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Case 11-788, Document 118-1, 08/27/2012, 702675, Page1 of 38
`
`11-788-cv
`WPIX v. ivi
`
`UNITED STATES COURT OF APPEALS
`FOR THE SECOND CIRCUIT
`August Term 2011
`(Argued: May 30, 2012 Decided: August 27, 2012)
`Docket No. 11-788-cv
`
`
`WPIX, INC., WNET.ORG, AMERICAN BROADCASTING COMPANIES, INC.,
`DISNEY ENTERPRISES, INC., CBS BROADCASTING INC., CBS STUDIOS,
`INC., THE CW TELEVISION STATIONS, INC., NBC UNIVERSAL, INC.,
`NBC STUDIOS, INC., UNIVERSAL NETWORK TELEVISION, LLC, TELEMUNDO
`NETWORK GROUP, LLC, NBC TELEMUNDO LICENSE COMPANY, OFFICE OF THE
`COMMISSIONER OF BASEBALL, MLB ADVANCED MEDIA, L.P., COX MEDIA
`GROUP, INC., FISHER BROADCASTING-SEATTLE TV, L.L.C., TWENTIETH
`CENTURY FOX FILM CORPORATION, FOX TELEVISION STATIONS, INC.,
`TRIBUNE TELEVISION HOLDINGS, INC., TRIBUNE TELEVISION NORTHWEST,
`INC., UNIVISION TELEVISION GROUP, INC., THE UNIVISION NETWORK
`LIMITED PARTNERSHIP, TELEFUTURA NETWORK, WGBH EDUCATIONAL
`FOUNDATION, THIRTEEN, AND PUBLIC BROADCASTING SERVICE,
`Plaintiffs-Appellees,
`
`v.
`IVI, INC., AND TODD WEAVER,
`Defendants-Appellants.
`
`WINTER, CHIN, and DRONEY, Circuit Judges.
`
`
`Before:
`
`

`
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`Appeal from a judgment of the United States
`District Court for the Southern District of New York
`(Buchwald, J.) granting plaintiffs-appellees' motion for a
`preliminary injunction and holding that defendant-appellant
`ivi, Inc. -- a company that streams television programming
`live and over the Internet -– is not a "cable system" under
`§ 111 of the Copyright Act of 1976, 17 U.S.C. § 111.
`AFFIRMED.
`
`
`ROBERT ALAN GARRETT (Peter L. Zimroth,
`Hadrian R. Katz, Lisa S. Blatt, C.
`Scott Morrow, R. Reeves Anderson, on
`the brief), Arnold & Porter LLP, New
`York, New York, and Washington,
`D.C., for Plaintiffs-Appellees.
`LAWRENCE D. GRAHAM (Ellen M. Bierman, on the
`brief), Black Lowe & Graham PLLC,
`Seattle, Washington, for Defendants-
`Appellants.
`
`
`CHIN, Circuit Judge:
`In this case, plaintiffs-appellees -- producers
`and owners of copyrighted television programming -- sued
`defendants-appellants ivi, Inc. ("ivi") and its Chief
`
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`Executive Officer, Todd Weaver, for streaming plaintiffs'
`copyrighted television programming over the Internet live
`and without their consent. The district court granted a
`preliminary injunction for plaintiffs, holding that:
`(1) plaintiffs were likely to succeed on the merits of the
`case because ivi was not a "cable system" entitled to a
`compulsory license under § 111 of the Copyright Act, 17
`U.S.C. § 111; (2) plaintiffs would suffer irreparable harm
`without injunctive relief; (3) the balance of hardships
`favored the grant of a preliminary injunction; and (4) the
`issuance of a preliminary injunction did not disserve the
`public interest. Defendants appeal. For the reasons that
`follow, we affirm.
`
`STATEMENT OF THE CASE
`
`1.
`
`The Facts
`The following facts are undisputed.
`On September 13, 2010, ivi began streaming
`plaintiffs' copyrighted programming over the Internet, live,
`
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`for profit, and without plaintiffs' consent. ivi began by
`1
`retransmitting signals from approximately thirty New York
`and Seattle broadcast television stations; by February 2,
`2011, ivi was also retransmitting signals from stations in
`Chicago and Los Angeles. Within five months of its launch,
`2
`ivi had offered more than 4,000 of plaintiffs' copyrighted
`television programs to its subscribers.
