Spanski Enterprises, Inc. v. Telewizja Polska, S.A.
Opinion
When the owner of a foreign website, acting abroad, uploads video content in which another party holds exclusive United States public performance rights under the Copyright Act and then directs the uploaded content to United States viewers upon their request, does it commit an infringing "performance" under the Act? If so, is it protected from liability by the principle-unquestioned here-that the Act has no extraterritorial application? Answering these questions "yes" and "no," the district court concluded that Polish broadcaster Telewizja Polska was, by transmitting fifty-one episodes of certain Polish-language television programs into the United States via its online video-on-demand *907 system, liable for infringing copyrights held by a company, Spanski Enterprises, Inc., that enjoys exclusive North and South American performance rights in the episodes. Telewizja Polska appeals this determination, as well as the district court's imposition of statutory damages of $60,000 per episode, for a total of $3,060,000. For the reasons that follow, we affirm as to both liability and damages.
I.
Appellant Telewizja Polska, S.A. ("TV Polska"), Poland's national public television broadcaster, owns, operates, and creates content for several Polish-language television channels, including one now called TVP Polonia. TV Polska entered into a licensing agreement with Canadian corporation Spanski Enterprises, Inc. ("Spanski"), appellee here, granting it North and South American broadcasting rights in TVP Polonia content. Following a legal dispute over the scope of these rights, the parties signed a 2009 settlement agreement establishing that Spanski has the exclusive right to perform TVP Polonia content, including over the internet, in North and South America.
In order to protect Spanski's exclusive rights, TV Polska-which makes its programming publicly available through a video-on-demand feature on its website-employs technology that prevents internet users in North and South America from accessing TVP Polonia content though its website. Known as geoblocking, this technology allows a website owner to digitally embed territorial access restrictions into uploaded content. When an internet-enabled device attempts to access restricted content, the geoblocking system compares the device's unique internet protocol (IP) address to a third-party database that reveals which IP addresses are associated with which countries. If the device's IP address is associated with a country subject to restricted access, the device cannot access the content.
Two groups of TV Polska employees are responsible for ensuring that each episode uploaded to the website is programmed to include the appropriate territorial restrictions. The first group-the audiovisual technicians working in what TV Polska calls its "Workflow System"-converts each episode into one or more digital video formats in accordance with episode-specific instructions they receive from the second group, the program editors working in TV Polska's "Content Management System." For example, such instructions might direct a technician working on a particular episode to create one format that is pay-per-view and one that is not or, as in this case, to create only formats that are geoblocked from specified countries. Even if a technician ignores an instruction to create a geoblocked format for a given episode in the Workflow System, though, a device with an IP address associated with a given country can access the episode only if the instructions generated in the Content Management System also specify that access from that country is permitted. In other words, an episode is geoblocked either if the technicians working in the Workflow System create only territorially restricted digital formats of that episode or if the program editors assign the episode a territorial restriction in the Content Management System. During the period relevant here, the default territorial access setting assigned to each TVP Polonia episode in the Content Management System was "minus America," meaning that the episode would be automatically geoblocked from devices with North or South American IP addresses unless a program editor affirmatively selected a different instruction from a drop-down menu, regardless of *908 what the technicians did in the Workflow System.
In late 2011, Spanski's attorneys discovered that certain TVP Polonia content was not properly geoblocked, leaving it available to North and South American internet users through TV Polska's video-on-demand system. This content included fifty-one individual episodes that Spanski had registered with the United States Copyright Office and in which it held valid and exclusive United States copyrights. From December 2011 to March 2012, Spanski's attorneys and website developer, between them, viewed each of these fifty-one episodes, at least in part, on TV Polska's website.
Spanski then sued TV Polska in federal district court, asserting its exclusive right under the Copyright Act,
Based largely on these findings, the district court held TV Polska liable under the Copyright Act for infringing Spanski's exclusive United States performance rights in the fifty-one episodes.
With liability settled, the district court turned to the issue of damages. Typically, an infringer's per-work liability under the Copyright Act's statutory damages provision is capped at $30,000,
see
*909
Having thus established TV Polska's eligibility for increased statutory damages, the district court ordered it to pay Spanski $60,000 per infringed episode, for a total of $3,060,000.
Spanski Enterprises, Inc. v. Telewizja Polska S.A.
