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All persons having business before the Honorable, the United States Court of Appeals for the District of Columbia Circuit are admonished to draw near and give their attention for the Court is now sitting.

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God save the United States and this Honorable Court.

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Be seated, please.

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Case number 16-7013, Fox Television Stations, Inc.

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et al.

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versus Film on TV Networks, Inc.

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et al.

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Appellant Alkiwides David.

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Mr. Baker for the appellant, Mr. Katyal for the appellee.

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Good morning, Your Honors.

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May it please the Court?

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My name is Ryan Baker.

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I represent the defendants and the appellants, FilmOnX, and the related FilmOn entities.

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In 1976, Congress revised the Copyright Act, which had stood since 1909.

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And in making those revisions, Congress recognized that technologies were changing.

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In 1976, the new disruptive technology was traditional cable.

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Today, we have new and additional disruptive technologies as they've continued to evolve at an ever-increasing pace.

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Congress, when it revised the Act in 1976, knew that technology would not stop evolving, that it would continue to develop, and that in fact it would probably continue to develop at an increasing pace as it has.

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Therefore, Congress looked forward

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and use language in drafting the compulsory license that's found in section 111 F3 using broad language to encompass technological change.

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The plaintiffs in this case, the appellees here, want us to look backwards and shackle ourselves to the technology of 1976, which they call traditional cable.

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that flies in the face of the statutory language.

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This Court should give meaning to that language, which the District Court did not, should not add additional terms such as direct, which the District Court repeats throughout its opinion.

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There's no requirement for a closed transmission path in the language of 111F3, nor is there any requirement for a local-to-local transmission in that section.

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Those requirements and other requirements are found in other legislation such as the Communications Act.

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but FilmOnX and other over-the-top providers aren't required to comply with those provisions at this time.

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That's something that's being considered by the FCC.

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Can I ask you to explain to me just in a technical way how I get how you have a building that has an antenna that brings in the captures, the transmission, the broadcast transmissions for the purpose of the first half of F3.

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Can you explain to me then how it gets from that captured

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antenna within your, what you call your facility, your building.

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How does it get transmitted out?

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As a matter of, as a physical matter, is it, I know you've got the individual antennas and all that, is it going, are they hooked up to cables, wires?

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How is it getting out of the facility to the customer?

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Yes, Judge Miller, I'll do my best.

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I'm not a technical expert, but I will try.

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So the signals are received by an antenna, as the district court found, and then they are taken into a facility, a literal building that actually resides in each of the communities which Philman X served and which it intends and would like to continue to serve.

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That signal is then taken into some

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equipment that processes the signal and then prepares it for retransmission using IP technology, which then is transferred over wires and cables to a point at which it then passes on to the Internet.

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Where is that point and what do you mean when you say it passes on to the Internet?

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Well, again, in somewhat layman's terms, if you can envision this room and there being an antenna on the roof of this building, the signal is received that comes into this room where there's equipment that then transfers or somehow translates that signal.

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And again, I'm way out of my pay grade here, but I'm doing my best.

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So it translates that signal.

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into packets of information that are then transferred from that equipment through wires and cables to a point at which we reach the end of the building and then there are internet service providers that Philmonx engages

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to provide service to it, so it's able to access the internet, those packets of information then pass onto the internet and are transferred directly through the internet to the subscriber, and only that subscriber is able to view those packets of information.

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Nobody else is able to view them.

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I'm still not quite understanding what you mean when you say you hook up then to service, Internet service providers.

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Aren't they then continuing to send the information through cables and wires to their customers?

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Or, I mean, it's described a lot of times on the Internet like it's just going out into the air.

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My assumption is that it's either using cables, wires, or radio waves all the way until it lands on a customer's computer.

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Well, that's exactly right.

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In fact, the experts in this case have agreed that the physical layer of the Internet is comprised of wires, cables, and microwaves.

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And so it is those wires, cables, and microwaves that then Filminix utilizes

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With IP technology, again, which I can't unfortunately really understand or explain at this point, that information is then passed from Film on X and goes only to the end user.

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And that's, I think, the most important thing to realize here, because the cases that are cited about the Internet, ACLU versus Reno,

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That's a 1997 case.

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And in 1997, in fact, that case describes a new emerging Internet technology as the World Wide Web.

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It describes AOL and prodigy as the ways that we get on the Internet using a cable modem.

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So to look at that case or, frankly, to look at IVI five years ago, which had starkly different facts from the facts before the Court here, is error, is wrong.

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Under your theory, what means of retransmission would not be a communications channel?

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And therefore, what system uses such retransmissions would not be a cable.

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Well, first of all, any system that didn't have paying subscribers.

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So this idea of the kid in the dorm room who could arguably have a facility, if that person met all the other requirements and had paying subscribers and utilized the internet, that could be, there's nothing against, again, looking at the words of 111 F3, a cable system.

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Okay, if that kid on the internet had a

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Video club where all his friends around the world Paid him money for him to retransmit that he would be a cable system Well, no your honor not around the world and that's within the United States

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Well, again, one of the concerns that has troubled the courts in these cases and troubled the IVI was this notion, and what IVI wanted to do, and I'll get to the question.

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I think this answers it.

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What IVI wanted to do was transmit simultaneously across the country.

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It had no intention of restricting its transmissions, and it had no intention.

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It stated... On your theory, the words localized, that part of the

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views of the Copyright Office also don't apply.

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Those aren't, in your view, those aren't in the statute, right?

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Correct.

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I think... So under your view, it could be nationwide, isn't it?

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I believe that's true, Your Honor.

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In fact, but that's not what FilmOn intends to do here because FilmOn recognizes... This may be a way of restricting a decision, but I... Let's leave out the nationwide.

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Your view, though, is it could be nationwide, right?

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There's nothing in the statute that would bar you from doing that?

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under section 111 F3.

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That's true.

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There is a separate mechanism for the transmission of distant signals.

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And also, I think that actually section 111 contemplates transmissions that go outside of market.

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But there are a whole host of other rights.

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And this is where the FCC steps in.

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And as we've identified, there's a... We're worried about your interpretation of the statute for a minute.

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Now, let's get back to the kid in the basement.

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What if he's just doing it in his local community?

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If he has...

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equipment and has all he needs would be an antenna and computer console and what's necessary to send it out into the internet right well he would need paying subscribers to the facility no i'm i was assuming paying subscribers

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Right.

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The definition of facility, if that would be an open question, frankly, if a Solia computer could constitute a facility.

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Again, and I keep going back to the precedent here, because I think that's where this body of law is sort of leaving the rails.

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In IVI, there was no facility.

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And both the district court and the circuit court recognized.

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What do you think facility means?

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Why isn't, under your theory, why wouldn't the kid in the basement

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with the internet connection be, why wouldn't his house be a facility?

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Does that have to be commercial in some bigger sense?

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Is there something?

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Well, that's certainly not in the statute.

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Right.

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So I think there's a test that has to be applied, and I think that test has to be applied by the courts.

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I don't know where the court's here, so I'm trying to figure out what that means.

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Yes, I understand.

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And so if I may, the finding of the district court here, it's on the sealed record

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required appendix.

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I don't want the funding.

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I want you to tell me what you think the statute means.

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If we were to adopt your view, I want to know how far it goes.

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Would it cover a kid in the basement with an antenna, computer, and an internet connection?

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I would have to say in that instance, it might.

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But those are not the facts before this court.

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What's the story on Netflix?

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I thought your brief was a little cagey on this, saying that the early version wouldn't be, it didn't say about the current version.

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Do you think Netflix is a capable system?

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I think Netflix could be, but it's not streaming broadcast television.

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It's not streaming live stream broadcast television.

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So instead, it's more video on demand.

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So it's not a cable system.

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Because it's not, it's not, I'm just trying to get the words, but because it's not receiving signals broadcast by one or more television broadcast stations.

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And then we transmit them to paying subscribers, correct?

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Right.

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instead of its current model, which is to pay for licenses.

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If it did that from facilities, then yes, Your Honor, to paying subscribers, absolutely.

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What about the early mail order version of Netflix?

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Our contention is that that would not qualify.

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Why not?

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Because that would not be another communications channel, and this is where we get into

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post office, the communications channel?

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Well, so there's an argument here about it just and generous.

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And while we don't adopt the argument that's made by the plaintiffs in this case, that communication channels is limited because under their rationale, communication channels has no meaning because it's only wires, cables, and microwave.

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Under our rationale, we agree that there is some

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in some report that we need to take from wires, cables, and microwave and apply that to communication channels.

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So we're talking about electronic communication channels.

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And in fact, again, in light of the expert's agreement here, that communication channels, or that the internet, rather, is made up in its physical layer of wires, cables, and microwave,

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to preclude a transmitter, a retransmitter that utilizes the Internet from accessing the license under the plain language of the statute, eviscerates the language of other communication channels.

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And as a practical matter, the common sense, we have to also apply common sense here.

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The Internet is the means by which all of us communicate today more than any other method.

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And one more point, and I understand I'm into my reserve time.

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What about the idea that

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Congress, when new technologies have come along, has updated the statute, and they make a big deal about that's what should happen here as well, and it hasn't happened yet.

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Yes, and that's, it's happened a couple of times.

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It's happened with satellites, and it's happened with microwave.

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And in satellites, when the Georgia District Court found first that there was no license, the case was appealed,

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The Copyright Office then started a formal rulemaking.

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The District Court, or the Circuit Court rather, then found there was a license.

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But then the Copyright Office issued a formal notice rulemaking, which has not been had here.

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No formal notice rulemaking on this issue directly here.

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There there was.

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Then the Circuit Court followed.

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Meanwhile, I assume there were efforts on Capitol Hill.

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I wasn't involved with those.

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I don't know the details of those.

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But Congress did set up a separate

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statutory regime, section 119 for satellite retransmissions.

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Having done that here, I'm going to loop in the Copyright Office now.

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The Copyright Office has had a consistent interpretation, maybe not authoritative for Chevron purpose, maybe so, but maybe not, but in any event consistent for a long time, and Congress has yet to update the statute on this technology.

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Well, let me say briefly a couple more things about the satellite.

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When Congress enacted section 119, it stated, nothing in this act is intended to reflect any view concerning whether prior to enactment or following termination,

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satellites could get a 111 license.

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So they reserved that issue.

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On microwaves, when Congress stepped in, it was again only after a formal notice rulemaking, and I'll get back to the Copyright Office.

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They thought the Copyright Office was wrong.

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It was unnecessarily restrictive in its reasoning, in its reading, because the Copyright Office in that instance had said, microwaves can't apply because they're not local.

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And Congress said no.

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That's not what this statute means.

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What about the Chevron question, generally, on the Copyright Office?

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Because one of the strongest arguments they have is the Copyright Office is the responsible agency here, and they have had a consistent interpretation.

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And why should we court upend that at this point?

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I have a lot to say about that.

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Let me first say, since I'm running out of time, you'll have... Okay, that... I can't speak to that.

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If you have enough time, the judges can ask questions as long as they want.

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Thank you.

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I just want to make sure I can answer them.

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First and foremost, we disagree categorically with the notion that Congress, or the Copyright Office, rather, has been consistent on this issue.

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In the 2000 H. Vera Report, when it came time to renew the Satellite Act, Congress was considering Verizon, Fios, and AT&T,

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systems that undisputably utilize the Internet or IP technology.

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The other side says that they use IP, that is, they use packet switching, but they use cables.

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They use fiber optics, for example, Verizon Fios.

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And to that I would say today I'll be flying out of Dulles and I'll have my phone and I can watch the March Madness Tournament on my phone.

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There's no cable that's connected to it and AT&T or Verizon doesn't control the Wi-Fi hub at the airport.

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So this notion that somehow there's this traditional cable that still exists and all of us are tethered to a wire is simply.

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make believe it's not true anymore.

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It might have been true when ACLU versus Reno came out, or even five years ago when the IVI cases were being considered, but it's not true anymore.

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But the Copyright Office in its 2000 HVR report stated and recognized that AT&T, U-Verse, and Verizon Firehouse were both national in scope, and they were quite different from traditional cable providers.

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Yet, later in that same report,

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The office concluded that AT&T, U-Verse, and Verizon Fios may use the Section 111 license.

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That's categorically different from what the plaintiffs say that they've said all along and what they've been saying.

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And it's also important to note as... Suppose they had, though, and I take your point on this, the consistency, so you made your point and that's a good point, but suppose they had been consistent, what about the question of Chevron deference to this office?

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Or did this interpretation, I should say?

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Well, first and foremost,

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We don't think the statute's ambiguous.

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I understand that there are differing views of that, and the courts have differed on that.

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And obviously, we differ in this courtroom on either sides of the table here.

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So we don't view that there's any need to consult the Copyright Office where the statute's clear.

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And so there's no gap under Orca Bay and City of Arlington.

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I assume it's ambiguous.

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What's your next argument?

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Well, if it's found that it's ambiguous, the Copyright Office has actually spoken on this direct

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case here that's before the court today, when we submitted our, when my clients submitted their filings with the office, there was a response letter.

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It's in the record at, actually, this is the wrong side.

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I'll get the side on my rebuttal.

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But it's in the record.

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And they stated there were three options the office can do when they get a submission.

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One, they can reject it.

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Two, they can hold onto it and note their, they actually say the reservations.

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Or three, they can receive it and process it.

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And if there were some clear pronouncement by the office here, they would have rejected it, I assume.

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But instead, they didn't.

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They received it, and they stated some reservations.

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They stated that they were concerned, that they believe that the internet is not a communication channel.

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And then they looked to the courts.

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They said this issue had been raised before the courts.

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It's been raised before the FCC.

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So we're going to wait and see what they do.

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And they did that because there are significant consequences to finding that the internet is not a communication channel.

[00:18:03] Speaker 05:
But I don't understand.

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All the letter says is we're going

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not throw away your filing.

[00:18:07] Speaker 05:
It says we will accept them on a provisional basis.

[00:18:11] Speaker 02:
Yeah, I'm reading the paragraph before where they describe what they can do, and I'm merely siding, arguing that the fact that they didn't reject it is an indication, again, that they're looking to the courts for guidance here.

[00:18:24] Speaker 05:
Well, to be fair, I think this letter doesn't help really either side very much because maybe they're looking to the courts to decide whether they're going to give Chevron deference to their earlier views.

[00:18:35] Speaker 05:
It says, for the reasons discussed above, the Office does not believe Fillmon qualifies for the Section 111 statutory license and will not process Fillmon's filings at this time.

[00:18:48] Speaker 05:
Then it goes on to say, we understand that this issue is in the court, so we're not going to refuse the filings, but we'll accept them on a provisional basis.

[00:18:55] Speaker 05:
That doesn't sound like an inconsistency in their views.

[00:18:57] Speaker 05:
That sounds like they're trying to be diplomatic and waiting to see what the court will do.

[00:19:02] Speaker 05:
That doesn't really answer this question.

[00:19:04] Speaker 02:
Well, I believe it does answer the question of whether or not there has been a notice in comment rulemaking.

[00:19:09] Speaker 05:
There's clearly been no notice in comment.

[00:19:11] Speaker 05:
I don't think anybody thinks there's been a notice in comment rulemaking on this issue.

[00:19:15] Speaker 05:
Both the 92 and the 97 rulemakings are both notice and comment rulemakings, and in both of them they say that Congress intended the compulsory license to apply to localized retransmission services.

[00:19:30] Speaker 05:
And then it says, and that's the reason why in, for SMATV we're saying it's okay, and why for satellite we're saying it's not okay, right?

[00:19:40] Speaker 05:
So the rationale has been subject to notice and comment rulemaking.

