Service Retransmitting TV Programming Over the Internet Not Entitled to "Cable System" Defense to Copyright Infringement

Plaintiffs, producers and owners of copyrighted television programming, sued ivi, Inc. and its chief executive officer for copyright infringement for streaming that programming over the Internet without their authorization.

Plaintiffs sought a preliminary injunction and the district court granted it, holding that plaintiffs were likely to succeed on the merits because ivi was not a "cable system" entitled to a compulsory license under Section 111 of the Copyright Act and that the other factors supported issuing an injunction.

Because it was undisputed that plaintiffs had valid copyrights in the television programming that ivi publicly performed without authorization, the principal issue on appeal was whether the district court was correct in concluding that ivi was not a "cable system" under Section 111 of the Copyright Act.  If ivi was a "cable system," it was entitled to a compulsory license to retransmit the programming and would therefore have a statutory defense to plaintiffs' copyright infringement claims.  If ivi was not, it had no such defense.

The Copyright Act defines a "cable system" in part as:

a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service.

17 U.S.C. Section 111(f)(3).

The Second Circuit concluded that it was unclear, based on the statutory language alone, whether ivi (which the court described as "a service that retransmits television programming live and over the Internet") constituted a "cable system."  For instance, the court opined that it was "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, the Second Circuit looked to legislative history for any guidance as to whether ivi constituted a "cable system" under Section 111.  The court divined "two societal benefits" that Congress sought to balance in enacting Section 111:  "Congress enacted Section 111 to enable cable systems to continue providing greater geographical access to television programming while offering some protection to broadcasters to incentivize the continued creation of broadcast television programming."  From this history, the Second Circuit concluded that Congress did not intend Section 111's compulsory license to extend to Internet retransmissions.

The Second Circuit then took the second step of looking to the Copyright Office's interpretation of the statute, which is to be accorded deference provided that it is reasonable.  According to the court, the "Copyright Office has consistently concluded that Internet retransmission services are not cable systems and do not qualify for Section 111 compulsory licenses," a position the court found both "reasonable and persuasive."

The Second Circuit summarized its holdings:

(1) the statutory text is ambiguous as to whether ivi, a service that retransmits television programming over the Internet, is entitled to a compulsory license under Section 111; (2) the statute's legislative history, development, and purpose indicate that Congress did not intend for Section 111 licenses to extend to Internet retransmissions; (3) the Copyright Office's interpretation of Section 111 -- that Internet retransmission services do not constitute cable systems under Section 111 -- aligns with Congress's intent and is reasonable; and (4) accordingly, the district court did not abuse its discretion in finding that plaintiffs were likely to success on the merits of the case.

The court then readily concluded that the district court had not abused its discretion in finding that the other factors (irreparable injury, balance of hardships, and the public interest) supported its grant of a preliminary injunction.

The case cite is WPIX, Inc. v. ivi, Inc., Case No. 11-788-cv (2d Cir. Aug. 27, 2012).

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