Zediva: The gift that keeps giving

Copyright If I were running the MPAA I might secretly offer to fund Zediva’s appeal of the federal judge’s order yesterday granting the studios a preliminary injunction against the DVD streaming service, if only to get its central holding affirmed by a circuit court. Apart from the order’s immediate effect of shutting down Zediva, the case could prove very useful to the studios (as I noted in a previous post) and the broader its legal authority the better.

The ruling is a complete victory for the MPAA. Citing case-law, Congressional committee reports and statutory language going back to before the 1976 Copyright Act, U.S. District Judge John Walter makes mincemeat of Zediva’s arguments that its service comprises anything other than an unlicensed public performance of the studios’ copyrighted works, as both a factual and legal matter.

Defendants’ transmissions are “to the public” because the relationship between Defendants, as the transmitter of the performance, and the audience, which in this case consists of their customers, is a commercial, “public” relationship regardless of where the viewing takes place. The non-public nature of the place of the performance has no bearing on whether or not those who enjoy the performance constitute “the public” under the transmit clause.

Moreover, it does not matter that Defendants’ customers are viewing the transmissions at different times and in different places. Section 101 of the Copyright Act explicitly states that a performance can still be public under the transmit clause “whether the members of the public … receive it in the same place or in separate places and at the same time or at different times.” 17 U.S.C. § 101. A 1967 Report by the House of Representatives reveals that Congress added this language to the transmit clause to cover precisely the sort of single-viewer system developed by Defendants:

[This language makes doubly clear that] a performance made available by transmission to the public at large is “public” even though the recipients are not gathered in a single place, and even if there is no direct proof that any of the potential recipients was operating his receiving apparatus at the time of the transmission.

Ouch.

Judge Walker handed the studios two other plums, however, that could prove even more valuable, especially if his analysis were some day embraced by the Ninth Circuit.

First, he disposes, albeit in a footnote, of any effort to appeal to the Second Circuit’s holding in the Cablevision remote-DVR case, which found that some types of Internet transmissions could be considered private performances, not subject to copyright owners’ exclusive public performance right.

Defendants argument that their performances are not “to the public” in light of The Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (“Cablevision”) is not persuasive. Under the facts of that case, the Second Circuit found that the transmissions were not “to the public” because “each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber.” … In this case, unlike Cablevision, Defendants’ customers do not produce their own unique copy of Plaintiffs’ Copyrighted Works. Instead … the same DVD is used over and over again to transmit performances of Plaintiffs’ Copyrighted Works.

With everyone from Apple to Amazon itching to provide consumers with cloud-based storage and retrieval of video content, the studios are obviously concerned not to let any more of that business fall outside their licensed control than the Cablevision case has already put there. A holding along the lines of Judge Walkers’ finding by the Ninth Circuit would certainly be helpful in that regard.

Similarly, Judge Walker goes pretty much all in on protecting and preserving the studios’ current business model.

As the copyright holders, Plaintiffs have the exclusive right to decide when, where, to whom, and for how much they will authorize transmission of their Copyrighted Works to the public… In exercising this right, Plaintiffs often negotiate agreements that grant licensees the exclusive right to perform a Copyrighted Work for a period of time. However, because Defendants operate in violation of Plaintiffs’ copyrights and without any license, they have and will perform works during these negotiated exclusivity periods. Thus, Defendants interfere with Plaintiffs’ grants of exclusivity to their licensees, Plaintiffs’ ability to negotiate similar agreements in the future (because potential licensees will not be willing to pay a premium for a non-exclusive period), Plaintiffs’ relationships, including the goodwill developed with their licensees, and Plaintiffs’ overall ability to control the use and transmission of their Copyrighted Works.

Why that particular monetization model, in and of itself, deserves express legal protection the judge doesn’t bother to say. But I doubt the MPAA could have drafted the order better itself if it had the chance.

No doubt the studios would love see their preferred business model affirmed by the Ninth Circuit.