the morning all our first case for argument this morning is film on x rose's window to the world communication mr baker copyright holder on the one hand and the governmental and public interests in the public good of broad access to free to air broadcast television on the other hand section one eleven reflects that balance creating a compulsory license for cable companies as defined in section one eleven f three of the one nine hundred seventy six act because film one acts meets all of the unambiguous statutory requirements in that provision film acts qualifies as a cable system under section one eleven and is therefore entitled to a compulsory license to exclude film and action the benefits and the public from the related benefits of that compulsory license the facility has and what a communications channel is in other words what a facility is and what a facility does they are different they are not the same well it is true isn't it that only the  subscriber to the film on services is able to see the broadcast data that is exactly right your honor and that that emphasizes that the conflation be based on the first the district court concludes that as a matter of law in the egg the record a page fourteen that the individual actually received the signal and that's what your honor just that only the individual can see the signal to the broadcast because it's transmitted impact across cables wires and microwave or the internet you said on ambiguous we was the word in the us because it was there an ambiguity necessary to get into all of that discussion no ambiguity in the statute your honor and therefore we don't need to get into things like legislative history or for the opinions of the copyright office which we can discuss but we don't even need to get there because the statute made in response to fortnightly and teleprompter which were then destructive technologies then technologies that were changing the industry now of course they're all technologies that antiquated technologies and so today we have new technologies that are more efficient for the consumer that are technologies that frankly address the exact same concerns that cable television addressed in one nine hundred seventy six and by that your honour's i mean in one nine hundred seventy six one of the concerns was people who lived in rural areas who couldn't see broadcast television and as i said this was already determined to be a public good there was a responsibility of all those who were companies or entities who were permitted to transmit on the public airwaves that they provide their signals to the public these people in rural areas could not see those signals today it's different today there are satellite television under section one thousand and section one twenty two there are cables going every which way that are interconnected and then there's the internet which which operates on those same cables that are connected around the world and today many people don't have a satellite dish and they don't have cable television a lot of new apartments and high rise buildings they don't there's no cable jack in the wall the old cable the thing that had the why are sticking out that you had to screw in and fiddle with for a while it doesn't exist in a lot of places but everybody has the internet and a lot of people today rely solely on the internet to access the public  has as we've highlighted in our papers the f c c has an app an item and n p r am currently on the desk but still on on that just it's still an active open item as to whether or not it should regulate actively o t c and the piece over the top meaning on the internet providers of the channel that you're programming service that the f c c is the entity that's tasked with stepping in and regulating the job of the court today is to independently give a fresh look to the statutory language and give that statutory language life and the only way to give that life is to avoid reading in additional requirements which is exactly what the district court did here which is what the copyright office has urged everyone to do and getting back to the initial point i was going to make that conflation between what a cable system is and what it does well and i appreciate that you give it you know that we understand the history and the evolution from seventy six to now but doesn't the decision of the term microwave to the definition suggest that congress did not intend for a broad definition of cable system well i think it's the opposite your honor and i think that in order to highlight why it's the opposite we need to look at the legislative statements surrounding what happened with the microwave addition to the statute and there in that instance the copyright office which notably in every instance when it's been presented with a new form of transmission or let's say another communication channel because remember the cable system has to transmit in a certain way the facility needs to transmit by wires cables or other communication channels and in every instance when and other communications channel like microwave was presented to the copyright office for compulsory license the office rejected as the court in the thing one of the first things the office says is we should abolish all compulsory licensure so going back to the microwave point though looking at the reason that the congress had to step in and act and they stated the nine ninety four amendment overturns and eroni us interpretation of the definition of cable system by the copyright office and interpretation which tonight license to mike we've carriers the definition of cable system has also been amended including the term microwave which was necessary because of an unnecessarily restrictive interpretation so congress was forced out by the copyright office now contrast what happened there when the copyright office had engaged in formal notice rulemaking with what's happened here here when the copyright office in this case and related cases in california and washington d c was presented with film on x s license filings and peace the office didn't reject them yet received them provisionally and in so doing stated that the reason that it was receiving them provisionally and not rejecting them was because the issue had been raised before the courts now in terms of the amendment i to get back to that and ask you another question doesn't congress's action by amending the act contain a separate