Recently, we wrote about a proceeding initiated by the Copyright Office to review the reporting obligations of cable and satellite television systems related to the statutory license that permits those systems to carry the programming of local television stations.  Systems must report information including revenue and subscriber information that allow royalties to be computed.  This

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.
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The US District Court in Washington DC last week decided that FilmOn X could not rely on the compulsory license of Section 111 of the Copyright Act to retransmit the signal of over-the-air television stations to consumers over the Internet. The compulsory license allows a system to rebroadcast copyrighted material without getting express permission from the copyright holder, as long as the service files the rules set out by the statutory provisions that create the license. The DC Court’s decision was the exact opposite of a decision reached in July by a California court which found that FilmOn did fit within the definition of a cable system as set out by the Copyright Act (see our summary of that decision here). Why the difference in opinions over exactly the same system?

Both Courts focused on the language of Section 111 which defines a cable system as follows:

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.

Even though both courts looked to this same definition, they reach different conclusions – the principal difference being one over the requirement that, to be a cable system, the company must make “secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels.” The California court had looked at this definition, and determined that Internet retransmissions of TV programs were in fact secondary transmissions (a secondary transmission being a retransmission of the broadcast) by “wires, cables, microwave or other communications channels” – concluding essentially that the Internet was a communications channel. The DC Court, in contrast, did a far more searching analysis of this statutory language, and found that Internet transmissions don’t qualify as cable systems under this definition.
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Aereo finally lost a court decision.  The US District Court in Utah released a well-reasoned decision finding that the service, by transmitting via the Internet over-the-air TV programming to subscribers without any consent from the TV stations or their program suppliers, violated the copyrights that the stations have in their programming.  Specifically, the Court found that the transmissions were public performances, the very issue to be determined later this year by the US Supreme Court when it considers the decision of the Second Circuit Court of Appeals in New York finding that no public performance was involved in the Aereo transmissions.  (See our summary of the NY decision here).  The Utah Court issued an injunction preventing Aereo from operating in Utah until the issue is decided by the Supreme Court. 

This is the first case that Aereo itself has lost, also winning a favorable decision from a District Court in Boston which essentially followed the Second Circuits reasoning (see our summary of the Boston decision here).  But the Aereo copycat service, FilmOn X, which presented essentially the same legal issues to Courts, has lost two decisions, one in California and one in Washington DC (see our summary of the DC decision here), both courts finding that the public performance right was implicated by Aereo’s transmissions.  Oral arguments in the Supreme Court are to be held in April, with a decision in the case expected before the Court adjourns for its summer recess in July.  Does this Utah decision serve as a preview of the upcoming Supreme Court decision?
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The Supreme Court on Friday announced that is has decided to review the decision of a US Appeals Court in New York finding that the Aereo service of retransmitting over the Internet the signals of local television stations, without permission from or payment to those stations, was legal.  We wrote about the Second Circuit Court of Appeals decision in the Aereo case here.  The Supreme Court’s decision to hear the case, which may signal that the case will be decided before the Court adjourns its term in June, was supported not only by the television stations who had sought to block the Aereo service and the program suppliers to those television stations (including many of the sports leagues), but also by Aereo itself.  As Aereo and its copycat service FilmOn X were being sued in every jurisdiction where they started to do business, the desire to get a quick and final resolution of the legality of their services is a natural one.  This is especially true as the Courts have been reaching different decisions, as demonstrated by the two cases decided only a month apart, one in Boston finding Aereo to be legal, and one in DC finding FilmOn X to be infringing on the copyrights of the TV stations who brought the lawsuit.  So what issues will the Supreme Court be deciding?

