Over-the-top video systems, using the Internet to transmit over-the-air TV signals to consumers, are back in the news. Last week, a US District Court Judge in the Central District of California, in a case involving FilmOnX, an Aereo-like service that had been involved in many of the court decisions that had preceded the Supreme Court’s Aereo decision, suggested that such platforms can get that public performance right through the statutory license provided by Section 111 of the Copyright Act – the same section of the Act that allows cable systems to retransmit broadcast signals without getting permission from every copyright holder of every program broadcast on those stations. Just last year, we were writing about the Supreme Court decision in the Aereo case, where the Court determined that a company could not use an Internet-based platform to stream the signals of over-the-air television stations within their own markets without first getting public performance rights from the stations themselves. The new decision raises the potential of a new way for these Internet services to try to get the rights to rebroadcast TV signals.
The FilmOn decision was on a motion for summary decision, and is a very tentative decision – the Judge recognizing that he was weighing in on a very sensitive subject, going where both the FCC and the Copyright Office have thus far feared to tread, and disagreeing with the Second Circuit Court of Appeals that had held the opposite several years ago in the Ivi decision. The FilmOn decision is a preliminary one – subject to further argument before the Judge at the end of the month. Even if adopted as written, the judge recognized the potential impact of his decision, and the fact that it contradicted Ivi and other decisions. Thus, the decision stated that its effect would be stayed pending an immediate appeal to the Ninth Circuit Court of Appeals. So, even if finalized, we have not seen the last of this argument yet.We wrote in detail about the issues raised by this decision when Aereo tried to make a similar argument after it lost the Supreme Court case. The Judge in the FilmOn case interpreted Section 111’s definition of a “cable system” in a technically agnostic manner – in a manner that we feared was possible in our earlier article on the subject. By doing so, he decided that previous decisions defining a cable system as requiring specific technical facilities were incorrect. As long as the system retransmitted television programs to the public for a fee, it can be defined, according to the Judge, as a cable system entitled to rely on the compulsory license of Section 111. That license allows the system to retransmit the television programming as long as it files the appropriate papers with, and pays the appropriate fees to, the Copyright Office. However, the question that is only mentioned only in passing is whether that system would also then have to pay retransmission consent fees.
We also discussed that issue in our article on Aereo’s attempt to qualify as a cable system. If the Section 111 definition of cable system is given this broad reading, it would seem hard to argue that the definition of a Multichannel Video Program Distributor (MVPD) in the FCC rules dealing with must carry and retransmission consent would not also apply to the system. In fact, in the FilmOn judge’s decision, there is a reference to the company actually seeking such elections from local television stations.
But the bigger question is one being debated by the FCC – exactly how these rules would apply to an online system such as FilmOn. The FilmOn judge recognized that the FCC currently has an ongoing proceeding (which we summarized here) to look at these issues. For instance, would an online MVPD be entitled to the same rights to “good faith negotiation” with TV stations over retransmission consent – even though the TV station’s network may itself be a competitor in the online video market by offering an online video service featuring the station’s programming? Would every system offering online video become an online MVPD, or would they have specific obligations before they qualify? How secure must such a system be to ensure that programming is not made available far beyond the area in which the television station has rights to such programming? In fact, while not part of the FCC proceeding, under the Copyright Act, there are provisions for the carriage of distant signals, but such carriage requires large payments to the Copyright Office to be distributed to program providers – would such rules apply to these online MVPDs? The FCC itself, in another proceeding (see our summary here), is assessing whether or not to keep its network nonduplication and syndicated exclusivity rules. If online systems become MVPDs, the FCC’s assessment of these rules might also be impacted – an issue not considered by the FilmOn judge.
Obviously, this decision leaves open many questions – only some of which were recognized by the Judge in his tentative decision. We will have to see if the Judge decides to actually finalize this ruling in his hearing at the end of the month, and if so, how the 9th Circuit deals with this issue when it considers the appeal that the Judge has allowed. Were the Judge’s decision to be upheld, given the conflict with the Ivi decision, there is even the potential for this issue to return to the Supreme Court given the conflicting decisions – if the matter is not resolved administratively through the FCC’s MVPD decision and subsequent Copyright Office proceedings. So the FilmOn decision is obviously troubling for broadcasters – but there are many issues yet to be resolved before we see any final decisions on this matter. Watch these developments carefully in the coming months.