U.S. Government, Hollywood Studios Weigh in on Dispute Exploring Reach of U.S. Copyright Law

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Judging by papers filed with the U.S. Court of Appeals for the D.C. Circuit this week, a dispute over the streaming of a Polish broadcaster's programming is likely to become an important one. The U.S. government is warning that it could hamper the ability of the Justice Department to crack down on large-scale criminal piracy abroad. And Disney, Fox, Warner Bros. and the leading trade groups in the music industry are hoping the federal appellate circuit clarifies that proof of infringement doesn't require what's known as "volitional conduct."

This case is more than two decades in the making.

In 1994, Poland's national public television broadcast company Telewizja Polska (TVP) granted Spanski Enterprises (SEI), a Canadian corporation, the exclusive right to distribute its content in North and South America for 25 years. About a decade ago, the two sides engaged in arbitration and open-court litigation over internet rights. The result was a settlement agreement that, among other things, required that TVP use geo-blocking technologies to ensure territorial restrictions on streamed content. Sometime afterwards, SEI's lawyers discovered that it could still stream TVP programs to their offices in New York — allegedly because TVP had disabled its geo-blocking technology.

Seeing a threat to the value of its license, SEI filed a copyright lawsuit, and ultimately, this resulted in a $3.06 million award against TVP for willfully infringing SEI's U.S. exclusive right of public performance.

TVP has now appealed and is making two important arguments that have gathered outside interest.

One deals with the reach of U.S. copyright law.

"It is well-established law that the Copyright Act does not apply extraterritorially," TVP writes in its appellate brief (see here). "Acts committed abroad, even if they would be actionable if performed in the U.S., cannot form the basis for a U.S. copyright infringement suit. The acts by TVP that the District Court found to be infringing were TVP’s uploading of multiple formats of the 51 Episodes to the TVP VOD system, which the District Court erroneously found to remove geo-blocking for those episodes. However, the District Court acknowledged that all of TVP’s acts occurred in Poland. Even if these acts would be a 'performance' by TVP under U.S. copyright law if they were done in this country, they were extraterritorial, and it was error for the District Court to conclude that TVP was liable under the Copyright Act."

The U.S. government has something to say about this.

In an amicus brief filed Wednesday (read here), the government urges the appeals court to hold that a copyright owner's exclusive right to control performance is infringed "just as clearly when the transmission comprising the unauthorized performance originates oversees," that is, when there's an audience in the United States who is able to receive it.

The government says this is an "issue of first impression," meaning the first time it's come up (though the Supreme Court has tackled other issues like whether foreign investors who purchase foreign companies on foreign exchanges can sue in United States courts).

And the U.S. has a big reason to weigh in on the case. The government says the case "implicates the ability of the Department of Justice to prosecute large-scale criminal piracy of copyrighted works by entities located abroad that stream copyrighted works over the Internet to viewers in the United States."

"Because the events relevant to the statute’s focus occurred within the United States, imposing liability on TVP in these circumstances for unauthorized performances to the American public represents a domestic application of the Copyright Act, even if TVP initiated the performances abroad," the government continues. "To hold otherwise would provide a roadmap for criminal enterprises to evade liability under United States law merely by ensuring that the servers they use to stream pirated works to the American public are stationed across the border."

If that were not enough reason to pay attention to this case, TVP makes a second argument that provides a bit of a sequel to Aereo, that referring to the 2014 Supreme Court opinion holding that the Barry Diller-led streaming company had infringed broadcasters' public performance rights. Since the decision, there's been controversy over whether copyright plaintiffs must show "volitional conduct," or an act that caused the infringement to occur, when claiming a tech service violates copyrighted material. The high court was asked to recognize a "volitional conduct" requirement in the Aereo case but was largely silent on the topic other than in a dissent from Justice Antonin Scalia. Thus, there's some confusion about the state of the law.

In its appellate brief, TVP posits, "A defendant may be held liable for direct copyright infringement only if its alleged infringing conduct was volitional. It is not infringement to establish an automated content delivery system that is not itself infringing, when the user of the system (not the defendant) selects the content to view, actuates the system, and employees of the defendant do not process the request. Here, TVP lawfully uploaded its own content, in which it owned copyright, to its own automated VOD system. The only volitional acts shown at trial were those of the employees of SEI's own law firm in New York, who sent commands to the VOD system, selected content, and received the resulting signal."

The U.S. government responds that such argument "cannot be squared with the Supreme Court’s Aereo decision, which rejected a similar volitional-conduct argument raised by the streaming service in that case."

But was volitional conduct really rejected by the Supreme Court? That wasn't the interpretation by the 9th Circuit Court of Appeals in January in a case concerning photos of nude women that had been uploaded to a message exchange. That case, Perfect 10 v. Giganews, is awaiting word from the Supreme Court on a potential review.

In the meantime, big copyright owners are joining the U.S. government in arguing against any volitional standard.

"First, nothing in the Copyright Act requires proof that a defendant acted 'volitionally' to be liable for direct infringement," states an amicus brief (here) from Disney, Fox, Warner, the RIAA and the National Music Publishers Association. "Second, the Supreme Court has rejected the very same arguments in the specific context of infringement of the public performance right by transmitting programming to users over the internet. Third, a defendant’s automation of infringing activities does not excuse it from direct-infringement liability. Fourth, a defendant’s operation of a video-on-demand service providing programming the defendant itself has chosen for viewers to choose from satisfies any causation or volition standard for liability for direct copyright infringement."