Spanski Enters., Inc. v. Telewizja Polska, S.A.

• Decision Date: 02 March 2018
• Docket Number: No. 17-7051,17-7051
• Parties: SPANSKI ENTERPRISES, INC., Appellee v. TELEWIZJA POLSKA, S.A., Appellant
• Court: U.S. Court of Appeals — District of Columbia Circuit

883 F.3d 904

SPANSKI ENTERPRISES, INC., Appellee

v.TELEWIZJA POLSKA, S.A., Appellant

No. 17-7051

United States Court of Appeals, District of Columbia Circuit.

Argued December 7, 2017

Decided March 2, 2018

Andrew L. Deutsch, New York, NY, argued the cause for appellant. With him on the briefs was Mary E. Gately, Washington, DC.

Jonathan Zavin, New York, NY, argued the cause and filed the briefs for appellee. Walter E. Steimel Jr. entered an appearance.

Megan Barbero, Attorney, U.S. Department of Justice, argued the cause for amicus curiae United States of America in support of appellee. With her on the brief were Mark R. Freeman, Attorney, and Sarang Vijay Damle, General Counsel, U.S. Copyright Office.

Thomas G. Hentoff and Connor S. Sullivan, Washington, DC, were on the brief for amici curiae Disney Enterprises, Inc., et al. in support of appellee.

Before: Tatel, Griffith, and Wilkins, Circuit Judges.

Tatel, Circuit Judge:

When the owner of a foreign website, acting abroad, uploads video content in which another party holds exclusive United States public performance rights under the Copyright Act and then directs the uploaded content to United States viewers upon their request, does it commit an infringing "performance" under the Act? If so, is it protected from liability by the principle—unquestioned here—that the Act has no extraterritorial application? Answering these questions "yes" and "no," the district court concluded that Polish broadcaster Telewizja Polska was, by transmitting fifty-one episodes of certain Polish-language television programs into the United States via its online video-on-demand system, liable for infringing copyrights held by a company, Spanski Enterprises, Inc., that enjoys exclusive North and South American performance rights in the episodes. Telewizja Polska appeals this determination, as well as the district court's imposition of statutory damages of $60,000 per episode, for a total of $3,060,000. For the reasons that follow, we affirm as to both liability and damages.

I.

Appellant Telewizja Polska, S.A. ("TV Polska"), Poland's national public television broadcaster, owns, operates, and creates content for several Polish-language television channels, including one now called TVP Polonia. TV Polska entered into a licensing agreement with Canadian corporation Spanski Enterprises, Inc. ("Spanski"), appellee here, granting it North and South American broadcasting rights in TVP Polonia content. Following a legal dispute over the scope of these rights, the parties signed a 2009 settlement agreement establishing that Spanski has the exclusive right to perform TVP Polonia content, including over the internet, in North and South America.

In order to protect Spanski's exclusive rights, TV Polska—which makes its programming publicly available through a video-on-demand feature on its website—employs technology that prevents internet users in North and South America from accessing TVP Polonia content though its website. Known as geoblocking, this technology allows a website owner to digitally embed territorial access restrictions into uploaded content. When an internet-enabled device attempts to access restricted content, the geoblocking system compares the device's unique internet protocol (IP) address to a third-party database that reveals which IP addresses are associated with which countries. If the device's IP address is associated with a country subject to restricted access, the device cannot access the content.

Two groups of TV Polska employees are responsible for ensuring that each episode uploaded to the website is programmed to include the appropriate territorial restrictions. The first group—the audiovisual technicians working in what TV Polska calls its "Workflow System"—converts each episode into one or more digital video formats in accordance with episode-specific instructions they receive from the second group, the program editors working in TV Polska's "Content Management System." For example, such instructions might direct a technician working on a particular episode to create one format that is pay-per-view and one that is not or, as in this case, to create only formats that are geoblocked from specified countries. Even if a technician ignores an instruction to create a geoblocked format for a given episode in the Workflow System, though, a device with an IP address associated with a given country can access the episode only if the instructions generated in the Content Management System also specify that access from that country is permitted. In other words, an episode is geoblocked either if the technicians working in the Workflow System create only territorially restricted digital formats of that episode or if the program editors assign the episode a territorial restriction in the Content Management System. During the period relevant here, the default territorial access setting assigned to each TVP Polonia episode in the Content Management System was "minus America," meaning that the episode would be automatically geoblocked from devices with North or South American IP addresses unless a program editor affirmatively selected a different instruction from a drop-down menu, regardless of what the technicians did in the Workflow System.