[00:19:46] Speaker 02:
Well, again, Your Honor, I point, Your Honor, to the 2008 Fair Report that I cited earlier, where they recognized their national services.

[00:19:55] Speaker 05:
Just to be fair here, that's not a rulemaking.

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That's a report to Congress.

[00:19:59] Speaker 05:
What I'm asking about are the two – there are two actual formal rulemakings, and in both of them,

[00:20:06] Speaker 05:
The case turns, the determination of the agency turns on its definition of cable system and other communications channel, right?

[00:20:16] Speaker 05:
Isn't that right?

[00:20:17] Speaker 05:
I think that's correct.

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And in each case, they define that their view is that it has to be an inherently localized transmission media of limited availability.

[00:20:28] Speaker 05:
Now, whether that's reasonable or not is yet another question, but that's clearly the rationale they use for making a determination.

[00:20:35] Speaker 05:
They – that's their definition.

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Without that definition, they could not have made the determination.

[00:20:41] Speaker 05:
So why isn't that – however strong the need requirement for a formalized rulemaking is,

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pretty strong on that issue.

[00:20:52] Speaker 05:
It doesn't resolve our case.

[00:20:54] Speaker 05:
It just tells us what the agency defines, definition is.

[00:20:59] Speaker 02:
I understand the agency's concern, and it also should be recognized, like the District Court in California recognized, that the Copyright Office has a mandate to protect copyrights, and that's why it's resisted the compulsory license at every turn.

[00:21:12] Speaker 02:
And it's no surprise that every time a new technology comes up, the Office resists that technology.

[00:21:18] Speaker 05:
The fact that an agency has policy views can't surprise you.

[00:21:21] Speaker 05:
This is like, you know, gambling in Casablanca, really.

[00:21:25] Speaker 05:
That's the whole point of having an agency is to have policies.

[00:21:27] Speaker 02:
And I appreciate that.

[00:21:28] Speaker 02:
I'm simply pointing that out and therefore I'm not surprised at all, Your Honor.

[00:21:34] Speaker 02:
I think it's dangerous though to play connect the dots with other rule makings that aren't directly on point.

[00:21:39] Speaker 02:
And so when we take these other rule makings and extrapolate from them to try to concoct some formal rule making here that precludes the internet from being a communication channel, there are significant consequences that I believe and I put to the court

[00:21:51] Speaker 02:
that that's why the Copyright Office has not taken a formal position here.

[00:21:56] Speaker 02:
And I further will point out the difference between what it did in satellite cases and what it did here.

[00:22:02] Speaker 02:
When it was confronted with satellite, even after the Georgia District Court said, you're not entitled because you don't have a facility that's not in outer space that's retransmitting the signal,

[00:22:11] Speaker 02:
This copyright office started to act then and there.

[00:22:14] Speaker 02:
It started to act.

[00:22:14] Speaker 02:
Formal notice rulemaking process begins.

[00:22:17] Speaker 02:
That hasn't happened here in spite of the fact that over a year and a half ago, a court in California said Film on X is or may be entitled to a license.

[00:22:25] Speaker 06:
So there are dramatically different facts.

[00:22:28] Speaker 06:
It is not a statutory term that's localized or inherently localized.

[00:22:33] Speaker 06:
Does it mean that the facility is in the same locality or region as the broadcast that it's transmitting, or does it mean that the customers are in the same locality as the facility?

[00:22:51] Speaker 02:
I believe it's the former.

[00:22:52] Speaker 02:
I believe it's the former, Your Honor, and I wish I could point to the case.

[00:22:56] Speaker 02:
I just don't remember which case.

[00:22:57] Speaker 02:
I've read a lot of cases that defines that concept as essentially within the market where you could receive the signal with an antenna.

[00:23:06] Speaker 06:
Do you, does Philmon comply with that locality?

[00:23:09] Speaker 02:
Yes.

[00:23:10] Speaker 06:
Okay, so then why aren't you embracing it?

[00:23:12] Speaker 06:
Fine, you're happy with that definition of inherently localized.

[00:23:15] Speaker 02:
We will embrace that in fact.

[00:23:17] Speaker 02:
We will embrace that.

[00:23:18] Speaker 02:
I'm answering the court's questions, but there's no intention to violate that provision or to transmit signals distantly.

[00:23:24] Speaker 06:
even whether you accept or not whether it should be there over the copyright office gets deference you don't dispute that you meet you don't dispute that you you contend that you meet that definition of an inherently localized correct I will point out that there are there have been past iterations of the film on technology that have not complied with that for instance the analog to IVI when which was the subject of the first litigation in this sequence before us the case

[00:23:48] Speaker 02:
The record before you, no, there's no intention to transmit outside of the local area.

[00:23:53] Speaker 02:
And again, this is an important distinction between this case and IVI and its progeny.

[00:23:58] Speaker 02:
IVI stated it had no intention to comply with any FCC rules and regulations, and it was going to transmit nationwide at the same time all the time.

[00:24:06] Speaker 02:
That's not what Philman's doing here.

[00:24:09] Speaker 02:
And again, I understand there's some, there may be a gray area as to what constitutes a facility, but there was no evidence of any facility in IVI.

[00:24:18] Speaker 02:
And IVI was grappling with whether or not the internet was a facility.

[00:24:22] Speaker 06:
Is the transmitting that you do coming from that same facility that receives the signals?

[00:24:27] Speaker 02:
Yes.

[00:24:28] Speaker 06:
Do you have servers in there?

[00:24:30] Speaker 02:
Yes.

[00:24:32] Speaker 02:
Yes, so there is a lot of equipment in there, again, that I can't explain.

[00:24:36] Speaker 02:
And if there are no further questions, I promise.

[00:24:38] Speaker 02:
I have some.

[00:24:40] Speaker 02:
I'm trying to respect my friend's time.

[00:24:47] Speaker 02:
We're going to take all of their time out of yours.

[00:24:52] Speaker 02:
Then I'll keep talking.

[00:24:54] Speaker 03:
What about their argument that we should construe the statute consistently with free trade agreements and the Berne Convention?

[00:25:04] Speaker 02:
So there are a few points that I would make in response to what I think has been styled the charming Betsy argument here.

[00:25:12] Speaker 02:
And first and foremost, this dispute is domestic.

[00:25:18] Speaker 02:
And the Sarah V. Lappin case holds that.

[00:25:20] Speaker 03:
I don't think that matters for charming Betsy necessarily.

[00:25:25] Speaker 02:
Well, I'll just cite the court to Sarah V. Lapin, which actually stated the charming Betsy Cannon comes into play only work.

[00:25:31] Speaker 02:
I'm sorry, I cited that wrong.

[00:25:34] Speaker 02:
It's a different case.

[00:25:38] Speaker 03:
And the point, I think, is the statute, wherever the activity is taking place, the statute should be construed consistently with international obligations.

[00:25:48] Speaker 02:
Well, so let me start over.

[00:25:49] Speaker 02:
I apologize.

[00:25:51] Speaker 02:
Sarah V. Lappin finds that it's not necessary where there's no ambiguity.

[00:25:55] Speaker 02:
So that's point one.

[00:25:56] Speaker 02:
Point two, I know the court wants to hear about if there is ambiguity, so allow me to move on.

[00:26:00] Speaker 02:
The Quality King case versus Danza, which I think is a very important case on this point, the Supreme Court found that because these treaties are entered into after the 1976 Act, they provide no guidance and no insight as to the interpretation of the 76 Act.

[00:26:18] Speaker 02:
I would also point to Capital Cities v. Crisp, where the Court found that

[00:26:22] Speaker 02:
anyone who's transmitting over the public airwaves, and these are public airwaves, we're talking about free-to-air television here, this is a public good, that anyone transmitting over those airwaves consents and is subject to the compulsory license.

[00:26:36] Speaker 02:
There's also this Court's opinion and Your Honor's concurring opinion in the Albahani case.

[00:26:41] Speaker 02:
That's not binding.

[00:26:44] Speaker 05:
except for its persuasive value.

[00:26:47] Speaker 02:
I would argue that it is persuasive.

[00:26:50] Speaker 02:
And in this case, these were not self-effectuating treaties.

[00:26:53] Speaker 02:
There has been subsequent congressional action to enact the treaties.

[00:26:59] Speaker 02:
But that action has actually, the implementing statutes have actually stated that nothing in these acts shall be construed to amend or modify any US law.

[00:27:08] Speaker 02:
So I think it's.

[00:27:08] Speaker 03:
So you would say the text of the statute specifically addresses this?

[00:27:14] Speaker 03:
Yes.

[00:27:15] Speaker 06:
And the Berne Convention doesn't apply to domestic law by its terms, is that correct?

[00:27:18] Speaker 02:
That's correct.

[00:27:23] Speaker 06:
Did you have more, Brett?

[00:27:24] Speaker 03:
No, go ahead.

[00:27:25] Speaker 06:
So here's what I think, for me at least, is the hardest thing with your position.

[00:27:32] Speaker 06:
And that is, in 1976, at the exact same time Congress enacted F3, the definition of facility we're wrestling with, over in the transmit clause, they adopted language that I think would be perfect for your situation.

[00:27:49] Speaker 06:
There they said,

[00:27:51] Speaker 06:
that they use to define transmit, any device or process now known or later developed.

[00:28:00] Speaker 06:
And that exact same year when they were writing that language in the exact same bill, they went over in F3 and used a definition that just inarguably by its words does not have that same type of capacious language, especially with respect to forthcoming technologies.

[00:28:20] Speaker 06:
How could we give effect to your reading of facility

[00:28:26] Speaker 06:
and still honor that textual distinction that Congress must have quite deliberately made.

[00:28:33] Speaker 02:
So I think there's a spectrum, pardon the pun, of legislation here.

[00:28:40] Speaker 02:
We have, as Your Honor points out, the transmit clause, which the Supreme Court recently found an area is technology agnostic.

[00:28:48] Speaker 02:
We've argued that the Copyright Act should be interpreted as such, but I concede that that language is more broad than what's in the Section 111 F3 compulsory license provision.

[00:29:01] Speaker 02:
But then we have to also look at what else is out there, and I point the court to one notch further down the spectrum, and that is the Communications Act, which has significant restrictions, which requires a closed end-to-end transmission path, for example.

[00:29:17] Speaker 02:
That's not in the Section 111 F3 requirements.

[00:29:22] Speaker 02:
And so, and moreover, in NFL, the inside, it was found that inside communications as a passive carrier did not need to own the entire transmission pass.

[00:29:31] Speaker 02:
So that requirement has been considered by other courts.

[00:29:34] Speaker 02:
Again, that's persuasive.

[00:29:35] Speaker 02:
It's not the law of this court.

[00:29:39] Speaker 02:
But the law, although not as broad as the transmit

[00:29:44] Speaker 02:
clause of the compulsory license is broad such that or other communication channels must include something that is made up of the three things that are enumerated, wires, cables, and microwave.

[00:30:00] Speaker 02:
And any other reading or to insert the words as the district court did of direct or must be local must be end to end.

[00:30:08] Speaker 02:
First of all those things don't happen today every one of the networks that's a plaintiff in this case has its content available on the Internet.

[00:30:16] Speaker 02:
already.

[00:30:17] Speaker 02:
And they'll argue that that's subject to licenses.

[00:30:20] Speaker 02:
And I don't know.

[00:30:21] Speaker 02:
That's not in the record in this case.

[00:30:22] Speaker 02:
I don't know what it is.

[00:30:23] Speaker 02:
But the parade of horribles that are pointed out about the internet simply don't exist anymore.

[00:30:29] Speaker 02:
And it is FilmOnX's intention to transmit only locally.

[00:30:33] Speaker 02:
FilmOnX should be a cable system and should be entitled to compete in equal footing with other technologies that at one time... Congress is like... Sorry, go ahead.

[00:30:41] Speaker 02:
that at one time needed a lift up.

[00:30:44] Speaker 02:
These cable companies were struggling and so there was some recognition of their investment.

[00:30:48] Speaker 02:
Film One X has invested significant resources and it's fighting against now some of the largest companies in the world that are these cable companies that got the benefit of this compulsory license in 1976.

[00:30:59] Speaker 06:
Does the now known or later developed language that does not appear in F3 mean that Congress did not want the definition of cable system to embrace new technologies, to leave it to Congress to deal with it?

[00:31:16] Speaker 06:
Because it strikes a delicate balance under the Copyright Act.

[00:31:21] Speaker 02:
I don't think it does, Your Honor, and I point to the microwave legislation in that when Congress actually said we have to step in here and act because of an overly restrictive and narrow interpretation of other communication channels, those are the critical words, or other communications, plural, channels, plural.

[00:31:38] Speaker 06:
The microwave was hardly a novel technology at the time, even in 1976.

[00:31:43] Speaker 06:
I mean, it was a new application, but microwaves have been around a very long time.

[00:31:48] Speaker 06:
So the Internet

[00:31:49] Speaker 02:
Yes, well, that's true, Your Honor, but I would say that the Internet again consists of

[00:31:55] Speaker 02:
physical wires, cables, and microwaves.

[00:31:57] Speaker 02:
It's simply an assembly of those things that can't somehow deprive it of being a communications channel.

[00:32:04] Speaker 02:
Because it is, again, an assemblage of the things that have been around for time immemorial.

[00:32:12] Speaker 02:
And again, we've also cited in our brief the fact that microwaves, as the Copyright Office was concerned with, weren't necessarily inherently localized.

[00:32:21] Speaker 02:
And neither are cables.

[00:32:22] Speaker 02:
The transatlantic cable, it goes thousands of miles.

[00:32:25] Speaker 02:
So the difference that the plaintiffs try to paint here between the internet, this horrible, unmanageable thing, and wires, cables, and microwave is immaterial in this instance.

[00:32:36] Speaker 02:
It's not recognized in the statute.

[00:32:38] Speaker 02:
And this court should give meaning to the words of Congress.

[00:32:41] Speaker 02:
And I'll reserve whatever time the court will give me.

[00:32:45] Speaker 05:
Just one more question.

[00:32:47] Speaker 05:
We'll give you some time, don't worry.

[00:32:49] Speaker 05:
The FCC rules requirement, what about that?

[00:32:53] Speaker 05:
It has to be permissible under the FCC rules?

[00:32:55] Speaker 02:
So as the court actually in IVI and the satellite case is recognized, because the FCC is not actively regulating OTT providers such as FilmOn, over-the-top providers such as FilmOn, FilmOn is therefore permissible.

[00:33:08] Speaker 05:
Does the FCC have a rule that says if we haven't directly addressed this, you can do anything you want?

[00:33:16] Speaker 02:
I can't point the court to an FCC rule, but I can point the court, the copyright office has taken that position, and the IVI court recognized that position.

[00:33:25] Speaker 02:
And here in this case, sorry?

[00:33:29] Speaker 02:
Yes, the 11th Circuit did in the satellite cases as well, Your Honor.

[00:33:32] Speaker 02:
And in this instance, in fact, there is in the record, there's an open NPRM at the FCC on this issue, and even as recently as January 17th,

[00:33:41] Speaker 02:
The FCC issued another update to its annual reporting of the status of television transmission.

[00:33:48] Speaker 02:
And in footnote 23 of that report, it identifies that NPRM, which is still an open item, at the FCC.

[00:33:54] Speaker 02:
So the FCC is actively considering these issues.

[00:33:58] Speaker 05:
Why didn't he enter them if we were to say that was the okay, you could go ahead, you would be the only communications channel that can go ahead without any regulation by the FCC?

[00:34:11] Speaker 02:
Well, Your Honor, I honestly can't speak to whether or not there are others out there that are outside of the FCC's active and current regulation.

