On March 21, 2017, the U.S. Court of Appeals for the Ninth Circuit ruled that retransmission of copyrighted works over the Internet are not eligible for compulsory licenses under 17 U.S.C. Section 111, which are available to “cable systems.”  Compulsory licenses generally equate to less economic return for copyright owners, so organizations such as Fox, NBC, ABC, and CBS sued FilmOn for copyright infringement by public performance over the Internet.

In so ruling, the court first declared ambiguous whether transmission over the Internet qualified as a “secondary transmission … by wires, cables, microwave, or other communications channels.”  Citing Fox’s expert as testifying that “[t]he Internet is not a communications channel,” the court suggested that the technological is “better left to an expert agency than a federal court.”

The court then examined whether the Copyright Office’s interpretation, that retransmission over the Internet is not subject to compulsory license, is persuasive and reasonable.  The court, noting a lack of Congressional action for years despite awareness of the Copyright Office’s position, held that “confining ‘cable systems’ to localized retransmission media is a sensible way to construe the phrase ‘other communications channels’ so that it does not sweep in every possible retransmission technology.”

In the end, this is a “win” for copyright owners that may be able to exact higher license fees for their content, albeit with a likely increase in transaction costs for all involved.

For more on the Copyright Office’s position on Internet retransmission and compulsory licensing, see Copyrighted Broadcast Programming on the Internet, Statement of Mary Beth Peters, Register of Copyrights, June 2000.

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