WPIX, INC., WNET.ORG, American Broadcasting Companies, Inc., Disney Enterprises, Inc., CBS Broadcasting Inc., CBS Studios, Inc., The CW Television Stations, Inc., NBC Universal, Inc., NBC Studios, Inc., Universal Network Television, LLC, Telemundo Network Group, LLC, NBC Telemundo License Company, Office of the Commissioner of Baseball, MLB Advanced Media, L.P., Cox Media Group, Inc., Fisher Broadcasting-Seattle TV, L.L.C., Twentieth Century Fox Film Corporation, Fox Television Stations, Inc., Tribune Television Holdings, Inc., Tribune Television Northwest, Inc., Univision Television Group, Inc., The Univision Network Limited Partnership, Telefutura Network, WGBH Educational Foundation, Thirteen, and Public Broadcasting Service, Plaintiffs-Appellees, v. IVI, INC., and Todd Weaver, Defendants-Appellants.
Docket No. 11-788-cv.
United States Court of Appeals, Second Circuit.
Argued: May 30, 2012. Decided: Aug. 27, 2012.
CHIN, Circuit Judge:
In this case, plaintiffs-appellees—producers and owners of copyrighted television programming—sued defendants-appellants ivi, Inc. (ivi) and its Chief Executive Officer, Todd Weaver, for streaming plaintiffs’ copyrighted television programming over the Internet live and without their consent. The district court granted a preliminary injunction for plaintiffs, holding that: (1) plaintiffs were likely to succeed on the merits of the case because ivi was not a “cable system” entitled to a compulsory license under
STATEMENT OF THE CASE
1. The Facts
The following facts are undisputed.
On September 13, 2010, ivi began streaming plaintiffs’ copyrighted programming over the Internet, live, for profit, and without plaintiffs’ consent.1 ivi began by retransmitting signals from approximately thirty New York and Seattle broadcast television stations; by February 2, 2011, ivi was also retransmitting signals from stations in Chicago and Los Angeles.2 Within five months of its launch, ivi had offered more than 4,000 of plaintiffs’ copyrighted television programs to its subscribers.
Specifically, ivi captured and retransmitted plaintiffs’ copyrighted television programming live and over the Internet to paying ivi subscribers who had downloaded ivi’s “TV player” on their computers for a monthly subscription fee of $4.99 (following a 30-day free trial). For an additional fee of $0.99 per month, subscribers were able to record, pause, fast-forward, and rewind ivi’s streams.
Almost immediately after ivi’s launch, several affected program owners and broadcast stations sent cease-and-desist letters to ivi. ivi responded to these letters on or about September 17, 2010, purporting to justify its operations on the ground that it was a cable system entitled to a compulsory license under
On September 20, 2010, ivi filed a declaratory action in the United States District Court for the Western District of Washington. On September 28, 2010, plaintiffs sued defendants for copyright infringement in the Southern District of New York, seeking damages and injunctive relief. On January 19, 2011, the United States District Court for the Western District of Washington (Robart, J.) dismissed ivi’s declaratory action as an impermissible anticipatory filing. See ivi, Inc. v. Fisher Commc’ns, Inc., No. C10-1512JLR, 2011 WL 197419 (W.D.Wash. Jan. 19, 2011).
On February 22, 2011, in a thorough and carefully-considered decision, the United States District Court for the Southern District of New York (Buchwald, J.) granted plaintiffs’ motion for a preliminary injunction. See WPIX, Inc. v. ivi, Inc., 765 F.Supp.2d 594, 622 (S.D.N.Y.2011). This appeal followed.3
DISCUSSION
We review a district court’s grant of a preliminary injunction for abuse of discretion. Kickham Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204, 209 (2d Cir. 2009). A district court abuses its discretion in granting a preliminary injunction when its decision rests on an error of law or a clearly erroneous factual finding, or when its decision cannot be located within the range of permissible decisions. Id. In a copyright case, a district court may grant a preliminary injunction when plaintiffs demonstrate: (1) a likelihood of success on the merits; (2) irreparable harm in the absence of an injunction; (3) a balance of the hardships tipping in their favor; and (4) non-disservice of the public interest by issuance of a preliminary injunction. Salinger v. Colting, 607 F.3d 68, 79-80 (2d Cir.2010). We discuss each prong of Salinger in turn.
