Fox Television Stations, Inc. v. Aereokiller

115 F.Supp.3d 1152

Fox Television Stations, Inc., et al.

v.AereoKiller, et al.

Case No. CV 12–6921–GW(JCx)

United States District Court, C.D. California.

Signed July 16, 2015

Attorneys Present for Plaintiffs: Robert A. Garrett, Julie A. Shepard, James S. Blackburn

Attorneys Present for Defendants: Ryan G. Baker, Scott M. Malzahn, Jaime W. Marquart

PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT [162]

DEFENDANTS' MOTION FOR SUMMARY ADJUDICATION OF DEFENDANTS' COUNTERCLAIM FOR DECLARATORY RELIEF AND DEFENDANTS' SECTION 111 AFFIRMATIVE DEFENSE [164]

The Honorable GEORGE H. WU, UNITED STATES DISTRICT JUDGE

The Court DENIES without prejudice Defendant's Ex–Parte application to stay [201].

The Court's Tentative Ruling is circulated and attached hereto. Court hears oral argument. The Court orders counsel to meet and confer and file a joint form of partial summary judgment by July 23, 2015. The Court continues the matter to July 27, 2015, at 8:30 a.m., unless the Court grants the proposed order by 4:00 p.m. on July 24, 2015, at which point, the hearing will be vacated.

Fox Television Stations, Inc. v. FilmOn X, LLC, Case No. CV–12–6921, consolidated with NBCUniversal Media, LLC v. FilmOn X, LLC, Case No. CV–12–6950 Tentative Rulings on Cross–Motions for Summary Judgment as to Compulsory License Eligibility under 17 U.S.C. § 111

I. Introduction

Plaintiffs Fox Television Stations, Inc., Twentieth Century Fox Film Corp., Fox Broadcasting Co., Inc., NBCUniversal Media LLC, Universal Network Television LLC, Open 4 Business Productions LLC, NBC Subsidiary (KNBC–TV) LLC, Telemundo Network Group LLC, WNJU–TV Broadcasting LLC, American Broadcasting Companies, Inc., ABC Holding Company Inc., Disney Enterprises, Inc., CBS Broadcasting Inc., CBS Studios Inc., and Big Ticket Television, Inc. (collectively, "Plaintiffs") move for summary judgment that Defendants FilmOn X LLC, Alkiviades "Alki" David, FilmOn.TV Networks, Inc., Filmon.TV, Inc., FilmOn.com, Inc., and DOES 1–3 (collectively, "Defendants") are not entitled to a compulsory license under § 111 of the Copyright Act, 17 U.S.C. § 111. Docket No. 183. Defendants cross-move for summary judgment that they are so entitled. Docket No. 167. The Court would, for reasons stated herein, DENY Plaintiffs' motion, GRANT Defendants' motion, and hold that Defendants are entitled to a § 111 compulsory license if they meet the applicable requirements.

However, because: (1) the legal issues are close and of significant commercial importance, both to these parties and to others; (2) this Court disagrees with the Second Circuit's decision in an analogous case; and (3) the resolution of the issues presented on summary judgment is likely to be determinative in this action, the Court would authorize an immediate appeal to the Ninth Circuit pursuant to Fed. R. Civ. P. 54(b), Fed. R. App. P. 5, and 28 U.S.C. § 1292(b). For the same reasons, and because Defendants have not yet been able to timely or consistently comply with the procedures attendant to a § 111 license, the Court would preserve the status quo, and maintain the existing preliminary injunction pending the outcome of the appeal. Finally, because of the relative importance of the issues decided here compared to those remaining in the case, the Court would stay this action pending the outcome of the appeal.

II. Background

A. Procedural Background

The same parties were before this Court in December 2012, when it granted Plaintiffs' motion for a preliminary injunction. Fox Television Stations, Inc. v. BarryDriller Content Sys., PLC, 915 F.Supp.2d 1138, 1139 (C.D.Cal.2012). At that time, Defendants expressly disclaimed the argument that they were entitled to a § 111 license, so the Court did not rule on the question now presented. Id. at 1146, n. 14. But after losing here at the preliminary injunction stage, and after having any hope of a different result on appeal dashed by the Supreme Court in American Broadcasting Companies v. Aereo, Inc., ––– U.S. ––––, 134 S.Ct. 2498, 189 L.Ed.2d 476 (2014) (" Aereo III "), Defendants asserted that their business is, in fact, a cable company, and thus entitled to a § 111 license.

