Abc, Inc. v. Primetime 24, Joint Venture, Civ. A. 1:97CV00090.

• Decision Date: 16 July 1998
• Docket Number: No. Civ. A. 1:97CV00090.,Civ. A. 1:97CV00090.
• Citation: 17 F.Supp.2d 467
• Court: U.S. District Court — Middle District of North Carolina
• Parties: ABC, INC., Plaintiff, v. PRIMETIME 24, JOINT VENTURE, Defendant.

17 F.Supp.2d 467

ABC, INC., Plaintiff, v. PRIMETIME 24, JOINT VENTURE, Defendant.

No. Civ. A. 1:97CV00090.

United States District Court, M.D. North Carolina.

July 16, 1998.

Reid L. Phillips, Brooks, Pierce, McLendon, Humphrey & Leonard, Greensboro, NC, Wade Hampton Hargrove, Brooks Pierce McLendon Humphrey & Leonard, L.L.P., Raleigh, NC, for ABC, Inc., plaintiff.

W. Andrew Copenhaver, Womble Carlyle Sandridge & Rice, Winston-Salem, NC, Pressly McAuley Millen, Womble Carlyle Sandridge & Rice, Raleigh, NC, Andrew Z. Schwartz, Stephen B. Deutsch, Richard M. Brunell, Daniel H. Haines, Foley Hoag & Eliot, LLP, Boston, MA, for Primetime 24, Joint Venture, defendant.

James Henry Jeffries, IV, Amos & Jeffries, L.L.P., Greensboro, NC, for Andrew S. Fisher, deponent.

MEMORANDUM OPINION

BULLOCK, Chief Judge.

This case presents a copyright dispute arising under 17 U.S.C. § 119 (the "Satellite Home Viewer Act" or "SHVA") and 17 U.S.C. § 501 et seq. The case is presently before the court on Plaintiff's motion for summary judgment. For the reasons that follow, the court will grant Plaintiff's motion and find Defendant liable for copyright infringement.¹

BACKGROUND

The material facts are not in dispute and are established by the pleadings, depositions, declarations, and exhibits furnished by the parties.

The Plaintiff, ABC, Inc. ("ABC") owns and operates the television station WTVD in Durham, North Carolina. WTVD is a primary network station of The ABC Television Network and televises the programming of that network on Channel 11 within its local market. The local market is the geographic area encompassed within WTVD's "predicted Grade B contour." See 17 U.S.C. § 119(d)(11). The predicted Grade B contour is a circular area extending approximately seventy-five miles from the base of WTVD's transmitting tower, located five miles east of Garner, North Carolina. It represents the predicted reach of WTVD's broadcast signal. The signal is strongest at the center of the contour. At its boundary, fifty per cent of the households are estimated with fifty per cent accuracy to receive a broadcast signal of Grade B intensity fifty per cent of the time.

Defendant PrimeTime 24, a Joint Venture ("PrimeTime") is a satellite carrier. It is engaged in the business of uplinking by satellite the programming of various broadcast networks' television stations and reselling the programming of these stations to satellite dish owners throughout the country. From early 1989 to the present date, PrimeTime has uplinked by satellite and resold to dish owners located within WTVD's local market the signals of various distant television stations affiliated with The ABC Television Network. The ABC network programs broadcast by those distant television stations substantially duplicate the ABC network programming broadcasts by WTVD. Although a subscriber in Raleigh to which PrimeTime has sold its service will receive the network and local programming of WKRN (ABC's Nashville affiliate) and KOMO (ABC's satellite affiliate), it will not receive any of the local news, public service announcements, or commercials broadcast by WTVD.

PrimeTime relies upon the statutory copyright license available to satellite carriers under the Satellite Home Viewer Act ("SHVA"), 17 U.S.C. § 119, for the right to uplink and transmit ABC network programming. SHVA grants to satellite carriers a limited and conditional compulsory license to uplink distant network broadcast stations by satellite and retransmit the programming of those stations to certain eligible households. SHVA defines eligible households as those that "cannot receive, through the use of a conventional outdoor rooftop receiving antenna, an over-the-air signal of Grade B intensity (as defined by the Federal Communications Commission) of a primary network station affiliated with that network" and have not "within 90 days before the date on which that household subscribes [to receive network programming via satellite] ... subscribed to a cable system that provides the signal of a primary network station affiliated with that network." 17 U.S.C. § 119(d)(10)(A) & (B). This restriction on eligibility is known as the "white area restriction" because it limits eligible households to those in areas that are not served by local television stations and have not recently received cable television. SHVA also requires the satellite carriers to pay royalties for every subscriber and furnish broadcast networks a monthly list of the names and addresses of their new subscribers and a list of terminated subscribers. The networks then compile the subscriber list for each local television market and provide them to their local affiliates. The local affiliates are charged with the responsibility of challenging any subscriber in its local market that it believes ineligible to receive network programming via satellite.

