The sleepy court battle between streaming service Locast and the broadcasters trying to sue it out of existence, Aereo-style, heated up this week, with both parties filing letters to the federal judge overseeing the case.
Williams & Connolly LLP partner Gerson Zwelfach, who represents the plaintiffs, a group including ABC, CBS, FOX and NBC, sought to shoot down Locast’s base defense, which uses the Copyright Act of 1976 to claim that it’s acting within the law to stream local feeds of network O&Os and affiliates to consumers on a “non-profit” basis.
For one, Zwelfach argues that Locast’s scheme—which makes it really hard to use the service unless a user donates at least $5.50 a month—is tantamount to actual capitalism, not the public service the plaintiffs claim.
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"Although Locast calls the amounts it extracts from users 'donations,' courts 'look beyond mere formal labels and consider the substance of the transaction,'" reads Zwelfach’s letter to U.S District Court Judge Louis Stanton. ”Here, the substance of the transaction is clear: Locast demands users pay a monthly fee in exchange for uninterrupted services.”
Meanwhile, representing the defendants, the Sports Fans Coalition NY and its founder, consumer rights attorney David Goodfriend, Orrick, Harrington and Sutcliffe LLP attorney David Hosp responded that Locast’s streams remain “secondary transmissions” legally transmitted under nonprofit circumstance.
“No one owns SFCNY,” Hosp wrote. ”It pays no dividends, no distributions, and no salaries. It pays typical, market prices for its costs, such as physical space, equipment, technical upkeep, and internet access. And it defrays those costs by seeking and accepting donations, including donations from viewers, for the actual and reasonable costs of maintaining and operating the secondary transmission service. Plaintiffs cannot dispute any of these facts.”
Currently situated in 31 designated marketing areas across the U.S., and touting 2.5 million registered users, Locast streams feeds of local broadcast stations for free. Users who don’t want their streams disrupted every 15 minutes with a come-on for donations need to agree to donate at least $5.50 a month to Sports Fans Coalition NY.
Calling the service “Aereo 2.0”—a nod to a similar for-profit streaming service shot down by the U.S. Supreme Court nearly a decade ago—the Big Four broadcasters filed suit against Goodfriend and Sports Fans Coalition NY in 2019, aiming to shut down Locast.
The case is scheduled to go to trial in September.
“The Copyright Act of 1976 is clearly on our side, and we believe we will win,” Goodfriend said in a statement, re-issued to Next TV two weeks ago when we checked on the case. “These broadcast giants reap billions of dollars from charging users for programming that’s supposed to be free and are attempting to use their copyrights to maintain market power and force consumers to pay more. The law allows for nonprofits to retransmit local TV channels and to ask for donations to help cover costs. Locast clearly meets these guidelines.”
