WPIX, Inc. et al v. IVI, Inc. et al

Filing 59

MEMORANDUM AND ORDER denying 37 Motion to Stay. Plaintiffs are hereby ordered to post a bond in accordance with this opinion within one week. (Signed by Judge Naomi Reice Buchwald on 4/18/11) Copies Mailed By Chambers. (cd)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------X
WPIX, INC.,
WNET.ORG,
AMERICAN BROADCASTING COMPANIES, INC.,
DISNEY ENTERPRISES, INC.,
CBS BROADCASTING INC,
CBS STUDIOS INC.,
THE CW TELEVISION STATIONS INC.,
NBCUNIVERSAL MEDIA, LLC,
NBC STUDIOS LLC,
OPEN 4 BUSINESS PRODUCTIONS LLC,
UNIVERSAL NETWORK TELEVISION, LLC,
TELEMUNDO NETWORK GROUP LLC,
WJNU-TV BROADCASTING LLC,
NBC TELEMUNDO LICENSE LLC,
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,
- against ivi, Inc. and Todd Weaver,
Defendants.
------------------------------------X
NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

1

MEMORANDUM AND
O R D E R
10 Civ. 7415 (NRB)

On February 22, 2011, this Court granted plaintiffs’ motion
for a preliminary injunction. Pursuant to that order, defendants
were

enjoined

from

infringing

plaintiffs’

“exclusive

rights

under Section 106(1)-(5) of the Copyright Act, including but not
limited to through the streaming over mobile telephone systems
and/or

the

Internet

of

any

of

the

broadcast

television

programming in which any plaintiff owns a copyright.” WPIX, Inc.
v. ivi, Inc., __ F. Supp. 2d __, No. 10 Civ. 7415 (NRB), 2011
U.S. Dist. LEXIS 17654 at *77-78 (S.D.N.Y. Feb 22, 2011). Before
the Court is defendants’ motion for a stay of the order pending
appeal to the Second Circuit. For the following reasons, the
motion is denied.
A.

Legal Standard
District

courts

consider

four

factors

in

determining

whether to issue a stay pending appeal: “(1) whether the stay
applicant has made a strong showing that he is likely to succeed
on the merits; (2) whether the applicant will be irreparably
injured absent a stay; (3) whether issuance of the stay will
substantially

injure

the

other

parties

interested

in

the

proceeding; and (4) where the public interest lies.” McCue v.
City of New York (In re World Trade Ctr. Disaster Site Litig.),
503 F.3d 167, 170 (2d Cir. 2007) (internal footnote omitted)
(quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)). The
“degree

to

which

a

factor

must
2

be

present

varies

with

the

strength

of

the

[factor]

other

excuses

less

factors,
of

the

meaning
other.’”

that
Id.

‘more

of

(alteration

one
in

original) (quoting Thapa v. Gonzales, 460 F.3d 323, 334 (2d Cir.
2006)). Thus, the “necessary level or degree of possibility of
success will vary according to the court’s assessment of the
other...factors.” Mohammed v. Reno, 309 F.3d 95, 101 (2d Cir.
2002)

(internal

quotation

omitted).

However,

the

“first

two

factors of the traditional standard are the most critical,” and
“more

than

a

mere

possibility

of

relief

[on

appeal]

is

required.” Nken v. Holder, 129 S.Ct. 1749, 1761 (2009) (internal
quotation and brackets omitted).
A stay is an “exercise of judicial discretion,” and the
“party requesting a stay bears the burden of showing that the
circumstances justify an exercise of [the court’s discretion].”
Id.

at

Court

1760-61

has

(internal

noted,

there

quotation

is

omitted).

“substantial

As

overlap”

the

Supreme

between

the

factors governing the issuance of a stay and those governing the
issuance of a preliminary injunction. Id. at 1761. This is “not
because

the

two

are

one

and

the

same,

but

because

similar

concerns arise whenever a court order may allow or disallow
anticipated action before the legality of that action has been
conclusively determined.” Id.
B.

