ivi copyright injunction in the public interest says US Appeals Court

The Second Circuit Court of Appeals released its decision in the WPIX, INC., v ivi INC. 2012 WL 3645304, (2nd.Cir.Aug. 27, 2012) case yesterday. It dismissed ivi’s appeal from a preliminary injunction prohibiting Ivi from continuing to stream television programming over the Internet.

ivi’s defense was that it was a cable system entitled to a compulsory license under § 111 of the US Copyright Act. The US Second Circuit reviewed the statute’s legislative history, development, and purpose which indicated that Congress did not intend for § 111 licenses to extend to Internet retransmissions. This was consistent with the view of US Copyright Office’s interpretation of § 111 that Internet retransmission services do not constitute cable systems under § 111. The Court accordingly concluded that “the district court did not abuse its discretion in finding that plaintiffs were likely to succeed on the merits of the case.”

The Court then turned to whether the district court abused its discretion in finding irreparable harm and that the injunction would be in the public interest. The Court found no error in the district court’s findings on irreparable harm. First, because ivi’s live retransmissions of plaintiffs’ copyrighted programming over the Internet would substantially diminish the value of the programming. Second, because the plaintiffs’ losses would be difficult to measure and monetary damages would be insufficient to remedy the harms. Third, ivi would be unable to pay damages should plaintiffs prevail.

The Court left little doubt about the potential disruptive effects of unlicensed streaming on the whole of the broadcasting and TV programming industries:

Indeed, ivi’s actions — streaming copyrighted works without permission — would drastically change the industry, to plaintiffs’ detriment…The absence of a preliminary injunction would encourage current and prospective retransmission rights holders, as well as other Internet services, to follow ivi’s lead in retransmitting plaintiffs’ copyrighted programming without their consent. The strength of plaintiffs’ negotiating platform and business model would decline. The quantity and quality of efforts put into creating television programming, retransmission and advertising revenues, distribution models and schedules –- all would be adversely affected. These harms would extend to other copyright holders of television programming. Continued live retransmissions of copyrighted television programming over the Internet without consent would thus threaten to destabilize the entire industry.

The Court was even more emphatic on why the public interest favored the grant of the injunction. Noting that copyright balances competing interests, it found that convenient access to TV programming did not outweigh the public interest in protecting exclusive rights since the latter encourages the production of creative works and ultimately serves the public’s interest.

Copyright law inherently balances the two competing public interests presented in this case: the rights of users and the public interest in the broad accessibility of creative works, and the rights of copyright owners and the public interest in rewarding and incentivizing creative efforts (the “owner-user balance”)…Here, streaming television programming live and over the Internet would allow the public — or some portions of the public — to more conveniently access television programming…

On the other hand, the public has a compelling interest in protecting copyright owners’ marketable rights to their work and the economic incentive to continue creating television programming. See Golan v. Holder, 132 S. Ct. 873, 890 (2012) (citing Eldred v. Ashcroft, 537 U.S. 186, 219 (2003); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 558 (1985)). Inadequate protections for copyright owners can threaten the very store of knowledge to be accessed; encouraging the production of creative work thus ultimately serves the public’s interest in promoting the accessibility of such works. See MetroGoldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 961 (2005) (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)).

Plaintiffs are copyright owners of some of the world’s most recognized and valuable television programming. Plaintiffs’ television programming provides a valuable service to the public, including, inter alia, educational, historic, and cultural programming, entertainment, an important source of local news critical for an informed electorate, and exposure to the arts. See Turner, 512 U.S. at 648. Plaintiffs’ desire to create original television programming surely would be dampened if their creative works could be copied and streamed over the Internet in derogation of their exclusive property rights.

The Court also noted the important distinction between enabling broad public access to content and merely enabling easy access to the content. The injunction might affect only the latter, but not the former.

Further, there is a delicate distinction between enabling broad public access and enabling ease of access to copyrighted works. The service provided by ivi is targeted more toward convenience than access, and the public will still be able to access plaintiffs’ programs through means other than ivi’s Internet service, including cable television. Preliminarily enjoining defendants’ streaming of plaintiffs’ television programming over the Internet, live, for profit, and without plaintiffs’ consent does not inhibit the public’s ability to access the programs. A preliminary injunction, moreover, does not affect services that have obtained plaintiffs’ consent to retransmit their copyrighted television programming over the Internet.

ivi’s legal position would have been even more untenable in Canada. Owners of copyright in television programming have the exclusive right to communicate programming to the public under Section 3(1)(f). Pursuant to the recent decision of the Supreme Court in Rogers Communications Inc. v. SOCAN, 2012 SCC 3 streaming TV programming over the Internet without consent would infringe the right of communication to the public. Following the iCrave TV case, our Copyright Act was amended to exempt new media retransmitters from the retransmission regime that covers cable and satellite retransmissions. Accordingly, ivi’s retransmissions would not have been subject to the Canadian compulsory license regime and would have been infringing.

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