[00:34:20] Speaker 02:
I'm not enough of an FCC expert.

[00:34:27] Speaker 02:
I can only say I don't believe that to be true, and I don't think that's dispositive in light of what the IVI Court in Levin Circus recognized.

[00:34:32] Speaker 02:
Sorry, Your Honor.

[00:34:34] Speaker 03:
You agree the FCC could regulate Filmon as a cable service?

[00:34:41] Speaker 02:
I absolutely do, and I've been there with my client urging them to do that, and that's an open item.

[00:34:47] Speaker 06:
Would it be as a cable service or as a multimedia distributor?

[00:34:50] Speaker 06:
Because you said you don't meet the definition of cable service under the Communication Act.

[00:34:53] Speaker 02:
MVPD is what it would be, and I think certain provisions, again, I'm sort of outside of my league on the FCC-ish side of this, but FilmOnX, even if it were deemed a cable company under the FCC Act, would comply with the Act to the extent that it could, because I believe there are some pieces of that that would be challenging, but there would be obviously a new, I believe the FCC is considering a new regime that would govern over the top providers like FilmOn.

[00:35:21] Speaker 05:
Okay, thank you.

[00:35:21] Speaker 05:
We'll let you go now.

[00:35:22] Speaker 02:
Thank you very much.

[00:35:41] Speaker 01:
Thank you, Chief Judge Garland, and may it please the Court.

[00:35:44] Speaker 01:
Before beginning, I'd just like to thank the Court and my lovely opposing counsel for agreeing to graciously move this argument by a few hours.

[00:35:52] Speaker 01:
FilmOn now claims that it's a cable system.

[00:35:55] Speaker 01:
That claim contradicts the text of the Copyright Act, contradicts its purpose, and contradicts what nearly every judge looking at this question has found.

[00:36:03] Speaker 06:
Well, before you dive in, I just had a question about the last footnote in your brief, where you say you still have other arguments as to why they would not qualify as a cable system, including under 111F3, which is a facility provision that we are supposed to be interpreting now.

[00:36:25] Speaker 06:
What is your argument that you haven't shared with us about 111F3?

[00:36:28] Speaker 01:
Well, I think it's, you know, I think there's basically four arguments that we're trying to preserve in that footnote.

[00:36:33] Speaker 01:
The first is that Philmon has been transmitting programs that have been altered and the section 111 precludes willful alteration.

[00:36:42] Speaker 01:
So Philmon's transmitting our programs with logos.

[00:36:46] Speaker 06:
I get that you've got some under the other sections of 111.

[00:36:49] Speaker 06:
I'm curious about the F3 one.

[00:36:51] Speaker 01:
Yeah, I think it's just, I mean, I'm not sure which one is F3.

[00:36:55] Speaker 01:
I'll just give you the four.

[00:36:56] Speaker 01:
And so that's one.

[00:36:58] Speaker 01:
The other is that Philmon has to file semi-annual statements with the Copyright Office.

[00:37:02] Speaker 01:
They haven't done that with all stations.

[00:37:04] Speaker 01:
That retransmissions also have to be permissible under FCC rules.

[00:37:08] Speaker 01:
But there is no FCC rule that's permitting Philmon to transmit this.

[00:37:12] Speaker 05:
I think your position would be, I think, as in one of the amicus, that it's not enough just to have an absence of regulation.

[00:37:18] Speaker 01:
Correct.

[00:37:18] Speaker 01:
Correct, Your Honor, and their position was just being, you know, elucidated, would basically make film on a unique category of one subject to no FCC regulations.

[00:37:28] Speaker 01:
Indeed, no government regulation at all in Congress in 1976 when they enacted the limited provision in Section 111 for compulsory licenses had something different in mind, kind of making up for the fact there's must carry an extensive FCC regulation and the like.

[00:37:44] Speaker 01:
And I think if you adopt Mr. Baker's form... I'm sorry, can we just get back?

[00:37:47] Speaker 06:
I haven't heard anything yet that's an F3 argument.

[00:37:49] Speaker 06:
You haven't yet.

[00:37:50] Speaker 06:
None of those arguments are F3 ones.

[00:37:52] Speaker 01:
They may not be.

[00:37:53] Speaker 01:
There might be that there's some technical reason why they're within the scope of F3, but I'm not totally sure.

[00:38:00] Speaker 01:
But those are the arguments.

[00:38:01] Speaker 01:
Oh, I'm sorry.

[00:38:03] Speaker 01:
F3 is the paying subscriber provision as well.

[00:38:06] Speaker 01:
And that's in the language of F3.

[00:38:09] Speaker 01:
And FilmOn, for at least a time, was transmitting the stuff for free to folks instead of to paying subscribers.

[00:38:16] Speaker 01:
And that, by the way, was the one limitation.

[00:38:19] Speaker 06:
On this current record, they don't charge customers?

[00:38:22] Speaker 01:
I'm not sure that it's necessarily in the record, you know, on summary judgment.

[00:38:27] Speaker 01:
It's something that we'd certainly preserve and want to elucidate to the extent that we didn't win before this court.

[00:38:34] Speaker 01:
But, you know, I do think that's a very important point, that Mr. Baker's position allows, as he was saying, a kid in the basement to be a cable system.

[00:38:44] Speaker 01:
That means anything.

[00:38:46] Speaker 03:
If you have paying subscribers, what's wrong with that?

[00:38:48] Speaker 01:
Well, paying subscribers is a separate limitation, as I was just saying to Judge Millett.

[00:38:54] Speaker 01:
I mean, the whole point of Congress in 1976, I think, and this was teed up by Judge Millett's point about the contrast between the broad Section 101 provision, the transmit clause, which does provide to any process now known or later developed

[00:39:10] Speaker 03:
It said other communications channels.

[00:39:13] Speaker 03:
Under your theory, it should have said wires and cables.

[00:39:15] Speaker 01:
No, not at all, Your Honor.

[00:39:16] Speaker 01:
We do agree that Congress, by using the phrase other communications channels, intended to pick up technologies that are like wires and cables in 1976.

[00:39:26] Speaker 01:
What fits in that?

[00:39:28] Speaker 01:
For example, fiber optic.

[00:39:30] Speaker 05:
Fiber optic is a cable.

[00:39:31] Speaker 01:
Well, I don't think it quite is a cable.

[00:39:33] Speaker 01:
The technical fiber optic, it looks like a cable.

[00:39:36] Speaker 01:
It looks like a cable, but I do think it's different, you know, and the technical term is optical fiber.

[00:39:40] Speaker 01:
And if you look, for example, at Oxford English Dictionary and define cable, it's defined as a thick rope of strands of iron wire.

[00:39:48] Speaker 01:
And that's why I think Congress is trying to say, look, we want to limit, we want to restore with the broad 101 provision,

[00:39:56] Speaker 01:
property rights overturning fortnightly and teleprompter, but we do want to provide this compulsory license to folks like wires and cables who have huge capital investments under a regime.

[00:40:13] Speaker 01:
maybe not maybe not as huge but but but yes but it but it but it again because the copyright office explained and this is uh... this is at fifty six federal register thirty one five eighty four there were those kinds of equipment investments there there's nothing by film on film on his pies why does that matter and that's congress was trying to solve a specific problem correct and you will know

[00:40:39] Speaker 03:
The Supreme Court has told us many times, don't interpret the words of the statute to be limited by the specific problem they might have been thinking about at the time, but just take the words as written.

[00:40:50] Speaker 03:
I think one of the keys to the case for me is trying to figure out what is wires, cables, microwave now, which doesn't help you, and other communications channels.

[00:41:00] Speaker 03:
What is the linkage or the trait that links those terms?

[00:41:04] Speaker 03:
Localized is not the trait that I think, to my mind, links those terms.

[00:41:09] Speaker 03:
So Copyright Office's interpretation of Euston Generous doesn't seem to fit here.

[00:41:15] Speaker 03:
Your response to all that?

[00:41:17] Speaker 01:
Yes, it's two things.

[00:41:18] Speaker 01:
Number one, Your Honor, in order to rule for them and adopt this, you'd have to say the statute is unambiguous the other way, given deference.

[00:41:26] Speaker 03:
How clear does it need to be to be clear?

[00:41:28] Speaker 01:
But I don't think they come close, and that's why six courts have come out the other way on this particular point.

[00:41:35] Speaker 01:
but the insert you but i think i agree with you that basically that you know the supreme court has taught this court in circuit city and other cases under the juices general issues this general principle look to wires cables and microwave and try and figure out what are those underlying characteristics of them and localizes not the underlying characters but i do think it is um... that's a bit of a civil wires and cable certainly aren't i don't think my friend and i think it was the underlying characteristic could have been physical

[00:42:02] Speaker 03:
But when they add microwaves, that kind of knocks that out of the picture.

[00:42:05] Speaker 01:
Correct.

[00:42:06] Speaker 01:
But again, as the Copyright Office said at that page that I read to you, microwaves are localized as well.

[00:42:11] Speaker 01:
It may be localized along a slightly broader transmission path, but it is still a defined transmission path.

[00:42:17] Speaker 01:
You know that for those 30 miles of the microwave burst where it's going.

[00:42:21] Speaker 01:
Contrast that to FilmOn, which uses the internet, and a packet on the internet could

[00:42:26] Speaker 06:
The internet, when they say they use the internet, it's not some other thing.

[00:42:30] Speaker 06:
It is, it has a physical structure.

[00:42:32] Speaker 06:
They don't just blast it into the air, right?

[00:42:35] Speaker 06:
They use cables, wires, microwaves, maybe radio waves, maybe they aren't all microwaves.

[00:42:41] Speaker 06:
But under Justum generis, I've got to think cable, wires, radio waves sure fits pretty close to cable.

[00:42:46] Speaker 01:
Judge Malik, we don't doubt at all that the internet uses wires and cables.

[00:42:52] Speaker 01:
That's not our argument.

[00:42:54] Speaker 01:
Our argument is everything uses those things.

[00:42:57] Speaker 01:
And if you accept their interpretation, you are striking the list altogether and giving cables and wires and microwaves and other communications channel no meaning whatsoever.

[00:43:07] Speaker 01:
A brief at page 24 gives you just a visual depiction of it.

[00:43:10] Speaker 06:
I got that.

[00:43:11] Speaker 06:
Now, what is your meaning?

[00:43:12] Speaker 06:
What is your connection?

[00:43:13] Speaker 06:
And what do you think is a communication channel?

[00:43:15] Speaker 06:
If you think fiber optics counts as cables, because they call them fiber optic cables, what fits in there?

[00:43:21] Speaker 01:
Something with a defined transmission path that's under the control of... What do you mean by defined transmission path?

[00:43:26] Speaker 01:
That you know exactly where it's going.

[00:43:28] Speaker 01:
And this is really important, Judge Mallett, because, you know, my friend said when he goes to Dulles that he can watch TV or something.

[00:43:34] Speaker 01:
on his iPad, that's because of negotiated for licenses for content.

[00:43:38] Speaker 01:
That's the only way that takes place.

[00:43:40] Speaker 01:
And when our clients are negotiating those licenses, one of the most important things, particularly about internet distribution, is the risk of piracy, is the risk that these packets are going all over the world with the internet, unlike the 30-mile microwave burst or something like that.

[00:43:56] Speaker 06:
So you want the communication channel to be controlled?

[00:43:59] Speaker 01:
Correct.

[00:44:01] Speaker 01:
The path of transmission to be controlled.

[00:44:04] Speaker 06:
So the communication channel, the path that microwaves use is the air?

[00:44:09] Speaker 01:
Correct.

[00:44:11] Speaker 01:
But it is a defined path as to which, as the Copyright Office says,

[00:44:16] Speaker 01:
The Copyright Office says that they provide specialized equipment that provides subscribers with the equipment necessary to receive the signals in their homes.

[00:44:24] Speaker 06:
I think the specialized equipment now happens to be cables and wires linking my computer at home or my TV at home up to

[00:44:34] Speaker 06:
the Internet, but you've got, as in the microwave situation, you've got an antenna, air, and a receiver.

[00:44:41] Speaker 06:
And what they have is antenna, cables, wires, waves going through the air, and a receiver.

[00:44:49] Speaker 06:
And I'm just not having, I'm not understanding, I think you both have problems, we all have problems with this text.

[00:44:54] Speaker 01:
Our position is not just to be clear that you have to read the text our way.

[00:44:58] Speaker 01:
We certainly agree.

[00:44:59] Speaker 01:
Could you read Microwave that way and read other communications channel that way?

[00:45:03] Speaker 01:
Is there an argument?

[00:45:04] Speaker 01:
Yes, there's an argument.

[00:45:05] Speaker 01:
We don't think it's the best reading and I think the best way of understanding this judgment.

[00:45:09] Speaker 01:
Microwave what way?

[00:45:10] Speaker 06:
How are you reading Microwave differently from how I read Microwave?

[00:45:12] Speaker 01:
Well, I think Microwave does have a defined transmission path, unlike the Internet, which is international and, as I was saying, that has huge implications for folks like our clients.

[00:45:22] Speaker 01:
I think the best way of understanding why our textual argument is better than theirs is to focus on the fact of what Congress did.

[00:45:29] Speaker 01:
This was Judge Kavanaugh's question before about satellites.

[00:45:32] Speaker 01:
Because when satellites came around, which does look very much like the Internet, a kind of global distribution system,

[00:45:38] Speaker 01:
or something like that.

[00:45:40] Speaker 01:
Congress passed two separate standalone statutes, which Judge Collier said as well, to deal with that.

[00:45:45] Speaker 01:
They didn't add this and jam it in.

[00:45:47] Speaker 06:
I know, because they didn't have a facility here on earth, which Philman does, but I guess what I'm trying, they say that they've got a controlled path that keeps it from going to others, and I understand you all have concerns about that.

[00:46:01] Speaker 06:
If their claim that they have a way of controlling and limiting when it leaves their antenna and goes through cables and wires and at some point it hits some either micro or radio waves, is there a disputed fact about whether this is controlled?

[00:46:16] Speaker 01:
Oh, absolutely, there's a disputed fact.

[00:46:18] Speaker 01:
I mean, this is just their say-so, Your Honor.

[00:46:22] Speaker 06:
And why are we here?

[00:46:23] Speaker 01:
Well, our position is that it's got to be inherently localized, not that you can add some technology to make it localized.

[00:46:30] Speaker 05:
Where do those words come from?

[00:46:31] Speaker 01:
Well, they come from, as you were saying, Your Honor, before, the Copyright Office has had that determination since 1992.

[00:46:36] Speaker 01:
And we think it's just like wires and cables in a Houston generous.

[00:46:42] Speaker 05:
in a circumstance in which the only person who can receive this is somebody who is paid.

[00:46:50] Speaker 05:
That is, not anyone on the internet can receive it.

[00:46:53] Speaker 05:
You have to have an IP address that is the one that pays for this subscription.

[00:46:59] Speaker 05:
They say that they can also geolocate this.

[00:47:03] Speaker 05:
Now, imagine we were to hold

[00:47:05] Speaker 05:
that an Internet-delivered system which has guaranteed geolocation and guaranteed subscriber definition is okay.

[00:47:19] Speaker 05:
But if this is not that system, it's not okay.

[00:47:22] Speaker 05:
And those are facts that have to be determined.

[00:47:24] Speaker 05:
And if they, for example, violated that or were unable to do that, they would be infringing.

[00:47:31] Speaker 05:
Just take that as a hypothetical.

[00:47:32] Speaker 05:
The hypothetical is they actually can geolocate.

[00:47:35] Speaker 05:
And they can also guarantee that only a subscriber gets the transmission.