, No. 12-cv-957,
TV Polska appeals the district court's conclusions as to both liability and damages. "We review the district court's findings of fact for clear error, but resolve issues of law
de novo
,"
Massachusetts v. Microsoft Corp.
,
II.
Liability under the Copyright Act attaches where one party infringes another's valid copyright.
See
Before considering TV Polska's legal claims, we address its single challenge to the district court's factual findings as to its conduct, namely, that the court clearly erred in finding that its employees "must have volitionally acted to remove territorial restrictions from the 51 Episodes." Appellant's Br. 27. The only support it musters for this position, however, is evidence that some of the episodes at issue had been uploaded in both geoblocked and non-geoblocked formats and that several of the non-geoblocked formats were created only after the period of infringement. These isolated points are nowhere near sufficient to undermine the district court's considered factual findings, which rested on record evidence that the fifty-one episodes had been viewed in the United States and Canada via the TV Polska website,
Spanski Enterprises
,
TV Polska is left, then, with its argument that its conduct did not constitute infringement as a matter of law. According to TV Polska, maintaining a fully automated video-on-demand service cannot constitute a copyright violation because the end user, who ultimately selects which content to view, is alone liable for any infringement. Alternatively, it argues that because its conduct occurred exclusively in Poland, imposing Copyright Act liability on the basis of that conduct would amount to an impermissible extraterritorial application of the Act. We consider these arguments *910 in turn and, like the district court, reject both.
A.
In support of its first argument-that the transmission of copyrighted content through an online video-on-demand system does not constitute infringement-TV Polska insists that "[p]roof that a defendant's alleged infringing conduct was volitional is a clear requirement of any claim for direct infringement," Appellant's Br. 24, and that such volitional conduct is absent where, as here, a website owner "operates an automatic content delivery system that is not itself infringing, the user, not [the website owner], selects the content it will view or receive and actuates the delivery system, and the user request is not processed by [the website owner's] employees," id. at 25.
This argument cannot be squared with the text of the Copyright Act. Among the privileges a copyright holder enjoys under the Act is the exclusive right "to perform [its] copyrighted work publicly."
Even if the statute's text left any room for doubt, the Supreme Court's recent decision in
American Broadcasting Cos. v. Aereo, Inc.
, --- U.S. ----,
Aereo
thus forecloses TV Polska's argument that the automated nature of its video-on-demand system or the end user's role in selecting which content to access insulates it from Copyright Act liability. Indeed, TV Polska played a more active role in performing infringing content than did Aereo. If an automated antenna system that, like Aereo, indiscriminately retransmits third-party content upon a user's request commits an infringing performance where that content happens to be under copyright, then a video-on-demand system, like TV Polska's, that transmits copyrighted episodes purposely selected and uploaded by the system operator surely does the same. Even the
Aereo
dissent recognized as much.
See
TV Polska offers two reasons for distinguishing Aereo . Neither is persuasive.
First, TV Polska points out that, unlike Aereo, which transmitted third-party content, it transmitted only content that it had itself created. But this distinction has no bearing on what it means "to show" a work's "images" to "the public,"
Next, TV Polska seems to suggest that
Aereo
's interpretation of the Copyright Act was a one-time deal, good for that case only. In support, it emphasizes that in finding an infringing performance, the Court relied on "Aereo's overwhelming likeness to the cable companies" targeted by the amendments that introduced the Act's public performance definition.
Aereo
,
To begin with, as every first-year law student learns, a judicial decision resolves only the case before it, so it is unsurprising that the Court declined to hypothesize about how its holding would apply to future cases.
See
Karl N. Llewellyn,
The Bramble Bush: The Classic Lectures on the Law and Law School
39 (Oxford University Press 2008) (1930) ("The court can decide only the particular dispute which is before it. ... When it speaks to the question before it, it announces law ...." (italics omitted) ). Such judicial restraint, though, hardly means that
Aereo
's holding has no applicability outside that case's narrow factual circumstances. As our first-year law student also learns, judicial opinions establish precedential principles that apply to materially similar factual scenarios arising in future cases.
See
id.
at 34 ("[T]he decision plus the opinion go far to show what this court that speaks will do again
upon like facts
...."). In
Aereo
, after reviewing the Copyright Act's legislative history, the Court concluded that a viewer's decision to access an infringing television program did not relieve a broadcaster from liability for "show[ing] the program's images and mak[ing] audible the program's sounds."