I. Likelihood of Success on the Merits
Under the Copyright Act, television broadcasters “generally [have] ‘exclusive rights’ ... to authorize the public display of [their] copyrighted content, including the retransmission of [their] broadcast signal[s].” EchoStar Satellite L.L.C. v. F.C.C., 457 F.3d 31, 33 (D.C.Cir.2006); see
In this case, it is undisputed that plaintiffs owned valid copyrights to the television programming that ivi publicly performed without plaintiffs’ consent. See ivi, 765 F.Supp.2d at 601. The burden of proof thus falls on defendants to demonstrate that they have an affirmative statutory defense to copyright infringement. See Bourne v. Walt Disney Co., 68 F.3d 621, 631 (2d Cir.1995) (noting possession of license by accused infringer is affirmative defense and burden falls on licensee to prove license’s existence (citing United States v. Larracuente, 952 F.2d 672, 674 (2d Cir.1992); Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 13.01)). Indeed, defendants argue that ivi is a cable system entitled to a
As discussed below, the Copyright Office—the federal agency charged with overseeing
A. Chevron Step One
To ascertain Congress’s intent at Chevron step one, we begin with the statutory text; if its language is unambiguous, no further inquiry is necessary. Cohen, 498 F.3d at 116 (citing Zuni Pub. Sch. Dist. v. Dep’t of Educ., 550 U.S. 81, 93-94 (2007); Robinson v. Shell Oil Co., 519 U.S. 337, 340 (1997); Daniel v. Am. Bd. of Emergency Med., 428 F.3d 408, 423 (2d Cir.2005)). If the statutory language is ambiguous, we look to the canons of statutory construction, and then to the legislative history to see whether any “‘interpretive clues’ permit us to identify Congress’s clear intent.” Cohen, 498 F.3d at 116 (citing Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581, 586 (2004); accord Daniel, 428 F.3d at 423).
1. The Statutory Text
[S]econdary transmissions to the public by a cable system of a performance or display of a work embodied in a primary transmission made by a broadcast station licensed by the Federal Communications Commission ... shall be subject to statutory licensing upon compliance with the requirements of subsection (d) where the carriage of the signals comprising the secondary transmission is permissible under the rules, regulations, or authorizations of the Federal Communications Commission.
a facility, located in any State, territory, trust territory, or possession of the United States, that in whole or in part receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service. For purposes of determining the royalty fee under subsection (d)(1), two or more cable systems in contiguous communities under common ownership or control or operating from one headend shall be considered as one system.
Based on the statutory text alone, it is simply not clear whether a service that retransmits television programming live and over the Internet constitutes a cable system under
Among other things, it is certainly unclear whether the Internet itself is a facility, as it is neither a physical nor a tangible entity; rather, it is “a global network of millions of interconnected computers.” 1-800 Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 403 (2d Cir.2005) (internal quotation marks omitted); see also Akamai Techs., Inc. v. Cable & Wireless Internet Servs., Inc., 344 F.3d 1186, 1188-89 (Fed.Cir.2003); ACLU v. Reno, 929 F.Supp. 824, 830, 832 (E.D.Pa.1996) (“[The Internet] exists and functions [because] hundreds of thousands of separate operators of computers and computer networks independently decided to use common data transfer protocols to exchange communications and information with other computers.... There is no centralized storage location, control point, or communications channel for the Internet....“), aff’d, 521 U.S. 844 (1997). When content is viewed over the Internet, the viewing computer typically receives information from several different servers. See Akamai, 344 F.3d at 1189. Additionally, the growth of “cloud-based systems,” or virtual platforms where content resides remotely on a distant server, further highlights the uncertainty as to whether an Internet retransmission service is or utilizes a facility that receives and retransmits television signals. See Elec. Privacy Info. Ctr. v. Nat’l Sec. Agency, 678 F.3d 926, 929 n. 1 (D.C.Cir.2012).
