This holiday season should Locast, a little known non-profit TV streaming service, be put on consumers’ “nice” or “naughty” list? That depends on which commercial group you ask. The 4 major television networks brought a suit against the service alleging it violated copyright law by taking their streaming content and releasing it to consumers for free. The networks stood to lose as much as $10 billion in revenue from its pay-to-view subscription fees
In early December, Locast countersued ABC, NBC, CBS, and Fox, claiming that these networks had colluded in an effort to shut down its business. In the countersuit David Goodfriend, the attorney and legal professor who owns Locast and used to work at the Federal Communications Commission, detailed efforts by the major four to weaken their broadcast signal so consumers would need to use a streaming service such as Netflix or Hulu, or a powerful digital antenna.
Federal Laws on Broadcasting
Under Federal law, broadcast stations must provide their signals free to the public, making network programming easily available through the use of an antenna. Broadcasters won a provision in copyright law in the 1990s that required pay-TV providers to negotiate what are known as “retransmission-consent fees” to carry those signals.
The Lawsuit Against Locast
“We believe the broadcasters’ lawsuit was brought without basis as part of a larger plan to unlawfully limit the public’s right to access that free programming,” David Hosp, a lawyer for Locast, said in a statement. Locast argues that its service complies with copyright law because, as a nonprofit entity, it is allowed to act as a so-called signal booster for the broadcasters’ programming.
The broadcasters totally disagree with this viewpoint. “We trust the courts to see right through this facade and recognize Locast for what it is — not a public service organization, but a creature of certain pay-TV interests with an entirely commercial agenda,” said Gerson Zweifach, an attorney for the broadcasters.
According to The New York Times, Locast’s countersuit, filed in Federal District Court in Manhattan, is the legal response to the big networks’ big financial interests. In addition to denying their allegations, the nonprofit, led by Mr. Goodfriend, put a twist on the proceedings, arguing that the big broadcasters have “colluded” as part of an effort to undermine and shut down Locast by “threatening business retaliation” against any potential partners.
The Locast complaint cites YouTubeTV as one example of a company that got cold feet. YouTubeTV, which is owned by Google, sells a streaming service that replicates a cheap cable bundle. Included in the complaint, Google executives alerted Locast in April that the networks had warned the tech company not to allow YouTubeTV to provide access to Locast. If it did, according to the complaint, Google would be “punished by the big four broadcasters.”
The broadcasters — working together — could put pressure on Google (and other pay-TV operators) by refusing to sell rights to cable channels that are allied with the broadcast networks, the complaint suggests.
“This is classic copyright abuse,” the Locast countersuit details. The networks may just have purposely “misused copyrights to expand their market power beyond what those copyrights were intended to protect.”
Locast’s Increasing Popularity
Locast flies mostly under the radar, but it has gained popularity at a time when more consumers are watching television digitally. More than 700,000 users are signed up in 13 cities including Chicago, Los Angeles, New York, San Francisco, and Washington. Although Locast relies on donations from viewers, it accepts money from corporations and recently received $500,000 from AT&T, which also operates the DirecTV satellite service. When a fee dispute blacked out CBS for more than 6.5 million AT&T television subscribers for a few weeks this summer, AT&T encouraged its users to try Locast
Mr. Goodfriend started Locast partly as a thought experiment on the Aereo case, which he taught in a law lecture at Georgetown University. He wanted to show how the ruling might affect the public interest. In 2014, the Supreme Court put a similar non-profit signal boosting service Aereo out of business. Some claim Locast was set up strategically to operate at the very edge of what copyright law in this area will allow.
Meanwhile the owner of Locast positions himself as an advocate of the people, “I had to teach them that more often than not, it’s from huge stakeholders battling it out that change happens,” Mr. Goodfriend told The New York Times in January. “There should be something that challenges the broadcasters.”
For more information on this, contact an intellectual property lawyer, like an intellectual property lawyer in Naperville, IL.
Thanks to The Law Offices of Konrad Sherinian for their insight into the rules regarding copyright in television streaming services.