`
`"Streaming" generally involves compressing a file to a
`1
`size small enough to be transmitted over the Internet and then
`allowing the receiving computer to start playing packets of the
`file while the remaining packets are being transmitted. Preston
`Gralla, How The Internet Works 229-31 (7th ed. 2004). ivi's
`technology further "encrypts" the transmitted content -- that is,
`ivi encodes the content so that it cannot be viewed as it is
`transmitted over the Internet; ivi then "decrypts" or decodes the
`content back into a viewable format in small increments or
`packets shortly before it appears on a given subscriber's screen.
`See id. at 98-99.
`ivi can also transmit data "peer-to-peer." "Peer-to-
`peer" configurations allow people to share files between
`computers over the Internet. Id. at 225. ivi's subscriber
`license agreement includes a section permitting ivi to use
`subscriber computers and bandwidth to enable peer-to-peer
`viewing. According to Weaver, however, ivi has not used a peer-
`to-peer configuration as of October, 2010.
`"Broadcast" television programming generally refers to
`2
`programs "originally propagated by traditional over-the-air
`television signals for receipt by antenna." Cablevision Sys.
`Dev. Co. v. Motion Picture Ass'n of Am., Inc., 836 F.2d 599, 601
`n.1 (D.C. Cir. 1988) ("MPAA"). "Cable" television programming or
`"non-broadcast" programming refers to programs "produced solely
`for cable systems and disseminated only through them." Id.
`-4-
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`

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`
`Specifically, ivi captured and retransmitted
`plaintiffs' copyrighted television programming live and over
`the Internet to paying ivi subscribers who had downloaded
`ivi's "TV player" on their computers for a monthly
`subscription fee of $4.99 (following a 30-day free trial).
`For an additional fee of $0.99 per month, subscribers were
`able to record, pause, fast-forward, and rewind ivi's
`streams.
`Almost immediately after ivi's launch, several
`affected program owners and broadcast stations sent cease-
`and-desist letters to ivi. ivi responded to these letters
`on or about September 17, 2010, purporting to justify its
`operations on the ground that it was a cable system entitled
`to a compulsory license under § 111 of the Copyright Act, 17
`U.S.C. § 111.
`2.
`
`Proceedings Below
`On September 20, 2010, ivi filed a declaratory
`action in the United States District Court for the Western
`District of Washington. On September 28, 2010, plaintiffs
`sued defendants for copyright infringement in the Southern
`
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`District of New York, seeking damages and injunctive relief.
`On January 19, 2011, the United States District Court for
`the Western District of Washington (Robart, J.) dismissed
`ivi's declaratory action as an impermissible anticipatory
`filing. See ivi, Inc. v. Fisher Commc'ns, Inc., No. C10-
`1512JLR, 2011 WL 197419 (W.D. Wash. Jan. 19, 2011).
`On February 22, 2011, in a thorough and carefully-
`considered decision, the United States District Court for
`the Southern District of New York (Buchwald, J.) granted
`plaintiffs' motion for a preliminary injunction. See WPIX,
`Inc. v. ivi, Inc., 765 F. Supp. 2d 594, 622 (S.D.N.Y. 2011).
`This appeal followed. 3
`
`DISCUSSION
`We review a district court's grant of a
`preliminary injunction for abuse of discretion. Kickham
`Hanley P.C. v. Kodak Ret. Income Plan, 558 F.3d 204, 209 (2d
`Cir. 2009). A district court abuses its discretion in
`
`On April 18, 2011, the district court denied ivi's
`3
`motion for a stay pending appeal. On July 28, 2011, this Court
`denied ivi's motion for a stay on the ground that ivi had failed
`to demonstrate a likelihood of success on the merits.
