Substantive trial on 'fair dealing' required following failed Olympic injunction bid

In Sky Network Television Limited v Fairfax New Zealand Limited [2016] NZHC 1883 (12 August 2016), Justice Fogarty has found for the defendant, Fairfax, refusing Sky TV’s interim injunction application for copyright infringement.

Sky TV is the exclusive licensee of the New Zealand rights to screen the Rio 2016 Olympics. Fairfax copied important excerpts from Sky’s coverage – winning moments, medial ceremonies and the like – and uploaded them for viewing as streamed video on its popular Stuff website.

At the time the injunction application was made, some three days after the Olympics commenced, Fairfax was auto-playing series of these excerpts one after the other, but during the course of the hearing, it ceased doing so (Justice Fogarty giving a clear steer that should it recommence doing so then he would likely restrain that by issue of a mandatory injunction). The case therefore focused on whether an injunction should be granted in respect to individual excerpts.

Having adopted the traditional interim injunction test: (a) is there a serious question to be tried; (2) what is the balance of convenience in favour of granting or not granting the injunction; and (3) what is the overall justice of the case, Justice Fogarty does not spend a lot of time on balance of convenience and even less time on overall justice.

Given the temporal nature of the Olympics, awarding an injunction to Sky TV would be the end of the matter since the substantive hearing would have to take place long after the end of the Games, rendering Fairfax’s desire to screen topical “current events” coverage nugatory. Therefore, if Fairfax could raise any argument that it had a defence to Sky TV’s allegation of copyright infringement, it was likely to succeed on balance and justice.

The real action in the case therefore centred on whether there was a serious question to be tried. In a copyright case that involves consideration of whether there is a reasonable argument that there is infringement, and then, whether there is any defence. If there is no possible defence, then the balance of convenience and overall justice will favour the applicant. Conversely, if the defendant can raise a defence that is reasonably arguable the balance question will be more relevant.

If the case went to full trial there might well be argument that the excerpts used by Fairfax were not substantial enough in the context of the works from which they were taken. However, given the important nature of the excerpts, it is clearly open to the court to assess, on an interim injunction basis, that qualitatively, these are substantial copies. Justice Fogarty does so relatively easily, noting that he is following the recent UK decision, England and Wales Cricket Board Ltd v Tixdaq Ltd & Fanatix Ltd [2016] EWHC 575 (Ch). In that UK case, the owner of the Fanatix platform, which allowed fans to upload and share copies of footage in which the Cricket Board held copyright, was found to have infringed that copyright.

Having found there is a reasonable case for copyright infringement, Justice Fogarty then considers the defence put forward by Fairfax, namely that its use falls within the exception in section 42(2) of the New Zealand Copyright Act 1994, which allows fair dealing with a work for the purposes of reporting current events. This is where most of the interest lies.

There was no argument that the Olympic footage excerpts were not of “current events”. But, was Fairfax’s use fair? 

Unfortunately, this is an interim injunction case so there is little real analysis. This is even more marked than is usual in an interim injunction situation since Justice Fogarty rendered his decision orally only the day after the two day hearing had concluded, as he needed to given the Games are already half way through.

Essentially, his Honour finds that Fairfax’s use could be fair but cannot go further than that given that fair dealing is a standard rather than a rule. He agrees with Fairfax counsel’s point that there is no “bright line test” against which to judge fairness. It is very fact dependent and an interim injunction hearing is not the place to consider fact specific evidence. That is enough, though, to shift the balance in Fairfax’s favour and rule out the granting of on injunction.

The most interesting point in the case for me, though, is the amount of time that is spent on the NAR and the SNAR – the network access rules and the supplementary network access rules. These are the rules sought to be imposed by agreement between rights holders such as the International Olympic Committee together with its exclusive licensees such as Sky TV, and those who wish to rebroadcast footage.

In New Zealand, Sky TV agreed the SNAR with other media outlets but was unable to reach agreement with Fairfax, which therefore chose to show the footage without permission, outside the NAR/SNAR contractual matrix, relying instead on its fair dealing rights.

What surprises me somewhat is that instead of any real discussion of what fair dealing entails in terms of its impact or not on the rights holder’s commercial exploitation of the rights it has acquired, what seems to have been posited is that the NAR and SNAR would represent the starting point for a fairness analysis. While such agreements may be commonplace and therefore perhaps might be argued to set some sort of “standard”, as Justice Fogarty notes, they are imposed by those who have monopoly market power. They are hardly balanced.

In respect of events such as the Olympics, I expect there is little room for negotiation by those wanting access to footage, as seems to have been borne out with the inability of Sky TV and Fairfax to reach agreement. It would be ironic indeed if a one-sided, permission-based, contractual matrix were to come to define a fair dealing exception designed for the very purpose of avoiding the need for such permission.

One would hope that if a fair dealing case does come to substantive trial (and I agree with Justice Fogarty that it is unlikely this one will), the starting point for what is fair will not be contractual permission rules sought to be imposed by the rights holder.

This is highly relevant when we come to review whether New Zealand should expand its fair dealing exceptions with a fair use overlay, to bring us into line with the United States. It is understandable but a shame, nonetheless, that this interim injunction case did not allow a more in depth analysis of fairness, which might have informed that review.

• Copyright expert Rick Shera is a partner at Lowndes Jordan. This piece was first published on the Lowndes Jordan website.