As Congress’s intent is not apparent from the statutory text, we turn to
Cable systems were built in the late 1940s to bring television programming to remote or mountainous communities and households that could not receive over-the-air broadcast television signals because of their geographic location. Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622, 627 (1994) (citing United States v. Sw. Cable Co., 392 U.S. 157, 161-64 (1968); D. Brenner, M. Price & M. Meyerson, Cable Television and Other Nonbroadcast Video § 1.02 (1992); M. Hamburg, All About Cable, Ch. 1 (1979)); see SHVERA Report, supra, at 2.
In 1968 and 1974, before Congress passed the Copyright Act of 1976, the Supreme Court held that retransmissions of broadcast programming by cable systems did not constitute copyright infringement under the Copyright Act of 1909 because such retransmissions were not performances. See Teleprompter Corp. v. Columbia Broad. Sys., Inc., 415 U.S. 394 (1974), superseded by
In 1976, Congress responded to the Supreme Court’s decisions by enacting
In 1991, the Eleventh Circuit held that a satellite carrier was a cable system covered by
Finally, in 1994, Congress expressly included “microwave” as an acceptable communications channel for retransmissions. See
3. Legislative Intent
The legislative history indicates that Congress enacted
Congress did not, however, intend for
Extending
Accordingly, we conclude that Congress did not intend for
B. Chevron Step Two
The Copyright Office is the administrative agency charged with overseeing
The Copyright Office has consistently concluded that Internet retransmission services are not cable systems and do not qualify for
In 2008, the Copyright Office stated:
The Office continues to oppose an Internet statutory license that would permit any website on the Internet to retransmit television programming without the consent of the copyright owner. Such a measure, if enacted, 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.
SHVERA Report at 188. It continued to hold this position in 2011. See U.S. Copyright Office, Satellite Television Extension and Localism Act § 302 Report 48 (Aug. 29, 2011); 2 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 8.18[E][1] n.129.25 (Matthew Bender rev. ed.2012) (1963).
To reach this conclusion, the Copyright Office has explained that
Finally, the Copyright Office has consistently recognized that
In light of the Copyright Office’s expertise, the validity of its reasoning, the consistency of its earlier and later pronouncements, and the consistency of its opinions with Congress’s purpose in enacting
Accordingly, applying Chevron, we hold that: (1) the statutory text is ambiguous as to whether ivi, a service that retransmits television programming over the Internet, is entitled to a compulsory license under
We next turn to whether the district court abused its discretion in finding that plaintiffs would suffer irreparable harm in the absence of a preliminary injunction—that is, harm to the plaintiffs’ legal interests that could not be remedied after a final adjudication. See Kickham, 558 F.3d at 209; Salinger, 607 F.3d at 82. Harm may be irreparable where the loss is difficult to replace or measure, or where plaintiffs should not be expected to suffer the loss. Salinger, 607 F.3d at 81. Under Salinger, courts may no longer simply presume irreparable harm; rather, plaintiffs must demonstrate that, on the facts of the case, the failure to issue an injunction would actually cause irreparable harm. Id. at 82 (citing eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393 (2006)). Courts must pay “particular attention to whether the ‘remedies available at law, such as monetary damages, are inadequate to compensate for [the] injury.’” Id. at 80 (quoting eBay, 547 U.S. at 391).
We hold that the district court did not abuse its discretion in finding that plaintiffs would suffer irreparable harm without a preliminary injunction. First, ivi’s live retransmissions of plaintiffs’ copyrighted programming over the Internet would substantially diminish the value of the programming. Second, plaintiffs’ losses would be difficult to measure and monetary damages would be insufficient to remedy the harms. Third, ivi would be unable to pay damages should plaintiffs prevail.
