Protecting Copyright, Innovation or the Business Model?

Entrepreneurs have come up with a variety of services that allow viewers to access broadcast television programming over the Internet.  Not surprisingly, courts have had quite the time and reached conflicting decisions about whether these entrepreneurs are infringing on the copyrights of the broadcasters.  What is surprising, however, is the extent to which courts holding in favor of granting an injunction to block the operation of these service have defended the current model of doing business.

In Fox Television Stations, Inc. v. Barrydriller Content Sys., the Ninth Circuit held that defendants were infringing on plaintiffs’ copyrights when they rebroadcast them over the Internet.  In granting the broadcasters’ request for an injunction, the court found that plaintiffs met the requirements for an injunction.  The court noted that defendants were competing with plaintiffs ability to develop distribution channels over the Internet and that defendants interfered with plaintiffs’ ability to strike deals to distribute their products via services such as hulu.com or iTunes.  The court also rested its conclusion on the fact that defendants limited the number of viewers captured by services that measured audience size and, therefore, interfered with plaintiffs’ ability to negotiate favorable advertising rates.

Along the same lines, in WPIX, Inc. v. ivi, Inc., the Second circuit granted an injunction against defendants’ services, which allowed users to watch broadcast television over the Internet.  The court found that an injunction was appropriate because their services were affecting the operation of the entire television industry and might reduce plaintiffs’ ability to negotiate with locate advertisers.  The court further found that were ivi allowed to continue to operate it would give license to other similar services.  This would undercut plaintiffs’ business model, which would reduce the quantity and quality effort put into creating television programming.

Judge Chin, who wrote the decision in ivi, dissented in the recent decision in WNET, Thirteen v. Aereo, Inc.  In his dissent, he again forcefully noted that he would have found that Aereo was infringing on plaintiffs’ copyrights.  He relied on his earlier decision in ivi and again noted that Aereo was drastically upsetting the present state of the industry.

Without touching on these courts’ interpretation of the copyright act, it’s fascinating and, likely wrong, that they paid any attention to the harm to the existing business model.  Whether a particular business model lives or dies is not something that courts take into account in deciding whether to issue the extraordinary relief of an injunction.  This should be particularly true where, at least from reading the courts’ opinions, it doesn’t seem that the plaintiffs offered anything other than speculation that their businesses would be harmed.  While copyright law is concerned with “the Progress of Science and the useful Arts,”  the business model of delivering broadcast television to viewers is not part of what is protected under copyright law.

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