Networks level lawsuits at TV-on-internet providers

According to the leaders of two fledgling Web ventures, they are doing for the broadcast networks what the broadcast nets can’t seem to do for themselves.

At a time when everything seems to be moving to the Web, mobiles devices, iPods and iPads, these companies offer their customers live streams of local TV stations — expanding the prospective auds for broadcasters beyond that found via cable or rabbit ears.

But the networks, local stations and others see their efforts as something entirely different: theft.

A legal battle is emerging that stands to popularize the concept of “online cable operator” — and force the FCC or Congress to take action.

Deja view

To the broadcast nets, the emergence of companies providing live video streams of their signals has a familiar ring: More than a decade ago, they successfully fought off iCrave TV, a Canadian company that offered online video streams of U.S. stations.

Seattle-based Ivi.tv, which charges $4.99 per month for dozens of channels, including stations from Seattle, New York, Los Angeles and Chicago, says that Section 111 of Copyright Act “expressly authorizes” what it is doing, because it allows for secondary transmission of broadcasts by paying a statutory license to the Copyright Office, just as a cable operator would do.

Subscribers download an Ivi TV player and pay for the subscription service “in the same way that cable or satellite television consumers are able to play the identical content using a set-top box or a similar player,” Ivi CEO Todd Weaver has said in court documents, adding that media companies rejected overtures to negotiate specific agreements before he sought a statutory license.

Ivi has compared its service to telco forays into multichannel programming, like Verizon’s Fios, and rejects the notion that it is a renegade out to challenge principles of copyright protection. Its streams are encrypted and restricted to the U.S.

“We have made sure to contact all of the appropriate government agencies, making sure that we conform to every letter of the law,” Weaver told Variety.

Before broadcast stations and the networks filed suit to stop Ivi, he even sought a declaration from a Seattle federal court that Ivi’s activities do not constitute copyright infringement, but the court rejected the effort.

Instead, a coalition of more than two dozen broadcast nets, station groups and content owners, as well as Major League Baseball, is seeking a preliminary injunction in a New York federal court, charging copyright infringement. They call Ivi’s claims “copyright technicalities” and note that the semi-annual license fee amounts to just $50.

Ivi, their suit states, is “nothing more than publicity-seeking pirates that use the pretext of a nonexistent loophole to exploit the creative efforts of plaintiffs and other broadcast stations and copyright owners for unjust profit.”

One network exec describes the logical conclusion of Ivi’s reasoning this way: “Everyone with a computer and a connection will be a cable system.”

Dismaying race

The fear is that, should it take off, Ivi would undercut what has been a lucrative additional revenue stream for stations and the networks, the “retransmission consent” fees they get from cable systems, not to mention what a network exec calls a “race to the bottom” that devalues high-cost programming.

“Ivi is just trying to pluck out some rules and not others,” says the exec, who did not want to be quoted by name because of the ongoing litigation.

Also not to be ignored is the simple question of control: Broadcast stations want to stream content such as news and sports to mobile devices using their own spectrum, in an array of different ventures they are experimenting with across the country. Even Hulu, jointly owned by News Corp., the Walt Disney Co. and NBC Universal, is reportedly mulling the idea of live streaming. “We don’t need their help,” says the network exec. “We can distribute our content ourselves.”

Weaver says that whatever happens, there will be an appeal. What should be disconcerting to him is that the New York judge who will rule in the case, Naomi Reice Buch-wald, has already slapped down another live streaming service, FilmOn, based in Los Angeles. In November, she issued a temporary restraining order that mandates that the company cease the live streams of broadcast station feeds, pending arguments from FilmOn on why she shouldn’t issue a permanent injunction.

David’s slings

Ivi has sought to distance itself from FilmOn, not only because it says FilmOn distributes outside the U.S. and has been “cavalier” about copyright law but because the company and its CEO, Alki David, have been considerably more brash in their approach to the dispute.

While claiming that it, too, was within the law in offering the live streams, David has fought back with two Web videos that throw copyright claims right back at CBS and the tech company it owns, CNET.

He says that he intends to file what amounts to a class-action infringement lawsuit against CBS, claiming that CNET’s Download.com site distributed Limewire peer-to-peer software, which has its own copyright issues.

The record labels sued Limewire and won a judgment last year that restricts the company from using the software. In late October U.S. District Judge Kimba Wood ordered Limewire to disable much of the file-trading functionality.

David, a billionaire perhaps best known most recently for offering $1 million to the first person who flashes President Obama on camera, has gone so far as to launch a website, Viacon, outlining what it calls the “duplicity” of CBS.

“They are very conservative organizations that are terrified of change,” David says. “There’s no way they are going to let this go down without the bloodiest of fights.”

He says they are simply responding to consumer trends, utilizing television broadcasts that are the “medium for the public.”

CBS declined to comment on the case but has previously said of David’s attacks at CNET, “Mr. David is clearly not feeling very good about his prospects in the court system. He is hardly an expert on intellectual property rights.”

Jack Lerner, clinical assistant professor of law and director at the USC Intellectual Property and Technology Law Clinic, outlines the conflict: “The definition of ‘cable operator’ in the Copyright Act is so broad that these providers probably fit, but the definition in the Communications Act and FCC regulations are so specific that they don’t fit.”

Nevertheless, he says, “If I were handicapping this race, the startups here would probably be pretty big longshots. …. That is not to say their service shouldn’t be part of the scheme. That is not to say that there shouldn’t be a means by which they could legally go forth and set out to do what they are seeking to do. Ultimately, it will add value to the networks’ brands and add value to the consumer.”

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