SDNY rules against Locast, knifes beleaguered free TV

[UPDATE: At 9:47 a.m. today, Thursday, Sept. 2, I received word that Locast is suspending operations, effective immediately.]  

Locast, an online retransmitter of broadcast television, and the American public together suffered a major blow on August 31, as the federal district court in New York handed partial summary judgment to ABC, CBS, Fox, and NBC in the networks' copyright infringement lawsuit.

Locast has irritated me, but only for not expanding fast enough.  Where I live, near Providence, R.I., the service is not available.  It is available in New York to the south and Boston to the north, but access is strictly geo-fenced.  As a result, my family cannot see free broadcast TV without springing for an expensive subscription to a cable service or streaming-channel consolidator.

That's not really Locast's fault.  Broadcasters have reduced their power over the years, making free TV incrementally more difficult to access.  I live just nine miles from the broadcast towers that serve the Rhode Island state capital, but I cannot receive any signal with an interior or window-mounted antenna.

Indeed, the networks seem to want out of the broadcast game altogether.  Kickbacks from online consolidators such as Hulu Live and YouTube TV, and the networks' profits from their own services, such as Paramount+ (and Hulu Live, in part), are more lucrative than broadcasting and come with no FCC regulatory strings attached.  Local affiliates, including vital broadcast news outlets, fall through the cracks, wreaking further havoc in our information market, but that's no matter to the bottom line.  Locast threatened to breathe life back into the corpse of free TV, so the networks pursued the service with a vengeance. 

Locast is a non-profit, and its "business" model is simple.  It sets up a technology hub in a place such as Boston and converts local broadcast signals to online streams.  Home cord-cutters thus have their access to free TV restored through the internet service they already have, no antenna needed.

On the face of it, of course, this business model would constitute copyright infringement for copying and redistributing the broadcast signals.  But Congress, in a rare showing of commitment to the public interest rather than to the profit margins of our corporate overlords, built an exemption into the Copyright Act.  Governmental or nonprofit organizations are permitted to retransmit "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."

Locast is freely available and supported only by voluntary donations.  But streaming is interrupted at 15-minute intervals by 15-second pleas for donations.  Like the ad-free versions of pay-TV services, Locast offers absolution from these interruptions in exchange for a minimum "donation" of $5 per month.  The $5-donation model proved sufficiently successful that Locast was able to cover its operating costs and use the excess to expand to new markets.

And that, expansion, was Locast's sin, in the eyes of the district court.  Judge Louis L. Stanton opined that Congress could have written "maintaining and operating and expanding" into the statutory exemption, but did not.  So Locast's dedication of additional accounts received to expansion was fatal to its claim of copyright exemption.

I find the court's reading of the statute exceedingly cramped.  Locast plainly is spending money to do precisely what Congress intended: making free TV available to people who cannot receive it without hiring a contractor to install an antenna tower.  That the books must balance within each micro-market rather than across live markets, in the utter absence of evidence that a dime has been diverted to any other objective, absurdly splits hairs.

Locast lawyers, joined by the Electronic Frontier Foundation, say they are examining the ruling.  Locast announced yesterday that it is for now ceasing streaming interruptions requesting donations. 

There are ways that Locast can work around its current predicament, I reason. Locast has been supported by some major corporate donors who are not old-school TV insiders, such as AT&T, which contributed $500,000.  Internet service providers such as AT&T benefit from Locast, because retransmissions are streamed into homes, rather than broadcast.  With more careful balancing of the books, it should be possible, if cumbersome, to parse operations between discrete markets and to raise capital to support expansion directly.

It's a shame that such gamesmanship should be required for what is clearly a public service.  And a bigger problem might remain for American information and entertainment consumers in the ongoing, if prolonged, death throes of free TV.  We might hope that Congress would obviate the fray with bold measures that would reinvigorate the landscape of electronic expression by enhancing public-interest limitations on digital intellectual property and guaranteeing access to the internet for all Americans.