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`

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`granting a preliminary injunction when its decision rests on
`an error of law or a clearly erroneous factual finding, or
`when its decision cannot be located within the range of
`permissible decisions. Id. In a copyright case, a district
`court may grant a preliminary injunction when plaintiffs
`demonstrate: (1) a likelihood of success on the merits;
`(2) irreparable harm in the absence of an injunction; (3) a
`balance of the hardships tipping in their favor; and
`(4) non-disservice of the public interest by issuance of a
`preliminary injunction. Salinger v. Colting, 607 F.3d 68,
`79-80 (2d Cir. 2010). We discuss each prong of Salinger in
`turn.
`I.
`
`Likelihood of Success on the Merits
`Under the Copyright Act, television broadcasters
`"generally [have] 'exclusive rights' . . . to authorize the
`public display of [their] copyrighted content, including the
`retransmission of [their] broadcast signal[s]." EchoStar
`Satellite L.L.C. v. F.C.C., 457 F.3d 31, 33 (D.C. Cir.
`2006); see 17 U.S.C. § 106(4)-(5). Congress, however,
`codified an exception to this exclusive right in 1976 --
`
`-7-
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`

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`§ 111 of the Copyright Act -- permitting cable systems to
`publicly perform and retransmit signals of copyrighted
`television programming to its subscribers, provided they pay
`royalties at government-regulated rates and abide by the
`statute's procedures. See 17 U.S.C. § 111(c) (exception),
`(d) (royalties); U.S. Copyright Office, Satellite Home
`
`Viewer Extension and Reauthorization Act Section 109 Report
`1 (2008) ("SHVERA Report").
`In this case, it is undisputed that plaintiffs
`owned valid copyrights to the television programming that
`ivi publicly performed without plaintiffs' consent. See
`ivi, 765 F. Supp. 2d at 601. The burden of proof thus falls
`on defendants to demonstrate that they have an affirmative
`statutory defense to copyright infringement. See Bourne v.
`Walt Disney Co., 68 F.3d 621, 631 (2d Cir. 1995) (noting
`possession of license by accused infringer is affirmative
`defense and burden falls on licensee to prove license's
`existence (citing United States v. Larracuente, 952 F.2d
`672, 674 (2d Cir. 1992); Melville B. Nimmer & David Nimmer,
`Nimmer on Copyright § 13.01)). Indeed, defendants argue
`
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`

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`that ivi is a cable system entitled to a § 111 license under
`the Copyright Act.
`Thus, the principal issue presented is whether
`ivi, a service that streams copyrighted television
`programming live and over the Internet, constitutes a cable
`system under § 111 of the Copyright Act. If so, ivi has a
`statutory defense to plaintiffs' claims of copyright
`infringement, and ivi is entitled to a compulsory license to
`continue retransmitting plaintiffs' programming. See
`Satellite Broad. and Commc'ns Ass'n of Am. v. Oman, 17 F.3d
`344, 345-46 (11th Cir. 1994). If not, ivi has no defense to
`plaintiffs' claims of infringement. See id. at 346.
`As discussed below, the Copyright Office -- the
`federal agency charged with overseeing § 111 -- has spoken
`on the issue of whether § 111's compulsory licenses extend
`to Internet retransmissions. Accordingly, we utilize the
`two-step process outlined in Chevron U.S.A., Inc. v. Natural
`Res. Def. Council, Inc., 467 U.S. 837 (1984). At Chevron
`step one, we consider whether Congress has clearly spoken on
`the issue of Internet retransmissions in § 111. See id. at
`
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`Case 11-788, Document 118-1, 08/27/2012, 702675, Page10 of 38
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`842-43; Cohen v. JP Morgan Chase & Co., 498 F.3d 111, 116
`(2d Cir. 2007). If the intent of Congress is clear, that is
`the end of the matter; courts "must give effect to the
`unambiguously expressed intent of Congress." Chevron, 467
`U.S. at 842-43. If we determine that Congress has not
`directly addressed the precise question at issue, we proceed
`to Chevron step two, "which instructs us to defer to an
`agency's interpretation of the statute, so long as it is
`'reasonable.'" Cohen, 498 F.3d at 116 (quoting Chevron, 467
`U.S. at 843-44).
`A.
