Hubbard Broadcasting, Inc. v. Southern Satellite Systems, Inc., 84-5173

• Decision Date: 17 December 1985
• Docket Number: No. 84-5173,84-5173
• Parties: , 228 U.S.P.Q. 102, 1985 Copr.L.Dec. P 25,857, 12 Media L. Rep. 1476 HUBBARD BROADCASTING, INC., a Minnesota corporation, Appellant, v. SOUTHERN SATELLITE SYSTEMS, INC., a Georgia corporation, Turner Broadcasting System, Inc., a Georgia corporation, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 393

777 F.2d 393

54 USLW 2329, 228 U.S.P.Q. 102, 1985

Copr.L.Dec. P 25,857,

12 Media L. Rep. 1476

HUBBARD BROADCASTING, INC., a Minnesota corporation, Appellant, v. SOUTHERN SATELLITE SYSTEMS, INC., a Georgia corporation Turner Broadcasting System, Inc., a Georgia corporation, Appellees.

No. 84-5173.

United States Court of Appeals Eighth Circuit.

Submitted Feb. 11, 1985.

Decided Nov. 13, 1985.

Rehearing Denied Dec. 17, 1985.

Sidney Barrows, Minneapolis, Minn., for appellant.

Duane W. Krohnke, Minneapolis, Minn., for appellees.

Before LAY, Chief Judge, and HEANEY and FAGG, Circuit Judges.

FAGG, Circuit Judge.

Hubbard Broadcasting, Inc. (Hubbard) appeals the dismissal of its copyright infringement action. That action, brought against Southern Satellite Systems, Inc. (Southern or Southern Satellite) and Turner Broadcasting System, Inc. (Turner or Turner Broadcasting), involves the interpretation and application of various provisions of section 111 of the Copyright Act of 1976, 17 U.S.C. Sec. 111. The district court, after examining the relevant provisions of section 111, concluded that neither Southern Satellite nor Turner was guilty of copyright infringement. Hubbard Broadcasting, Inc. v. Southern Satellite Systems, Inc., 593 F.Supp. 808, 823 (D.Minn.1984). We agree and affirm the district court's dismissal of Hubbard's action.

Legislative and Factual Background

Section 111 of the Copyright Act of 1976 provides for a compulsory copyright licensing program applicable to cable systems that retransmit television signals containing copyrighted programming material. See 17 U.S.C. Sec. 111(c)-(d). Prior to the enactment of this licensing program, cable systems, unlike television broadcast stations, paid no copyright royalties even though cable systems, like television stations, transmitted copyrighted material to the general public. This situation was in large part the result of two Supreme Court decisions in which the Court concluded that the retransmission of television signals by cable systems did not constitute a "performance" under the Copyright Act of 1909, and therefore did not give rise to copyright liability. Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974); Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968); see also Capital Cities Cable, Inc. v. Crisp, --- U.S. ----, 104 S.Ct. 2694, 2705, 81 L.Ed.2d 580 (1984).

In revising the Copyright Act, however, Congress determined that cable systems should, in some instances, be required to pay copyright royalties to the creators of copyrighted programs. See H.R.Rep. No. 1476, 94th Cong., 2d Sess. 89, reprinted in 1976 U.S.Code Cong. & Ad.News 5659, 5704. At the same time, Congress "recognized that 'it would be impractical and unduly burdensome to require every cable system to negotiate [appropriate royalty payments] with every copyright owner' in order to secure consent for such retransmissions." Capital Cities Cable, Inc., 104 S.Ct. at 2706 (quoting H.R.Rep. No. 1476, 94th Cong., 2d Sess. 89, reprinted in 1976 U.S.Code Cong. & Ad.News at 5704); see also National Cable Television Association, Inc. v. Copyright Royalty Tribunal, 724 F.2d 176, 179 (D.C.Cir.1983) ("Individual marketplace negotiations * * * would entail inordinately high transaction costs.").

As a result, rather than require cable systems to contract with each program creator individually, Congress established a compulsory licensing program for qualifying cable systems. See 17 U.S.C. Sec. 111(c)-(d). Under this program, cable television systems pay a semiannual fee into the Register of Copyrights. Id. Sec. 111(d)(2). In return, cable systems receive a license entitling them to retransmit to their subscribers certain television signals containing copyrighted programming. See id. Sec. 111(c)-(d). The fees deposited by the cable systems are subsequently distributed to eligible copyright owners by the Copyright Royalty Tribunal. See id. Secs. 111(d)(5), 801(b)(3).

