Practical Impact of D.C. Circuit's Ruling on Foreign Broadcasters and Copyright Liability

In addition to licensing content, TV Polska made its programming publicly available through a video-on-demand feature. In order to allow Spanski to maintain its exclusivity in North and South America, TV Polska used geoblocking technology in connection with the content that TV Polska made available from its own website. This technology allows a website owner to embed restrictions into its uploaded content that prevent access by devices from the unauthorized jurisdictions. When TV Polska employed this technology, if the IP address of a device indicated that the device was trying to access TV Polska's website from an unauthorized jurisdiction, the device would be prevented from gaining access to the content.

In 2011, Spanski learned that, in violation of its agreement with TV Polska, 51 episodes of content for which it was the exclusive licensee were not geoblocked in the United States and accessible through TV Polska's website.

Spanksi had registered the copyright in each of these episodes and brought suit. The trial court held that TV Polska had taken action to remove the geoblocking technology.

Infringement in U.S.

On appeal, the D.C. Circuit first addressed the issue of why the Copyright Act is applicable to Internet broadcasting companies, beginning with the principle that the Copyright Act gives a copyright holder the exclusive right to perform its copyrighted work publicly in 17 U.S.C. §106(4). By statute, the definition of performance in §101 includes the showing of images in any sequence or making the sounds to accompany the images audible, and includes the transmission of a performance or display of the work by any device or process.

In the seminal case American Broadcasting Cos. v. Aereo, 134 S.Ct. 2498 (2014), the U.S. Supreme Court held that a service that at a user's request would direct an automated antenna to capture broadcast television signals and retransmit them over the Internet to a user's computer constituted transmission of a public performance. In Spanski, the D.C. Circuit held that TV Polska's on-demand video site was an easier case than Aereo because unlike in Aereo, in which an automated antenna system indiscriminately retransmitted third-party content, TV Polska's system operator purposely selected and uploaded the content. Additionally, the Spanski court of appeals relied upon the district court's finding that TV Polska deliberately removed its geoblocking elements from the 51 episodes at issue, was aware of Spanski's exclusive right to broadcast those episodes in the United States, and took after-the-fact steps to hide its conduct. The D.C. Circuit also emphasized analysis from Aero that concluded that a viewer's decision to access an infringing television program would not relieve the broadcaster of liability.

In discussing the liability, the D.C. Circuit took the opportunity to call out other entities, noting that YouTube and Facebook also have the capacity to show content that infringes the rights of copyright holders. Additionally, the D.C. Circuit specifically mentioned that Internet services providers (ISPs) Comcast and AT&T have a hand in communicating infringing performances. Further, the appeals court asked rhetorically whether Twitter commits infringement when its users impermissibly post copyrighted images or whether T-Mobile commits infringement when it allows its customers to access posts. However, in contrast to TV Polska's situation, the D.C. Circuit noted that those other companies have the potential to escape liability as ISPs that do not engage in volitional conduct. Part of the standards for avoidance of liability, which was not available to TV Polska, is codified in the Digital Millennium Copyright Act's safe harbor provisions, 17 U.S.C. §512.

Thus, TV Polska, by virtue of its actions of maintaining a video-on-demand system and communicating infringing performances, transmitted and thus publicly performed copyrighted works that exposed it to copyright liability.

After concluding that TV Polska's acts qualified as public performances, the D.C. Circuit asked whether holding TV Polska liable would violate an impermissible extraterritorial limitation of the Copyright Act because TV Polska's performance originated abroad. Employing a two-step framework adopted by the U.S. Supreme Court in RJR Nabisco v. European Community, 136 S.Ct. 2090 (2016), the D.C. Circuit asked: 1) whether the Copyright Act gives a clear, affirmative indication that it applies extraterritorially; and 2) whether the case, notwithstanding its extraterritorial elements involves a permissible domestic application.

The parties and the Spanski court agreed that the Copyright Act does not have an affirmative indication that it is to be applied extraterritorially, and consequently, focused on the second issue. Considering this, the D.C. Circuit asked whether conduct relevant to the statute's focus occurred in the United States or abroad. In defining the focus of the Copyright Act, the Spanski court noted the statute's explicit right to perform a work publicly and that this right is, also by statute, effectuated by allowing suits for infringement.

With this framework, the appeals court acknowledged that TV Polska uploaded and formatted the works at issue in Poland. However, the court emphasized that the infringing performances and the consequent violations of Spanski's copyrights occurred in the United States on the computer screens on which the episodes were shown. Accordingly, the Spanski court concluded that the conduct relevant to the statute's focus occurred in the United States and therefore the case involved a permissible domestic application of the Copyright Act.

TV Polska had tried to convince the court that this application of the Copyright Act was not proper when there is an international transmission and that instead one should view the process as containing two performances of the work — one by the broadcaster and one by the viewer. However, the D.C. Circuit found this interpretation to be problematic because it would inevitably lead to the conclusion that there would be liability for the broadcaster even if the broadcaster transmitted into a void, regardless of whether the images were ever shown. But the court concluded that there is one performance, and both the broadcaster and the viewer can liable for that same performance.

Mindful of the implications of its holding, the appeals court underscored that it made sense from a policy perspective. The court emphasized that were domestic copyright holders not allowed to enforce their rights against these foreign broadcasters who direct infringing performances, the door would be open to widespread infringement rending copyright rights in works that are capable of being transmitted on-line, largely “nugatory.”

Finally, the Spanski court took note that unlike the case before it, there might be other circumstances in which foreign actors innocently post materials that are downloaded in the United States. Although these actors might not escape liability due to their geolocation, they might have additional defenses such as a lack of proximate cause.

Conclusion

Spanski is the first federal appellate decision to hold that when a foreign broadcaster uploads copyrighted content to its website and at a user's request directs that content onto a computer screen in the United States, the broadcaster commits an actionable domestic violation of the Copyright Act. This case should send a clear message to foreign broadcasters to adopt and implement effective geoblocking technologies.

For the U.S. copyright holder, the case should cause it to revisit its policy for enforcing its rights against these foreign broadcasters. Of course, enforcement will still involve many of the procedural challenges that accompany pursuing a foreign transgressor. However, one can expect that under Spanksi, courts will carefully scrutinize accused infringers' claims that there is a lack of jurisdiction. Perhaps even more importantly, courts may be more ready to infer the likelihood of success in a claim against these types of accused infringers, and therefore, more readily consider injunctive relief.

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Scott D. Locke is a partner at the national law firm Dorf & Nelson, where he chairs the intellectual property practice group. Laura-Michelle Horgan is a senior litigation associate at the firm.