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.