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

from the filmon-wins-while-aereo-loses dept

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 (often 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 them.

Then, after the Supreme Court ruled in 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 as 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, 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.

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  • identicon
    Anonymous Coward, 17 Jul 2015 @ 5:54am

    it seems to me that, as in other instances, the courts usually side with Hollywood and the entertainment industries, that includes TV and books, as well as games. i understand that those industries want time to go backwards or at least stand still but to continuously want to hold back progress and have the courts assist in them doing so, is totally ridiculous! the ones who have lost out big time are customers, obviously, because if Aereo had been allowed to continue it's business, things would have been shaken up with the stick in the mud industries!

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jul 2015 @ 5:59am

    I got to say, if I was Aereo, I might be a little pissed. Courts basically shit all over me but these guys are good? I don't know; maybe Aereo can use this to try and make a come-back somewhere.

    reply to this | link to this | view in chronology ]

  • icon
    TheResidentSkeptic (profile), 17 Jul 2015 @ 6:19am

    I'm so confused

    Scenario #1:
    I have crapcast cable, connected to a dedicated computer (their set-top box), which connects to an HDMI monitor to show selected entertainment which is streamed to their dedicated computer over that cable. This is considered good and legal.

    Scenario #2
    I have crapcast cable, connected to my computer, which connects to an HDMI monitor to show entertainment which is streamed to my PC over that cable via a 3rd party service. This is considered bad and illegal.

    Seems to me that I am still paying for a digital cable to deliver digital packets of information which I have paid to receive.

    So what's the F'N problem again?

    reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 17 Jul 2015 @ 6:28am

      Re: I'm so confused

      "So what's the F'N problem again?"

      You bypassed their dated business model and, even worse, someone else made some money supplying the demand they wouldn't supply.

      reply to this | link to this | view in chronology ]

  • icon
    nasch (profile), 17 Jul 2015 @ 8:03am

    I guess the judge told the plaintiff they can't have their duck and eat it too.

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    • identicon
      PRMan, 17 Jul 2015 @ 9:41am

      Re: tick... tick... tick... tick... .. . .

      Google car was rear-ended at a stoplight.

      But keep up the Google hate.

      reply to this | link to this | view in chronology ]

      • icon
        jameshogg (profile), 17 Jul 2015 @ 11:16am

        Re: Re: tick... tick... tick... tick... .. . .

        Google was driving the car behind as well. Employee of Google hiding behind persona. False flag to make it look like the victim.

        GOOGLE IS CONTROLLING THE GOVERNMENT AND THE CONGRESS AND THE JUSTICE SYSTEM AND WILL EAT YOUR BABIES AND THROW YOUR PUPPIES OFF CLIFFS.

        reply to this | link to this | view in chronology ]

    • icon
      Ninja (profile), 17 Jul 2015 @ 9:51am

      Re: tick... tick... tick... tick... .. . .

      In another news man decapitates himself with chainsaw. Because to hell with the topic being discussed.

      reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 17 Jul 2015 @ 9:53am

    Ahh, it would be AWESOME if Aereo ends up being a huge shot in the feet of the MAFIAA. If the FCC doesn't change things (which by now given how it has been behaving seems possible) this could lead to a ruling that largely benefits consumers and provide forced availability. I do hope FilmOn doesn't screw up. I'd like to see solid amicus briefs in this case!

    reply to this | link to this | view in chronology ]

  • identicon
    communication channel, 17 Jul 2015 @ 12:12pm

    The internet.

    Nuff said.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 17 Jul 2015 @ 1:48pm

    [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...
    Why are our courts filled with steampunk cosplayers?

    reply to this | link to this | view in chronology ]

  • icon
    Bergman (profile), 17 Jul 2015 @ 7:07pm

    If the internet is not a communications channel...

    Does that then mean that anyone I send an email to is hallucinating any information the email contains that they did not previously have?

    reply to this | link to this | view in chronology ]

  • identicon
    AnonCow, 19 Jul 2015 @ 9:26am

    The Aereo case was a judicial train wreck. The courts should not be able to create a legal Catch-22. Appeals courts should exist to specifically prevent these types of situations from occurring, not create them.

    reply to this | link to this | view in chronology ]


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