`
`Chevron Step One
`To ascertain Congress's intent at Chevron step
`one, we begin with the statutory text; if its language is
`unambiguous, no further inquiry is necessary. Cohen, 498
`F.3d at 116 (citing Zuni Pub. Sch. Dist. v. Dep't of Educ.,
`550 U.S. 81, 93-94 (2007); Robinson v. Shell Oil Co., 519
`U.S. 337, 340 (1997); Daniel v. Am. Bd. of Emergency Med.,
`428 F.3d 408, 423 (2d Cir. 2005)). If the statutory
`language is ambiguous, we look to the canons of statutory
`construction, and then to the legislative history to see
`
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`whether any "'interpretive clues' permit us to identify
`Congress's clear intent." Cohen, 498 F.3d at 116 (citing
`Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581, 586
`(2004); accord Daniel, 428 F.3d at 423).
`1.
`The Statutory Text
`Section 111(c)(1) of the Copyright Act provides:
`[S]econdary transmissions to the public
`by a cable system of a performance or
`display of a work embodied in a primary
`transmission made by a broadcast station
`licensed by the Federal Communications
`Commission . . . shall be subject to
`statutory licensing upon compliance with
`the requirements of subsection (d) where
`the carriage of the signals comprising
`the secondary transmission is permissible
`under the rules, regulations, or
`authorizations of the Federal
`Communications Commission.
`17 U.S.C. § 111(c)(1). A "cable system" is defined as:
`4
`a facility, located in any State,
`territory, trust territory, or possession
`of the United States, that in whole or in
`part receives signals transmitted or
`programs broadcast by one or more
`television broadcast stations licensed by
`the Federal Communications Commission,
`
`A "secondary transmission" is defined as "the further
`4
`transmitting of a primary transmission simultaneously with the
`primary transmission." 17 U.S.C. § 111(f)(2).
`-11-
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`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. For
`purposes of determining the royalty fee
`under subsection (d)(1), two or more
`cable systems in contiguous communities
`under common ownership or control or
`operating from one headend shall be
`considered as one system.
`17 U.S.C. § 111(f)(3). 5
`Based on the statutory text alone, it is simply
`not clear whether a service that retransmits television
`programming live and over the Internet constitutes a cable
`system under § 111. That is, it is unclear whether such a
`service (1) is or utilizes a "facility" (2) that receives
`and retransmits signals (3) through wires, cables,
`microwave, or other communication channels. See 17 U.S.C.
`§ 111(f). 6
`
`"A cable system's 'headend' is its control center, from
`5
`which a cable company receives signals and then transmits them,
`by coaxial cable, to the company's subscribers." Oman, 17 F.3d
`at 347 n.5 (citing, inter alia, E. Microwave, Inc. v. Doubleday
`Sports, Inc., 691 F.2d 125, 128 (2d Cir. 1982)).
`ivi argues that it "plainly has a 'facility' as
`6
`required" by § 111. Reply Br. of Defs.-Appellants at 2. ivi
`explains that the Internet is not "the only equipment at issue
`here." Id. at 3. Rather, "the primary transmissions are
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`Among other things, it is certainly unclear
`whether the Internet itself is a facility, as it is neither
`a physical nor a tangible entity; rather, it is "a global
`network of millions of interconnected computers." 1-800
`Contacts, Inc. v. WhenU.Com, Inc., 414 F.3d 400, 403 (2d
`Cir. 2005) (internal quotation marks omitted); see also
`
`Akamai Techs., Inc. v. Cable & Wireless Internet Servs.,
`Inc., 344 F.3d 1186, 1188-89 (Fed. Cir. 2003); ACLU v. Reno,
`929 F.Supp. 824, 830, 832 (E.D. Pa. 1996) ("[The Internet]
`exists and functions [because] hundreds of thousands of
`separate operators of computers and computer networks
`independently decided to use common data transfer protocols
`to exchange communications and information with other
`computers. . . . There is no centralized storage location,
`control point, or communications channel for the Internet
`. . . ."), aff'd, Reno v. ACLU, 521 U.S. 844 (1997). When
`content is viewed over the Internet, the viewing computer
`
`received by physical encoder hardware, located in a state, then
`retransmitted from a headend also located in a state." Id. ivi,
`however, has not identified the location or nature of its
`facility.