We also might hope to see pigs take flight.

The case is American Broadcasting Cos. v. Goodfriend, No. 1:19-cv-07136 (S.D.N.Y. Aug. 31, 2021). I bet Judge Stanton is one of those people who has both cable and Fubo and can't use either one unless someone helps him with the remote.

Despite IP exclusion, insurer bound to defend in right-of-publicity case over running shoes, Mass. high court holds

Upon an underlying case involving the right of publicity coupled with consumer protection and equity claims, the Massachusetts Supreme Judicial Court (SJC) today held insurers duty-bound to defend an insured running-shoe maker, despite the exclusion of intellectual property claims from coverage.

Abebe Bikila in Rome, 1960

Massachusetts-based Vibram USA, through its affiliate Vibram FiveFingers, named a line of "minimalist" running shoes after Ethiopian Olympic athlete Abebe Bikila, who ran barefoot when he set a marathon world record in Rome in 1960.  (See clips from 1960 and Bikila's 1964 marathon win in Tokyo on the Olympic Channel).  Seriously injured in a car accident in 1969, Bikila died of a cerebral hemorrhage in 1973.  Since then, the family has made commercial use of the Bikila name in enterprises including a Spanish retail sporting goods chain, a Bikila biography, a Japanese commercial, and a biographical feature film.  The family objected to Vibram's association of its shoe with Bikila without permission.

The complaint comprised four counts: (1) right of publicity under the Washington Personality Rights Act, (2) violation of the Washington Consumer Protection Act, (3) unfair competition under the Lanham Act, 15 U.S.C. § 1125(a), and (4) unjust enrichment.  Vibram's general insurance and liability policies with two providers, Salem-based Holyoke Mutual and Maryland Casualty, covered "personal and advertising injury liability," without defining "advertising injury"; however, the coverage excluded intellectual property liability.  The insurers sought, and the superior court granted, declaratory relief from coverage.  The SJC reversed.

To trigger an insurer's duty to defend, the insured need show only "a possibility that the liability claim falls within the insurance coverage."  The duty to defend is broader than the duty to indemnify.  The Bikila complaint alleged that Vibram used Bikila as "an advertising idea."  Bikila family members alleged that they had "intentionally and specifically connected the name to running-related ventures, and the name itself conveys a 'barefoot dedication to succeed under any circumstances,' a desirable quality for any of these ventures."  The insurers were mistaken in arguing that the claim was limited to the right of publicity, or was synonymous with trademark infringement, both IP theories excluded from coverage.  Rather, the essence of the Bikila claim was that Vibram sought to profit from Bikila-associated ideas.

Vibram FiveFingers Bikila Running Shoes (by Fuzzy Gerdes, CC BY 2.0)

From the court's opinion, it is not clear to me which or what combination of claims ensures that a complaint such as this one rises beyond the coverage exclusion.  Count 1 right of publicity by itself would not have been covered by the policy, and it is informative to see that the privacy tort now resides firmly in the IP household.  I suspect that count 3 under the Lanham Act also constitutes an excluded IP claim.  So perhaps statutory consumer protection and equitable quasi-contract each could do the trick.  Yet those theories, in any given case, could overlap wholly with IP claims.  The court's opinion suggests that there is something special about the misappropriation of an "advertising idea" that sets this case apart qualitatively from IP claims.  I'm not sure I see it.

