Fox Television Stations, Inc. v. Aereokiller, LLC

• Decision Date: 21 March 2017
• Docket Number: No. 15-56420,15-56420
• Parties: FOX TELEVISION STATIONS, INC; Twentieth Century Fox Film Corporation; Fox Broadcasting Company, Inc. ; NBC Universal Media, LLC ; Universal Network Television, LLC; Open 4 Business Productions, LLC ; NBC Subsidiary (KNBC-TV) Inc ; American Broadcasting Companies, Inc.; ABC Holding Company, Inc.; Disney Enterprises, Inc.; CBS Broadcasting Inc.; CBS Studios Inc.; Big Ticket Television, Inc.; Telemundo Network Group LLC; WNJU-TV Broadcasting LLC, Plaintiffs-Appellants, v. AEREOKILLER, LLC; Alkiviades David; Filmon.tv Networks, Inc.; Filmon.tv, Inc.; Filmon.com, Inc.; Filmon X, LLC; Does, 1–3, inclusive, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

851 F.3d 1002

FOX TELEVISION STATIONS, INC; Twentieth Century Fox Film Corporation; Fox Broadcasting Company, Inc. ; NBC Universal Media, LLC ; Universal Network Television, LLC; Open 4 Business Productions, LLC ; NBC Subsidiary (KNBC-TV) Inc ; American Broadcasting Companies, Inc.; ABC Holding Company, Inc.; Disney Enterprises, Inc.; CBS Broadcasting Inc.; CBS Studios Inc.; Big Ticket Television, Inc.; Telemundo Network Group LLC; WNJU-TV Broadcasting LLC, Plaintiffs-Appellants,

v.AEREOKILLER, LLC; Alkiviades David; Filmon.tv Networks, Inc.; Filmon.tv, Inc.; Filmon.com, Inc.; Filmon X, LLC; Does, 1–3, inclusive, Defendants-Appellees.

No. 15-56420

United States Court of Appeals, Ninth Circuit.

Argued and Submitted August 4, 2016, Pasadena, California

Filed March 21, 2017

Neal Katyal, Hogan Lovells US LLP, Washington, DC, argued the cause and filed the briefs for the plaintiffs-appellants. With him on the brief was Thomas P. Schmidt, Hogan Lovells US LLP, New York, NY; Matthew A. Shapiro and Frederick Liu, Hogan Lovells US LLP, Washington, DC; Paul Smith, Jenner & Block LLP, New York, NY; Richard L. Stone and Julie A. Shepard, Jenner & Block LLP, Los Angeles, CA; Ronald L. Johnston, John C. Ulin, James S. Blackburn, and Eric D. Mason, Arnold & Porter LLP, Los Angeles, CA; and Robert Alan Garrett and Murad Hussain, Arnold & Porter LLP, Washington, DC.

Ryan Geoffrey Baker, Baker Marquart LLP, Los Angeles, CA, argued the cause and filed the brief for the defendants-appellees. With him on the brief was Scott M. Malzahn, Baker Marquart LLP, Los Angeles, CA.

Duncan W. Crabtree-Ireland, SAG-AFTRA, Los Angeles, CA, filed a brief on behalf of amici curiae Screen Actors Guild-America Federation of Television and Radio Artists; Directors Guild of America, Inc.; and Writers Build of America, West, Inc., in support of the plaintiffs-appellants. With him on the brief was Danielle S. Van Lier, SAG-AFTRA, Los Angeles, CA; David B. Dreyfus, Directors Guild of America, Inc., Los Angeles, CA; and Anthony R. Segall, Writers Guild of America, West, Inc., Los Angeles, CA.

Jay A. Rosenthal and J. Matthew Williams, Mitchell Silberberg & Knupp LLP, Washington, DC, filed a brief on behalf of amici curiae The American Society of Composers, Authors and Publishers; Broadcast Music, Inc.; The National Music Publishers' Association; The Recording Industry Association of America; The Recording Academy; and SESAC, Inc. in support of the plaintiffs-appellants.

Geoffrey Manne, International Center for Law and Economics, Portland, OR; and Hans Bader and Sam Kazman, Competitive Enterprise Institute, Washington, DC, filed a brief on behalf of amici curiae The Competitive Enterprise Institute and The International Center for Law and Economics in support of the plaintiffs-appellants.

Brandon Butler, Glushko-Samuelson Intellectual Property Clinic, American University Washington College of Law, Washington, DC, filed a brief on behalf of amici curiae Consumer Federation of America in support of defendants-appellees. With him on the brief was Alexandra Wilson, Law Student, Glushko-Samuelson Intellectual Property Clinic, American University Washington College of Law, Washington, DC.

Eleanor M. Lackman, Cowan, Debaets, Abrahams & Sheppard LLP, New York, NY, filed a brief on behalf of amici curiae The Copyright Alliance in support of the plaintiffs-appellants. With her on the brief was Keith Kupferschmid ; Terry Hart and Terry Hart, Copyright Alliance, Washington, DC; and Nancy E. Wolff ; Scott J. Sholder ; and Marissa B. Lewis, Cowan, Debaets, Abrahams & Sheppard LLP, New York, NY.

