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No Copyright Dec Action for New Technology

A Harrisonburg U.S. District Court dismisses this declaratory judgment action filed by three FM radio stations asking the court to declare that broadcasts, made via a geofencing technology yet to be implemented, are exempt from liability for copyright royalties under sections 112 and 114 of the Copyright Act; plaintiffs’ allegations are too speculative, indefinite and hypothetical to allow the court to make a judgment as to whether the proposed broadcasts will result in copyright infringement or not.

The Copyright Act permits radio stations to broadcast copyrighted sound recordings if the broadcast is part of a “retransmission of a nonsubscription broadcast transmission” and the “transmission is not willfully or repeatedly transmitted more than a radius of 150 miles from” the site of the station’s radio broadcast transmitter. Should a station willfully or repeatedly retransmit recordings beyond that radius, it must pay for the privilege of using any copyrighted sound recording.

Defendant Sound Exchange Inc. is a nonprofit organization designated by the Copyright Royalty Board to collect royalties from broadcasters on behalf of copyright owners who join its membership. SoundExchange is the sole collector of royalties due under statutory licenses. Plaintiff stations hope to implement a technology known as geofencing which they claim will allow them to restrict retransmitted broadcasts to listeners physically located within the 150-mile radius. The stations claim they have not yet implemented this technology due to the substantial financial investment it would require and the unresolved legal question of whether geofencing will exempt them from copyright liability.

The magistrate judge recommend dismissing the suit pursuant to Rule 12(b)(1), finding that while the parties disagreed as to the interpretation of the Copyright Act, the stations failed to allege any cognizable injury fairly traceable to SoundExchange. Plaintiffs object, arguing that because the magistrate judge focused on liability for copyright infringement, he overlooked potential contract liability for the two plaintiff stations operating under the statutory license. The court will limit its review only to the issue of the “contract-based claim” as to the other two stations, a claim which was neither raised in the letter giving rise to the suit nor pleaded in the complaint.

Nothing about the stations’ allegations remotely resembles a contract claim. The stations do not ask the court to interpret or enforce the claimed contract – the statutory license. Rather, they seek a declaration that they will meet an exemption from copyright liability under an exemption in the Copyright Act. The real issue here does not concern the terms of the statutory license entered into by two of the plaintiff stations and administered by SoundExchange. Rather, the entire issue focuses on the Copyright Act exemption.

Thus, the magistrate judge neither erred nor failed to address the stations’ arguments by focusing his analysis on § 114(d)(1)(B)(i) and concluding that the injury here was not fairly traceable to SoundExchange. Although SoundExchange refused to give assurances that the stations would not face legal challenges with implementation of the geofencing technology, such a refusal to give assurances does not create an actual controversy.

Granting leave to amend would be futile. The stations have done little or nothing to demonstrate that geofencing is anything more than a pipe dream.

WTGD 105.1 FM v. SoundExchange Inc. (Urbanski) No. 5:14cv15, Feb. 13, 2015; USDC at Harrisonburg, Va. VLW 015-3-097, 12 pp.


VLW 015-3-097

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