[00:47:42] Speaker 01:
Right.

[00:47:42] Speaker 01:
I think that that isn't enough because Congress had in mind inherently localized, not some technology that could be added on after the fact.

[00:47:50] Speaker 01:
Wires and cables are inherently localized and that the path of transmission from one end to the other is always under the control of the facility.

[00:48:00] Speaker 06:
Always under control and inherently localized?

[00:48:03] Speaker 01:
They are always under control.

[00:48:04] Speaker 01:
So my friend on the other side was pointing to AT&T, for example, using IP in Verizon, which is absolutely wrong.

[00:48:12] Speaker 01:
When it uses IP, in those examples, it's IP the language, not IP the internet protocol for transmission.

[00:48:20] Speaker 05:
Microwave inherently localized.

[00:48:21] Speaker 01:
Well, as the Copyright Office said, it's localized in the sense that it's a defined path of about 30 miles.

[00:48:28] Speaker 01:
It's not the internet.

[00:48:29] Speaker 07:
And that's why... Microwaves can go much longer than 30 miles.

[00:48:31] Speaker 01:
You can string them together and stuff like that, but still it is a defined transmission path.

[00:48:36] Speaker 01:
You know when the microwave burst happens, basically the axis... Is it a narrow beam that only hits your house?

[00:48:43] Speaker 01:
I don't think it's that narrow, but it is a very big difference from the internet, which is international packets.

[00:48:50] Speaker 05:
But fine, the only thing that guarantees that a subscriber is the one who gets it is some kind of de-encrypting device, right?

[00:48:58] Speaker 01:
For a microwave?

[00:48:59] Speaker 05:
For a microwave, yeah.

[00:49:01] Speaker 01:
I assume that's right.

[00:49:02] Speaker 01:
Well, I should say two things.

[00:49:03] Speaker 01:
One is that's right in that it's the decryption technology, but also just the physical limitations of the spectrum so that you have to be fairly near the microwave to be able to pick up the signal.

[00:49:14] Speaker 05:
But still, there could be, in a city, there could be millions of people.

[00:49:18] Speaker 05:
in a rural area, there might be fewer, it just depends on how many people are in that, within that.

[00:49:23] Speaker 01:
But I think the whole point of Section 111 is to focus narrowly on narrow geographies.

[00:49:28] Speaker 01:
There's all sorts of language in 111 about communities, about distant signals.

[00:49:32] Speaker 01:
That's in the other sentence though.

[00:49:33] Speaker 01:
It's all through though.

[00:49:34] Speaker 01:
I think it's, you know, I think it's, you know, head ends, you know, I think all of this, 111 is really getting at

[00:49:40] Speaker 03:
Here's, I just want you to respond to this.

[00:49:42] Speaker 03:
So cable system, if it hadn't been defined in the statute, I would think inherently localized makes some sense as a instinct.

[00:49:53] Speaker 03:
And so if the Copyright Office had defined it.

[00:49:56] Speaker 03:
But the problem for you, and I want you to address is,

[00:49:59] Speaker 03:
that congress did define what cable system is in a way that's broader perhaps than what my instinct would have been about what a cable system is by using these broad phrases including other communications channels and so i think the copyright office it's inherently localized really goes to cable system what we instinctively think not to

[00:50:23] Speaker 03:
At least in my judgment, I'm worried about not to the defined terms that Congress has put in for what a cable system.

[00:50:30] Speaker 01:
So Judge Kavanaugh, that's interesting.

[00:50:32] Speaker 01:
I would think it cuts exactly the other way.

[00:50:34] Speaker 01:
That is, if you accept their interpretation, you're effectively gutting cable system of anything.

[00:50:39] Speaker 01:
Everything is a cable system then.

[00:50:40] Speaker 03:
Congress...

[00:50:42] Speaker 03:
arguably, if the text means what they say, did that.

[00:50:45] Speaker 03:
And so the microwave example is a good one in some sense because the Copyright Office says no, and Congress comes back and says yes.

[00:50:53] Speaker 03:
And I don't put too much credence on this, but the House and Senate reports do say, hey, the Copyright Office, in our judgment of those committees, was wrong to so narrowly confine the statutory terms.

[00:51:05] Speaker 01:
Well, but they don't overrule the Copyright Office's long-standing definition, which is inherently localized.

[00:51:11] Speaker 01:
And I think the contrast between 101, which would do the kind of work that you're saying about any device in process, and the much more limited terms, wires and cables, in the statutes underscored by the fact that Congress, when they're confronted with new technologies, every time has created standalone legislation, satellites, microwaves, and the like.

[00:51:30] Speaker 03:
That's why this is a

[00:51:32] Speaker 03:
you know, great statutory interpretation case.

[00:51:35] Speaker 03:
Is it a statute where Congress meant to freeze it in time and to update it when new technologies came along, or is it a statute where Congress gave that open-ended

[00:51:46] Speaker 03:
terminology that would encompass the known unknowns.

[00:51:50] Speaker 01:
And I would say we have three textual clues that say it's really the latter in our favor.

[00:51:54] Speaker 01:
One is the fact that they use these technology-specific words, wires, cables, microwave, unlike the language in 101.

[00:52:02] Speaker 01:
So I do think that that suggests a kind of technology-specific limitation.

[00:52:07] Speaker 01:
Two, if you adopt their interpretation, it effectively means anything is a communications channel.

[00:52:13] Speaker 01:
And three, you have the... Not the mail, for example.

[00:52:15] Speaker 01:
Excuse me?

[00:52:16] Speaker 03:
Not the mail.

[00:52:17] Speaker 01:
Not the mail, but anything that transmits a signal.

[00:52:20] Speaker 01:
Mail doesn't transmit a signal, but the kid in the basement.

[00:52:24] Speaker 01:
And that would radically reshape the entire nature of broadcast TV in this country, something I don't think Congress had in mind.

[00:52:32] Speaker 06:
thought back then that kids in the basement could transmit things for subscription.

[00:52:37] Speaker 06:
I think they thought the for subscription was going to ensure that it was serious.

[00:52:41] Speaker 01:
Quite agree Judge Muller, but I think that point cuts in our favor.

[00:52:44] Speaker 01:
As Judge Collier found at page 39 of her opinion, Congress has picked up and tinkered with section 111 time and again.

[00:52:50] Speaker 01:
This very statute, including very recently, four times in the last decade, but they've never

[00:52:56] Speaker 03:
the sense of Congress has tinkered with it because the Copyright Office has consistently been interpreting it too narrowly.

[00:53:03] Speaker 03:
I mean, you can argue it both ways.

[00:53:05] Speaker 06:
They've never put inherently localized in.

[00:53:07] Speaker 06:
They haven't done that, even though they've been told to do it.

[00:53:09] Speaker 01:
Well, the Copyright Office has said very clearly and consistently, and Judge Buchwald goes through this in a lot of detail, as well as Judge Collier, always that internet-based transmissions don't qualify, whether or not it's notice and rulemaking is a different matter.

[00:53:22] Speaker 03:
area and I'm not gonna draw too much significance from this again but there by my count seven times where the opinion put aside the oral argument where the opinion says the activities are substantially similar to cable overwhelming likeness for all practical purposes a traditional cable system many similarities why should any of the technological differences matter highly similar to cable

[00:53:52] Speaker 03:
You know, that aerial, and that's just the court.

[00:53:56] Speaker 03:
looking at the statute, looking at the technology, and saying, looks like a cable system.

[00:54:00] Speaker 01:
Yeah, I'll answer that.

[00:54:01] Speaker 01:
And I'd like to go back to the third reason in response to your last question.

[00:54:04] Speaker 01:
So I think, as Judge Collier said, that's an absolute over-reading of the decision.

[00:54:08] Speaker 01:
They certainly looked at the statute.

[00:54:09] Speaker 01:
But what part of the statute were they looking at?

[00:54:11] Speaker 01:
Judge Millett's Section 101, the broad transmit clause.

[00:54:15] Speaker 01:
The whole point of Congress in 76 was to restore broad property rights protections and then a narrow exception for cable systems and compulsory licenses.

[00:54:24] Speaker 01:
And that's underscored by the fact that ARIO itself, at footnote 17 of its brief to the Supreme Court, disclaimed any idea that there was Section 111 cable system.

[00:54:32] Speaker 01:
By the way, Philman also disclaimed that as well, as Judge Collier points out.

[00:54:37] Speaker 03:
the best argument, and now they're going for the second ballot.

[00:54:39] Speaker 01:
But I'm just pointing out that, well, it's not just they're going for the second ballot, it was disclaimed before, and certainly was disclaimed in area.

[00:54:46] Speaker 05:
So, just as you quoted, says the words have to be similar, and as Judge Kavanaugh said, the Supreme Court said

[00:54:56] Speaker 05:
five times, at least by his count, that it was similar to a cable system.

[00:55:01] Speaker 05:
And what we're trying to do is interpret a definition of, quote, cable system.

[00:55:08] Speaker 05:
That's those are the words we're trying to interpret.

[00:55:11] Speaker 05:
Right.

[00:55:11] Speaker 05:
So under that theory, I don't see why Houston-Generes doesn't get

[00:55:16] Speaker 01:
Because, again, for Section 111, Congress had a technology-specific idea in mind.

[00:55:22] Speaker 01:
That's the enumeration of wires, cables, microwaves, and stuff like that.

[00:55:26] Speaker 01:
I don't think so.

[00:55:28] Speaker 01:
I think what it suggests is that they're focused on specific technologies, and then the question is what are the underlying characteristics of those technologies?

[00:55:39] Speaker 01:
In the same way as, for example, in Circuit City, you know, the statute there, which covered Seaman, Long-Termin, and other workers, you know, the reason why it added other workers is any other workers, by the way, in that statute, is because they said other workers that are like transportation workers.

[00:55:56] Speaker 01:
Here, again, like fiber optic or other things like that.

[00:55:59] Speaker 05:
These are other things that bear the communication.

[00:56:03] Speaker 05:
In the other statute, it was other workers in international or interstate commerce, which is the important additional words that you're leaving out in that definition.

[00:56:16] Speaker 05:
And that's statutory definition.

[00:56:18] Speaker 05:
And here, we're looking at other communications channels, and we know that wires, cables, microwaves are methods of communication.

[00:56:26] Speaker 05:
So what we're looking for is something that enables communication.

[00:56:30] Speaker 01:
Chief Chuck Garland, I do think you could read the statute that way, but I think to read it that way is to defy everything we know about what Congress is doing in 1976.

[00:56:39] Speaker 01:
You know, if you read just the reply brief, you might be left with the impression that Congress was trying to enable compulsory licenses for all sorts of other communications channels, but there's just nothing to support that.

[00:56:50] Speaker 01:
Rather, what Congress was trying to do was restore property rights protections for small mom and pop, to the copyright holders, and then to have a narrow exception for small mom and pop cable systems that engage in huge sunk costs.

[00:57:09] Speaker 05:
I don't think either way that and certainly I don't see anything that establishes your position.

[00:57:16] Speaker 05:
I understand you could construct it from the

[00:57:19] Speaker 05:
course of events, but it's not usually the way we try to figure out what the text means.

[00:57:24] Speaker 01:
I do think that there's a lot in the legislative history about the fact that the cable industry at the time was pervasively regulated, including must-carry regulations, and that folks like Philman, who argue that they don't have to comply with any of it, that's really different.

[00:57:39] Speaker 01:
Congress was not, in 1976, granting compulsory licenses to any communications.

[00:57:45] Speaker 05:
So you think pervasively regulated is the question.

[00:57:47] Speaker 05:
I do think that's part of what Congress had in mind.

[00:58:01] Speaker 01:
Well, I think, you know, to the extent the FCC does, and as I understand the last thing they've said, they've disclaimed the idea that they're going to continue with any sort of rules.

[00:58:08] Speaker 01:
And so I think you deal with that case then, but I think it would make it a closer case than what you have right now, which is quite different element than we've heard before.

[00:58:18] Speaker 01:
It's an additional one.

[00:58:19] Speaker 06:
How does it apply to microwaves?

[00:58:21] Speaker 06:
The wireless broadcasters, they don't have must-carry.

[00:58:24] Speaker 01:
Yeah, I think it's complicated with microwaves.

[00:58:27] Speaker 01:
Some parts of microwave aspects do and some don't.

[00:58:30] Speaker 01:
But again, their Congress added that specific technology to the list, as Judge Collier said.

[00:58:35] Speaker 01:
That's really the way Congress deals with this problem, either for satellites and microwaves.

[00:58:39] Speaker 06:
wrong Copyright Office.

[00:58:40] Speaker 06:
They don't say, wow, we never thought of that.

[00:58:43] Speaker 06:
You were right, Copyright Office, but now that we think about it, let's put them in, even though they aren't inherently regulated and subject to these mucks.

[00:58:49] Speaker 01:
But Judge Millett, what's the it that Congress said they got wrong?

[00:58:52] Speaker 01:
They got wrong the it of the microwave.

[00:58:54] Speaker 01:
That is that Congress never overruled the Copyright Office's longstanding determination that Section 111 is limited to inherently localized transmission media of limited

[00:59:05] Speaker 06:
2008 report where they said that the AT&T U-verse, which is a national cable system, is permissible as a facility under 111 F3 because the term cable system is meant to be read quite broadly in their words.

[00:59:23] Speaker 06:
That seems very difficult.

[00:59:24] Speaker 01:
So I do think that my friend on the other side hasn't totally read to you all of that report.

[00:59:29] Speaker 01:
So first of all, page five.

[00:59:30] Speaker 01:
the Shivera report says quote Verizon has built a fiber fiber to the premises physical plant that's in the report okay yeah so and it's certainly the case that Verizon has a national cable system but the fact is that cable is still inherently localized that is the transmission path Verizon is using from one end to the

[00:59:55] Speaker 06:
have to interpret cable system in their words quite broadly.

[00:59:59] Speaker 06:
The issue here is whether AT&T and Verizon each operate a single national cable system and they have national IP based systems and they go, but

[01:00:11] Speaker 06:
Yeah, it works for us.

[01:00:13] Speaker 06:
It's a facility under 111 F3.

[01:00:15] Speaker 01:
Correct.

[01:00:15] Speaker 01:
And there's other parts of that report that specifically say, the Copyright Office specifically says they don't think internet-based transmission technologies are eligible for 111 license.

[01:00:25] Speaker 01:
Why?

[01:00:26] Speaker 01:
Because they say that unlike that national cable system, it is

[01:00:32] Speaker 01:
It is national, it's not local, but the technical term and the thing that the Copyright Office cares about is inherently localized, not local.

[01:00:41] Speaker 06:
This phrase keeps coming up a lot.

[01:00:46] Speaker 06:
Do you mean by inherently localized that the facility is picking up the local broadcast transmissions and sending them out and the customers have to be in that same jurisdiction?

[01:00:59] Speaker 01:
Well, we do think that the transmission path.

[01:01:02] Speaker 01:
No, it's just the transmission path has to be something that is controlled by by the facility.

[01:01:09] Speaker 01:
Exactly.

[01:01:09] Speaker 01:
And so, you know, this is something you'd ask.

[01:01:12] Speaker 03:
But no, that's different than localized because it could be over the whole country and you could control the wire.

[01:01:17] Speaker 01:
But I think, you know, for purposes of, you know, your question about make and facility, the argument there that Judge Collier was getting at is that Congress didn't use the word send, use the word make.

[01:01:28] Speaker 01:
And so if I send.

[01:01:31] Speaker 01:
Correct.

[01:01:33] Speaker 01:
Correct.

[01:01:33] Speaker 01:
Well, I don't think it's send.

