District court holds that Internet television streaming service is eligible for compulsory licenses under § 111 of Copyright Act because it meets requirements of definition of “cable company” and Copyright Act does not expressly distinguish between traditional cable services and Internet rebroadcasting services.

FilmOn X LLC provides an Internet streaming service that receives and rebroadcasts programs through antenna systems on trailers and in commercial data centers to paying subscribers. Plaintiffs Fox Television Stations, Inc., and other broadcasting companies moved for summary judgment and a finding that FilmOn X and other defendants were not eligible for compulsory licenses under § 111 of the Copyright Act, which gives traditional cable companies automatic access to broadcast content for a set price. FilmOn X cross-moved for summary judgment. In a decision running counter to both the Second Circuit’s opinion in an analogous case and the opinion of the U.S. Copyright Office, the district court held that Internet rebroadcasting services such as FilmOn X are eligible for the same § 111 copyright licenses as traditional cable companies.

In reaching its decision, the district court examined cases leading up to the enactment of § 111 as well as the plain text of the provision, which grants compulsory licenses to “cable systems.” As defined by the statute, a cable system is “a facility … that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations … 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 district court ruled that Internet streaming services such as FilmOn X met the statutory requirements because “the undisputed facts in this case are that the signals . . . are received by antennas, located in particular buildings wholly within particular states. They are then retransmitted out of those facilities on ‘wires, cables, microwave, or other communications channels.’” Moreover, the plaintiffs’ reliance on a subsequent sentence in § 111 did not narrow the definition of a cable system, because that sentence addressed royalty obligations and had no bearing on the definition.

The district court noted that the Copyright Office has consistently opposed compulsory licensing for broadcast retransmissions in general and that the office sees a “fundamental difference” between Internet retransmissions and cable and satellite retransmissions. The court also acknowledged that the Copyright Office had potentially valid policy reasons for its opposition. Nevertheless, it held that these administrative statements were not controlling, as the intent of Congress was clearly expressed in the statute. “[N]o matter how strong the policy arguments for treating traditional cable services and Defendants’ service differently, [§ 111] simply does not draw the distinction Plaintiffs urge.” The district court therefore declined to follow the Copyright Office’s reasoning. Similarly, the district court deemed the Second Circuit 2012 opinion inWPIX, Inc. v. IVI, Inc. (read our summary of that decision here) unpersuasive to the extent it relied on the same reasoning.

Setting aside certain compliance failings by FilmOn X (e.g., errors in source code, certain unpaid royalty submissions and other violations) for which FilmOn X would have to pay damages for infringement, the district court denied the plaintiffs’ motion for summary judgment and granted FilmOn X’s cross-motion. Given the significance, complexity and finality of the issues presented in the ruling, the district court authorized an immediate appeal of its opinion to the Ninth Circuit, maintained an existing preliminary injunction and stayed the action pending the outcome of the appeal.