WGN Continental Broadcasting Co. v. United Video, Inc.

• Decision Date: 22 October 1982
• Docket Number: No. 81-2687,81-2687
• Citation: 693 F.2d 622
• Parties: , 217 U.S.P.Q. 151, 1982 Copr.L.Dec. P 25,433, 1982 Copr.L.Dec. P 25,459, 8 Media L. Rep. 2170 WGN CONTINENTAL BROADCASTING COMPANY and Albuquerque Cable Television, Inc., Plaintiffs-Appellants, v. UNITED VIDEO, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 622

693 F.2d 622

216 U.S.P.Q. 97, 217 U.S.P.Q. 151,

1982 Copr.L.Dec. P 25,433,

1982 Copr.L.Dec. P 25,459, 8 Media L. Rep. 2170

WGN CONTINENTAL BROADCASTING COMPANY and Albuquerque Cable Television, Inc., Plaintiffs-Appellants, v. UNITED VIDEO, INC., Defendant-Appellee.

No. 81-2687.

United States Court of Appeals Seventh Circuit.

Argued June 4, 1982.

Decided Aug. 11, 1982.

Opinion on Denial of Rehearing and

Rehearing En Banc Oct. 22, 1982.

Don H. Reuben, Reuben & Proctor, Chicago, Ill., for plaintiffs-appellants.

Alan Raywid, Cole, Raywid & Braverman, Washington, D. C., for defendant-appellee.

Before POSNER and COFFEY, Circuit Judges, and CAMPBELL ^*, Senior District Judge.

POSNER, Circuit Judge.

This appeal requires us to decide a question of first impression under the Copyright Act of 1976, 17 U.S.C. Secs. 101 et seq.: to what extent does the copyright on a television program also include program material encoded in the "vertical blanking interval" of the television signal?

Each picture that flashes on a television screen is generated by an electron gun behind the screen that moves rapidly back and forth from the top to the bottom of the screen. When the gun reaches the bottom it shuts off and returns to the top of the screen to begin again. The interval in which the gun is shut off--an interval too brief for the viewer to be aware of--is the vertical blanking interval. It has traditionally been used to carry certain signals that "tell" the television set how to set up the next picture on the screen, but the time required for this function is only a fraction of the interval, and the rest is available, and increasingly is used, to carry other information. Subtitles for deaf people are the most common such use; they appear as an overlay at the bottom of the television picture on sets equipped with a suitable decoder to "unlock" the information carried in the vertical blanking interval and to display it--much as the electron gun generates the regular picture--on the screen. But all sorts of other information can be encoded in the unused portion of the vertical blanking interval--news bulletins, weather reports, ballgame scores, station announcements the stock ticker, etc. Overlaying the information on the television picture is only one method of display; alternatively, the information can be displayed on a different channel of the television set, or on a different set altogether.

WGN is an "independent" television station in Chicago (that is, it is not affiliated with any of the television networks) and it is also a "superstation," meaning that its programs are carried, outside its local area, by cable television systems. To get those programs to the cable systems requires the services of an intermediate carrier such as United Video, a satellite common carrier that plucks broadcast signals off the air, including signals from WGN, and transmits them to cable systems.

WGN decided to experiment with "teletext" (as the use of the vertical blanking interval to carry material intended for the television viewer is called) by broadcasting at first just a test signal, then news stories and a program schedule, in the vertical blanking intervals of its copyrighted 9:00 p.m. news broadcast. The teletext was intended for subscribers to a WGN-affiliated cable system in Albuquerque who own television sets equipped with a suitable decoder. The cable system planned to run the teletext on a different channel (which the viewer would select, if we understand correctly, by pushing a button on the decoder) from the one on which it runs the nine o'clock news. But the cable system never received the teletext. United Video did not retransmit it along with the nine o'clock news but instead substituted teletext supplied by Dow Jones, containing business news. WGN and its affiliate brought this suit to enjoin, as a copyright infringement, United Video's refusal to retransmit WGN's teletext along with the nine o'clock news. See 17 U.S.C. Secs. 501(a), (b), 502(b). They appeal from the district court's judgment holding that United Video did not violate the Copyright Act and dismissing the complaint. 523 F.Supp. 403 (N.D.Ill.1981).

