The Second Circuit today upheld a court order preventing internet service ivi, inc. from continuing to operate.
ivi was formed in 2007 and offered, for $4.99 a month, access to broadcast television from select markets to online users. In 2010, a group of national, local, commercial, and nonprofit TV broadcasters filed a lawsuit against iVi for publicly performing their works without consent. The district court granted the plaintiff’s motion for a preliminary injunction in February 2011, and ivi appealed that decision to the Second Circuit, which affirmed the injunction.
ivi had argued at both the district court and circuit court that it was a “cable system” under the Copyright Act, which would entitle it to a statutory compulsory license for retransmitting broadcast programs without the permission of broadcasters, much the same way “traditional” cable companies operate -- absent the FCC regulations that affect cable companies. Neither court was convinced by this argument.
Section 111 of the Copyright Act creates a compulsory license for secondary transmissions to the public by a “cable system.” The Act defines “cable system” somewhat broadly, and ivi seized on the language of the statute to argue that its service fits within the definition. Because of the ambiguity in the statutory language, the court delved into legislative intent and the interpretation of the provision by the Copyright Office for more clarity.
As the Second Circuit notes, “Congress enacted § 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.” But the compulsory license provision must be read narrowly since it acts “in derogation of the exclusive property rights granted by the Copyright Act to copyright holders” and results in governmental intrusion into the marketplace. The court concluded “that Congress did not intend for § 111's compulsory license to extend to Internet retransmissions.”
The Circuit court also found that the Copyright Office has consistently held the position that § 111 doesn’t apply to Internet retransmissions, expressing that position multiple times over the past decade and a half.
The Second Circuit also concluded that the other factors required for a preliminary injunction weighed in favor of the television broadcasters: they would suffer irreparable harm if iVi continues operation, the balance of hardships “tips in plaintiffs’ favor”, and the public interest would be best served by the injunction. As the court observed:
“Plaintiffs' television programming provides a valuable service to the public, including, inter alia, educational, historic, and cultural programming, entertainment, an important source of local news critical for an informed electorate, and exposure to the arts. Plaintiffs' desire to create original television programming surely would be dampened if their creative works could be copied and streamed over the Internet in derogation of their exclusive property rights.”
The Second Circuit today correctly distinguished between true innovation and ivi’s commercial misappropriation, ensuring that television broadcasters can continue to create the popular programming that viewers enjoy.