[01:01:34] Speaker 01:
I think there's a difference between send and make.

[01:01:36] Speaker 01:
So, I mean, if I send you flowers, then I could have someone else send you the flowers.

[01:01:42] Speaker 01:
But if I, you know, make a delivery of flowers... Or they make a transmission.

[01:01:47] Speaker 06:
You could make a transmission to me without doing it yourself.

[01:01:50] Speaker 01:
Well, I think it's possible again to read it that way, but I think the best... I think it's a very natural reading of a transmission.

[01:01:57] Speaker 01:
Well, I think make does signify personal completion in a way that SEND doesn't, and that's why the make a delivery.

[01:02:04] Speaker 03:
You have to own the wires?

[01:02:05] Speaker 01:
Well, I think you have to control the wires.

[01:02:07] Speaker 01:
What do you mean by control?

[01:02:08] Speaker 01:
I think you have to lease or have actual, you know, understand that defined transmission path, and again that's- I understand the point about guaranteeing the destination, but you do that by the headers on your packets.

[01:02:23] Speaker 01:
It's not just guaranteeing destination, it's the entire path.

[01:02:29] Speaker 05:
I understand that's what a judge said, but I don't see that in anything, even the copyright.

[01:02:36] Speaker 01:
I think the Copyright Office has said, for example, in the Peter's testimony, that they're very worried about Internet-based transmission services because of the risk of piracy.

[01:02:47] Speaker 01:
And as I was saying before to Judge Millett, every time one of our clients negotiates one of those licenses for internet TV, one of the most extensive things that takes place is precisely this question about how to guard against taking the signal, disruption of the signal in the packets, and piracy of that.

[01:03:05] Speaker 03:
That's a good policy argument, but it doesn't... I don't see how it's...

[01:03:09] Speaker 03:
fits into the language of this statute?

[01:03:11] Speaker 01:
Well, again, if you're trying to understand what cables, wires, and microwave means, I think one way of understanding it is to say that these are all limited transmission media localized where the risk of piracy is not as great.

[01:03:25] Speaker 03:
This is the problem with this canon, the use of generous canon.

[01:03:28] Speaker 03:
It forces judges to make up a linkage, and I'm not criticizing you because we have the canon.

[01:03:34] Speaker 03:
But do you agree the internet is a communications channel?

[01:03:37] Speaker 01:
well it is colloquially communications channel we just don't think it is for purposes of you know of section one eleven to read it that way is to effectively got and strike that list of any meaning whatsoever is a communications it colloquially speaking just as workers were you know someone at circuit city employee was a worker in the circuit city case but not a worker for purposes of the statute there if i could i'd like to return

[01:04:03] Speaker 03:
Supreme Court's also said, and I know they have the cases like Circuit City, but the whole value, this is Iraq versus Haiti, the whole value of a generally phrased residual clause, like the one used here, is that it serves as a catch-all for matters not specifically contemplated, known unknowns, in the happy phrase coined by the Secretary of Defense.

[01:04:23] Speaker 03:
If Congress wanted to limit the waiver authority to particular statutes that it had in mind, it could have enumerated them individually.

[01:04:29] Speaker 03:
So too here, they could have said cables and wires.

[01:04:32] Speaker 01:
They could have, but I think that textually we have a very good clue that Congress wanted to limit it because of the contrast to 101.

[01:04:38] Speaker 01:
Congress knew exactly how to write a statute that did what Philman wants.

[01:04:42] Speaker 01:
They did so in the transmit clause.

[01:04:44] Speaker 03:
I really can't think.

[01:04:44] Speaker 03:
I'm trying to put myself in the mind of a member of Congress in 1975, and you know the problem, and you know it's cables and wires, and then someone says, well, let's add in just these few other words, other communications channel,

[01:05:00] Speaker 03:
That's a huge door that you're opening to who knows what in the future, potentially.

[01:05:05] Speaker 01:
I don't think it's a huge door, Your Honor, because it's in the defined term of cable system.

[01:05:10] Speaker 01:
That's what the title of the statute is.

[01:05:12] Speaker 01:
That's what Section 111D is, cable systems.

[01:05:15] Speaker 01:
And the idea that Congress was opening the door to, you know, particularly given their stated policy concerns about pervasive regulation.

[01:05:22] Speaker 03:
Why create the risk?

[01:05:23] Speaker 03:
If you're a member of Congress in 1976, why create the risk of

[01:05:29] Speaker 03:
future expansion, why not just say we want wires and cables?

[01:05:32] Speaker 03:
We know the problem in front of us, it's cable systems, as we instinctively think of them, and so we'll put wires and cables in here.

[01:05:39] Speaker 03:
Or why define it at all?

[01:05:41] Speaker 01:
Because I assume they thought, you know, other things might come along like fiber optic, which are bicable systems.

[01:05:47] Speaker 03:
Like fiber optic you're adding in, but I agree with the first part of what you said.

[01:05:51] Speaker 03:
I think they thought other things might come along.

[01:05:53] Speaker 01:
Did they tend to actually undo the definition altogether, which is what theirs would do?

[01:05:58] Speaker 01:
I think that's hard.

[01:05:58] Speaker 01:
And we know this because Congress, every time there's new technologies, satellites and microwaves, three times have enacted standalone legislation to deal or added to the list specifically to deal with it.

[01:06:10] Speaker 01:
They haven't done what Philman is asking this court to do, which is jam in internet-based distribution technologies to this Section 111 definition.

[01:06:19] Speaker 01:
Now, I said a long time ago that I'd love to return to the third point.

[01:06:22] Speaker 01:
Can I please do that?

[01:06:24] Speaker 00:
Thank you.

[01:06:25] Speaker 01:
The third point is the charming Betsy Cannon, something you'd ask my friends on the other side about.

[01:06:30] Speaker 01:
And we do think, again, that's a separate tiebreaker.

[01:06:32] Speaker 01:
We haven't yet really talked about administrative deference, which I'd like to do as well.

[01:06:36] Speaker 01:
But, you know, that's a canon that says that, you know, if this court is going to interpret, you know, a statute that would put it in violation of the laws of nations or of treaties, then that is a factor counseling against it.

[01:06:50] Speaker 01:
We're not saying it's, you know, an absolute hundred.

[01:06:52] Speaker 06:
What law of nations?

[01:06:53] Speaker 06:
There's no treaty.

[01:06:56] Speaker 06:
What law of nations?

[01:06:58] Speaker 06:
would be violated here.

[01:07:00] Speaker 06:
Law nations had a very specialized meaning back at the time Chief Justice Marshall.

[01:07:04] Speaker 01:
Your Honor, there are treaties.

[01:07:05] Speaker 01:
There are nine separate treaties at issues of, I think your question is, how does it apply to, how does Attorney Betsy Cannon apply to treaties?

[01:07:11] Speaker 01:
Is that the?

[01:07:12] Speaker 06:
No, my question is, so what treaty, what treaties, not bilateral trade agreements?

[01:07:18] Speaker 01:
There are nine free trade agreements that have been... Okay, so there are free trade agreements that have been... Well, I think Charming Betsy actually just uses the word glob nations.

[01:07:33] Speaker 01:
It doesn't use treaties.

[01:07:36] Speaker 03:
There's new statements broadened to that, I think.

[01:07:38] Speaker 01:
Okay, and the Supreme Court twice judged Mallette.

[01:07:41] Speaker 01:
This is in Weinberger versus Rossi and in Weimar versus Skyrafer applied this charming Betsy Cannon to international agreements.

[01:07:48] Speaker 01:
And so it definitely applies on the Supreme Court.

[01:07:50] Speaker 01:
Bilateral free trade agreements?

[01:07:52] Speaker 01:
The first one, certainly, Weinberger is about 12 bilateral agreements.

[01:07:55] Speaker 01:
Not necessarily free trade, but I don't think that matters.

[01:07:58] Speaker 06:
The Supreme Court, of course, didn't do that in the copyright case, Quality King copyright case.

[01:08:03] Speaker 01:
Well, you know, I think there were other things going on in that case, but I think, you know, I can't remember the facts of that.

[01:08:10] Speaker 01:
I don't think, you know, my friend cited it, but I don't think it's, you know, I think here you've got the Copyright Office saying that if you adopt this interpretation of film on, it would put us out of compliance with nine pre.

[01:08:21] Speaker 06:
the copyright office's specialty, right?

[01:08:24] Speaker 06:
Because you have bilateral trade agreements here that had to have implementing legislation to have any force at all.

[01:08:31] Speaker 06:
And the implementing legislation, unless I'm wrong, omitted the provision about internet retransmissions.

[01:08:38] Speaker 06:
It was in the trade agreement.

[01:08:39] Speaker 06:
So there is nothing in what Congress enacted that carried forward that language.

[01:08:44] Speaker 06:
So I'm having trouble understanding, first of all, how we know those things were articulating the law of nations.

[01:08:51] Speaker 06:
And two, if Congress did not include them in the implementing legislation, what on earth authority do we have to give it effect?

[01:08:57] Speaker 01:
First of all, I think that the international agreements, and Arief explains this, were ones that President Bush, when he signed them, said would not require any changes to legislation, that we're already in compliance with this, including the internet-based transmission provisions.

[01:09:15] Speaker 01:
And then Congress enacted that very statement as part of its legislative package.

[01:09:20] Speaker 01:
Our brief goes into some detail.

[01:09:22] Speaker 06:
I'm asking you about something very specifically that happened.

[01:09:25] Speaker 06:
If I've got it wrong, please tell me.

[01:09:27] Speaker 06:
My understanding is the implementing legislation.

[01:09:30] Speaker 06:
The president proposes it.

[01:09:34] Speaker 06:
The president just proposed it, wrote it up, and it omitted the provision that was in the agreements that talked about limiting or prohibiting

[01:09:42] Speaker 06:
internet retransmission, so that did not get put into the implementing legislation.

[01:09:46] Speaker 06:
Am I wrong?

[01:09:47] Speaker 01:
My friend on the other side hasn't pointed that out, and I don't recall seeing that anywhere.

[01:09:51] Speaker 01:
It might be that that's true, but as our brief points out, separately from that, the President said, and Congress enacted that very statement, that no change to the legislation was necessary because we're already doing that right now, and that was an enactment by Congress.

[01:10:09] Speaker 03:
Each of them also has a, each of the statutes also has a provision that purports to abrogate any provision that violates US law.

[01:10:16] Speaker 03:
It's kind of an, yeah, I would call it an anti-charming Betsy clause.

[01:10:24] Speaker 01:
Well, I don't know if it's an anti-charming Betsy.

[01:10:26] Speaker 01:
Yeah, I think that is over-reading.

[01:10:27] Speaker 01:
I think that just highlights the fact that courts shouldn't, you know, to read something to put us in out of compliance with their international agreements.

[01:10:34] Speaker 03:
I think it was saying don't read the treaty to be

[01:10:38] Speaker 03:
to cause any change to US laws you would otherwise interpret it.

[01:10:42] Speaker 01:
Well I don't think that's what it says and I think the only precedent we have on this is Allegheny Ludlam versus United States, a Federal Circuit decision from 2004 looking at a very similar anti-abrogation clause and saying don't read it that way, rather read it as a Congress underscoring, please don't put us out of compliance with our international agreements.

[01:11:02] Speaker 06:
I think they also say that they can't be used as a defense.

[01:11:07] Speaker 06:
And to the extent you're defending against a counterclaim, then the provisions themselves say that the provisions of the agreement are not meant to create any legal defense.

[01:11:16] Speaker 06:
So how does that then allow you to assert Charming Betsy as a defense to their counterclaim?

[01:11:20] Speaker 01:
I don't know that the agreement is that specific on such things.

[01:11:26] Speaker 01:
But anyway, we're plaintiffs.

[01:11:27] Speaker 01:
So this isn't a counterclaim.

[01:11:29] Speaker 01:
Yeah, but this isn't a counterclaim.

[01:11:30] Speaker 01:
This is our affirmative lawsuit.

[01:11:32] Speaker 06:
So I don't know that that... We're here on a certified 54B counterclaim, disposition of a counterclaim.

[01:11:37] Speaker 01:
I think that, I mean, this is, it's our affirmative lawsuit saying, you know, seeking an injunction to stop Philmon from proceeding.

[01:11:46] Speaker 01:
So I don't think it's a counterclaim.

[01:11:48] Speaker 01:
And I think it would be a very weird thing to say that, you know, that this court should put, you know, our country out of compliance with these free trade agreements based on the procedural posture under which something is arising.

[01:12:04] Speaker 01:
The other tiebreaker.

[01:12:05] Speaker 03:
The court, correct me if I'm wrong, has never applied Charming Betsy, where it's a later-in-time, non-self-executing agreement.

[01:12:13] Speaker 01:
So I don't know if there is a precedent.

[01:12:15] Speaker 01:
I don't know that they ruled it out one way or the other.

[01:12:18] Speaker 01:
I'm not sure there's a precedent one way.

[01:12:19] Speaker 03:
I mean, it's a gerrymandered way to look at it and not appropriate, but I think that's correct.

[01:12:25] Speaker 01:
Again, we're just saying it's a tiebreaker rule here.

[01:12:28] Speaker 01:
My friend cited the Quality King case on the other side for this proposition, I think.

[01:12:32] Speaker 03:
But a tiebreaker, I mean, I'm going to question the use of that term, because you're saying that actually, even if our reading's not the best,

[01:12:42] Speaker 03:
So long as it's ambiguous, we win.

[01:12:45] Speaker 03:
So it's not just a tiebreaker saying even if your position is 35%, we win based on charming Betsy.

[01:12:52] Speaker 03:
So when you say it's just a tiebreaker, actually, it could be a big deal in the sense of pushing you from losing the case to winning.

[01:12:58] Speaker 01:
Well, I sure hope not.

[01:13:00] Speaker 01:
I think we should win on other reasons.

[01:13:01] Speaker 01:
Well, but I guess I'd say

[01:13:02] Speaker 03:
Your position, correct me if I'm wrong, is even if we don't have the best ratings, so long as it's ambiguous, we still need it.

[01:13:08] Speaker 01:
We think that's true for Chevron and the presumption against compulsory licenses, the other two doctrines that are tiebreakers plus.

[01:13:15] Speaker 01:
But I do think charming Betsy is a softer canon.

[01:13:17] Speaker 01:
You know, we're not, you're saying, and I think your concurrence in al-Bahani kind of gets at this.

[01:13:21] Speaker 01:
We're not trying to say this is, yeah.

[01:13:24] Speaker 03:
So on presumption against compulsory licensing?

[01:13:29] Speaker 01:
Correct.

[01:13:29] Speaker 01:
Where does that come from?

[01:13:31] Speaker 01:
Well, I think there's a long-standing tradition in statutory interpretation that exceptions should be read construed narrowly and broad grants construed broadly.

[01:13:41] Speaker 01:
And that's something that's specifically applied in the copyright law itself.

[01:13:45] Speaker 01:
you know that's something that that's one doctrine and the other one which we haven't gotten to yet but is really important is deference because as Chief Judge Garland was saying the Copyright Office twice

[01:13:55] Speaker 06:
What would I do with the fact that the Copyright Office said to construe cable system broadly in 2008, in its 2008 report?

[01:14:02] Speaker 01:
Well, I don't think they've ever said anything about construring cable systems to include internet-based transmission technologies.

[01:14:09] Speaker 06:
They have their language to construe cable system broadly in the context of a national system that's at least using internet protocols and... That is totally misunderstanding what inner IP is about.

[01:14:22] Speaker 01:
And this Judge Collier...

[01:14:24] Speaker 06:
We can even say they were wrong, or we can say IP is very narrow there, but they just said Section 111F defines cable system quite broadly.

