Fox v. FilmOn: Wires Cables and Microwaves, Oh My!

A lively oral argument took place on March 17 at the U.S. Federal Court of Appeals for the D.C. Circuit, in the latest round of litigation between broadcast network Fox and internet television retransmitter FilmOn.

Chief Judge Garland and Judges Kavanaugh and Millet presided over the lengthy oral argument, which extended over two hours. FilmOn sought to overturn a lower court decision that held the internet service does not qualify as a “cable system” under Section 111 of the Copyright Act, which provides a compulsory license for broadcast television content to cable providers.

Section 111’s compulsory license embodies a carefully crafted and narrow exception to the broad rights the Copyright Act grants to creators and copyright holders. It set a fixed, discounted price to cable providers for retransmission of broadcast television programming. The law defines a cable system as a “facility…that in whole or in part receives signals transmitted or programs broadcast…and makes secondary transmissions of such signals or programs by wires, cables, microwave or other communication channels.”

So, what constitutes a “cable system?” The Copyright Office, which administers the cable compulsory license, has consistently stated that the Section 111 license does not apply to internet retransmissions. Congress has not spoken out against the Copyright Office’s expertise, and courts (most recently the 9th Circuit) have deferred to the Copyright Office’s interpretation.

According to the Copyright Office, a “cable system” must use communications channels that are “inherently localized transmission media” in order to qualify for compulsory licenses under Section 111. Arguing on behalf of Fox, Neal Katyal of Hogan Lovells seconded the Copyright Office’s interpretation and argued that the plain language of the statute defines a “cable system” as a service where the communication channels of “wire, cable, or microwave” are “inherently localized” and controlled by the cable company within its limited geographic reach.

FilmOn provides an internet streaming service that retransmits and rebroadcasts television programs to paying subscribers. At the oral arguments, FilmOn insisted that it qualified as a “cable system” under Section 111 because the phrase “wires, cables, microwaves or other communication channels” is broad enough to include the internet. Judge Millet seemed to accept that the internet uses cables and wires and might seem to qualify as “other communication channels,” but questioned how to reconcile that phrase with the Copyright Act’s Transmit Clause in §101 (which uses the much broader language of “any device or process” rather than specifying specific types of communication channels).

The judges posed challenging questions to both parties during oral arguments. Judge Kavanaugh seemed to have separation of powers concerns, questioning whether the court or the legislative branch should decide which technologies qualify as cable systems under the statute. Judge Garland seemed to lean toward extending deference to the Copyright Office’s definition of a “cable system”, which would disqualify FilmOn. Garland also voiced concerns about the broadening of Section 111 to include many more services than its original legislative language and intent. If a transmitter with “other communication channels” and paying customers qualified for a compulsory license, Garland questioned whether “a teenager in his basement with a computer who retransmits for a fee also qualifies as a cable system?”Judge Millet questioned whether the statute was created with the flexibility to adapt to technological change without congressional amendments.

It is challenging to predict a judicial decision based on oral arguments. Hopefully, this court will follow the 9th Circuit’s recent lead and protect the interest of creators against services like FilmOn.

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