The future of Locast is in peril after a New York federal court granted a partial summary judgment favoring major US broadcasters, which have long claimed that Locast retransmits their local TV station signals without authorization and, therefore, violates copyright law.
Locast has argued that it operates as an independent, nonprofit organization that provides a public service in transmitting free, over-the-air broadcasts, holding that its activities are expressly permitted under the Copyright Act. ABC, NBCU, Fox and CBS disputed that position in a lawsuit filed in 2019.
Locast is available for free and uses geolocation technology to ensure users can only access the service in supported local TV markets. But Locast does encourage users to pay a voluntary donation (starting at $5 per month). Viewers who don't pay the donation see a brief ad every 15 minutes encouraging them to contribute.
Following its recent expansion into Milwaukee, Locast's service is now available in 36 US markets. In November 2020, David Goodfriend, Locast's founder and chairman, told Light Reading that the service, which debuted in January 2018, had reached operational sustainability, despite the fact that only a "small portion" of Locast's users make voluntary contributions.
In a ruling rendered Tuesday (August 31), the US District Court for the Southern District of New York effectively found that Locast's service is not exempt from Section 111 (a) (5) of the Copyright Act, which sets certain limitations on a copyright holder's exclusive rights. The court noted that certain secondary transmissions are exempted if, for example, they are made by a government body or another nonprofit organization "without any purpose of direct or indirect commercial advantage," and without charge to the recipients of the secondary transmission other than to defray "the actual and reasonable costs of maintaining and operating the secondary transmission service."
Locast's service does not hold up to that standard, the court said, noting that the minimum $5 monthly fee for month-long, uninterrupted access to the service "is not merely a recurring gift to a charitable cause."
"Based on the undisputed facts, it is clear that the Locast service is not offered without charges other than those 'necessary to defray the actual and reasonable costs of maintaining and operating' its service," Judge Louis L. Stanton wrote. "It is of no consequence that a number of users employ the service without paying."
Locast, the judge added, still solicits and receives "substantial amounts" from consumers for its uninterrupted service. According to the court, Locast's total costs in 2020 were $2.43 million, and total revenues for 2020 were $4.51 million ($4.37 million from users and $147,161 from other sources).
"On those undisputed facts, in 2020 Locast made far more money from user charges than was necessary to defray its costs of maintaining and operating its service," the judge wrote. He added that income from charges to recipients can only be used to defray the "actual and reasonable costs" to maintain the service, not expand it into new markets.
Locast to evaluate its options
In an email to registered users, Locast called the ruling "disappointing," adding that it and its legal team are evaluating their options. The Electronic Frontier Foundation (EFF), a nonprofit group that has stepped in to help Locast cover its legal costs, noted that more than 3 million people use Locast to access local TV, including those who can't access those signals with digital over-the-air antennas. The ruling, the organization added, threatens to cut their access to local news and vital information during the current pandemic and when natural disasters strike.
"We are disappointed that the court ruled against Locast on its copyright defense," the Electronic Frontier Foundation said in a statement. "The court interpreted the law in an artificially narrow way. Congress wrote copyright's nonprofit retransmission exception to make sure that every American has access to their local broadcast stations, and expanding access is exactly what Locast does."
The ruling, the EFF added, "treats copyright law not as an engine of progress but a moat protecting the privileged position of the four giant broadcasting networks."
Latest victim of the courts
Locast is the latest streamer of local broadcast TV signals to fall short in court. Aereo, a now-defunct startup that captured local TV broadcasts using thumbnail-sized antennas before redistributing those signals to paying customers via the Internet, shut down operations in 2014 in the wake of a US Supreme Court ruling that favored US broadcasters. Ivi, another similar service, was ordered by a New York court to shut down in 2011.
- US broadcasters attack Locast
- Locast has achieved operational sustainability, chairman says
- AT&T donates $500K to Locast
- Locast puts a bit more meat on the bone
- Aereo Presses Pause… for Good?
— Jeff Baumgartner, Senior Editor, Light Reading