Am. Broad. Cos. v. Goodfriend

557 F.Supp.3d 409

AMERICAN BROADCASTING COMPANIES, INC., Disney Enterprises, Inc., Twentieth Century Fox Film Corporation, CBS Broadcasting Inc., CBS Studios Inc., Fox Television Stations, LLC, Fox Broadcasting Company, LLC, NBCUniversal Media, LLC, Universal Television LLC, and Open 4 Business Productions, LLC, Plaintiffs and Counterclaim Defendants,

v.David R. GOODFRIEND and Sports Fans Coalition NY, Inc., Defendants and Counterclaim Plaintiffs.

19 Civ. 7136 (LLS)

United States District Court, S.D. New York.

Signed August 31, 2021

Angelica H. Nguyen, Jean Ralph Fleurmont, Tian Huang, Thomas G. Hentoff, Gerson Avery Zweifach, Williams & Connolly LLP, Washington, DC, Joseph M. Terry, Williams & Connolly LLP, New York, NY, for Plaintiffs and Counterclaim Defendants American Broadcasting Companies, Inc., Disney Enterprises, Inc, Twentieth Century Fox Film Corporation, CBS Broadcasting Inc., CBS Studios Inc., NBCUniversal Media, LLC, Universal Television LLC, Open 4 Business Productions, LLC.

Paul D. Clement, Erin E. Murphy, Kirkland & Ellis LLP, Angelica H. Nguyen, Jean Ralph Fleurmont, Tian Huang, Thomas G. Hentoff, Gerson Avery Zweifach, Williams & Connolly LLP, Washington, DC, Joseph M. Terry, Williams & Connolly LLP, New York, NY, for Plaintiffs and Counterclaim Defendants Fox Televisions Stations, LLC, Fox Broadcasting Company, LLC.

Elizabeth Eilleene Brenckman, Lindsay Michelle Rindskopf, Orrick, Herrington & Sutcliffe LLP, New York, NY, R. David Hosp, Caroline Koo Simons, Laura Brooks Najemy, Mark S. Puzella, Sheryl Koval Garko, Orrick, Herrington & Sutcliffe LLP, Boston, MA, Erin Marie Boyd Leach, Orrick Herrington & Sutcliffe, LLC, Irvine, CA, Shane D. Anderson, Orrick, Herrington & Sutcliffe LLP, Los Angeles, CA, for Defendant and Counterclaim Plaintiff David R. Goodfriend.

Elizabeth Eilleene Brenckman, Lindsay Michelle Rindskopf, Orrick, Herrington & Sutcliffe LLP, New York, NY, R. David Hosp, Caroline Koo Simons, Laura Brooks Najemy, Mark S. Puzella, Sheryl Koval Garko, Orrick, Herrington & Sutcliffe LLP, Boston, MA, Erin Marie Boyd Leach, Orrick Herrington & Sutcliffe, LLC, Irvine, CA, Mitchell L. Stoltz, Electronic Frontier Foundation, San Francisco, CA, Shane D. Anderson, Orrick, Herrington & Sutcliffe LLP, Los Angeles, CA, for Defendant and Counterclaim Plaintiff Sports Fans Coalition NY, Inc.

OPINION & ORDER

LOUIS L. STANTON, U.S.D.J.

Plaintiffs seek partial summary judgment dismissing defendants’ affirmative defense that defendants’ operation of the Locast internet service is exempt from copyright infringement liability under 17 U.S.C. § 111(a)(5). See Dkt. No. 117. Reciprocally, defendants move for summary judgment on the same issue, seeking a contrary finding that Section 111(a) (5) does grant them a statutory exemption from the copyright law. See Dkt. No. 123.

For the reasons set forth below, plaintiffs’ motion is granted, and defendants’ is denied.

BACKGROUND

Defendant non-profit organization Sports Fans Coalition NY, Inc. ("SFCNY") operates the Locast service, which captures over-the-air ("OTA") broadcast signals and retransmits them over the internet, enabling viewers to stream live television on their preferred internet-connected viewing device. The signals include copyrighted transmissions from plaintiffs’ broadcast stations. Locast has not paid for a license or obtained plaintiff's consent to retransmit those programs.

Defendant Goodfriend founded SFCNY in 2017.¹ According to Mr. Goodfriend, the organization was founded and Locast was created in order to provide Americans free access to local, free television which, for technical and geographic reasons, they are unable to access without commercial Pay-TV services (provided by multichannel video programming distributors, or "MVPDS") or other subscription-based internet services such as YouTube TV and Hulu+ Live TV.

Locast's retransmissions are available online to any registered user in the designated geographic area, even those who can access the original OTA signal using OTA television antennas. Locast recipients have free access to the full repertory of news and entertainment channels; but non-paying users’ programming is interrupted after every fifteen minutes of watching a single channel with a fifteen-second video requesting donations, and viewers then lose time re-acquiring the program.

To avoid that interruption in service, users can pay $5 a month for "preferred" (i.e., uninterrupted) access to the service, or can request that the service stop displaying the donation requests based on their financial circumstances. Users who choose to pay receive the uninterrupted service for time correlating to the amount of the payment. For example, if the user pays the minimum $5 amount, she receives uninterrupted service for the entire month. If the user pays less, the time period during which she receives uninterrupted service within the month is decreased on a pro-rata basis (e.g., $1 paid provides uninterrupted service for 20% of the month).

The obvious economic fact is that these "donations" are really a scale of fees for uninterrupted service, and it works. At present, Locast is almost fully funded by payments from users.

Besides those payments from Locast recipients, SFCNY also generates income through donations from MVPDs, such as AT&T, Promotion and Advancement of Local Opportunities ("PALO") and Liberty Cable vision of Puerto Rico LLC. Some MVPDS integrate the Locast application in their own smart-TV platforms, and in the event of a channel blackout (which may result from a breakdown in retransmission consent negotiations between an MVPD and broadcast owner), those MVPDS can direct their customers to the Locast app so that there is no disruption in their live TV service.

As of May 2021, SFCNY and Locast capture and retransmit OTA signals over the Internet that are receivable in 32 designated market areas and are available to viewers all day.

Plaintiffs bring this suit to bar defendants from operating the Locast service and for statutory damages for their infringed works.

In December of 2019, the parties agreed to limit the scope of the litigation to the issue of applicability of the Section 111(a)(5) exemption, which is the sole question before the Court on these two motions.

STANDARD

"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "A fact is material if it ‘might affect the outcome of the suit under the governing law,’ and a dispute is genuine if ‘the evidence is such that a reasonable jury could return a verdict for the nonmoving party.’ " Baldwin v. EMI Feist Catalog, Inc., 805 F.3d 18, 25 (2d Cir. 2015), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

DISCUSSION

Section 111(a)(5) of the Copyright Act sets forth certain limitations on a copyright holder's exclusive rights. Subsection (a)(5) states:

(a) Certain Secondary Transmissions Exempted. –The secondary transmission of a performance or display of a work embodied in a primary transmission is not an infringement of copyright if–

...

(5) the secondary transmission is not made by a cable system but is made by a governmental body, or other nonprofit organization, without any purpose of direct or indirect commercial advantage, and without charge to the recipients of the secondary transmission other than assessments necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service.

17 U.S.C. § 111(a)(5)

Plaintiffs set forth several arguments that defendants’ Locast service does not come within the statutory exemption. For the most part, they present such conflicting characterizations of the facts...