Unlicensed Public Internet Streaming Is a Legal Work in Progress

There’s been a recent swell of litigation asserting violations of the Federal Communications Act against commercial establishments that live-stream sporting events over the internet without paying a commercial licensing fee, but through an otherwise legal IPTV streaming service.

The FCA generally prohibits the unlawful reception and interception of cable signals via the Wire Piracy Statute and satellite signals via the Radio Piracy Statute. Although the Copyright Act already provides a claim against those who publicly display even a lawfully obtained creative work, it appears that owners of these programs are also pursuing FCA claims because they provide a possibility for damages that may be applied on top of their existing copyright claims.

The case law resulting from these FCA claims has raised two questions. Do the piracy statutes apply to the unlicensed but otherwise lawful internet streaming of television programs in a commercial establishment? If so, how will courts calculate damages?

Applicability to Internet Streaming

No court of appeals has addressed the statutes’ application to this type of internet streaming, nor have district courts adopted a uniform approach to the issue.

Some courts have held that the internet is neither a cable nor a radio communication as defined by the FCA, so internet streaming necessarily falls outside of the statutes’ purview.

For example, in G & G Closed Cir. Events, LLC v. Olson, the US District Court for the Southern District of California found that the piracy statutes “were intended to prevent pirate interception of radio, satellite, and cable signals” rather than internet signals. On the opposite end of the spectrum are courts holding that internet signals may themselves be cable or satellite signals, in which case the statutes directly apply.

Other courts take a third approach, holding that even if internet signals aren’t radio or cable signals per se, the statutes cover the receipt of all signals that were at some point radio or cable signals, which is virtually always the case with IPTV transmissions.

Calculation of Damages

Assuming the piracy statutes do apply to internet streaming, the question of how to calculate damages remains.

The Wire Piracy Statute permits a plaintiff to recover either actual damages—as well as the profits of the violator that resulted from the violation—or up to $10,000 in statutory damages “as the court considers just.”

If the plaintiff proves the defendant’s conduct was willful and for commercial advantage or personal gain, the court may award up to $50,000 enhanced damages on top of either actual or statutory damages.

The Radio Piracy Statute provides a similar damages mechanism, although it permits a maximum award of $100,000 for both statutory and enhanced damages. However, if the violator had no reason to know that the conduct was wrongful, the court may limit the award to as little as $250 under the Radio Piracy Statute or $100 under the Wire Piracy Statute.

Because a commercial licensing fee is often less than $1,000, plaintiffs routinely seek statutory damages rather than actual damages. Courts have taken varying approaches in calculating statutory damages. Some essentially calculate statutory damages the same as they would actual damages. Others treat statutory damages more like enhanced damages and consider factors such as the defendant’s willfulness and the deterrent effect of the statutory damages.

Courts that award enhanced damages usually award no more than three times the statutory damages. Moreover, total damages exceeding $15,000 tend to be reserved for scenarios in which an actual theft occurred, such as using a decoder to illegally access the program.

Impact

Given the divergence in determining the piracy statutes’ applicability to a commercial establishment’s unlicensed but otherwise lawful internet streaming of a television program, a plaintiff’s success in asserting this type of claim likely will be district-dependent until an appellate court intervenes.

Even after appellate intervention, however, the different approaches to awarding damages likely will continue given the wide discretion the statutes afford district courts in assessing damages.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Marko R. Zoretic is a partner at Knobbe Martens. He has handled cases involving patent, trademark, trade dress, copyright, trade secret, unfair competition, and breach of contract matters.

Adam G. Copeland is an associate at Knobbe Martens.

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