in the drafting of copyright exceptions, rather than attempting to codify in statute one moment in a rapidly evolving digital landscape. Today's outcome has closed the door on one cloud-based personal video service; we must take care that our copyright laws don't lock cloud services out of Australia altogether.