Likelihood of Success on the Merits

3

Defendants’ discussion of the first factor, likelihood of
success on appeal, is largely a reiteration of arguments made
during

the

briefing

injunction

motion.

and

oral

Further,

argument

as

will

on

be

the

set

preliminary

forth

below,

defendants have taken the liberty of misstating our decision so
as to attack straw men.
Rather than reiterate our extended analysis, we only note
that we are not persuaded, even after considering defendants’
submission

which

reargument,

that

in

some

defendants

respects
have

a

mirrors
likelihood

a

motion

of

for

success

on

appeal for largely the same reasons that we granted plaintiffs’
motion for a preliminary injunction. We write further only to
comment for the sake of clarity on a few points that defendants
raise in their memoranda of law.
1.

Ownership of Wires

Contrary

to

defendants’

contention,

the

result

of

our

opinion is not to impose a requirement that a cable system own
the wires that make the secondary retransmission. Our opinion
was explicit in stating that “there is no requirement in Section
111 that a company own the wires in order to be a cable system.”
WPIX,

Inc.,

Defendants

2011

can

U.S.

advance

Dist.
this

LEXIS

17654

contention

at

only

*53-54
by

n.28.

erroneously

claiming that the single meaningful distinction between ivi’s
architecture and that of entities which the Copyright Office has
4

endorsed as cable systems, such as AT&T’s U-Verse, is that AT&T
“purportedly

owns

its wires.” Defs.’ Mem. at 7 (emphasis in

original). As was articulated at oral argument and referenced in
our previous opinion, there are numerous structural differences
between AT&T’s U-Verse and ivi. See WPIX, Inc., 2011 U.S. Dist.
LEXIS 17654 at *53-54 n.28.
We

did

mention,

in

the

same

footnote

28,

that

it

is

relevant whether a company has any control over the wires it
uses, and thus can prevent piracy. In identifying the issues of
control and piracy as potentially significant, we were merely
considering

“the

common

sense

of

the

statute...[and]

the

practical consequences of the suggested interpretations,” as is
our duty in “divin[ing] and apply[ing] the intent of Congress”
in a “statute enacted in the technological milieu of an earlier
time.” Eastern Microwave, Inc. v. Doubleday Sports, Inc., 691
F.2d 125, 127 (2d Cir. 1982) (internal quotations omitted).
While we in no way retreat from our view that control over
the wires is relevant,1 that is not the same as an ownership
requirement.2

1

We do not believe that Congress intended Section 111 to apply to a company,
such as ivi, which has no control over the wires or legal relationship with
the companies that operate the wires making the secondary transmissions.
Significantly, in the case that defendants cite for the proposition that
ownership of the wires is not necessary in order to qualify as a cable
system, the entity in question had subcontracted with another company which
owned and operated the wires. Nat’l Football League v. Insight Communs.
Corp., 158 F.Supp.2d 124 (D. Mass. 2001). The Court noted that preventing a
company from taking advantage of Section 111 simply because it did not
actually own the wires would not be consistent with “practical business
5

2.

Headends

Defendants

also

challenge

our

reliance

on

the

second

sentence of Section 111(f)(3) as part of the textual analysis of
the

statute.3

Presumably,

Once

again,

defendants

take

defendants
issue

distort

with

our

our

decision.

reference

to

a

Copyright Office rulemaking proceeding wherein the Office stated
that the second sentence of Section 111(f)(3) refers to concepts
such as “headends” and “contiguous communities” which “do not
have any application to a nationwide retransmission service.” 57
practices” since “‘outsourcing’ is an accepted method of doing business” in
the “real business world.” Id. at 132. In addition, we should note that this
case dealt with the passive carrier exception of Section 111, and did not
discuss cable systems.
2

