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Networks Fight Online TV Upstart in 9th Circuit

PASADENA, Calif. (CN) — An online streaming platform that wants to offer network television content to its subscribers returned to the Ninth Circuit on Thursday to square off against broadcasters that say the service infringes their copyrights.

In a case closely watched by the film and television industry, the major broadcast networks FOX, ABC, NBC and CBS have now entered the fourth year of a legal wrangle with billionaire Alki David's FilmOn TV.

Last year, U.S. District Judge George Wu issued a decision that confounded the networks when he ruled that FilmOn X, a subscription service that allowed users to watch television programming on their personal devices, is a "cable system" and could potentially get a compulsory license to retransmit the networks' contents.

FilmOn X is a separate entity to FilmOn TV, according to a spokesman for the service's law firm Baker Marquart.

Wu's ruling conceded that "legal issues are close and of significant commercial importance, both to these parties and others," and allowed an immediate appeal to the Ninth Circuit.

At the Thursday morning hearing at the Richard H. Chambers courthouse, the broadcasters' attorney Neal Katyal urged the court to reverse Judge Wu and argued that FilmOn X could not by definition call itself a cable system under the Copyright Act of 1976.

A compulsory license under a section of the law that determines limitations on rights to rebroadcast programming allows cable providers to air network content if the provider pays statutory fees to the Copyright Office, Katyal noted in a brief.

But Katyal told the panel that because FilmOn X is an internet-based transmission service it is turning a "mouse hole into an elephant" to try a get around the section's limitations.

"It's not an open-ended invitation to do anything," the attorney told the panel.

FilmOn X attorney Ryan Baker insisted that the court should affirm, arguing that the statute had been created with the flexibility in mind.

"Today we have new technologies that have developed over time. One of those technologies is the internet," Baker told the panel.

Baker said outside the courtroom that a ruling in the broadcasters' favor would stymie innovation and new technology.

Once upon a time, "disruptive technology" used to include cable companies which had been "built on the back" of the statute, he said.

"Now we have a new upstart, a new disruptive technology that's being used by FilmOn X. So for the court to pull the ladder and deny the access to provide consumers with something they're entitled to watch — which is broadcast television — is to intentionally deprive the statute of its intended meaning," Baker said.

Katyal declined to comment after the hearing.

In 2014, the U.S. Supreme Court ruled 6 to 3 against the platform Aereo, which allowed subscribers to watch live TV on their phones, computers and tablets using a mini-antenna technology.

The Supreme Court ruling was the death knell for Aereo's business, and it filed for Chapter 11 bankruptcy protection in late 2014. The DVR pioneer TiVo later bought the company for $1 million.

On its website, Aereo said TiVo had embraced Aereo's over-the-air broadcast technology in an "even better way" with the product Tivo Bolt, a set-top box that allows users to combine over-the-air programming and streaming services like Netflix and Hulu.

"Because of the Supreme Court's Aereo ruling last year, over-the-air television won't be delivered in the exact way Aereo had pioneered. However, TiVo shares Aereo's disruptive spirit," Aereo said in an undated statement.

Circuit Judges Diarmuid O'Scannlain, Johnnie B. Rawlinson and Consuelo María Callahan took the broadcasters' case under submission.

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