IP Law Daily Internet streaming TV service again denied protection of Copyright Act’s cable license
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Monday, March 28, 2016

Internet streaming TV service again denied protection of Copyright Act’s cable license

By Thomas Long, J.D.

Streaming television service provider FilmOn X, LLC, was not entitled to a compulsory license under Section 111 of the Copyright Act to retransmit over-the-air television programming to paying subscribers over the Internet, the federal district court in Chicago has decided (FilmOn X, LLC v. Window to the World Communications, Inc., March 23, 2016, Kocoras, C.). Chicago television network operator Window to the World Communications, Inc. (WTTW) was entitled to summary judgment in its favor that FilmOn’s service did not meet the statutory definition of a “cable system,” and FilmOn’s retransmission of WTTW’s copyrighted programming was not authorized under the compulsory license scheme for such systems. This decision marks the third time that FilmOn has failed to persuade a federal district court that its streaming TV service was entitled to a compulsory cable retransmission license.

FilmOn’s service. FilmOn provided a service that used the Internet to give consumers the ability to watch live over-the-air television channels through their computers and on their mobile devices. FilmOn also offered digital video recorder (DVR), capability, permitting users to pause live programming or record shows for later viewing. FilmOn assigned an individual user the content stream from one of thousands of tiny antennas that it operated in major metropolitan areas, including Chicago.

Copyright dispute. FilmOn filed a declaratory judgment action against WTTW, asserting that its technology allowing subscribers to access WTTW’s programming from any Internet-enabled device did not infringe WTTW’s copyrights. WTTW counterclaimed for copyright infringement.

Aereo case. In a separate case, the U.S. Supreme Court held that the Copyright Act forbade the unauthorized retransmissions of copyrighted programs over the Internet by a similar service provider, Aereo, even when such retransmissions relied on the use of separate antennas and data streams. In American Broadcasting Cos., Inc. v. Aereo, Inc., 134 S. Ct. 2498, 2511 (2014), the Court drew an analogy between Internet-based retransmitters and the community antenna television (CATV) systems that Congress brought within the scope of the Transmit Clause, 17 U.S.C. §101, in the 1976 amendments to the Copyright Act. Under Supreme Court decisions interpreting the 1909 Copyright Act, CATV systems’ transmissions were not public performances, but the 1976 amendments superseded those decisions. According to the Court, the practices of Internet-based retransmission services were highly similar to those of CATV systems, which were precursors to modern cable systems. Therefore, retransmitting copyrighted programming over the Internet using an antenna-based system constituted a public performance within the meaning of the Transmit Clause.

“Cable system.” The 1976 Copyright Act also provided for a statutory licensing scheme for the retransmission by cable systems of over-the-air broadcasts to their subscribers, codified at Section 111. FilmOn, relying on the Supreme Court’s analogy in Aereo, amended its pleadings and raised the argument that it was entitled to a Section 111 compulsory license to retransmit broadcast programming as a cable system. FilmOn’s argument has failed in other litigation, in New York City (CBS Broadcasting, Inc. v. FilmOn.com, Inc., No. 10 Civ. 7532 (NRB), July 24, 2014) and Washington, D.C. (Fox Television Stations, Inc. v. FilmOn X LLCCivil Action No. 13-758 (RMC), November 12, 2015). The Northern District of Illinois sided with the other courts and held that FilmOn’s Internet-based retransmission service did not meet the definition of a “cable system” and was not entitled to a Section 111 compulsory license. The court did not find persuasive a decision of the Central District of California, holding that FilmOn’s predecessor, “AereoKiller,” should be able to avail itself of the Section 111 licensing scheme (Fox Television Stations, Inc. v. AereoKillerNo. CV-12-6921, July 16, 2015).

“Communications channel.” WTTW argued that FilmOn’s system was not a “cable system” under Section 111 because it was not a “facility” that both “received signals” and “made secondary transmissions of such signals” to the public by a “communications channel.” The Internet was not a “communications channel,” according to WTTW, but rather an “international network of millions of interconnected computers.” FilmOn argued that content delivered over the Internet was transmitted over wires, cables, microwaves, and other communications channels, as described in Section 111.

The parties’ dispute centered on whether an Internet transmission met the statute’s requirement of transmission to the public by a “communications channel” and, thus, whether FilmOn’s antenna facility made the “secondary transmission” required by Section 111. The court agreed with WTTW that the Internet was not a “communications channel” within the meaning of the statute.

