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The National Football League will not be awarded attorneys’ fees despite its one-sided court victory over a satellite service that illegally retransmitted football games into Canada. U.S. Magistrate Judge Andrew J. Peck of the U.S. District Court for the Southern District of New York said the satellite service, PrimeTime 24 Joint Venture, litigated a copyright issue on the game telecasts based on a case from the 9th U.S. Circuit Court of Appeals that was later rejected by the 2nd Circuit. But defendant PrimeTime’s reliance on the 9th Circuit “was not asserted in bad faith nor objectively unreasonable,” Magistrate Judge Peck said. The magistrate judge’s ruling, if adopted by U.S. District Judge Lawrence McKenna, also of the Southern District, means that the NFL will not recover the $554,231 in fees it has sought in the case. But Magistrate Judge Peck also recommended, in National Football League v. PrimeTime 24 Joint Venture, 98 Civ. 3778, that the NFL be awarded $2.5 million in statutory damages, in part because the satellite venture continued to transmit games after McKenna had rejected a motion to dismiss and granted summary judgment to the N.F.L., and while an appeal was pending. “PrimeTime’s conduct clearly demonstrated chutzpah, or in more legal parlance, willfulness,” Peck said. The NFL brought the action in 1998, charging that PrimeTime retransmitted copyrighted football telecasts to Canada and thus exceeded the statutory license for U.S. retransmissions under the Satellite Home Viewer Act (SHVA). The SHVA allows delivery in the United States of network programming to “unserved households,” or those with no cable television or weak over-the-air reception. But it does not provide for retransmissions outside the country. In March 1999, McKenna found that the Copyright Act applies to the retransmissions because “PrimeTime’s transmission of the signals captured in the United States is a step in the process by which a protected work wends its way to its audience.” McKenna noted that the 9th Circuit, in Allarcom Pay Television Ltd. v. General Instrument Corp., 69 F.3d 381 (1995), had ruled the other way: that federal copyright law does not apply to extraterritorial acts of infringement. In September 1999, McKenna granted summary judgment for the NFL and granted a permanent injunction requested by the league. Nonetheless, PrimeTime retransmitted 12 games after the ruling. The 2nd Circuit stayed the injunction until April 2000, when it finally upheld McKenna’s decision. The 2nd Circuit noted that the 9th Circuit’s decision in Allarcom “has been subject to some non-judicial criticism,” and because it lacked an analysis of the copyright law, carried “little weight.” During the time that the injunction was stayed, PrimeTime retransmitted 33 additional football broadcasts into Canada. PrimeTime argued that it reasonably believed, in part because of advice of counsel, that the infringements did not violate the Copyright Act. And because the infringements were therefore innocent, it should be required to pay only minimal damages of $200 per infringement under 17 U.S.C. Sections 504(a)(1)-(2) and 504(c). Magistrate Judge Peck disagreed. “Use of the ‘innocent infringer’ damage reduction of Section 504(c)(2) appears to have been limited to cases where the defendant (often unsophisticated) proves that it did not know about plaintiff’s copyright and immediately ceased its infringing conduct upon being made aware of plaintiff’s copyright claim,” he said. In fact, Peck found, the continued retransmission of games during September and October of 1999, when McKenna had already ruled against PrimeTime, demonstrated “knowing or at least reckless” conduct, and the company must therefore pay higher statutory damages. “PrimeTime’s reliance on advice of counsel and on the 9th Circuit’s Allarcom decision became unreasonable after Judge McKenna’s March, 1999 decision [rejecting Allarcom and] denying PrimeTime’s motion to dismiss,” Peck said. “PrimeTime knew, or should have known that with its legal theory demolished, the undisputed facts would entitle the NFL to summary judgment.” Turning to the fee application, Peck said the NFL argued that the copyright issue was a case of first impression in the 2nd Circuit. But he said that the “novelty and complexity of the issue, and the contrary view of the 9th Circuit, however, actually point … to the denial of the NFL’s request for attorneys’ fees.” “Despite the deficiencies in PrimeTime’s reliance on counsel evidence … the court credits the testimony at least to this extent: before this litigation began, and until Judge McKenna’s March 1999 decision denying PrimeTime’s motion to dismiss, PrimeTime’s position in reliance on the 9th Circuit’s view was not asserted in bad faith nor objectively unreasonable,” he said. The company was entitled to pursue the litigation “to its conclusion,” he said, and, indeed, it is now asking the U.S. Supreme Court to hear the case. “Finally, in light of the court’s $2.5 million statutory damage award to the NFL, the NFL has been appropriately compensated, and that damage award serves as sufficient deterrence to PrimeTime and others,” he said. The NFL was represented by Neil K. Roman, of Covington & Burlington, and Eric Seiler, of Friedman Kaplan Seiler & Adelman. PrimeTime was represented by Brandon F. White, of Foley Hoag & Eliot, and Roger L. Zissu, of Fross Zelnick Lehrman & Zissu.

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