CBS Broadcasting Inc. v. FilmOn.com, Inc.

814 F.3d 91, 64 Communications Reg. (P&F) 253, 117 U.S.P.Q. 2d (BNA) 1685, 44 Media L. Rep. (BNA) 1347, 2016 U.S. App. LEXIS 2609, 2016 WL 611903
CourtCourt of Appeals for the Second Circuit
DecidedFebruary 16, 2016
Docket14-3123-cv
StatusPublished
Cited by80 cases

This text of 814 F.3d 91 (CBS Broadcasting Inc. v. FilmOn.com, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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CBS Broadcasting Inc. v. FilmOn.com, Inc., 814 F.3d 91, 64 Communications Reg. (P&F) 253, 117 U.S.P.Q. 2d (BNA) 1685, 44 Media L. Rep. (BNA) 1347, 2016 U.S. App. LEXIS 2609, 2016 WL 611903 (2d Cir. 2016).

Opinion

HALL, Circuit Judge:

FilmOn.com, Inc. (“FilmOn”) and Fil-mOn’s Chief Executive Officer, Alkiviades David (“David”), appeal from an August 15, 2014 judgment entered in the United States District Court for the Southern District of New York (Buchwald, J.) pursuant to a decision holding FilmOn and David in contempt of an August 8, 2012 Consent Order of Judgment and Permanent Injunction (the “Injunction”). The Injunction prohibited FilmOn from distributing copyrighted content owned by Plaintiffs-Appel-lees (collectively, the “Plaintiffs”) — a group of television networks including CBS Broadcasting Inc., NBC Studios LLC, Fox Television Stations, Inc., and ABC Holding Company Inc. On July 7, 2014, the district court ordered FilmOn and David to show cause why the district court should not hold FilmOn in contempt for violating the Injunction because FilmOn had used its Teleporter technology (“Teleporter System”) to distribute the Plaintiffs’ copyrighted television programs without the Plaintiffs’ permission. The district court found that FilmOn had violated the Injunction and held both FilmOn and David in civil contempt, sanctioned FilmOn $90,000, and awarded the Plaintiffs attorneys’ fees. On appeal, FilmOn and David argue that the district court abused its discretion when it held them in contempt, sanctioned FilmOn, and awarded the Plaintiffs attor *96 neys’ fees. For the reasons stated below, we affirm the district court’s decision.

I. BACKGROUND

In 2010, FilmOn launched a service that allowed subscribers to use a computer or mobile device to stream an assortment of television stations over the Internet. The Plaintiffs sued FilmOn for copyright infringement and sought a temporary restraining order. In response, FilmOn argued that it was operating as a cable system and therefore it qualified for a Section 111 compulsory license under the Copyright Act, 17 U.S.C. § 111. 1 The district court granted the temporary restraining order, and in July 2012 the parties entered into a settlement agreement (the “2012 Settlement Agreement”) which was executed by David in his personal capacity and on behalf of FilmOn. The district court approved the 2012 Settlement Agreement and then entered it as a stipulated consent judgment and the Injunction.

The Injunction prevents FilmOn and its “affiliated companies, and all of its officers, directors, agents ... from infringing, by any means, directly or indirectly, any of 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.” App. 175. The injunction explicitly provides that any violation of its provisions would expose FilmOn to “all applicable penalties, including contempt of Court.” Id.

After consenting to the Injunction, Fil-mOn began offering its subscribers a video on demand (VOD) service which allowed users to access an archive of previously televised programs for streaming at any time. In July 2013, the Plaintiffs sought an order to show cause why FilmOn should not be held in contempt for violating the Injunction. The district court found Fil-mOn and David in contempt for the unauthorized VOD streaming of the Plaintiffs’ programming. The district court issued a contempt judgment (“2013 Contempt Judgment”) that required defendants to agree not to use the VOD system to stream any of the Plaintiffs’ copyrighted programming and to remove all broadcast programming identified by the Plaintiffs. In addition, the 2013 Contempt Judgment awarded the networks $115,046.10 in attorneys’ fees and provided that “any further failure to comply with the Injunction [] shall be punishable by a penalty of $10,000 per day of noncompliance.” App. 269.

After the 2013 Contempt Judgment was entered, FilmOn X 2 — FilmOn’s sister company — deployed a new Teleporter technology which FilmOn alleges was specifically designed to comply with the Injunction and this Circuit’s decision in Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir.2008) (“Cablevision”) while still providing copyrighted content to users. In Cablevision we held that a remote storage DVR system allowing users to record *97 and store programming on hard drives did not violate the public performance rights of copyright owners. Id. at 140. FilmOn’s Teleporter System leveraged this remote storage DVR technology to allow consumers to view' television content over the Internet at essentially the same time that the content was being broadcast over the airwaves.

Other companies began using similar technology in an attempt to comply with the law and to deliver copyrighted content to users over the Internet. The television networks challenged the use of this technology — this time by suing the company Aereo, Inc. — and this Court determined that the technology did not infringe upon the networks’ copyrights because the technology was analogous to the technology in Cablevision. WNET, Thirteen v. Aereo, Inc., 712 F.3d 676, 696 (2d Cir.2013) (“Aereo II”). Because FilmOn’s Teleporter System is essentially the same as Aereo’s technology, this decision arguably made clear that FilmOn could deploy its Tele-porter System to distribute copyrighted material throughout the geographic scope of the Second Circuit.

In an attempt to prevent FilmOn from deploying this technology nationwide, the Plaintiffs filed copyright infringement actions in California and in the District of Columbia. The California District Court enjoined FilmOn from using the Teleporter technology within the Ninth Circuit, Fox Television Stations, Inc. v. Barry-Driller Content Sys., PLC, 915 F.Supp.2d 1138, 1151 (C.D.Cal.2012), and on September 5, 2013, the D.C. District Court issued another injunction enjoining FilmOn from deploying the Teleporter technology nationwide, Fox Television Stations, Inc. v. FilmOn X LLC, 966 F.Supp.2d 30, 52 (D.D.C.2013). Due to our decision in Aereo II, the D.C. District Court’s nationwide injunction explicitly did not apply within the geographic boundaries of the Second Circuit. Id. After deployment of the Tele-porter System within the First Circuit, the D.C. District Court held FilmOn in contempt for violating its order. The D.C. District Court warned that it would impose a fine of $20,000 per day for any further violations of the injunction, noting that Fil-mOn had once violated the underlying Injunction in this case. The D.C. Court’s contempt order was never appealed.

On June 25, 2014, the Supreme Court, in American Broadcasting Companies, Inc., v. Aereo, Inc., reversed this Court’s decision that had arguably demarcated the Second Circuit as a safe haven for using the Teleporter technology. — U.S. -, 134 S.Ct. 2498, 189 L.Ed.2d 476 (2014) (“Aereo III ”).

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814 F.3d 91, 64 Communications Reg. (P&F) 253, 117 U.S.P.Q. 2d (BNA) 1685, 44 Media L. Rep. (BNA) 1347, 2016 U.S. App. LEXIS 2609, 2016 WL 611903, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cbs-broadcasting-inc-v-filmoncom-inc-ca2-2016.