CBS Draws First Blood in Its Effort to Shut Down Filmon.com’s Internet Streaming

Judge Naomi Buchwald on November 22 in CBS Broadcasting v. Filmon.com issued an order temporary restraining FilmOn “from infringing by any means, directly or indirectly, any of plaintiffs’ exclusive rights under Section 106 (1 )-( 5) of the Copyright Act, including but not limited to through the streaming over mobile telephone systems and/or the Internet of any of the broadcast television programming in which any plaintiff owns a copyright.”

The order will continue pending a hearing on CBS’s request for a preliminary injunction. The court declined to set a hearing date thought it is likely to be sometime after December 13 when Filmon’s papers in opposition to the request for a preliminary injunction are due.

In late September Filmon began U.S. streaming digital feeds of broadcast network programming without the consent of the  broadcasters. On October 1, CBS, joined by every other major network, sued for copyright infringement.  Although the Copyright Act compels broadcasters to license the retransmission of their content to cable systems and broadcast satellites, the networks argue they are not required by Section 111 of  the Copyright Act to grant compulsory licenses to start-ups like Filmon for streaming internet services.

The broadcasters appear to have precedent and the Copyright Office on their side. VuVision attempted to start a similar service in December 2009. By January 4, 2010, it consented to an injunction ending that service. iCravetv.com tried to stream network broadcasts from Canada into the US in 2000 and again was shut down. The injunction, findings of facts and conclusions of law are here.

The Copyright Office also opposes internet streaming. In 2000 it stated “copyright owners should be allowed to determine when and under what circumstances they wish to make broadcast programming available over the Internet without concern that a third-party packager will make these decisions for them under the auspices of a government-mandated compulsory license.” Eight years later in the Satellite Home Viewer Extension and Reauthorization Act Section 109 Report the Copyright Office again said no to internet streaming, stating it “opposes the circumstance where any online content aggregator would have the ability to use a statutory license to sidestep private agreements and free from any of the limitations imposed on cable operators and satellite carriers by the Communications Act and the FCC’s rules.”

So where’s the beef? Why would Filmon and another internet streamer ivi, TV (yes with a small “i”) venture into this market knowing that Big Content was ready to jump on their necks?

One answer may be the face of the compulsory license provision, 17 U.S.C. § 111(f)(3). This subsection loosely defines a cable system as a

a facility, located in any State, Territory, Trust Territory, or Possession, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service.

The Copyright Office’s regulations at 37 CFR section 201.17 (implementing this section) contain the same broad definition of a cable system. In fact, that regulation adds that a cable system that meets this definition “is considered ‘a cable system’ for copyright purposes even if the FCC excludes it from being considered a ‘cable system.’”

Filmon and ivi may fit under this definition. A “facility” is not defined but may extend to some kind of on the ground presence which Filmon and ivi presumably have in New York. Each receives signals transmitted by one or more television broadcast stations and then makes secondary transmissions of those signals over the internet, which constitutes “wires, cables, microwaves, or other communications channels.” Each also made its transmissions to subscribing members of the public who pay for the service.

Although Congress enacted this generous definition of a cable system in 1976 to give the cable industry, then heavily regulated, some breathing room, it is still on the books; and courts often interpret statutes as they are written.

Remember the Copyright Office has not always fared so well when it takes a position contrary to the face of a statute. In the recent case of Muench v. Houghton Mifflin, Judge Preska rejected a Copyright Office’s long-standing interpretation of a provision of the Copyright Act stating that a court’s function is “to give effect to the best reading of the words” of a statute “even if the proper interpretation” “upholds a ‘very bad policy.’”

There is much at stake here. The networks and cable systems will fight to retain their business model in the face of increasing consumer streaming of real-time entertainment and a desire among some to cut the cord and remove a cable subscription from a physical address.

As I told the Wall Street Journal in their fine article on these cases a few days ago, I think the networks have the “better argument.” But the face of the statute gives the streaming start ups some hope. Stay tuned.

For a later post focusing on iv click here.

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5 Responses to “CBS Draws First Blood in Its Effort to Shut Down Filmon.com’s Internet Streaming”

  1. [...] against FilmOn.com (“FilmOn”) and iviTV.com (“ivi”).  Now a federal judge in New York has issued a temporary restraining order (“TRO”) against FilmOn prohibiting it from streaming any of the [...]