This case is not the first between the parties concerning a similar service. In 2010, a group of plaintiffs who overlap with Plaintiffs here sued FilmOn.Com, an entity related to Defendants here, in the Southern District of New York. CBS Broadcasting, Inc. v. FilmOn.Com, Inc., No. 1:10–cv–07532, 2010 WL 4000592 (filed Oct. 1, 2010). Plaintiffs in that case asserted that FilmOn.Com was operating a broadcast retransmission system similar to that operated by the defendants in a companion case, WPIX, Inc. v. ivi, Inc., No. 1:10–cv–07415–NRB (S.D.N.Y., filed Sep. 28, 2010). In that companion case, the Southern District of New York later held that the defendants' internet retransmission system did not qualify as a "cable system," and was thus not entitled to a § 111 compulsory license. WPIX, Inc. v. ivi, Inc., 765 F.Supp.2d 594, 617 (S.D.N.Y.2011) ("ivi I "). Shortly before that decision was affirmed on appeal, 691 F.3d 275 (2d Cir.2012) ("ivi II "), cert. denied, ––– U.S. ––––, 133 S.Ct. 1585, 185 L.Ed.2d 607, FilmOn.Com stipulated to a consent judgment and permanent injunction. Docket No. 49 in 1:10–cv–07532 (S.D.N.Y. Aug. 9, 2012).

The record does not state why FilmOn.Com did not wait for the appeal in the companion case before stipulating to a judgment. Nor does it state why, when Defendants here launched a new internet retransmission service a few months later in 2012, Plaintiffs did not seek a finding of contempt from the Southern District of New York, and instead, filed this case. The reason for both of those strategic choices was likely a decision handed down by the Southern District of New York on July 22, 2012: American Broadcasting Companies v. AEREO, Inc., 874 F.Supp.2d 373, 382 (S.D.N.Y.2012) (" Aereo I "). In that case, the court held that, under Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir.2008) (the " Cablevision " case), Aereo's use of a separate antenna and a separate data stream for each user meant that Aereo did not infringe the networks' public performance rights. In filing this case, Plaintiffs hoped for a different result under the law of the Ninth Circuit. And they got one. See Fox Television Stations, 915 F.Supp.2d at 1151.

After this Court preliminarily enjoined Defendants, the Second Circuit affirmed the decision in Aereo I.WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2d Cir.2013) ("Aereo II "). But the Supreme Court then reversed, agreeing with this Court that using separate antennas and data streams did not avoid "transmit" clause liability. Aereo III, 134 S.Ct. at 2503.¹

After the Supreme Court's Aereo III decision, Defendants switched theories. They argued to the Southern District of New York, as they argue here, that statements in Aereo III implied that Defendants' system qualified as a "cable system," and thus, for a compulsory license. The Southern District of New York rejected that argument for several reasons, including, prominently, the Second Circuit's ivi II decision. CBS Broad. Inc. v. FilmOn.com, Inc., No. 10 CIV. 7532 NRB, 2014 WL 3702568, at *2 (S.D.N.Y. July 24, 2014) ("Aereo did not mention, let alone abrogate, WPIX, Inc. v. ivi, Inc., 691 F.3d 275 (2d Cir. 2012) [ ]. That case established the law in the Second Circuit that ‘Internet retransmission services do not constitute cable systems under § 111’ of the Copyright Act.").

Plaintiffs, satisfied with the trajectory of the case in New York and the rule of ivi II, then argued here that any further litigation of the compulsory license question should take place in the Second Circuit. See Reply Mem. of Plaintiffs Responding to the Court's Request for Briefing on Defendants' Section 111 Defense, Docket No. 133. This Court declined that suggestion, holding that "Plaintiffs wanted a fresh look at the Second Circuit's conclusions in Cablevision /Aereo, and they will now get a fresh look at the Second Circuit's conclusions in [ivi II ], which is the case which they feel should be dispositive as to the Section 111 issue." Mins. of Sept. 8, 2014 Status Conference, Docket No. 136.²

A. Factual Background

1. Defendants' System

Defendants have used two different systems to receive and retransmit broadcast programming: a "trailer system" and a "Lanner system." Meldal Decl. in Supp. of Defs.' Mot., Docket No. 177 at ¶ 14. The trailer system involved an array of small antennas on the roof of a trailer. Id.³ The Lanner system used a single master antenna on the roof of a commercial data center, which then routed the signals to an antenna box where the signals were amplified and captured by small antennas. Id. When a user accessed the FilmOn X website, the user's computer requested a list of available programming, and the FilmOn X server responded with the list. Id. at ¶ 15. When a user picked an over-the-air broadcast channel, the request was directed to and managed by the local facility in the user's region. Id. at ¶ 16. Defendants employed a system that attempted to restrict a user's access to programming based on the user's location. Id. at ¶ 32. Defendants also used an encryption "token" to protect the transmitted content, which was supposed to ensure that only the user with the authorized IP address is able to view the broadcast stream, and only for a limited time. Id. at ¶ 49.

FilmOn X's system modified the broadcast program by inserting FilmOn X's logo and omitting the closed captioning. Jones Deck in Supp. of Pls.' Mot., Docket No. 182 at ¶¶ 10, 14–15. FilmOn X also made available local major channels in standard definition format for free. Id. at ¶¶ 5–6. FilmOn X also played an advertisement before the user could view the selected program. Id. at 10.⁴

Defendants have also modified their system in anticipation of being permitted to restart operations. Now, FilmOn X's geolocation system is designed to attempt to deny access to a broadcast...