In a decision released this week, the 9th Circuit Court of Appeals overturned a District Court decision (about which we wrote here) that had found that a video service provided by Aereokiller was a “cable system” as defined by Section 111 of the Copyright Act. That decision had held that, as a cable system, Aereokiller was entitled to retransmit the programming broadcast by a television station under a statutory license, without specific permission from the copyright holders in that programming. The Court of Appeals, while finding that the wording of Section 111 was ambiguous, determined that the consistent position taken by the Copyright Office, finding that cable systems as defined by Section 111 had to be local services retransmitting TV programming, with some fixed facilities to a defined set of communities was determinative of the issue. The Copyright Office’s interpretation was given particular deference as Congress had been well-aware of this interpretation of the statute in other contexts, had in the past amended the Copyright Act to accommodate other new technologies that the Copyright Office found to be outside its definition of a cable system, and had taken no action to amend the statute to include Internet-based video transmission services.

The issue in the case is whether the broad definition of a cable system included in Section 111 would include an over-the-top system such as that offered by Aereokiller. The definition contained in Section 111 is:

A “cable system” is a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service. For purposes of determining the royalty fee under subsection (d)(1), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered as one system.

The question of whether this definition includes Internet-based video systems has been raised many times since the Supreme Court’s Aereo decision (about which we wrote here), which found that the retransmission of television signals by such systems were “public performances” that needed a license. After the Supreme Court’s determination in Aereo, which had language comparing these over-the-top systems to cable systems that need a statutory license to cover their public performances, these services argued that they were in fact cable systems entitled to rely on the Section 111 statutory license to cover their public performances of the TV station’s programming. These systems argued that they made “secondary retransmissions” of television signals “by wire, cables, microwave or other communications channels” – the Internet argued to be one of those other communications channels. While most courts have rejected this argument (see our articles here and here), a District Court in California was an exception, finding that the statutory language was broad enough to cover these Internet-based systems. Continue Reading Court of Appeals Rules that Over-the-Top Video Service is Not a Cable System Entitled to Statutory License to Retransmit TV Station Programming

The Georgia Supreme Court this week issued a decision holding that the streaming of pre-1972 sound recordings by iHeart Media does not violate the state’s criminal statutes against the “transfer” of recorded sounds without the permission of the owner of the master recording. While many trade press articles have lumped this decision in with the ongoing litigation about the public performance right in pre-1972 sound recordings, this case is actually dealing with a different issue – and does not even mention the words “public performance” that were the center of debate in the Flo & Eddie cases against Sirius XM and Pandora, leading to the decisions that we wrote about in New York (here and here), California (here), and Florida (here).

What is at issue in the Georgia case is a criminal statute similar to those found in many states that prohibits the unauthorized transfer of various recordings, including pre-1972 sound recordings, without permission of the owner of the master recording. The plaintiff in this case, argued that the illegal transfers violated criminal law, and thus gave rise to a claim of civil liability under state racketeering statutes which provide for civil recovery against a defendant engaged in multiple criminal activities. By finding that there was no criminal violation here, the Georgia Supreme Court effectively ended the racketeering claim. Continue Reading New Wrinkle in Pre-1972 Sound Recording Cases – Georgia Supreme Court Holds that iHeart Streaming Does Not Violate State Criminal Statute

We’ve written (see, e.g. our articles here, here and here) about the pending petitions asking the FCC to reconsider decisions reached last year to end the UHF discount, to leave the TV local ownership rules in place and to make attributable new TV Joint Sales Agreements, and to not adopt any change in the FCC radio ownership rules in “embedded markets.” Recently, that list of items on the table before the FCC has expanded, with a number of radio groups making a concerted push to change the FCC rules on ownership “subcaps” – limiting the number of AM or FM stations that can be owned in a single market. Thus, while a broadcaster can own up to 8 radio stations in the largest markets, no more than 5 can be either AM or FM. In the smallest markets, broadcasters can own up to 3 as long as they do not exceed half the stations in a market, but only 2 can be of the same service. The new petitions seek to eliminate those subcaps, allowing owners to own up to the maximum number of stations in a market without regard to whether those stations are AMs or FMs.