`
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`typically receives information from several different
`servers. See Akamai, 344 F.3d at 1189. Additionally, the
`growth of "cloud-based systems," or virtual platforms where
`content resides remotely on a distant server, further
`highlights the uncertainty as to whether an Internet
`retransmission service is or utilizes a facility that
`receives and retransmits television signals. See Elec.
`Privacy Info. Ctr. v. Nat'l Sec. Agency, 678 F.3d 926, 929
`n.1 (D.C. Cir. 2012).
`As Congress's intent is not apparent from the
`statutory text, we turn to § 111's legislative history to
`see if any "interpretive clues permit us to identify
`Congress's clear intent" as to whether ivi constitutes a
`cable system under § 111. See Cohen, 498 F.3d at 116
`(internal quotations marks ommitted).
`2.
`Legislative History
`Cable systems were built in the late 1940s to
`bring television programming to remote or mountainous
`communities and households that could not receive over-the-
`air broadcast television signals because of their geographic
`
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`location. Turner Broad. Sys., Inc. v. FCC, 512 U.S. 622,
`627 (1994) (citing United States v. Sw. Cable Co., 392 U.S.
`157, 161-64 (1968); D. Brenner, M. Price & M. Meyerson,
`Cable Television and Other Nonbroadcast Video § 1.02 (1992);
`M. Hamburg, All About Cable, Ch. 1 (1979)); see SHVERA
`Report, supra, at 2.
`In 1968 and 1974, before Congress passed the
`Copyright Act of 1976, the Supreme Court held that
`retransmissions of broadcast programming by cable systems
`did not constitute copyright infringement under the
`Copyright Act of 1909 because such retransmissions were not
`performances. See Teleprompter Corp. v. Columbia Broad.
`Sys., Inc., 415 U.S. 394 (1974), superceded by 17 U.S.C.
`§ 111, as recognized in Capital Cities Cable, Inc. v. Crisp,
`467 U.S. 691, 709-10 (1984); Fortnightly Corp. v. United
`Artists Television, 392 U.S. 390 (1968) (same). As a
`result, cable systems were able to retransmit broadcast
`television programming without obtaining licenses or
`incurring any fees. The Teleprompter Court, however,
`concluded that "if the Copyright Act of 1909 was inadequate
`
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`to govern the commercial relationships that had emerged in
`the interim, it was for Congress to create a substitute."
`MPAA, 836 F.2d at 602 (citing Teleprompter, 415 U.S. at
`414).
`
`In 1976, Congress responded to the Supreme Court's
`decisions by enacting § 111. Balancing two societal
`benefits, Congress enacted § 111 to enable cable systems to
`continue providing greater geographical access to television
`programming while offering some protection to broadcasters
`to incentivize the continued creation of broadcast
`television programming. SHVERA Report, supra, at 4; see
`Crisp, 467 U.S. at 710-11 ("Compulsory licensing not only
`protects the commercial value of copyrighted works but also
`enhances the ability of cable systems to retransmit such
`programs . . . thereby allowing the public to benefit by the
`wider dissemination of works carried on television broadcast
`signals."); E. Microwave, 691 F.2d at 132; MPAA, 836 F.2d at
`602. Section 111's compulsory license thus enabled cable
`systems to bypass the transaction costs and impracticalities
`of negotiating individual licenses with dozens of copyright
`
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`owners, while simultaneously ensuring that copyright owners
`were compensated. See Crisp, 467 U.S. at 711 & n.15; SHVERA
`Report, supra, at 3-4.
`In 1991, the Eleventh Circuit held that a
`satellite carrier was a cable system covered by § 111's
`compulsory licensing scheme. See Nat'l Broad. Co., Inc., v.
