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Is your live TV legal?

Digital signage that incorporates network programs is legal only if licensed correctly. Here are pitfalls to avoid.

December 19, 2007

This article originally published in Retail Customer Experience magazine, Jan. 2008.

 

Since the day they hit the mass market, flat-panel televisions and monitors have garnered considerable fascination from consumers and the able media. This new era of display — with sales spurred by falling prices and the increasing availability of high-definition content — has sparked a revolution in in-store signage and retail advertising. With store the ability to transform static advertising with real-time graphics, video and audio components, digital signage does far more than hawk a retailer's wares.

 

Embedded high-definition content combined with television feeds from popular networks such as CNN, ESPN or MTV enables retailers to draw customers in, promote products and specials, bring the retail environment to life and generally enhance the customer's overall experience. One popular method lets retailers display digital advertising around cable television content.

 

While it creates an effective tool for advertising, the method has potential legal implications. Before you run out and buy a set of monitors to display digital signage around cable television content, first investigate these ramifications.

 

Common use and copyright

 

The concept of using television in consumer environments has been around a long time, but with the recent proliferation of affordable flat-panel monitors, digital signage has become a marketing stronghold. Retailers incorporate LCD or plasma display panels into store design; banks and financial institutions incorporate televisions in lobby areas; even public spaces such as transit hubs, fast-food restaurants and gas stations use them.

 

As a communications tool, digital signage offers the ultimate capability. Retailers can deliver targeted messages as dictated by their customers' interests, requirements and spending habits. Promotions, announcements, product information, retail spots and brand loyalty messages spread throughout the consumer environment, while cable-television feeds offer entertainment.

 

This amount of television content, from numerous sources and providers across varying networks, demands serious copyright consideration from the content user.

 

When using a signage provider to access and deliver cable television content, be aware of the parameters of the contract between your provider and the cable companies. Often the signage provider's contract with the cable provider limits use to non-commercial settings.

 

Even if commercial use is allowed, the subscriber must obtain permission from the cable provider before such use is possible. Displaying cable television in a digital signage medium without express written permission probably would constitute prohibited commercial use. With such use, the subscriber would have breached its contract with the cable provider.

 

In addition to potential contractual violations, the Copyright Act may be implicated. The content in cable television is copyrighted in its entirety and the replaying of it in a digital signage medium constitutes a secondary transmission.

While an effective and burgeoning market for advertising, displaying digital signage around cable television content has potential legal implications.

 

A secondary transmission in this case is the digital signage network retransmitting a cable signal simultaneously with the cable provider, duplicating the cable provider's service. This is where contractual and copyright issues come into play. (Recall 2007's brouhaha over the Super Bowl. Game owners took a hard-line stance against allowing fans to retransmit the game for large parties, citing the Copyright Act.)

 

Potential pitfalls

 

Altering content: According to copyright laws, only the owner of a cable transmission has the right to alter the transmission. This means that if a digital signage network changes the original appearance or delivery of cable content at all — say, by dividing the television screen into parts and displaying advertising around the cable content, for example — the signage provider would be liable.

 

Licensing: Secondary transmission of cable signals, modified or not, is illegal. So, how are bars able to transmit sports events for patrons? Licensing.

 

Bars and other venues license the right to play cable television for a fee. Ignoring an available license program and transmitting content without permission could result in fines or a lawsuit. And the same applies to music. The American Society of Composers, Authors and Publishers (ASCAP) is one such licensing organization, and it has been known to pursue even small, family-owned bars for copyright infringement.

 

Potential damages

 

If copyright infringement claims are brought and upheld, remedies could include actual damages, statutory damages and injunctions.

 

Actual damages include profits earned by the user as a direct result of the digital signage displays. In such cases, it is imperative that the content user can deliver accurate records. The copyright owner is "required to present proof only of the infringer's gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work."

 

Statutory damages are determined by the judge. Guidelines dictate that damages may range from $750 to $30,000 per infringement. However, if the court finds the content user acted willfully, that ceiling is raised to $150,000 per infringement.

 

In extreme cases, remedies may include the impounding or destruction of the offending articles and charges of criminal liability. More often, though, the copyright owner will seek monetary damages and an order, called an injunction, to prevent further infringements by the digital signage user.

 

The defendant in a copyright infringement case may be forced to pay the plaintiff's court costs and attorney's fees, which, depending on the complexity of the case and the amount of work involved, could reach into the tens of thousands of dollars. Courts use a number of factors to determine whether to assess costs and fees against the infringer.

 

Protecting your businesses

 

Though there are some costly consequences to copyright infringement, businesses can take simple steps to mitigate these risks. Remember that with new technology and ingenuity comes new considerations and obligations for providers and users.

 

The first step to preparing a plan to ensure your business is protected is to conduct some early research into the benefits and pitfalls of digital signage. Retailers should examine carefully their subscriber agreements to determine the extent of their transmission rights. When reviewing these the advice of an attorney with expertise in licensing and copyrights can be an invaluable resource — well worth the cost to avoid costly mistakes down the road.

 

Robert J. Scott is the managing partner of Scott & Scott LLP.