2nd Circuit Rules Internet Streaming of TV Programming is Not a Cable Service

August 27, 2012. The U.S. Court of Appeals (2ndCir) issued its opinion [38 pages in PDF] in WPIX v. ivi, holding that a business that streams copyrighted broadcast TV programming over the internet without consent is not a "cable system" within the meaning of 17 U.S.C. § 111 that is entitled to a compulsory license.

This is a victory for TV broadcasters. Also, since this case concerns an injunction, the Court applied the four part test for the award of equitable relief, which includes a weighing of the public interest. The Court found that consumers benefit from this holding, because "the public has a compelling interest in protecting copyright owners' marketable rights to their work and the economic incentive to continue creating television programming".

The National Association of Broadcasters' (NAB) Dennis Wharton stated in a release that "This confirms that Congress never intended to allow Internet providers to retransmit broadcast programming without the consent of copyright owners."

The numerous plaintiffs below, and appellants before the Court of Appeals, are producers and owners of copyrighted television programming. Defendant ivi, Inc. streamed plaintiffs' programming over the internet, live, to its paying subscribers, without plaintiffs' consent. Defendant Todd Weaver is CEO of ivi.

Defendants argued that ivi is a "cable system" entitled to a compulsory license under 17 U.S.C. § 111. The District Court held that ivi is not cable system, and granted plaintiffs an injunction.

This appeal followed. The Court of Appeals affirmed.

It wrote that "the principal issue presented is whether ivi, a service that streams copyrighted television programming live and over the Internet, constitutes a cable system under § 111 of the Copyright Act. If so, ivi has a statutory defense to plaintiffs' claims of copyright infringement, and ivi is entitled to a compulsory license to continue retransmitting plaintiffs' programming."

Section 111 provides, in part, that "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 (FCC) "shall be subject to statutory licensing upon compliance with the requirements of subsection (d) where the carriage of the signals comprising the secondary transmission is permissible under the rules, regulations, or authorizations" of the FCC.

Section 111 also defines "cable system" as "a facility, located in" the US, "that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed" by the FCC, "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."

The statute is silent as to whether internet streamers can qualify as a cable service.

The Court wrote that the Copyright Office (CO), "the federal agency charged with overseeing § 111 -- has spoken on the issue of whether § 111's compulsory licenses extend to Internet retransmissions." The CO has determined that internet steaming is not a cable service.

The Court held that the CO's determination is entitled to Chevron deference.

The Court held as follows:

"(1) the statutory text is ambiguous as to whether ivi, a service that retransmits television programming over the Internet, is entitled to a compulsory license under § 111;

(2) the statute's legislative history, development, and purpose indicate that Congress did not intend for § 111 licenses to extend to Internet retransmissions;

(3) the Copyright Office's interpretation of § 111 -- that Internet retransmission services do not constitute cable systems under § 111 -- aligns with Congress's intent and is reasonable; and

(4) accordingly, the district court did not abuse its discretion in finding that plaintiffs were likely to succeed on the merits of the case."

The Court also discussed the purpose and public interest of copyright protection, as applied to this case.

It wrote that "Copyright law inherently balances the two competing public interests presented in this case: the rights of users and the public interest in the broad accessibility of creative works, and the rights of copyright owners and the public interest in rewarding and incentivizing creative efforts".

"Here, streaming television programming live and over the Internet would allow the public -- or some portions of the public -- to more conveniently access television programming."

"On the other hand, the public has a compelling interest in protecting copyright owners' marketable rights to their work and the economic incentive to continue creating television programming. ... Inadequate protections for copyright owners can threaten the very store of knowledge to be accessed; encouraging the production of creative work thus ultimately serves the public's interest in promoting the accessibility of such works."

The Court continued that "Plaintiffs' desire to create original television programming surely would be dampened if their creative works could be copied and streamed over the Internet in derogation of their exclusive property rights."

Moreover, "the public will still be able to access plaintiffs' programs through means other than ivi's Internet service, including cable television."

This case is WPIX, Inc., et al. v. ivi, Inc. and Todd Weaver, U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 11-788-cv, an appeal from the U.S. District Court for the Southern District of New York. Judge Buchwald granted the District Court injunction.

Judge Denny Chin wrote the opinion of the Court of Appeals, in which Judges Winter and Droney joined.

While most federal judges go for long stretches without trying a copyright case, or ruling on a complex copyright motion, Judge Chin has considerable experience with copyright law.

As a District Court Judge, he wrote the 2007 opinion of the District Court in Cartoon Network v. CSC Holdings, which is also known as the Cable News Network case and the DVR case. Although, the Court of Appeals reversed in its 2008 opinion [PDF].

He is also the Judge who rejected the proposed class action settlement in Google Books copyright infringement litigation. See, opinion [48 pages in PDF] in Authors Guild v. Google, and story titled "District Court Rejects Google Books Class Action Settlement" in TLJ Daily E-Mail Alert No. 2,206, March 22, 2011.

See also, story titled "Obama Nominates Judge Chin to 2nd Circuit" in TLJ Daily E-Mail Alert No. 1,998, October 7, 2009.