Fox TV Stations, Inc. v. Aereokiller, LLC - 851 F.3d 1002 (9th Cir. 2017)

Rule:

To be a cable system, a facility must make secondary transmissions of broadcast signals or programs by wires, cables, microwave, or other communications channels. 17 U.S.C.S. § 111(f)(3). Nothing in that language on its face compels the conclusion that the facility must control the retransmission medium--the wires, cables, microwaves, or other communications channels--that it relies on to deliver its retransmissions.

Facts:

FilmOn operates a service that uses antennas to capture over-the-air broadcast programming, much of it copyrighted, and then uses the Internet to retransmit such programming to paying subscribers, all without the consent or authorization of the copyright holders. Fox sued FilmOn for copyright infringement in 2012; in its most recent defense, FilmOn claimed that it is a "cable system" eligible for a compulsory license under § 111 of the Copyright Act of 1976. The district court granted partial summary judgment to FilmOn, agreeing with it that it qualified as a "cable system" and was therefore potentially entitled to a compulsory license. 

Issue:

Should FilmOn be excluded from Sec. 111’s definition of “cable system”?

Answer:

No.

Conclusion:

As Fox points out, and as FilmOn does not dispute, "[a] traditional cable system is a 'facility' in this sense: It . . . retransmits [broadcast] signals directly to its subscribers over a transmission path fully within its control." Nevertheless, it cannot be concluded that the statute compels the conclusion that to qualify as a "cable system," a retransmission service must encompass or have control over the means it uses to transmit material to paying subscribers. The most important difficulty with Fox's interpretation is that it finds insufficient support in the text of the statute. Nothing in that language on its face compels the conclusion that the facility must control the retransmission medium—the wires, cables, microwaves, or other communications channels—that it relies on to deliver its retransmissions. Fox does not cite any specialized or technical meaning, and as a matter of ordinary interpretation, the text could certainly be read the other way. For instance, someone who deposits a letter in a mailbox could certainly be said to "transmit" his letter "by mail," even though he does not control the mail system that actually delivers his letter to its recipient. Likewise, it would be reasonable to say that someone "makes a transmission" of money "by wire" when he initiates an electronic funds transfer through Western Union, even though he does not have any possession or control over the wires that transport his money to its destination. In addition, § 111(a)(3) specifically discusses a scenario in which one entity selects the content or recipients of a secondary transmission, while a different entity supplies the communications channel. According to that provision, a "carrier" who "provid[es] wires, cables, or other communications channels for the use of others" is not liable for copyright infringement, while the upstream entity who exercises "control over the content or selection of the primary transmission or over the particular recipients of the secondary transmission" may be liable. Section 111(a)(3), therefore, suggests that a facility may be said to make secondary transmissions even if it does not exercise ownership or control over the communications channel it uses. If that is true, then FilmOn's lack of ownership or control over the Internet does not necessarily exclude it from the class of facilities that "make[] secondary transmissions . . . by wires, cables, microwave, or other communications channels."

One could reasonably conclude that extending § 111 to Internet-based retransmission services would not further, and might in fact jeopardize, the values just described. For one, cable systems serve limited geographic communities, but an Internet-based service has no geographic boundary—it can retransmit works across the globe instantaneously—meaning that Internet-based retransmission poses a more serious threat to the value and integrity of copyrighted works. Such threat is exacerbated insofar as Internet retransmissions are more vulnerable than traditional cable to unauthorized copying and other acts of piracy. For another, many copyright owners are capable of transmitting their works over the Internet on their own; they do not need to rely on third parties to do so, as they had to rely on cable companies if they wanted to reach the isolated, distant communities cable systems traditionally served. Relatedly, compared to cable systems and satellite carriers, Internet-based retransmission services have not needed to make the same sort of investments in a delivery platform infrastructure. Finally, there is no evidence that Internet-based services lack market power or face prohibitive transaction costs of the sort that justified the compulsory license for cable systems. To be sure, we agree with FilmOn that there are important values on its side of the equation as well. Still, our conclusion from this discussion is a predictable one: the array of competing interests at stake does not unambiguously counsel for or against a broad reading of § 111.