Published by LawTechie - December 11, 2013 - LawTechie

NimbleTVLast night Mashable sought my comment on the legality of NimbleTV’s business model vis-a-vis the latest developments in the Aereo and FilmOn X litigations. Some background:

NimbleTV launched its television-on-demand service on Tuesday to the New York City area. Next, the world… The company acts as a middleman between cable companies and subscribers seeking to access television content on computers, tablets and phones. NimbleTV takes cable content and streams it for a fee (the basic package is $3.99 per month).

However the service is not for cord cutters — a cable subscription is required or one must be purchased through NimbleTV, which pairs customers with cable providers based on the channels they want and the price.

Like Aereo and FlimOn X, NimbleTV does not have an agreement with with the cable companies. According to Mashable, when asked about the legality of their business model, NimbleTV CEO Anand Subramanian replied that it is a “fair use” concept since subscribers can only stream content that they already pay their cable providers to view.

Unfortunately, The Fair Use Argument May Not Hold Up.

I am not sure whether Mr. Subramanian’s “fair use” response was meant to convey NimbleTV’s legal position on its streaming model, or if he just thinks that it is fair to re-broadcast content to users who have already paid the cable companies for it. The problem is that copyright law does not recognize the colloquial definition of “fairness” and that the legal definition of the Fair Use doctrine is unlikely to apply to what NimbleTV is doing.

As outlined in the 2nd Circuit’s most recent Google Books decision, the Fair Use doctrine is a defense where the defendant says, “Yes, I am infringing on your copyrights, but what I am doing is protected by copyright law because it transforms the copyrighted work in such a way as to promote education or the arts, etc…” (This is contrary to Aereo’s model where Aereo denies any infringement on its part, arguing that the subscribers at home doing the copying and are merely using the antennas that Aereo provides.)

When analyzing fair use, a court examines (i) the purpose and character of the use; (ii) the nature of the copyrighted work; (iii) the amount or portion of the work copied; and (iv) the effect of the use on the potential market.

In most cases (Google Books was the exception), when the character of the use is commercial, this spells a death knell for the fair use defense. In NimbleTV’s case, the video streaming service is clearly commercial in nature — NimbleTV makes money off the service. Additionally, there is the major factor that some cable channels, like HBO, have begun to offer a streaming service like HBO Go that NimbeTV’s service would directly compete with.

When it is fairly clear that NimbleTV’s service is taking potential profits out of the content providers’ pockets and, unlike Aereo, directly copies the copyrighted content, I unfortunately do not see a legal argument that would save NimbleTV’s service should it get sued.

I Say Unfortunately…

I say “unfortunately” because I, like many cable consumers, would love to see a good streaming service. HBO Go is, in my opinion, sub-par in that it still requires you to subscribe to the entire cable package of unwanted channels (HBO is probably contractually obligated to do this).

I should also note that back in 2011 a company called ivi, Inc. tried to do something similar to what NimbleTV is doing, arguing that its streaming service was legal based on the Copyright Act’s compulsory license provisions for re-broadcasters. Unfortunately the SDNY and the 2nd Circuit decided that the compulsory license provisions were not meant to apply to internet re-broadcasting. See WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 285 (2d Cir.2012).

So here’s one consumer hoping that NimbleTV will work out some sort of distribution agreement with the cable companies before it gets sued.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.


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