`Satellite Broad. Networks, Inc., 940 F.2d 1467, 1471 (11th
`Cir. 1991), superceded by 17 U.S.C. § 119, as recognized in
`Oman, 17 F.3d 344; see also EchoStar, 457 F.3d at 33-34. In
`1998, rather than incorporate satellite technology as a
`communications channel under § 111, Congress responded to
`the Eleventh Circuit's decision by codifying a separate
`statutory license for satellite carriers under § 119 of the
`Copyright Act. See 17 U.S.C. § 119 (the Satellite Home
`Viewer Act of 1988 ("SHVA")). In 1999, Congress noted that
`in "creating compulsory licenses, it is acting in derogation
`of the exclusive property rights granted by the Copyright
`Act to copyright holders, and that it therefore needs to act
`as narrowly as possible to minimize the effects of the
`government's intrusion on the broader market in which the
`
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`affected property rights and industries operate." S. Rep.
`No. 106-42, at 10 (1999); cf. Tasini v. N.Y. Times Co., 206
`F.3d 161, 168 (2d Cir. 2000) (Where the Copyright Act "sets
`forth exceptions to a general rule, we generally construe
`the exceptions 'narrowly in order to preserve the primary
`operation of the provision.'" (alterations omitted) (quoting
`Commissioner v. Clark, 489 U.S. 726, 739 (1989))).
`Finally, in 1994, Congress expressly included
`"microwave" as an acceptable communications channel for
`retransmissions. See 17 U.S.C. § 111(f)(3). Congress has
`not codified a statutory provision for Internet
`retransmissions, nor has it included the "Internet" as an
`acceptable communication channel under § 111. 7
`
`Toward the end of Congress's last session in 2000, an
`7
`amendment was proposed to clarify that § 111 does not apply to
`broadcast retransmissions over the Internet. Copyrighted
`Broadcast Programming on the Internet: Hearings Before the
`Subcomm. on Courts and Intellectual Prop. of the House Comm. on
`the Judiciary, 106th Cong. (2000) (statement of Marybeth Peters,
`Register of Copyrights). For indiscernible reasons, the
`amendment was ultimately removed from the legislation. See id.
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`3.
`Legislative Intent
`The legislative history indicates that Congress
`enacted § 111 with the intent to address the issue of poor
`television reception, or, more specifically, to mitigate the
`difficulties that certain communities and households faced
`in receiving over-the-air broadcast signals by enabling the
`expansion of cable systems. See Turner, 512 U.S. at 627;
`Crisp, 467 U.S. at 710-11; E. Microwave, 691 F.2d at 132;
`MPAA, 836 F.2d at 602; SHVERA Report, supra, at 1, 3.
`Through § 111's compulsory license scheme,
`Congress intended to support localized -- rather than
`nationwide -- systems that use cable or optical fibers to
`transmit signals through "a physical, point-to-point
`connection between a transmission facility and the
`television sets of individual subscribers." Turner, 512
`U.S. at 627-28 (citing Cmty. Commc'ns Co. v. Boulder, 600
`F.2d 1370, 1377-78 (10th Cir. 1981)). 8
`
`The statute's reference to "contiguous communities,"
`8
`and a "headend" in defining a cable system also indicates that
`Congress intended to direct § 111's license at localized --
`rather than national -- retransmission services. See 17 U.S.C.
`§ 111(f).
`
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`Congress did not, however, intend for § 111's
`compulsory license to extend to Internet transmissions.
`Indeed, the legislative history indicates that if Congress
`had intended to extend § 111's compulsory license to
`Internet retransmissions, it would have done so expressly --
`either through the language of § 111 as it did for microwave
`retransmissions or by codifying a separate statutory
`provision as it did for satellite carriers. See 17 U.S.C.
`§§ 111, 119.
`Extending § 111's compulsory license to Internet
`retransmissions, moreover, would not fulfill or further
`Congress's statutory purpose. Internet retransmission
`services are not seeking to address issues of reception and
`remote access to over-the-air television signals. They
`provide not a local but a nationwide (arguably
`international) service.
`Accordingly, we conclude that Congress did not
`intend for § 111's compulsory license to extend to Internet
`retransmissions. To the extent that there is any doubt as
`to Congress's intent, however, we proceed to Chevron step
`
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`two, and we conclude that the position of the Copyright
`Office eliminates such doubt in its entirety.
`B.
`
`Chevron Step Two
`The Copyright Office is the administrative agency
`charged with overseeing § 111's compulsory licensing scheme.
