Appeals Court Upholds Sanctions Against TV Streamer

FilmOn flouted an injunction order after the Supreme Court ruled against Aereo.

Aereo might be finished, but FilmOn is still fighting for the right to stream television programming.

On Tuesday, however, FilmOn suffered a new setback when the 2nd Circuit Court of Appeals affirmed rulings that found the company and its founder, Alki David, in civil contempt, sanctioned the company $90,000 and awarded about $115,000 in plaintiffs' legal fees for violating an injunction.

The dispute dates back six years. In 2010, FilmOn actually beat Aereo to the market of delivering broadcast television to consumers' digital devices. Initially, FilmOn argued that it qualified for a compulsory license under section 111 of copyright law, but after another company called ivi was unsuccessful in making this same argument, FilmOn decided to deploy an Aereo-like technology called the "teleporter system" that was akin to a remote-storage DVR technology blessed by the 2nd Circuit.

Then, the Supreme Court ruled against Aereo by likening the much-publicized upstart to an unlicensed cable operator. Aereo and FilmOn took different paths after the high court's decision in June 2014. Aereo would stop its service and eventually sell off its assets while FilmOn trucked on, returning to the argument that a compulsory license was in order in light of what the Supreme Court said and what the FCC was considering. Last year, FilmOn found some success in a California court while losing in the District of Columbia. Those cases are now on appeal.

Meanwhile, the 2nd Circuit had to figure out what to do about an injunction that was previously imposed on FilmOn at the beginning stages of the dispute.

David's company argued that the injunction was unclear and ambiguous and that the Supreme Court's ruling created confusion over the issue of compulsory licenses (which is one advantage given to cable operators).

"FilmOn’s arguments are unpersuasive," writes 2nd Circuit judge Peter Hall. "Regarding Section 111, we note that at no point in time has FilmOn obtained a Section 111 license. Although at some point in the future FilmOn’s technology may eventually qualify for a Section 111 license, under the current law of the Second Circuit 'Internet retransmission services do not constitute cable systems under § 111.' And whatever future door Aereo III may have opened regarding Section 111 licensing, there is no doubt that the Supreme Court’s holding explicitly slammed shut the possibility that FilmOn could continue deploying the Teleporter System throughout the Second Circuit, absent a license, without violating the Copyright Act."

The 2nd Court also rules the district judge wasn't in error by finding that there is clear and convincing proof of noncompliance and that FilmOn could have attempted to petition the court for modification of the injunction, but didn't. Further, the sanctions award is deemed an appropriate attempt to get FilmOn to comply.

The opinion states, "Irrespective of whether FilmOn will eventually qualify for a Section 111 license, the fact that it applied for a license is not evidence that it acted in a reasonable manner under the circumstances."

Here's the full opinion.

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