LEGAL MEMO BY MICHAEL D. BERG

The Two Court Rulings Rocking Aereo, FilmOn

In Fox Television Stations' court battle with FilmOn in Washington, D.C., the court held that the Copyright Act forbids FilmOn from retransmitting Fox's copyrighted programs over the Internet. And in New York, CBS Broadcasting had a big win against FilmOn, after a judge found its CEO to be in contempt of court. Now Aereo may attempt to distinguish its technology from FilmOn's, as litigation proceeds.

In today’s Legal Memo, I update my Aug. 1 column, “The 411 On Aereo’s Many Legal Challenges”.

Two major new court rulings have since rocked the Aereo/FilmOn X legal landscape.  

Last month, I focused on Aereo and its competitors, such as FilmOn X (aka Barry Driller), and others using similar technology. They are abbreviated here as “URs”, for “unauthorized retransmitters.” Without consent from or compensation to TV broadcasters, URs use multiple tiny antennas, one for each subscriber, to capture over-the-air TV broadcast signals and retransmit them to paying customers by Internet streaming to consumer devices. URs also offer digital video recorder (DVR) options enabling customers to pause broadcast programs or record them for later viewing.

That column also summarized several resulting, and still pending, lawsuits brought by broadcasters, programmers, a UR and others on copyright and other grounds. I compared the URs to the startup period of the cable industry, which at first, also retransmitted broadcast signals to paying customers without broadcaster consent or payment.

Back then, the courts ruled mainly against copyright protection for the broadcasters. In response, through the Copyright Act of 1976, Congress and the FCC required cable operators to have broadcast permission and compensation via the must carry/retransmission consent regime. 

Public performance?

The key copyright law issue now is whether the new UR transmissions of broadcast signals are “public performances” of broadcast property.  If there is a public performance, copyright law applies, and the URs cannot use the signals without broadcaster consent and the right to compensation. The federal copyright law’s  “transmit clause,” defines public performance as “… to transmit or otherwise communicate a performance … to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.”

BRAND CONNECTIONS

In current litigation, several courts have come down on opposite sides of the public performance issue. Some courts have found no public performance because, although the URs offer their services to the entire public and some are expanding aggressively to achieve nationwide coverage, each individual antenna can only be used by one subscriber at a time. Therefore, each transmission is to one user rather than the public.

Other courts have held that the TV programs being transmitted to the public is what really matters. Each transmission may be private, but these courts have argued that those antennas are nevertheless networked together so that a single tuner server, router, video encoder, and distribution endpoint can communicate with them all. For example, in the Fox v. FilmOn ruling this month in Washington, D.C., the court endorsed a dissenting opinion in another case that FilmOn technology was “hardly akin to an individual user stringing up a TV antenna on the roof,” and that the federal Copyright Act says it applies to technologies that did not exist when the Act took effect. A court on this side of the debate found that UR technology, such as the thousands of little antennas that are co-located and offer the same broadcast programs, are not functionally necessary.

Ground-shaking New Rulings

The two new court rulings this month in D.C. and New York hold that the transmissions are public performances. These are potentially game-changing decisions, though appeals of both could take a year to conclude.

Fox Television Stations, Inc., et al., v. FilmOn X LLC, et al., issued Sept. 5 by the U.S. District Court in Washington, DC

  • This is the first time that a court in the important D.C. federal circuit has addressed the new UR copyright issues. The District Court held resoundingly in favor of the broadcasters: “The Copyright Act forbids FilmOn X from retransmitting Plaintiffs’ copyrighted programs over the Internet.” On copyright, the Court said “FilmOn X is in no meaningful way different from cable television companies,” who must obtain prior consent from broadcasters.
  • The Court issued a preliminary injunction against FilmOn ordering it to stop operating nationwide, except in the Second Circuit, where a New York Court had ruled earlier in favor of Aereo based on a 2008 decision known as Cablevision. The Second Circuit includes New York, Connecticut, and Vermont.
  • In the Sept. 5 D.C. opinion, the court criticized the Cablevision ruling for failing to consider the potential audience of the underlying work rather than the potential audience for each separate mini-antenna transmission. The focus should be on whether the copyrighted work — the TV signal or program — is being transmitted to the public rather than whether the transmission itself is public, the court said.
  • The D.C. Court embraced a dissent in the 2008 Cablevision case, which said that the thousands of individual antennas are functionally unnecessary. FilmOn, in its defense, said it followed the Cablevision ruling in designing its technology. However, the Cablevision ruling is binding only in the Second Circuit.  
  • FilmOn has already appealed the Sept. 5 decision to the U.S. Court of Appeals for the D.C. Circuit, which has ordered the parties to take preliminary steps by Oct. 21. Ultimately, the Supreme Court may have to resolve the issue.