Aereo
,
Undaunted, TV Polska argues that literal application of the Copyright Act's public performance definition would result in virtually limitless liability. Of course, any website that allows third parties to post content-say, YouTube, Facebook, or even the comments section in the Washington Post online-has the capacity to publicly show infringing content. And any internet service provider-say, Comcast or AT&T-that merely allows users to connect to the internet likewise has a hand in communicating infringing performances to the public. Does Twitter unwittingly commit infringement, for example, whenever its users impermissibly post copyrighted images? Or does T-Mobile commit infringement when it allows its customers to access such posts?
Congress has already provided statutory protection against some of these potential ramifications.
See
Our court has yet to decide whether to read such a volitional conduct or proximate cause requirement into the Copyright Act, and we need not do so today. TV Polska's conduct-"us[ing] its own equipment" to "allow[ ] [users] to watch television programs, many of which are copyrighted," by transmitting content upon a user's request,
Aereo
,
Finally, TV Polska cites two Supreme Court cases,
Sony Corp. of America v. Universal City Studios, Inc.
,
B.
This brings us to TV Polska's argument that even if it did infringe Spanski's copyright, holding it liable for that infringement would constitute an impermissible extraterritorial application of the Act because it did nothing in the United States. Whether an infringing performance that originates abroad but that ultimately reaches viewers in the United States can be actionable under the Copyright Act is a question of first impression in the federal appellate courts.
The Supreme Court recently described "a two-step framework for analyzing" whether a statutory violation that, at least in part, takes place abroad gives rise to liability.
RJR Nabisco, Inc. v. European Community
, --- U.S. ----,
The Supreme Court recently modeled the "focus" inquiry in
Morrison v. National Australia Bank Ltd.
,
*914
Guided by the Supreme Court's methodology, we identify the "conduct relevant to the [Copyright Act's] focus,"
RJR Nabisco
,
Characterizing the statute's focus differently, TV Polska points to
Aereo
's discussion of the Act's 1976 amendments as establishing that "the 'focus' of the Copyright Act's public performance provisions is prohibition of unauthorized retransmissions by cable TV systems." Reply Br. 16. TV Polska misunderstands the "focus" inquiry: instead of asking what components of an otherwise actionable statutory violation must occur within the United States to bring it within the Act's domestic sweep, TV Polska rehashes its unsuccessful argument as to what sort of conduct violates the Copyright Act in the first place. Given our conclusion that TV Polska's broadcasts would have been actionable had they been entirely domestic, the relevant question is whether the ultimate performance of those broadcasts on computer screens in the United States was "relevant to [the Copyright Act's] focus."
RJR Nabisco
,
Alternatively, TV Polska argues that even if the Copyright Act's focus includes, as we have concluded, the infringing performance itself,
Aereo
establishes that its performance occurred abroad. As TV Polska sees it,
Aereo
's observation that under the Act "
both
the broadcaster
and
the viewer of a television program 'perform' " that program,
Aereo
,
Congress had good reason to allow domestic copyright holders to enforce their rights against foreign broadcasters who direct infringing performances into the United States. Given the ease of transnational internet transmissions, a statutory scheme that affords copyright holders no protection from such broadcasters would leave the door open to widespread infringement, rendering copyright in works capable of online transmission largely nugatory.
In its
amicus
brief, the United States offers two examples that helpfully illustrate this point. First, it points out that under such a scheme, "large-scale criminal copyright pirates could avoid United States copyright liability simply by locating their servers outside the United States." United States Br. 14. Second, "television stations in San Diego and El Paso could eliminate the need to obtain U.S. copyright licenses simply by moving their broadcast antennae to Tijuana and Ciudad Juarez."
TV Polska offers little response to these troubling consequences of its position, claiming only that foreign enforcement authorities can address such cases. But nothing in the Copyright Act even hints that Congress intended to rely on the uncertain cooperation of foreign governments to ensure that copyright holders are able to enjoy their exclusive statutory rights while in the United States. Nor do we see any relevance to the Supreme Court's statement in
RJR Nabisco, Inc. v. European Community
, --- U.S. ----,
TV Polska argues that even if the government's concerns are well taken, they lose their force in situations where, as here, the foreign infringers "are lawful copyright owners in their home countries," Reply Br. 22, or where, again as here, the domestic copyright holder is protected by contract and so need not invoke statutory law to protect its interests, id. at 24. TV Polska, however, offers no legal grounding for these proposed distinctions. Nor do we see any logical connection between the scope of a broadcaster and copyright holder's respective rights and the question of whether the direction of an infringing performance into the United States from abroad is domestic or extraterritorial.
