FilmOnX, that Aereo copycat service that seeks to deliver the signals of over-the-air television stations to consumers’ computers for a fee, has lost another round in its attempt to be recognized as a cable system. Ever since the Aereo decision of the Supreme Court (which we summarized here), finding that services like Aereo and FilmOn did involve a public performance of television programming for which they permission of program owners, FilmOn has been seeking to be declared a cable system. Why? Because cable systems have a “statutory license” under Section 111 of the Copyright Act allowing them to rebroadcast television programming without explicit permission of the copyright owners simply by paying a fee – a fee which is very small when rebroadcasting a television signal in its own television market. The decision released last week by the US District Court for the Northern District of Illinois joined courts in New York and DC (see our article about the DC court decision here) in determining that FilmOn did not qualify for that license. Only a lone court in California has thus far agreed with FilmOn’s position (see our summary here), and that decision is on appeal.
In reaching its decision, the Illinois court looked at the definition of a cable system in the Copyright Act. The Copyright Act states that a cable system is “a facility” that “receives signals transmitted or programs broadcast by one or more television broadcast stations” and “makes secondary transmission of such signals or programs by wires, cables microwave or other communications channels” to subscribers. In looking at that definition, the Court found that the FilmOn system was not a facility that made secondary transmissions (meaning a rebroadcast or retransmission of the original signal) of the television signals that it received. While it received those signals, rather than transmitting those signals to the public, as does a traditional cable system or even an unwired “wireless cable system,” FilmOn instead simply transmitted those signals to the Internet, and the Internet was the mechanism that delivered the signals to the customers. In essence, the Court adopts the requirement for a “facilities based” transmission system in order for a system to be considered a cable system for purposes of qualifying for the statutory license – meaning that it must be one that owns or controls the means of communication of the television signals to the company’s customers. As FilmOn does not own or control the Internet, it is not such a facilities-based carrier.
While FilmOn premised its arguments on statements made by the Supreme Court in the Aereo decision that suggested that Aereo was like a cable system, and thus could not transmit the signals of a TV stations without the station’s consent or some sort of statutory license, the Illinois Court, as did the Courts in NY and DC, found that the mere fact that some judges said that Aereo was like a cable system did not make it a cable system for purposes of the Section 111 statutory license. The Court made the very good point that the Supreme Court was not considering whether Aereo was a cable system under Section 111 of the Copyright Act, but was instead looking at whether its service fit under the “transmit” clause of Section 101 of the Act, which requires that a user get a license from a copyright holder if it transmits the copyrighted programming. The transmit clause merely requires that a party which makes a communication of the copyrighted material “by any device or process whereby images or sounds are received beyond the place from which they are sent” get permission for that communication. That definition does not imply that the party doing the transmission must own any means of transmission – it just requires that it do the transmitting. That, the Court concluded, is different from the more limited definition of a cable system in Section 111, where only certain kinds of transmissions, those done by companies that have facilities that acquire the signal and transmit it to the public, get the benefits of the statutory language. Based on these distinctions, the Court rejected the FilmOn claims.
This case never even got to the question of whether, if FilmOn had been deemed a cable system, it would then owe retransmission consent fees to the TV stations (see our article on that question here). Nor did it mention the FCC proceeding that is looking at whether, for purposes of the FCC rules, OTT video systems (“over-the-top” systems, i.e. ones transmitted by the Internet) should be considered “MVPDs” – multichannel video program distributors (see our summary of the FCC proceeding here). The Court instead looked at Copyright Office rulings concluding that OTT video providers are not cable systems – a regulatory scheme different than the FCC’s MVPD definition process.
Given these distinctions, once again a system trying to make a living off of retransmitting over-the-air TV signals has failed to establish its legal rights to carry TV programming without direct permission of the copyright holders. While it is still possible that this question could end up in the Supreme Court, given the fact that more and more courts are lining up against FilmOn, the high court may never even need to resolve the issue if there ends up being unanimity among the lower courts. So watch as these cases play out.