Editor’s Note: The following is a guest post by Matthew Scherb, an attorney at the San Francisco office of Winston & Strawn LLP. He litigates complex copyright, trademark, and Internet-related disputes.

In 2000, the now-defunct iCraveTV allowed its users to watch live television over the Internet.  It retransmitted broadcast television without obtaining permission from or paying broadcasters, framed the retransmission with paid advertisements, and users watched while paying nothing.  A federal court in Pennsylvania found iCraveTV was likely on the hook for copyright infringement.  iCraveTV shut down, and the court’s decision appears to have had a blanket chilling effect on Internet-based television.  No one came along to take iCraveTV’s place.

Fast forward to 2010: Seattle-based ivi has arrived.  Like iCraveTV, ivi lets you watch live television on the Internet.  Also like iCraveTV, ivi has not sought permission from or paid broadcasters.  Unlike iCraveTV, there is no paid advertising: ivi draws revenue from a flat monthly fee.  For a premium, ivi offers DVR “time sifting” features such as pause, rewind, and fast forward.  ivi currently streams programs from New York and Seattle affiliates of ABC, CBS, NBC, Fox, and a few other networks.  So, next Thursday you could watch an episode of The Office as it airs on WNBC (an NBC station in New York) or, next month catch Major League Baseball’s World Series on KCPQ (a Fox station in Seattle).  You might cheer the return of Internet television.  You might be glad to see a potential competitor to your cable or satellite provider.  But does ivi’s retransmission of broadcast television run afoul of copyright law?  Will it face the same fate as iCraveTV?

We may soon find out.

In mid-September, broadcasters and copyright owners (including the major networks and Major League Baseball) sent ivi a cease-and-desist letter.  They accused ivi of copyright infringement and demanded that ivi stop streaming their television programs.  Fearing a lawsuit from its accusers, ivi preemptively filed a lawsuit in Seattle federal court on Monday, September 20.  ivi seeks an order declaring that its Internet television service is legal.  In quick response, the broadcaster and copyright owners filed their own lawsuit against ivi in New York federal court on September 28.  If ivi wins or obtains a favorable settlement in these cases before it runs out of money, it can proceed with a stamp of approval from a federal judge or from its accusers.  A loss could torpedo its ambitions.

ivi has pegged its legal hopes on a rarely-invoked but potentially powerful exception to copyright liability: the “passive carrier exemption.”  The exemption makes it lawful to retransmit a transmission intended for the public so long as the retransmitter lacks control over the content of the original transmission or over the recipients of the retransmission. ivi believes that by retransmitting freely-available, over-the-air broadcasts and offering basic DVR-like services, it is nothing more than a passive carrier and exempt from copyright liability.

The iCraveTV case never dealt with the passive carrier exemption.  Because iCraveTV framed its retransmissions with advertisements, it probably could not have claimed the passive carrier exemption in any event: by adding advertisements, it was arguably modifying and exercising control over the original broadcast transmission.

Major court decisions involving the passive carrier exemption are, like the iCraveTV case, also a decade old.  They offer mixed signals.

In 1999, the same New York federal court now hearing the broadcasters’ and copyright owners’ lawsuit against ivi denied the exemption to a company called Media Dial-Up.  Media Dial-Up retransmitted radio broadcasts via telephone to its customers who paid a fee for access.  Even though Media Dial-Up did not control the content of the radio broadcasts or limit reception to particular individuals, the court refused to classify Media Dial-Up as a “carrier.”  ”In an era of rapid technological change,” the court wrote, “possibilities for the capture and retransmission of copyrighted material over the Internet . . . are enormous.”  If Media Dial-Up could be a passive carrier, it “would threaten considerable mischief.”  The court called this “common sense.”

Just two years later, in 2001, a Massachusetts court reached the opposite result.  It applied the exemption to Insight, a company that facilitated retransmission of Boston-area television broadcasts, including National Football League games, to Bell Canada for a fee.  It noted that Congress had intended courts to give “carrier” an “expansive” definition.

Will ivi distinguish itself from iCraveTV and Media Dial-Up and align itself with Insight?

If it can, ivi will have succeeded in making the passive carrier exception a powerful shield for itself and others, perhaps other Internet retransmitters such as Ustream or Justin.tv looking to offer new services or cable and satellite retransmitters looking to make the leap to the Internet.

As for television broadcasters, though they may prefer to control the market for Internet television themselves, they may actually benefit financially from having their broadcasts retransmitted on the Internet and other media.  They will reach more eyeballs and could presumably demand higher advertising fees.