A group of radio broadcasters have filed a letter with the FCC asking that these subcaps be abolished, citing the change in the media landscape in the 20 years since the rules were adopted. A more detailed economic study was submitted by a Syracuse radio broadcaster, here, showing that the growth in digital and mobile advertising to local companies already exceeds the share of advertising enjoyed by radio generally, and is likely to grow in the coming years. Google alone, according to this analysis, has as much local advertising in Syracuse as the entire radio industry. To compete against these growing new media entities that are eating into local advertising dollars, the radio broadcasters have asked that they be allowed to own more radio stations in a single service – AM or FM – than currently allowed.

As the FCC has told the Court of Appeals (where some parties filed an appeal of last September’s ownership decision) that they plan to review the entire ownership decision, not just those areas singled out by petitions for reconsideration, the radio ownership issue is now before the FCC. There has been some limited grumbling against these new proposals, some observers suggesting that AM radio would be further imperiled if big broadcasters gave up their AM holdings to pursue the ownership of more FM stations. Of course, if that were to happen, there would be nothing stopping ethnic programmers and others who are making more and more uses of the AM spectrum to acquire more AM stations, perhaps at lower prices, to pursue their innovative programming. This is an issue that will be debated in the coming months, as broadcasters adjust to the reality that all of the old rules are now subject to reexamination by this new FCC.

We wrote here and here about the FCC’s new rules to relax the limits on where licensees of AM stations can use FM translators to rebroadcast their stations. The new rules allow the location of these translators so that their 1 mv/m coverage area does not extend beyond 25 miles from the AM station or beyond the AM station’s 2 mv/m contour – whichever is greater. Up to now, the translator had to stay within the lesser of those two areas. According to a Federal Register publication today, the new rules are effective on April 10. No doubt, many AM broadcasters can hardly wait to take advantage of these new rules, and they will be able to do so starting April 10. Watch for more from the FCC on this effective date.

Update, 3/16/2017, 2:00 EDT – The FCC has released a Public Notice, here, confirming this April 10 effective date. 

The music battle continues over the question of whether state laws provide a public performance right in pre-1972 sound recordings. While, as we wrote here and here, the highest court in New York has determined that there is no such right in that state ending the litigation there, cases continue in other states, notably California (where a Federal Court determined that there was a state right, see our summary here) and Florida (where the Federal Court determined that there was not, see our summary here). The Florida case has been referred to that state’s highest court for an advisory ruling on the state of the state’s law on the issue, and earlier this week, the same thing happened in California. The US Court of Appeals for the 9th Circuit, which was hearing an appeal of the Federal District Court decision that there was a performance right under California law, decided to turn to the experts in California state law – the California Supreme Court – and ask for an interpretation of California law to determine if there is indeed a public performance right in these pre-1972 recordings.

Flo & Eddie, the performers behind the 1960s band the Turtles, stirred up a major music rights controversy several years ago by their high-profile lawsuits against music services including Sirius XM and Pandora as to whether there is a state law public performance right in pre-1972 sound recordings (see our article here on the first of these suits). Those recordings are not covered under Federal Copyright law, so Flo & Eddie had the novel idea of bringing state law actions to enforce a purported state law performance right in these recordings – even though no such right had been enforced against any music service in the 45 years since Federal Copyright law decided to cover all new US sound recordings, and even though Federal law did not itself create any performance right in sound recordings until 1995, and then limited it solely to digital performances under a very carefully crafted statutory license scheme. Even though no state law explicitly states that there is a performance right in these pre-1972 law, in California, the band has relied on a very general statutory grant of property rights in pre-1972 sound recordings to conclude that this broad grant included a performance right – even though there were no indication as to how such a performance right would function, or what limitations would apply, as are specified under Federal law. The US Court of Appeals, in its order referring this question to the California Supreme Court, noted the general nature of this statutory grant, and asked the state court for an interpretation as whether it really is meant to include a performance right. Continue Reading More on Flo & Eddie: Federal Court Certifies to California State Court Question of Whether There is a Public Performance Right in Pre-1972 Sound Recordings

