Aug. 27 (Bloomberg) -- A company that streams TV shows to subscribers petitioned appeals judges in California to overturn a lower-court ruling that granted broadcasters’ bid to shut down the service in the state.
FilmOn X LLC, based in Beverly Hills and founded by Alki David, told judges at a hearing in Pasadena today that it isn’t infringing copyrights by capturing broadcasters’ over-the-air signals with its small remotely located antennas and retransmitting the programming to its customers.
“The rulings of the district court in these cases should be reversed,” Ryan Baker, a lawyer for FilmOn X, told the judges. They said they would rule later.
Baker argued that the California appeals court should follow a decision by the appeals court in New York. The New York court ruled against an injunction that would have shut down Aereo Inc., which has a technology similar to FilmOn’s. The appeals panel in New York, affirming a lower-court order, said that Aereo’s retransmissions are private rather than public performances under copyright law and thus don’t need to be licensed.
“When someone inserts themselves as a middleman and tries to make a profit, licenses should be obtained,” Robert Garrett, a lawyer for Comcast Corp.’s NBC, told the judges. “Singing in the shower is a private performance. Sending transmissions to 50,000 customers is not singing in the shower.”
Fox Broadcasting, a unit of Twenty-First Century Fox Inc., sued FilmOn X in 2012, claiming that it violates Fox’s exclusive rights to reproduce and perform its works publicly and that the service doesn’t have a license to transmit its programming. Fox and other broadcasters, including CBS Corp., NBC and Walt Disney Co.’s ABC, are fighting unlicensed online streaming services because they are a threat to the revenue the broadcast networks receive from cable and satellite TV providers.
Aereo and FilmOn X both argued that because each of the transmissions comes from a single antenna to a single subscriber, it is a private performance under copyright law.
“Isn’t your problem that this is an innovation for the sole purpose of avoiding the statute?” U.S. District Judge Brian Cogan, who was on the appeals panel, today asked FilmOn X’s lawyer. “Maybe you’ve succeeded.”
Baker replied, “The purpose was to comply with the law. The only type of performance that is enabled by FilmOn X is private.”
U.S. Circuit Judge Diarmuid O’Scannlain suggested that this might be an issue for the U.S. Congress to resolve. The Copyright Act that contains the provision about public performance was enacted in 1976.
“Is this a matter that is a judicial issue or a matter to be dealt with by Congress?” O’Scannlain asked.
FilmOn X founder David said in a telephone interview before the hearing that “broadcast laws are very clear about this. Broadcasters got their licenses by making their signals available by any technology.”
U.S. District Judge George Wu granted the broadcasters’ motion for an injunction and FilmOn X appealed. Wu denied the broadcasters’ petition to extend the injunction beyond California and several other states and they appealed that ruling.
If the California appeals court upholds Wu’s injunction, it will create a legal split between the two federal circuits, which might result in a Supreme Court review.
Garrett told the judges to “allow the marketplace to function here and allow the parties to negotiate licenses.”
David said he had approached the broadcasters and offered to pay for licenses for their programming and the offers were rejected. He said the FilmOn X service is in about a dozen U.S. markets and in Europe. Its revenue comes primarily from advertising not subscriber fees, he said. The FilmOn X service previously was called Aereokiller.
FilmOn X has also been sued by broadcasters in the federal court for the District of Columbia. No ruling has been made yet on an injunction.
The lower-court case is Fox Broadcast Stations v. Aereokiller, 12-6921, U.S. District Court, Central District of California. The appeal is Fox Television Stations v. Aereokiller, 13-55156, U.S. Court of Appeals for the Ninth Circuit (Pasadena).
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