GEORGE H. WU, District Judge.
Court hears oral argument. The Tentative Final Ruling circulated and attached hereto, is adopted as the Court's
The Court accepts the following stipulation placed on the record:
Plaintiffs Fox Television Stations, Inc., Twentieth Century Fox Film Corp., and Fox Broadcasting Co., Inc. (in CV-12-6921), and Plaintiffs NBCUniversal Media LLC, Universal Network Television LLC, Open 4 Business Productions LLC, NBC Subsidiary (KNBC-TV) LLC, Telemundo Network Group LLC, WNJU-TV Broadcasting LLC, American Broadcasting Companies, Inc., ABC Holding Company Inc., Disney Enterprises, Inc., CBS Broadcasting Inc., CBS Studios Inc., and Big Ticket Televison, Inc. (in CV-12-6950) (collectively, "Plaintiffs") moved for a preliminary injunction against Defendants Aereokiller LLC, Alkiviades "Alki" David, FilmOn.TV Networks, Inc., Filmon.TV, Inc., and FilmOn.com, Inc. (collectively, "Defendants").
Plaintiffs produce and license the distribution of copyrighted works that appear on free, over-the-air broadcast television networks. Id. at 4.
A plaintiff seeking a preliminary injunction must establish: (1) that it is likely to succeed on the merits, (2) that it is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in its favor, and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008).
Courts should not issue nationwide injunctions where the injunction would not issue under the law of another circuit.
United States v. AMC Entm't, Inc., 549 F.3d 760, 773 (9th Cir.2008) (reversing grant of nationwide injunction).
Plaintiffs must meet two requirements to present a prima facie case of direct infringement: (1) ownership of the infringed material, and (2) violation of at least one exclusive right granted to copyright holders under 17 U.S.C. § 106 by the infringer. A & M Records v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir.2001).
Defendants request that the Court take judicial notice of a scheduling order and two amicus briefs filed in Aereo. Docket No. 46-1. Under Fed.R.Evid. 201, the Court can take judicial notice of "a fact that is not subject to reasonable dispute because it ... can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." Courts may take judicial notice of another court's opinion for the existence of the opinion, but not for the truth of the facts recited therein. Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir.2001). The Court would take judicial notice of the scheduling order. The Court would not take judicial notice of the amicus briefs because, as Plaintiffs object, the request is an implicit attempt to extend Defendants' page limits without leave, or to file amicus briefs without leave. Calence, LLC v. Dimension Data Holdings, PLC, 222 Fed. Appx. 563, 566 (9th Cir.2007) (district court did not abuse its discretion in refusing to consider briefing that party attempted to incorporate by reference).
Plaintiffs argue that Defendants' internet retransmission service infringes their exclusive right to make public transmissions of their copyrighted works.
The Transmit Clause of the Copyright Act, 17 U.S.C. § 106(4), vests in a copyright holder the exclusive right "to perform the copyrighted work publicly." 17 U.S.C. § 101 defines a public performance to mean, inter alia, "to transmit or otherwise communicate a performance or display of the work ... to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times." Defendants maintain that under Second Circuit law, they are not making public performances of Plaintiffs' copyrighted content.
In Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir.2008) ("Cablevision"), the Second Circuit considered the question of whether a system that made a unique copy of a television program requested by a user and then transmitted that program from the user-specific copy solely to that user violated the copyright holder's exclusive public performance right. The Second Circuit first parsed the statutory definition of public performance, and concluded that "[t]he fact that the statute says `capable of receiving the performance,'
That is not the only possible reading of the statute. The definition section sets forth what constitutes a public performance of a copyrighted work, and says that transmitting a performance to the public is a public performance. It does not require a "performance" of a performance. The Second Circuit buttressed its definition with a "cf." to Buck v. Jewell-La Salle Realty Co., 283 U.S. 191, 196, 51 S.Ct. 410, 75 L.Ed. 971 (1931), which interpreted the 1909 Copyright Act's provision of an exclusive right to publicly perform a musical composition and held that "the reception of a radio broadcast and its translation into audible sound" is a performance. But Buck, like Cablevision and this case, was concerned with a copyright in the work that was broadcast. Id. at 195, 51 S.Ct. 410. The Supreme Court was not concerned about the "performance of the performance" — instead, it held that using a radio to perform the copyrighted song infringed the exclusive right to perform the song (not to perform the performance of the song). Id. at 196, 51 S.Ct. 410.