In late 2011, Spanski's attorneys discovered that certain TVP Polonia content was not properly geoblocked, leaving it available to North and South American internet users through TV Polska's video-on-demand system. This content included fifty-one individual episodes that Spanski had registered with the United States Copyright Office and in which it held valid and exclusive United States copyrights. From December 2011 to March 2012, Spanski's attorneys and website developer, between them, viewed each of these fifty-one episodes, at least in part, on TV Polska's website.

Spanski then sued TV Polska in federal district court, asserting its exclusive right under the Copyright Act, 17 U.S.C. § 101 et seq. , to "perform" the fifty-one episodes "publicly," id. § 106(4). Following a five-day bench trial, the district court found that "the 51 episodes copyrighted by [Spanski] were available and viewed in the [United States] via [TV Polska's] website" during the period of infringement, see Spanski Enterprises, Inc. v. Telewizja Polska S.A. , 222 F.Supp.3d 95, 105 (D.D.C. 2016), and that "[t]here [was] no evidence that a failure in [TV Polska's] geoblocking system" caused the episodes to become available, id. at 108. Rather, the district court found, the episodes became available in the United States because "[TV Polska] employees took ... volitional action[ ]" by removing the episodes' default "minus America" territorial restriction in the Content Management System and creating non-geoblocked digital formats of the episodes in the Workflow System. Id. at 106.

Based largely on these findings, the district court held TV Polska liable under the Copyright Act for infringing Spanski's exclusive United States performance rights in the fifty-one episodes. Id. at 111–12. Observing that Spanski's rights under the Act were "not in dispute," id. at 110, the court ruled that even if "the Copyright Act requires volitional conduct by the Defendant for direct infringement to have occurred," id. at 112, TV Polska had satisfied that requirement by streaming copyrighted content to United States viewers through its website, id. at 111–12. Finally, although assuming that the Copyright Act imposes no liability for infringements that occur abroad, the court concluded that the infringement here "was not wholly extraterritorial" because the episodes at issue were viewed within the United States. Id. at 112 n.3 (internal quotation marks omitted).

With liability settled, the district court turned to the issue of damages. Typically, an infringer's per-work liability under the Copyright Act's statutory damages provision is capped at $30,000, see 17 U.S.C. § 504(c)(1), but the cap increases to $150,000 where the "infringement was committed willfully," id. § 504(c)(2). Here, the district court found, contrary to the sworn denials of "[t]he person in charge of [TV Polska's] geoblocking system," that TV Polska technicians had created episode formats that lacked geoblocking, Spanski Enterprises , 222 F.Supp.3d at 106, saw "no evidence that a format could be created accidentally," id. at 107, and concluded that TV Polska "acted willfully and intentionally to infringe [Spanski's] copyright," id. at 106. Further bolstering its inference of intent, the district court found that TV Polska had tried to cover its tracks by abruptly deleting several of the episodes' non-geoblocked formats and then retrospectively altering certain work logs, introduced as evidence, to give the incorrect impression that the episodes had appeared exclusively in geoblocked formats all along. Id. at 107–08.

Having thus established TV Polska's eligibility for increased statutory damages, the district court ordered it to pay Spanski $60,000 per infringed episode, for a total of $3,060,000. Spanski Enterprises, Inc. v. Telewizja Polska S.A. , No. 12-cv-957, 2017 WL 598465, at *1 (D.D.C. Feb. 14, 2017). This substantial figure was appropriate, the court concluded, because TV Polska's violation was willful and in need of deterrence, it had a "history of infringing [Spanski's] copyright," its deletion of certain records from the relevant period made it impossible to estimate Spanski's actual damages, and it had committed "egregious" manipulation of the evidence. Id. at *2.

TV Polska appeals the district court's conclusions as to both liability and damages. "We review the district court's findings of fact for clear error, but resolve issues of law de novo ," Massachusetts v. Microsoft Corp. , 373 F.3d 1199, 1207 (D.C. Cir. 2004) (en banc) (citations omitted), and we review the statutory damages award for abuse of discretion, see, e.g. , Bryant v. Media Right Productions, Inc. , 603 F.3d 135, 143 (2d Cir. 2010) ; Frank Music Corp. v....