Court Rules Not a Cable System, Issues Injunction

Streaming TV startup has tried to build a business on re-broadcasting TV content online, raising the ire of several big broadcasters who took it to court, hoping to shut down its streams. Well, Hon. Naomi Rice Buchwald, U.S. district judge for the Southern District of New York, is siding with those broadcasters. The judge has issued a preliminary injunction against, ruling its practice of retransmitting broadcast TV signals without copyright owners’ consent was not protected by a 70s-era copyright loophole, mainly because the startup doesn’t qualify as a cable system.

Ivi offered a streaming service to U.S. viewers that allowed them to watch broadcast TV content on their computers by downloading a desktop application and paying a $4.99 a month subscription fee. The startup claimed it could rebroadcast local TV feeds online as part of a loophole in the U.S. Copyright Act so long as it paid semi-annual fees to the U.S. Copyright Office. But more than 40 big broadcasters — including ABC, (s DIS) CBS, (s CBS) Fox, (s NWS) NBC (s CMCSA) and Telemundo — were unhappy that Ivi was rebroadcasting their local TV feeds without offering retransmission consent, and took the startup to court to shut down the service.

According to the court’s ruling, Ivi attempted to argue that its service fit “within the statutory definition of a cable system under the Copyright Act,” which would allow it to rebroadcast TV signals, so long as it paid a nominal annual fee to the U.S. Copyright Office to do so. But, it argued that it did not fall under the rules or regulations of the FCC because the regulator has no authority over Internet video transmissions. In her ruling, Buchwald writes:

“In other words, defendants argue that ivi is a cable system for purposes of the Copyright Act, and thus may take advantage of the compulsory license, but that it is not a cable system for purposes of the Communications Act, and thus it need not comply with the requirements of that Act and the rules of the FCC promulgated thereunder.”

The judge ruled, for a number of reasons, that Ivi is not a cable system as described in the Copyright Act and is therefore in violation of broadcasters’ copyrights. Chief among the reasons for that ruling is that Ivi takes local broadcasts and retransmits them to a national audience, as well as Ivi’s claim that it shouldn’t be regulated by the FCC. There’s also the nature of Ivi’s infrastructure, which is vastly different from the cable systems Congress was seeking to regulate with the passage of the Copyright Act in the 1970s. As Buchwald wrote:

“First, a service providing Internet retransmissions cannot qualify as a cable system. Second, the compulsory license for cable systems is intended for localized retransmission services, and cannot be utilized by a service which retransmits broadcast signals nationwide. Third, the rules and regulations of the FCC, even if found not to be binding on a service such as ivi, are integral to the statutory licensing scheme established in 1976.”

Because the court found was clearly in violation of broadcasters’ copyrights, it issued a preliminary injunction against the company, ordering it to cease infringing those rights by streaming broadcast TV over the Internet or on any mobile devices. That’s a big blow to and to its subscribers, and could spell the end for the company. issued a statement, telling customers that it will appeal the decision, but that it will be shutting down most of its broadcast offerings in the interim. As a result, the company will suspend invoicing for existing customers until channels can be restored.

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