July 31, 2019 – A group of U.S. broadcast television networks have filed a copyright infringement lawsuit against Locast, a aprovider of a free streaming service offering local, over-the-air television.[1] The suit was filed in U.S. District Court for the Southern District of New York (Case 1:19-cv-07136).

The following broadcasters are the lawsuit’s plaintiffs: American Broadcasting Companies, Inc., Disney Enterprises, Inc., Twentieth Century Fox Film Corporation, CBS Broadcasting Inc., CBS Studios Inc., Fox Television Stations, LLC, Fox Broadcasting Company, LLC, NBCUniversal Media, LLC, Universal Television LLC, and Open 4 Business Productions, LLC.

The defendants are David R. Goodfriend, the founder of Locast, and Sports Fans Coalition NY, Inc., a non-profit advocacy group which initially launched the Locast service in New York City in January 2018.[2] Mr. Goodfriend is the President, Director, and Treasurer of Sports Fans Coalition NY, Inc.[3]

Locast’s free streaming service is available in a total of thirteen television markets, including the nine largest markets in the U.S. Locast’s service is “available to users via all manner of devices and platforms, including applications for Android and Apple smartphones and devices, and applications for Roku, Chromecast, Amazon Fire TV, Apple TV, and Android TV television-viewing devices.”[4] To support the costs of its free service, Locast relies on donations from customers and corporations. AT&T recently donated $500,000 to Locast.[5] It’s important to note that the service provided by Locast is similar to the subscription streaming service provided by Aereo, which went out of business in 2014 following a Supreme Court decision finding Aereo’s service violated copyright law.[6] The difference between the two is that Locast’s service is free and Locast claims to be a nonprofit organization.

Locast has previously acknowledged that it engages in the unauthorized retransmission of copyrighted content. However, Locast claims its service does not infringe the copyrights of broadcasters because Locast believes it is covered by the exemption in Section 111(a)(5) of the Copyright Act that applies to nonprofit organizations. Here’s the language from the exemption claimed by Locast:

The secondary transmission of a performance or display of a work embodied in a primary transmission is not an infringement of copyright if the secondary transmission is not made by a cable system but is made by a governmental body, or other nonprofit organization, without any purpose of direct or indirect commercial advantage, and without charge to the recipients of the secondary transmission other than assessments necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service.[7]

Locast does not ask for or obtain consent from broadcasters to retransmit their content. Retransmission consent, enacted as part of the 1992 Cable Act, requires cable operators and other video programming distributors to obtain permission from TV broadcasters before retransmitting their programming.[8] The Supreme Court has described the retransmission consent requirements as a “highly detailed compulsory licensing scheme that sets out the conditions, including the payment of compulsory fees, under which cable systems may retransmit broadcasts.”[9]

All things considered, you can see why the broadcasters are not happy about the service provided by Locast. Here’s how the broadcasters describe Locast’s failure to comply with retransmission consent: “unlike licensed cable, satellite, and streaming services, Locast neither obtains [broadcasters’] permission nor pays for its exploitation of [broadcasters’] exclusive rights to publicly perform their copyrighted content. Instead, Locast simply takes [broadcasters’] copyrighted content and retransmits it to its registered users at will over the internet.[10]

In their complaint, the broadcasters describe the Section 111(a)(5) exemption under which Locast operates as a “narrow exemption [that] permits local governments and other not-for-profit entities to operate booster and translator stations, which amplify broadcast signals so they can reach antennas in nearby areas otherwise unable to receive them.”[11] The broadcasters argue Locast goes beyond this narrow exemption by promoting “itself to users who already have access to broadcast television as a way to enjoy the added convenience of live mobile viewing over the internet without having to pay for it.”[12]

The broadcasters list 10 ways in which Locast’s service departs from the activities of a mere booster of broadcast signals, and shows why the service should not be exempt from infringement under the Copyright Act:

