FilmOn X settles copyright dispute
May 16, 2017
By Colin Mann
OTT streaming service FilmOn X has reached settlements in its copyright dispute with the major US networks regrading whether Internet streaming services can use the same automatic copyright licence granted to ‘traditional’ cable companies, following a Ninth Circuit ruling in favour of the broadcasters. According to Ryan Baker of Baker Marquart, the attorney for FilmOn X, the operator has confidentially settled appeals of the issue in cases at the D.C., Seventh and Ninth Circuits
In a decision which reversed the district court’s partial grant of summary judgment in favour of an Internet streaming service, the US Court of Appeals for the Ninth Circuit relied on the US Copyright Office’s interpretation of § 111 of the Copyright Act in finding that an Internet streaming service does not qualify as a ‘cable system’ under the statute and therefore is not eligible for a compulsory license to stream copyrighted content from broadcast television signals.
FilmOn used antennas to provide over-the-air broadcast programming to subscription customers via Internet streaming. After the Supreme Court of the United States’ 2014 decision in American Broad. Cos. v. Aereo held that use of antenna technology to rebroadcast TV to the Internet was a ‘public performance’ in violation of US copyright law, FilmOn made an attempt to place its business within the Copyright Act and applied to the US Copyright Office for a compulsory licence to stream its broadcast television content under § 111 of the Act.
Section 111 provides that cable systems are eligible for a compulsory license to retransmit content originally broadcast by someone else. The statute defines a ‘cable system’ as a ‘facility . . . that receives signals transmitted or programs broadcast by one or more television broadcast stations . . . and makes secondary transmission of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members …’
The US Copyright Office denied FilmOn’s § 111 application, deeming that Internet-based retransmission services are not cable systems and thus are not covered under the statute. In the meantime, FilmOn was sued by a grouping of broadcasters for copyright infringement.
Having found that FilmOn did qualify as a ‘cable system’ and may be entitled to a compulsory licence for retransmitted broadcast content, the district court granted partial summary judgment to FilmOn. However, the district court also authorised the immediate appeal on this ‘controlling question of law,’ noting a difference of opinion among the courts on the issue of whether Internet-based retransmission services count as ‘cable systems’ under § 111. The district court was the only court to conclude that Internet retransmissions services qualified as ‘cable systems’.
On appeal, the Ninth Circuit rejected the arguments put forth by both parties with regard to their respective interpretations of the ‘plain meaning’ of § 111 and whether Internet streaming services qualify as ‘cable systems.’
Focusing on the word ‘facility’ in the § 111 language, Fox, on behalf of the broadcasters, argued that FilmOn is not a cable system because it does not control the full retransmission process, contending that the Internet transmission path is outside of FilmOn’s control, or otherwise beyond its ‘facility.’ The Ninth Circuit disagreed, finding that nothing in the statute compels the conclusion that ‘cable systems’ must have control over the full process or retransmission medium.
Relying on the Supreme Court’s decision in Aereo, FilmOn argued that § 111 ‘should be interpreted in a technology agnostic manner,’ making compulsory licences available to any facility that retransmits broadcast signals or programming, regardless of the medium. However, the Ninth Circuit clarified that Aereo did not deal with § 111, rather it examined the Copyright Act’s Transmit Clause under § 101 to determine the types of retransmissions qualifying as public performances of copyrighted content.
The Court also said that Internet-based retransmissions actually lend themselves to piracy and pose a ‘more serious threat to the value and integrity of copyrighted works.’
Addressing the Copyright Office’s long-held interpretation of § 111, the Ninth Circuit said that Internet streaming services may not use the same statutory compulsory copyright licence granted to cable companies, thereby reversing the district court suggesting that the Copyright Office’s consistent position on § 111 strikes a balance between the public’s interest in ‘improved access to broadcast television and the property rights of copyright holders,’ and is based on the statute’s text, structure and legislative history. The court further noted that Congress has ‘effectively acquiesced’ to the Copyright Office’s position, since Congress has repeatedly amended the statute in other respects, but has left this interpretation of § 111 intact.