D.C. Circuit Makes Geoblocking De Facto Mandatory for Copyright Law Purposes–Spanski v. TV Polska (Guest Blog Post)

by guest blogger Marketa Trimble

On March 2, 2018, two events occurred that will affect the future of the use of geoblocking: The Official Journal of the European Union published the new EU Anti-Geoblocking Regulation, and coincidentally on the same day, the U.S. Court of Appeals for the District of Columbia (the “D.C. Circuit”) issued its decision in Spanski Enterprises Inc. v. Telewizja Polska S.A. The Regulation aims to minimize the use of geoblocking in the EU, although it does not eliminate geoblocking completely. The Spanski decision arguably makes geoblocking de facto mandatory for internet actors who want to avoid liability for copyright infringement under U.S. law.

Spanski‘s abbreviated facts are as follows: Telewizja Polska (“TVP”), the Polish state-owned television station, granted an exclusive license to Spanski Enterprises, Inc. (“SEI”) for the public performance of TVP’s content in North and South America. After a dispute arose because TVP’s website was allowing access to the exclusive content licensed to SEI to users who connected to the internet from the United States, TVP agreed to geoblock U.S. users. However, at some point after TVP agreed to geoblock U.S. users, TVP’s geoblocking did not function properly and users from the United States could access the TVP content. SEI filed the current lawsuit against TVP in 2012 and prevailed after a bench trial in the U.S. District Court for the District of Columbia.

The irony of Spanski is apparent to a careful reader of the court documents: The copyright owner (TVP) is the party being hit with a $3 million verdict for copyright infringement. The only users in evidence that were shown to have accessed the exclusively licensed content from inside the United States were employed by SEI’s U.S. law firm. The law firm hired no specialized forensic firm to collect evidence, nor did the law firm collect and preserve the evidence in an optimal manner. SEI’s law firm – and not TVP – had registered the copyright to the exclusively licensed content with the U.S. Copyright Office.

An important reason existed for SEI to register the U.S. copyrights: SEI planned to sue for copyright infringement (rather than for breach of contract pertaining to the license from TVP, as it had in previous lawsuits). While copyright registration is not required in order to file a lawsuit for infringement of copyright of a non-U.S. work, registration is required if a plaintiff wants to have the option of electing an award of statutory damages – a crucial option for infringements on the internet because actual damages are typically difficult or impossible to prove (see p. 102 of the Spanski bench trial transcript).

As of March 6, 2018, the U.S. Copyright Office’s Public Catalog showed only 51 registrations of copyright of the works of “Telewizja Polska Spolka Akcyjna” (the 51 individual TV show episodes that are the 51 TVP works at issue); all of the registrations were filed with SEI as the copyright claimant. All 51 registrations bear the same registration date: May 31, 2012. SEI filed this particular lawsuit on June 11, 2012. Curiously, SEI’s law firm registered only the 51 TVP works; it is surprising that SEI did not register copyrights to additional works, particularly given the prospect of statutory damages (which are calculated per work infringed). It seems odd that TVP’s alleged intent not to geoblock would pertain to only 51 TV show episodes.

Whether copyright law is better suited than contract law to provide a remedy in a case such as Spanski is debatable; TVP failed to geoblock sufficiently, and therefore was arguably in breach of the license it had granted. The Spanski result seems to be difficult to square with the purpose of U.S. copyright law, which is to provide exclusive rights to authors in order to “promote the progress of science.”  But copyright law does serve the general purpose in this case: It protects the value of exclusive licenses, which in turn strengthens the position of copyright owners in general in their licensing negotiations.

TVP was not without warning; although SEI did not alert TVP to geoblocking problems during the period in issue in the 2012 copyright infringement lawsuit, SEI apparently did raise the issue of TVP’s internet distribution to U.S. internet users as early as 2000. In view of what should have appeared to TVP to be the very likely possibility of further litigation, TVP should have designed and audited carefully its geoblocking practices, since it had previously agreed with SEI to implement geoblocking.

In its March 2, 2018, opinion, the D.C. Circuit ruled that TVP had publicly performed the works at issue in the United States and therefore was liable for copyright infringement under U.S. copyright law. TVP argued that its conduct was not volitional, but perhaps not surprisingly given Aereo, the D.C. Circuit rejected the argument. TVP also argued that the application of U.S. copyright law in the case presented an impermissible extraterritorial extension of the law, an argument that the D.C. Circuit also rejected.

Some might find the D.C. Circuit opinion troubling because the D.C. Circuit did agree with TVP’s argument that the decision means that anyone acting on the internet (an “internet actor”) who makes content available on the internet could be held liable for infringement of copyright under U.S. law if the internet actor has no copyright, or no permission or license from one who does hold copyright, to make the content available in the United States (Opinion, Mar. 2, 2018, p. 19). However, this conclusion is not surprising to anyone familiar with conflict-of-laws issues that arise on the internet.

Whether geoblocking can protect an internet actor from liability, and under what conditions, remains unclear; the D.C. Circuit specifically noted that it had “no occasion to prejudge” a situation in which users connecting from the United States could access content by circumventing geoblocking (Opinion, Mar. 2, 2018, p. 19). The D.C. Circuit confirmed the district court’s finding that TVP acted willfully by “deliberately remov[ing] geoblocking,” while being aware of SEI’s rights, and by taking “purposeful after-the-fact steps to hide its conduct” (Opinion, Mar. 2, 2018, p. 22). In this case the obligation to geoblock stemmed from an agreement between the parties; the decision does not address what the effects of a failure to geoblock would be if there were no such agreement.