  2. Armchair Lawyer says:

    Interesting article on a complicated matter. But as a lawyer who has been following the case closely, I do have a couple of quibbles/additions.

    First, the quibble. You make the statement that “. . . the networks argue they are not required by Section 111 of the Copyright Act to grant compulsory licenses to start-ups . . . .”

    The networks do not “grant” compulsory licenses. The license is available to any cable system that meets the requirements of Section 111. That’s why it’s termed “compulsory”, it’s a mandatory license compelled by Congressional statute.

    Semantics? Perhaps. But it is an important to understand that cable systems do not need network permission to retransmit broadcast signals.

    You also say that the networks have “precedent and the Copyright Office on their side.” I think that contention is a fairly generous reading.

    Neither the iCraveTV or the VuiVision cases have any precedential value legally. Because neither case was ever decided on the merits. iCraveTV was enjoined by a TRO and the parties settled afterward. VuiVision entered a consent judgment and then settled. As a side matter, iCraveTV did not contend that it was entitled to the “compulsory license”, nor could it have, because it transmitted broadcast content free of charge. Just like FilmOn.com.

    ivi, Inc. has actual case precedents on its side. Cable companies retransmitted broadcast television without network permission and won two landmark Supreme Court victories in Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968), and Teleprompter Corp. v. Columbia Broad. Sys., Inc., 415 U.S. 390 (1968), which held that retransmission of broadcast television was not copyright infringement.

    These cases gave rise to the enactment of the Section 111 compulsory license. Thus, the cable television industry was born.

    Then, in 1991, satellite companies prevailed over the networks in Nat’l Broad. Co., Inc. v. Satellite Broad. Networks, Inc., 940 F.2d 1467 (11th Cir. 1991), where the Eleventh Circuit held that satellite television company fit under the definition of a “cable system” because it retransmitted broadcast television to “subscribing members of the public who paid for such service.”

    This case was later overruled after the Copyright Office issued a “final rule”, but this was only after the satellite industry received its own specific compulsory license, in Section 119 of the Copyright Act.

    Those cases not only support ivi, Inc.’s reading of the definition of “cable system”, but they also show that, historically, companies with new television delivery technologies unfortunately have to fight their right to innovate in the courts. It’s not an ideal situation, but it’s the way the system has worked historically.

    Finally, you contend that the Copyright Office “opposes internet streaming”. Again, I’m not sure that’s a proper characterization.

    The Copyright Office is certainly concerned about internet streaming, and rightfully so, given the existence of Internet piracy. But the Office states in its 2009 report, at page 181 that:

    “The principal finding here is that new systems that are substantially
    similar to those systems that already use Section 111, should be subject to the license. Thus, systems that use Internet protocol to deliver video programming, but are the same in every other respect to traditional cable operators, should be eligible to use Section 111 to retransmit broadcast signals.”

    More importantly, the Report also states that AT&T’s Internet Protocol television delivery technology, U-verse (as well as Verizon’s FIOS television system) should be considered are “cable systems”, at page 199, as follows:

    “By its terms, the statutory license applies only to cable systems and Section 111(f) defines “cable system” quite broadly. Consequently,
    both AT&T, as well as Verizon, meet each of the elements of the cable system definition.”

    It is my understanding from following the ivi, Inc., case that ivi’s television delivery system is the functional equivalent of AT&T’s U-Verse technology.

    The only difference is that ivi uses its player as a “virtual set-top box” instead of the actual hardware receiver box that AT&T’s U-Verse customers use.

    If my understanding of the facts is correct, then it would appear that ivi, Inc. actually has the Copyright Office’s interpretation of “cable system” on its side, since its service is analogous to AT&T’s.

    Consumers do want television on the Internet, but it is important that Internet television be delivered in a secure manner that ensures that copyright holders can be fairly compensated. From my vantage point, it appears that ivi, Inc. has developed a system that will accomplish both those ends.

    Wow, this post ended up being longer than I anticipated. Sorry about that. Thank you for adding your voice to the discourse on this matter.

  3. Dear Armchair Lawyer

    You make a number of good points. Let me respond to them in the order you made them.

    First you were right to quibble. I should have said that compulsory licenses are automatically granted to those who qualify, instead of saying that broadcaster are “required to grant” those licenses.