Stay tuned for the court’s decisions and also keep an eye on Congress, which can revoke or modify the passive carrier exception.  Congress created special, compulsory licensing regimes for cable and satellite retransmitters as those technologies matured.  Cable and satellite retransmitters do not infringe copyright when they retransmit a television broadcast, but they must pay a royalty fixed by statute.  Congress could choose to impose a similar regime on Internet retransmitters.

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Mike Elgan criticizes Google for being condescending in a recent column on one of the dead tree IT rags. His first point is that Google PR exec Gabriel Stricker started off a recent press conference with a quip about how fast paced Google innovation is:

He said that the reason Google holds events like this one was that “we hear from a lot of you that with the kind of breakneck pace of innovation that we go through at Google, it’s nice for us to kind of let you catch your breath.” He went on to tell the audience that they would “hear from our Search rocket scientists in a second who will hold your hand through the latest and greatest of what we’re up to.”

So Google is so awesome that the company has to pause so the rest of the world can catch its breath? And we’re all so stupid that Google geniuses have to “hold our hands” as they explain things?

He backs up his point with recent comments by Google CEO Eric Schmidt on what users want Google to build, and on privacy issues.

So first off this looks to me like an example of media mass manipulation I wrote about recently. At first blush, knowing how the whole press game works, Elgan is pissed off at Google for something or other and wrote this post.

But even if it really is something that’s been nagging him for some time, I just don’t see it. Google is far less arrogant than they were even a few years ago. And even I, possibly the most sensitive and defensive person you’ll ever meet, don’t see Elgan’s examples as condescending in any way.

Remember when Google blackballed CNET in 2005 for posting information about Schmidt?

That was a year after they went public, when companies are typically at their peak of arrogance. And boy was that a condescending thing to do.

More recently I’ve seen a Google that’s been humbled by droves of engineers leaving for Facebook and Twitter, a Google humbled by China, and a Google generally terrified of an upcoming decade where they may not be the center of attention on the Internet.

The Google I’ve seen recently is a humble Google. A Google that appreciates press more and that seems more willing to consider change. Most of the arrogance I see is across town at Facebook, which is exactly what I’d expect from a company on the rise.

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The countdown is officially on for the big Facebook location backlash. How long will it be? One week? Two weeks? We all know it’s coming, it’s just a matter of when. And that’s too bad because I think Places is actually pretty great — potentially.

The ACLU wasted little time yesterday trying to start such a backlash (their post on the matter came what, a whole 30 seconds after the press conference ended?). Evelyn already did a nice job deconstructing many of their arguments and showing why a few were ridiculous. All I can add is to say that thank god the ACLU doesn’t design consumer apps — it would be like Facebook’s current nightmare of settings multiplied by a billion. We’d have settings for individual minutes in individual days for when individual users could see individual profiles. It would be the the least social social network ever.

Today, the EFF followed up the ACLU’s post by citing things like pleaserobme.com as an illustration of how sensitive location information can be. Not cited is the fact that most people have jobs which they are at from 9 to 5 everyday, so they’re not likely to be home then, leaving their houses susceptible to robbery.

My point is that plenty of people right now are out there on the hunt for a way to show that Facebook Places is the devil. It’s an easy angle. You take something that already a very sensitive topic: Facebook privacy — and combine it with another sensitive topic: location privacy. Boom. Match made in hell.

I thought Facebook’s presentation (and video) about Places yesterday was great because it focused on the positive. The talk was about serendipitous meetups and friends nearby, not people being stalked or worse. It seems like Facebook fully understands that location has the potential to be the bridge between social networking and actually being social. I’m just surprised it has taken them this long to launch a product.

But clearly they wanted to be careful. And they’re still being careful. Places is about as bare-bones as a location service can be. It is just check-ins. And that’s undoubtedly why they’re paying homage to Foursquare in the Places logo. Without Foursquare, Places would not exist.

But after only one day of using Places I’m seeing the potential here. I’m seeing friends checking-in who I’ve never seen use Foursquare. I’ve seen some friends check-in who I’m fairly positive have no idea what Foursquare is. Earlier, I was in a park near my apartment and I checked-in and saw that 30-some other people that I wasn’t friends with were checked-in there as well.

To some people, that’s creepy (it has been a feature on Foursquare for a while and that’s basically what Loopt was for a while). But to me, I think that’s potentially really interesting for when it comes to meeting people. And the fact that so many had checked-in on day one of the service is impressive.

