Another CBS Intellectual Property Victory

Just Friday we wrote about CBS’s continual, successful monetizing of their long tail, their archived properties, at once spirit-lifting to IP managers and valuators alike. There’s more to the story, as we spotlight how IP management strategies must be multi-pronged and coordinated.  At one end of the spectrum is the licensing of copyrighted materials long in the vault. In order for the long tail to have value, CBS needed to have invested in protection of that value. The other end of the spectrum requires CBS (and others in similar situations) to vigorously defend their IPRs.  Last week we were treated to the opportunity to watch both ends at the same time, in public forums, as U.S. District Court Judge Naomi Buchwald, of the Southern District of New York, shut down the real-time streaming service of ivi (Full Text).

ivi was charging as low as $4.99  a month for streaming TV programs over the Internet. Essentially, they would grab in-the-public-airways, live signals from stations broadcasting in major cities in the U.S. and would rebroadcast those signals through the Internet to all who subscribed and who downloaded the ivi player, all without the consent of the copyright holders. In late 2010, content owners sued.  Plaintiffs in the case were:

WPIX, Inc.

WNET.ORG

AMERICAN BROADCASTING COMPANIES, INC.

DISNEY ENTERPRISES, INC.

CBS BROADCASTING INC.

CBS STUDIOS INC.

THE CW TELEVISION STATIONS INC.

NBC UNIVERSAL, INC.

NBC STUDIOS, INC.

UNIVERSAL NETWORK TELEVISION, LLC

TELEMUNDO NETWORK GROUP LLC

NBC TELEMUNDO LICENSE COMPANY

OFFICE OF THE COMMISSIONER OF BASEBALL

MLB ADVANCED MEDIA, L.P.

COX MEDIA GROUP, INC.

FISHER BROADCASTING-SEATTLE TV, L.L.C.

TWENTIETH CENTURY FOX FILM CORPORATION

FOX TELEVISION STATIONS, INC.

TRIBUNE TELEVISION HOLDINGS, INC.

TRIBUNE TELEVISION NORTHWEST, INC.

UNIVISION TELEVISION GROUP, INC.

THE UNIVISION NETWORK LIMITED PARTNERSHIP

TELEFUTURA NETWORK

WGBJ EDUCATIONAL FOUNDATION

THIRTEEN

And PUBLIC BROADCASTING SERVICE

 ivi’s argument?  We are a cable company, endowed with special rights created by Congress under Section 111(c)(1) of the Copyright Act, and entitled to a compulsory license.

Here’s where it gets good: 1) royalties are mentioned in the statute, and ivi feels the $100 annual payment to Copyright Clearance Center satisfies that; 2) as a cable company, ivi would be regulated by the FCC … but they aren’t … and here is how they explain that:

“…they claim that its transmissions are 'permissible' under these rules because they occur over the Internet, which the FCC does not regulate. In other words, defendants argue that ivi is a cable system for purposes of the Copyright Act, and thus may take advantage of the compulsory license, but that it is not a cable system for purposes of the Communications Act, and thus it need not comply with the requirements of that Act and the rules of the FCC promulgated thereunder.”

Though the decision is 59 pages long, it is fun to extract some of the judge’s comments that reflect her opinion of the arguments put forth by ivi.  In no particular order:

“… assertions are erroneous.  “

“…cannot be taken seriously…”

“…unrealistic… it is even less supportable…”

“Furthermore, defendants distort the history of administrative activity.”

“…defendants’ position misstates applicable law.”

And speaking of value, every analyst worth his or her salt knows the value of recurring revenues. Here’s how ivi is trying to protect its subscription revenue…

“A notice to all ivi TV subscribers and interested parties.

As you may be aware we have been in a fight to provide affordable Cable TV for the Internet.

On February 22nd, 2011 the Southern District Court of New York granted a preliminary injunction in the case 1:10-cv-07415-NRB. We will be appealing the decision in the second circuit but in the interim we must shut-down most of our broadcast channel offerings.

We believe the court made an error in the ruling and will be appealing the decision supported by many public interest groups. But we cannot do it alone. In return, we ask that you support them. If you can, visit Public Knowledge and/or EFF to leave a donation.

In the interim we are suspending invoicing for ivi Air and ivi Pro, so it is not necessary to cancel subscriptions. As soon as we can restore the channels we will resume the subscriptions from that point forward.

We will continue to carry a number of channels and will be adding channels from broadcasters and content providers as we grow.

Thank you for your support, The ivi TV team”

Now replacing a TV Guide-type listing of what was once live CBS programming is this:

WCBS 2 (CBS)    9:00 AM        9:30 AM        10:00 AM        10:30 AM

                                   Please visit www.ivi.tv for an important message …