WPIX, Inc. v. IVI, Inc.

• Decision Date: 27 August 2012
• Docket Number: Docket No. 11–788–cv.
• Citation: 104 U.S.P.Q.2d 1071,691 F.3d 275
• Parties: WPIX, INC., WNET.ORG, American Broadcasting Companies, Inc., Disney Enterprises, Inc., CBS Broadcasting Inc., CBS Studios, Inc., The CW Television Stations, Inc., NBC Universal, Inc., NBC Studios, Inc., Universal Network Television, LLC, Telemundo Network Group, LLC, NBC Telemundo License Company, Office of the Commissioner of Baseball, MLB Advanced Media, L.P., Cox Media Group, Inc., Fisher Broadcasting–Seattle TV, L.L.C., Twentieth Century Fox Film Corporation, Fox Television Stations, Inc., Tribune Television Holdings, Inc., Tribune Television Northwest, Inc., Univision Television Group, Inc., The Univision Network Limited Partnership, Telefutura Network, WGBH Educational Foundation, Thirteen, and Public Broadcasting Service, Plaintiffs–Appellees, v. IVI, INC., and Todd Weaver, Defendants–Appellants.
• Court: U.S. Court of Appeals — Second Circuit

691 F.3d 275

104 U.S.P.Q.2d 1071

WPIX, INC., WNET.ORG, American Broadcasting Companies, Inc., Disney Enterprises, Inc., CBS Broadcasting Inc., CBS Studios, Inc., The CW Television Stations, Inc., NBC Universal, Inc., NBC Studios, Inc., Universal Network Television, LLC, Telemundo Network Group, LLC, NBC Telemundo License Company, Office of the Commissioner of Baseball, MLB Advanced Media, L.P., Cox Media Group, Inc., Fisher Broadcasting–Seattle TV, L.L.C., Twentieth Century Fox Film Corporation, Fox Television Stations, Inc., Tribune Television Holdings, Inc., Tribune Television Northwest, Inc., Univision Television Group, Inc., The Univision Network Limited Partnership, Telefutura Network, WGBH Educational Foundation, Thirteen, and Public Broadcasting Service, Plaintiffs–Appellees,

v.IVI, INC., and Todd Weaver, Defendants–Appellants.

Docket No. 11–788–cv.

United States Court of Appeals, Second Circuit.

Argued: May 30, 2012.

Decided: Aug. 27, 2012.

Robert Alan Garrett (Peter L. Zimroth, Hadrian R. Katz, Lisa S. Blatt, C. Scott Morrow, R. Reeves Anderson, on the brief), Arnold & Porter LLP, New York, NY, and Washington, D.C., for Plaintiffs–Appellees.

Lawrence D. Graham (Ellen M. Bierman, on the brief), Black Lowe & Graham PLLC, Seattle, WA, for Defendants–Appellants.

Before: WINTER, CHIN, and DRONEY, Circuit Judges.

CHIN, Circuit Judge:

In this case, plaintiffs-appellees—producers and owners of copyrighted television programming—sued defendants-appellants ivi, Inc. (“ivi”) and its Chief Executive Officer, Todd Weaver, for streaming plaintiffs' copyrighted television programming over the Internet live and without their consent. The district court granted a preliminary injunction for plaintiffs, holding that: (1) plaintiffs were likely to succeed on the merits of the case because ivi was not a “cable system” entitled to a compulsory license under § 111 of the Copyright Act, 17 U.S.C. § 111; (2) plaintiffs would suffer irreparable harm without injunctive relief; (3) the balance of hardships favored the grant of a preliminary injunction; and (4) the issuance of a preliminary injunction did not disserve the public interest. Defendants appeal. For the reasons that follow, we affirm.

STATEMENT OF THE CASE

1. The Facts

The following facts are undisputed.

On September 13, 2010, ivi began streaming plaintiffs' copyrighted programming over the Internet, live, for profit, and without plaintiffs' consent.¹ ivi began by retransmitting signals from approximately thirty New York and Seattle broadcast television stations; by February 2, 2011, ivi was also retransmitting signals from stations in Chicago and Los Angeles.² Within five months of its launch, ivi had offered more than 4,000 of plaintiffs' copyrighted television programs to its subscribers.

Specifically, ivi captured and retransmitted plaintiffs' copyrighted television programming live and over the Internet to paying ivi subscribers who had downloaded ivi's “TV player” on their computers for a monthly subscription fee of $4.99 (following a 30–day free trial). For an additional fee of $0.99 per month, subscribers were able to record, pause, fast-forward, and rewind ivi's streams.

Almost immediately after ivi's launch, several affected program owners and broadcast stations sent cease-and-desist letters to ivi. ivi responded to these letters on or about September 17, 2010, purporting to justify its operations on the ground that it was a cable system entitled to a compulsory license under § 111 of the Copyright Act, 17 U.S.C. § 111.

2. Proceedings Below

On September 20, 2010, ivi filed a declaratory action in the United States District Court for the Western District of Washington. On September 28, 2010, plaintiffs sued defendants for copyright infringement in the Southern District of New York, seeking damages and injunctive relief. On January 19, 2011, the United States District Court for the Western District of Washington (Robart, J.) dismissed ivi's declaratory action as an impermissible anticipatory filing. See ivi, Inc. v. Fisher Commc'ns, Inc., No. C10–1512JLR, 2011 WL 197419 (W.D.Wash. Jan. 19, 2011).