The Second Circuit further supported its position via citation to the House Report on the 1976 Copyright Act, which states that "a performance made available by transmission to the public at large is `public' even though the recipients are not gathered in a single place.... The same principles apply whenever the potential recipients of the transmission represent a limited segment of the public, such as the occupants of hotel rooms or the subscribers of a cable television service," and thus, reasoned that the transmission had to itself be public. Cablevision at 135 (emphasis in Cablevision).
Id. at 135. But the House Report did not discuss which copy of a work a transmission was made from. The statute provides an exclusive right to transmit a performance publicly, but does not by its express terms require that two members of the public receive the performance from the same transmission. The statute provides that the right to transmit is exclusive "whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times." 17 U.S.C. § 101. Again, the concern is with the performance of the copyrighted work, irrespective of which copy of the work the transmission is made from. Very few people gather around their oscilloscopes to admire the sinusoidal waves of a television broadcast transmission. People
The Second Circuit's focus is also in tension with precedent in the Ninth Circuit. Cablevision expressly disagreed with On Command Video Corp. v. Columbia Pictures Industries, 111 F.Supp. 787 (N.D.Cal.1991), which held that a hotel system that transmitted to individual hotel rooms movies being played from individual videotapes by remote control from a central bank in a hotel equipment room violated the copyright holder's public performance right. The Second Circuit believed On Command wrongly decided, but also distinguished On Command on the basis that the hotel system at issue there made multiple successive transmissions to different members of the public from a single copy of the work, whereas Cablevision's system used a separate copy of each work to make the transmission. Cablevision at 138-39. That is only a relevant distinction if one focuses on whether the transmission is publicly performed. Precedent in the Ninth Circuit instead properly looks at public performance of the copyrighted work.
In Aereo, the Southern District of New York recently applied Cablevision to find that a service that assigned each user a unique antenna, allowing each user to watch over the internet live or recorded television broadcasts received by the user's unique antenna, did not infringe the copyright holder's right of public performance. Following Cablevision, Aereo found no infringement because the defendant's service operated such that the broadcasts captured by the individual user's assigned antenna were never shared with or accessible to any other user. Aereo, 874 F.Supp.2d at 378.
In addition to their reliance on their interpretation of the text of the Copyright Act,
Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 400, 88 S.Ct. 2084, 20 L.Ed.2d 1176 (1968). Acting in response to Fortnightly, Congress found the difference significant and legislated accordingly in the 1976 Copyright Act. As Plaintiffs point out, Congress found that "cable systems are commercial enterprises whose basic retransmission operations are based on the carriage of copyrighted program material and ... copyright royalties should be paid by cable operators to the creators of such programs." See H.R. Rep. No. 94-1476, at 88-89 (1976), 1976 U.S.C.C.A.N. 5659, 5704, cited in Reply, Docket No. 52 at 4. So too here. The Court finds that Defendants' unique-copy transmission argument based on Cablevision and Aereo is not binding in the Ninth Circuit.
At the Motion hearing, Defendants urged that Cablevision was only important to their argument insofar as it recognized the importance of customer control and held that a cable company was not liable for the acts of its customers. But as Aereo followed Cablevision's holding that the transmission from unique copies avoids infringement of the public performance right, that aspect of Cablevision in fact appears central to Defendants' argument in this case.
At the hearing, Defendants also analogized their service to self-contained portable televisions of the kind that have been available for many years which can be used, e.g., by attendees at a football game to watch another game being played at the same time. That argument ignores a key distinction. In marked contrast to Defendants' system here, such portable televisions play the broadcast signal within inches of the place the signal is received by the attached antenna, and do not "send[] out some sort of signal via a device or process to be received by the public at a place beyond the place from which it is sent." Columbia Pictures Indus., Inc. v. Prof'l Real Estate Investors, Inc., 866 F.2d 278, 282 (9th Cir.1989).
Thus, Plaintiffs have shown a likelihood of success on the merits on their public performance theory of liability, at least within the Ninth Circuit.
Plaintiffs have demonstrated irreparable harm. Revenues from retransmission consent licensing have become increasingly important to the broadcast industry, and are used to fund the development and acquisition of broadcast programming. Decl. of Sherry Brennan in Support of Mot. ("Brennan Decl."), Docket No. 41-9, at ¶ 15. Defendants' service threatens to damage Plaintiffs' ability to negotiate favorable retransmission consent agreements with cable, satellite and telecommunications providers. Id. at ¶¶ 15-17. If Defendants can transmit Plaintiffs' content without paying a fee, Plaintiffs' existing and prospective licensees will demand concessions to make up the loss of viewership to non-paying alternatives, and may push additional players away from license-fee paying technologies and toward free technologies like Defendants'. The availability of Plaintiffs' content from sources other than Plaintiffs also damages Plaintiffs' goodwill with their licensees. Warner Bros. Entm't Inc. v. WTV Sys., Inc., 824 F.Supp.2d 1003, 1012-1013 (C.D.Cal.2011) ("WTV"), Brennan Deck, Docket No. 41.-9 at ¶¶ 15-17.