Mitchell L. Stoltz, Electronic Frontier Foundation, San Francisco, CA, and Phillip R. Malone ; Jeffrey T. Pearlman; and Brian Quinn, Juelsgaard Intellectual Property and Innovation Clinic, Stanford, CA, filed a brief on behalf of amici curiae Electronic Frontier Foundation and Public Knowledge in support of the defendants-appellees.

Rodney A. Smolla, Wilmington, DE, filed a brief on behalf of amici curiae The Media Institute in support of the plaintiffs-appellants.

Rick Kaplan and Benjamin F. P. Ivins, National Association of Broadcasters, Washington, DC; Joseph R. Palmore and James R. Sigel, Morrison & Foerster LLP, Washington, DC; and Paul Goldstein, Morrison & Foerster LLP, San Francisco, CA, filed a brief on behalf of amici curiae National Association of Broadcasters in support of the plaintiffs-appellants.

Brandon Butler, Glushko-Samuelson Intellectual Property Clinic, American University Washington College of Law, Washington, DC, filed a brief on behalf of amici curiae National Federation of the blind in support of defendants-appellees. With him on the brief was Darlene Tzou, Law Student; Glushko-Samuelson Intellectual Property Clinic, American University Washington College of Law, Washington, DC.

Anthony J. Dreyer ; Jordan A. Feirman ; and David M. Lamb, Skadden, Arps, Slate Meagher & Flom LLP, New York, NY, filed a brief on behalf of amici curiae National Football League; The Officers of the Commissioner of Baseball d/b/a Major League Baseball; and The PGA Tour, Inc. in support of the plaintiffs-appellants.

Susan Cleary, Vice President & General Counsel, Independent Film & Television Alliance, Los Angeles, CA, and Kelly M. Klaus and David J. Feder, Munger, Tolles & Olson LLP, Los Angeles, CA, filed a brief on behalf of amici curiae Paramount Pictures Corporation; Warner Bros. Entertainment Inc.; and Independent Film & Television Alliance in support of the plaintiffs-appellants.

Ralph Oman, Pravel Professorial Lecturer in Intellectual Property and Patent Law, George Washington University Law School, Former Register of Copyrights of the United States of America, Washington, DC, filed a brief on behalf of amici curiae on his own behalf in support of the plaintiffs-appellants.

Cory L. Andrews &Mark S. Chenoweth, Washington Legal Foundation, Washington, DC, filed a brief on behalf of Washington Legal Foundation in support of the plaintiffs-appellants.

Before: Diarmuid F. O'Scannlain, Johnnie B. Rawlinson, and Consuelo M. Callahan, Circuit Judges.

OPINION

O'SCANNLAIN, Circuit Judge:

We must decide whether a service that captures copyrighted works broadcast over the air, and then retransmits them to paying subscribers over the Internet without the consent of the copyright holders, is a "cable system" eligible for a compulsory license under the Copyright Act.

I

A

The Copyright Act of 1976 gives copyright holders six "exclusive rights," including the exclusive right "to perform" copyrighted works "publicly." 17 U.S.C. § 106(4). The Act provides that "[a]nyone who violates any of the exclusive rights of the copyright owner ... is an infringer." Id. § 501(a). This case concerns an important limitation on the Act's provision for exclusive rights.

Under § 111 of the Act, a "cable system" is eligible for a so-called compulsory license that allows it to retransmit "a performance or display of a work" that had originally been broadcast by someone else—even if such material is copyrighted—without having to secure the consent of the copyright holder. Id. § 111(c). So long as the cable system pays a statutory fee to the Copyright Office and complies with certain other regulations, it is protected from infringement liability. Id. § 111(c)–(d). Compulsory licenses are highly coveted, in no small part because, according to the Copyright Office, the royalty payments the Act requires cable companies to pay are "de minimis " when compared to the gross receipts and revenues the cable industry collects, a gap suggesting that the government-set rates fall well below market levels. U.S. Copyright Office, Satellite Home Viewer Extension and Reauthorization Act § 109 Report 43 (2008) ("SHVERA Report"); see also id. at 70.

This lawsuit pits a group of broadcast stations and copyright holders (collectively, "Fox") against an entity now known as FilmOn X ("FilmOn"). 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. The Supreme Court recently held that such a service does "perform" the retransmitted works "publicly," and hence infringes the copyright holders' exclusive performance rights. American Broad. Cos. v. Aereo, Inc. , ––– U.S. ––––, 134 S.Ct. 2498, 2503, 189 L.Ed.2d 476 (2014). Fox sued FilmOn for copyright infringement in 2012; in its most recent defense, FilmOn claims that it is a "cable system" eligible for a compulsory license under § 111.

The relevant provision of the Copyright Act defines "cable system" as follows:

A "cable system" is a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service. For purposes of determining the royalty fee under subsection (d)(1), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered as one system.

17 U.S.C. § 111(f)(3). The parties offer dueling interpretations § 111, each grounded in various aspects of its text, its perceived purposes, and slices of its legislative history.

B

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. The district court based its conclusion on what it took to be the plain meaning of § 111, as well as the Supreme Court's Aereo decision, which had analogized Internet-based retransmission services to cable companies in the course of deciding that Internet...