[A2k] TechDirt: Compulsory Licenses on Streaming Services

Zack Struver zack.struver at keionline.org
Fri Jul 17 07:21:48 PDT 2015

Court Surprises Everyone: Says Filmon Streaming Service May Be Able To Get
Compulsory License To Stream TV Online

Mike Masnick Fri, Jul 17th 2015 5:31am


Well this is a surprise. During nearly the entire time of the big Aereo
fight over streaming TV online, there was a second player fighting battles
on the side: FilmOn, by self-promotional billionaire Alki David (at times
the name of FilmOn changed to mock Aereo and its investor Barry Diller, but
it was originally FilmOn and eventually became FilmOn again down the road).
Aereo appeared to have been constructed carefully to follow the various
precedents in court cases, whereas FilmOn appeared to be designed on a whim
to just get whatever attention it could. In the early days, it was little
surprise that Aereo won
 and FilmOn lost
badly). The arguments FilmOn's team made in court were not at all
sophisticated and seemed mostly to be daring the judge to rule against

Then, after the Supreme Court ruled
the Aereo case using its "looks like a duck test," both companies shifted
plans and started arguing that *if* the Supreme Court was arguing that they
were the equivalent of *cable TV companies* then they should have access to
compulsory licenses under Section 111 that allows cable systems to offer
local channels so long as they pay a fee to the Copyright Office. In other
words, if you're going to call us a duck, then we're going to quack

In Aereo's case, the court was not impressed
And it looked like the same thing was happening in FilmOn's case as well.
In fact, the company was held in contempt
it tried to push this argument forward. In both cases, courts pointed to
the ruling against ivi
an earlier online streaming company that based its entire business on
leveraging that Section 111 compulstory license. Aereo and FilmOn tried to
argue that the Supreme Court's Aereo ruling effectively overruled the ivi
ruling. And the courts had rejected this argument.

Until now. In a move incredibly surprising to probably everyone, a court
has actually sided with FilmOn
saying that it *can* make use of Section 111. This is a different case and
different court than the one that found FilmOn in contempt last year
(Hollywood is suing in a few different places). In this ruling, the judge,
George Wu, is well aware of all of the other rulings in Aereo and FilmOn
cases... he just disagrees:


*... this Court disagrees with the Second Circuit's decision in an
analogous case....*


In fact, the court argues that the Supreme Court ruling in Aereo actually
*does* support the idea that internet companies qualify for a Section 111
compulsory license, because the Supreme Court keeps pointing back at
the Fortnightly
Supreme Court ruling <https://supreme.justia.com/cases/federal/us/392/390/>,
which was the impetus for Congress to change the law concerning cable TV
and require the compulsory license. And, based on that, the court thinks
that FilmOn has a legitimate argument that its service fits into the same
category. Basically, the court says that it can see no reason that
"internet" video providers should not qualify for the Section 111 licenses
the same way Congress intended cable TV companies to qualify for it. The
judge has trouble seeing how suddenly inserting "on the internet" makes
things any different.


*In finding that ivi's internet streaming service did not qualify for the
§111 compulsory license, the Second Circuit affirmed the district court's
determination that it was unclear whether ivi was a "facility" that
receives broadcast signals and makes secondary transmissions, or whether
the "internet" qualified as a "communications channel." ... The Second
Circuit held that the statutory text was unclear as to whether the
defendant operated a "facility" because "it is certainly unclear whether
the Internet itself is a facility, as it is neither a physical nor a
tangible entity; rather, it is 'a global network of millions of
interconnected computers,'" thus, there is "uncertainty as to whether an
Internet retransmission service is or utilizes a facility that receives and
retransmits television signals.... And the Second Circuit noted that while
Congress added "microwave" as an "acceptable communications channel for
retransmissions," it had not "included the 'lnternet'" as an acceptable
communications channel under § 111.... The Second Circuit did not purport
to find any ambiguity in the phrase "or other communications channels," but
nonetheless deferred to the Copyright Office's view that it should not be
read broadly to include "future unknown services."*


But, the court notes, that really doesn't make any sense under the law:


*This is all at loggerheads with the thrust of Plaintiffs' prior
"technology agnostic" argument in this case. And it is difficult to
recognize the ambiguity the Second Circuit saw in the statute, at least as
applied to the facts of this case... The "internet" is not the "facility"
urged by Defendants here. And it can't be a "facility" for purposes of the
§ 111 analysis because without Defendants' facilities, the internet does
not receive Plaintiffs' public broadcast signal. Thus, the undisputed facts
in this case are that the signals are not received by "the internet." They
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." We know that
they are so communicated because Defendants' users received them.... Thus,
the nebulous nature of the internet does not seem to bear on
whether Defendants operate equipment that "receives signals transmitted or
programs broadcast by one or more television broadcast stations," reformats
those signals, and then sends them out to the viewing public." .... [T]he
Second Circuit's ivi II opinion focuses on the mysterious "ether" (then
spelled "either") through which the retransmission is made, but the
"facility" that Defendants have control over and operate consists of the
"complicated electrical instrumentalities" used for retransmission, which
precede "the internet" in Defendants retransmission scheme. Thus, contrary
to the Second Circuit's conclusion, it is unnecessary to turn to the
legislative history or the administrative interpretation: "if the intent of
Congress is clear and unambiguously expressed by the statutory language at
issue, that would be the end of our analysis."...*


Basically, the internet is meaningless here under the statute, and based on
this court's ruling, ivi, Aereo and FilmOn are likely no different than
cable companies (quack, quack!), and thus they should absolutely be able to
make use of the § 111 compulsory licenses.

Of course, knowing that this ruling is different than others and the fact
that the FCC is rethinking all of this anyway
the court is allowing the case to be immediately appealed. Still, this
certainly makes things interesting and, depending on the eventual appeals
court ruling, could set up a circuit split. Of course, it could become moot
by the FCC, but at the very least it shakes things up in some interesting
ways that say that if a company quacks like a cable duck on the internet,
perhaps we really should treat it as a cable duck.

[pdf of tentative ruling available on article website]

Zack Struver, Communications and Research Associate
Knowledge Ecology International
zack.struver at keionline.org
Twitter: @zstruver <https://twitter.com/zstruver>
Office: +1 (202) 332-2670 Cell: +1 (914) 582-1428

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