While determining that cable systems should be required to pay licensing fees for the retransmission of copyrighted programming, Congress also concluded that the compulsory licensing program would not be applicable in all instances. Specifically, Congress rejected application of the compulsory license to a cable system's rebroadcast of local television signals because Congress found "no evidence that the retransmission of 'local' broadcast signals by a cable operator threaten[ed] the existing market for copyright program owners." H.R.Rep. No. 1476, 94th Cong., 2d Sess. 90, reprinted in 1976 U.S.Code Cong. & Ad.News at 5704. Congress further concluded that "the retransmission of network programming, including network programming which is broadcast in 'distant' markets, does not injure the copyright owner [since] [t]he copyright owner contracts with the network on the basis of his programming reaching all markets served by the network and is compensated accordingly." Id.

With respect to the retransmission of distant nonnetwork programming, however, Congress determined that the

retransmission of distant non-network programming by cable systems causes damage to the copyright owner by distributing the program in an area beyond which it has been licensed. Such retransmission adversely affects the ability of the copyright owner to exploit the work in the distant market. It is also of direct benefit to the cable system by enhancing its ability to attract subscribers and increase revenues.

Id. at 90, reprinted in 1976 U.S.Code Cong. & Ad.News at 5704-05. On the basis of these various determinations, Congress "concluded that the copyright liability of cable television systems under the compulsory license should be limited to the retransmission of distant non-network programming." Id. at 90, reprinted in 1976 U.S.Code Cong. & Ad.News at 5705; see 17 U.S.C. Sec. 111(d)(2)(A) and (d)(4); see also Christian Broadcasting Network, Inc. v. Copyright Royalty Tribunal, 720 F.2d 1295, 1303 (D.C.Cir.1983).

By specifically limiting the copyright liability of cable systems to the retransmission of distant nonnetwork programming, Congress clearly anticipated that television signals carrying this type of programming would be readily available to cable systems and their subscribers. See Eastern Microwave, Inc. v. Doubleday Sports, Inc., 691 F.2d 125, 132 (2d Cir.1982), cert. denied, 459 U.S. 1226, 103 S.Ct. 1232, 75 L.Ed.2d 467 (1983). One particularly important provision of the Copyright Act intended by Congress to help accomplish this goal is the carrier exemption of section 111(a)(3). This exemption protects from copyright liability communications carriers (here Southern) that retransmit secondarily the "primary transmission" of a licensed television broadcast station (here Turner or WTBS) to cable systems. See 17 U.S.C. Sec. 111(a), (f). This exemption is applicable, however, only if:

the secondary transmission [of the primary transmission] is made by a[ ] carrier who has no direct or indirect control over the content or selection of the primary transmission or over the particular recipients of the secondary transmission, and whose activities with respect to the secondary transmission consist solely of providing wires, cables, or other communications channels for the use of others * * *.

Id. Sec. 111(a)(3). In other words, communications carriers that are sufficiently passive with respect to the actual retransmission of television signals incur no copyright liability when acting as a communications conduit between the distant broadcast station and interested cable systems.

At the core of the relatively complex statutory scheme of section 111 is an attempt by Congress "to further the important public purposes framed in the Copyright Clause, U.S. Const. Art. I, Sec. 8, of rewarding the creators of copyrighted works and of 'promoting broad public availability of literature, music, and the other arts.' " Capital Cities Cable, Inc., 104 S.Ct. at 2706 (citations omitted). By enacting compulsory licensing provisions, Congress "not only [sought to] protect[ ] the commercial value of copyrighted works but also enhance[d] the ability of cable systems to retransmit such programs carried on distant broadcast signals, thereby allowing the public to benefit by the wider dissemination of works carried on television broadcast signals." Id. (footnote omitted); see also Eastern Microwave, Inc., 691 F.2d at 132 (emphasizing Congress' intent to ensure a diversity of broadcast signals). With this general legislative framework in mind, we turn to the actions that gave rise to Hubbard Broadcasting's complaint.

Southern Satellite is licensed by the Federal Communications Commission (FCC) to provide services as a communications common carrier. At issue here is Southern Satellite's retransmission of WTBS, an Atlanta based television station owned and operated by Turner Broadcasting. WTBS is licensed by the FCC as a television broadcast station. Like other commercial television stations, Turner transmits the WTBS video signal to the viewing public free of charge and generates WTBS' income principally from advertising revenues. See Capital Cities Cable, Inc., 104 S.Ct. at 2701.

In December of 1976, after receiving FCC approval, Southern Satellite began to retransmit the WTBS signal to cable systems around the nation. At that time, Southern Satellite received the WTBS signal over the air by means of a UHF receiving antenna. After reception by Southern, the WTBS signal was retransmitted in its entirety and without modification to a satellite transponder leased by Southern from RCA. From there the WTBS signal was relayed by the satellite back to receiving antennae on earth. These antennae are normally owned by cable systems. After reception by a cable system, the WTBS signal was relayed to the system's headend and from this point was distributed by wire...