Definition of Cable System not Technology-Neutral, District Judge in FilmOn X Ruling Says

Though the ruling was issued last month (see 1511130048), Collyer’s opinion was sealed until the broadcast plaintiffs and FilmOn X could propose a version of it that redacts proprietary information. Their proposed redacted version was signed by Collyer Wednesday. “The fact that ‘an entity performs copyrighted works in a way similar to cable systems’ cannot be construed as an order that such entity ‘must then be deemed a cable system for all purposes of the Copyright Act,’” Collyer said.

“The court seems to have played it pretty straight,” said Pillsbury Winthrop communications attorney John Hane, who's not connected to the case. “Cable systems use specific facilities and operate in a limited geographic area, while Internet services don’t. That’s the basic distinction, and this decision really hammers it home.” FilmOn X and some of the broadcast plaintiffs didn’t comment.

FilmOn X had argued that it was entitled to a compulsory copyright license, like a cable system. It also has been lobbying the FCC to designate it as a multichannel video programming distributor (MVPD). U.S. District Judge George Wu ruled in Los Angeles (see 1507170024) that FilmOn X is eligible for a compulsory license, while the 2nd Circuit ruled that streaming video services aren’t eligible for such licenses. Collyer’s ruling is in line with other rulings against FilmOn X, making Wu’s decision the outlier, a cable attorney not connected with the case told us. Wu’s ruling has been appealed to the 9th U.S. Circuit Court of Appeals, and Collyer’s decision is expected to be similarly appealed by FilmOn X to the U.S Court of Appeals for the D.C. Circuit.

FilmOn X’s arguments that it is a cable system were based in part on comments by Supreme Court justices in oral arguments during the Aereo case, and on U.S. Supreme Court Justice Antonin Scalia’s dissenting opinion in that case, Collyer said. However, Aereo wasn’t arguing that it was a cable system in that case, and “Justices’ questions and commentary at oral argument have no legal effect,” Collyer said. “Even if relevant or instructive, the Justices’ comments undermine Defendants’ position because they show that the Justices were fully aware” of a potential defense based around Aereo being eligible for a compulsory license “and yet chose not to mention it in the Court’s opinion,” Collyer said.

Collyer also dismissed FilmOn X’s request that the court hold a decision until after the FCC issues a rule designating online video providers (OVDs) as MVPDs. “The FCC has never issued any regulation or expressed any policy view that contradicts the Copyright Office’s longstanding interpretation,” Collyer said. “Even if the Copyright Office recognized the pendency of the FCC proceeding,” there’s no certainty to when the FCC will issue a rule or whether that would lead the U.S. Copyright Office to issue FilmOn X a compulsory license, Collyer said.

Though FilmOn X said the fact that it geolocates customers and limits the availability of the broadcasts they're eligible to receive to what’s locally available is one of the reasons it's like a cable system, Collyer didn't attack that argument, the cable attorney said. “I could see this decision helping some new entrants that don’t use the Internet qualify for the Section 111 (compulsory) license if the systems are localized, the FCC regulates them as cable systems, and they don’t use the Internet,” Hane said. “This decision considered whether an Internet service can qualify as a cable system for purposes of the Section 111statutory license, not whether it can qualify as an MVPD,” he said.

Correction: It was a Washington, D.C., U.S. District judge who ruled against FilmOn X (see 1511130048).