In an appeal of a preliminary injunction against ivi, Inc., the U.S. Court of Appeals for the Second Circuit found that internet streaming services are not entitled to compulsory licenses under 17 U.S.C. § 111 of the Copyright Act for broadcast TV retransmissions. WPIX, Inc. v. ivi, Inc., Case No. 11-788-cv (2d Cir., Aug. 27, 2012) (Chin, J.).
In 2010, ivi began streaming live, broadcast TV signals over the internet to subscribers without consent of copyright owners. In response to cease-and-desist letters, ivi justified its service as being a “cable system” entitled to a compulsory license under § 111. After less than six months in operation, the district court granted the copyright owners’ motion for a preliminary injunction to halt ivi’s internet streaming. ivi appealed.
On appeal, the parties did not dispute that ivi’s streaming internet retransmissions violated valid copyrights of the broadcast programming. Thus, the 2d Circuit considered whether ivi constitutes a cable system under § 111. Section 111 defines a “cable system” as “a facility [that makes retransmissions of] signals or programs by wires, cables, microwave, or other communications channels.”
The 2d Circuit addressed ivi’s likelihood of success on the merits by applying the two-step Chevron test to determine whether § 111’s compulsory licenses extend to streaming internet retransmissions. In step one, the court determined that the statutory language was ambiguous as to whether the internet could be a “facility” because the internet is not located in one place and the streaming retransmissions would inevitably flow through multiple servers. The court further determined that the legislative history was of little help for “other communications channels” because Congress had expressly codified other specific retransmission vehicles in §§ 111 and 119 without addressing the internet. The 2d Circuit found, however, that Congress did not intend for § 111 to extend to the internet because doing so would not further the statute’s purpose of addressing issues of reception and remote access through a local service. Specifically, ivi’s streaming internet service merely addressed subscriber convenience through a national or international service.
In step two, the 2d Circuit determined that the Copyright Office has maintained that § 111’s compulsory license is intended for localized retransmission services and that the internet should not be read into “other communications channels.” Since the Copyright Office does not have authority to make rules carrying the force of law, the weight afforded to its interpretation of § 111 is based on the thoroughness of its consideration, reasonableness of its conclusions, and the consistency of its pronouncements. The 2d Circuit found that an analysis of all of these factors weighed heavily in favor of accepting the Copyright Office’s position as persuasive.
The court also found that the copyright owners would be irreparably harmed by ivi’s continued streaming internet service under a compulsory license because it would undermine the entire industry’s bargaining power with retransmission service providers. The 2d Circuit concluded that the final two injunction factors also supported the district court’s issuance of the injunction.