Published by LawTechie - April 6, 2011 - LawTechie

Last month we reported about movie streaming newcomer Zediva, which allows users to watch newly released DVDs at $2 per “rental” despite failing to secure any copyright license with Hollywood studios. Now the Movie Picture Association of America (MPAA) seems to have gotten wind of the fledgling company and launched its first salvo against Zediva’s streaming model by arguing that Zediva’s streaming violates the copyright holders’ right of public performance. Warner Bros. Entertainment Inc., et al v. WTV Systems, Inc. et al, 11-CV-02817 (CDCA, April 4, 2011).

You may recall Zediva’s streaming model (aka “copyright loophole”) as described by Wired:

[T]he company literally rents you a DVD and a DVD player, with your computer, tablet or Google TV as the remote control. Unlike the other streaming movie services, Zediva doesn’t turn a movie into a file on their servers that they can serve to as many users as care to see it at once.

Instead, Zediva’s servers have DVD drives and actual DVDs. So when you rent a movie, that disc goes out of circulation until you release it back to the company, just like in one of those increasingly rare real-world video stores.

Zediva’s streaming model seems to rely on the 2nd Circuit holding in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F. 3d 121 (2nd Cir. 2008) which found that Cablevision’s “streaming” of DVR content to subscribers did not constitute infringement because, technically, the content resided in Cablevision’s buffer memory for a mere “transitory” period. (Note: We disagreed with that holding as well as with the 2nd Circuit’s apparent gloss over the fact that Cablevision operated a copyright infringement workshop by allowing its subscribers to use Cablevision hardware to store copyright content until such time as they felt like streaming it — we took issue with the Court’s analogy to an innocent copy shop that has no control over it’s customers’ actions.)

Cartoon Network also discussed the issue of public performance, holding that Cablevision’s model was not a public performance, as per the transmit clause:

[W]e find that the transmit clause directs us to identify the potential audience of a given transmission, i.e., the persons “capable of receiving” it, to determine whether that transmission is made “to the public.” Because each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber, we conclude that such transmissions are not performances “to the public”…

(Our emphasis added.)

In fact, the Cartoon Network Court went on to point out that “[t]his holding… does not generally permit content delivery networks to avoid all copyright liability by making copies of each item of content and associating one unique copy with each subscriber to the network.” Accordingly, since Zediva’s users do not create their own copies a la DVR, the MPAA can potentially distinguish Cartoon Netowork from Zediva’s streaming model and prevail on its public performance theory.

It should be noted that California does not seem to have a modern equivalent of the Cartoon Network case; its last similar case was On Command Video Corp. v. Columbia Pictures, 777 F.Supp. 787 (NDCA 1991), which took a much broader view of “public performance.”

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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