CBS Broadcasting Inc., et al. v. FilmOn.Com, Inc., Issued Sept. 10 by a U.S. District Court for the Second Circuit, in New York

Other broadcast TV networks are also plaintiffs.  The Second Circuit is also a prominent judicial circuit and handles many copyright law cases. 

  • This suit was first brought on Oct. 1 2010. FilmOn launched its service in Sept. 2010. The broadcasters sought money damages and a permanent injunction, ceasing FilmOn operation.
  • In July 2012 the networks and FilmOn reached a Settlement Agreement that, (1) required FilmOn and its CEO pay $1.6 million in damages to plaintiffs and agree to a permanent injunction against FilmOn issued by the Court in August 2012; (2) FilmOn would remove “inflammatory videos” from the Internet urging participation in Barry Driller’s California lawsuit against CBS; and (3) extended Court supervision over implementation of the settlement. The injunction shut down FilmOn services. On Aug. 15, oral argument was held about compliance with the Settlement Agreement.
  • The Sept. 10 court ruled that FilmOn failed to pay the settlement money except for $250,000 and failed to withdraw its “inflammatory videos” from the Internet. But FilmOn’s recent launch of its video-on-demand service violated the permanent injunction.
  • The New York Court found FilmOn and its CEO to be in contempt of court, ordered them to pay the rest of the $1.6 million agreed to, plus interest, costs of collection and attorney’s fees.

The net effect for FilmOn:  FilmOn may not operate now in New York, Connecticut, and Vermont until a Second Circuit Appeals Court decision. That could happen quickly. Future operation in the rest of the country could depend on how the D.C., 2nd Circuit or another Circuit rules on appeal. In the meantime, FilmOn is barred from operating nationwide, due to the D.C. Circuit District Court injunction.

The net effect for Aereo: No injunctions have issued against Aereo yet. Aereo has announced, but delayed the start dates for its next four markets: Columbus, Cincinnati, Indianapolis and San Antonio. Aereo will likely try to distinguish itself from FilmOn. The recent wins for broadcasters in D.C. and New York may spawn further litigation against Aereo and perhaps other URs.

The net effect for broadcastersTwo significant wins, especially the Fox D.C. Sept. 5 opinion. The Sept. 10 New York opinion addresses details of the settle agreement, but it doesn’t depart from Cablevision, which was decided in the same court.

Other recent developments: FilmOn has appealed a California preliminary injunction pending in the Ninth Circuit. Oral arguments were made on August 27, there is no appeals ruling yet.  Even if the Ninth Circuit reverses the injunction, there still remains the nationwide injunction issued by the D.C. Circuit.

What’s next?  All of these developments may take more than a year to play out, and it may be up to the Supreme Court to resolve the interpretations of the Copyright Act’s transmit clause. There may be further changes in where the URs can operate legally. Ironically, given that cable and its satellite and fiber optic competitors are required to obtain broadcasters’ prior consent for retransmission of broadcast programming, and pay stations electing retransmission consent, cable and other MVPD’s may well be on the same page as broadcasters as to the Aereos, FilmOns and others of their ilk.  Those new services could draw viewers away from cable and other MVPDs as will as from broadcast stations.

This column on TV law, policy and regulation by Michael Berg, an experienced Washington D.C. communications lawyer and principal in the Law Office of Michael D. Berg, appears periodically. He is also the co-author of FCC Lobbying: A Handbook of Insider Tips and Practical Advice. He represents commercial and noncommercial television and radio broadcasters, and others in communications industries. He can be reached at 1200 New Hampshire Ave., N.W., Suite 800, Washington, D.C. 20036-6802; [email protected]; or 202-776-2523. Read more of Berg’s Legal Memos here. 

Norry Sierra Harn, a legal intern at Berg’s firm, contributed to this article. She expects to have her Juris Doctor degree in 2015 from the Georgetown University Law Center.  Her email is[email protected]telephone 562-219-1212.

Note: This column provides general guidance only, and is not a substitute for individualized legal advice for particular situations.


Comments (22)

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Bobbi Proctor says:

September 27, 2013 at 9:55 am

I still wonder if anyone has checked these ‘miracle antennas” to see if they are actually picking up all of the delivered stations and that each renter’s antenna is actually connected in some way only to their television receivers? And, if they actually work, why they aren’t being sold. I’d like to buy a few if they do and I’m sure a lot of others would.

Clayton Mowry says:

September 27, 2013 at 10:19 am

I think there is a shroud of secrecy over their operations and subscriber counts because it is too hard to technically make each tiny antenna addressable and account that its signal is streaming to the unique subscriber’s IP address. I would bet that the array of antennas often does not stream to the person supposedly renting it. And I also agree, if these things work as great as they say they do, why not publicly demonstrated how a “dime sized” antenna achieves a clear HD signal in the midst of a big city with a lot of rf and reflections. Think Aereo does want that scrutiny.

