By Zoe Tillman, From The National Law Journal

Broadcasters defeat FilmOn X in follow-up litigation to Supreme Court’s Aereo ruling.

Federal district judges in Los Angeles and Washington have split on whether online television-streaming provider FilmOn X LLC is entitled to a cable license, setting the stage for appellate judges to again consider the legality of the service.

U.S. District Judge Rosemary Collyer in Washington, whose ruling was published Wednesday, concluded that FilmOn, which relies on the Internet to transmit network broadcasts, wasn’t a “cable system” as envisioned under federal law. Her opinion, dated Nov. 12, was released this week after the lawyers agreed how much information should stay under seal.

Collyer reached the opposite conclusion as a California federal district judge did in July. U.S. District Judge George Wu in Los Angeles found that FilmOn was entitled to a license under the federal Copyright Act. The television networks have appealed Wu’s decision to the U.S. Court of Appeals for the Ninth Circuit.

FilmOn attorney Ryan Baker of Baker Marquart in Los Angeles and FilmOn founder Alki David did not immediately return a request for comment.

FilmOn’s business model took a hit when the U.S. Supreme Court concluded in June 2014 that former FilmOn competitor Aereo Inc.—and, by extension, FilmOn—violated the networks’ exclusive right to “publicly perform” the TV programs. Aereo declared bankruptcy in the aftermath of the high court’s decision, but FilmOn pressed on.

Drawing on the Supreme Court’s comparison of Aereo to early versions of cable providers, FilmOn argued that it should be granted the same license as other cable systems under the Copyright Act. FilmOn’s lawyers pursued that argument in California and Washington.

At a hearing in October 2014, Baker told Collyer that he had asked the networks if they were willing to put the D.C. litigation on hold in order to focus on the California case, since they were raising the same arguments in both courts. Collyer said at the time that she wouldn’t halt the case in her courtroom, noting—correctly, as it turned out—that she might reach a different conclusion than the California judge.

Collyer in her opinion this month pointed out that FilmOn in the past had denied that it was a cable system in order to argue that it wasn’t violating copyright laws by using miniature antennae to transmit shows to subscribers.

After the Supreme Court’s Aereo decision, FilmOn changed its business model to try to comply with the Copyright Act’s requirements for cable systems. The law made cable systems eligible for licenses if they delivered broadcast retransmissions through “wires, cables, microwave, or other communications channels.” Collyer found that the Internet did not fall into those categories.

“The court concludes that a system that operates through nebulous international connections in cyberspace does not constitute a ‘channel’ similar to ‘wires, cables [or] microwave,’ ” Collyer wrote.

Arnold & Porter represents NBC Studios, American Broadcasting Companies Inc., CBS Broadcasting Inc. and a group of other networks that sued FilmOn. Jenner & Block separately represents Fox Broadcasting Co. and related entities. Lawyers at Arnold & Porter and Jenner & Block were not immediately reached for comment.

“We’re gratified that the court confirmed that rogue services like FilmOn who retransmit copyrighted material over the Internet cannot find a loophole in statutes that were clearly designed to exclusively address local cable television services,” Fox said in a statement. “We look forward to the trial on damages for FilmOn’s infringement.”

A wall of TV’s. ivansmuk/iStock

For more on this story go to: http://www.nationallawjournal.com/id=1202743904233/Online-TV-Streaming-Service-Loses-Latest-Court-Fight-with-Networks#ixzz3tIvshfCZ