Illinois Federal Court Rules In Favor Of WTTW In Filmon Claim That It Is A Cable System

Illinois Federal Court Rules In Favor Of WTTW In Filmon Claim That It Is A Cable System

April 8, 2016
by Jerry Glover

Raise your hand if you remember the Aereo case. That company used technology to capture local television signals in a given market and send them (i.e., retransmit them) to Aereo subscribers via the Internet. When a subscriber elected to watch a specific television show, a dime-sized antenna was assigned exclusively to that subscriber for the time period of the show’s broadcast. The signal was then transmitted to that subscriber, and only that subscriber, via the assigned antenna. The subscriber could not download the program although the subscriber could view the program on several digital devices. In 2014, the U.S. Supreme Court held that the Aereo system violated the Copyright Act’s transmit clause which gives copyright owners the exclusive right to transmit their copyrighted material (i.e., television programs) to the public. The Court held that despite the fact that Aereo subscribers were assigned their own antenna, the signals transmitted by Aereo were in reality sent to the public since more than one subscriber could request the same television program be sent. American Broadcasting Companies, Inc. v. Aereo, Inc., 134 S. Ct. 2498 (20140).

In the course of its opinion the Supreme Court noted that Aereo was substantially similar to a traditional cable system. Another Aereo-like signal transmission company, FilmOn X, LLC, has faced lawsuits in several federal district courts filed by copyright owners alleging that FilmOn also violates the public transmission right. After the Aereo decision, FilmOn amended its answers to several of these lawsuits claiming that its system meets the statutory definition of a cable system giving it the right to transmit copyrighted programming to subscribers.

One of those lawsuits against FilmOn was filed in the federal district court for the Northern District of Illinois. That court recently decided that FilmOn does not meet the cable system definition. FilmOn X, LLC v. Window to the World Communications, Inc., 2016 WL 1161276 (N.D. Ill. March 25, 2016). Section 111 of the U.S. Copyright Act defines “cable system” as

a facility, located in any State … that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the [FCC] and makes secondary transmission of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service.

The declaratory judgment defendant, WTTW, Chicago’s public television station, argued that FilmOn is not a “facility” that “receives signals” and “makes secondary transmissions of such signals to the public by a “communications channel” arguing that the Internet, which FilmOn used to transmit programming, was not a “communications channel.” WTTW claimed that the Internet was “an international network of millions of interconnected computers.” But FilmOn countered noting that the Internet is transmitted over wires, cable, microwaves and other communications channels as required by Section 111.

The trial court agreed with FilmOn that FilmOn’s system received programming from network stations like WTTW. The court added that FilmOn also retransmitted that programming to individuals over the Internet. But the court noted that the law’s definition of “cable system” is not met by data traveling over any communications channel at any point before its ultimate destination. The court noted that FilmOn received broadcast signals and retransmitted them to Internet service providers and did not send them directly to the subscriber’s digital device. Therefore, the court concluded that the subscriber’s device receives the retransmission, not from the “facility” (i.e., FilmOn) but from interconnected computers through cyberspace. To meet the definition of “cable system”, FilmOn must receive the signals and make the second transmission directly to the subscriber. It does not matter, the court noted, that subscribers may ultimately receive those signals via coaxial cables, fiber-optic cables, microwave links, etc. FilmOn has no control over those methods of transmission to subscribers; it is, therefore, not a cable system.

The district court noted that Section 111 references a cable system’s “headend” which performs the function of receiving signals and transmitting them directly to the subscriber. The court stated that the Copyright Act’s transmit clause did not limit “transmission” to any specific technical device, i.e., it is technology agonistic. But, the court noted, the cable system provision requires specific communications (secondary transmissions ( to specific recipients (subscribers) by specific means (wire, cables, etc.). Therefore, the transmit provision of the Act was unavailable to support for FilmOn’s position.

Finally, the court noted that the U.S. Copyright Office had long taken the position that Internet-based retransmissions are not cable systems. The court stated that it can consider the Copyright Office’s position as an aid in reaching its own conclusions.

The parties disagreed as to how much deference the trial court should give the Copyright Office’s position. WTTW claimed that the court had to defer to the Office’s interpretation if its is reasonable while FilmOn claimed that the Office’s opinions as expressed in policy documents, rather than rules or regulations made after formal notice-and-comment periods, are not entitled to deference arguing that the opinions are only entitled to “respect.”

The court agreed with WTTW noting that the Office’s development of its position on the meaning of “cable system” was more involved and formal than what is usually found in opinion letters. But to play it safe (and possibility to avoid being overruled by federal appeals court if its decision were to be appealed), the court concluded that even if the Office’s position was only to be considered persuasive rather than requiring deference the end result would be the same noting that the Office’s position was reached through a thorough reasoned process and was persuasive.

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