It used to be that a cable system that picked up and retransmitted a broadcast signal containing a copyrighted program was not an infringer. See Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968); Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394, 94 S.Ct. 1129, 39 L.Ed.2d 415 (1974). But the Copyright Act of 1976 changed this, though it allows a cable system to pick up and retransmit broadcast signals without the copyright owner's permission so long as it pays him royalties as fixed in the statute. See 17 U.S.C. Sec. 111. However, "secondary transmissions" made by "any 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 ...," are exempt from any copyright liability. 17 U.S.C. Sec. 111(a)(3). A "primary transmission" is the initial broadcast; a "secondary transmission" is the "further transmitting" of a primary transmission. 17 U.S.C. Sec. 111(f). The exemption thus allows carriers such as United Video to act as purely passive intermediaries between broadcasters and the cable systems that carry the broadcast signals into the home, without incurring any copyright liability. The cable system selects the signals it wants to retransmit, pays the copyright owners for the right to retransmit their programs, and pays the intermediate carrier a fee for getting the signal from the broadcast station to the cable system. The intermediate carrier pays the copyright owners nothing, provided it really is passive in relation to what it transmits, like a telephone company. See S.Rep.No.473, 94th Cong., 1st Sess. 78 (1975). It may not even delete commercials; an important part of the scheme set up in section 111 is the requirement that any cable system that wants to retransmit a broadcast signal without negotiating with the broadcast station or copyright owner transmit intact any commercials it receives from that station. See 17 U.S.C. Sec. 111(c)(3).

What we have explained so far is common ground between the parties; and another point can be disposed of briefly: although United Video's retransmission of WGN's broadcast signal to the cable systems may be immunized from copyright liability by the exemption in section 111(a)(3) for passive carriers, it cannot be immune just because United Video does not retransmit WGN's signal directly to the public--that is, to the cable subscribers--but instead transmits the signal to cable systems which retransmit it to their subscribers. The passive carrier exemption would be superfluous if intermediate carriers such as United Video could never be infringers anyway because they do not transmit directly to the public. And the scheme in section 111 for compensating copyright owners would be disrupted, or at least made cumbersome. United Video could mutilate to its heart's content the broadcast signal it picked up and the copyright owner would have no recourse against it. His only recourse would be against the cable systems--more than a thousand in the case of WGN--that were retransmitting the mutilated signals: a thousand or more copyright infringement suits instead of one.

We cannot find good textual support for the district court's position. The word "public" does not appear either in the definition of secondary transmission or in the provision making the carrier of a secondary transmission liable unless passive. See 17 U.S.C. Secs. 111(a), (f). It is true that WGN can complain only if United Video is interfering with its exclusive right to perform or display the copyrighted work publicly. 17 U.S.C. Secs. 106(4), 106(5). But the Copyright Act defines "perform or display ... publicly" broadly enough to encompass indirect transmission to the ultimate public, who in this case are the subscribers to WGN's cable affiliate in Albuquerque. "To perform or display a work 'publicly' means ... to transmit or otherwise communicate a performance or display of the work ... to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times." 17 U.S.C. Sec. 101.

Therefore, no exemption for nonpublic performance is available in this case. And United Video cannot avail itself of the passive carrier exemption, because it was not passive--it did not retransmit WGN's signal intact. But the fact that United Video cannot claim an exemption from copyright liability does not conclude the case. It needs an exemption only if it would otherwise be an infringer, and it would be that only if WGN's copyright of the nine o'clock news includes the teletext in the vertical blanking intervals. If it does, the deletion of the teletext from United Video's retransmission was an alteration of a copyrighted work and hence an infringement under familiar principles. A copyright licensee who "makes an unauthorized use of the underlying work by publishing it in a truncated version" is an infringer--any "unauthorized editing of the underlying work, if proven, would constitute an infringement of the copyright in that work similar to any other use of a work that exceeded the license granted by the proprietor of the copyright." Gilliam v. American Broadcasting Cos., 538 F.2d 14, 20 (2d Cir. 1976).

Before deciding whether WGN's copyright does cover the teletext at issue, we consider briefly what if anything turns on our answer to this question. WGN could copyright its teletext separately; but it has not done so...