    Angie McClimon says:

    September 27, 2013 at 10:40 am

    I find it hard to believe that if they install an array of 100 micro antennas, only 100 people can use the service at any given time. There has to be a cheat in there somewhere.

Ellen Samrock says:

September 27, 2013 at 11:27 am

Yup, it’s…just…about…game…over…for Aereo. Great analysis from Mr. Berg. A few judges may have been bamboozled by Aereo but other courts have recognized what the underlying principle of services such as these is all about, namely stealing content and re-selling it. No doubt the network suits are studying the FilmOn X and Aereokiller decisions carefully and planning their next strategy.

Keith ONeal says:

September 27, 2013 at 9:22 pm

Just waiting for Homebrew’s usual comment.

Tracey Thomerson says:

September 28, 2013 at 4:30 pm

I find it interesting this article is entitled “Two Court Rulings Rocking Aereo” when in fact both cases mentioned are against FilmOn, not Aereo.

The genie is out of the bottle, there’s no putting it back. The people have spoken and are speaking, they want Ala Carte programming or they are willing to cut their cord entirely.

When will the old men in charge learn to EMBRACE THE TECHNOLOGY (and profit) rather than hide in their turtle shells and fight the technology (and be destroyed)? Did nobody pay attention to what happened to the music inductry over the last 15 years?

    Ellen Samrock says:

    September 28, 2013 at 6:26 pm

    Spoken like a true Aereo sock puppet. Hey, if Aereo is so slam dunk legal how come the entire western half of the US won’t be getting it, namely the entire 9th Circuit Court region? And why is it’s presence in jeopardy in the upper east coast states such as Maine, New Hampshire, Massachusetts and Rhode Island? Look, this isn’t about squashing technology. And, in theory, the networks shouldn’t care if Aereo exists or not. But the company needs to pay content owners a fair, negotiated price for the use of their content. This is the sensible, legal and right thing to do. If Chet Kanojia just signs the licensing agreements then all his legal headaches will go away and Aereo can begin to grow and flourish.

    Tracey Thomerson says:

    September 29, 2013 at 8:13 am

    You make a few good points D BP, not sure why you feel the need to call me names, but anyway… Recently Comcast CEO Brian Roberts said in an interview with PBS (http://www.pbs.org/newshour/bb/media/july-dec13/comcast_09-25.html) that A La Carte programming will “never happen” at Comcast. This is exactly my point. His customers have said loud and clear what they want, but this guy doesn’t care, he will hang on to his cash cow and keep doing things the old way until he can’t anymore. Just like the music execs did in the first decade of this century. Until someone steps up and becomes the TV Broadcast Steve Jobs, Broadcast TV subscription rates will continue to decline. (http://www.slate.com/blogs/future_tense/2013/09/19/pay_tv_subscriber_decline_college_cord_nevers_are_killing_cable.html) … (http://mediadecoder.blogs.nytimes.com/2012/05/03/nielsen-reports-a-decline-in-television-viewing/?_r=0). I guess what I’m saying is, how unfortunate that Aereo even exists. Why didn’t the TV Broadcasting Community already think of this revenue generating idea and enact it years ago? I fear the answer is: Because they can’t. They refuse to EMBRACE THE TECHNOLOGY, they are too busy fighting it.

    Ellen Samrock says:

    September 29, 2013 at 12:45 pm

    Actually, Embrace, sock puppet is a descriptor, not a name. Obviously, you’re not a sock puppet for Aereo. You mention Steve Jobs, I’m assuming, in context with iTunes and how it disrupted the entire music industry’s method of distribution. But, as you know, Jobs and Apple spent years negotiating with the record labels to acquire the rights to sell individual song titles online. And with the new iTunes Radio service, Apple had to go back to those same labels and get the streaming rights. Had Aereo done this with the networks right from the start, instead of employing some snake oil technology to do an end run around the law, they would never have gotten into this legal mess. As for cable resisting the calls to go a la carte, in many cases they can’t. As we know, cable companies have contracts that commit them to carrying highly rated networks along with low rated networks that belong to the same parent company. Like NBC but don’t like The Watching Alfalfa Grow Network? Too bad. You’re getting both because, contractually, the cable companies have to do it. I still predict that, one day, the cable companies will throw in the towel on carrying TV channels and just become an internet provider. So much simpler and just as profitable. An encouraging sign is the interest shown by Jeff Bewkes in making HBO an internet-only network (however, being the CEO of TWC he wants to tie it in to a service that only TWC cable subscribers get). But can you imagine what would happen if all the most desired cable nets decided to go internet-only? Consumers would get their TV a la carte and the MVPDs would dry up overnight. In many ways Netflix and Hulu Plus are doing that now. Which brings me back to your main point. I don’t think most people in the industry are resistant to technology as long as they can all profit by it. The trick is to find a way to do so.

