Emergency Business Litigation

Overview of the Court's Decision in Online Television Streaming Case

Last week we wrote about a recent decision in a copyright infringement case involving online television streaming. Today we are going to run through the court’s process in reaching the decision.

The court used the standard four-part test to determine whether or not a preliminary injunction should be granted in this case.

Likelihood of Success

The first question was whether the moving party was likely to succeed on the merits of the case. As a result, the court first had to look at the two elements that must be shown in a successful copyright claim, (1) that the plaintiff owns the allegedly infringed material and (2) that the infringement is a violation of the copyright holder’s rights set forth in the federal copyright law. In this case, the court noted that there was little dispute that the plaintiffs owned the material in question.

The second element, though, whether the infringement violated the plaintiffs’ rights, was more carefully scrutinized. The plaintiffs’ argument was that although online streaming was not entirely what Congress had in mind when they had last updated the relevant law, the streaming service provided by the defendant was an effective retransmission of the copyrighted material and, as a result, the defendants had violated the Copyright Act by failing to secure a license before retransmitting the copyrighted work.

The defendants, on the other hand, argued that the streaming service did not constitute a public retransmission of copyrighted material, instead casting its service as a private transmission to a single user, who could use the service in order to record broadcasts as a matter of convenience, which has, since the Betamax case, been considered a right of the consumer, and not a violation of copyright law.

Ultimately, the court chose to look at the legislative history regarding the 1976 amendments to the Copyright Act, which contained the clauses that were operative in this case, and came to the conclusion that, although Congress had not been able to foresee the exact cluster of facts in this case, it was clear from the record that they would have considered a streaming service like the defendant’s to be considered a transmission for the purposes of the Copyright Act and, as a result, there was a strong likelihood that defendant had violated the law by failing to gain the plaintiffs’ consent before retransmitting the material over its service.  The court then went on to explain that, even if the technological methods involved in the streaming service meant that, in a technical sense, the streaming was not done by conventional public transmission as was contemplated in the act, the overall effect of the streaming service was effectively the same as public transmission in either case. As a result, the court found that there was a likelihood that the plaintiffs would succeed on the merits of the case, passing the first part of the test.

Irreparable Harm

The second factor is whether there is a likelihood of irreparable harm should the injunction not be granted. The court ruled that there was, as the existence of the streaming service negatively impacted the copyright holder’s ability to sell advertising, negotiate retransmission agreements, or create its own internet television presence, as well as the danger of loss of control over its own content. Further, this harm could not be compensated with money damages as it would be difficult to calculate the total damages and, in all likelihood, the defendant would not be able to afford the judgment should the plaintiffs prevail on the case.

The defendant countered that such damages were speculative, and that plaintiffs had not shown that said damages were imminent or anything other than economic losses that could be recovered at law. The court rejected this argument, however, noting that the plaintiffs had produced some testimony from television executives that cable companies had already begun to take entities such as the defendant into account when negotiating retransmission fees, and therefore the harms were both imminent and non-speculative. The court ruled that there was a likelihood of irreparable harm as well.

Balance of Harms

The court looked at the balance of harms only briefly. The defendants had argued that, even if there were a likelihood of irreparable harm to the plaintiffs in the form of lower payments from content partners, the harm done to them by the granting of this injunction would be more severe, potentially collapsing their business model and thereby chilling technological innovation. The court, however, noted that the defendant had already begun to make agreements to legally transmit material through its streaming service, and therefore would not be too badly damaged by having its illegal streaming services shut down by an injunction.

Public Interest

The final question, that of the public interest, was dismissed with the court merely pointing to the long-held precedent that the public interest favors the upholding of copyright law and, as a result, that this final factor weighed in the plaintiffs’ favor as well.

Having decided that an injunction was warranted, the court next turned to two ancillary questions. First, what the scope of the injunction should be, and second, what amount of bond should be required of the plaintiffs. This will be covered in our next post.



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