Must All Foreigners Online Comply With US Copyright Law? (Part 1 of 2)

US copyright law is supposed to apply only within US borders, not to actions done in Poland. But when a company in Poland streamed copyrighted TV shows into the US, that infringed US copyrights, according to a US trial court. This decision will be upheld on appeal, experts widely expect. Such an appellate decision, however, could expand the reach of US copyright law to a problematic extent. It will be tricky to find infringement in this case without also extending US copyright law to any online content posted anywhere on the globe.

Map of Poland

The facts in this case are pretty damning. Poland’s public broadcasting corporation, Telewizja Polska, created a TV show and granted Spanski Enterprises an exclusive license to distribute the show’s episodes in North and South America for 25 years. After a dispute over internet rights, Telewizja entered into a settlement agreement that acknowledged Spanski’s license included the right to distribute the episodes online. Telewizja agreed to use geo-blocking technology on its website to prevent the episodes from being streamed to people in the Americas.

Telewizja did not live up to its agreement. According to the US District Court for the District of Columbia, the Polish firm “willfully and intentionally” disabled the geo-blocking, enabling episodes to be streamed into the US. There was no evidence that the episodes were widely streamed into the US. Spanski proved only that 51 episodes were so streamed – by having its own attorneys stream those episodes. The court found Telewizja guilty of infringing Spanski’s copyrights in the episodes and ordered Telewizja to pay statutory damages of $60,000 per streamed episode, for a total of $3,060,000.[1]

Telewizja appealed, arguing that the trial court erroneously applied US copyright law extraterritorially. That argument, however, is unlikely to fly at the D.C. Circuit Court. “If Telewizja deliberately transmitted the episodes from Poland into the US, there’s no question that US law applies,” said Prof. Tyler T. Ochoa of Santa Clara Law School.

A contrary ruling, upholding Telewizja’s position, would create a road map for online piracy. “If the US couldn’t apply its copyright laws to material being streamed into the US, criminals could stream works into the US and avoid liability,” said Lynda Zadra-Symes, a partner in the law firm of Knobbe Martens.

Display’s the Thing

This case, Spanski Enterprises v. Telewizja Polska, will be precedent-setting. It will be the first time a US appellate court rules on whether a foreign entity commits infringement when it allows copyrighted works to be transmitted into the US without the consent of the US copyright owner. “This will be a widely watched case,” said Ochoa.

Lower courts have already addressed this issue several times, repeatedly holding US copyrights to be infringed. For instance, in Los Angeles News Service v. Conus Communications Co., the US District Court for Central California held in 1997 that the Canadian Broadcasting Corp. infringed US copyrights when the corporation broadcast copyrighted shows to Canadians in Canada, but the broadcasts were also received in the US (by average of 7,814 households). The broadcasts to US households violated the US copyright owner’s exclusive right to perform the works in the US, the court ruled.

In 20th Century Fox v. iCraveTV [pdf], the US District Court for Western Pennsylvania issued a preliminary injunction in 2000 against iCraveTV, a Canadian company that re-transmitted broadcast TV shows over the internet in Canada. The injunction stopped iCraveTV from streaming into the US any works of the plaintiff US copyright owners.

In both of these cases, the infringer was a foreign entity, and the infringing works originated outside the US. The courts nevertheless found that, because the infringing works were displayed here, US copyrights were infringed.

Going Too Far

Spanski Enterprises v. Telewizja Polska may thus seem like an open-and-shut case. Telewizja deliberately streamed copyrighted TV episodes to the US. The episodes were seen here, violating Spanski’s exclusive public performance right in the US. Thus, Telewizja is guilty of infringement under US copyright law.

Yet ruling against Telewizja poses a risk. Because while Telewizja appears to be a bad actor that deliberately streamed infringing works into the US, Telewizja’s bad intent is irrelevant for purposes of establishing direct copyright infringement. Direct copyright infringement is a strict liability offense. Such infringement occurs even if an entity, acting with the best of intentions, inadvertently copies, performs, or publicly displays another’s copyrighted work. In the Conus case, for example, the CBC was held liable for infringement in the US even though the Canadian corporation was merely trying to broadcast to Canadians and it was just happenstance that CBC broadcasts reached some residents of the US.

If Telewizja’s intent is irrelevant, then it would seem the firm infringed US copyrights simply because Telewizja put a copyrighted work on the internet and the work was accessible in the US. If this is the case, then anyone outside the US who lawfully puts material online, in compliance with local copyright law, would nonetheless face US infringement liability if the material was copyrighted in the US and could be accessed from the US.

That would stretch the reach of US law too far, according to many experts. “[Such a] ruling would impose an obligation on foreign websites to impose geo-blocking. That sounds pretty extraterritorial,” said Ochoa.

There are strong policy reasons against such an extraterritorial application of copyright law. “Copyright laws differ from country to country. It would be intolerable if citizens of other countries were prohibited from doing things their own jurisdictions had decided were lawful unless those citizens prevented clever individuals from nations with more restrictive laws from seeing and hearing them,” said Prof. Jessica Litman of University of Michigan Law School. “Here’s an analogue: In Germany, posting and selling Nazi souvenirs is illegal, indeed, sometimes criminal. Yahoo was therefore properly enjoined from making Nazi souvenirs available for purchase in Germany by Germans. In the US, though, posting and selling Nazi souvenirs is First Amendment-protected activity. If Joe Smith seeks to sell his Nazi medal collection on eBay, we don’t want him to be subject to criminal prosecution any time a German citizen sees the item or tries to buy it.”

“Applying US law to activities outside the US would create a lot of international diplomatic issues,” noted Zadra-Symes.

This puts the DC Circuit Court in a dilemma. How can it find Telewizja guilty of infringement without endorsing a rule that applies US copyright law in an intolerable, extraterritorial manner? This issue will be examined in Intellectual Property Watch’s second and concluding article on Spanski Enterprises v. Telewizja Polska.

[1]          There’s a good argument that since Spanksi had the license for those episodes and the streaming was done with Spanski’s approval, such streaming could not be infringing; the streaming clearly was authorized by the US copyright owner. This argument, however, has not been made by Telewizja.

Image Credits: Halibutt