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A case that began with hype that someone had finally cracked the code for delivering free and legal broadcast streaming is ending with a $32 million payment of copyright damages to ABC, CBS, Fox and NBC. After suspending its service following a devastating court loss, Locast has also now agreed to a permanent injunction, according to court papers filed on Thursday.
The popular app for cord-cutters made a splashy debut two years ago. The New York Times announced its arrival onto the scene with the headline: “Locast, a Free App Streaming Network TV, Would Love to Get Sued.”
But when the case actually got to court, ABC, CBS, Fox and NBC challenged whether Locast was really “free” or a front for greater ambitions.
That mattered because copyright law allows a limited exception for secondary transmission of broadcast programming when it’s “made by a governmental body, or other nonprofit organization, without any purpose of direct or indirect commercial advantage.”
In late August, a federal judge in New York looked at the way Locast raised funds — soliciting donations from users and interrupting service every 15 minutes for non-paying ones — and where the money went. The judge ruled that fundraising could only be used to defray costs of operating the service, not of expanding it into new markets. Locast, which had expanded into 36 markets serving 55 percent of the U.S. population, had exceeded an exemption.
While technically, the judge hadn’t yet ruled that Locast had violated copyright, only that Locast couldn’t raise its primary affirmative defense (the service had other defenses), the parties had made an unusual agreement at the start of litigation. Broadcasters got Locast to agree to an injunction in the event a federal judge rejected its key defense. The broadcasters quickly sought to hold Locast to that promise, and in mid-September, just in time for the NFL season and MLB playoffs, where millions of cord-cutters may have looked to Locast for telecasts of local games, the judge agreed.
Now, the injunction extends through settlement to those running Locast, including founder David Goodfriend, and includes a $32 million payment of statutory damages.
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