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IP/Entertainment Case Law Updates

Spanski Enterprises, Inc. v. Telewizja Polska, S.A.

D.C. Circuit affirms judgment for plaintiff and statutory damages in copyright infringement action, holding that foreign broadcaster that uploads copyrighted content to its website and directs that content onto computer screens in U.S. at user’s request commits an actionable domestic violation of Copyright Act.

Plaintiff Spanski Enterprises Inc., a Canadian broadcaster, sued Telewizja Polska S.A., Poland’s national public television broadcaster, for copyright infringement. After the district court held TV Polska liable for infringing Spanski’s exclusive U.S. performance rights in 51 television episodes, and ordered TV Polska to pay $60,000 per episode ― more than $3 million ― in statutory damages, TV Polska appealed, arguing that its liability represented an impermissible extraterritorial application of the Copyright Act. The D.C. Circuit affirmed both the district court’s liability determination and its award of statutory damages. 

TV Polska entered a licensing agreement with Spanski granting it exclusive North and South American broadcasting rights in certain content. Following an earlier dispute, the parties signed a 2009 settlement agreement establishing that Spanski had the exclusive right to perform the content, including over the Internet, in those markets. Subsequently, TV Polska, which also includes on its website a video-on-demand feature that makes its programming publicly available, utilized “geoblocking” technology to prevent users in the Americas from accessing the restricted content through TV Polska’s website. Spanski brought action for infringement of its exclusive public performance rights after it discovered, in late 2011, that certain content, including 51 individual television episodes which Spanski registered with the U.S. Copyright Office, was not properly geoblocked, and was available through TV Polska’s on-demand system to users who should have been geographically restricted. 

After a five-day bench trial, the district court found that the 51 copyrighted episodes had been available and viewed in the U.S. during the period in question, and that the availability of the episodes was not due to a failure in the geoblocking system, but rather to “volitional action” by TV Polska in uploading the content to its website, and by its employees in changing the settings on the on-demand system. Consequently, the district court held TV Polska liable under the Copyright Act for infringing Spanski’s exclusive U.S. performance rights in the 51 episodes. The district court further imposed statutory damages of $60,000 per infringed episode, for a total of $3,060,000, finding that TV Polska’s infringement was willful and intentional, based on the lack of evidence that the change could have occurred accidentally and on TV Polska’s disingenuous attempt to cover its tracks by deleting certain nongeoblocked files and retroactively altering certain work logs. 

On appeal, TV Polska first argued that maintaining its fully automated video on-demand system could not constitute a copyright violation, since only the end user who actually selects which content to view engages in sufficient conduct to be liable. The court rejected this argument as a matter of simple statutory interpretation of the Copyright Act. According to the court, TV Polska publicly performed the 51 episodes when it “show[ed]” them “to the public” through its video on-demand system, which is a “device or process” that rendered “members of the public capable of receiving the performance . . . in separate places and . . . at separate times.” As the Copyright Act contains no requirement that a work is performed only if a third-party end user plays no role in the showing, the court held that TV Polska’s conduct clearly fit within infringement of the public performance right as so defined. The court found further support from the Supreme Court’s 2014 decision in American Broadcasting Companies v. Aereo, Inc., which held that a service that would, at the user’s request, direct antennae to capture broadcast television signals and retransmit them over the Internet infringed the television broadcasters’ public performance rights. 

Second, TV Polska argued that holding it liable for that infringement would constitute “an impermissible extraterritorial application” of the Copyright Act, since TV Polska itself committed no act within the United States. To guide the analysis, the D.C. Circuit looked to the Supreme Court’s 2016 decision in RJR Nabisco, Inc. v. European Community, which developed a two-step test for analyzing whether a statutory violation that, at least in part, takes place abroad gives rise to liability. Under the first step, the court asks whether the statute gives a clear, affirmative indication that it applies extraterritorially, but here the parties and court all agreed that the Copyright Act has no extraterritorial application. 

Under the second step of the RJR Nabisco test, the court looks to whether the case at issue, notwithstanding its extraterritorial elements, “involves a permissible domestic application” of the statute. If the conduct relevant to the statute’s focus occurred in the United States, then the case involves a permissible domestic application even if other conduct occurred abroad. If the conduct relevant to the statute’s focus occurred abroad, then the case “involves an impermissible extraterritorial application regardless of any other conduct that occurred in U.S. territory.” Applying this test, the court first reasoned that the Copyright Act “focuses” on protecting the exclusivity of the rights it guarantees, which, in this case, was violated when the 51 episodes were performed publicly on computer screens in the United States. Therefore, the court concluded that the conduct relevant to the statute’s focus occurred domestically, and that the case involved a “permissible domestic application” of the Copyright Act.

From a policy perspective, the D.C. Circuit reasoned that “Congress had good reason to allow domestic copyright holders to enforce their rights against foreign broadcasters who direct infringing performances into the United States.” Since the Internet allows for such ease of transnational transmission, the court stated that TV Polska’s interpretation would frustrate the intent of Congress by facilitating widespread infringement, “rendering copyright in works capable of online transmission largely nugatory.” As the United States pointed out in an amicus brief, TV Polska’s interpretation would allow “large-scale criminal copyright pirates” to avoid liability “simply by locating their servers outside the United States.” The court therefore adopted the rule that a foreign broadcaster that directs infringing performances into the U.S. from abroad commits a domestic violation of the Copyright Act.

Finally, the D.C. Circuit affirmed the district court’s finding of willfulness and its ultimate damage award of $60,000 per infringed episode, for a total of $3,060,000. The district court had based the willfulness determination on its findings that TV Polska “deliberately removed geoblocking from the 51 episodes at issue, was aware of Spanski’s exclusive right to broadcast those episodes in the U.S., and took purposeful after-the-fact steps to hide its conduct.” According to the appellate court, it required “no great leap from these factual predicates” to reach the ultimate conclusion “that TV Polska knew it was up to no good,” and that damages of $60,000 per episode were appropriate in light of the circumstances. 

Summary prepared by Jonathan Zavin and Jordan Meddy