Internet streams of over-the-air broadcasts illegal, says judge

"Barely restrained incredulity" is not often a feature of judicial decisions, but today's ruling against Internet rebroadcaster ivi features a judge who isn't buying anything the company's lawyers are selling.

ivi's business model consists of grabbing over-the-air TV signals from stations broadcasting in New York, Seattle, Los Angeles, and Chicago, then blasting those signals through the Internet to reach ivi's paying customers anywhere in the country. And did we mention that ivi had no permission from broadcasters for any of this?

We're a cable company!

It might sound blatantly illegal, but ivi relied on an old compulsory license that Congress had created decades ago to help the cable industry get started. It insisted it was acting legally. (Indeed, the company even attacked rival FilmOn, telling Ars that it "welcomes the opportunity to distinguish itself from a 'bad actor' who was not operating in good faith by blatantly violating copyright law.")

ivi was promptly sued in late 2010 by a huge list of broadcasters, and the judge in the case today came down on their side; ivi is now under a preliminary injunction and must stop the retransmissions.

"To place defendants’ argument in a real world context," wrote Judge Naomi Buchwald, "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."

But the judge ruled that ivi was not a cable operator and that "absent defendants’ skewed interpretation of the statutory text and administrative record, there is absolutely no basis for holding otherwise."

"ivi’s architecture bears no resemblance to the cable systems of the 1970s," she continued. "Its service retransmits broadcast signals nationwide, rather than to specific local areas. Finally, unlike cable systems of the 1970s, ivi refuses to comply with the rules and regulations of the FCC… An opposite finding in this case would surely 'threaten considerable mischief.'"

Broadcasters objected to having content retransmitted without consent, they didn't like ivi's practice of making local stations (and their ads) available nationally, and they worried that ivi's transmissions might be viewable outside the US.

ivi insists that it is no different from AT&T's IPTV service U-Verse and that it encrypts the broadcasts and makes them available only to paying, US-based customers.

According to the judge, none of that matters, since ivi has been transmitting signals without consent and does not qualify for the Section 111 statutory license.

Public Knowledge attorney John Bergmayer lamented the ruling. "We are disappointed that Judge Buchwald chose to shut down ivi at all, much less so early in the legal process. Her decision showed clearly the ambiguities in current law and regulation which online video providers like ivi face. If competition to traditional cable service is to develop in the online distribution sector, then the Federal Communications Commission (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."