[01:14:33] Speaker 06:
That was their predicate before going into that.

[01:14:35] Speaker 06:
Do you disagree with that?

[01:14:36] Speaker 01:
I mean, I don't disagree with that.

[01:14:39] Speaker 01:
It's just that as you then read the report, it says internet-based transmission technologies, as opposed to IP the language, do not qualify.

[01:14:47] Speaker 06:
I get that distinction.

[01:14:48] Speaker 06:
I'm just, because I thought we were talking now about, apart from that specific provision, the background rule of statutory construction here.

[01:14:55] Speaker 03:
I think you're saying construe the broad language narrowly, which is not a, I'm not, correct.

[01:15:01] Speaker 01:
No, no, that's exactly right.

[01:15:02] Speaker 01:
That I think Congress in 1976 said, we're going to restore broad property rights protections, and then there's a narrow exception.

[01:15:10] Speaker 01:
for cable systems.

[01:15:12] Speaker 01:
And yes, once you're a cable system, you get a lot of, you know, you get this compulsory license, a complete exception from market-based principles.

[01:15:19] Speaker 01:
I mean, that's a huge thing you get.

[01:15:21] Speaker 01:
But, as the Copyright Office said in 2008, they said it in 2000, they said it in 1991 in the Notice for Rules rulemaking, in 1992 and 1997 in formalized rulemakings, that

[01:15:33] Speaker 01:
What Section 111 provides is only compulsory licenses for inherently localized transmission media of limited availability.

[01:15:43] Speaker 01:
And however you construe the Internet, it's not that.

[01:15:47] Speaker 03:
Why should we construe this section narrowly?

[01:15:49] Speaker 03:
I guess I'm going to challenge that premise, because why not just construe it as written, as opposed to construing it narrowly?

[01:15:57] Speaker 03:
I'm thinking of each of these, as you call them, tiebreakers.

[01:16:01] Speaker 03:
What if this decided the case?

[01:16:03] Speaker 03:
Okay, the presumption against compulsory licensing seems to come out of thin air.

[01:16:08] Speaker 03:
It sounds good, but I don't see it in any law.

[01:16:13] Speaker 03:
And why construe it narrowly?

[01:16:16] Speaker 03:
Why not just construe it as written?

[01:16:17] Speaker 01:
Well, because I think that normally when you're interpreting a statute, you interpret the grant broadly and the exceptionarily, particularly when it's something like this, which is a deviation from property rights principles.

[01:16:32] Speaker 01:
So this is an unusual thing.

[01:16:35] Speaker 01:
Indeed, this is the only compulsory license in the entire code for audiovisual works when it's enacted in 1976.

[01:16:41] Speaker 01:
So this is a really unique thing.

[01:16:44] Speaker 01:
And then the question would be.

[01:16:46] Speaker 06:
The copyright act, the copyright law is very much a balance, a give here and a give here.

[01:16:51] Speaker 06:
So how do we know this is an exception as opposed to this is, you get this, but this is all you get because these folks are being given this.

[01:17:00] Speaker 01:
Judge Mallette, that's exactly our point, that Congress in 76 balanced these things and said, look,

[01:17:06] Speaker 01:
you know, cable systems you've been operating under the teleprompter and fortnightly regime in which you thought you were able to do all of this and so you've made all of these investments because of this and now we're switching the rules on you and with the broad transmit clause of section 101 and so to deal with that problem congress enacted that exception that's what the legislative history is about and every time subsequently a new technology

[01:17:33] Speaker 06:
to call it an exception, which seems to be quite critical, as opposed to a grant.

[01:17:39] Speaker 01:
Well, because, you know, it's an exception to the transmit clause, the broad language.

[01:17:46] Speaker 03:
You're starting a baseline of property rights, which I agree with, perhaps, as a matter of policy, but I'm not sure the statute's all about

[01:17:54] Speaker 01:
But that is Congress's whole goal in the 76 Act is to do exactly that, is to restore broad property rights after those two Supreme Court decisions.

[01:18:03] Speaker 01:
And so instead of providing some balanced Judge Millett that allowed any system to operate, they defined it narrowly as wires and cables and other communications channels.

[01:18:17] Speaker 01:
And again, I think you could possibly read it the other way, but that isn't the way the Copyright Office has read it for now more than two decades, including in that 2008 report, including- So on the Copyright Office, because you want to get to that, I know.

[01:18:30] Speaker 01:
Yes, thank you.

[01:18:30] Speaker 03:
So let's talk about that.

[01:18:31] Speaker 03:
I think Judge Mallett does too, which is why should we treat these interpretations as authoritative, mead-like interpretations?

[01:18:42] Speaker 01:
Well, I'll start with the fact, as Chief George Garland said, you know, you do have, in 1992 and 1997, the definition adopted after formal notice and comment rulemaking.

[01:18:54] Speaker 01:
And once you have that definition of inherently localized, I think it's just merely ministerial to apply that definition to internet-based transmission technologies.

[01:19:04] Speaker 03:
Perhaps not always, but usually, as you know, the regulation would be in a regulation or the statement would be in a regulation that then could be challenged by someone withstanding at the time the regulations issued.

[01:19:17] Speaker 03:
Here, it seems to be

[01:19:21] Speaker 03:
drive-by in a different issue than the issue presented before us, so respond to that.

[01:19:29] Speaker 01:
Yeah, I don't think this is anything like drive-by.

[01:19:31] Speaker 01:
I mean, this is the subject of immense debate.

[01:19:34] Speaker 01:
I mean, you know, this is, you know, huge amounts of hearings.

[01:19:36] Speaker 01:
This is about TV over the internet.

[01:19:38] Speaker 01:
This is not the Midnight Judges Act.

[01:19:39] Speaker 01:
I mean, this is as, you know, kind of popularly salient as one could get.

[01:19:44] Speaker 01:
And there were, as Judge Mallette was saying, all sorts of congressional reports.

[01:19:48] Speaker 01:
The Copyright Office has been very clear from start to finish, including the 2014 letter that Chief Judge Garland was looking at, which is page 157 of the appendix.

[01:19:57] Speaker 01:
And I point you to the paragraph before the one that everyone was reading.

[01:20:01] Speaker 01:
which says, you know, in no uncertain terms, in the view of the Copyright Office, such a service falls outside the scope of the Section 111 license.

[01:20:09] Speaker 01:
In IVI, the Second Circuit deferred and agreed with the Office's interpretation of Section 111.

[01:20:15] Speaker 01:
We don't see anything in the Supreme Court's recent aerial decision that would alter this conclusion and on and on.

[01:20:20] Speaker 01:
I mean, this has been

[01:20:22] Speaker 03:
Again, not always, but usually the agency would put out a regulation that says the term cable system for purposes of the statute means the following.

[01:20:33] Speaker 03:
And then people would know it would be out there in the CFR, could be challenged, and that's not how this one was done.

[01:20:42] Speaker 03:
And your point, I guess, is that shouldn't matter for Chevron purposes.

[01:20:46] Speaker 03:
and Meade purposes because it's still preceded by notice and comment.

[01:20:50] Speaker 01:
Correct.

[01:20:50] Speaker 01:
And I think there's just no argument that this is something that wasn't, like, that snuck by in the night or something like that.

[01:20:55] Speaker 03:
This is the most, you know... Well, it gets to what Meade's trying to get at, which I don't know the answer to that.

[01:21:01] Speaker 01:
But I do think, as Chief Judge Garland says, one of the things Chevron Deference is trying to get at is agency expertise.

[01:21:07] Speaker 01:
And here, this agency is vested with this power.

[01:21:10] Speaker 01:
Judge Silberman's opinion in MPA versus Cablevision about this very statute, Section 111, says you give Chevron deference to the Copyright Office.

[01:21:18] Speaker 01:
And here they've said this in formal rules twice and lots of times in all sorts of other things, including testimony.

[01:21:25] Speaker 01:
So I don't think anyone is under the illusion that the Copyright Office thinks internet-based transmission technologies don't qualify for the Section 111 license.

[01:21:34] Speaker 05:
A slightly stronger argument in response to Judge Kavanaugh, though not on the subject of the internet.

[01:21:39] Speaker 05:
So it's true that the definition isn't in the regulation, but in explaining why they're adopting the regulation, they base it, that is both the SMATV and the satellite one, on this definition.

[01:21:53] Speaker 05:
They give their definition, and then they say, therefore this one is, therefore this one isn't.

[01:22:00] Speaker 05:
And actually in the regulation from MMDS, it says,

[01:22:04] Speaker 05:
They're not eligible for the cable compulsory license based upon an interpretation of the whole of Section 111.

[01:22:10] Speaker 05:
So if somebody thought that they had a disagreement with that definition, they could do it.

[01:22:16] Speaker 05:
They could have appealed at that point.

[01:22:19] Speaker 05:
Now, they couldn't have appealed the internet question because that was not decided by regulation.

[01:22:25] Speaker 01:
Well, I'm not sure if they could or couldn't there.

[01:22:28] Speaker 01:
But I don't know that deference turns on whether or not someone could appeal the regulation.

[01:22:32] Speaker 01:
I think that Chevron deference is given because of agency expertise and accountability.

[01:22:37] Speaker 01:
Both of those things are true here.

[01:22:41] Speaker 01:
And this brings up a different canon, one that Judge Collier pointed out at page 39, which is the legislative acquiescence.

[01:22:48] Speaker 03:
It has to have the force of law.

[01:22:51] Speaker 03:
And there isn't a definition.

[01:22:53] Speaker 03:
out there that has the force of law in the sense of being adopted in a regulation.

[01:22:59] Speaker 01:
Well, I do think that it does govern, for example, whether or not the Copyright Office will take these submissions that, you know, encounter those submissions.

[01:23:07] Speaker 03:
That's like any other agency guidance that the agency itself follows, but it's not something that the mead term force of law, it's not there.

[01:23:18] Speaker 01:
Well, I think that, you know, I don't know that it's enough, you know, Meade and Barnhart were, you know, a little more expansive than just providing Chevron deference there.

[01:23:28] Speaker 01:
What I was saying about legislative acquiescence is a separate but important point.

[01:23:31] Speaker 01:
Judge Collier at page 39 said, Congress has reenacted the statute, tinkered with it in other ways, but has never changed the Copyright Office's longstanding definition.

[01:23:44] Speaker 03:
I really reject relying on congressional inaction in this circumstance or generally, because we don't know why they did not act.

[01:23:53] Speaker 03:
We know they also didn't act in 1999 to adopt your position.

[01:23:57] Speaker 03:
I mean, I wouldn't use that against you.

[01:23:59] Speaker 03:
I don't think we can use congressional inaction in any way.

[01:24:02] Speaker 03:
We just don't know.

[01:24:03] Speaker 03:
It's hard to pass a matter of basic separation of powers.

[01:24:06] Speaker 03:
It's hard to pass legislation.

[01:24:07] Speaker 03:
Congress not acting is not the same as Congress acts.

[01:24:10] Speaker 01:
But it's not just about congressional inaction.

[01:24:12] Speaker 01:
It's congressional inaction in the teeth of an administrative interpretation.

[01:24:16] Speaker 01:
So this court's decision in Bolden versus Blue Cross, and there have been a whole bunch of other decisions, some that Chief Judge Garland has been on as well.

[01:24:24] Speaker 03:
That doesn't mean the majority of both houses approved of the copyright office.

[01:24:29] Speaker 01:
Well, I do think, as Bolden says, it's at least a thumb on the scale to the extent you're trying to decide what does a statute mean.

[01:24:40] Speaker 01:
The fact that Congress has tinkered with the statute but has left that part of the statute, that part of the administrative interpretation intact, is important evidence.

[01:24:51] Speaker 03:
going to rely on that, shouldn't we rely on the fact that in 1999, they considered but did not enact a proposal that would have adopted your position?

[01:25:00] Speaker 01:
No, because that's just a mere Congressional inaction doctrine.

[01:25:04] Speaker 01:
And what I'm saying, Judge Kavanagh, is this is different because this is something in which the Copyright Office has clearly said, hey, internet doesn't qualify.

[01:25:12] Speaker 01:
The definition of 111 is inherently localized.

[01:25:15] Speaker 03:
huge grant of authority to the executive branch, huge, which is you can do any crazy thing you want, executive branch, and if Congress doesn't overrule it, you can call it congressional acquiescence.

[01:25:26] Speaker 01:
That is a huge... I'm not saying that, Judge Kavanaugh.

[01:25:30] Speaker 01:
I'm saying... That is what you just said.

[01:25:31] Speaker 01:
No, no, no.

[01:25:32] Speaker 03:
Congress is presented with an interpretation

[01:25:35] Speaker 03:
and they tinker with other parts, but they don't tinker with this part, then that becomes law.

[01:25:41] Speaker 01:
And I think you've even written about this once.

[01:25:43] Speaker 01:
You've said if it's something that Congress didn't know about or something, that's one thing.

[01:25:48] Speaker 01:
But this is a unique circumstance.

[01:25:51] Speaker 01:
This is one in which the administrative interpretation is obvious, consistent, and known to people in Congress, the subject of Senator Hatch and other people talking about it in the hearing.

[01:26:01] Speaker 01:
And then they alter this very provision, 111.

[01:26:04] Speaker 03:
If you have 41 senators who you can get to agree with the agency, you can block everything.

[01:26:09] Speaker 03:
And that's not how we are not supposed to then defer to 41 senators and treat that as if it's a majority, the House majority, the Senate and the President.

[01:26:18] Speaker 01:
No, I completely understand that.

[01:26:20] Speaker 01:
But I do think, again, and this court has said it several times, including in the Blue Cross case, including in national customs and women involved, that this is a thumb on the scale when you're trying to interpret a statute.

[01:26:31] Speaker 01:
Finally, if on deference, I would say, even if you think that we're wrong on Chevron deference, as Judge Collier found, then that would just put you back into Skidmore deference.

[01:26:39] Speaker 01:
And here, the agency has been consistent.

[01:26:43] Speaker 01:
It has been thorough.

[01:26:44] Speaker 01:
And there are all sorts of policy reasons that underlie its judgments about disrupting markets.

[01:26:50] Speaker 06:
Deference, whatever the level of deference, and it's to the phrase inherently localized, right?

[01:26:54] Speaker 06:
That's what you want?

[01:26:55] Speaker 06:
Correct.

[01:26:56] Speaker 06:
And your position is that they are not inherently, tell me how they are not inherently localized as a technological matter in a way that distinguishes them from microwave transmitters.

[01:27:10] Speaker 01:
Because when they transmit, and this was my friend Mr. Baker was saying, when their facility transmits, what they call facility, it is sending packets of information, not along a control distribution path, but literally across the entire globe.

[01:27:27] Speaker 06:
Control is very different from inherently localized.

[01:27:29] Speaker 01:
No, I do think it's the same thing.

[01:27:31] Speaker 01:
It's very hard to say the internet is inherently localized.

[01:27:35] Speaker 01:
That is the path of transmission.

[01:27:37] Speaker 06:
We need to say that their transmission path under your theory, if we need to do it, is inherently localized, which means controlled.

[01:27:46] Speaker 01:
Inherently localized transmission media of limited availability.

[01:27:50] Speaker 03:
The internet is not... Well, you have two different arguments there, just so I'm clear on this.

[01:27:53] Speaker 03:
I thought you had an inherently localized argument and a control argument.

[01:27:56] Speaker 01:
Yes, that's true.

[01:27:58] Speaker 06:
But all the copyright offices adopted so far is inherently localized, and then... Transmission media.

[01:28:07] Speaker 01:
And the internet is not inherently localized transmission media.