We note that, separate from the question of ownership, ivi does not appear
to meet the statutory requirement that a cable system be a facility which
both “receives” signals and “makes” secondary transmissions. Rather, it could
well be that the viewer’s Internet service provider makes the secondary
transmission. WPIX, Inc., 2011 U.S. Dist. LEXIS 17654 at *61-62. AT&T does
not face a similar issue, in part because it owns the wires that make the
secondary transmissions.
Notably, defendants do not even attempt to address this issue, even as
they maintain that the “only way to exclude ivi from the definition of a
cable system is by imposing additional restrictions not found in the text of
the statute itself” and that there is “no portion of the statute that does
not readily apply to ivi.” Defs.’ Mem. at 3, 6.
3

To review, Section 111(f)(3) sets forth the definition of “cable system”:
“[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.”

17 U.S.C. § 111(f)(3).

6

Fed. Reg. 3284 (Jan 29, 1992). Defendants assert that the second
sentence of Section 111(f)(3) is not part of the definition of a
cable system since it “literally begins by stating that the
headend and contiguous community aspects are for purposes of
determining whether there is one system or more than one system
for calculating the fee under subsection (d)(1).” Defs.’ Mem. at
12.

Defendants

thus

contend

that

the

statute

does

not

specifically require a cable system to have a headend. This
argument does not advance the discussion of what constitutes a
cable

system

as

there

is

little

doubt

that

the

drafters

of

Section 111 understood that cable systems, by definition, had
headends. Nor did our decision turn on or even speculate as to
whether ivi can be said to have a headend, as defendants suggest
that it did.
Moreover, there can be no serious dispute, regardless of
the Copyright Office’s observation, that the language used in
the

second

sentence

of

Section

111(f)(3)

is

useful

in

determining the scope of the first sentence. See, e.g., ASM
Capital, LP v. Ames Dep’t Stores, Inc. (In re Ames Dep’t Stores,
Inc.),

582

interpretation

F.3d

422,

always

427

begins

(2d
with

Cir.
the

2009)

plain

(“Statutory

language

of

the

statute, which we consider in the specific context in which that
language is used, and the broader context of the statute as a
whole.”)

(internal

quotations

and
7

citations

omitted).

The

Copyright Office determined that it was relevant that Congress
used the terms “headend” and “contiguous communities” in Section
111(f)(3), and that it was unlikely such terms would have been
used in the statute if the Section was meant to encompass a
nationwide

retransmission

service.

Our

reference

to

the

Copyright Office’s statement was simply intended to demonstrate
that

it

is

hardly

clear

that

ivi

fits

“neatly”

within

the

definition of a cable system.
3.

The Communications Act

Defendants dedicate several pages in their memorandum of
law to the proposition that ivi’s transmissions are permissible
under the Communications Act and the rules and regulations of
the FCC. This discussion ignores the fact that our decision did
not reach (because it did not need to) the question of whether
defendants were in violation of the Communications Act. Nor did
we rest our decision that ivi did not qualify for a compulsory
license

on

the

fact

that

their

retransmissions

were

“impermissible” under the rules of the FCC. To be clear: ivi is
not

a

cable

system

because

it

does

not

meet

the

statutory

requirements of Section 111, as understood by a reading of the
text, administrative record, and congressional intent. Whether
or not ivi is a cable system for purposes of the Communications
Act,

and

thus

is

retransmitting

programming

thereof, has not been addressed by this Court.
8

in

violation

C.

Irreparable Injury Absent a Stay
Defendants’

injured

by

the

argument

that

preliminary

they

are

injunction

being

and

irreparably

that

they

will

continue to suffer injury absent a stay is identical to the
hardship argument made in opposition to plaintiffs’ motion. As
noted in our previous order, while “it is a practical hardship
for ivi to go out of business, it is not a legally recognized
harm.” WPIX, Inc., 2011 U.S. Dist. LEXIS 17654 at *74. This is
because an “infringer of copyright cannot complain about the
loss of ability to offer its infringing product.” Id.
D.

