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FilmOn X sets out licensing appeal case

OTT Internet TV service FilmOn X (formerly Aereokiller LLC) has set out its case against the appeal by US broadcast networks opposing the July 2015 ruling by Judge George Wu, of the Central District of California, that FilmOn X is entitled to a compulsory license under Section 111 of the Copyright Act of 1976.

Wu stated that companies like FilmOn X should have all the rights and responsibilities of cable systems, as defined in the Copyright Act, and quoted the Supreme Court’s opinion in American Broadcasting Cos., Inc. v. Aereo, in which the Court compared companies such as FilmOn X to cable companies.

The networks appealed Judge Wu’s decision to the Ninth Circuit. The question certified for appeal was whether a company that uses the Internet to make secondary transmissions of broadcast television to subscribers is entitled to a Section 111 compulsory license. At oral argument August 4, the networks argued that a further act of Congress is required for companies such as FilmOn X, which transmit to subscribers over the Internet, to obtain a Section 111 copyright licence.

The networks relied principally on jurisprudence for the Second Circuit, most notably WPIX, Inc. v. ivi, Inc. They also continued to argue that only 1970s technologies could be covered by the four-decades-old Copyright Act. The Networks arguments were the same arguments that Judge Wu had heard and decided.

According to FilmOn X, the Networks misinterpret the plain statutory definition of a ‘cable system’ under the Copyright Act, as well as the legislative history of that act, and contend that Congress purposely drafted the definition of cable system in a broad manner to ensure that technologies developed after 1976 would fall within the scope of the act so cable systems could use those technologies to deliver free over-the air broadcast television to the public.

In oral arguments, FilmOn X countered the Network suggestion that the Court apply ivi, arguing that that case was decided on the basis that ivi presented no evidence of physical facility, which is a definitional requirement of a Section 111 cable system. In contrast, FilmOn X has physical facilities, brick-and-mortar head-ends, which satisfy the requirements of the Act.

FilmOn X showed that the Congress was acting in 1976 to provide room for the disruptive technology of that time: what we now call traditional cable. The spirit of the law was to promote innovation and competition in order to continue to increase the public’s right to access broadcast television. While the Networks argued Congress intended the permissible technology under the statute be essentially frozen in the past, FilmOn X argued that Congress intended that the Act would embrace technological advancement, including the Internet.

The consequences of the Networks’ attempt to expand the very specific details of ivi into a blanket ruling preventing Section 111 cable systems from using new technologies would be significant, says FilmOn X. Were the court to adopt that reasoning, it would restrict and stifle investment and innovation, and it would limit the access of consumers to broadcast television, it warns

The panel asked FilmOn X attorney Ryan Baker, that, if the statute is ambiguous, as the Networks argue, why doesn’t Congress step in and fix it? Baker countered that Congress did indeed fix it, in 1976, with a law that clearly allowed for new technologies. “It’s not ambiguous. It’s broad,” he declared.

Consumer advocacy groups the Electronic Frontier Foundation and Public Knowledge have filed briefs supporting FilmOn X, saying that Federal Court rulings in favour of the Broadcasters are an effort to stifle innovation and competition and explaining that the Copyright Act of 1976 was clearly meant to be technology-neutral.

Additionally, the Consumer Federation of America and the Federation for the Blind filed amicus briefs in support of FilmOn X.

The case in the D.C. Courts is essentially the same as the case in the Ninth Circuit, featuring the same parties and the same issues. In the appeal filed in D.C., FilmOn X argued that for three decades, the rule has been that when that where two cases between the same essential parties on the same cause of action are commenced in two Federal courts the one that commenced first should be allowed to proceed to its conclusion first.

The networks filed against Aereokiller in the Ninth before the D.C. case was filed. At this time, the case is proceeding in front of the district court in D.C., as well as the D.C. Circuit Court, which is hearing an appeal similar to the appeal argued today. Briefing of that appeal is not yet complete.

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