Ninth Circuit Holds That Internet Transmission Services Don't Merit Compulsory License Under Copyright Act

In Fox Television Stations, Inc. v. Aereokiller LLC, U.S. Court of Appeals for the Ninth Circuit cautions that media innovators must follow the strict provisions of the law, or face liability for infringement.

The Internet continues to change the ways in which media is consumed around the world. Many millennials do not own televisions, preferring instead to view content on their computers and mobile devices. However, many laws have not quite caught up to this new media landscape. Indeed, the Copyright Act of 1976 does not always allow the "retransmission" of copyrighted media content over the Internet without the consent of the copyright holder, unless specific conditions are met.

In Fox Television Stations, Inc. v. Aereokiller LLC, (9th Cir. 2017), the U.S. Court of Appeals for the Ninth Circuit cautions that media innovators must follow the strict provisions of the law, or else face liability for infringement.

Background Facts of Case

FilmOnX LLC operated an Internet-based service to capture broadcast signals with antennas, and then rebroadcast those signals on the Internet for paying subscribers. This service would effectively allow subscribers to watch live or delayed television programs on their computers or mobile devices.

A group of broadcast stations and copyright holders; including Fox Television Stations, NBC Universal Media, and CBS Broadcasting; sued FilmOnX, which operated a service that used special antennas to capture over-the-air broadcast programming and then retransmit that programming over the internet to its private subscribers. There was no dispute that the material captured by the antennas was subject to copyright protection.

Legal Analysis of Case

A provision of the Copyright Act of 1976, 17 U.S.C. 111(c), provides that a "cable system" can receive a compulsory license to allow it to retransmit a performance of a work even if such work is copyrighted without permission. However, that "cable system" must pay a statutory fee and comply with various regulations. If the re-broadcaster can meet these hurdles under the statute, it would not have any liability for infringement.

Under the Act, "secondary transmissions to the public by a cable system of a performance or display of a work embodied in a primary transmission made by a broadcast station licensed by the Federal Communications Commission... shall be subject to statutory licensing upon compliance with the requirements of [17 U.S.C. 111(d)] where the carriage of the signals comprising the secondary transmissions is permissible under the rules, regulations, or authorizations of the Federal Communications Commission."

The referenced 17 U.S.C. 111(d) spells out extensive requirements for various statements of account for the various compulsory license fees and other regulations around re-broadcasting.

FilmOnX argued that it should be considered a “cable system” under the Copyright Act, thus qualifying for the ability to use the compulsory license scheme outlines above.

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."

Initially, the trial court granted summary judgment in favor of FilmOnX because it held that the service qualified as a "cable system."

However, the U.S. Court of Appeals for the Ninth Circuit held that the Copyright Act was ambiguous on the definition of a "cable system" and deferred to the judgment of the Copyright Office (the federal agency involved with implementing the Act). The Copyright Office has taken the position that Internet-based retransmission services should not be classified as “cable systems.” The Ninth Circuit, therefore, adopted that agency determination. It reversed the trial court and found for the plaintiffs, meaning that FilmOnX could not qualify for a compulsory license and therefore could face liability for infringement.

Takeaways From Ninth Circuit Court's Decision

Even as the Internet changes the ways in which media is delivered to consumers, this case reminds innovators that the provisions of the Copyright Act are still strictly interpreted by courts. Retransmission of copyrighted content will be shielded from liability only if the legislation's provisions are closely followed.

Effective Date: March 21, 2017