By Jennifer Martinez - 08/28/12 08:19 PM EDT
Ivi livestreamed copyrighted TV programs over the Web on its so-called TV player for a monthly subscription fee of $4.99. Subscribers could record, pause, fast forward and rewind ivi's streams for an additional 99 cents each month.
According to the Copyright Act, cable systems are allowed to retransmit signals of copyrighted TV programming to subscribers, but for a royalty fee.
The Second Circuit Court of Appeals noted that the Copyright Office had previously decided that Internet retransmission services are not cable systems and therefore not eligible for a compulsory license, which lets cable systems skip negotiating individual programming licenses with copyright owners. Congress had also not intended for compulsory licenses to be extended to Internet retransmission services like ivi, the court said.
Without an injunction against ivi's service, "the quantity and quality of efforts put into creating television programming, retransmission and advertising revenues, distribution models and schedules — all would be adversely affected," the panel of appeals court judges argued. "These harms would extend to other copyright holders of television programming."
Ivi's service would let some subscribers watch TV programs before they played live on their local broadcast stations, which the judges said would undercut the value of the copyright owners' programming and undermine "existing and prospective retransmission fees, negotiations, and agreements."
The National Association of Broadcasters lauded the federal appeals court's decision to uphold the injunction.
"This confirms that Congress never intended to allow Internet providers to retransmit broadcast programming without the consent of copyright owners," said Dennis Wharton, spokesman for the National Association of Broadcasters.
But ivi may have some fight left in it. A spokesman for ivi told Bloomberg the decision "is not the final chapter to this story."