• by Wendy Davis , March 1, 2011

Online video distributor Ivi on Tuesday appealed an order directing it to immediately cease distributing streams of TV shows. Ivi also is asking for a stay of the order pending appeal.  

Unless the preliminary injunction is suspended, Ivi "will be irreparably harmed, having to cease its service, end its primary means of income, and address dissatisfied subscribers whose service is summarily terminated," the company argues in its legal papers.

The online video distributor also says it is likely to win on appeal.

Ivi is appealing a preliminary injunction issued last week by U.S. District Court Judge Naomi Reice Buchwald in New York. She 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 streams TV shows as they are being shown over-the-air in four markets: New York, Seattle, Chicago and Los Angeles. The company, which launched in September, offers nationwide subscriptions to its streams for $5 a month.

Its debut spurred a coalition of broadcasters to complain that the company infringed their copyright because Ivi lacked permission to stream shows. The dispute landed in federal court in New York, where the broadcasters sought monetary damages and an injunction ordering Ivi to stop streaming TV shows.

Ivi unsuccessfully 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 ruled that a "common sense approach" to the copyright law's mandatory retransmission provision shows that it was not intended to apply to companies that stream TV shows online.

In addition, a separate communications law provides that cable operators must obtain broadcasters' permission to retransmit. The broadcasters did not sue under that law, but it clearly influenced 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."

In its legal battle, Ivi drew support from a coalition of digital rights groups, including Public Knowledge and the Electronic Frontier Foundation. They argued in a friend-of-the-court brief that the law should not favor "1970s-era cable operators" over companies that use new technology to offer similar services.

But copyright expert Tyler Ochoa, a law professor at Santa Clara University, says that Buchwald's decision was "well-reasoned and highly persuasive" because Ivi lacks two characteristics of cable systems. First, the company doesn't limit its retransmissions to a limited geographic area. Secondly, it doesn't have to comply with FCC rules governing cable operators.