Nexstar Broadcasting, Inc. v. Time Warner Cable, Inc.

The U.S. Court of Appeals for the Fifth Circuit affirmed a lower court’s ruling denying a content provider/broadcaster’s motion for a preliminary injunction and a temporary restraining order to prevent a cable company from retransmitting copyrighted broadcasts to non-local markets, finding that petitioner was not likely to succeed on the merits of its breach of contract or copyright infringement claims. Nexstar Broadcasting, Inc. v. Time Warner Cable, Inc., Case No. 12-10935 (5th Cir., May 30, 2013) (Jolly, J.).

Nexstar produces and distributes copyrighted broadcast television signals. Time Warner operates systems to distribute those signals to television viewers. Nexstar and Time Warner entered into a Retransmission Consent Agreement (RCA) that permitted Time Warner to retransmit certain television signals owned by Nexstar. Nexstar brought suit against Time Warner alleging that Time Warner breached various provisions of the RCA by retransmitting Nexstar’s copyrighted signals outside of an agreed upon geographic area (non-local). Further, Nexstar alleged that Time Warner’s breach constituted copyright infringement that could not be excused since Time Warner was not entitled to a statutory copyright license.

In the U.S. District Court for the Northern District of Texas, Nexstar moved for a preliminary injunction and a temporary restraining order. In response to Nexstar’s motions, Time Warner argued that the RCA provided broad retransmission rights that were not geographically restricted and, thus, Time Warner did not infringe any copyright owned by Nexstar. The district court denied Nexstar’s motions, finding that Nexstar was not likely to succeed on the merits of its claims. Applying Texas law, the district court held that Time Warner did not breach the RCA because “[n]owhere in the RCA d[id] Nexstar limit its retransmission consent” to only local markets. Because Nexstar’s copyright infringement claims were contingent upon breach of the RCA, Nexstar’s copyright infringement claims were also unlikely to succeed on the merits. Nexstar sought interlocutory appeal.

The 5th Circuit affirmed, reiterating the district court’s reasoning and concluding that the RCA granted Time Warner the ability to retransmit Nexstar signals over every Time Warner system, including non-local markets. According the court, the RCA only described what Time Warner must retransmit, but was silent as to what it may retransmit. Indeed, the language of the RCA as a whole demonstrated that the parties “knew how to insert geographic limitations when relevant,” but simply did not do so.

As for Nexstar’s copyright infringement claim, the 5th Circuit relied on a slightly different rationale than the district court, reasoning that under the RCA and the Federal Communications Act, Time Warner was permitted to retransmit Nexstar’s signals notwithstanding their copyright status, so long as Time Warner later paid Nexstar a royalty. The court recognized provisions under which Nexstar could exercise non-retransmission rights by notifying Time Warner of its intent to do so—but found that Nexstar never provided such notice. Thus, the court found that Time Warner was eligible for a statutory copyright license.

Practice Note: Practitioners should be aware that affirmative directives in agreements may not have the effect of excluding, sub silento, all other options. If intended, practitioners should include a clarifying statement in such agreements expressly prohibiting specific directives from morphing into permissive options, i.e., to show that the intent of the parties as to what one party “must” do, does not include (silent) permission as to what that party “may” do.