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Fox Television Stations, Inc. v. Filmon X LLC

United States District Court, District Circuit

September 5, 2013

FOX TELEVISION STATIONS, INC., et al., Plaintiffs,
v.
FILMON X LLC, et al., Defendants.

OPINION

ROSEMARY M. COLLYER, District Judge.

Defendants operate FilmOn X, a service that uses the Internet to give consumers the ability to watch live over-the-air television channels through their computers and on their mobile devices. FilmOn X also has a digital video recorder, or DVR, capability, permitting users to pause live programming or record shows for later viewing. FilmOn X assigns an individual user the content stream from one of thousands of minute antennas that it operates in major metropolitan areas, including Washington, D.C. Plaintiffs are a group of copyright holders that includes over-the-air television broadcasters and television programmers who have not licensed any of their content to FilmOn X. Plaintiffs complain that FilmOn X is violating their exclusive right to public performance of their copyrighted works, which include local programs and some of the country's most popular evening television shows. Plaintiffs rely on a recent decision from the U.S. District Court for the Central District of California, Fox Television Systems, Inc. v. BarryDriller Content Systems, PLC ( BarryDriller ), in which that court concluded that FilmOn X violated the plaintiffs' copyrights under the Copyright Act of 1976 and barred FilmOn X from offering their content in the Ninth Circuit.

FilmOn X responds that it modeled its process after the system approved in a 2008 Second Circuit case, Cartoon Network, LP v. CSC Holdings, Inc. ( Cablevision ), 536 F.3d 121 (2d Cir. 2008). FilmOn X contends that Cablevision held, as a matter of law, that there is no public performance of a copyrighted work if there is a one-to-one relationship between a copy of the copyrighted work and the recipient- i.e., so long as each FilmOn X user has his or her own assigned antenna, there is no copyright violation. FilmOn X notes that the Second Circuit decided in April of this year that a substantially identical Internet service, Aereo, was not committing copyright infringement. See WNET, Thirteen v. Aereo, Inc. ( Aereo II ), 712 F.3d 676 (2d Cir. 2013).

The Court has carefully considered the rulings in Cablevision and Aereo II, but it is not bound by them or by the California court's ruling in BarryDriller, although the Court finds BarryDriller to be more persuasive. This Court concludes that the Copyright Act forbids FilmOn X from retransmitting Plaintiffs' copyrighted programs over the Internet. Plaintiffs are thus likely to succeed on their claim that FilmOn X violates Plaintiffs' exclusive public performance rights in their copyrighted works. Because there is no dispute of fact between the parties-indeed, each has won and each has lost in a different forum on these same facts-the Court will grant Plaintiffs' motion for a preliminary injunction and will convert the scheduled preliminary injunction hearing to a status conference.

I. FACTS

A. The Parties

Plaintiffs[1] include the four major national broadcast television networks-ABC, CBS, Fox, and NBC-as well as other distributors, rights holders, and DC-area television broadcasters. Am. Compl. [Dkt. 5] ¶¶ 13-26. Defendants, referred to collectively as FilmOn X, are: FilmOn X LLC (formerly known as Aereokiller); FilmOn.tv Networks, Inc.; FilmOn.tv, Inc.; and FilmOn.com Inc. FilmOn X operates a website that combines the functionality of a television with that of a digital video recorder. The Amended Complaint states one claim-that FilmOn X infringes copyrights held by Plaintiffs for, inter alia, local news broadcasts and nationally broadcast television programs including Glee (Fox), The Office (NBC), Grey's Anatomy (ABC), and Elementary (CBS). Id. ¶¶ 37-46; see also id., Ex. B. [Dkt 5-2] (list of illustrative copyright registrations); see also Mem. Supp. Pls. Mot. (Pls. Mem.) [Dkt. 27-1] at 6 (listing as examples of local programming Washington Nationals baseball telecasts and WUSA 9 News at 6 p.m.). Plaintiffs have provided extensive documentation as to the copyrights they hold for both local and national programming, which is not disputed by FilmOn X. E.g., Decl. Sherry Brennan [Dkt. 27-4] (declaration of Senior Vice President of Fox Cable Network Services, LLC) & Brennan Decl., Ex. A (copyright registration for Fox programming such as a November 20, 2012 episode of The New Girl, a sitcom starring Zooey Deschanel).

FilmOn X has filed an Answer, see First Am. Answer, Dkt. 14, and a Counterclaim for declaratory judgment that it is not infringing Plaintiffs' copyrights, see First. Am. Counterclaim, Dkt. 15, ¶¶ 44-45, which Plaintiffs have answered, Dkt. 24. Plaintiffs filed their Joint Motion for Preliminary Injunction on August 1, 2013. See Pls. Mot. Prelim. Inj. (Pls. Mot.) [Dkt. 27]. Because the parties agree on all material facts, the preliminary injunction hearing scheduled for September 20, 2013 will be converted to a status conference.