    Next you state that iCraveTV and VuVision were not decided on the merits. I am not sure you are correct at least with respect to VuVision. It ended with a final judgment (and a consent injunction resolving all claims). Let’s call that action # 1. Isn’t that final judgment in action # 1 entitled to res judicata effect barring VuVision from raising any defenses in a later action it raised or could have raised in action # 1? And because of the final judgment’s res judicata effect, isn’t the final judgment in action # 1 on the merits, even though the judgment does not expressly so state? I haven’t researched this issue but that’s my instinct.

    Re the iCraveTV case, a couple of quibbles (I like that word as well). That case ended with a preliminary injunction (not a TRO). And the court in granting that injunction held that defendants were “unlawfully publicly performing plaintiffs’ copyrighted works” (in the US) by “use of ‘streaming’ technology.” So iCrave was also an internet streamer. You are right that iCrave did not raise the Section 111 compulsory license defense. But I think it didn’t because it couldn’t. That defense is only available to cable systems with facilities in the US. But iCrave was operating only in Canada, although its retransmissions were easily accessed in the US.

    So there is no case directly in point. But in the two previous cases where start-ups streamed without broadcasters’ consent, the start-ups did not get beyond first base. Thus, I think these cases are precedent-worthy and it seems the broadcasters felt the same way. The broadcasters cited them in their motion papers.

    Next you refer to two Supreme Court precedents. But they were decided under the old 1909 Copyright Act. Therefore, I am not sure how relevant they are to the present controversy which arises under the 1976 Copyright Act, except, as you correctly say, the two cases helped give birth to the compulsory licensing scheme in Section 111.

    Further, I agree that the Nat’l Broad. Co., Inc. v. Satellite Broad. Networks case helps ivi. It has a useful footnote stating that Congress intended to “paint” the definition of a cable system “with a broad brush.”

    Re the Copyright Office’s Satellite Home Viewer Extension and Reauthorization Act Section 109 Report I also agree there is language there supporting ivi’s position.

    But I think you have to conclude that the Register, after much discussion, comes out against extending the compulsory licensing scheme to internet streamers. She states at p. 188 of the Report:

    “The Office continues to oppose an Internet statutory license that would permit any website on the Internet to retransmit television programming without the consent of the copyright owner. Such a measure, if enacted, would effectively wrest control away from program producers who make significant investments in content and who power the creative engine in the U.S. economy. In addition, a government-mandated Internet license would likely undercut private negotiations leaving content owners with relatively little bargaining power in the distribution of broadcast programming. Further, there is no proof that the Internet video market is failing to thrive and is in need of government assistance through a licensing system. In fact, the lack of a statutory license provides an incentive for parties to find new ways to bring broadcast programming to the marketplace and that market, by all accounts, continues to grow. Finally, there is technology currently available, such as Slingbox, that uses the Internet to make existing licensed programming available to individuals for personal use in a controlled fashion and without the need for an additional license. Thus, the demonstrated ability and willingness to use the Internet to bring programming to consumers obviates the need for a government sanctioned statutory license.”

    Finally, you may be correct that ivi’s television delivery system “is the functional equivalent of AT&T’s U-Verse technology.” Hopefully, ivi will have the opportunity to make that showing at the still-to-be-scheduled hearing on the broadcasters’ motion for preliminary injunction.

    Thanks again for adding your good comments to this controversy. I agree it is one well worth watching.

  4. Armchair Lawyer says:

    Mr. Berger -

    Thanks for posting my reply and for your thoughtful response.

    One final quibble (because that’s what we lawyers do!).

    The quote you cite from the Register’s report (at pg. 188) is proof that the Register of Copyrights opposes the enactment of a NEW compulsory license covering Internet delivery of broadcast television.

    (Like when Congress enacted Section 119 to give satellite television its own compulsory license).

    However, the Register’s report does not oppose the application of the existing license (Section 111) to new and innovative technologies that fall within its purview. ivi, Inc. is not arguing that Congress should enact a new compulsory license; it is arguing that it is protected by the existing license.

    So, while I would agree with you that that the Register opposes the legislative enactment of a new Internet-specific compulsory license, I think it’s clear that the Register does not oppose IP-based television delivery services that fit within the existing license.

    (See the Register’s quote in my post above at pg. 181, and the Register’s endorsement of AT&T’s U-Verse technology).

    In any event, we both agree that ultimately this issue will be decided in court.

    Thanks again for the open forum for discussion!

  5. [...] my earlier take on the FilmOn and ivi, T.V. litigations click here and here. Got some predictions about where this will go and how it will turn out? Share them [...]

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