Legal Reprimand: Web Video Distributor Ivi Is Not 'Cable System'

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Granting a request by TV broadcasters, a federal judge has ordered the online video distributor Ivi to immediately cease offering streams of television programs.  

In a 59-page ruling, U.S. District Court Judge Naomi Reice Buchwald in New York rejected Ivi's argument that it is a "cable system" and therefore entitled under federal copyright law to a mandatory license allowing it to stream TV shows.

"Ivi's architecture bears no resemblance to the cable systems of the 1970s," the judge wrote. "Its service retransmits broadcast signals nationwide, rather than to specific local areas. Finally, unlike cable systems of the 1970s, Ivi refuses to comply with the rules and regulations of the FCC."

The National Association of Broadcasters praised the ruling, saying it was "gratified to learn that the federal court in New York has preliminarily enjoined Ivi from continuing its illegal retransmission of broadcast signals over the Internet."

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But Ivi CEO Todd Weaver said the company will appeal Buchwald's ruling to the 2nd Circuit.

Ivi, which launched in September, streams TV shows as they are being shown over-the-air in select markets: New York, Seattle, Chicago and Los Angeles. The company offers nationwide subscriptions to its streams for $5 a month.

As soon as the service launched, the broadcasters alleged that their copyright was being infringed by Ivi because it didn't have their permission for the streams. The matter landed in federal court in New York, where the broadcasters sought monetary damages and an injunction ordering Ivi to stop streaming TV shows.

Ivi argued that the infringement claim should be dismissed because it's entitled to a license to stream shows, under the federal Copyright Act. That statute says that cable systems are entitled to compulsory retransmission licenses under copyright law, as long as they pay a fee of around $100 a year.

But Buchwald said that a "common sense approach" to the copyright law's mandatory retransmission provision shows that it wasn't meant to apply to Internet companies like Ivi.

She wrote that Congress enacted compulsory licensing rules because it wanted everyone to have access to the same network programs offered by local broadcast stations. "It had no interest in ensuring that all Americans would have several opportunities to watch 'The Good Wife' on their computer or Internet-capable device in case they were unavailable at the time it aired in their time zone, or could watch every Seattle Seahawks game no matter whether it is available in their region," she wrote.

The legal matter is complicated by a separate communications law providing that cable operators must obtain broadcasters' permission to retransmit. While the broadcasters didn't bring suit under that law, it clearly factored into the judge's decision. She wrote that Congress enacted the Copyright Act's mandatory retransmission provisions "with an understanding that the cable systems it was granting a compulsory license to would also be subject to the regulations of the FCC."

Ivi's Weaver said in a statement that the company complies with all FCC rules. But Ivi isn't subject to the same FCC regulations as cable operators because the FCC doesn't categorize Ivi as a cable system.

Ivi garnered support for its position from a coalition of digital rights groups, including Public Knowledge, the Electronic Frontier Foundation, Media Access Project and the Open Technology Initiative. They argued in a friend-of-the-court brief that the law shouldn't favor "1970s-era cable operators" over companies that use new technology to offer similar services.

The digital rights groups also argued that companies like Ivi help create demand for high-speed Web access, which in turn gives Internet service providers more incentives to expand broadband to those areas that still lack the service.

Public Knowledge said in a statement that it was disappointed in Tuesday's ruling, adding that the decision shows "the ambiguities in current law and regulation." The group also called on the FCC and Copyright Office to update their rules "to conform to the realities of new technology and consumer choice."

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