section pertaining the satellite transmission also weigh against your arguments that the section applies to internet re transmissions well no it doesn't your honor there are there was a wholly different set of litigation that was occurring in the eleventh circuit and while that litigation was ongoing again the copyright office made a formal regulation to say satellites are not entitled to license but even actually taking a step before they just might have a chronology right while that litigation was pending congress enacted section one thousand nine hundred eighty eight and in doing that it created a separate license for satellite systems and the reason that it did that was because the transmissions of satellites which are woefully different than what's provided for specifically in the act in that they come from outer space and the facility is in outer space which is one of the issues that the court in the eleventh was grappling with so in light of those things in order to avoid i suppose confusion congress created section one thousand but it's important to note your honor that even when congress created section one thousand for satellites it's specifically stated that the creation of that separate statute should not be interpreted to mean that the satellite systems were not also entitled to a license that are section one eleven so there we have congress saying we're going to create something new because this is so unique and different but at the same time it doesn't mean that one eleven doesn't apply what ultimately happened with satellites was the eleventh circuit found that in by the way the eleventh circuit after there was some rule making by the copyright office declined to follow the copyright office and said that yes satellite systems are in fact entitled to a compulsory license under section one eleven then the copyright office issued a formal rule making the case went back to the eleventh circuit and at that point the eleventh circuit applied chevron deference and deferred that is an important point because in that in the papers that w t t w was submitted to the court they argue that every circuit that's considered this issue was a pipe show on deference that's false the first compulsory license because somehow it has to control the the distribution medium in other words there has to be a literal wire that it controls going from the head and it's facility all the way to each end user you honour's any one of us can go outside and turn on our phone or i pad and we can watch broadcast television it nobody can seriously contend that there is a some sort of a cable or that your paypal provider controls that network that's going to honor there are ways to track where the customer is to geo locate that person to make sure that the other rules and regulations are being respected to the extent that they apply force here the f c c has rules and regulations do not get apply which again the first satellite case the eleventh circuit means that film and x also satisfies the her miscible requirement of the rules and regulations of the f c c fits it's not actively regulated but there are certainly ways and the record is replete with all of the efforts that film on  made to comply with or to to offer what it will do to comply with f c c rules and regulations if and when they apply and that's an important point to make in light of one of the cases that's been cited by courts that have gone against film on x in these cases and also that went against every oh that's an idea and the i b i case is important to distinguish for a variety of reasons first and foremost as i was saying i mean i had no intention and stated that it would not comply with the c rules and regulations more importantly the evidence on the record in the second circuit actually states and it's in footnote six of the i b i opinion there was no evidence there was there was no evidence of the nature or the location of their facility that's a fundamental requirement of section one eleven there must be a facility in the state province or territory that facility again she needs to receive over the air signals needs to retransmit them and then we get to how does it reach transmit the statute is clear by using wires cables or other communication channels and where is the transfer of them to subscribers so the conclusion that the district court reaches that somehow that film on  transmits to the internet and then the internet goes on and transmit something to the end user is nonsense and sent that it must be rejected and it reads again it reads in additional requirement of the statute it's important to know in that regard congress knew how to draft a statute that required a klutz called a close transmission path which is what the w t w is argument here which is what the district court is is teaching us  required by the copyright act i so let me ask you this isn't it possible that congress intended the act to be broad a section one one one or one eleven to be narrowly construed like your opponent that is certainly possible and there is a canon of statutory construction which provides that the general rule or the protection is brought in the exceptions are to be narrowly construed i want to draw the court's attention to one case that's not in the  apple lease here will contend that they use something called ip t v as opposed to using the internet ip t v as an internet protocol that in fact is a way of of using the internet and when when they argue th v operates over a network that network is the internet and the evidence in the record is that our experts first of all agree that the physical layer of the internet is made up of wires cables and microwave with the addition that you're complaining about is one of the things we talk about when you talk to the consumer it says and would means anything directly to does that change anything they may be more specific maybe i'm just own the entire transmission path in n f l the insight it was found that in section one eleven didn't require that because inside communications which was a passive carrier under section one eleven didn't it it did not control the entire path there was some some other entity that had a part of that and so that that transmission that they were providing went from their hands to someone else to the end receiver and that was ok and here it's ok as well control seems to be the add on that you don't like that you object to this not in