Attempting to turn the table on the United States, TV Polska argues that treating its conduct as a domestic violation of the Copyright Act would leave any casual internet user anywhere in the world open to liability for uploading copyrighted
*916
content to a foreign website whenever anyone in the United States happens to stumble upon it. Indeed, given that "intent is not an element of [copyright] infringement,"
Costello Publishing Co. v. Rotelle
,
Finally, the decisions TV Polska cites for the proposition that "acts committed abroad cannot form the basis for a U.S. copyright infringement suit," Appellant's Br. 33, hold nothing of the sort. Instead, they indicate only that infringements that, unlike the performances at issue here, occur abroad cannot in most cases generate Copyright Act liability.
See
Subafilms
,
In passing the Copyright Act, Congress bestowed on copyright holders a specific set of rights. Holding foreign actors liable for conduct that results in the domestic infringement of those rights effectuates the Act's guarantees and fully coheres with principles of extraterritoriality as articulated by the Supreme Court.
III.
Having concluded that the district court properly held TV Polska liable for copyright infringement, we turn to TV Polska's challenges to the $3,060,000 damages award. Recall that the district court found TV Polska eligible for statutory damages of $60,000 per episode because its infringement was "willful," and that it based the total damages award on its finding that TV Polska infringed all fifty-one episodes.
Spanski Enterprises
,
Willfulness
TV Polska attempts to evade clear-error review by arguing that a
de novo
standard ought to apply because the Federal Circuit employs such a standard when reviewing a district court's willfulness finding in patent infringement cases.
See
Bard Peripheral Vascular, Inc. v. W.L. Gore & Associates, Inc.
,
The district court found that TV Polska deliberately removed geoblocking from the fifty-one episodes at issue, was aware of Spanski's exclusive right to broadcast those episodes in the United States, and took purposeful after-the-fact steps to hide its conduct.
See
Spanski Enterprises
,
TV Polska points to testimony by a Deputy Director in its Technology Department who professed ignorance as to United States copyright law. It also argues that neither the licensing agreement nor Spanski itself gave it express notice that Spanski held copyright in the licensed episodes. But TV Polska pressed both points at trial, and the district court found them unpersuasive. TV Polska has given us no basis for upsetting the district court's reasonable finding, based on ample evidence of misconduct, that TV Polska knew it was up to no good. And to the extent TV Polska argues that the district court committed legal error by supposedly concluding that willfulness requires only "intentional conduct that amounts to infringement," Appellant's Br. 41, rather than the specific intent to violate protected rights, it fails to account for the district court's express finding that TV Polska "could not have been ignorant to the fact
it was infringing
[
Spanski's
]
copyright
."
Spanski Enterprises
,
Number of Episodes Infringed
TV Polska concedes that thirty-six of the fifty-one episodes were viewed in the United States, but contends that the district court clearly erred in finding that the remaining fifteen were similarly viewed. The district court based its finding principally on the testimony of one of Spanski's attorneys, who kept a contemporaneous log of the episodes-including the *918 fifty-one at issue here-he had viewed on the TV Polska website. At trial, the lawyer testified that during the infringement period he "streamed each" of the fifty-one episodes on his computer in New York "to make sure they were available" on the website. Trial Tr. 200 (Feb. 23, 2016), Joint Appendix (J.A.) 481.
Attempting to undermine the force of the lawyer's testimony, TV Polska highlights his statement that he had no specific recollection at the time of trial-four years after the fact-of having watched all fifty-one episodes, as well as his inability to say that he "definitely" checked each episode to ensure that it was streaming.
IV.
To sum up, then, we hold that where a foreign broadcaster uploads copyrighted content to its website and directs that content onto a computer screen in the United States at a user's request, the broadcaster commits an actionable domestic violation of the Copyright Act. Consistent with this view of the law, the district court, based on its supportable factual findings, found TV Polska liable for infringing Spanski's copyrights in the fifty-one episodes and concluded that damages of $60,000 per episode were appropriate in light of the circumstances. Seeing no basis for upsetting these considered judgments, we affirm as to both liability and damages.
So ordered.
Reference
- Full Case Name
- SPANSKI ENTERPRISES, INC., Appellee v. TELEWIZJA POLSKA, S.A., Appellant
- Cited By
- 18 cases
- Status
- Published