First, ivi’s actions harm plaintiffs’ retransmission and advertising revenues by substantially diminishing the value of their copyrighted programming. Retransmission consent is a substantial and growing revenue source for the television programming industry. Plaintiffs obtain retransmission revenue by licensing the right to retransmit their copyrighted television programming to cable, satellite, and telecommunications providers. See ivi, 765 F.Supp.2d at 618-19. Plaintiffs broadcast their copyrighted programming to various communities at different scheduled times, for example, based on time zone or local network provider. For this reason, negotiated Internet retransmissions—for example, on Hulu.com—typically delay Internet broadcasts as not to disrupt plaintiffs’ broadcast distribution models, reduce the live broadcast audience, or divert the live broadcast audience to the Internet.
If ivi were allowed to continue retransmitting plaintiffs’ programming live, nationally (and arguably, internationally), over the Internet, and without plaintiffs’ consent, ivi could make plaintiffs’ programming available earlier in certain time zones than scheduled by the programs’ copyright holders or paying retransmission rights holders. ivi’s retransmissions of plaintiffs’ copyrighted programming without their consent thus would devalue the programming by reducing its “live” value and undermining existing and prospective retransmission fees, negotiations, and agreements. ivi’s retransmissions would dilute plaintiffs’ programming and their control over their product.
The value of plaintiffs’ programming would also be harmed by the impact on advertising revenue. Broadcast television stations and networks earn most of their revenues from advertising. Plaintiffs argue—persuasively—that advertisers pay substantial fees to target specific audiences; such fees are often determined by the number of viewers and their demographic profiles. ivi’s retransmissions of plaintiffs’ copyrighted programming over
Indeed, ivi’s actions—streaming copyrighted works without permission—would drastically change the industry, to plaintiffs’ detriment. See e.g., Adam B. Vanwagner, Seeking a Clearer Picture: Assessing the Appropriate Regulatory Framework for Broadband Video Distribution, 79 Fordband L.Rev. 2909, 2912 (2011); Lisa Lapan, supra, at 344-45, 350-58; Howard M. Frumes, Susan Cleary, and Lorin Brennan, Developing an Internet and Wireless License Agreement for Motion Pictures and Television Programming, 1 J. Int’l Media & Ent. L. 283, 284-85 (2007). The absence of a preliminary injunction would encourage current and prospective retransmission rights holders, as well as other Internet services, to follow ivi’s lead in retransmitting plaintiffs’ copyrighted programming without their consent. The strength of plaintiffs’ negotiating platform and business model would decline. The quantity and quality of efforts put into creating television programming, retransmission and advertising revenues, distribution models and schedules—all would be adversely affected. These harms would extend to other copyright holders of television programming. Continued live retransmissions of copyrighted television programming over the Internet without consent would thus threaten to destabilize the entire industry.
Second, plaintiffs’ losses would be difficult to measure and monetary damages would be insufficient to remedy the harms. See eBay, 547 U.S. at 391; Salinger, 607 F.3d at 80; Tom Doherty Assoc., Inc. v. Saban Entm’t, Inc., 60 F.3d 27, 38 (2d Cir.1995) (holding injunctive relief appropriate “to avoid the unfairness of denying an injunction to a plaintiff on the ground that money damages are available, only to confront the plaintiff at a trial on the merits with the rule that [the quantification of] damages must be based on more than speculation.“). In this case, there is no assurance that damages could be reasonably calculated at trial. Indeed, even ivi “appreciates that the magnitude of the harm ... may be difficult or impossible to quantify.” Br. of Defs.-Appellants at 36. Additionally, because the harms affect the operation and stability of the entire industry, monetary damages could not adequately remedy plaintiffs’ injuries.
