A federal judge focuses on the way Locast has raised money and rules an exception to copyright liability for nonprofits doesn't apply here.
of the Copyright Act, a nonprofit organization is allowed to operate a secondary transmission service., broadcasters questioned whether it was really free given that the service solicits donations from its users. For those who don’t pay $5 a month, service is interrupted a few times every hour. In other words, it’s “freemium.”
In an order favoring the broadcasters, U.S. District Court Judge Louis Stanton writes that under the law, fundraising can only be used to defray costs of operating the service, not of expanding it into new markets. “Since portions of its user payments fund Locast’s expansion, its charges exceed those ‘necessary to defray the actual and reasonable costs of maintaining and operating the secondary transmission service,’ which is the only exemption granted in Section 111 .”According to Locast’s website, it now operates in 36 markets serving 55 percent of the U.S. population. It has a couple million users.
While the impact of the order is to rule out Locast’s primary affirmative defense to copyright claims, the case isn’t quite over and may be headed to trial on the company’s ultimate liability.
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