American Broadcasting Companies, Inc. et al v. Goodfriend et al
Filing
322
OPINION & ORDER granting 116 Motion for Partial Summary Judgment; denying 120 Motion for Summary Judgment; denying 189 Motion for Summary Judgment; granting 194 Motion for Partial Summary Judgment: Plaintiffs' motion for partial summary judgment is granted. Defendants' motion for summary judgment is denied. (Signed by Judge Louis L. Stanton on 8/31/2021) (ml)
Case 1:19-cv-07136-LLS Document 322 Filed 08/31/21 Page 1 of 8
· USDC SON'\.
DOCUMENT
UNI TED STATES DISTRICT COURT
EL ECTRONIC.ALLY FILED
SOUTHERN DISTRICT OF NEW YORK
DOC #: _ _ ___,___,..__,.--,-AMERICAN BROADCASTING COMPANIES ,
DA TE Fl LE D:
INC ., DISNEY ENTERPRISES , INC .,
TWENTIETH CENTURY FOX FILM
CORPORATION , CBS BROADCASTING INC .,
CBS STUDIOS INC ., FOX TELEVISION
19 Civ . 7136 (LLS)
STATIONS , LLC , FOX BROADCASTING
COMPANY , LLC , NBCUNIVERSAL MEDIA ,
OPINION & ORDER
LLC , UNIVERSAL TELEVISION LLC , AND
OPEN 4 BUSINESS PRODUCTIONS , LLC ,
ORIGINAL
s z-1
hrf'
Plaintiffs and Counterclaim
Defendants ,
- against -
DAVID R . GOODFRIEND and SPORTS FANS
COALITION NY , INC .,
Defendants and Counterclaim
Plaintiffs.
Plaintiffs seek partial summary judgment dismissing
defendants ' affirmative defense that defendants ' operation of
the Locast internet service is exempt from copyright
infringement liability under 17 U. S.C. § lll(a) (5) . See Dkt . No .
117. Reciprocally , defendants move for summary judgment on the
same issue, seeking a contrary finding that Section lll(a) (5)
does grant them a statutory exemption from the copyright law .
See Dkt . No . 123 .
For the reasons set forth below , plaintiffs ' motion is
granted , and defendants '
is denied .
BACKGROUND
Defendant non - profit organization Sports Fans Coalit i on NY ,
Inc .
("SFCNY " ) operates the Locast service , which captures over - 1-
Case 1:19-cv-07136-LLS Document 322 Filed 08/31/21 Page 2 of 8
the-air ( " OTA") broadcast signals and retransmits them over the
internet , enabling viewers to stream live television on their
preferred internet-connected viewing device . The signals include
copyrighted transmissions from plaintiffs ' broadcast stations.
Locast has not paid for a license or obtained plaintiff's
consent to retransmit those programs .
Defendant Goodfriend founded SFCNY in 2017.
1
According to
Mr . Goodfriend , the organization was founded and Locast was
created in order to provide Americans free access to local , free
television which,
for technical and geographic reasons , they are
unable to access without commercial Pay - TV services
(provided by
multichannel video programming distributors, or "MVPDS") or
other subscription - based internet services such as YouTube TV
and Hulu+ Live TV .
Locast ' s retransmissions are available online to any
registered user in the designated geographic area , even those
who can access the original OTA signal using OTA television
antennas. Locast recipients have free access to the full
repertory of news and entertainment channels ; but non - paying
users' programming is interrupted after every fifteen minutes of
watching a single channel with a fifteen - second video requesting
donations , and viewers then lose time re - acquiring the program .
1 Mr . Goodfriend moves separately for summary judgment on the basis that he is
statutorily immune from liability . See Dk . No . 109 . A more detailed
background of SFCNY's founding and Mr. Goodfriend's role at the organization
will be contained in an Order addressing that motion.
- 2-
Case 1:19-cv-07136-LLS Document 322 Filed 08/31/21 Page 3 of 8
To avoid that interruption in service , users can pay $5 a
month for "preferred" (i . e ., uninterrupted) access to the
service , or can request that the service stop displaying the
donation requests based on their financial circumstances. Users
who choose to pay receive the uninterrupted service for time
correlating to the amount of the payment . For example , if the
user pays the minimum $5 amount, she receives uninterrupted
service for the entire month . If the user pays less, the time
period during which she receives uninterrupted service within
the month is decreased on a pro - rata basis (e . g ., $1 paid
provides uninterrupted service for 20 % of the month) .
The obvious economic fact is that these "donations" are
really a scale of fees for uninterrupted service , and it works .
At present, Locast is almost fully funded by payments from
users .
Besides those payments from Locast recipients , SFCNY also
generates income through donations from MVPDs , such as AT&T ,
Promotion and Advancement o f Local Opportunities ("PALO") and
Liberty Cable vision of Puerto Rico LLC . Some MVPDS integrate
the Locast application in their own smart - TV platforms , and in
the event of a channel blackout (which may result from a
breakdown in retransmission consent negotiations between an MVPD
and broadcast owner), those MVPDS can direct their customers to
the Locast app so that there is no disruption in their live TV
serv ice .
- 3-
Case 1:19-cv-07136-LLS Document 322 Filed 08/31/21 Page 4 of 8
As of May 2021 , SFCNY and Locast capture and retransmit OTA
signals over the Internet that are receivable i n 32 des i gnated
market areas and are available to viewers all day .