[01:28:11] Speaker 06:
How is what they do, I don't have to cite the internet at all, how is what they're doing technologically

[01:28:16] Speaker 06:
not inherently localized.

[01:28:20] Speaker 01:
Because it is the opposite.

[01:28:21] Speaker 01:
When they hit send, the packets of information, the transmission media, are the internet, which means that it could be Russia?

[01:28:29] Speaker 06:
No.

[01:28:30] Speaker 06:
I mean, maybe this is a fact dispute in this case.

[01:28:33] Speaker 06:
But as they say, it's not shooting into the air.

[01:28:35] Speaker 06:
It's going through cables.

[01:28:37] Speaker 06:
Their packets have IP addresses on them.

[01:28:40] Speaker 06:
that tell them where to go and where not to go.

[01:28:43] Speaker 01:
The cables, and I think this is what Mr. Baker said to you, is that the cables that they use are before it hits the internet.

[01:28:50] Speaker 06:
Once it hits the internet, they... The internet has a physical structure itself, and that is cables, wires, and microwaves.

[01:28:58] Speaker 01:
Judge Millett, everything has a physical structure at some level, so that can't be what Congress is getting at.

[01:29:04] Speaker 06:
I'm trying to get you to pin down what it is.

[01:29:06] Speaker 06:
They got it.

[01:29:07] Speaker 06:
How does it get from that building?

[01:29:10] Speaker 06:
Where they've hit the send button to Imagine I'm six blocks away in the same town that they're in how does it get to me it goes through cables?

[01:29:19] Speaker 06:
Right or wires from that building to my computer Maybe some radio waves or microwaves that that's physically how it gets there and because of the IP address It's coming and their encryption

[01:29:32] Speaker 06:
It's coming to me and no one else can get it.

[01:29:35] Speaker 01:
It is still not inherently localized transmission media.

[01:29:38] Speaker 01:
That is to say, when they hit send, initially, you know, there may be wires in their house.

[01:29:44] Speaker 01:
So the laptop connects to a wire.

[01:29:46] Speaker 01:
So it's using a wire to send it to a router.

[01:29:49] Speaker 01:
Once the router hits it and sends it out as packets of information, those packets of information are transmitted, not locally, but nationally, indeed internationally.

[01:30:00] Speaker 01:
That is how the internet works.

[01:30:03] Speaker 01:
That's why it's not an inherently localized transmission media.

[01:30:06] Speaker 01:
And so, for example, a hacker in Russia could

[01:30:10] Speaker 01:
Microwaves go into the air along a localized distribution path.

[01:30:14] Speaker 01:
It's a small burst.

[01:30:17] Speaker 01:
Someone in Russia cannot get an interceptive microwave signal and get live TV.

[01:30:22] Speaker 01:
But their technology, the internet, it's not their technology.

[01:30:26] Speaker 01:
That's one of our other points.

[01:30:27] Speaker 01:
It's the internet.

[01:30:28] Speaker 01:
They didn't pay for it.

[01:30:29] Speaker 03:
Should it matter, I guess, that it takes a long road to the, a long and winding road to the same destination?

[01:30:36] Speaker 01:
It's not about length.

[01:30:37] Speaker 01:
It is, again, about inherently localized.

[01:30:40] Speaker 01:
That is, is it, you know, is it something, is it a transmission?

[01:30:45] Speaker 03:
to here and one's going directly and one's getting there the same amount of time or even quicker, but going all over the place before it gets there and getting broken up, I guess, before it gets there too.

[01:30:54] Speaker 03:
But why should that matter?

[01:30:57] Speaker 01:
Well, again, I think that one of the animating concerns that the Copyright Office has had is that once you have

[01:31:03] Speaker 01:
transmission media that are not localized.

[01:31:06] Speaker 01:
It could be anywhere that's vulnerable to interception and things like that.

[01:31:09] Speaker 01:
And as I was saying, when our clients have these bargain for licenses, that's one of the key elements of the negotiations, is to make sure that the signal is preserved.

[01:31:21] Speaker 06:
Unable to be broken into, or is AT&T U-verse unable to be broken into?

[01:31:26] Speaker 01:
Again, it'd be broken into at a specific defined point, and that's different.

[01:31:34] Speaker 01:
Yeah, and so those things again negotiated for licenses with all sorts of, you know, specific content protection in there.

[01:31:43] Speaker 06:
hasn't taken its compulsory license, the copyrights that it gets in 2008, it's negotiated licenses instead?

[01:31:50] Speaker 01:
I think, as I understand it, that AT&T is also subject to, has been, is using, is using licenses, and to the extent they use IP, it's... The company provides you

[01:32:06] Speaker 05:
access on a tablet or a mobile device in addition to your home.

[01:32:10] Speaker 05:
You're saying that the in-your-home part is this statutory license and the to-your-mobile device is a paid-for license, individually negotiated?

[01:32:21] Speaker 01:
It is individually negotiated, yes.

[01:32:23] Speaker 01:
Yes, exactly.

[01:32:24] Speaker 06:
So they negotiate a separate license to go to the phone?

[01:32:27] Speaker 01:
Or the iPad?

[01:32:28] Speaker 01:
Yeah, and indeed if you travel, you know, these are all the subject of all sorts of negotiated licenses that take place.

[01:32:34] Speaker 03:
I think prior oral arguments and in your brief have referred to the Brown and Williamson principle, Elephants and Mouseholes principle.

[01:32:46] Speaker 03:
That usually applies when it's a major question.

[01:32:50] Speaker 03:
Do you think this is the kind of major question that triggers that?

[01:32:54] Speaker 01:
I very much do, Judge Kavanaugh.

[01:32:56] Speaker 01:
And again, this goes back to that whole exception versus, you know, construe exceptions narrowly, particularly for compulsory licenses.

[01:33:02] Speaker 01:
I think, you know, the idea that Congress in this term, you know, other communications channels intended to do something as dramatic as reshape, you know, television, you know, in this way is, I think, you know, not the way that traditionally statutes should be read.

[01:33:17] Speaker 03:
reports said in UARG and others that that doctrine applies in cases of vast economic and political significance and there's no bright line for that I will concede but I'm not sure this you kind of know when you see it I'm not sure this really fits that

[01:33:34] Speaker 03:
that moniker.

[01:33:34] Speaker 01:
Well, certainly the amici before this quarter saying that it does, the Chamber of Commerce, the paramount brief saying that, you know, this is really going to reshape things if this interpretation were adopted.

[01:33:47] Speaker 01:
And again, I just think, you know, if you're reading the statute and trying to say

[01:33:50] Speaker 01:
Well, I could read it the way they are to jam internet in.

[01:33:54] Speaker 01:
Is that really what the best way of understanding a statute like this, which does something unique and unusual, compulsory licenses, and did so because of very specific things they were reacting to, must carry regulation, and sunk capital costs by cable systems?

[01:34:12] Speaker 01:
Hard to say that that's really, you know, that Congress's words here really meant something this broad.

[01:34:20] Speaker 03:
pushing the envelope in here.

[01:34:22] Speaker 03:
Obviously, the agency's not doing that at the agency.

[01:34:24] Speaker 01:
No, I think the agency's recognized the text as its best read, as to be inherently localized.

[01:34:29] Speaker 01:
And, you know, look, Congress can change it if they wanted to.

[01:34:32] Speaker 01:
Certainly, Philman's asked for that for any number of years and tried to go across the street, but they haven't done that.

[01:34:37] Speaker 03:
And I... That's my concern about the elephants and mouse holes thing here, is it wasn't really

[01:34:43] Speaker 03:
a mouse hole in the way that some of these cases are because it did say other communications channels which should have alerted people I think this I'm repeating myself now but probably should have alerted people that wait what do we mean by other communications again you could read it that way but then you have a really hard time explaining what Congress is doing with satellites and microwaves so every time there are new technologies Congress deals with them with legislation they don't jam it into other communications channels

[01:35:08] Speaker 01:
And that, we think, is very good evidence that our textual reading, even apart from tiebreakers or tiebreakers plus, is the correct reading.

[01:35:15] Speaker 05:
Can I ask you just a few?

[01:35:16] Speaker 05:
They're not really hypothetical, so I'm more to help my understanding about this.

[01:35:19] Speaker 05:
So on this mobile device question, if the transmission is by Wi-Fi or cellular,

[01:35:26] Speaker 05:
You're saying that's not included?

[01:35:28] Speaker 05:
I understand you're saying in the real world they pay, but in the real world the way we get the information on your phone that you would otherwise get from your cable system at home is through either Wi-Fi or through cellular.

[01:35:42] Speaker 05:
Those are not

[01:35:43] Speaker 05:
Those are not consistent with microwave, cable, wires, like that.

[01:35:47] Speaker 01:
That is correct.

[01:35:48] Speaker 01:
If you adopt their interpretation, it would be.

[01:35:50] Speaker 01:
But so, Chief Judge Garland, if you're at home and you have, you know, grabbed television signals over the air and then broadcast them on your Wi-Fi network to anyone who can grab them, yeah, I don't think that that's an other communications channel.

[01:36:05] Speaker 05:
I'm talking about for myself.

[01:36:07] Speaker 05:
I'm talking about if the cable company provides

[01:36:12] Speaker 05:
not only to your home, but also to your device, and they do it by cellular or Wi-Fi.

[01:36:19] Speaker 05:
Why aren't those inherently localized medium of limited availability?

[01:36:24] Speaker 05:
I can guarantee you Wi-Fi, at least mine, is of limited availability.

[01:36:28] Speaker 01:
So they're using a compulsory license to get it into your home?

[01:36:32] Speaker 05:
I'm asking you, I'm not saying they're doing this, I'm asking you, could they, why would this not be part of a cable system?

[01:36:39] Speaker 05:
This is the additional transmission to your mobile device by Wi-Fi.

[01:36:44] Speaker 01:
But the system has a compulsory license to get it into your home.

[01:36:48] Speaker 01:
And then the question is, can they carry it through to Wi-Fi or something like that?

[01:36:54] Speaker 01:
In that circumstance, I think it would go back to the underlying question of if you've got a compulsory license to get it into someone's home, then I think distributing it to someone in that local path, I think, would be permissible.

[01:37:09] Speaker 05:
That sounds inherently localized.

[01:37:12] Speaker 01:
That might be harder.

[01:37:15] Speaker 01:
That's not necessarily inherently localized anymore, and so that is broader.

[01:37:19] Speaker 01:
Yeah, but that doesn't, to me, have the same kind of elements and hallmarks of what Congress said when they specified wires and cables, something much more local than the city.

[01:37:30] Speaker 01:
Cities are big, after all.

[01:37:32] Speaker 01:
But again, I think even when microwaves were there, Congress, I think, had in mind kind of, you know, much more localized transmissions than, you know, you being able to grab it anywhere in the city.

[01:37:46] Speaker 01:
That's a harder question.

[01:37:47] Speaker 05:
This is an easier one.

[01:37:51] Speaker 05:
Those are the words that they use in legislative history.

[01:37:55] Speaker 01:
Correct.

[01:37:55] Speaker 01:
But again, I think that still refers to a very local area.

[01:37:59] Speaker 01:
I don't think it refers to anywhere in the city or as you travel on.

[01:38:02] Speaker 01:
It sounds more like satellites, you know, Chief Judge Garland.

[01:38:06] Speaker 01:
Satellites, you know, where you could really grab the signal wherever you happen to be.

[01:38:10] Speaker 01:
And that's where Congress enacted standalone legislation.

[01:38:14] Speaker 06:
And if they were able to show factually that their system transmits it to customers within the same geographic area as the facility and the local broadcast transmissions, and they control it to the best of their technological capacity, nothing's perfect.

[01:38:31] Speaker 06:
Cable's not perfect.

[01:38:32] Speaker 06:
People hack into cable.

[01:38:33] Speaker 01:
Well, that's just their say so.

[01:38:35] Speaker 06:
I'm just asking you, then not take it anywhere you go in the country.

[01:38:39] Speaker 06:
They just say, we're going to let you have it.

[01:38:41] Speaker 06:
If you've got a Wi-Fi router in your house, you can use the router part.

[01:38:46] Speaker 06:
You don't have to be plugged into a cable up in your study, even if you are in your living room.

[01:38:51] Speaker 06:
That would be OK.

[01:38:53] Speaker 01:
No, that's just their say-so.

[01:38:54] Speaker 01:
That's certainly not OK.

[01:38:55] Speaker 01:
That's not making the technology inherently localized.

[01:38:59] Speaker 01:
Is that a fact dispute?

[01:39:00] Speaker 01:
No, I don't think it's a fact dispute at all.

[01:39:01] Speaker 01:
It's just not inherently localized.

[01:39:03] Speaker 01:
At that point, the transmission signal, again, and this goes back to our interchange earlier, when you use the internet, the transmission media is not localized.

[01:39:11] Speaker 01:
It is internationalized.

[01:39:13] Speaker 05:
What if 119 and 122 expired?

[01:39:17] Speaker 05:
For right now, how does direct TV work?

[01:39:26] Speaker 01:
I'm not sure.

[01:39:29] Speaker 01:
There's a separate compulsory license regime.

[01:39:33] Speaker 05:
If there weren't, if those expired, direct broadcast satellite TV uses microwaves to small dishes.

[01:39:41] Speaker 05:
So would that be covered by 111?

[01:39:43] Speaker 01:
I mean, I suppose they try and jam themselves into calling themselves a microwave system and not a satellite.

[01:39:48] Speaker 05:
They wouldn't have to jam themselves because that's what they use.

[01:39:51] Speaker 01:
Again, I'm not familiar enough with how DirecTV technology operates, and if it's purely a microwave-based technology system, then I assume that they would, but I think the whole point of Congress's standalone legislation was to say satellites, you know,

[01:40:04] Speaker 05:
When they do provide communications by microwave, do they have to get a spectrum license for that?

[01:40:15] Speaker 01:
I don't know the answer.

[01:40:16] Speaker 01:
I'm sorry to that.

[01:40:17] Speaker 05:
So I ask that question because in your argument about 111, you say you either own or rent the medium.

[01:40:25] Speaker 05:
And I'm wondering how you own or rent microwaves.

[01:40:29] Speaker 05:
Now, you do, obviously, radio broadcasters have to have a license.

[01:40:34] Speaker 05:
Do you know or do you not know?

[01:40:35] Speaker 01:
Well, you know, I do know that the Copyright Office has dealt with this microwave issue.

[01:40:40] Speaker 01:
And then this is at 56 Federal Register 31584 and pointed out that microwave systems do have the system has to own the microwave system's own equipment at both ends, both the sending end, the head equivalent to the head end, as well as at the receiving end in people's homes.

[01:40:58] Speaker 01:
And that's very different than Philmon, which doesn't do any of that.

[01:41:03] Speaker 05:
Any further questions?

[01:41:04] Speaker 05:
Thank you very much.

[01:41:05] Speaker 05:
I guess we'll have to give you a little more time.

[01:41:18] Speaker 06:
A lot you want to say, and you can do it in whatever order you want, but at some point I hope you'll address whether these points about inherently localized and controlled and whether it's a fact dispute or whether it is just the nature of the internet.

[01:41:31] Speaker 06:
By its definition, it can't be fitted technologically and controlled in the way that they say.

[01:41:38] Speaker 02:
Well, no, I'll start with that.

[01:41:41] Speaker 02:
I think there is some issue.

[01:41:43] Speaker 02:
Obviously, this was our cross-motion for summary judgment, first of all, to clarify that, that we've appealed.

[01:41:50] Speaker 02:
And there were cross-motions.