`See 17 U.S.C. § 111(d); Oman, 17 F.3d at 347; MPAA, 836 F.2d
`at 608. Although Congress has not expressly delegated
`authority to the Copyright Office to make rules carrying the
`force of law, "agencies charged with applying a statute
`. . . certainly may influence courts facing questions the
`agencies have already answered." United States v. Mead
`Corp., 533 U.S. 218, 227 (2001). To determine the
`appropriate amount of deference to an agency administering a
`statute, "courts have looked to the degree of the agency's
`care, its consistency, formality, and relative expertness,
`and to the persuasiveness of the agency's position." Id. at
`228 (citing Skidmore v. Swift & Co., 323 U.S. 134, 139-140
`(1944)). The weight accorded to the Copyright Office's
`interpretations "'depend[s] upon the thoroughness evident in
`its consideration, the validity of its reasoning, its
`
`-21-
`
`

`
`Case 11-788, Document 118-1, 08/27/2012, 702675, Page22 of 38
`
`consistency with earlier and later pronouncements, and all
`those factors which give it power to persuade.'" Id. at 228
`(quoting Skidmore, 323 U.S. at 140); see also Morris v. Bus.
`Concepts, Inc., 283 F.3d 502, 505-06 (2d Cir. 2002); Oman,
`17 F.3d at 345.
`The Copyright Office has consistently concluded
`that Internet retransmission services are not cable systems
`and do not qualify for § 111 compulsory licenses. In 1997,
`the Copyright Office concluded that Internet retransmission
`services, "so vastly different from other retransmission
`industries now eligible for compulsory licensing[,]" were
`not entitled to a § 111 compulsory license. U.S. Copyright
`Office, A Review of the Copyright Licensing Regimes Covering
`Retransmission of Broadcast Signals 97 (1997). In 2000, the
`Register of Copyrights (the "Register") asserted that "the
`section 111 license does not and should not apply to
`Internet retransmissions." Copyright Broadcast Programming
`
`on the Internet: Hearing Before the Subcomm. on Courts and
`Intellectual Property of the Comm. on the Judiciary, 106th
`Cong. 25-26 (2000) (statement of Marybeth Peters, The
`
`-22-
`
`

`
`Case 11-788, Document 118-1, 08/27/2012, 702675, Page23 of 38
`
`Register of Copyrights) (quoting Letter of Marybeth Peters,
`Register of Copyrights, to the Honorable Howard Coble (Nov.
`10, 1999)). The Register further concluded that "if there
`were to be a compulsory license covering such
`retransmissions, it would have to come from newly-enacted
`legislation and not existing law." Id.
`In 2008, the Copyright Office stated:
`The Office continues to oppose an
`Internet statutory license that would
`permit any website on the Internet to
`retransmit television programming without
`the consent of the copyright owner. Such
`a measure, if enacted, would effectively
`wrest control away from program producers
`who make significant investments in
`content and who power the creative engine
`in the U.S. economy. In addition, a
`government-mandated Internet license
`would likely undercut private
`negotiations leaving content owners with
`relatively little bargaining power in the
`distribution of broadcast programming.
`SHVERA Report at 188. It continued to hold this position in
`2011. See U.S. Copyright Office, Satellite Television
`Extension and Localism Act § 302 Report 48 (Aug. 29, 2011);
`2 Melville B. Nimmer & David Nimmer, Nimmer on Copyright
`§ 8.18[E][1] n.129.25 (Matthew Bender rev. ed. 2012) (1963).
`
`-23-
`
`

`
`Case 11-788, Document 118-1, 08/27/2012, 702675, Page24 of 38
`
`More broadly, the Copyright Office has maintained
`that § 111's compulsory license for cable systems is
`intended for localized retransmission services; under this
`interpretation, Internet retransmission services are not
`entitled to a § 111 license. See 57 Fed. Reg. 3284 (Jan.
`29, 1992) (codified at 37 C.F.R. § 201.17); see also Oman,
`17 F.3d at 346. With respect to satellite carriers, the
`Copyright Office has stated: "Examination of the overall
`operation of section 111 proves that the compulsory license
`applies only to localized retransmission services regulated
`as cable systems by the FCC." 57 Fed. Reg. 3284, 3292 (Jan.