Less than a week ago, the National Collegiate Athletic Association filed a trademark infringement action in federal court against a company that runs online sports-themed promotions and contests under the marks “April Madness” and “Final 3.”  The NCAA is seeking injunctive relief, damages, the defendant’s profits, punitive damages and an award of attorneys’ fees.

Last year, I wrote about the risks of publishing ads or engaging in promotional activities that “play off” the NCAA Collegiate Basketball Playoffs.  Clearly, such activities continue to carry great risks.  Accordingly, I am republishing last year’s blog post on this subject:

It’s March Madness!  Know the NCAA’s Rulebook or Risk A Foul Call Against the Unauthorized Use of Its Trademarks

With the NCAA Basketball Tournament about to begin, broadcasters, publishers and other businesses need to be wary about potential claims arising from their use terms and logos associated with the tournament, including March Madness,® The Big Dance,® Final Four® or Elite Eight,® each of which is a federally registered trademark.

The NCAA Aggressively Polices the Use of its Trademarks

It has been estimated that, last year, the NCAA earned $900 million in revenue associated with the NCAA Basketball tournament.  Moreover, its returns from the tournament have historically grown each year.  Most of this income comes from broadcast licensing fees.  It also has a substantial amount of revenue from licensing March Madness® and its other marks for use by advertisers.  As part of those licenses, the NCAA agrees to stop non-authorized parties from using any of the marks.  Indeed, if the NCAA did not actively police the use of its marks by unauthorized companies, advertisers might not feel the need to get a license or, at least, to pay as much as they do for the license.  Thus, the NCAA has a strong incentive to put on a full court press to prevent non-licensees from associating their goods and services with the NCAA tournament through unauthorized use of its trademarks. Continue Reading It’s March Madness! … It’s April Madness! … Be Wary of Using the NCAA’s Trademarks

Last year, we wrote about legislation adopted by Congress telling the FAA to adopt rules to require the lighting of towers less than 200 feet tall located in rural areas.  That legislation was designed to protect aircraft used for agricultural purposes like crop-dusting from collisions with such towers.  The law surprised most of the broadcast industry as it was slipped into legislation dealing with other issues without any real notice or debate.  Many in the communications industry wondered if the costs of implementing this rule was really justified by the harms it prevented.  The questions raised by broadcasters and other communications users received support in a blog post on the FCC blog, here, from FCC Commissioner Michael O’Rielly, who raised questions about whether the facts about communications towers had been fully considered when the legislation was adopted.

His post is certainly worth reading – noting that communications towers between 50 and 200 feet are included in the scope of the legislation requiring this new lighting requirement, while wind turbines and electric towers are not, asking whether this disparate treatment was really justified.   He states that as many as 50,000 existing communications towers could fall under the coverage of any rule adopted by the FAA to implement the law. While emphasizing his concern for air safety, the Commissioner urged more review of the need for any new requirements, noting that there appeared to be only 2 accidents last year involving small planes and a communications tower, and it was unclear in either case whether questions of visibility of the tower contributed to those incidents.  He suggests a legislative fix or careful consideration of the issues by the FAA before the specific rules implementing the legislation are adopted – a suggestion with which most communications users no doubt agree.