[01:41:52] Speaker 02:
There were motions on both sides, obviously.

[01:41:54] Speaker 02:
I think there are issues to the extent the court, first and foremost, focusing solely on the language of 111F3, I think if the court's already identified, why don't we just construe it as written?

[01:42:07] Speaker 02:
And why are we having all these other terms that are inserted into it?

[01:42:09] Speaker 02:
And so that's the first response, is there's no need to consider inherently localized control of the transmission path or any of those things.

[01:42:18] Speaker 02:
They are not in the statute.

[01:42:20] Speaker 02:
To the extent the court is considering those, I think there are some factual disputes.

[01:42:25] Speaker 02:
Whether or not there is, what does control the transmission path mean?

[01:42:30] Speaker 02:
What is inherently localized?

[01:42:34] Speaker 05:
I understand where the phrase inherently localized transmission, that comes from.

[01:42:40] Speaker 05:
the agency, but where does the phrase controls the path of the signal and its destination?

[01:42:45] Speaker 02:
There's language to that effect in the Communications Act.

[01:42:49] Speaker 05:
Oh, uh-huh.

[01:42:50] Speaker 02:
And essentially, the Communications Act requires actual control of the transmission path from end to end, which, again, glaringly absent from Section 111, F3.

[01:43:00] Speaker 06:
But to the extent the Court is going to render an opinion based on... Was that language enacted before or after the 1976 Copyright Act, the Communications Act language?

[01:43:11] Speaker 02:
I believe was after.

[01:43:12] Speaker 02:
I believe that that act has been modified over time a lot more than the Copyright Act has.

[01:43:20] Speaker 02:
And I think that's another point that I wanted to get to.

[01:43:22] Speaker 02:
There's talk about the legislative history and it being vague and kind of going both ways.

[01:43:27] Speaker 02:
And I certainly admit that there are statements that go both ways.

[01:43:31] Speaker 02:
But I think one set of statements that needs to be clear and that is clear is that the

[01:43:38] Speaker 02:
The Congress that enacted this statute knew that there would be continuing evolving technology and that they took particular care that the language of the bill would be sufficiently flexible to allow for further evolution in technology and communications.

[01:43:52] Speaker 02:
As cited in our opening brief at page 20, reply at page 16, they stated, we must adapt a lot to accommodate future change in the technology, which progress is bound to bring.

[01:44:04] Speaker 02:
This is what the court faces today.

[01:44:06] Speaker 02:
We have another communication channel.

[01:44:07] Speaker 03:
The competing principle to that is the idea that courts should be careful about reading old statutory language to authorize some big new thing that was not specifically contemplated by Congress at the time.

[01:44:24] Speaker 03:
And so that's the competing, the Elephants and Mount Souls principle.

[01:44:29] Speaker 03:
And how would you suggest we reconcile those two things in this case?

[01:44:33] Speaker 02:
Well, I think a lot of what's going on in this case is what Carl Llewellyn pointed out in 1950, that for every peri- for every thrust there's a peri of these candidates' interpretations.

[01:44:43] Speaker 02:
So I think the Court ought to be reluctant to adopt this sort of tiebreaker thought that, first of all, that there needs to be a tie that's broken.

[01:44:50] Speaker 02:
I don't think there does based on the plain language.

[01:44:52] Speaker 02:
But to the extent there is some concern about

[01:44:56] Speaker 02:
what Congress meant in 1976 and whether it meant to be open-ended.

[01:45:00] Speaker 02:
First of all, other communication channels or the language is important.

[01:45:04] Speaker 02:
But then we also have another act of Congress when it corrected in 1994, the microwave.

[01:45:09] Speaker 02:
So we have an agency here that the plaintiffs are pointing to that again has indisputedly taken always a very narrow view of any exception to copyright.

[01:45:20] Speaker 02:
And we have Congress in one instance where there was a specific, again, it's important, a notice and comment rulemaking.

[01:45:25] Speaker 02:
And that's when Congress has stepped in.

[01:45:27] Speaker 02:
It was when that's happened.

[01:45:28] Speaker 02:
It's happened with satellites.

[01:45:29] Speaker 02:
It was happening with satellites.

[01:45:30] Speaker 02:
The legislation was enacted prior to the formal notice rulemaking issuing.

[01:45:35] Speaker 02:
But the proceeding had begun.

[01:45:36] Speaker 02:
And it happened with microwaves after a notice and comment rulemaking.

[01:45:39] Speaker 02:
There has not been such thing here.

[01:45:41] Speaker 02:
So there's been no need for Congress to act.

[01:45:43] Speaker 02:
And so I think the Court properly disposed of any acquiescence argument.

[01:45:47] Speaker 02:
That's simply not true.

[01:45:48] Speaker 02:
Turning to a case that counsel, I think, tried to distinguish but couldn't describe, the Equality King v. Danza case.

[01:45:58] Speaker 02:
That is, in fact, a very important case that is on all fours when we go back to Charming Betsy.

[01:46:04] Speaker 03:
That case was dealing— I don't think Charming Betsy was cited specifically by the advocates in that case, and the court—it does help you, I grant you, but it's unclear that the court really grappled with the full Charming Betsy

[01:46:17] Speaker 02:
Well, I agree with your honor, but what the court was grappling with was free trade agreements, which are cited here, exactly on point in that respect alone.

[01:46:25] Speaker 02:
And the court said those agreements shed no light at all.

[01:46:27] Speaker 02:
And the court was dealing, mind you, with an exception to copyright licenses in that case.

[01:46:32] Speaker 02:
There you had hair products that were shipped overseas.

[01:46:34] Speaker 02:
There was a first sale doctrine issue that came back into the states that copyright holder argued you couldn't do that.

[01:46:40] Speaker 02:
And this exception needs to be narrowly construed.

[01:46:42] Speaker 02:
Charming Betsy prevents this.

[01:46:44] Speaker 02:
And among other things, the court said these treaties shed no light on the interpretation of the law.

[01:46:49] Speaker 02:
So I think Charming Betsy goes out the door with that case.

[01:46:52] Speaker 02:
Another point that I wanted to respond to, counsel said that there's no evidence that Philmon has spent anything on its technology.

[01:47:00] Speaker 02:
Well, there is, in fact, evidence.

[01:47:02] Speaker 02:
It's on the docket in the district court 31-1 at page 6.

[01:47:07] Speaker 02:
There's at least $10 million that Philmon has spent in developing its technology.

[01:47:12] Speaker 02:
And it had numerous data centers, facilities around the country.

[01:47:15] Speaker 02:
And I'll say that, but then at the same time, I'll say, once again, language not in the statute.

[01:47:21] Speaker 02:
There's no requirement for an expenditure of X amount or Y amount in order to qualify as a cable system.

[01:47:25] Speaker 02:
It's simply not there.

[01:47:27] Speaker 02:
So all of these things that are being brought up,

[01:47:29] Speaker 02:
are not in the language.

[01:47:31] Speaker 02:
And Congress drafted, we have to assume, with intent and purpose in including, again, I know I've said it probably too many times, or other communications channels.

[01:47:41] Speaker 02:
The only way to give that meaning, because you can ask either one of us.

[01:47:45] Speaker 02:
You've asked me what's not.

[01:47:46] Speaker 02:
And I've said, well, there are a few examples.

[01:47:49] Speaker 02:
But if the internet is not another communications channel, what is?

[01:47:54] Speaker 02:
So that, I think, is the fundamental principle that the court has to answer.

[01:47:59] Speaker 02:
And again, as your honor pointed out, the Internet does operate only on this physical layer of wires, cables, and microwave.

[01:48:06] Speaker 02:
There is technology available today, may or may not have been available when the IVI court was grappling with what it was, but again, very different facts there.

[01:48:16] Speaker 02:
So this notion that there are these six cases floating out there that are against us, there are two that are against us on our facts.

[01:48:22] Speaker 02:
And they are the WTTW case in the Northern District of Illinois, which is before the Seventh Circuit, and they are this case from the District Court.

[01:48:29] Speaker 02:
And of course, there's the case in California where Judge Wu found that we were entitled to the extent we comply with the other provisions of the act.

[01:48:37] Speaker 02:
And I think, Judge Millett, when you started with, by asking a question about the footnote at the end of their brief, and they started talking about, my friends started talking about

[01:48:46] Speaker 02:
Well, did they modify the programming?

[01:48:49] Speaker 02:
Do they do this or that?

[01:48:50] Speaker 02:
There are other things that FilmOnX will still have to do once it gets the license.

[01:48:55] Speaker 02:
But those don't deprive it of the opportunity to get that license.

[01:48:59] Speaker 02:
In other words, they can still be liable for infringement for a variety of reasons after they have a compulsory license.

[01:49:05] Speaker 02:
And one of those things could be if there's an issue with local to local.

[01:49:08] Speaker 02:
If they transmit and somehow it leaks over into Canada or somewhere else, there's technology in place to prevent that.

[01:49:15] Speaker 02:
But as Your Honor has identified also, there's a lot of piracy that happens with every type of signal.

[01:49:21] Speaker 02:
And I've represented DirecTV in a number of cases dealing with signal piracy.

[01:49:25] Speaker 02:
So there's no way to get around that.

[01:49:26] Speaker 02:
And the fact that that may happen, the specter of piracy certainly is no reason to read something into the statute that's not there.

[01:49:33] Speaker 02:
In terms of, again, going back to deference in the Copyright Office, when we're talking about the cases that are cited by the plaintiffs here, the MPAA and other cases, those are instances where the Copyright Office, number one, has issued a very specific rule of regulation.

[01:49:51] Speaker 02:
And most of those cases deal with something like copyright royalties, a more ministerial task that the Copyright Office is clearly tasked with.

[01:49:58] Speaker 02:
in the history of statements by the Office.

[01:50:02] Speaker 05:
Although our Court expressly rejected the argument that we only give deference to ministerial determinations.

[01:50:08] Speaker 05:
To use exactly those words, that was exactly the argument made in that case, the Cablevision v. MPAA case.

[01:50:15] Speaker 02:
Well, I agree with Your Honor, and I'm simply pointing out that the case law, so I understand that there still may be, and I invite the Court to

[01:50:23] Speaker 02:
under Skidmore consider whether or not there are compelling reasons at the Copyright Office, and I think the Court may well do that.

[01:50:29] Speaker 02:
That's what the District Court did.

[01:50:30] Speaker 02:
That's what District Courts have done across the country.

[01:50:32] Speaker 02:
In California, the District Court looked at the Copyright Office and determined that due to the historical hostility,

[01:50:38] Speaker 02:
great care needed to be taken, and there should be a fresh look at the statutory language in this instance.

[01:50:44] Speaker 06:
I'm trying to understand, I'm obviously missing something technologically here.

[01:50:49] Speaker 06:
You fight so hard against the copyright office's requirement that you be inherently localized.

[01:50:55] Speaker 06:
But then when I asked you, you said, yeah, yeah, we're inherently localized.

[01:51:00] Speaker 06:
So why are you fighting it?

[01:51:02] Speaker 06:
Why don't you just say you don't have to decide, Deference, in this case, because we think we meet it?

[01:51:07] Speaker 06:
If that's true, tell me how you think you meet it.

[01:51:09] Speaker 02:
Well, I think the issue is counsel's argument that once something touches the Internet, it's all of a sudden available around the world, and therefore it's not inherently localized.

[01:51:18] Speaker 02:
And I would put to the Court that

[01:51:20] Speaker 02:
I don't think that the system in 1976 of an antenna on the hill with one wire that runs to my house and it touches nothing else.

[01:51:30] Speaker 02:
That doesn't exist anymore.

[01:51:32] Speaker 02:
There are easements that the FCC deals with.

[01:51:34] Speaker 02:
There are a number of issues.

[01:51:36] Speaker 02:
Things, the world is interconnected.

[01:51:38] Speaker 02:
So the notion that somehow because a signal may travel on a path that I'm not following the entire route of and therefore it's not localized is simply

[01:51:50] Speaker 06:
Would you agree it's a physical matter that it goes to Russia and back?

[01:51:53] Speaker 06:
I thought they would go to exchange centers and would take the most efficient path, which presumably would not be via Russia.

[01:52:01] Speaker 06:
But I am not a technology expert, so I'm trying to understand

[01:52:06] Speaker 06:
Well, I agree with your honor.

[01:52:09] Speaker 06:
Is it available to the world, or do you guys have protections in place, both through the encryption and the addressing that you're using to get it to the person, and the nature of how this internet system works, that theoretically that's possible, but actually the way this lecture city travels through the most efficient path, it doesn't take a long way around the world?

[01:52:31] Speaker 02:
Well, I agree with Your Honor that it does, it should take the most efficient path.

[01:52:37] Speaker 02:
But I think the issue is, and I recognize the issue, and this is the issue that they've argued, the issue is that one can't predict the path that it will take, which it may determine is the most efficient, the data.

[01:52:50] Speaker 02:
And again, I'm sort of outside my league when I start talking about how it determines.

[01:52:54] Speaker 05:
My general understanding of packet switching is it could go anywhere, and the packets all get put back together.

[01:53:00] Speaker 05:
There is no control that you can provide over the path the packets take.

[01:53:07] Speaker 05:
It is the most efficient, but in this world, that can mean going around the world before it gets back.

[01:53:11] Speaker 02:
I agree with Your Honor.

[01:53:12] Speaker 02:
I'm saying it can't be controlled.

[01:53:14] Speaker 02:
I believe it takes the most efficient path.

[01:53:16] Speaker 02:
But what I do know is that with the IP encoding, there is information on that packet that will not allow it to be intercepted or decoded by anyone else.

[01:53:25] Speaker 02:
And, of course, that does run the risk of

[01:53:27] Speaker 02:
sure, is it conceivable that somebody in Russia would somehow crack things?

[01:53:32] Speaker 02:
I mean, obviously, we know that can happen.

[01:53:35] Speaker 02:
And it doesn't even have to leave here for that to happen, frankly.

[01:53:37] Speaker 02:
There are all sorts of ways in the interconnected world to wreak havoc and wreak mischief.

[01:53:44] Speaker 02:
It does take the most efficient path.

[01:53:45] Speaker 02:
FilmOn has a number of technologies in place.

[01:53:47] Speaker 02:
They are the same technologies that are used, I suppose, according to counsel's representation, because it's not in the record, according to these private licenses or pursuant to these private licenses that internet or cable companies procure.

[01:54:00] Speaker 02:
And the other thing, during counsel's argument, he referred to cable companies as these little things, or somehow, again, we're talking about some of the largest companies in the world.

[01:54:12] Speaker 02:
And we have a disruptive technology now that's trying to utilize what is efficient, what makes sense to disseminate the publicly, well, I think it's a public good of television, a broadcast over the air television, the news, emergency broadcast network to people.

[01:54:28] Speaker 02:
And there are, in 1976, when people lived in rural areas and didn't have the ability to put an antenna up and receive signals, there are a body of people today who get their everything over the internet.

[01:54:40] Speaker 02:
So this court needs to look at the current status of technology, look back at what Congress intended, look at the statements of Congress and the broad language that Congress used.

[01:54:51] Speaker 02:
And I would say one last thing, that the fact that other communication channels may be broad does not render it ambiguous.

[01:54:58] Speaker 02:
So there's no need necessarily to go look to all these other sources to try to figure out what it means.

[01:55:04] Speaker 02:
If the internet is not another communication channel, what is?

[01:55:11] Speaker 02:
And if the court has no further questions, then I will submit.

[01:55:14] Speaker 05:
Thanks very much.

[01:55:15] Speaker 05:
Excellent argument on both sides.

[01:55:17] Speaker 05:
We will take the matter under submission.