NEWS

By Tamlin Bason  

July 28 — FilmOn.com Inc., a company that offers a service identical to the one held infringing by the Supreme Court in ABC v. Aereo, violated an injunction when it continued operating for nine days after Aereo itself stopped transmitting copyrighted content to Internet users.

Holding FilmOn in contempt, the Southern District of New York on July 24 rejected the argument that the Aereo decision effectively turned the two streaming services into cable companies entitled to compulsory licences under Section 111 of the Copyright Act. Yes, the Supreme Court implied that Aereo's service may be similar to certain cable companies, “but an implication is not a holding,” the court said. It then concluded that the Supreme Court ruling did not overturn controlling Second Circuit precedent that streaming services are not entitled to compulsory licenses.

Since both the instant case and the Aereo litigation concerned operations in the Second Circuit, it was “reasonable” for FilmOn to follow Aereo's lead, the court said. It accordingly determined that FilmOn was in contempt beginning the day after Aereo itself suspended operations. It ordered the company to pay $90,000, or $10,000 for each day that it was not in compliance with the earlier injunction.

Aereo's Mini Antenna Argument Not Persuasive

A consent order of judgment and permanent injunction was entered in the instant case in August 2012. That injunction, however, did not specifically prohibit FilmOn from using its “Teleporter” system.

Virtually identical to Aereo's system, the Teleporter system relied on the use of thousands of miniature antennas to capture over-the-air broadcasts and them transmit those broadcasts to individual subscribers.

The Supreme Court on June 25 rejected Aereo's argument that its one-antenna-per-subscriber setup did not result in a public performance of the broadcasters' copyrighted content. Am. Broad. Cos. v. Aereo, Inc., No. 13-461, 2014 BL 175778, 110 U.S.P.Q.2d 1961 (U.S. June 25, 2014). Rather, the court instead found Aereo's practices to be “highly similar” to those of early generation cable companies that Congress sought to regulate with the Section 111 statutory license.

Court, Agency Agree: Aereo Didn't Overrule Ivi 

FilmOn raised two arguments for why it should not be held in contempt for using its Teleporter technology. First, it argued that since that technology was not specifically enjoined by the 2012 injunction, its continued use cannot form the basis of a contempt order. The court disagreed.

“[D]efendant's suggestion that the Injunction must list every potential transmission mechanism that it bars in order to be ‘clear and unambiguous' is simply untenable,” Judge Naomi Reice Buchwald said. “The fact that the Injunction did not explicitly mention the mini-antenna technology does not render it unclear, and defendant's argument to the contrary is baseless,” the court said.

FilmOn's second argument was based on the Supreme Court's repeated references to the similarities between Aereo's service and two cable television (CATV) services that had been reviewed by the Supreme Court in the 1960s and 1970s.

Although the Supreme Court had found those CATV companies to be noninfringing, Congress intervened soon after and, among other things, enacted the transmit clause and Section 111. The Supreme Court said that the latter section “creates a complex, highly detailed compulsory licensing scheme that sets out the conditions, including the payment of compulsory fees, under which cable systems may retransmit broadcast.”

“Defendant may argue that the Supreme Court's language in Aereo implies that FilmOn may be entitled to a license under § 111, but an implication is not a holding,” the court said. “In fact, the governing law in the Second Circuit is that services like FilmOn that retransmit broadcast programming are not entitled to compulsory licenses under § 111 of the Copyright Act,” the court said, citing WPIX Inc. v. Ivi Inc., 691 F.3d 275, 104 U.S.P.Q.2d 1071 (2d Cir. 2012).

In Ivi, the Second Circuit took an exhaustive look at Section 111 before determining that web streaming services are not entitled to compulsory licenses under that section. The court here said:

The detailed analysis and ultimate decision of the Second Circuit is not rendered moot by the Supreme Court's use of an analogy in answering an entirely different question. Moreover, given that Aereo never mentioned Ivi, let alone purported to overrule it, Ivi remains controlling precedent here.

In any event, even if Aereohad overruled Ivi, FilmOn still would have needed to obtain a Section 111 license. It did not even apply for such a license until July 10, after the motion to show cause had already been filed.

“Not only is hope no defense to the violation of an injunction, but defendant's faith that the Copyright Office would grant it a cable license was misplaced,” the court said. It then noted that the Copyright Office apparently shared its view that Aereodid not overturn Ivi since the agency told Aereo in a July 16 letter that Internet retransmissions of broadcast television are not within the scope of a Section 111 license.

The court accordingly ordered FilmOn to pay $90,000 and it said that the plaintiffs would also be entitled attorneys' fees in an amount to be determined later.

The plaintiffs were represented by Anthony D Boccanfuso of Arnold & Porter LLP, New York. FilmOn was represented by Ryan G. Baker of Baker Marquart LLP, Los Angeles.

To contact the reporter on this story: Tamlin Bason in Washington at tbason@bna.com

To contact the editor responsible for this story: Naresh Sritharan at nsritharan@bna.com

Text is available at http://www.bloomberglaw.com/public/document/CBS_Broadcasting_Inc_et_al_v_FilmonCom_Inc_Docket_No_110cv07532_S.