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IRIS 2017-6:1/31

United States

Compulsory licenses for cable systems do not apply to TV streamers

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Jonathan Perl

Locus Telecommunications, Inc.

The 9th Circuit issued a ruling on 21 March 2017 that the website FilmOn X (“FilmOn”), which streams television shows over the Internet, is not a cable system eligible to reproduce the copyrighted works pursuant to a compulsory license under the Copyright Act. Section 111 of the Copyright Act provides that a cable system is eligible for a compulsory license that allows it to retransmit “a performance or display of a work” originally broadcast by someone else without having to secure the consent of the copyright holder by paying a de minimis fee for each use. FilmOn provides a service that uses antennas to capture over-the-air broadcast programming - much of it copyrighted - and then uses the Internet to retransmit this programming, utilizing both subscription and advertisement-based methods of revenue generation. Essentially, it enables users to watch television on their computers. The case, Fox Television Stations v Aereokiller, arose when a group of broadcasters, including Fox, NBC Universal, ABC, CBS, and Disney, filed suit alleging that FilmOn is not a cable system and should be required to negotiate the royalties for each reproduction of a copyrighted work.

The Court deferred to the Copyright Office’s long held interpretation of the statute that Internet-based retransmission services are not cable systems in reaching its conclusion, explaining that the language of the statute is ambiguous and that the Copyright Office is institutionally better equipped to understand and interpret Congressional intent and the Act’s legislative history. The Court gave deference to the Copyright Office’s position that “a provider of broadcast signals [must] be an inherently localized transmission media of limited availability to qualify as a cable system,” particularly since Congress has been aware of this interpretation for years and has not taken any steps to change the language of the statute.

US Court of Appeal for the Ninth Circuit, No. 15 56420, 21 March 2017 EN