the i would say it's control your honor i think it's ownership and they will contend that eight hundred eighty and horizon have a managed network there's no evidence of what that means and at the end of the day the important consideration here is we transmit a signal it is only received by the end user that's it we have a facility that receive the signal it's here in chicago it retransmits it retransmits with wires cables and communicate and other communication channels technological disruptor and to serve consumers let me be clear they are not doing anything technologically new the only thing new they are trying to do is to create a loophole in the law for a compulsory license it is correct as council put it the end of this argument you can obtain television over the internet it's ubiquitous today the reason being there are market negotiated licenses for that content such as hulu amazon prime even cable companies enter into market licenses nowadays so the cable companies can separately stream over the internet so so the service is provided by eighteen  signals to your television as a cable system they are using internet protocol t v which is a language that allows devices to communicate over a network and network that they completely control we know that that was discussed in the i one case and it's discussed in the legislative history for the satellite as well but in any event eighteen thousand rise and when it goes to your television set use a language but they control that network just like any other cable system separately they will stream to for example your phone and television the of the internet your phone with that is pursuant to evil license they negotiate with the programmers and so what we're arguing about today is they want to come in and avail themselves of a government imposed compulsory license and it's no fluke that six separate courts senators hatch and leahy the copyright office and the former register of copyrights mr oman have all agreed with the pelly that the cable compulsory license is not available to internet re transmitters and the starting point for all this is what is the legal plans through which we look at section want to eleven and particularly this compulsory license will we know that section one eleven is a limitation on the broad exclusive rights given to copyright holders we know that it's settled law that such a limitation must be viewed narrowly elsewise the limitation swallows t signals or programs and makes secondary transmissions of signals or programmes by wires cables microwave or other communication channels to subscribers now why isn't the technology  internet is not a physical tangible thing it is simply a global interconnection of computers as many courts have found a c l u versus reno the i v to port of stutterers so we know that the internet can't even be a facility it's not a tangible physical entity we also know the internet is not located in a state it's global there is really no location per se to the internet that's why it's representatives clowder cyberspace typically we also know that the internet is not phil wants to steal they don't even contend that the internet is their facility and no four has ever held that that the internet is anyone's the silly but it is the internet that transmits to their subscribers so the transmission of programming to their subscribers is done by the internet but we know it's not their facility they don't even contend that there is no film on facility that made three transmissions to its subscribers and it would make no sense to define a cable system as a combination of technologies that are owned by different entities you know film on a saying it's  on plus the internet which it doesn't own or control equals a cable system and it's completely the opposite of the statue now we get to this the second part so we know it's not located in the state we know it's not a tangible entity that could be a facility we know it's  facility now we go to well even if we were to assume that hypothetically it still has to then make your film one has to make use of the communications channel it fails that test for several reasons first of all as the fox television court judge collier found the internet is not a communications channel at all it has no bandwidth no throughput or more noise and that's undisputed in this record in footnote six of judge course as opinion he  provides the record evidence that philmont isn't disputing the fact the internet does not have the qualities of a communications channel which is banned with throughput or noise in the i do case they cited many authorities or so there's no central stores will cation in the internet there's no control point and there's no communications channel and when you think about it the internet is not a channel at all when you think about a communications channel like a wire you know where the beginning is there's a defined path that the communication falls and then there's an end point that's controlled by the person doing the transmissions well there's no channel in the internet the message can go to prague and back to florida to california one time where it can go from new york to chicago and china and back again is a global dispersed connection of computers so it it by definition cannot be a communications channel and certainly not within the meaning of the statute now remember we have other communication channels preceded by the terms wires cables and likely the interview the copyright office has found that those are all the paralegal lies mediums of transmission of limited availability well what would congress need to do to bring the i guess possible with the internet where it would be i guess labeled a facility or a device that the word i would use that if it's not  a broad look at the internet but it's like kind of a funnel that goes to there somehow brings in only what they want to their their customers you know i think i think we can understand exactly how congress would treat that because we have the example of satellite i mean satellite is much closer to cable than the internet yet congress provided an entirely separate statute for satellite and frankly and in section one twenty but congress looked at satellites their way to say that this is not inherently localized it's a satellite up in space it's not located in any state the internet is the same it's actually even global at least for for satellite it's actually