Issues to Watch

ARE INTERNET STREAMING SERVICES COMMUNICATIONS CHANNELS ENTITLED TO A COMPULSORY LICENSE UNDER THE 1976 COPYRIGHT ACT?


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Are Internet Streaming Services Communications Channels Entitled to a Compulsory License Under the 1976 Copyright Act?

Kimberly Boyd*

In its most recent battle with major television broadcast networks, online video distributor (OVD) FilmOn X, LLC (formerly Aereokiller, LLC) argued before the United States Court of Appeals for the Ninth Circuit that its services were analogous to cable systems and therefore should be eligible for the same compulsory licenses issued to cable providers.  John Eggerton, FilmOn X, Broadcasters Square Off in Ninth Circuit, Broadcasting & Cable (Aug. 8, 2016, 9:31 AM), http://www.broadcastingcable.com/news/washington/filmon-x-broadcasters-square-ninth-circuit/158681.  At issue is whether the Internet is a “communications channel” within the context of 17 U.S.C. § 111 of the 1976 Copyright Act.  Id.  An affirmative determination would entitle FilmOn X to retransmit broadcaster’s programming to subscriber’s mobile devices through its streaming Internet service.  Colin Mann, FilmOn X Sets Out Licensing Appeal Case, Advanced Television (Aug. 8, 2016), http://advanced-television.com/2016/08/08/96178/.

The FilmOn X Model Redefining The Meaning of Cable

FilmOn X streams over-the-air broadcasts online by capturing the signals of multiple television channels and assigning users “the content stream from one of thousands of minute, dime-sized antennas that it operates in major metropolitan areas.”  Fox Television Stations, Inc. v. FilmOn X LLC, 150 F. Supp. 3d 1, 5–6 (D.D.C. 2015).  The company “use[s] one master antenna located on the roof of a commercial data center” and has other “physical facilities across the country, which contain[] the necessary electronic equipment to capture, store, and retransmit broadcast programming.”  Id. at 10.  The signals received by antennas in buildings within the United States “are then retransmitted out of those facilities on ‘wires, cables, microwave, or other communications channels.’”  Fox Television Stations, Inc. v. AereoKiller, 115 F. Supp. 3d 1152, 1167 (C.D. Cal. 2015).

Under § 111(f)(3) of the 1976 Copyright Act, a cable system is defined as:

[A] facility, located in any State, territory, trust territory, or possession of the United States, 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.

 Id. at 1161.

Lawyers for FilmOn X assert that, when Congress enacted § 111, it intended for the statute to include future technological innovations, and thus, drafted the statutory language broadly to include new technologies.  Mann, supra.  The Internet, one of the new technologies referenced by FilmOn X, includes wires, cables and microwaves: “the very things that are mentioned specifically in §111 as being examples of communications channels.”  Eggerton, supra.  FilmOn X contends that broadcasters misinterpret the statutory definition of a “cable system” under the Act.

For their part, broadcasters argue that an act of Congress would be necessary for companies like FilmOn X to acquire a compulsory license.  Mann, supra.  They also point to the Copyright Office, the agency tasked with managing the compulsory licensing policy under § 111, and its “longstanding position that § 111 does not apply to Internet-based retransmission services.”  FilmOn X, 150 F. Supp. 3d at 9.  The federal agency did, however, accept FilmOn X’s statutory license fees in 2014 on a “provisional basis” since “the question of eligibility of internet-based retransmission services for the Section 111 license appears to have been raised again before the Courts.”  AereoKiller, 115 F. Supp. 3d at 1163.

Prior Rulings

The network’s appeal to the Ninth Circuit stems from last year’s ruling by United States District Court Judge George Wu that FilmOn X would be entitled to a § 111 compulsory license once compliance with all provisions of the statute were met.  Id. at 1171.  Broadcasters including Fox, ABC, NBC, and CBS argued that the online streaming service infringed on their copyrights when it retransmitted their broadcasts.  Id. at 1152.  Broadcasters hope to overturn Wu’s decision, which is an outlier among the seven decisions handed down so far on the issue of the § 111 compulsory license.  Eggerton, supra.

Following the Supreme Court’s decision in American Broadcasting Companies, Inc. v. Aereo, Inc., FilmOn X redefined itself as a cable company after the Court noted that Aereo, a similar internet streaming company, bore an “overwhelming likeness to the cable companies targeted by the 1976 amendments.” 134 S. Ct. 2498, 2507 (2014).  In Aereo, the Court decided whether Internet-based retransmissions “constituted public performances” under the Transmit Clause of the Copyright Act and did not focus on whether Aereo was a cable company under § 111(c).  FilmOn X, 150 F. Supp. 3d at 15.  Judge Wu, who conceded that the language in Aereo was not controlling in his decision, said that it was “about as close a statement directly in Defendants’ favor as could be made.”  AereoKiller, 115 F. Supp. 3d at 1163.

While it sparred with broadcasters in the Ninth Circuit, FilmOn X also filed a brief in July asking the D.C. Circuit Court of Appeals to reverse last year’s decision by the D.C. District Court denying the claim that FilmOn X is entitled to compulsory copyright license rights because it is a cable provider for purposes of § 111(f)(3).  Patrick S. Campbell, FilmOn X, Supporters Ask D.C. Circuit to Reverse Lower Court Decision on Compulsory License Rights, Lexology (July 29, 2016), http://www.lexology.com/library/detail.aspx?g=98368f1e-5e19-4117-8915-65b1a37c1297.  In these proceedings, FilmOn X warned that “if th[e] court holds as a matter of law that Internet retransmission services are ineligible for a Section 111 [compulsory] license, it would create an unnecessary obstacle to broad public access to broadcast television over the Internet.”  Id.  The Federal Communications Commission (FCC) commenced proceedings on this issue, examining whether OVDs were multichannel video program distributors (MVPDs) entitled to compulsory license rights.  Id.  However, because “there are so many innovative things going on right now in the video space,” the FCC decided it wanted companies to continue to innovate and consequently halted its proceedings on the matter indefinitely last December.  Id. 

Conclusion

As Judge Wu pointed out, the courts likely will not have the last word on the issue of broadcast retransmission.  AereoKiller, 115 F. Supp. 3d at 1170–71.  Ultimately, it will “be up to Congress to say what the law will be.”  Id.

*Kimberly Boyd is a second-year evening law student at the University of Baltimore School of Law, where she is a staff editor for Law Review, as well as President of the International Law Society.

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