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District court holds Internet television streaming service is not eligible for compulsory license under Section 111 of  Copyright Act because it does not meet definition of “cable company” and therefore infringed broadcasters’ public performance rights.

FilmOn X, LLC provides a service that captures the signals of multiple television channels that are broadcast over the air and then streams them over the Internet using thousands of tiny, dime-sized antennas. Plaintiffs Fox Television Stations Inc. and other broadcasting companies moved for summary judgment that defendant FilmOn X and others were not eligible for compulsory licenses under Section 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 that it was so entitled. In a decision that was initially filed under seal in November 2015 and unsealed on December 1, the district court held that FilmOn X did not qualify for the same Section 111 copyright licenses as traditional cable companies because it relied on the Internet, which was neither a tangible nor physical “facility,” as defined by the statute.

In reaching its decision, the district court first rejected Fox Television’s attempts to dismiss the case on the basis of res judicata principles. Although the issues presented in the case were similarly litigated twice in New York, and although FilmOn X decided to bring actions in California and D.C., the instant case did not involve the same nucleus of facts as the New York action. The district court also rejected defendants’ reliance on ABC, Inc. v. Aereo, Inc. (Aereo III), in which the U.S. Supreme Court held that the differences between Aereo, a program similar to FilmOn X, and cable companies were “invisible to subscriber and broadcaster alike.” In Aereo III, the legal issue was whether the differences between Aereo and cable companies were material for purposes of Transmit Clause liability; here, the question is whether the differences are relevant for purposes of Section 111.

Interpreting the plain language of Section 111, which grants compulsory licenses to “cable systems,” the district court held that FilmOn X’s system did not qualify as a “cable system.” As defined by the statute, a “cable system” is a physical facility that must both (1) “receive signals transmitted or programs broadcast by one or more television broadcast stations licensed by the FCC” and (2) “make 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 concluded that FilmOn X was not a “facility” under the statute.

While FilmOn X has physical facilities with dime-sized antennas that captured broadcast signals, it ultimately relied on the Internet to deliver video content to the subscriber. Cable companies have a control center known as a “headend,” from which they both receive signals and directly retransmit them by coaxial cable, wires, or microwave links to their subscribers, noted the district court. In contrast, FilmOn X relies on hundreds of thousands of separate operators of computers and computer networks independently deciding to use common data transfer protocols to exchange communications and information with other computers. Since the Internet is neither a physical “facility located in any State” nor a “physical tangible entity,” the district court held that FilmOn X’s Internet-based retransmission system was not entitled to a Section 111 compulsory license. The district court also found persuasive the Copyright Office’s consistent position that Internet-based retransmission services are not cable systems and do not fall with Section 111. 

Having concluded that FilmOn X was not entitled to a Section 111 compulsory license, the district court next addressed whether Fox Television Stations’ public performance rights were actually infringed. Contrary to the defendants’ arguments, the issue of infringement was ripe for adjudication, given that it was a purely legal question that could be resolved based on undisputed evidence in the record. There was no dispute that the broadcasters owned copyrights in the asserted content. It was also undisputed that FilmOn X’s nearly simultaneous retransmissions of over-the-air content were public performances for purposes of the Transmit Clause, and that the plaintiffs did not authorize these performances. Thus, FilmOn X’s nearly simultaneous retransmissions directly infringed plaintiffs’ exclusive right of public performance. Moreover, FilmOn X’s time-delayed service, which allowed individual subscribers to record over-the-air television programs and watch the selected content at a later time, were not merely “private transmissions” to single users and therefore also constituted infringement of plaintiffs’ public performance rights.