Injury to Plaintiffs
Defendants’

argument

that

plaintiffs

are

not

actually

injured by ivi’s service again mirrors the argument made in the
context of the preliminary injunction, which we considered in
detail and unequivocally rejected. WPIX, Inc., 2011 U.S. Dist.
LEXIS 17654 at *63-73. That plaintiffs “have been selling the
same content to numerous others for decades, including at the
same statutory licensing fees that would be paid by ivi” and
that

the

“content

is

also

available

for

free,

both

on

the

Internet and over the air,” Defs.’ Mem. at 16, is not in any way
relevant to whether plaintiffs are injured by ivi’s illegal use
of their content. It is absurd to suggest that since plaintiffs’
copyrighted works are made available in a variety of legal ways,
adding an illegal method does not cause them harm. It is equally
9

misguided to argue that the existence of a statutory rate means
that plaintiffs do not suffer harm in an amount greater than
that rate when their works are used by entities which do not fit
within the applicable statute.
E.

The Public Interest
The public interest does not support a stay. Defendants

argue

that

rewarding
broad

Section

the

public

111

creators

“advances

of

availability

the

copyrighted
of

those

public

purposes

works

while

works”

and

of

promoting
that

the

“enactment of Section 111” was Congress’ determination that “it
would be impossible for companies like ivi to secure permission
from

each

of

the

copyright

owners

in

advance,

and

that

the

public interest of broad dissemination could only be advanced by
a statutory license.” Defs.’ Mem. at 16-17.
While

these

contentions

are

indisputable,

they

are

only

available to entities which qualify as a cable system. As ivi
does not, defendants may not rely on these arguments.
Defendants offer no theory as to why this Court, having
found

that

they

are

in

violation

of

plaintiffs’

copyrights,

should discount the object of copyright law to “promote the
store

of

knowledge

available

to

the

public”

by

“providing

individuals a financial incentive to contribute to the store of
knowledge.” Salinger v. Colting, 607 F.3d 68, 82 (2d Cir. 2010).
The programming that defendants wish to make available to the
10

public

is

whomever

not

a

natural

obtains

access.

resource
It

is

that

may

be

proprietary

exploited
material

by

that

plaintiffs spend millions of dollars to develop and protect. The
public

is

served

by

enjoining

those

who

seek

to

illegally

exploit the statutory rights of copyright holders.
F.

Bond Pursuant to Rule 65(c)
When

this

Court

granted

plaintiffs’

motion

for

a

preliminary injunction, it did not impose a bond pursuant to
Rule

65(c)

of

the

Federal

Rules

of

Civil

Procedure.

As

plaintiffs point out, while defendants did not request that a
bond be imposed or provide any basis for this Court to determine
the appropriate amount of such a bond, it is unclear whether we
have the authority to eliminate the security requirement. See
Eyewonder, Inc. v. Abraham, 293 Fed. Appx. 818, 821 (2d Cir.
2008). Thus, plaintiffs are hereby ordered to provide a $10,000
bond.

11

CONCLUSION

For

the

aforementioned

reasons,

defendants'

motion

for

a

aintiffs are hereby ordered to

stay pending appeal is denied.

post a bond in accordance with this opinion within one week.

SO ORDERED.

Dated:

New York, New York
April 18, 2011

NAOMI REICE BUCHWALD
UNITED STATES DISTRICT JUDGE

Copies of the foregoing Order have been mailed on this date
to the following:
Attorney for Plaintiffs
Peter L. Zimroth
Arnold & Porter, LLP
399 Park Avenue
New York, NY 10022
Attorneys for Defendants
Lawrence D. Graham
Bl
, Lowe & Graham PLLC
701 Fi
Avenue
Suite 4800
Seatt ,WA 98104

Gavin Ira Handwerker
Nissenbaum Law Group, LLC
2400 Morris Avenue
Union, NJ 07083

12