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Locast slapped with permanent injunction

A New York federal court on Wednesday (September 15) ordered a permanent injunction that bans Locast from operating, a decision that arrives just weeks after the court ruled that Locast's local broadcast TV streaming service is not exempt from copyright rules.

Judge Louis L. Stanton's order permanently enjoins Locast from operating its service pursuant to a copyright case with major US broadcasters, but does open the door for Locast and its founder and chairman David Goodfriend to request a stay pending appeal.

Locast suspended operations in early September after a court ruled that its service was not exempt from copyright rules. 
(Image source: Locast)
Locast suspended operations in early September after a court ruled that its service was not exempt from copyright rules.
(Image source: Locast)

Within the order, the judge pointed to a December 2019 agreement made by Locast and US broadcasters that if the court determined that Locast does not qualify for a copyright exemption, they'd agree that the court should "immediately enter a Permanent Injunction" that bars Locast's operation. "Nothing in this Agreement is intended to bar Mr. Goodfriend and SFCNY from applying for a stay of the Permanent Injunction pending appeal, nor to bar the Broadcasters from opposing any such stay," the agreement continued. SFCNY refers to Sports Fans Coalition NY, the non-profit entity that operated Locast.

Locast suspended operations on September 2, just days after the court handed down a ruling that favored the nation's major broadcasters. The court determined that Locast does not qualify for a copyright exemption typically set aside for nonprofits.

That ruling stemmed from a lawsuit led by ABC, CBS, Fox and NBCU alleging that Locast was distributing their local TV station signals without authorization and, therefore, was violating copyright law. Locast originally was available for free to registered users, with programming interrupted every 15 minutes by ads requesting donations, starting at $5 per month. Locast users who made donations did not see those program-interrupting ads.

Judge Stanton argued that Locast's donation-seeking extended beyond what is "necessary to defray the actual and reasonable costs of maintaining and operating" the service, and that funds coming way of donations were used to help fuel Locast's market expansions.

Locast, which did not oppose this week's order for a permanent injunction, has been asked for comment on the court's injunction order. Earlier this month, attorneys with the Electronic Frontier Foundation (EFF), a nonprofit organization that's helping Locast with its legal battle, hinted that an appeal could be forthcoming.

'Brief bench trial' sought to address statutory damages

In a motion filed Thursday (September 16), the broadcasters and Locast asked the court to schedule a "brief bench trial" to address a statutory damages award before final judgment is entered, and before an appeal proceeds. Notably, an agreement detailed in the motion appears to limit the scope of the litigation, particularly against Goodfriend as an individual.

"The Parties will first attempt to agree on a statutory damage award against SFCNY," the motion states, referring to the Sports Fans Coalition NY, the non-profit entity that operated Locast. "If the Parties cannot reach agreement, the Broadcasters agree to pursue a statutory award not to exceed $10,000 per infringed and eligible work, and solely against SFCNY."

"The Broadcasters agree to Withdraw any claims for monetary remedies of any kind whatsoever (e.g., legal, equitable, statutory, direct, indirect, derivative, or otherwise) against Mr. Goodfriend concerning the Locast service," the motion explained, noting that an agreement to withdraw claims for monetary damages against Goodfriend does not alter his status as a defendant for any other purpose.

"For the avoidance of doubt," the motion continued, "the Broadcasters are not agreeing that they have suffered no economic harm caused by the infringement pled in the Complaint, only that they are not going to seek a statutory or other monetary damages award against Mr. Goodfriend" and a group of other individuals that includes former or current SFCNY board members and employees.

However, the agreement does entitle the broadcasters to discovery from Goodfriend, SFCNY and other third parties for certain elements linked to the case. Those elements include IP addresses and other data in possession or control of that group that tends to identify where the users of Locast are physically located, as well as all sources of funding and support for SFCNY.

The scope of potential discovery also includes all lobbying and consulting activity undertaken by Goodfriend and certain of his consulting parties related to positions taken on retransmission consent-related issues and other activity undertaken for the benefit or in support of Dish Network, DirecTV and AT&T "and any other pay-TV platform."

The pay-TV group appears to be of particular interest to broadcasters because Locast was viewed as a tool pay-TV providers could use to gain leverage in retransmission negotiations with broadcasters, and possibly avert any short-term blackouts of local broadcast TV signals. Before Locast suspended service, Sling TV, the Dish-owned OTT-TV service, integrated Locast into its app-based channel guides.

Among notables in that group, AT&T, which recently spun-off its pay-TV business, donated $500,000 to SFCNY back in 2019. Goodfriend is a former exec at Dish Network. In an interview in November 2020, Goodfriend characterized Dish as a "small client" in his law and lobbying practice, but also stressed that Charlie Ergen, Dish's chairman, turned down requests for contributions to Locast from Dish or Ergen's foundation.

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— Jeff Baumgartner, Senior Editor, Light Reading

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