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ABC, CBS, Fox and NBC have gained a huge court decision that could imperil the ongoing viability of Locast, a much-hyped digital app that streams over-the-air television stations. On Tuesday, a New York federal court granted partial summary judgment to broadcasters in this closely-watched copyright case.
Locast has helped cord-cutters by providing digital access to local stations without a cable or satellite subscription. It’s like Aereo, a similar streamer that lost big at the Supreme Court, except for one key fact that Locast hoped would help save it from copyright liability. The operators of Locast have presented it to the public for “free.” Under § 111(a)(5) of the Copyright Act, a nonprofit organization is allowed to operate a secondary transmission service.
But in the summary judgment round, broadcasters questioned whether it was really free given that the service solicits donations from its users. For those who don’t pay $5 a month, service is interrupted a few times every hour. In other words, it’s “freemium.”
In an order favoring the broadcasters, U.S. District Court Judge Louis Stanton writes that under the law, fundraising can only be used to defray costs of operating the service, not of expanding it into new markets.
“Since portions of its user payments fund Locast’s expansion, its charges exceed those ‘necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service,’ which is the only exemption granted in Section 111 (a) (5).”
According to Locast’s website, it now operates in 36 markets serving 55 percent of the U.S. population. It has a couple million users.
While the impact of the order is to rule out Locast’s primary affirmative defense to copyright claims, the case isn’t quite over and may be headed to trial on the company’s ultimate liability.
Gerson Zweifach, counsel for the plaintiffs, commented: “The federal court’s ruling is a victory for copyright law, vindicating our claim that Locast is illegally infringing copyrights in broadcast television content in violation of federal law. We will now seek a permanent injunction to stop Locast’s copyright infringement of the programming that the broadcasters and their partners work to create.”
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