A federal judge in New York has issued a preliminary injunction against internet TV service ivi, in a closely-watched case pitting an upstart web video service against some of the most powerful entertainment companies in the world.
In a phone interview with Wired.com after the ruling Tuesday, ivi founder and CEO Todd Weaver vowed to appeal the order.
"The judge has it wrong," Weaver said flatly.
The injunction is a victory for the major TV networks and a setback for the nascent crop of online video distributors aiming to offer an alternative to the major cable and satellite companies. The case highlights the disharmony between copyright law and FCC regulatory policy at a time of rapid evolution and innovation in the online video space.
"Plaintiffs have demonstrated a likelihood of success on the merits of their copyright claim," U.S. District Judge Naomi Reice Buchwald wrote in her decision. "They also have demonstrated irreparable harm, that the balance of hardships tip in their favor, and that the public interest will not be disserved by an injunction."
"ivi streams signals to a nationwide audience, without copyright owners’ consent or compliance with the rules and regulations of the FCC," the judge added.
Launched by Weaver, a Seattle-based entrepreneur, in September 2010, ivi (pronounced "ivy") immediately drew the legal wrath of several major entertainment companies, including Disney, NBC Universal, Fox Television, and Major League Baseball.
That's not altogether surprising, considering that the company's business involves pulling down over-the-air TV signals from 55 stations in New York, Los Angleles and Chicago, and rebroadcasting them over the internet to its users, for $5 per month. Needless to say, ivi does not have the originating stations' permission to rebroadcast the programming.
In its defense, ivi argued that it fits within the statutory definition of a "cable system" under Section 111 of the 1976 Copyright Act, and thus is entitled "to perform plaintiffs’ programming" as long as it makes payments to the Copyright Office.
In her decision, Judge Buchwald concluded that ivi is not, in fact, a cable system.
"To place defendants’ argument in a real world context," Judge Buchwald wrote, "they assert that for the payment of approximately $100 a year to the Copyright Office (the payment for a Section 111 compulsory license) and without compliance with the strictures of the Communications Act or plaintiffs’ consent, that they are entitled to use and profit from the plaintiffs’ copyrighted works."
"ivi’s architecture bears no resemblance to the cable systems of the 1970s," the judge added. "Its service retransmits broadcast signals nationwide, rather than to specific local areas."
The internet video startup argued that it is not bound by FCC retransmission rules -- and thus not required to obtain retransmission consent -- because the FCC does not regulate the internet.
But Judge Buchwald wasn't buying that argument either. "No company or technology, which refuses to abide by the rules of the FCC has ever been deemed a cable system for purposes of the Copyright Act," the judge wrote.
For its part, ivi disputed that, arguing that it "has met with all the commissioner's offices of the FCC repeatedly and has received assurances that we are in full and complete compliance."
Therein lies a taste of the disconnect between copyright law and FCC regulatory policy.
To Weaver, ivi's founder, this battle represents yet another attempt by the legacy entertainment giants to stifle competitive threats based on new technology.
"We are a new form of distribution," Weaver told Wired.com. "And every new form of distribution has been challenged in the past. Be that cable, when they were sued, or satellite, when they were sued. And here we are, as the third."
"The judge has it wrong," Weaver added. "She is supposed to rule on copyright. And she is granting a preliminary injunction in a copyright case to make communications policy, which is something that the FCC needs to do."
Public Knowledge, a D.C.-based advocacy group that supports ivi, issued a statement expressing disappointment with the court's ruling and urging the FCC and Copyright Office to provide clarity, given the rapidly evolving nature of video on the internet.
“If competition to traditional cable service is to develop in the online distribution sector, then the FCC and Copyright Office are going to have to move quickly to update their rules to conform to the realities of new technology and consumer choice," said John Bergmayer, staff attorney for Public Knowledge.
In a defiant statement, Weaver said ivi will appeal.
"The oppressive big media networks must open their doors to innovators or they will inevitably fall," he said. "People want responsible choice, not the one-size-fits-all television offerings imposed by powerful media interests."
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