Defendants' service also competes with Plaintiffs' ability to develop their own internet distribution channels. Plaintiffs license a variety of entities, including Hulu.com (which licenses content from Fox, NBC and ABC for internet distribution) and Apple (which licenses content from all four networks for distribution through iTunes) to distribute programming over the Internet on a time-delayed basis. Brennan Deck, Docket No. 41-9 at ¶¶ 18-20. Defendants' competing activity puts the same kind of pressure on those licensing relationships as it does on Plaintiffs' traditional retransmission relationships, but to a greater degree, because the services are more directly substitutable. The same is true for Plaintiffs' proprietary internet distribution websites and mobile applications. Id. ¶¶ 18, 21-23.
Because Defendants divert users who would otherwise access Plaintiffs' content in a way that includes the users in the measurement of the audience for purposes of advertising revenue calculation, Defendants' service also harms Plaintiffs' position in their negotiations with advertisers. Id. ¶¶ 8-13, Aereo, 874 F.Supp.2d at 397-398.
The foregoing harms are irreparable because they are "neither easily calculable, nor easily compensable." WTV, 824 F.Supp.2d at 1013, Aereo, 874 F.Supp.2d at 397-398. Further, given the extent of Defendants' retransmissions, and the large statutory damages that may be available, it is unlikely that Defendants' start-up companies would be likely to be able to satisfy the damages award.
Defendants "cannot complain of the harm that will befall [them] when properly forced to desist from [their] infringing activities." Triad Sys. Corp. v. Southeastern Express Co., 64 F.3d 1330, 1338 (9th Cir. 1995). To the extent that the Court finds that Plaintiffs are likely to succeed on the merits here, then Defendants have no equitable interest in continuing an infringing activity. Id. (citing Concrete Mach. Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 612 (1st Cir.1988) ("Where the only hardship that the defendant will suffer is lost profits from an activity which has been shown likely to be infringing, such an argument in defense `merits little equitable consideration'"); Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1255 (3d Cir.1983) (in motion for preliminary injunction, district court should not
There is "a public interest in making television broadcasting more available." Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 454, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984). That public interest could in theory cut both ways in the case, which pits television creators and broadcasters against those who seek to use that broadcasting without payment, or at least without permission. But here, the public interest factor is inextricably bound up in how the Court decides the merits, which it does in light of Congress's enactment and revisions to the Copyright Law. "[I]t is virtually axiomatic that the public interest can only be served by upholding copyright protections and corresponddingly, preventing the misappropriation of skills, creative energies, and resources which are invested in the protected work." WTV, 824 F.Supp.2d at 1015 (citing Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1255 (3rd Cir.1983) (internal quotations omitted)). Thus, the public interest would be served by an injunction if Plaintiffs are likely to succeed on the merits.
Given the application of Ninth Circuit law that differs from Second Circuit law, principles of comity prevent the entry of an injunction that would apply to the Second Circuit. United States v. AMC Entm't, Inc., 549 F.3d 760 (9th Cir.2008). If other circuits do not have law that conflicts with this decision, they might adopt such law when presented with the choice. The Court would therefore issue an injunction covering only the Ninth Circuit.
The parties submitted briefing on the issue of geographical scope on December 26, 2012. Plaintiffs argue that, based on Defendants' argument at the motion hearing, Defendants have abandoned their reliance on Cablevision and Aereo, and instead reply on more general arguments in Supreme Court cases that were superseded by the 1976 Copyright Act. Joint Submission Re (1) Geographic Scope of Preliminary Injunction and (2) Amount of Preliminary Injunction Bond, Docket No. 74 at 1. Whether Defendants meant exactly that is unclear, but in any event, the Court's foregoing analysis rests explicitly on interpreting the statutory language differently than the Second Circuit did in Cablevision.
Plaintiffs argue that even focusing on Cablevision, the Second Circuit is the only potential limitation to a nationwide injunction, because "[n]o other Circuit has adopted the public performance analysis in Cablevision...." Docket No. 74 at 1-2. However, the Court notes that the copyright-holder plaintiffs in Cablevision — a group that included many of the Plaintiffs in this case — had every reason to seek rulings contrary to Cablevision's public performance analysis in the other circuits in the four years after Cablevision, and do not appear to have done so. In those circumstances, the Court would not assume that the other Circuits would agree with a decision from this Court rather than Cablevision.
