One legal expert, though, said that the company's
re-broadcasting could be short-lived, and that the Government could
close the loophole at any time.
Zattoo.com has over two million registered users and has agreed
rights deals for 190 channels in eight countries, it said. It makes
money by showing adverts whenever users change channel. But it is
re-broadcasting UK television without permission.
"We have not entered into any formal licence arrangements with
Zattoo to re-distribute BBC channels," said a BBC spokeswoman.
The Zattoo service only re-broadcasts live TV as it happens, it
does not archive programmes for later viewing. The company claims
that it is not in breach of the UK's copyright legislation, and
that a loophole allows for the live re-broadcast of material from
public service broadcasters.
Zattoo chief executive Beat Knecht told the Financial Times
newspaper that "Zattoo is not in conflict" with TV stations. "We
feel we have legal title to retransmit," he said.
Channel 4 said it has also not been consulted. "We are are
obviously concerned about any new platforms, online or otherwise,
that use Channel 4 content without any agreements in place. We
don't have any formal arrangements with Zattoo and we are looking
in detail at the legal position," said a spokesman.
Five, too, is investigating its legal rights. "The inclusion of
the Five service on Zattoo has not been authorised or licensed by
Five and we are currently looking into the situation," said a
statement.
The perceived loophole is section 73 of the Copyright, Designs
and Patents Act 1988. It applies to the immediate re-transmission
by cable of wireless broadcasts. It provides that, subject to
certain conditions, the copyright in a broadcast is not infringed
"if and to the extent that the broadcast is made for reception in
the area in which it is re-transmitted by cable".
Zattoo could argue that delivery online is re-transmission by
cable. If it restricts users of its online service by territory, to
ensure that only online viewers in the UK can watch broadcasts made
for the UK, it might succeed in its argument, according to Kim
Walker, head of intellectual property law at Pinsent Masons, the
law firm behind OUT-LAW.COM.
Walker said that section 73 was designed to allow the sending of
signals to remote parts of the country not reached by traditional
transmission.
"It may be the case that they've found a loophole," he said.
"The section appears to have been put in the Act to allow the old
fashioned diffusion services to operate."
Diffusers took transmitted signals and passed them down wires to
places that used to have difficulty receiving over-the-air
signals.
"It was to enable the diffusers to do this without infringing
copyright," said Walker.
Walker said that even if Zattoo has found a legitimate loophole,
it may not be open for long.
"The Act says that the Secretary of State has the power to
withdraw the permission at any time," said Walker. "If this is a
loophole that as a matter of policy the Government isn't happy with
people exploiting, then it would appear to be a relatively simple
matter for the Secretary of State to say that the right does not
apply to re-transmission online."
Walker said the owners of copyright in the programmes being
broadcast also have rights. Section 73 states that such copyrights
are not infringed "if and to the extent that the broadcast is made
for reception in the area in which it is re-transmitted by cable".
But Walker said that the owners of the programmes could still argue
before a court that section 73 was never intended to facilitate
online delivery of broadcasts.
"When a US network like ABC or CBS sells a series to a UK
broadcaster, its contract will inevitably address online
distribution," said Walker. "That will either be forbidden by the
contract or it will cost the broadcaster more money. So ABC is
unlikely to sit back and let Zattoo operate, even if Zattoo is not
a party to that contract. The network will either insist on the UK
broadcaster taking action or it will go to court itself and demand
an injunction."
"Fighting over loopholes is rarely straightforward but a court
might decide that the commercial prejudice to the copyright
holders, both broadcasters and producers, outweighs the benefit to
Zattoo and its users," he said. "They might just say that this is
something Zattoo should pay for."
Another provision of the 1988 Act, section 144A, gives the owner
of copyright in a TV show the right to grant or refuse
authorisation for cable re-transmission of a wireless broadcast
from another European Economic Area (EEA) state in which the work
is included. Switzerland, where Zattoo is based, is not a member of
the EEA.
The BBC said that it had conducted experiments in
re-broadcasting live television and may allow third parties to
re-broadcast online in the future. "We are currently reviewing our
linear syndication policy following a number of trials around
internet re-distribution of linear TV broadcasts," said the
spokeswoman.
