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FilmOn fires back after judge hits it with $90,000 fine

Aereo competitor FilmOn, with help from its outspoken CEO Alki David, managed to dig itself into an even deeper hole when the service was hit with a $90,000 contempt order last Friday. U.S. District Court Judge Naomi Buchwald handed down the contempt order after FilmOn refused to cease broadcasting for nine days following the Supreme Court’s decision that Aereo’s broadcast model infringed copyrights. The contempt order – the latest in a drawn-out saga – comes after a hearing for FilmOn left Judge Buchwald “inclined to grant the contempt motion.”

FilmOn was hit with $10,000 for each day it continued to distribute network TV channels against the U.S. District Court’s wishes, according to coverage by Ars Technica. In an email response to inquiries from Ars, David said he plans to appeal the judge’s order, claiming Buchwald “largely relied on unauthenticated and inadmissible news articles” to find him in contempt.

In its decision against Aereo, the Supreme Court ultimately asserted that Aereo’s model of rebroadcasting network content online via tiny-antennae was akin to behaving like a traditional cable system, without paying the licensing fees associated with that business model.

As a result, Aereo’s lawyers filed papers in court stating the company should be able to resume operations as soon as it obtained the proper licensing to become a cable operator. But the U.S. Copyright Office opted to deny Aereo’s application for a compulsory broadcast network TV license saying, “In the view of the Copyright Office, Internet retransmissions of broadcast television fall outside the scope of the Section 111 license.” Meanwhile, the Copyright office did accept Aereo’s bid to pay royalty fees for content on a “provisional basis.”

Instead of shutting down immediately along with its rival Aereo, David vowed to stay in business by changing FilmOn’s format. He saw the Supreme Court’s majority decision and its comparing Aereo to a cable provider as “a very clear designation.”

“If it functions like a cable company, it should be treated like a cable company,” David wrote shortly after the Court’s decision. “FilmOn meets all the criteria.” Following that argument, FilmOn moved forward with business as usual, causing the $90,000 fine. FilmOn claims it has also submitted a bid for copyright licensing that’s since been granted, allowing the company to pay royalty fees for content on a provisional basis. According to FilmOn, it just took a bit longer than Aereo to submit its paperwork.

The ever-contentious CEO was not content to let the contempt matter end quietly, however. In his letter to Ars, David went on to explain why he believes he will be successful in his appeal of Judge Buchwald’s contempt order, claiming that his company’s means of rebroadcasting network content online is “a new technology” that is “not a ‘streaming’ technology'” and is “in fact far more developed” than Aereo’s. What David refers to as this “new” technology is probably Teleporter Technology, which provides the service’s subscribers with access to a network of hundreds of thousands of antenna-equipped remote desktop computers.

While FilmOn is currently in a state of limbo when it comes to broadcasting network content, a representative for the company reached out to us via email to assure us that FilmOn will still be in business when it comes to other services.

“FilmOn is in no danger of going out of business over this – it has 40 million monthly users world wide who use the 600 licensed linear channels and tens of thousands of VoD offerings. Revenue comes from advertising and subs. It has just signed a co-production deal with Relativity,” the rep wrote.

“There is no injunction against offering other independent channels via (Teleporter Technology).”

We’ll keep an eye on this story, and update as developments unfold.

Updated 8/01/14: A representative for FilmOn informed us in an email that the company did, in fact, apply for the same provisional privilege to pay royalty fees for rebroadcasted content, and has been granted the provisional rights. The representative also ensured us that FilmOn is not in danger of going out of business as a result of its current limbo status when it comes to rebroadcasting network content.