Apparently the "advertising injury" language of the insurance coverage here is not without precedent, and the court gave an informative catalog of the "wide variety of concepts, methods, and activities related to calling the public's attention to a business, product, or service [that have] constitute[d] advertising ideas":

• logo and brand name, Street Surfing, LLC v. Great Am. E&S Ins. Co., 776 F.3d 603, 611-612 (9th Cir. 2014);
• patented telephone service enabling sale and promotion of products, Dish Network Corp. v. Arch Specialty Ins. Co., 659 F.3d 1010, 1022 (10th Cir. 2011);
• advertising strategy of "trad[ing] upon a reputation, history, and sales advantage" associated with Native American made products, Native Am. Arts, Inc. v. Hartford Cas. Ins. Co., 435 F.3d 729, 733 (7th Cir. 2006);
• concept of "Psycho Chihuahua" obsessed with Taco Bell food to advertise business, Taco Bell Corp. v. Continental Cas. Co., 388 F.3d 1069, 1072 (7th Cir. 2004);
• word "NISSAN" to promote vehicles to public, constituting "quintessential example of trademark functioning to advertise a company's products," State Auto Prop. & Cas. Ins. Co. v. The Travelers Indem. Co. of Am., 343 F.3d 249, 258 (4th Cir. 2003);
• use of internet domain, CAT Internet Servs., Inc. v. Providence Wash. Ins. Co., 333 F.3d 138, 142 (3d Cir. 2003);
• artwork and product model numbers designed to promote products (claim for trade dress infringement), Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179, 1189 (11th Cir. 2002);
• word "fullblood," connoting desirable quality, to advertise Simmental cattle breed, American Simmental Ass'n v. Coregis Ins. Co., 282 F.3d 582, 587 (8th Cir. 2002);
• agent misrepresenting himself as working for another company for purposes of inducing customers to make purchases, Gustafson v. American Family Mut. Ins. Co., 901 F. Supp. 2d 1289, 1301 (D. Colo. 2012); and
• patented technology used to market music for online sales, Amazon.com Int’l, Inc. v. American Dynasty Surplus Lines Ins. Co., 120 Wash. App. 610, 616-617, 619 (2004).

 "Advertising injury" is not "injury caused by other activities that are coincidentally advertised" (quoting Couch treatise).  "Otherwise stated, '[i]f the insured took an idea for soliciting business or an idea about advertising, then the claim is covered ... [b]ut if the allegation is that the insured wrongfully took a ... product and tried to sell that product, then coverage is not triggered'" (quoting Washington precedent and offering authorities in accord from other states).  Thus coverage is excluded in cases such as:

• use related to manufacture and not marketing, Winklevoss Consultants, Inc. v. Fed. Ins. Co., 991 F. Supp. 1024, 1034 (N.D. Ill. 1998);
• conspiracy to fix egg prices, Rose Acre Farms, Inc. v. Columbia Cas. Co., 662 F.3d 765, 768-769 (7th Cir. 2011);
• disparagement of competitor's pineapples to undermine their advertising, Del Monte Fresh Produce N.A., Inc. v. Transp. Ins. Co., 500 F.3d 640, 643, 646 (7th Cir. 2007);
• advertising another's patented method for cutting concrete, Green Mach. Corp., v. Zurich-American Ins. Group, 313 F.3d 837, 839 (3d Cir. 2002);
• design of product, Ekco Group, Inc. v. Travelers Indemnity Co. of Ill., 273 F.3d 409, 413 (1st Cir. 2001);
• misappropriation of product design, Frog, Switch & Mfg. Co. v. Travelers Ins. Co.,
  193 F.3d 742, 749-750 (3d Cir. 1999);
• taking of customer list and solicitation of customers from it, Hameid v. National Fire Ins. of Hartford, 31 Cal. 4th 16, 19-20 (2003);
• manufacture and sale of patented product, Auto Sox USA Inc. v. Zurich N. Am., 121 Wash. App. 422, 427 (2004).

So memorize those, and let me know when you're ready for the exam.

The case is Holyoke Mutual Insurance Co. in Salem v. Vibram USA, Inc., No. SJC-12401 (Mass. Sept. 12, 2018).  Suffolk Law has the oral argument video of Feb. 6.  The case was heard by the full court upon granting direct appeal, and the unanimous opinion was authored by Associate Justice David A. Lowy, a Boston University law grad and former ADA and Goodwin Proctor litigator.