Locast To Pay $32 Million, Shut Down For Good

Defunct streaming television service Locast has agreed to pay $32 million to broadcasters, and to remain shuttered, in order to settle their copyright infringement claims.

Locast and the broadcasters revealed those settlement terms Thursday, in papers filed with U.S. District Court Judge Louis Stanton in New York.

The move comes less than two months after Stanton ruled that Locast infringed the broadcasters' copyright by transmitting programs without licenses.

Locast, created by the nonprofit Sports Fans Coalition NY, captured over-the-air broadcast signals and streamed them to people within specific geographic areas. The company launched with broadcast feeds from 13 stations in the New York City area, and later expanded to include feeds from more than 30 markets.

In July of 2019, ABC, CBS, Fox and NBC sued Locast for copyright infringement.

The startup defended its service, arguing that a provision in the Copyright Act allows nonprofits to boost antenna signals, provided the nonprofits don't charge for service.

Locast said its service was free, and therefore fell within that exception. But the broadcasters countered that the company solicits $5 monthly donations, and interrupts the streams of non-contributors every 15 minutes.

Stanton agreed with the broadcasters, ruling that Locast wasn't actually free due to those interruptions. Last month, he ordered the company to shut down.

Locast originally indicated it would appeal, but settled the case instead. 

The conclusion of the battle marks yet another defeat for streaming startups that have challenged broadcasters.

Among other examples, the company TVEyes, which offered snippets of television news programs to paying customers, lost a major copyright fight with Fox News.

TVEyes records and indexes news programs, and allows paying subscribers to search for news clips by keywords and access portions of the shows.

Fox alleged in a lawsuit that TVEyes infringed copyright by showing its subscribers clips from Fox News shows. TVEyes countered that its service was protected by fair use principles.

A federal appellate panel disagreed with TVEyes, and ruled that Fox was entitled to an injunction banning the streaming company from displaying Fox News clips.

Several years before that battle, the defunct startup Aereo, which attempted to transit over-the-air television online, was forced into bankruptcy after the Supreme Court ruled that the company violated broadcasters' copyright.

Like Locast, Aereo also thought it had found a legal way to stream local programs without infringing copyright. Specifically, the company said its transmissions were “private” -- and therefore didn't require licenses -- because it used dime-size antennas to capture and stream programs an antenna-to-user basis. The start-up argued that the one-to-one nature of the streams meant they weren't the kinds of “public” performances that require licenses.

TV broadcasters disagreed and took their fight with the comapny to the Supreme Court, which ruled 6-3 in 2014 that Aereo's behind-the-scenes architecture was irrelevant to whether it infringed copyright.

“Why would a subscriber who wishes to watch a television show care much whether images and sounds are delivered to his screen via a large multi-subscriber antenna or one small dedicated antenna?” Justice Stephen Breyer wrote for the majority.

In Locast's case, the settlement agreement not only calls for the company to remain shuttered, but also provides that its founder David Goodfriend -- a deputy staff secretary to former President Bill Clinton, and also a former Dish Network executive -- won't again operate any service that relies on the Copyright Act's exemption for nonprofits that boost signals.

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