`29, 1992); see also 62 Fed. Reg. 187-05, 18707 (Apr. 17,
`1997) ("[T]he Office retains the position that a provider of
`broadcast signals be an inherently localized transmission
`media of limited availability to qualify as a cable system."
`(citing 56 Fed. Reg. 31595 (July 11, 1991)).
`To reach this conclusion, the Copyright Office has
`explained that § 111(f) refers to "headends" and "contiguous
`communities," which are inapplicable to nationwide
`retransmission service. 57 Fed. Reg. 3284, 3290. The
`
`-24-
`
`

`
`Case 11-788, Document 118-1, 08/27/2012, 702675, Page25 of 38
`
`Copyright Office also noted that § 111 defines a "'distant
`signal equivalent' with reference to television stations
`'within whose local service area the cable system is
`located.'" Id. Because satellite carriers provide
`9
`nationwide retransmission service and because they are not
`located in their local service area, the Copyright Office
`concluded that satellite carriers were not cable systems
`under § 111. Id. Under this interpretation, Internet
`retransmission services cannot constitute cable systems
`under § 111 because they provide nationwide -- and arguably
`global -- services.
`Finally, the Copyright Office has consistently
`recognized that § 111's reference to "other communications
`channels" should not be read broadly to include "future
`unknown services," such as satellite, multipoint
`distribution ("MMDS"), and satellite master antenna
`television ("SMATV") transmissions. Id. at 3293-96 & n.5.
`
`A "'distant signal equivalent' is a figure used to
`9
`calculate the percentage of gross receipts owed by a cable system
`to the copyright holders of programs broadcast." Oman, 17 F.3d
`at 347 n.6 (citing sources).
`
`-25-
`
`

`
`Case 11-788, Document 118-1, 08/27/2012, 702675, Page26 of 38
`
`In 1992, in response to whether "future unknown services"
`could qualify for compulsory licenses, the Copyright Office
`concluded that because "the 1976 Act did not consider the
`public policy implications of extending a compulsory license
`to these non-cable services, the Copyright Office should not
`assert the authority to interpret the Copyright act in this
`way. Id. at 3293, n.5.
`In light of the Copyright Office's expertise, the
`validity of its reasoning, the consistency of its earlier
`and later pronouncements, and the consistency of its
`opinions with Congress's purpose in enacting § 111, we
`conclude that the Copyright Office's position is reasonable
`and persuasive. See Mead, 533 U.S. at 227-28.
`Accordingly, applying Chevron, we hold that:
`(1) the statutory text is ambiguous as to whether ivi, a
`service that retransmits television programming over the
`Internet, is entitled to a compulsory license under § 111;
`(2) the statute's legislative history, development, and
`purpose indicate that Congress did not intend for § 111
`licenses to extend to Internet retransmissions; (3) the
`
`-26-
`
`

`
`Case 11-788, Document 118-1, 08/27/2012, 702675, Page27 of 38
`
`Copyright Office's interpretation of § 111 -- that Internet
`retransmission services do not constitute cable systems
`under § 111 -- aligns with Congress's intent and is
`reasonable; and (4) accordingly, the district court did not
`abuse its discretion in finding that plaintiffs were likely
`to succeed on the merits of the case.
`II. Irreparable Injury
`We next turn to whether the district court abused
`its discretion in finding that plaintiffs would suffer
`irreparable harm in the absence of a preliminary injunction
`-- that is, harm to the plaintiff's legal interests that
`could not be remedied after a final adjudication. See
`Kickham, 558 F.3d at 209 (abuse of discretion); Salinger,
`607 F.3d at 82 (irreparable harm). Harm may be irreparable
`where the loss is difficult to replace or measure, or where
`plaintiffs should not be expected to suffer the loss.
`Salinger, 607 F.3d at 81. Under Salinger, courts may no
`longer simply presume irreparable harm; rather, plaintiffs
`must demonstrate that, on the facts of the case, the failure
`to issue an injunction would actually cause irreparable
`
`-27-
`
`

`

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