A new US-based Internet TV provider, ivi, Inc., has recently come under fire from ABC, NBC, CBS and FOX, who allege that the ivi TV service breaches copyright in their broadcasts.

Following its launch in September 2010, ivi received numerous cease and desist letters and subsequently filed a pre-emptive Complaint for Declaratory judgment in the US District Court in Seattle to confirm its services were legal [1]. Days later, the TV broadcasters countered with an action filed in the US District Court Southern District of New York, arguing that ivi was breaching their copyright [2].

Essentially, ivi provides its customers with television broadcasts over the Internet. It operates by receiving the live over-the-air broadcasts of primary transmitters, including ABC, NBC, CBS and FOX, then makes this content available over the Internet to its customers who download the Ivi TV player. But is it legal?

Ivi maintains that its activities fall within the scope of the US statutory license set out in s 111 of the US Copyright Act, which exempts certain secondary transmissions, such as cable TV.

Ivi CEO Todd Weaver likens ivi’s position to the cable providers, arguing [3]: “We pay broadcasters in accordance with the law, just like cable. This is not about copyright, this is about competition.”

“Congress created the compulsory licensing scheme for cable systems, to distribute broadcast content to the masses,” Weaver says. “We intend to increase viewer numbers and would welcome opportunities to work with the Broadcasters.”

Whether or not this particular form of secondary transmission falls within the ambit of the statutory license remains to be seen but the actions are being closely watched in the increasingly converged operating landscape of television.

The US Copyright Office addressed similar issues in a report issued in a June 2008 report, expressing opposition to a statutory license that would permit websites to retransmit television broadcasts without the consent of copyright owners. In its reasoning, the U.S. Copyright Office, amongst other things, said this would “effectively wrest control away from program producers who make significant investments in content and who power the creative engine in the U.S. economy. In addition, a government-mandated Internet license would likely undercut private negotiations leaving content owners with relatively little bargaining power in the distribution of broadcast programming” [4].

The U.S. Copyright Office argues that, “the carriage of programming on the Internet has been subject to marketplace negotiations and private licensing with some degree of success. As such, there is no market failure warranting the application of a statutory license in this context. An Internet statutory license would likely remove incentives for individuals and companies to develop innovative business models” [5].

The report also notes both that the Internet raises unique issues of security, which if not managed properly could be detrimental to rights holders [6]. Further, it is argued that allowing Internet retransmission to be statutorily licensed would breach U.S. obligations under several international free trade agreements [7]. This is because these agreements require the parties not to permit retransmission of television signals on the Internet without the consent of rights holders (See for example, the Australia-United States Free Trade Agreement, Article 17.4.10(b)).

In Australia, a service such as ivi TV would unlikely comply with the conditions of the Part VC statutory license given that the statutory license specifically does not apply to a retransmission that “takes place over the Internet”[8].

This is an important issue for primary broadcasters, particularly given that other businesses are likely to enter this space. Even more recently, another Internet TV provider, FilmOn.com, has also been sued by the major television broadcasters. FilmOn.com’s founder, billionaire Alki David, has been quoted saying, “There is no difference between the Internet and satellite. There’s little difference between having a digital television box (and having television delivered through a computer). It’s all just semantics” [9].

Whether or not he is right will be revealed in the litigation to come, but it is clear for now that the primary broadcasters are keen to maintain control of the distribution of their programming over the Internet, and won’t be letting go without a fight.

[1] Case number 10 CV 1512

http://assets.bizjournals.com/cms_media/pdf/ivi-complaint.pdf?site=techflash.com

[2] Case number 10 CV 7415

[3] Ivi TV Statement in response to NAB, 21 September 2010

http://www.ivi.tv/pr/2010-09-21_ivi-tv-statement-in-response-to-nab

[4-7] United States Copyright Office, Satellite Home Viewer Extension and Reauthorization Act Section 109 Report, at 188, 181, 181, 188.

http://www.copyright.gov/reports/section109-final-report.pdf

[8] Section 135ZZJA The Copyright Act 1968

[9] FilmOn owner preps for battle with TV networks, Eriq Gardner, Reuters

http://www.reuters.com/article/idUSTRE69510K20101006