On February 22, 2011, in a thorough and carefully-considered decision, the United States District Court for the Southern District of New York (Buchwald, J.) granted plaintiffs' motion for a preliminary injunction. See WPIX, Inc. v. ivi, Inc., 765 F.Supp.2d 594, 622 (S.D.N.Y.2011). This appeal followed. ³

DISCUSSION

We review a district court's grant of a preliminary injunction for abuse of discretion. Kickham Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204, 209 (2d Cir.2009). A district court abuses its discretion in granting a preliminary injunction when its decision rests on an error of law or a clearly erroneous factual finding, or when its decision cannot be located within the range of permissible decisions. Id. In a copyright case, a district court may grant a preliminary injunction when plaintiffs demonstrate: (1) a likelihood of success on the merits; (2) irreparable harm in the absence of an injunction; (3) a balance of the hardships tipping in their favor; and (4) non-disservice of the public interest by issuance of a preliminary injunction. Salinger v. Colting, 607 F.3d 68, 79–80 (2d Cir.2010). We discuss each prong of Salinger in turn.

I. Likelihood of Success on the Merits

Under the Copyright Act, television broadcasters “generally [have] ‘exclusive rights' ... to authorize the public display of [their] copyrighted content, including the retransmission of [their] broadcast signal[s].” EchoStar Satellite L.L.C. v. F.C.C., 457 F.3d 31, 33 (D.C.Cir.2006); see17 U.S.C. § 106(4)-(5). Congress, however, codified an exception to this exclusive right in 1976— § 111 of the Copyright Act—permitting cable systems to publicly perform and retransmit signals of copyrighted television programming to its subscribers, provided they pay royalties at government-regulated rates and abide by the statute's procedures. See17 U.S.C. § 111(c) (exception), (d) (royalties); U.S. Copyright Office, Satellite Home Viewer Extension and Reauthorization Act Section 109 Report 1 (2008) (“SHVERA Report”).

In this case, it is undisputed that plaintiffs owned valid copyrights to the television programming that ivi publicly performed without plaintiffs' consent. See ivi, 765 F.Supp.2d at 601. The burden of proof thus falls on defendants to demonstrate that they have an affirmative statutory defense to copyright infringement. See Bourne v. Walt Disney Co., 68 F.3d 621, 631 (2d Cir.1995) (noting possession of license by accused infringer is affirmative defense and burden falls on licensee to prove license's existence (citing United States v. Larracuente, 952 F.2d 672, 674 (2d Cir.1992); Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.01)). Indeed, defendants argue that ivi is a cable system entitled to a § 111 license under the Copyright Act.

Thus, the principal issue presented is whether ivi, a service that streams copyrighted television programming live and over the Internet, constitutes a cable system under § 111 of the Copyright Act. If so, ivi has a statutory defense to plaintiffs' claims of copyright infringement, and ivi is entitled to a compulsory license to continue retransmitting plaintiffs' programming. See Satellite Broad. and Commc'ns Ass'n of Am. v. Oman, 17 F.3d 344, 345–46 (11th Cir.1994). If not, ivi has no defense to plaintiffs' claims of infringement. See id. at 346.

As discussed below, the Copyright Office—the federal agency charged with overseeing § 111—has spoken on the issue of whether § 111's compulsory licenses extend to Internet retransmissions. Accordingly, we utilize the two-step process outlined in Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). At Chevron step one, we consider whether Congress has clearly spoken on the issue of Internet retransmissions in § 111. See id. at 842–43, 104 S.Ct. 2778;Cohen v. JP Morgan Chase & Co., 498 F.3d 111, 116 (2d Cir.2007). If the intent of Congress is clear, that is the end of the matter; courts “must give effect to the unambiguously expressed intent of Congress.” Chevron, 467 U.S. at 842–43, 104 S.Ct. 2778. If we determine that Congress has not directly addressed the precise question at issue, we proceed to Chevron step two, “which instructs us to defer to an agency's interpretation of the statute, so long as it is ‘reasonable.’ ” Cohen, 498 F.3d at 116 (quoting Chevron, 467 U.S. at 843–44, 104 S.Ct. 2778).

A. Chevron Step One

To ascertain Congress's intent at Chevron step one, we begin with the statutory text; if its language is unambiguous, no further inquiry is necessary. Cohen, 498 F.3d at 116 (citing Zuni Pub. Sch. Dist. v. Dep't of Educ., 550 U.S. 81, 93–94, 127 S.Ct. 1534, 167 L.Ed.2d 449 (2007); Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997); Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 423 (2d Cir.2005)). If the statutory language is ambiguous, we look to the canons of statutory construction, and then to the legislative history to see whether any “ ‘interpretive clues' permit us to identify Congress's clear intent.” Cohen, 498 F.3d at 116 (citing Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581, 586, 124 S.Ct. 1236, 157 L.Ed.2d 1094 (2004); accord Daniel, 428 F.3d at 423).

1. The Statutory Text

Section 111(c)(1) of the Copyright Act provides:

[S]econdary transmissions to the public by a cable system of a performance or display of a work embodied in a primary transmission made by a broadcast station licensed by the Federal Communications Commission ... shall be subject to statutory licensing upon compliance with the requirements of subsection (d) where the carriage of the signals comprising the secondary transmission is permissible under the rules, regulations, or authorizations of the Federal Communications Commission.

17 U.S.C. § 111(c)(1).⁴ A “cable system” is defined as:

a...