That’s the power of Facebook’s social graph. It’s a graph that none of the current location players can touch even if you added all of their users together and multiplied them by twenty. Facebook is going to bring location to the mainstream by virtue of their size alone.

But the flip side is that because Facebook has such a large social graph that’s already established, a lot of current users are going to feel this new layer as something being forced upon them. And again, creepy. Of course there’s the option not to use it, but I can certainly see how the friend tagging thing is troubling to a lot of people (particularly because of the somewhat confusing three states).

But it’s also potentially a great tool. Imagine if you’re with a group of friends and only one of you has to check everyone in. That’s the cure for check-in fatigue right there. And when you think about it, this functionality isn’t much different than the tweets we’ve all sent that state something like “at the park with @____ @_____ @_____ and @_______”.

But the real key of Facebook Places is as a platform. Though it is still in the process of being turned on, it’s going to be great to be able to load up one app and see where people from Foursquare, Gowalla, Yelp, etc have all checked-in. And even better will be when you can check-in on Facebook Places and push it out to these services (so far, only Gowalla has committed to working on this as far as I know).

These services are all going to have to focus on building great utilities on top of this platform because the check-in will finally be completely commoditized. And that’s a good thing. I hope the Places API becomes the Facebook Connect for check-ins so the real innovation can begin. We need to remove the “ugh, another service I have to check-in to” factor.

That’s undoubtedly what Facebook is hoping for too. It’s a potential new branch of the Platform.

While location obviously has risks associated with it, it’s the upside that has all of these startups and now bigger players interested in the space. It’s easy to forget about this upside and instead worry about how everyone is going to be stalking one another. You know, the same things people used to say about the Internet itself back in the day.

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In 1997 Wired Magazine declared the browser dead. “Sure, we’ll always have Web pages. We still have postcards and telegrams, don’t we?” said Kevin Kelly and Gary Wolf.

They were wrong, of course. The browser is still the killer app of killer apps. It’s the single most important way that we interact with the Internet. From Wikipedia to webmail to YouTube, it’s the universal virtual machine that has made pc operating systems irrelevant. If all you have is a browser, you’ll be just fine.

Fast forward to today and Wired is once again saying the browser is dead. “Over the past few years, one of the most important shifts in the digital world has been the move from the wide-open Web to semiclosed platforms that use the Internet for transport but not the browser for display,” says Chris Anderson.

And about that 1997 article: They weren’t wrong, they were prescient. “The point was altogether prescient,” Anderson says now of that article. Overheard on the TechCrunch Yammer stream: “Possibly the greatest explanation for being dead fucking wrong that I’ve ever seen.”

Wired is still wrong. Way wrong.

The new article is based on a foundation of data supplied by Cisco that shows web traffic, as taking a smaller piece of total Internet traffic. The chart itself is misleading, as BoingBoing pointed out. But even taken at face value, it’s still wrong.

Wired’s argument, based on the data, is that the browser is dead and apps, like iPhone apps, are taking over. “This is not a trivial distinction. Over the past few years, one of the most important shifts in the digital world has been the move from the wide-open Web to semiclosed platforms that use the Internet for transport but not the browser for display.”

Um, ok. But the data doesn’t show this at all. Sure, video traffic is expanding. Which makes sense because it’s a heavy load. But most of it is also being transported via Flash and HTML right through a web browser. And most app data is counted under “web” in Wired’s graph, meaning its all lumped together with normal browser data.

In other words, Wired took a misleading graph and then drew all kinds of conclusions based on it that don’t even make sense in their make believe world. It’s like they showed a picture of a banana and said it explains the rising cost of gasoline.

In fact, the only thing Wired’s chart really shows is that video files are really big, and people like to watch them in browsers.

The browser isn’t dead. Web pages aren’t dead. HTML works really, really well. Check out Facebook’s iPad “app,” for example. You don’t download it from an app store, you just point your browser to touch.facebook.com. Not only does it work really well, Steve Jobs doesn’t get to have a veto right over people using it. It’s no wonder that we’re seeing a surge of traffic from the iPad to our site, via a browser.

Apps are great on mobile phones with small screens. But they are a pain to install and keep synchronized. Eventually having less local software will make sense on phones, too. All you really need is that browser virtual machine and you can pull everything else from the cloud. This is obvious. Only a bunch of hipster tech journalists checking email on their iPads all day* would think otherwise, and then make up a bunch of data to support their argument.

*Wired, not us.

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