Judge's Ruling Rattles TV Networks

The major television networks were hit with a legal earthquake on Thursday when a federal judge issued a shocking ruling by declaring that the streaming company FilmOn was potentially entitled to a compulsory license of broadcasters' copyrighted programming.

According to The Hollywood Reporter, if the judge's opinion survives scrutiny on appeal, it could mean that CBS, Fox, NBC and ABC have to license their programming to a digital outlet at below-market rates.

Coming less than a year after Aereo shut down following a devastating Supreme Court ruling, U.S. District Court Judge George W. Wu's opinion in favor of FilmOn and against the pleas of the major broadcast networks provides a new interpretation of Section 111 of the Copyright Act, which was enacted by Congress in the 1970s thanks to a perception of the burdensome nature of requiring cable systems to negotiate with every copyright owner over the retransmission of channels on public airwaves.

The ruling is surprising because the 2nd U.S. Circuit Court of Appeals rejected a bid by a prior TV streamer, Ivi, to take advantage of the compulsory licensing system. Aereo also attempted unsuccessfully at a late stage to use Section 111 as its own salvation. But past courts have rejected this approach out of fear that the streamers would not be able to control where content is routed and the result would "destabilize the entire industry."

In a tentative decision, Judge Wu acknowledged the prior "analogous case" of Ivi, but said he "disagrees" with its conclusions. At a hearing this morning, he adopted the tentative as final and ruled in favor of FilmOn.

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