Fed.R.Civ.P. 65(c) requires the party requesting the preliminary injunction to provide security "in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined." The parties
Defendants for a very substantial bond of $15 million. They argue that Defendant FilmOn was capitalized with at least $19 Million, of which $10 Million was dedicated to the technology at issue, that Defendants will lose a substantial amount of that investment if wrongfully enjoined, and that Plaintiffs have argued that Defendants stand to take millions of dollars worth of market share if not enjoined (Defendants imply that they stand to gain a similar amount, although Defendants have not presented evidence of that).
Defendants' arguments do not take into account the limited geographical scope of the injunction, fail to explain why any portion of their technology investment would be wasted in the event that Defendants act quickly and successfully to obtain a reversal of the preliminary injunction decision, and do not address Plaintiffs' points about Defendants' non-infringing offerings. Given the limited factual submissions, the Court finds it difficult to ascertain an appropriate bond amount with certainty. The damage to Defendants of an incorrectly entered injunction could be greater than the loss of its current paying subscribers. It could, and would likely try, to obtain others, and Plaintiffs have pointed out that Defendants receive advertising revenue from their free service. Yet, Defendants have not provided the Court with competent evidence of that revenue. Given the information provided by both sides, the Court would set the bond in the amount of $250,000 (two hundred and fifty thousand dollars).
The Court would grant Plaintiffs' motion for preliminary injunction. The terms of the injunction and bond requirements will be set forth in separate orders issued in each case.
This Court, having considered all the submissions in support of, and in opposition to, Plaintiffs Fox Television Stations, Inc., Twentieth Century Fox Film Corp., and Fox Broadcasting Company, Inc.'s (collectively "Fox" or "Plaintiffs") Motion for Preliminary Injunction ("Motion"), and
1. For purposes of this Preliminary Injunction, the following definitions shall apply:
2. Pending a final resolution of this action, Defendants, and all of their parents, subsidiaries, affiliates, officers, agents, servants, employees, attorneys, and those persons in active concert or participation with them who receive actual notice of this Order (the "Enjoined Parties") are preliminarily enjoined from retransmitting, streaming, or otherwise publicly performing or displaying within the geographic boundaries of the United States Court of Appeals for the Ninth Circuit, directly or indirectly, over the Internet (through websites such as filmonx.com or filmon.com), via web applications (available through platforms such as the Windows App Store, Apple's App Store, the Amazon Appstore, Facebook or Google Play), via portable devices (through applications on devices such as iPhones, iPads, Android devices, smart phones, or tablets), or by means of any device or process, the Copyrighted Programming.
3. Violation of this Preliminary Injunction shall expose Defendants and all other persons bound by this Preliminary Injunction to all applicable penalties, including contempt of Court.
4. The injunction shall become effective two court days after Plaintiffs file with the Court and serve through CM/ECF a notice that the required bond in the amount of $250,000.00 has been posted.
5. Within three court days of the effective date of the Preliminary Injunction, Defendants shall file and serve a report in writing and under oath setting forth in detail the manner and form with which Defendants have complied with the Preliminary Injunction.
6. Nothing herein shall restrict Plaintiffs' ability to seek to amend this injunction or to seek permanent injunctive relief with terms that are broader in scope than those delineated herein.
IT IS SO ORDERED.
Defendants have moved to strike and objected to the Jones Decl. The Court would deny the motion to strike and overrule the objections. The Court would find that the Jones Decl. fairly responds to the Defendants' arguments, and does not consist of material that should have been submitted earlier, and the evidentiary objections are not well-taken (although Jones's use of Aereo's patent applications is not helpful because the relevant question is whether Defendants' service resembles what the Aereo decision described, not whether it resembles what Aereo put in its patent applications).
Additionally, Defendants contend in response to Plaintiffs' objections that they only seek judicial notice of the existence of the amicus briefs filed in the Aereo case in the Southern district of New York, and have not offered them for their content. Def.'s Resp. to PL's Evidentiary Objections, Docket No. 66 at 1. Nonetheless, Defendants argue that the very existence of the briefs shows that Defendants' technology serves an important public interest. Id. However, it is impossible to draw that conclusion without examining the content of the proffered briefs.
Richard A. Posner, Reasoning by Analogy, 91 Cornell L. Rev. 761, 771 (2006). Posner's argument supports Plaintiffs' position here.