B. FilmOn X's Service

FilmOn X offers free and paid services through which consumers can watch live and recorded television over the Internet, including local channels that are affiliates of ABC, CBS, NBC, and Fox that are also broadcast over-the-air.[2] FilmOn X began offering its services in a small number of cities in late 2012, including Los Angeles and Chicago. It later expanded to Washington, D.C.[3] FilmOn X readily admits that its technology is "similar... in every relevant way" to the technology at issue in Aereo and BarryDriller. [4] Defs. Opp. [Dkt. 31] at 1, 14 n.3. To describe its technology and services, FilmOn X offers the declarations of its CEO and Founder, Alkiviades David, see David Decl., Dkt. 31-1, and its Chief Technology Officer Mykola Kutovyy, who is responsible for "implementing and managing FilmOn's technology, " Kutovyy Decl., Dkt. 31-2, ¶¶ 2-3. There is no dispute between the parties as to the material elements of the technology employed by FilmOn X and the services a user can access. They also agree that the Aereo courts and BarryDriller court described the technology and services accurately. Thus, the Court will summarize FilmOn X's system briefly.

First, a brief peek under the figurative hood.[5] When it expands to a city, FilmOn X installs an array of "mini antennas, each no larger than the size of a dime and spaced inches apart." A large number of mini-antennas are aggregated on a circuit board, which also contains other electronic components essential to FilmOn X's Internet broadcast system. An antenna may be assigned to a specific, individual user ("static"). More generally, an antenna is available for "dynamic" allocation by the tuner server-that is, a specific antenna is assigned to one specific individual user only when that user is watching television via FilmOn X and is assigned to a different user when the first user is done. No single antenna is used by more than one user at a single time, and all dynamic antennas are shared.[6] The antennas are networked to a tuner router and server, which in turn link to a video encoder. The encoder converts the signals from the antennas into a video format viewable by computers and mobile devices. The video encoder is connected to a "distribution endpoint, " which is a "server or group of servers" that delivers the video and audio to FilmOn X users. Defs. Opp. at 6.

When a FilmOn X user selects a channel to watch through FilmOn X's website or a mobile application, the user's request is sent to FilmOn X's web server. The web server sends a command to the tuner router and server. The tuner router and server identify an available antenna and encoder slot, and then the tuner directs the assigned antenna to tune to the requested channel. Once the antenna begins receiving the signal, data for the requested channel flows from the antenna to the antenna router and then to the video encoder, where it is stored on a computer hard drive in a "unique directory" that is created for the specific user. The data then goes through the distribution endpoint, over the Internet to FilmOn X's website or a mobile application, for the user's consumption. Video data remains on FilmOn X's server in the user's unique directory while the user is actually watching television. When the user "finishes viewing the channel" by pressing stop or pause, closing the user application, or switching channels, a "stop" request is passed from the user to the antenna router, which immediately stops retrieving data from the antenna and frees the antenna for use by another user. The data in the user's unique directory is then deleted. Defs. Opp. at 6-7.

A FilmOn X user accesses the service by using an authorized "client application, " which allows access from a desktop or laptop computer via software or the FilmOn X website, filmonx.com, as well as applications or "apps" for mobile devices, such as FilmonTVPlus for Apple's iPhone or LiveTV for Google's Android mobile operating system. The user can then select from a list of available channels within the application. Once the user selects a channel, the technological process described above begins. Defs. Opp. at 5. Below is a screenshot of the FilmOn X website accessed from the Court in Washington, D.C. on August 29, 2013, showing the different local channel viewing options on the left.

Plaintiffs describe additional characteristics of the FilmOn X service that were not detailed by FilmOn X, although FilmOn X has not controverted them in any meaningful way.[7] For example, Plaintiffs have provided a variety of screenshots of the FilmOn X service, including screenshots of the different local programming available in the Los Angeles, Chicago, Washington, and Dallas- i.e., users in each city can access the channels of Plaintiffs' local affiliates while in that metropolitan area. See Shepard Decl., Ex. E. FilmOn X offers live standard-definition ("SD") viewing for free. Shepard Decl. ¶ 15. Users who pay can (1) watch live television in high definition ("HD") and (2) select shows for later viewing, which FilmOn X will record by saving a copy into the user's unique directory. Id. ¶ 14; id., Ex F (screenshots showing that, for example, viewers can pay $0.99 per month to "watch in HD and Record" certain shows like "Travel with Rick Steves" or $99 per year to "watch in HD and Record" the CBS, NBC, Fox, and ABC local Washington channels). In addition, Plaintiffs also assert that FilmOn X advertises both by (1) inserting brief ("10 to 30 second") video advertisements upon initiation of viewing but before the viewer can see live television and (2) displaying banner advertisements above the video viewer while a user is watching television. Id. ¶¶ 16-17; id., Exs. G, H, & I (screenshots of advertisements). Finally, FilmOn X superimposes over all local programming a small "bug" containing the FilmOn or FilmOn X logo. Id. ¶ 18; id., Ex. J (screenshots).

Plaintiffs have not consented to FilmOn X's streaming of their programming and have not entered into any licensing agreements with FilmOn X. Pls. Mem. at 1; Pls. Reply [Dkt. 32] at 1.

