• by Karlene Lukovitz  @KLmarketdaily, September 2, 2021

In response to a potentially devastating court ruling against it earlier this week, Locast has announced that it has suspended one practice cited in the ruling.

The court rejected the nonprofit status on which Locast bases its argument that it is eligible for a copyright exemption, and can legally capture over-the-air broadcast signals, without retransmission agreements, and stream them over the internet to users who live within a specific geographic areas.

While Locast says it does not charge users fees, it does ask for $5 monthly donations.

And when users don’t donate, Locast repeatedly interrupts their streams to run ads asking for donations and sends the users back to its program guide, according to the copyright infringement lawsuit filed against the service by broadcasters ABC, CBS, NBC Universal and Fox.

Judge Louis Stanton of the Southern District of New York cited that Locast practice as a key factor in rejecting its nonprofit status. “The payments defendants elicit from users are charges assessed on users to avoid constant service interruptions...[it] is not merely a recurring gift to a charitable cause,” he wrote.

Stanton also cited Locast’s use of some of the monies collected to expand into new markets, rather than using all of it to cover operating costs, as a factor weighing against its nonprofit status. 

On Wednesday, Locast announced that it was addressing the requests-for-donations interruptions objection by immediately suspending those interruptions.

In a statement issued after the decision, Locast’s attorney, R. David Hosp, said Locast was “in the process of evaluating the decision and formulating next steps.”

It remains to be seen whether its suspension of streaming interruptions will influence any legal developments going forward.

Note: Hours after this development, Locast suspended operations entirely.