Netflix, Old Overholt, Mickey Mouse, and Sonny Bono: A Copyright Story (Best Of)

By David A. Boag, BOAG LAW, PLLC

The modish little bar at the corner of my old street street has a handsome side room that is wooden, warmly lit and welcoming.  A sandwich board outside beckons passers-by to join them in watching the Game of Thrones season premiere with a proper rye Manhattan, in the company of friends.

It’s a throwback social network at a time when networks already solicit viewer participation through Twitter, Instagram, and otherwise.  And it seems like the type of activity that a network would encourage.

But can you do that?  I mean, is it legal to broadcast HBO in your bar?  Or Netflix?  Or the World Series?  Surprisingly, it depends.

Start with an ordinary terrestrial HDTV broadcast of Game 1 of the World Series on FOX.  That’s legal provided that: (1) you don’t charge for admission; (2) your food or drinking establishment has less than 3,750 square feet of space; and (3) you have no more than four televisions showing the broadcast, none of which are more than 55 inches.  (See 17 U.S.C. § 110(5)(B)(ii) if you want to check for yourself.)

The oddly-specific 3,750 ft2 (that’s exclusive of parking) and 55” limitations come from the Sonny Bono Copyright Term Extension Act of 1998, a pro-business copyright extension bill that lengthened the term of copyright by 20 years.  Absent the extension, works from the 1920s—including Mickey Mouse’s 1928 debut in Steamboat Willie—would have entered the public domain in 1998.

But more relevant to the corner bar, the Act also expanded the “Homestyle Exception,” allowing certain categories of business to show broadcast television without fear of infringement.  (What at first glance seems to be an attempt to balance the bill against a massive concession to Disney and other corporate copyright-holders was actually been a nod to the restaurant lobby and several large restaurant chains that stood to benefit from the new exemptions.)

So, the Simpsons, the Stanley Cup, and Meet the Press are all safe if you meet the above.

But how many saloonkeepers and restaurateurs pull an over-the-air signal?  What changes when you receive FOX or NBC over cable?

First, the exemption above no longer applies and you infringe the broadcaster’s copyright unless you have a license.  Second, your cable subscription probably doesn’t provide you with the license that you need.

The Verizon Fios Terms of Use provide you no cover:  “You agree to use the Service only for your private non-commercial use and own personal viewing enjoyment.  The Programming distributed via the Service may not be viewed or otherwise displayed in areas open to the public . . . .”  Time Warner gets more personal:  “You may not share our in-home Services or related Software with any person who is not a member or guest of your household or to persons outside your premises.”

Sure, those are the standard-bearers of Old Media.  Copper wires and coaxial cable.  How about New Media?

Netflix kills the party in 6(b) of their surprisingly readable Terms of Use:  “The Netflix service, and any content viewed through our service, are for your personal and non-commercial use only. . . . You agree not to use the service for public performances.”  Pretty clear there.

Hulu?  They’re run by Fox, NBC, ABC so no deal.  How about Apple?  Apple, you’re cool.  Apple?  Sorry.  Same as Netflix, albeit more blunt: “You shall be authorized to use iTunes Products only for personal, noncommercial use.”

Part of this is practical.  Netflix and Apple have to pay the content provider for a license so that they can serve the content to their subscribers.  The less expansive the license, the less expensive.

Will FOX, MLB, or Netflix saunter in, smash everything behind the bar, shoot the piano player, and sue you to make an example?  The odds are in your favor that they will not, but the risk is there and the damages can be astounding.

Maybe the NHL’s goon squad doesn’t find you, but you’ve made an enemy in a competitor across the street who makes the phone call.  Or an unhappy employee.  An outfit known as the Business Software Alliance offers rewards for employees who report unlicensed software in the workplace; perhaps the HBO bounty isn’t far behind.

Stories of runaway copyright damages are legion, going back to the Napster era.  A Minnesota woman paying $220,000 for illegally downloading 24 songs.  A restaurant owner in Laredo, Texas being hit with a $32,000 award for showing a single UFC match without a license.

Why so much?  Statutory damages.  Rather than being required to provide actual damages (what is HBO’s loss when eight non-subscribers gather in a local bar to watch), a copyright holder can elect to pursue damages that are set by statute, and can reach $150,000 per work infringed.  Statutory damages exist in areas of the law where the amount of harm is especially difficult to quantify.  Imagine that a review copy of the next blockbuster is leaked two weeks before its release.  Would it have made $500M or $1B absent the free copies circulating?  Is the $200M in receipts because it was terrible or because people already saw it for free?

No, statutory damages also aren’t a lottery and should be grounded in reality.  Nonetheless, the judge’s reality can be painful for a small businessperson.

What’s the law-abiding, responsible citizen to do?  Take the appropriate license.  Verizon, Time Warner and others all have business-level packages that provide enhanced licenses.  DirecTV is perhaps the most transparent in its pricing scheme.  If it’s an event like IFC or anything rhyming with “Mayweather,” individual licenses may be necessary.  Talk to your copyright attorney about your plans and get the license.

Like insurance, it’s all expensive in the moment, but cheap in hindsight.

Best Of: A series of posts and articles from the archive that we still enjoy and are still relevant.