Locast Accuses the Major Broadcasters of Antitrust Violations

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As alleged in court papers filed on Friday morning, the major broadcasters including ABC, CBS, NBC and Fox are purposely broadcasting weak over-the-air signals to the public as part of a conspiracy to limit consumer access to popular programming including local news and live sports and force Americans to pay for cable or satellite service.

The claim comes from the owner of Locast, a much-hyped digital app that streams over-the-air television stations. In July, the broadcasters hit Locast with a copyright lawsuit. The legal fight could impact cord-cutting and promises to be a sequel to the Supreme Court's 2014 Aereo decision, which held a streamer of over-the-air stations was illicitly performing copyrighted works.

Of course, the lawsuit over Locast is unique in its own right. Denying any affiliation with Dish and maintaining that it is operating in the red despite a donation from AT&T and some of its users, Locast owner David Goodfriend tells a judge that the company "fits squarely" into a "Congressionally-designated exception to infringement," namely § 111(a)(5) of the Copyright Act, which allows a nonprofit organization to operate a secondary transmission service.

Goodfriend, besides responding to copyright claims, also goes on the counterattack.

The broadcasters, states his answer, "have colluded to limit the reasonable public access to the over-the-air signals that they are statutorily required to make available for free, and have opted instead to use their copyrights improperly to construct and protect a pay TV model that forces consumers to forgo over-the-air programming or to pay cable, satellite and online providers for access to programming that was intended to be free."

"This is classic copyright abuse," the court papers continue. "By limiting access to the over-the-air signals that Plaintiffs have committed to make freely available, and simultaneously using the copyrights in their programming to drive revenue for the local programming that consumers cannot now effectively receive over the air through their pay TV model, Plaintiffs have colluded and misused copyrights to expand their market power beyond what those copyrights were intended to protect. The pay TV providers get rich. Plaintiffs get rich. The public gets fleeced."

The court papers detail the history of broadcasting and the regulatory framework before discussing the 2018 launch of Locast, which its owner says was designed to be local by design. The service of allowing consumers to access over-the-air TV stations online is currently provided in 13 markets. Locast says it uses geo-location technology to restrict use outside of targeted markets.

Locast is characterized as sorely needed. "By extending the reach of local broadcasting, Locast performs a critical public safety mission," the company's court papers say. 

Goodfriend, a former communications advisor to various Democrats including Bill Clinton and Charles Rangel, as well as the former general counsel at Air America Radio, also says he's taken meetings with others in the digital industry including T-Mobile and Mediacom. His counterclaims recount how during these meetings, executives discussed how the broadcast industry would retaliate against any supporters of Locast.

Ultimately, the case is made that the broadcasters are violating the Sherman Act, the Donnelly Act, New York and California competition law, plus tortiously interfering with prospective economic advantage.

Here are the full counterclaims.

Goodfriend is represented by an Orrick team led by David Hosp, who was once one of the lead attorneys for Aereo.

"Locast’s filing today only confirms that it has no answer for its industrial scale violations of the law," responds Gerson Zweifach of Williams & Connolly representing the plaintiffs in the Locast case. "Sixteen million households receive broadcast television free over the air, which represents a nearly 50 percent increase in the last eight years. Locast does nothing for those households; it serves the interests of its pay-TV patrons, who have provided Locast and its founder with hundreds of thousands of dollars in lobbying fees, donations and nationwide distribution on certain pay-TV platforms. We trust the courts to see right through this façade and recognize Locast for what it is – not a public service organization, but a creature of certain pay-TV interests with an entirely commercial agenda.”