1. captures, transcodes, and retransmits broadcast signals over the internet, where they reach not only the local area served by the originating stations but are also accessible to anyone with internet access and an internet enabled device;

2. retransmits the signals of broadcast stations that serve tens of millions of Americans, with a goal of disrupting the national broadcast television retransmission consent market;

3. strips from the over-the-air broadcast signals the Nielsen watermarks that measure viewing for local and national advertisers, thereby endangering broadcasters’ advertising revenue;

4. partners with DISH and DIRECTV to integrate its internet-TV service into set-top boxes of the country’s two leading pay-TV satellite providers, even though DISH and DIRECTV satellite subscribers already receive the major broadcast stations’ signals as part of their subscriptions;

5. competes unfairly in the market for live television delivered over the internet by refusing to seek the licenses paid for by every one of its streaming competitors;

6. supports and complements the commercial lobbying and consulting business of its founder and president David R. Goodfriend, who lobbies Congress on behalf of DISH for retransmission consent “reform”; 

7. maintains and grows a commercially valuable database of Locast user email addresses by requiring users to register and log in with email addresses or Facebook accounts even though there is no technological reason to do so;

8. as enabled by its broad Terms of Service, collects commercially valuable data about its users’ television viewing habits while offering that data as an enticement for other commercial players to support Locast with infrastructure or other assistance; 

9. helps DISH’s internet-TV service Sling TV compete unfairly with competitors like Hulu With Live TV, YouTube TV, and PlayStation Vue by enabling it to tell potential subscribers that they can “supplement” their lower-cost Sling TV service with the free Locast service; and

10. claims to be a free service but interrupts its stream every fifteen minutes to display commercials that seek “donations” while also terminating the stream, requiring users to reload a channel to continue watching; Locast then promises that the commercials will abate if viewers commit to the recurring monthly “donation.”[13]

Putting all of this aside, the case is about infringement of the exclusive right to perform copyrighted works publicly.[14] The exclusive right to perform a copyrighted work publicly includes the exclusive right to transmit a performance of the work to the public.

The broadcasters are seeking statutory damages for a massive number of instances of copyright infringement, a permanent injunction enjoining and restraining Locast from offering its service, and of course attorneys’ fees and full costs incurred in the action. So that’s the basics of this lawsuit. If I had to place a bet on how this ends, I’d put all my money on the side of the broadcasters. They seem to always win, don’t they. Without researching Section 111(a)(5) and only browsing the complaint, it seems Locast’s service goes beyond the intent of the nonprofit exemption. Here’s one thing I like about the lawsuit – it will dial up the volume on discussions of reforming (or getting rid of) the retransmission consent regime. It’s a very hot topic again on the hill. Cable providers will tell you that the fees demanded by broadcasters have become outrageous. As the complaint notes, some of these pay-TV providers have promoted Locast to users during blackouts as a way to still watch their local networks. This move is probably what made the broadcasters decide to file their lawsuit. Anyway, this lawsuit will be fun to watch.

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[1] American Broadcasting Companies, Inc., et. al., v. David R. Goodfriend and Sports Fans Coalition NY, Inc., Complaint For Damages And Injunctive Relief, Case 1:19-cv-07136, U.S. District Court for the Southern District of New York (July 31, 2019) (Complaint).

[2] https://en.wikipedia.org/wiki/Locast; https://www.sportsfans.org/bringing_the_public_interest_back_to_sports.

[3] Complaint at ¶27.

[4] Complaint at ¶47.

[5] Complaint at ¶10.

[6] American Broadcasting Companies, Inc. v. Aereo, Inc., 134 Sup.Ct. 2498 (June 25, 2014).

[7] 17 U.S.C. § 111(a)(5).

[8] 47 U.S.C. § 325(b).

[9] Aereo, 134 Sup.Ct. at 2506.

[10] Complaint at ¶3.

[11] Complaint at ¶45.

[12] Complaint at ¶46.

[13] Complaint at ¶12.

[14] 17 U.S.C. § 106(4).