II. LEGAL STANDARD

A district court may grant a preliminary injunction "to preserve the relative positions of the parties until a trial on the merits can be held." Univ. of Tex. v. Camenisch, 451 U.S. 390, 395 (1981). An injunction is an equitable remedy, so its issuance falls within the sound discretion of the district court. See Hecht Co. v. Bowles, 321 U.S. 321, 329 (1944). To obtain a preliminary injunction, the movant must establish that:

(a) he is likely to succeed on the merits;
(b) he is likely to suffer irreparable harm in the absence of preliminary relief;
(c) the balance of equities tips in his favor; and
(d) an injunction is in the public interest.

Winter v. NRDC, Inc., 555 U.S. 7, 20 (2008); see also eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006) (in patent case, requiring as second factor a showing that "that remedies available at law, such as monetary damages, are inadequate"). The D.C. Circuit has further instructed that "the movant has the burden to show that all four factors... weigh in favor of the injunction." Davis v. Pension Benefit Guar. Corp., 571 F.3d 1288, 1292 (D.C. Cir. 2009); see also Sherley v. Sebelius, 644 F.3d 388, 392-93 (D.C. Cir. 2011).

III. ANALYSIS

To some extent, this case could just boil down to a binary choice between the reasoning of the Second Circuit in Aereo or the California district court in BarryDriller. Compare Defs. Opp. at 15 ("[P]laintiffs are left with the argument that the Cablevision court got it wrong and the Aereo court could not correct Cablevision 's error because of stare decisis....") with Pls. Reply at 3 ("FilmOn X simply urges this Court to blindly follow Aereo and Cablevision because they exist and have not yet been overturned by the Supreme Court."). It does not. This Court is tasked with making a legal judgment. While it has carefully considered the competing authorities offered by the parties, the Court applies the Copyright Act and case law and finds that Plaintiffs are likely to succeed on their claim that FilmOn X violates Plaintiffs' exclusive public performance rights in their copyrighted works. Because the other preliminary injunction factors also favor Plaintiffs, their motion will be granted.

A. Cases Relied on by the Parties

The Court briefly reviews the cases relied on by the parties before turning to its own analysis of the Transmit Clause.

1. The Second Circuit Cases, Cablevision & Aereo

FilmOn X relies on a trio of cases: Cartoon Network, LP v. CSC Holdings, Inc. ( Cablevision ), 536 F.3d 121 (2d Cir. 2008); American Broadcasting Companies, Inc. v. Aereo, Inc. ( Aereo I ), 874 F.Supp.2d 373 (S.D.N.Y. 2012); and WNET, Thirteen v. Aereo, Inc. ( Aereo II ), 712 F.3d 676 (2d Cir. 2013). Aereo II affirmed and adopted the analysis of Aereo I in toto, and the Court follows the parties' lead in referring to those two decisions collectively as Aereo when it is helpful to do so.

In 2008, the Second Circuit considered the copyright implications of a cable-television operator's "Remote Storage DVR System" (RS-DVR). Cablevision, 536 F.3d at 123. The RS-DVR permitted customers who did not have "a stand-alone DVR, " such as a Tivo, "to record cable programming on central hard drives housed and maintained by Cablevision at a remote' location." Id. at 124. Customers could then "receive playback of those programs through their home television sets, using only a remote control and a standard cable box equipped with the RS-DVR software." Id. The plaintiffs, some of whom are plaintiffs in this case, were copyright holders who, among other claims, asserted that the RS-DVR violated their exclusive public performance rights. Id.

The Second Circuit ruled in Cablevision that the district court had erred in preliminarily enjoining the RS-DVR service. The Second Circuit opined at length about why the RS-DVR did not infringe the plaintiffs' public performance rights under the Transmit Clause of the Copyright Act, 17 U.S.C. § 101, which provides: "To perform or display a work publicly' means... to transmit or otherwise communicate a performance... 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."[8] See Cablevision, 536 F.3d at 134-40. The Cablevision court held that the Transmit Clause required a court "to discern who is capable of receiving' the performance being transmitted" when "determining whether a transmission is made to the public." Id. at 134; see also id. at 135 (rejecting district court's view that the Transmit Clause requires a court to consider "not the potential audience of a particular transmission, but the potential audience of the underlying work ( i.e., the program') whose content is being transmitted"). Having established its premise, the Second Circuit then agreed with Cablevision that "because each RS-DVR transmission is made using a single unique copy of a work, made by an individual subscriber, one that can be decoded exclusively by that subscriber's cable box, only one subscriber is capable of receiving any given RS-DVR transmission." Id. at 135; see also id. at 137 ("[B]ecause the RS-DVR system, as designed, only makes transmissions to one subscriber using a copy made by that subscriber, we believe that the universe of people capable of receiving an RS-DVR transmission is the single subscriber whose self-made copy is used to create that transmission."). Cablevision concluded:

In sum, we find that the transmit clause directs us to identify the potential audience of a given transmission, i.e., the persons "capable of receiving" it, to determine whether that transmission is made "to the public." Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude that such transmissions are not ...

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