As we wrote last week, the FCC approved the expanded use of FM translators by AM stations – allowing their use anywhere within a 25-mile radius of their AM transmitter site, or within the 2 mv/m contour of the AM station – whichever is greater.  The current rule restricts that will be replaced limit FM translator use to the lesser of the 2 mv/m contour or the 25-mile radius for the AM station.  We summarized the draft order here, and the final order generally tracks that draft.  While the FCC has approved the change in these rules, these changes are not yet effective.  Yesterday, the FCC warned eager AM broadcasters not to file an application in reliance on the new rules just yet, or to even file an application asking for a waiver of the current rules based on the upcoming rule change, as the rules do not become effective until they are approved by the OMB under the Paperwork Reduction Act and that approval is published in the Federal Register.  To give all broadcasters an equal opportunity to take advantage of the new rules, any premature application filed in reliance on the rule change will be dismissed.

However, the FCC will entertain extensions to the construction permits for unbuilt FM translators used for AM stations where the AM licensee has decided that the new rules will afford them the opportunity to move the translator to a more advantageous location.  Translator permittees must file for these extensions and have them approved by the FCC, and the extensions will last no more than 6 months past the effective date of the new rules (see footnote 22 of last week’s decision).  The FCC also noted that, if the translator was moved using the 250-mile waiver rules (which we summarized here), any new move of the translator allowable under the new rules must stay within the 250-mile circle – the move done in reliance on the waivers afforded to stations last year, plus the moves allowed under the current rules, cannot exceed 250 miles.  There will no doubt be many broadcasters looking to take advantage of these new rules soon.

The FCC yesterday released its first decision approving 100% foreign ownership of a group of US broadcast stations. This comes after significant relaxation of the FCC’s interpretation of the foreign ownership limits which, less than 4 years ago, had been interpreted to effectively prohibit foreign ownership of more than 25% of a company controlling broadcast licensees (see our article here about the 2013 decision to relax the restrictive policy). In yesterday’s decision, the FCC approved the application of an LLC controlled 100% by a husband and wife, both Australian citizens, to acquire complete control over several companies that are the licensees of 7 AMs, 8 FMs, 13 FM translators, and 1 TV translator in Alaska and Texarkana, Arkansas and Texas. The FCC’s approval requires that these individuals get FCC approval if any other foreign owners are added to their company, but otherwise imposes no other significant conditions on this acquisition. Given the simple 50/50 ownership of a husband and wife in a closely held company, the ownership reporting and analysis conditions imposed on public companies who have been allowed to exceed the 25% threshold in the past (see our article here and here) were not required in this case.

What is perhaps most interesting is just how routine this process has now become. Very recently, the FCC approved investment by a Cayman Islands based fund of more than 5%, up to 49%, of the ownership in Pandora (which owns a company that holds a radio station). These approvals come on top of several other acquisitions by foreign investors of non-controlling interests in broadcast licensees. As long as these owners are approved by various US government agencies as not presenting security risks, the approvals don’t seem to be an FCC issue. The FCC noted in yesterday’s order that allowing this kind of foreign ownership brings new sources of capital into the US broadcasting industry, and may encourage other countries to relax their ownership rules to allow investment by US companies in broadcast companies serving other countries. What a difference a few years can make!

At its meeting yesterday, the FCC took two big actions affecting broadcasters. First, it approved a Notice of Proposed Rulemaking looking to adopt a transition plan for television broadcasters to move to the new ATSC 3.0 standard. The Commission apparently took the general actions previewed in its draft order released earlier this month, though additional questions were said to have been teed up for public comment in the final version of the NPRM. The final version had not been released when this article was written on Friday morning. The FCC press release on its action yesterday is here. We’ll write more about the details of the NPRM in the next few days, after it is released.

The FCC also formally adopted the other order it had released in draft form back in early February.  This order expands the area in which FM translators can be operated to rebroadcast an AM station. We wrote about the draft order here. The FCC Press Release about yesterday’s action is here, but again the final text has not been released, so we can’t confirm that there were no changes from the original order. Watch for more information, including details of the effective date in these new translator rules, shortly.