Section 111’s definition of a “cable system” was not satisfied simply by data traveling over any communications channel at any point before its ultimate destination; it required a “facility” that “receives” the signals or programs to make secondary transmissions to subscribing members of the public. FilmOn relied on the Internet to make its retransmissions to subscribers. It did not have control over the Internet; the “facility” over which FilmOn had control and operated consisted of the “complicated electrical instrumentalities” used for retransmission, which preceded the Internet in FilmOn’s streaming TV system. FilmOn’s subscribers did not receive the retransmission from FilmOn’s “facility,” but rather from the Internet. Therefore, FilmOn’s service did not meet the clear definition of “cable system” provided by Section 111, the court said.

Supreme Court’s “cable system” analogy in Aereo. FilmOn contended that the Supreme Court’s conclusion in Aereo that Aereo’s Internet retransmission service publicly performed within the meaning of the Copyright Act’s Transmit Clause indicated that similar Internet-based systems “were meant to be reached by the entire Act,” including its compulsory license for “cable systems.” Because the Court based its decision on a determination that the accused system was “substantially similar” to “a traditional cable system,” the accused system—and systems like it—should be given the same license as traditional cable systems, FilmOn urged. The court disagreed. Adopting the reasoning of other courts that had also rejected FilmOn’s argument, the court concluded that the Supreme Court had analyzed Aereo’s activities only for purposes of the Transmit Clause; thus, any analogy to cable companies should be interpreted in that particular limited context. The fact that an entity performed copyrighted works in a way that was similar to cable systems did not mean that the entity must be deemed a cable system for all purposes of the Copyright Act.

Statutory scheme. FilmOn argued that it made “little sense” to read the Transmit Clause as applying to any technology that communicated a performance by means of any device or process, but then to adopt a different construction of “secondary transmissions,” “transmitted,” and “retransmitted” for purposes of the Section 111 compulsory license. The court found two problems with this argument. First, FilmOn’s suggested interpretation of “cable system” failed not because of the construction of the term “transmit,” but rather because of FilmOn’s faulty argument that a “cable system” required merely a facility “that receives and retransmits broadcast programming.”

Second, FilmOn’s “technology agnostic” approach to the Copyright Act did not recognize the clear difference in language between the Transmit Clause in Section 101 and the definition of a “cable system” in Section 111, the court said. Section 101’s broad definition of “transmit” plainly applied to the activities of Internet-based retransmission services; however, the narrower definition of “cable system” in Section 111 required the additional elements of “secondary transmissions” by “communications channels” to “subscribing members of the public.” Because FilmOn’s system did not employ a “communications channel” for purposes of Section 111, its argument failed.

Legislative history. FilmOn’s “technology agnostic” approach to Section 111’s definition of a “cable system” also was at odds with the legislative history, in the court’s view. The Judiciary Committee’s Report on the 1976 amendments to the Copyright Act drew a “marked distinction” between the definitions in Sections 111 and 101. The report noted that the definitions in Section 111 had particular applicability to secondary transmissions by cable systems, whereas the definitions in Section 101 applied to the Act as a whole. In particular, the report highlighted the “broad” definition of “transmit” in Section 101, while describing Section 111’s “cable system” in narrower terms.

Copyright Office construction. Finally, the court noted that the Copyright Office had taken the position for over 15 years that Internet-based retransmission services were not cable systems and did not fall within the Section 111 licensing scheme. Even if the Copyright Office’s determinations on the matter were entitled only to limited deference, and were to be considered for their persuasive power alone, the Copyright Office’s conclusion that Internet retransmission services were not “cable systems” within Section 111 was thorough, reasoned, and consistent, the court said. The Copyright Office’s position on the matter further bolstered the court’s conclusion that WTTW was entitled to summary judgment defeating FilmOn’s purported license defense.

The case is No. 13 C 8451.

Attorneys: Vivek Jayaram (Jayaram Law Group) and Ryan Geoffrey Baker (Baker Marquart LLP) for FilmOn X, LLC. Julie Shepard (Jenner & Block, LLP) for Window to the World Communications, Inc.

Companies: FilmOn X, LLC; Window to the World Communications, Inc.

MainStory: TopStory Copyright TechnologyInternet IllinoisNews

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