Third, as defendants have acknowledged, ivi would be unable to pay any substantial damages award should plaintiffs prevail. See Br. of Defs.-Appellants at 38 (“[T]he injunction has effectively shut down the majority of ivi’s business, foreclosing any meaningful ability to generate any revenue during the pendency of the litigation.“). The “unlikelihood that defendant[s] ... would, in any event, be able to satisfy a substantial damage award” further supports a finding of irreparable harm. Omega Importing Corp. v. Petri-Kine Camera Co., 451 F.2d 1190, 1195 (2d Cir.1971).
III. Balance of Hardships
We next turn to whether the district court abused its discretion in finding that the balance of hardships weighed in favor of granting a preliminary injunction. See Kickham, 558 F.3d at 209; Salinger, 607 F.3d at 82.
We conclude that it did not, for plaintiffs demonstrated that the balance of hardships weighed heavily in favor of granting a preliminary injunction. As discussed above, plaintiffs established both a likelihood of success on the merits and irreparable harm—the absence of an injunction would result in the continued infringement of their property interests in the copyrighted material. As for defendants, as the district court noted, “[i]t is axiomatic that an infringer of copyright cannot complain about the loss of ability to offer its infringing product.” ivi, 765 F.Supp.2d at 621 (citing sources). ivi cannot be “legally harmed by the fact that it cannot continue streaming plaintiffs’ programming, even if this ultimately puts ivi out of business.” Id. The balance of hardships, therefore, clearly tips in plaintiffs’ favor.
IV. Public Interest
Finally, we assess whether the district court abused its discretion in finding that the public interest would not be disserved by the grant of a preliminary injunction. See Kickham, 558 F.3d at 209; see also eBay, 547 U.S. at 391; Salinger, 607 F.3d at 82-83.
Copyright law inherently balances the two competing public interests presented in this case: the rights of users and the public interest in the broad accessibility of creative works, and the rights of copyright owners and the public interest in rewarding and incentivizing creative efforts (the “owner-user balance“). See Crisp, 467 U.S. at 710.
Here, streaming television programming live and over the Internet would allow the public—or some portions of the public—to more conveniently access television programming. See Lisa Lapan, supra, at 361 (discussing choice and convenience in “TV/Internet” convergence); see Tim Wu, Intellectual Property, Innovation, and Decentralized Decisions, 92 Va. L.Rev. 123, 139 (2006) (discussing balancing of interests and noting historic problem where “holders of copyright block or slow the dissemination of technologies of potentially broad social value that threaten an existing market position“).
On the other hand, the public has a compelling interest in protecting copyright owners’ marketable rights to their work and the economic incentive to continue creating television programming. See Golan v. Holder, 132 S.Ct. 873, 890 (2012) (citing Eldred v. Ashcroft, 537 U.S. 186, 219 (2003); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S. 539, 558 (1985)). Inadequate protections for copyright owners can threaten the very store of knowledge to be accessed; encouraging the production of creative work thus ultimately serves the public’s interest in promoting the accessibility of such works. See Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 961 (2005) (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)).
Further, there is a delicate distinction between enabling broad public access and enabling ease of access to copyrighted works. The service provided by ivi is targeted more toward convenience than access, and the public will still be able to access plaintiffs’ programs through means other than ivi’s Internet service, including cable television. Preliminarily enjoining defendants’ streaming of plaintiffs’ television programming over the Internet, live, for profit, and without plaintiffs’ consent does not inhibit the public’s ability to access the programs. A preliminary injunction, moreover, does not affect services that have obtained plaintiffs’ consent to retransmit their copyrighted television programming over the Internet.
Accordingly, we conclude the district court did not abuse its discretion in finding that a preliminary injunction would not disserve the public interest.
CONCLUSION
We have considered defendants’ remaining arguments and conclude that they are without merit. For the reasons set forth above, we hold that the district court did not abuse its discretion in granting a preliminary injunction to plaintiffs, and the judgment of the district court is AFFIRMED.