Plaintiffs bring this suit to bar defendants from operating
the Locast service and for statutory damages f or their infringed
works .
In December of 2019 , the parties agreed to limit the scope
of the litigation to the issue of applicability of the Section
lll(a) (5) exemption , which is the sole question before the Court
on these two motions .
STANDARD
" The court shall grant summary judgment if the movant shows
that there is no genuine dispute as to any materia l fact and the
movant is entitled to judgment as a matter of law. " Fed . R . Civ .
P . 56(a) . "A fact is material if it ' might affect the outcome of
the suit under the governing law ,' and a dispute is genuine if
' the evidence is such that a reasonable jury could return a
verdict for the nonmoving party .'" Ba l dwin v. EMI Fe i st Catalog ,
Inc ., 805 F . 3d 18 , 25 (2d Cir . 2015) , quoting Anderson v .
Liberty Lobby , Inc. , 477 U.S . 242 , 248 , 106 S . Ct . 2505 , 2510 ,
91 L.Ed . 2d 202
(1986) .
DISCUSSION
Section 111 (a) ( 5) of the Copyright Act sets forth certain
limitations on a copyright holder ' s exclusive rights . Subsection
(a) (5) states:
- 4-
Case 1:19-cv-07136-LLS Document 322 Filed 08/31/21 Page 5 of 8
(a)
Certain Secondary Transmissions Exempted . -The secondary
transmission of a performance or display of a work
embodied in a primary transmission is not an infringement
of copyright if-
(5)
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 .
17 U. S . C .
§
lll(a) (5)
Plaintiffs set forth several arguments that defendants '
Locast service does not come within the statutory exemption . For
the most part , they present such conflicting characterizations
of the facts that they are more suited to trial than a summary
disposition.
But summary judgment is appropriate with respect to the
requirement that defendants '
service is conducted".
. 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 ."
Based on the undisputed facts , it is clear that the Locast
service is not offered without charges other than those
"necessary to defray the actual and reasonable costs of
maintaining and operating" its service .
The payments defendants elicit from users are charges
-5 -
Case 1:19-cv-07136-LLS Document 322 Filed 08/31/21 Page 6 of 8
assessed on users to avo i d constant se r vice interruptions ,
regardless of whether defendants euphemistical l y call them
publicly " recommended donations". Locast users pay the minimum
$5 monthly fee in exchange for month - long , uninterrupted
service . It is not merely a recurring gift to a charitable
cause . It is of no consequence that a number of users employ the
service without paying. SFCNY still solicits , and receives ,
substantial amounts in charges from recipients for its
uninterrupted service .
In 2020 , Locast ' s total costs (including depreciation) were
$2 . 436 million . Pls. R . 56 . 1 Statement (" SOMF " ) i 78 . According
to defendants , those costs " represent what i t costs to operate
the Locast service in 2020 , when the Locast service began
operating in 16 markets and gradually expanded to 25 markets ."
Dfs . Counter SOMF i 78 . Locast ' s total revenue in 2020 was
$4.519 million , comprised of $4 . 372 million from users and
$147 , 161 from other sources . Pls. SOMF i 79 . On those undisputed
facts , in 2020 Locast made far more money from user charges than
was necessary to defray its costs of maintaining and operating
its service.
Defendants argue that Locast's funding qualifies for the
statutory exemption because payments from users are r e-inves t ed
in the organization to cover costs of " maintaining an operating
an expanding system", see Dfs. Opp . Br . at 33 , and the costs of
expansion are part of the operation. See Dfs. Br. at 36 .
- 6-
Case 1:19-cv-07136-LLS Document 322 Filed 08/31/21 Page 7 of 8
Defendants aver that contributions from users are essential to
the expansion of the Locast service . See Dfs . SOMF
~~
149 - 150 .
They argue that disallowing use of the assessments for that
purpose would prevent expansion , which they say was not intended
by Congress when granting the exemptions . See Dfs. Opp. Br . at
33 .
But under the statute , income made from charges to
recipients can only be used to defray the actual and reasonable
costs of maintaining and operating the service , not of expanding
it into new markets . The argument that Section lll(a) (5)
should
not " prevent" a natural process of expansion misconceives the
statutory structure . Retransmissions
(i . e ., secondary
performances of copyrighted matter) are already penalized
("prevented") by the Copyright Law in its main section . See 17
U. S . C . § 501
( " Anyone who violates any of the exclusive rights
of the copyright owner .
. is an infringer of the copyright or
right of the author , as the case may be ." ) . Nothing in Section
111 specifies that an expansion of the number of infringing
transmissions is exempt from that law , and it is not for a court
to infer that Congress really meant to allow them.
It would have
been simple for Congress to add one word to paragraph (5) to
make it read" .
. costs of maintaining , expanding, and
operating the secondary transmission service. " But expansion is
nowhere mentioned , and it is therefore excluded from the short ,
tightly - crafted grant of exemptions.
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Since portions of its user payments fund Locast ' s
expansion , its charges exceed those " necessary to defray the
actual and reasonable costs of maintaining and operating the
secondary transmission service ", which is the only exemption
granted in Section 111 (a) (5).
Accordingly , defendants '
affirmative defense is stricken .
CONCLUSION
Plaintiffs ' motion for partial summary judgment is granted .
Defendants ' motion for summary judgment is denied .
So Ordered .
Dated:
New York , New York
August 31 , 2021
~ L .. J i ~
LOUIS L . STANTON
U. S . D. J .
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