Free TV vs. Fee TV: Analysis of Broadcasting Companies’ Lawsuit Against Nonprofit Streaming

By: Leon Stern

As technology is continually advancing and updating, so must the laws that regulate it. In July 2019, major broadcasting companies joined together and filed suit in the Southern District of New York against a streaming service run by the former Vice President of Law and Policy of DISH network.[1] The streaming service known as Locast is a nonprofit organization that takes broadcast network signals, strips the data, and redistributes the over-the-air broadcasts online.[2] The broadcast companies allege in their complaint that Locast is in violation of the Copyright Act.[3] The networks allege that Locast has been stripping their broadcast signals of data and redistributing the copyrighted material online to Locast’s registered users without the copyright owners permission.[4] Locast has raised the defense that it is not in violation of the Copyright Act because it is a nonprofit organization and is protected under the secondary transmission exemption of the Copyright Act.[5]

The exemption under the Copyright Act states that a secondary transmission of a performance or display is not infringement if

the secondary transmission is not made by a cable system but is made by a governmental body, or other nonprofit organization, without any purpose of direct or indirect commercial advantage, and without charge to the recipients of the secondary transmission other than assessments necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service.[6]

 This lawsuit does not represent the first time the courts have been asked to interpret the Copyright Act in the context of streaming services. In 2014, the Supreme Court decided a similar case which involved the same attorneys who litigated this most recent lawsuit.[7] The Court held that the transmission service was performing publicly within the definition of the Copyright Act when it allowed its subscribers to pay a fee to watch television programs over the internet without broadcast companies’ permission.[8] The Court reasoned that Aereo was substantially similar to a “cable system” within the definition of the Copyright Act.[9] Aereo is a concrete example that Congress needs to reexamine the Copyright Act and provide more specific language to address streaming networks.

It is likely that the New York court will rule that Locast is in violation of the Copyright Act. A secondary transmitter cannot receive a direct or indirect commercial benefit.[10] Locast does not charge its subscribers but it does accept donations, and one of the donors is a well-known competitor in the broadcasting business.[11] Some argue that this lawsuit is an attempt by the broadcasting companies to control content distribution and is against the spirit of the Copyright Act.[12] This lawsuit has the potential to lock out nonprofit organizations from broadcasting signals for free to low income communities. Congress should create more explicit language to advise courts on how to deal with these services and reach equitable solutions.


[1] See Complaint, Am. Broad. Companies, Inc., et al., v. Goodfriend et al., (S.D.N.Y. 2019) (No. 19-cv-07136); Edmund Lee, CBS, NBC, ABC and Fox Sue to Stop Locast, a Free Streaming Service, N.Y. Times (July 31, 2019), https://www.nytimes.com/2019/07/31/business/media/broadcast-networks-lawsuit-locast.html?module=inline.

[2] See Simon Cohen, What is Locast and Why is it Being Sued by the Big Four Broadcasters, Dig. Trends (Aug. 1, 2019), https://www.digitaltrends.com/home-theater/what-is-locast-local-tv-online-broadcaster/ (providing a brief description of Locast).

[3] See complaint at 13, Am. Broad. Companies, Inc., et al., v. Goodfriend et al., (S.D.N.Y. 2019) (No. 19-cv-07136).

[4] See id. at 3.

[5] Id. at 44-45 (stating that Locast claimed it was exempted under the Copyright Act as a nonprofit entity and was no more than a signal booster and was not acting with intent of gaining commercial advantage).

[6] 17 U.S.C.A. § 111 (a)(5) (2014).

[7] See Am. Broad. Companies, Inc. v. Aereo, Inc., 573 U.S. 431 (2014).

[8] See id. at 431-44.

[9] See id. at 441-42; 17 U.S.C.A. § 111 (f)(3) (2014) (defining cable system as a facility that “receives signals transmitted or programs broadcast by one or more television broadcast stations licensed by the Federal Communications Commission, and makes secondary transmissions of such signals or programs by wires, cables, microwave, or other communications channels to subscribing members of the public who pay for such service.”).

[10] See 17 U.S.C.A. § 111 (a)(5) (2014) (stating that nonprofits cannot have a purpose of receiving a commercial advantage, either directly or indirectly).

[11] See Kerry Flynn, Non-profit Streaming Service Locast Sues ABC, CBS, FOX and NBC, Cnn Business (Sept. 27, 2019), https://www.cnn.com/2019/09/27/media/locast-streaming-lawsuit/index.html (stating that AT&T made a $500,000 donation to Locast’s parent company to support its mission to make content available to consumers and promote choice).

[12] See Conor May, Locast Lawsuit: the Latest Copyright Powergrab, Pub. Knowledge (Aug. 9, 2019), https://www.publicknowledge.org/blog/locast-lawsuit-the-latest-copyright-powergrab/.

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