Online Services Not Entitled To License Broadcast TV Programming, Court Says

In a potentially significant win for broadcasters, the 9th U.S. Circuit Court of Appeals today reversed a 2015 district court ruling that might have allowed an online service to retransmit their over-the-air signals without their consent.

The three-judge appeals court rejected the view that Alki David’s FilmOn could carry broadcasters’ programming by paying for a copyright compulsory license offered to cable providers.

At issue is an interpretation of the federal Copyright Act. The law has been interpreted to give cable and satellite companies the right to offer broadcasters’ fare for a negotiated fee — or, if a deal can’t be reached, with one set by the U.S. Copyright Office.

The provision of the Act that allows cable companies to pay a government-set fee is “ambiguous” on whether an Internet-delivered service qualifies, the justices found. As a result, they deferred to the Copyright Office’s view that streaming services cannot take advantage of the rule.

Broadcasters including Fox, NBCUniversal, ABC, and CBS contended that the copyright law applied to companies that control the entire retransmission chain — not those, like FilmOn, that hand transmissions off to the internet.

FilmOn said that the law was agnostic about technology because it refers to transmissions that broadly include “other communications channels” along with “wires, cables, [and] microwave.”

If lawmakers wanted to include these secondary transmissions, the appeals court said, then “it was strange for Congress to have provided separate compulsory license provisions…for broadcast retransmissions by satellite carriers.”

What’s more, the ruling says, cable systems serve limited areas while the Internet “has no geographic boundary…meaning that Internet-based retransmission poses a more serious threat to the value and integrity of the copyrighted works.”

Although the justices agreed with FilmOn that “there are important values on its side of the equation,” the legislative history of the Copyright Act is “a wash” leading the court to “defer to the Copyright Office’s interpretation of it.”

The ruling “is not a good result for consumers or competition,” says John Bergmayer, Senior Counsel of open internet activist group Public Knowledge, which filed a brief on FilmOn’s behalf in a related case at the DC Circuit Court of Appeals.

Cable and satellite distributors “are dominant buyers of programming that can use their influence to keep content away from competitors,” he says. “Adding legal barriers to those existing advantages benefits incumbents at the expense of consumers and potential new entrants.”

He adds that “it’s long overdue for Congress to revisit the outdated and overly complex retransmission consent/compulsory license system that makes new entry into the video marketplace overly burdensome.”

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