PrimeTime has taken the position that because the purpose of SHVA was to provide persons that could not receive clear pictures on their television set with access to network programming via satellite, whether or not a potential subscriber is eligible depends upon the clarity of the broadcast picture that the subscriber receives. PrimeTime has systematically incorporated this interpretation of SHVA into its screening procedures. Almost all of PrimeTime's subscribers are signed up by independent distributors such as DirecTV. PrimeTime's distributor contracts permit the distributors to authorize subscribers to receive network programming through PrimeTime after the distributor asks about the household's reception of over-the-air network stations. PrimeTime provides a specific script for that purpose. The potential subscriber is asked three questions in order to determine whether or not PrimeTime will provide network programming: (1) If he intends to use the service for private residential purposes; (2) If he has received cable service within the last three months; and (3) If he can receive an acceptable over-the-air picture with a conventional rooftop antenna. Before asking the third question, PrimeTime suggests that its distributors tell potential subscribers that, if they say they receive an acceptable quality picture, they will not be eligible to receive network services. PrimeTime also conducts training and monitoring of its distributors' customer-service personnel in order to ensure that only subscribers that claim to have a poor quality picture receive their services. PrimeTime never tested the signal strength at any of its subscribers' households prior to this suit. Former PrimeTime CEO Sid Amira testified that although a signal strength test is necessary "to be totally determinative" of whether a household could receive a Grade B signal, Amira Dep. at 100, PrimeTime found such testing "to be too expensive and nonconclusive [sic] as to whether the household gets a viewable acceptable picture." Id. at 105-06.

ABC and the other broadcast networks have taken a different interpretation of SHVA. ABC believes that SHVA's restriction of eligible households to those that "cannot receive, through the use of a conventional outdoor rooftop receiving antenna, an over-the-air signal of Grade B intensity," 17 U.S.C. § 119(d)(10)(A), constitutes an objective test of signal strength that satellite carriers can forego only at their peril. However, the networks and the satellite carriers have not been able to agree upon an industry standard for conducting such measurements.

When a network station challenges the eligibility of PrimeTime's subscribers under the white area restriction, PrimeTime's practice is to send letters and questionnaires to the subscribers involved, informing them that their eligibility has been challenged and that, unless they can provide information confirming their eligibility, their service will be terminated. In the Raleigh-Durham market, PrimeTime took the additional step of sending such questionnaires to every subscriber through the end of 1997 who lived in zip codes located within WTVD's predicted Grade B contour — whether or not WTVD had challenged their eligibility. The cover letter accompanying this questionnaire informed the subscriber of ABC's suit. The letter sets forth PrimeTime's position that it "is not authorized to distribute satellite transmissions of network television stations to households that can receive an `acceptable' over-the-air signal from their local network station through the use of a conventional rooftop receiving antenna." (Levi Decl.Ex. N). The letter also informs the subscriber that ABC is seeking an injunction that would prevent PrimeTime from distributing any ABC network programming to any satellite dish user in the Raleigh-Durham area. If the subscriber believes that he "cannot receive WTVD clearly using a conventional rooftop antenna," id., the letter requests him to complete and return the accompanying questionnaire. The questionnaire asks the subscriber to describe his type of residence and indicate his reception of WTVD by checking boxes labeled "clear," "snowy," "ghosting," "sparkle," "lines," or "other." The questionnaire also asks if the subscriber has a conventional television antenna on his roof. If not, the subscriber is asked to indicate whether he believes the reception with such an antenna would be clear or poor. He is then asked to base his conclusion on one or both of two options: "prior experience with a rooftop antenna" or "neighbor's experience with a rooftop antenna." (Id.) The majority of those responding indicated that they did not receive a clear picture using a rooftop antenna. Those who did receive a clear picture, as well as those who did not respond to the questionnaire, had their network programming terminated. Although PrimeTime at one time had approximately 35,000 subscribers in the Raleigh-Durham market, that number was down to about 11,700 as of April 2, 1998, with an additional 2,700 scheduled for deauthorization. PrimeTime...