Sky Television has lost its bid to get a High Court injunction against Fairfax over the media company's use of Olympic video.
Justice John Fogarty, after a two day hearing, released his decision in person this afternoon in a packed Auckland courtroom.
Sky argued that Fairfax's use of Olympic footage directly competed with its own broadcasts and that it needed an injunction to ensure its copyright "was not eaten away and undermined".
Sky had paid "many of millions of dollars" for its broadcast rights, the court heard.
The injunction sought to limit the way in which Fairfax was using video from the Games on its website, stuff.co.nz.
Fairfax opposed the bid and argued that its use of Sky's broadcasts fell within fair dealing rules of New Zealand copyright law. These rules allow media to use copyrighted works - like sports broadcasts - for the reporting of current events.
Fairfax argued that it was impossible at an injunction hearing to decide a "bright-line" rule to determine whether its use of Sky's Olympic material breached fair dealing rules. Justice Fogarty agreed.
"The standard of fair dealing is just that, it's a standard not a rule. It cannot be applied precisely. I use the term 'rule' to cover simple rules such as 'no parking on this spot between 9am and 5pm'...here is a standard saying 'you must deal fairly'. Applications of standards can be obvious: 'Do not go outside if it's wet'. If it is pouring with rain one knows one doesn't go outside but what if the odd spot is falling. Is that wet?," he asked.
Fairfax said this week it wanted the case to go to a trial, but Justice Fogarty said he doubted it would.
"If this case goes to a substantive hearing, which I doubt, it's the function of the judge to make the call whether the standard of fair dealing applies or not to one or more of [Fairfax's] upload," Justice Fogarty said.
One of Sky's arguments this week was that if a user went to stuff.co.nz and watched one Olympic video then another played automatically once it finished.
Sky's lawyer Julian Miles, QC, argued that this was a "mounting montage of highlights".
Justice Fogarty's believed that the auto-playing of clips went well beyond any sensible interpretation of fair dealing.
However, the judge said that Fairfax had since disabled that auto-play function.
Justice Fogarty did not believe it was possible an interim injunction hearing could decide whether or not the use of video footage of the end of a race or a winning shot goes beyond fair dealing.
Although Sky had a reasonable argument that Fairfax's conduct should have more closely followed the rules the paid-TV company had negotiated with the likes of TVNZ and MediaWorks, Justice Fogarty said it was not possible for the court to make a ruling on that without a full trial.
"If an injunction were granted it is likely to end the dispute. The court looks for a strong argument in the favour of the application in such a case. I'm of the view that such a strong argument is there for the applicant, Sky, in respect of the [automatic-playing] function. However, its my understand that Fairfax has agreed that the [automatic-playing function] as it was set up before this case cannot be defended... therefore any future occurrence of it is likely to be met by a mandatory interim injunction," the judge said.
He gave leave for Sky to come back to the court in that event. He reserved costs.
Sky chief executive John Fellet did not wish to comment.
Fairfax group executive editor Sinead Boucher said the decision was "validation" that the company was acting properly with its coverage.
"It is a great day for press freedom in our country. And it is a great day for all New Zealanders who want to follow and support our Olympic heroes," Boucher said.
Boucher said if the matter goes to trial then Fairfax would defend itself.