    Wagner Pereira says:

    September 29, 2013 at 10:53 pm

    I would really be interested in knowing if D BP, Homebrew and other Aereo=theft posters think Slingbox is legal?

    Ellen Samrock says:

    September 30, 2013 at 2:24 am

    Slingbox is a piece of hardware that extends the reach of one’s subscription TV service to other devices around the house or on the internet. “Placeshifting” they call it. Slingbox doesn’t have a monthly subscription fee and must be hooked up to a video source, either a cable set top box, DVR or satellite receiver. Aereo, on the other hand, requires a monthly subscription and actually supplies the user with a television service similar to cable or satellite which can then be received on numerous devices. No one is suing Slingbox, everyone is suing Aereo. Obviously they see the difference even if you don’t.

    Wagner Pereira says:

    September 30, 2013 at 9:36 am

    OK, so you agree Slingbox is legal. Slingbox has a tuner in it (at least all the millions of units sold up until a month or so ago), despite what you say. So with that in mind, if I put my Slingbox in a co-location facility near the Empire State Building Master Antenna in NYC, with plenty of RF, are you saying that my Slingbox now is illegal?

    Ellen Samrock says:

    September 30, 2013 at 12:25 pm

    Slingbox has no tuner. Period. It needs to be hooked up to either a cable set top box, DVR, satellite receiver and internet. Without any of those, Slingbox is a brick.

    John Murray says:

    September 30, 2013 at 1:46 pm

    I’m afraid you miss (or are deliberately burying) the point. Broadcasters aren’t “fighting” the technology. In fact, like your “handle,” they are embracing it. They simply want to get paid for their content, just as does any other provider of expensive-to-produce copyrighted content. If Mr. Kanojia offers to negotiate with broadcasters over compensation, there’s no issue.

    Wagner Pereira says:

    September 30, 2013 at 6:39 pm

    Sorry you are incorrect and do not know the product. From the earliest Slingboxes, Slinbox Tuner (interesting name for no tuner), Slingbox AV, Slingbox Pro, Slingbox Solo or the Slingbox HD (SB-300), these all have tuners. Millions of Slingboxes are in the USA with a tuner built in. But let’s say I take a brand new Slingbox 350 or Slingbox 500 that does not have a built in tuner. I purchase either a LG or HP External ATSC tuner (or any of the other brands) for between $75 to $125. I plug that tuner into the Slingbox 350 (for a total cost of $225). I put that in a 1u unit and have it installed in a co-location unit near the Empire State Building Transmitter Site in NYC. A simple yes or no, do you think I breaking the copyright laws?

    John Murray says:

    September 30, 2013 at 6:57 pm

    Minor distinction, Insider. If you are retransmitting that signal to multiple end users and charging them a subscription fee for that — then a fair interpretation of copyright law would be that you owe the owner of the copyrighted material you are retransmititng-for-profit some consideration for that. Mr. Kanojia’s argument that all he is providing is an antenna-cum-DVR is too cute by half.

    Ellen Samrock says:

    October 1, 2013 at 12:15 am

    OMG! I don’t believe it! Incisor you are too much. You futilely try to make your argument using a product that was discontinued 7 years ago and the Pro HD (which has no tuner, BTW) was discontinued last year. As it is (or was) the original Slingbox still required a cable connection. The rest of your installation is only missing an alchemist’s hat. Good thing I wasn’t drinking milk when I read your comment, it would have definitely sprayed out my nose from laughter.

    Wagner Pereira says:

    October 1, 2013 at 2:35 pm

    First, I have 5 ProHDs and they have a coax in and out on the rear because they have a tuner. You still do not have any idea what you are speaking about with Slingboxes. Regardless, You still refuse to answer the question because you know you cannot have it both ways.

    Wagner Pereira says:

    October 1, 2013 at 2:37 pm

    A Slingbox does not transmit copyright material to multiple users – and according to Aereo (whether incorrect or not), they do not either.

    Ellen Samrock says:

    October 1, 2013 at 3:53 pm

    Like I said, the networks aren’t suing Slingbox. But they are suing Aereo. Obviously, they can spot the difference even if you can’t.

    Wagner Pereira says:

    October 1, 2013 at 7:51 pm

    Unfortunately you can show the line where it is crosses from legal to illegal, meaning you cannot support your argument, even when asked for a simple yes or no. No surprise given you have posted incorrectly 3 times about what a Slingbox does or does not contain.

    Ellen Samrock says:

    October 2, 2013 at 1:19 am

    Mr. Berg, myself and others here have already made our case regarding the illegality of Aereo. If you want to continue to argue the point using dead Slingbox products, knock yourself out, Incisor. I’m done discussing it.


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