One newspaper editorial, from the Los Angeles Times, has suggested that this is a Betamax case for the 21st century.  The Betamax case, officially known as Sony Corp. v Universal City Studios, was the case that declared the VCR to be legal, and found that its original manufacturer, Sony, was not contributorily infringing on the copyrights held by Universal and other studios that brought the case.  But that comparison really does not hold up, as the Betamax decision was premised on several findings that simply cannot be made here.  First, the Court in the Betamax case found that the VCR was not in and of itself an infringing service, as it had substantial legal uses.  In fact, there was testimony in the record that many copyright holders actually were not opposed to the use of a Betamax to copy their programs for time shifting and other purposes.  In the Aereo cases, copyright holders are for the most part universally opposed to the service and, other than retransmitting copyrighted programs without consent, there does not appear to be another use for the service.
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The battle over services that record and stream over-the-air TV without compensation to TV broadcasters has become even more confusing, with a US District Court judge in Boston denying an injunction to stop the Aereo service in Massachusetts in a suit brought by Hearst Corporation, which owns a local TV station. This decision comes on the heels of a decision the decision by the US District Court in Washington DC finding that Aereo-like service FilmOn X was violating the copyrights of TV stations by operating a similar service in the DC area (see our discussion of that decision here). Joining decisions in NY favoring the streaming services (a decision we initially wrote about here), and one is California favoring broadcasters, the decision appears to be headed to an ultimate resolution before the Supreme Court to reflect these conflicting points of view. In fact, TV broadcasters have already announced the likelihood of their filing a Supreme Court petition asking the Court to resolve the matter. 

Of course, the decisions outside of NY have been by District Courts, not US Appeals Courts. All except the NY decision are subject to review by the US Court of Appeals in the Circuits in which these District Courts lie. It is possible that the appeals could come out differently than the decisions by the District Courts, and either increase or decrease the likelihood of Supreme Court review, depending on whether the other appellate courts rule for Aereo or FilmOn X (decreasing the likelihood of Supreme Court review if the Circuits agree on the outcome) or against it (increasing the likelihood of review as the Court would be faced with conflicts among the circuits which is a usual ground for Supreme Court review). The Boston decision, while not as comprehensive as some of the other decisions on the topic, does raise some interesting issues that will no doubt be considered on appeal.


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The US District Court in Washington DC issued a decision earlier this month, enjoining the operation of the television streaming service FilmOn X throughout the United States – except within the Second Circuit (covering NY) where the US Court of Appeals reached a contrary decision in connection with Aereo – a very similar service. Both of these services utilize multiple small antennas to receive over-the-air television programs, which are recorded on a central server and sent over the Internet on demand to individual viewers. In effect, these viewers, by paying the subscription fee charged by the services, get their television programming on the Internet – through their computers and soon to their mobile devices.  The contrary decisions in these two cases illustrate a fundamental disagreement between two courts as to the meaning of the "public performance" right enjoyed by copyright holders in their copyrighted works.

As we wrote here, the Second Circuit, in the Aereo case, determined that, as the transmission of the over-the-air programming was done on an individual basis, at the demand of the individual viewer, it was not a “public performance.” In the Second Circuit’s opinion, the fact that the transmission is made to a single user, either when the program is aired or on a delayed basis, made each individual performance of the television program a "private performance," which did not infringe on the rights of the copyright holders, and more than a transmission of a signal from an antenna on someone’s roof to the television set in the living room was a public performance.  The DC Court disagreed with that interpretation, joining a District Court in California in deciding that this type of service, without the permission of the broadcaster, is a violation of the copyright laws.

The DC Court was very thorough in its review of the issue and its basis for disagreeing with the Second Circuit (or agreeing with the dissenting opinion in the Second Circuit). The issue raised in the FilmOn X case, whether the retransmission over the Internet of the over-the-air television signal of a broadcaster is essentially the same issue raised 40 years ago when cable television operators first started to operate, charging customers for bring them television signals from over-the-air TV stations. After the Supreme Court at that time, in the Fortnightly and Telepromter cases, agreed with cable operators that their retransmissions of television stations did not constitute a "public performance" of those signals, Congress intervened in 1976, revising the Copyright Act to make clear that such retransmissions of broadcast signals were in fact covered by the Act. The changes adopted then, which are still in place in the Copyright Act, were cited by the DC Court in finding that the operations of FilmOn X indeed violated the copyright holders public performance rights under the Copyright Act.


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