What are the effects of Spanski? I have argued that the specter of the simultaneous applicability of multiple national copyright laws to internet actor conduct is lessened by practical limitations that constrain transnational litigation. This practical aspect will place restrictions on the numbers of national laws to which internet actors will be exposed. Among the important practical limitations are problems with proving infringement and damages for multiple jurisdictions. However, these limitations are largely ineffective if, as was the case in Spanski, access to internet content by a plaintiff’s lawyers will suffice to show infringement, and actual damages need not be proven because statutory damages are claimed instead.

With two important practical limitations having been eliminated, it is possible that internet actors may face liability under U.S. copyright law whenever their content is accessible from the United States. Therefore, efforts to avoid liability will now focus on the issue of personal jurisdiction and on the need to clarify the role of geoblocking – a need that is now more pressing than ever.

Courts have hesitated to rule in ways that would render geoblocking de facto mandatory for the purposes of avoiding personal jurisdiction: In Triple Up, a D.C. District Court judge (a different judge from the judge in Spanski) said that geoblocking was not required to avoid personal jurisdiction in U.S. courts. The judge did acknowledge, however, that “a website’s affirmative geoblocking efforts should weigh against the exercise of personal jurisdiction.” A Central District of California judge recently agreed with Triple Up and refused to find specific jurisdiction over the BBC based on users’ access to BBC content, where users accessed content by circumventing BBC geoblocking (allegedly with the BBC’s knowledge that users had frequently bypassed its geoblocking). (Carsey-Werner Company, LLC v. BBC, CDCA, 2:17-cv-08041-PA-AS, Feb. 23, 2018.)

The role of geoblocking needs to be clarified – and not only for purposes of evaluating personal jurisdiction. While in some instances effective and good-faith geoblocking may shield alleged infringers from personal jurisdiction in U.S. courts, in other instances geoblocking will not shield alleged infringers if personal jurisdiction is not contested, or if general jurisdiction exists independently of any geoblocking. In cases where jurisdiction is not contested or geoblocking does not affect the jurisdictional inquiry, the impact of geoblocking with respect to liability needs to be clarified. The effect of geoblocking will also be at issue in cases litigated in foreign courts that are courts of general jurisdiction of alleged infringers; with copyright infringement being treated as a transitory cause of action in at least some foreign jurisdictions, a claim of copyright infringement under U.S. law can be brought in the courts of the foreign jurisdiction, as long as they are courts of general jurisdiction of the alleged foreign infringer.

At present, both the EU Anti-Geoblocking Regulation and Spanski have raised more questions about geoblocking than they have answered. In light of Spanski, and as I suggested in May 2017, internet actors who want to protect themselves against claims of copyright infringement in the United States may no longer have any choice but to geoblock.

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Eric’s Comments: I don’t like the Spanski decision at all. As Prof. Trimble explains, it involves some stylized facts, including the division of copyright interests based on geographic territories, the parties’ prior settlement agreement, and the Polish broadcaster’s attempted but failed use of geoblocking technology without a good explanation for the failure–suggesting the obvious conclusion that the Polish broadcaster intentionally disabled geoblocking, an inference strong enough to prompt the court to award willful statutory damages. In light of those facts, the court’s conclusion is logical.

Unfortunately, the court’s wrecking ball opinion has consequences that reach far beyond these stylized facts–especially the court’s rejection of the defendant’s argument that “even if it did infringe Spanski’s copyright, holding it liable for that infringement would constitute an impermissible extraterritorial application of the Act because it did nothing in the United States.” Everyone agrees that a country’s copyright law only applies within its borders, yet the court says “the infringing performances…occurred on the computer screens in the United States on which the episodes’ ‘images’ were ‘show[n].'”

This parallels a problematic thread from the Second Circuit’s Goldman v. Breitbart decision holding that in-line linking can constitute an infringing public display. In both cases, the courts turn the legal inquiry on what occurs on the users’ screen, instead of focusing on the servers as the locus of legally significant activity. Moving legal liability away from computer servers towards what happens on users’ screens dramatically expands the scope of liability for many reasons, including most obviously that defendants can only control the servers, not what happens on the users’ ends. Thus, for example, web browsing software can be configured to block displaying in-line links, and in those situations no copyright infringement occurs; or in this case, there’s no evidence anyone other than plaintiff’s counsel actually watched the improperly geoblocked programs in the US.

I hope Prof. Trimble is correct that the practical barriers to litigating transborder copyright infringements will effectively restrict the collateral damage of this court’s ruling. I generally have less sanguine views about how overly aggressive or irrational copyright plaintiffs approach their enforcement actions. And I do fear that courts will start holding the failure to use geoblocking technologies against defendants–despite the cost, hassle, and obvious functional limits of deploying such technologies. (I don’t use geoblocking for this blog, and I don’t even know how I would start doing so if I wanted to).

One obvious practice pointer from this case: if anyone is still dividing copyright interests on geographical territory bases, the contract better spell out exactly what technological steps the licensors/licensees are required to take to avoid stepping on each others’ toes; and then the parties better implement them correctly.