FilmOn Will Survive Regardless of Aereo Case Outcome, CEO Vows

Free-to-air TV is “really irrelevant to us from a business standpoint, but from the point of view of being a vanguard of the IPTV business it’s important,” said David. The “ramifications from the point of view of what it means to the old Nielsen scam” are “huge,” he said. “The major broadcasters and the major channels rely on” the Nielsen ratings system to fund their businesses via advertising, and “that’s what’s going to get challenged ultimately by transparent analytics” such as those provided by his company, he said.

FilmOn plans to file a motion with the Supreme Court to “intervene” in the Aereo case, said Ryan Baker, an attorney with law firm Baker Marquart that’s representing FilmOn, told us Wednesday. FilmOn would like to argue the case in the Supreme Court “alongside” Aereo and “have its case sort of heard” during the same proceeding because it will be affected by the outcome in the Aereo case, he said. If that request is turned down, FilmOn may file an amicus brief “in support of FilmOn’s position” in the case and the technology at issue, he said. That brief “would not explicitly support Aereo,” he said. FilmOn’s “position on copyright is different” from Aereo’s, “and in fact our technology is considerably more evolved in how it deals with access to our antenna arrays, therefore we expect the Court to treat us separately,” David said by email Wednesday.

FilmOn sees the dispute with broadcasters as more than just interpreting one sentence in the Transmit Clause of the Copyright Act, as panelists at the meeting had suggested, David said in the Skype transmission Tuesday. “Broadcasters get their license to be broadcasters and to have the spectrum that they have on the basis that they offer a free public service,” he said. “The facts have been obscured” by the broadcasters, he said.

Some judges also seem to “already have their minds made up” about new technologies like FilmOn’s and Aereo’s “before going into the courtroom,” David said, singling out comments made by 2nd Circuit Judge Denny Chin in his dissenting opinion in the Aereo case. FilmOn’s technology is “legal” and “not a loophole” to the Transmit Clause, he said. David is open to sitting down to talk with broadcasters about negotiating a fair licensing deal, but will accept “only what is fair,” he said. “You cannot steal something that is given away for free,” and it is “absolutely necessary that free-to-air television is made available” to all consumers, he said.

FilmOn, Aereo Customers Different

FilmOn and Aereo “probably serve different customers,” because FilmOn customers tend to be males 18-40 years old, while the average age of the network TV audience is “50-plus,” said David. FilmOn will be “rolling out a new technology within the next week” that he said “sits on top” of its “micro antenna technology which will give independent broadcasters a whole new world of distribution” globally “based on what we're doing,” he said. More details will be revealed in a coming announcement, he said.

Panelists at the New York meeting debating the battle for over-the-air TV retransmissions expressed some surprise that the Supreme Court granted cert on broadcasters’ appeal of their case seeking a preliminary injunction against Aereo. “There are big implications” in the case, said Barry Werbin of New York law firm Herrick Feinstein, who specializes in intellectual property and Internet issues.

It was also “pretty unusual” that Aereo filed a brief that was essentially in favor of the broadcasters’ petition to the Supreme Court, said Werbin. But clearly Aereo wanted to put an end to the long court battle with broadcasters and “have some finality one way or another,” despite the “risk,” he said. Though the broadcasters’ petition asked the court to overturn a 2nd Circuit decision that was in Aereo’s favor, Aereo had also asked for cert to be granted, and Aereo CEO Chet Kanojia said he welcomed the chance to bring the case before the justices.

The Aereo and FilmOn cases “really boil down to trying to decipher Congress’s intent behind really very few words” that were used in the Transmit Clause, said Werbin. He asked panelists whether Congress may have “missed the boat” when it enacted the amended 1976 Copyright Act or if Congress just didn’t have the “possible foresight to see where” things would stand now with tech and the Internet.

