The European Court of Justice has ruled against UK-based cloud service VCAST, a service that recorded Italian TV content broadcast via terrestrial TV and played it back over the Internet to its subscribers. A court in Turin had ruled against the company previously but had referred the issue of a "private copy exception" to the EU Court of Justice.

The concept of a "private copy exception" to copyright has existed since the seventies, based on rulings that allowed consumers to record content they have purchased (or have a right to view for free) for viewing at a later time with no commercial benefit.

That legal definition was clear in a world without connectivity, but today content can be easily recorded in the cloud, which means that the actual copy could reside anywhere. This is particularly important as pay-TV providers can offer time-shifting options via the cloud instead of investing hundreds of dollars in expensive set-top boxes with hard drives to deliver the same function.

But the EU Court of Justice has found that recording TV content in the cloud and transmitting it to viewers still qualifies as "communication to the public" and requires the prior permission of the rights holder. This could complicate the legality of cloud DVR recording even for pay-TV providers, although the decision to find against VCAST was influenced by the fact that the transmission technology was different (broadcast by the original Italian broadcaster versus Internet streaming by VCAST) and that the "public" was not the same. (VCAST allows viewers outside Italy to access that content in contrast to the local footprint of the broadcaster.)

This could complicate the deployment of cloud DVRs by pay-TV providers, who have long argued that Cloud DVR is essentially an evolution of the videotape, which consumers have used to time-shift their TV content for years. Even with agreement around that idea, the difference between "private-copy" and "shared-copy" approaches have created problems. Operators argue that they should be able to create one copy of the TV show, which can then be streamed out to all subscribers that want to view it. But some content providers insist that each customer gets their own, private copy to qualify for the private copy exception. This exponentially multiplies the volume of content required, and obviously the associated storage costs for the operator.

Ultimately each country has defined its own rules regarding cloud DVRs and private vs. shared copy requirements making technology development frustrating for platform vendors. But yesterday's ruling precludes national legislation within the EU, so might affect existing law in this area across Europe.

However, the advocate-general presenting to the court had pointed out that third-party providers would have to be involved in any cloud DVR service, and interpretation of the private copy exception should not be too narrow. In VCAST's case, the difference in distribution technology and reach were important factors in ruling against the service -- along with the fact that it was a revenue-generating business for the company. These circumstances may be different for pay-TV providers offering cloud DVR services, and so they might have more flexibility.

Lastly, the growing availability of catch-up services directly from broadcasters and streaming bundles from pay-TV providers make rulings in this space even more complex. A pay-TV provider may not be able to offer a cloud-based DVR service under this interpretation, but the same content may be available, on-demand, via an online streaming service for everyone. That might satisfy the legal requirements, but could come across as a bit silly.

— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation