Appeals Court Rules TV Streamers Don't Get Compulsory License to Broadcast Networks

The 9th Circuit Court of Appeals reversed a seismic victory in favor of streaming company FilmOn, handing significant relief to broadcasters like CBS, Fox, NBC and ABC who were aghast by a federal judge's decision in July 2015 that streamers could be deemed to be a "cable system" eligible for a compulsory license under the Copyright Act.

The battle took place after the US Supreme Court determined in June 2014 that another streamer, Aereo, had publicly performed the copyrighted work of broadcasters. The high court, though, left some room for further litigation upon Justice Stephen Breyer's opinion that compared unlicensed Aereo to licensed cable systems. After this decision, which ultimately brought down Aereo, FilmOn argued that it was entitled to perform copyrighted works without consent of copyright holders by taking advantage of Section 111 of the Copyright Act, which was enacted by Congress in the 1970s thanks to a perception of the burdensome nature of requiring cable systems to negotiate with every copyright owner over the retransmission of channels on public airwaves. In a huge surprise, US District Court judge George Wu then agreed with FilmOn, writing that "courts consistently reject the argument that technological changes affect the balance of rights as between broadcasters and retransmitters in the wake of technological innovation."

Now a three panel led by Judge Diarmuid O'Scannlain overturned Judge Wu by holding that a service that captures copyrighted works broadcast over the air, and then retransmits them to paying subscribers over the Internet without the consent of copyright holders, is not a "cable system" eligible for a compulsory license.