"I don’t think it’s fair to say” that Congress “missed the boat,” said Matthew Schruers, vice president-law and policy at the Computer and Communications Industry Association, which has members including Aereo. “Clearly, Congress intended a broad construction of technologies to be covered,” but it “didn’t really anticipate what the words it was using were going to mean,” he said. Most of the Copyright Act was written in the 1960s, when the word “perform” had a “very different meaning” than it does now with the widespread use of cloud-related services, he said. Congress “really didn’t appreciate” in 1976 “what it would mean that we could perform works privately” via the use of online services, he said. The Aereo court battle “isn’t really a case about Aereo; it’s a case about what it means to perform something,” he said. If playing content via a DVR does not represent a performance to the public, “then adding an antenna onto that DVR does not make what was previously a private performance now a public performance,” he said. CCIA filed an amicus brief on Aereo’s behalf in the company’s battle against broadcasters.

Despite what seems to be “relatively straightforward language, we have a pretty huge variety of opinions” on what the Transmit Clause covers, said a lawyer and consultant for new-entrant and established media, Howard Homonoff. “It really does depend so much on where you sit” in how one views the Aereo dispute, said Homonoff, managing director of Homonoff Media Group. What seems to be the big difference among Cablevision, Aereo and FilmOn is the notion of Cablevision “operating subject to a license,” he said. In the 2008 Cablevision decision, the 2nd Circuit ruled individual digital recordings of broadcast content were private rather than public performances, and therefore not subject to copyright law.

If Cablevision didn’t have a license, the 2nd Circuit “would not have decided the same way” in that case, said Mary Ann Zimmer, a New York attorney who has represented broadcasters in court disputes. The Cablevision decision clearly recognized that Cablevision’s “license,” even if that concept was just “implicit,” was a key issue because the word “subscribers,” not “viewers,” was used in that decision to describe people accessing the content, she said. Disagreeing with the other panelists, she said Congress “clearly … had a definitional framework for what performance meant and a definitional framework for what transmission meant, and if it was the same thing they would have said so.”

Aereo Issue Called Narrow

The Supreme Court will be ruling on a “very narrow issue” in the Aereo case, said Zimmer. The broadcasters, in their petition for cert, are seeking only a determination that the 2nd Circuit “erred” in its interpretation of the Transmit Clause, she said. The broadcasters didn’t ask the court to overturn Cablevision or interpret how the Transmit Clause applies to remote-storage DVRs, she said. But “theoretically” the Supreme Court could opt to overturn Cablevision, she said.

It’s “very unlikely” Congress will take up these issues anytime soon, regardless of how the Supreme Court decides in the Aereo case, said Homonoff. “They couldn’t do anything about gun control after Newtown, so the notion that they're going to step in and fix” the Supreme Court decision on Aereo, “either way,” is unlikely, he said.

The ultimate goal should be to create a “system where the creator is incentivized, in whatever the medium may be, to create” works of art and “make them available” in the “stream of commerce without fear that you will then not be able to do it again or that you will not realize the benefits” of it, said Homonoff. “That, to me, is the starting point” for creating a policy that is in the public’s interest, he said. Zimmer agreed.

"One of the big public policy issues” inherent in the Aereo case and the “entire battle over retransmission consent” is also whether broadcasters are “misusing” the spectrum when they deny the public certain TV stations, said Homonoff. He pointed to the battles in recent years between networks and TV stations, including CBS versus Time Warner Cable, that resulted in many cable subscribers not getting access to some stations. “On the other hand,” Congress granted broadcasters the right of retransmission consent as a provision of the 1992 Cable Act, he said.

Panelists also pointed to some industry fears about the growing number of cord-cutters. Each year the number of students who don’t subscribe to cable TV is growing, said Schruers. “Sports is the only thing that’s really keeping people” subscribers now, he said. But there’s still a “huge amount of consumption” of linear TV content, said Homonoff, citing the huge viewership of last week’s Grammy Awards. Although many young people aren’t watching TV traditionally anymore, many of them are still viewing that content on alternative devices, he said, noting the many young people who are using their parents’ subscription passwords to access HBO Go. Zimmer predicted that many of the young people without pay-TV subscriptions today will get one when they start making more money.