retransmission of over the air TV programming

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.
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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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