A federal judge in New York has denied a request by streaming service Locast for summary judgment in a copyright infringement lawsuit brought by the parent companies of the four major broadcast television networks.
Locast is a registered not-for-profit corporation that captures over-the-air broadcast signals in nearly three dozen markets, then re-transmits those signals over the internet to users who live within a specific geographic area.
The service has stoked the ire of major broadcast networks and local station owners who complain that Locast does not financially compensate them for the programming that is streamed to users.
For its part, Locast says its operation complies with the U.S. Copyright Act, which allows some not-for-profit companies to re-transmit broadcast television signals to users without first reaching re-transmission agreements with station owners and networks.
Locast does not charge its users in areas of the country where its service is offered, but it does interrupt a user's video stream four times an hour until a customer agrees to make a donation. Locast says this donation mechanism is intended to defer costs associated with offering the service in an area.
However, on Tuesday a federal judge in New York overseeing a copyright infringement lawsuit brought by the parent companies of ABC, CBS, Fox and NBC used Locast's solicitation for donations as a reason to deny the streaming service's request for summary judgment, noting that the amount of money Locast brought in last year — more than $4.3 million — was nearly double the $2.4 million Locast assumed in operational expenses.
"Based on the undisputed facts, it is clear that the Locast service is not offered without charges other than those 'necessary to defray the actual and reasonable costs of maintaining and operating' its service," District Judge Louis Stanton wrote in the eight-page order.
"The payments defendants elicit from users are charges assessed on users to avoid constant service interruptions...[it] is not merely a recurring gift to a charitable cause," the judge wrote.
Part of the problem lies with how Locast uses the donations that it raises from its users: In addition to maintaining costs involving in delivering the service in areas where it is available, Locast has said in the past that funds are also used to expand to other parts of the country.
While certain exemptions found in the Copyright Act allow Locast to use donations to maintain and operate the service, the judge said there exists no provision in the law that allows Locast to use those funds to grow the company.
"Expansion is nowhere mentioned, and it is therefore excluded from the short, tightly-crafted grant of exemptions," Stanton wrote.
The order denying Locast's motion for summary judgment means the case against the streaming service is likely headed to trial. The broadcasters who are plaintiffs in the case are seeking unspecified monetary damages from Locast and its founder, David Goodfriend, as well as an order that would effectively shut down the streaming service.
A spokesperson for Locast did not return a request for comment by press time. As of April, Locast said it served more than 2.5 million streaming customers.