ends up down on someone's television as sort of a kin to a cable system whereas the internet doesn't even do that so i think if congress were to look at this and given congress's knowledge that the copyright office for two decades now has interpreted section want to eleven as prohibiting little anything very much actually nothing to do i mean they they've you know they say what they've done is in again there isn't this antipathy to the internet generally what it is is they've looked at what congress did him and and there's a clear legislative history that when congress passed section one eleven f three was dealing with an industry specific compulsory license and in both the house report and senate report they said it typical cable system has a central intent which receives signals and it then transmits them over a network of cables to the receiving sense and with that history and then the copyright office has studied the language of the act and if you look and that's another thing if you look at the overall statutory scheme it's it's a very local in fact congress in the two thousand and four specifically distinguished cable as being local in character versus satellite which is national and that is the reason congress created two separate compulsory licenses in congress's own words and if you look at the other sections of sexual one eleven subsections excuse me it speaks in terms of continuous communities community service the it refers to programming within whose local service area the cable system is located that so it's replete with references to community team unity communities which are served local service area those are all concepts that are local in nature and the internet is the antithesis of that the internet intangible it's global it's completely unregulated it's been controlled by anyone so so the copyright office has looked at that repeatedly and in fact that's why that the copyright office said well wait a second this is very local we've studied this statute we've studied legislative history satellite you should get your own separate compulsory license congress ended up agreeing with that in passing that congress has been aware of the copyright office's interpretation of section one eleven for decades now senators hatch and leahy discussed it openly in the congressional record there's been several lawsuits and section one hundred eleven has been amended four times in the last ten years so this statute has been revisited by congress repeatedly and despite knowing of the copyright offices interpretation in spite knowing of the court's decisions for example i did you came down in two thousand and twelve the last amendment want to live in this two thousand and fourteen yet congress has never amended the statute to repeal or overturn the copyright office's interpretation that internet re transmitters cannot avail themselves of the license i think you going back to this is or how did you talk about it channeling something and what can congress do because the internet's not going away it's expansive and it seems to me that you can ignore it now they're using it and you're saying well there but that's not a facility or whatever it needs to be to fit under this it doesn't channel because it's ubiquitous and then the now use the word funnel simply because it does at least concentrate i guess another question be how does it localized if that's what it's got to be i don't think the internet could ever be localized and i think i think there has been sort of neglect of the internet by congress the reason being if you look at the reason for the compulsory license for cable systems cable systems were heavily regulated for a long time they were not violating copyright they were required to carry certain channels by the f c c they invested in infrastructure to serve rural communities could not otherwise get signals they're performing a service that broadcasters can do themselves so that's why congress looked at this and said ok we've now change the law if you're transmitting you're violating copyright act but you know it is going to be you know economically unfeasible practically impossible for you to have individual negotiations to carry all of this program that you're required to carry and you've made all these investments and you're doing something broadcasters can't do the internet is completely different broadcasters such as my client can actually directly transmit over the internet if they so choose so philmont others aren't providing anything they can't film on is not serving for under served communities film on has not made any investment in infrastructure like the cable companies did and unlike the cable companies where you have essentially a market failure for this licensing regime for the internet there is a r market for negotiated licenses and that's why you have cable companies or eighteen thousand who can give you television in two ways over your television kind of i'll call it the old way or over your phone through internet streaming license  amazon netflix they all negotiate licenses so i think that's why congress would never step in because the market's working and the reason that's important your honor is because as you pointed out it's it's  just it's kind of odd funnel and how could the internet really ever be ever be localized indeed have how could the internet ever really be regulated for example and that's that's a real issue and abuse that going way too sure exactly it's here to stay so what i think what congress would do is say well we would prefer market negotiated licenses rather that a government imposed one size fits all employers group so so your bottom line really is a service that captures copyright protected broadcast and then the retransmits and over the internet is not a cable system right that is correct and as an idiot so it violates the principles of copyright law as well as the public policy i antenna congress underlying the statute that were interpreted absolutely it is they absolutely do not fit within the compulsory license of the they then have to go into the marketplace like everyone else and attempt to it licenses and the reason that's important is because of the sort of uncontrolled unregulated global nature of the internet when you negotiate a license you can then as a copyright owner you can then impose strict requirements on anti piracy on where you are the strict requirements on how you were you will