In the midst of a bruising few months where broadcasters have faced off against Barry Diller‘s Aereo and Dish Network’s AutoHopper, both with the potential to shape the TV industry going forward, broadcasters got a victory on Monday at the 2nd Circuit Court of Appeals when the judges there affirmed a lower court’s grant of an injunction against ivi, one of the first TV streaming services.
The decision by 2nd Circuit Judge Denny Chin isn’t a broad ruling that necessarily indicates how the appellate circuit might come down when it soon reviews Aereo, but is nevertheless welcome news to many broadcasters in a particularly hot summer.
Ivi, a Seattle-based upstart, was founded in 2007 and made headlines in 2010 when it was sued by many of the TV networks including Fox, NBC, CBS, ABC, PBS, The CW, and others. At the time, many onlookers hyped the lawsuit as possibly legitimizing live TV on the Internet.
Unlike Aereo, ivi didn’t proclaim to have antennae farms that would capture over-the-air signals. Instead, this company argued it was a new breed of company — an “Online Video Distributor” that could be considered a cable system under Section 111 of the Copyright Act. As such, ivi believed that it didn’t need permission to retransmit signals and underlying copyrighted content. Instead, the company argued that like other cable systems, it merely had to pay a statutory rate of about $100 a year to have access to the content.
In February 2011, a district court judge disagreed with that assessment, finding ivi’s legal justification to be skewed, and ordering the shutdown of the service. Since then, the injunction order has been cited by broadcasters in subsequent battles, including the Aereo hearing a few months ago. In the meantime, the ruling was challenged to the 2nd Circuit.
On Monday, Judge Chin reviewed ivi’s system of capturing and retransmitting programming, with the ability to record, pause, fast-forward, and rewind streams, and its legal arguments.
On one point, the judge says that based on the statutory text of the copyright provision, it is “not clear” whether a service that retransmits live television programming over the Internet constitutes a cable system and says the growth of “cloud-based systems…highlights the uncertainty.”
But such confusion only goes so far.
The judge also reviews legislative history and notes that “Congress has not codified a statutory provision for Internet retransmissions, nor has it included the ‘Internet’ as an acceptable communication channel under § 111.7.”
The judge says that by providing a compulsory license system to guide cable operations, Congress was merely attempting to address the problems that certain communities and households had in attaining strong TV signals. Congress was not opening the door to digital streamers, says the judge, rejecting ivi’s novel attempt to latch onto old statutory language.
Judge Chen goes onto affirm in the strongest language possible that a streaming service like ivi’s does in fact present irreparable harm to broadcasters:
“Indeed, ivi’s actions — streaming copyrighted works without permission — would drastically change the industry, to plaintiffs’ detriment. The absence of a preliminary injunction would encourage current and prospective retransmission rights holders, as well as other Internet services, to follow ivi’s lead in retransmitting plaintiffs’ copyrighted programming without their consent. The strength of plaintiffs’ negotiating platform and business model would decline. The quantity and quality of efforts put into creating television programming, retransmission and advertising revenues, distribution models and schedules –- all would be adversely affected. These harms would extend to other copyright holders of television programming. Continued live retransmissions of copyrighted television programming over the Internet without consent would thus threaten to destabilize the entire industry.”
The decision doesn’t necessarily signal what the 2nd Circuit might do when the expedited case concerning Aereo comes before them soon.
Aereo, after all, is not arguing for the legitimacy of its service through Section 111 but rather that its own system creates unique, user-requested copies of captured over-the-air signals that are transmitted only to the particular user that created them and, therefore, its performances are nonpublic. The company that attracted millions from Diller hopes to use the different 2nd Circuit precedent in the Cablevision case to survive broadcaster challenges.
Nevertheless, broadcasters will be pleased at having its view on the threats and legalities of one web streaming outfit confirmed by the 2nd Circuit. The full decision is on the next page.
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