limit what you do you can then negotiate the license fee that takes into account this uncertainty when stuff goes over the internet if  otherwise we'd be in a situation where anybody could provide this kind of service well it's interesting basically regulation that that's actually right i mean fact if you take their interpretation of the compulsory license to its logical conclusion you know anyone with an antenna and an internet connection is now a cable system who automatically gets the government license and with whom the copyright holder has no interaction so yes i mean it becomes you know literally the wild west and and as the copyright office pointed out with things going internet we're talking digital copies i mean the n t piracy scheme that is perfect has not been invented yet and so the copy can go over the internet you know literally globally overnight and it's a perfect copy so the piracy risks are enormous with respect to the internet unlike with respect to the cable systems remember that the reason congress in large part gave them the compulsory licenses is not only the investment etc but they they had to point to point control transmission of the member cable system is a facility that does two things it receives the signals and it transmits them to subscribers over limited communications channels so if you do that from point a to point b over a wire you know where it started you know where it's ending up in you know that local ice pack it all comes back to control i think it does and then that  you know it's not a wire is not whatever and that's why i am not sure how you invented the word funnel i did read anywhere but it just seems that that's one way you concentrate this whole global internet for a specific purpose now i understand why you know maybe the office is the nickname it is is doesn't like a lot of this stuff because they're trying to protect amazon the cable companies have done with respect to internet streaming you know attempt to negotiate licenses so they have a more specific way since for everything that they transmit yes there are negotiated licenses the cover of the many funnels so he message can go one path one day you can go a different path a different day parts of that message can actually take different paths and get recombined at the end and there is absolutely no control by any particular entity over the internet it's simply a global connection of computers now it's a very useful thing obviously but when you're dealing with a government imposed compulsory license it's sort of the antithesis of what congress invision in the cable system compulsory license and we know that because of what they did with respect to satellite when the i have really no answer to this very quickly and if you even conclude the one which is ambiguous we without all the typewriters charming betsy if it's interpreted the way they want we're violation of numerous treaties there's the presumption against the composer life license there's a difference to the copyright office there's congressional acquiescence in the position of the copyright office all of these type breakers they would have to run the art i'd like to respond to a few of the points that were made by mr stone first it's interesting that throughout the opinion from the district court and throughout the communications channels or other communication channels he said limited communication channels and this is what the networks and the other cases and deputy deputy are to try to do some of the ports of falling down that path the you describe your aunt and and can and contrast that to what has been traditionally viewed is ok sure so the entity that is film on x has a facility which is literally in a building it's a it's structure and that facility has a an antenna that receives signals and then there are so you you own that facility that's own or lease you know like there's some encodes the signal that's received and sends it out on to the internet in packets so there's a software and code that's written to do that so the equipment the facility receives the signal and then retransmits the signal and retransmits a signal using wires and cables and then that signal travels onto the internet and only is received by an end user who has a software that's been provided by film on x which enables only that end user to decode and then view the transmission and it's not at all dissimilar to microwaves and even in the papers that have been said that it might be happily they argue that microwaves are ok because there is a transmit and receiver and the receiver once it receives the signal is is somehow there some control it by the end user or by the transmitter it's the same here not we're not credible to the airwaves like a microwave or travelling over the internet and again only reaching the end user and is it possible then to have some sort of the contract or license or whatever to when when you pull it out of the internet you mean your client then it is specific is that an opportunity for them to get a license or copyright whatever it takes to get to be able to use their product news it at that point they use the phone with you and when you get it when you finally an is aired in a point where you have to pay for it or you have to get an agreement or some other acknowledgement and agreement from the owner yes your honor under the compulsory license regime we pay license fees based on the number of of retransmissions that are made to end users so little time once you have it license once you have the composer a license then there are a number of the statute it certainly could it's had an opportunity has been presented with the copyright office view for many times in fact there was legislation on the table to exclude the internet and it did not and act that legislation and we should you know when that you're right your hon poised it's there it's ready to regulate this is not just a kid with an antenna these are complicated equipments based on the record before this court there's evidence of the money that's been spent to build these things that again the same situation is as as put in one nine hundred seventy six it's just a different technology as you're honest acknowledge is no secret the copyright office is is going to be an animus towards this towards any intrusion but this is one that's explicitly permitted by the statute this court should reverse the district court and remand the case