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Report On Business Ontario court sides with Bell in dispute over VMedia streaming service

VMedia argued it was allowed to retransmit the over-the-air signals free of charge under the Copyright Act.

Tim Fraser/The Globe and Mail

An Ontario court has barred upstart television provider VMedia Inc. from streaming a basic set of live TV channels online, but left the door open for the federal broadcast regulator to decide otherwise.

VMedia, a Toronto-based startup, launched an app in September that offers a package of basic channels delivered through the Roku media player, instead of a traditional cable box.

The service was advertised as a new, low-cost way for viewers to get channels such as CTV, CBC or Omni.

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But Bell Media, a division of communications giant BCE Inc. that owns the CTV networks, took issue with the app, arguing it was "a clear copyright violation" and should be shut down. VMedia refused, insisting it was allowed to retransmit the over-the-air signals free of charge under the Copyright Act.

Both sides asked the courts to decide the matter, which could have wider implications for broadcasting technology at a time when increasing numbers of viewers are ditching traditional TV in favour of online services such as Netflix and CraveTV.

Justice Fred Myers of the Ontario Superior Court sided with Bell on Tuesday, ordering VMedia to stop offering the Roku service. But he repeatedly said it will ultimately be up to the Canadian Radio-television and Telecommunications Commission to set broadcasting policy. "Why are you here instead of there?" he asked VMedia's lawyers at a hearing last Thursday.

"If technology has overcome the existing laws and policies, it is open to interested parties to put the issues before the CRTC to try to revise the policies and the definitions," Justice Myers wrote in a 15-page decision. "This decision says what the law is. It is for others to determine what the applicable law ought to be."

Priced at $17.95 a month, VMedia's now-outlawed service was designed to mirror its basic TV package. The key difference was that it was available to users of any Canadian Internet provider through a Roku – and perhaps eventually other streaming boxes such as Apple TV – rather than being confined to TV providers' proprietary set-top boxes.

It was billed, in part, as a way to invite those who ditched traditional TV back into the system, but it caught some broadcasters off guard when it launched. The court also awarded Bell $150,000 in costs, as VMedia had taken a "very aggressive business position" and used "hardball tactics."

VMedia will comply, but advisor George Burger said, "It's a disappointing decision," and the company was simply trying to "go to where the consumers are."

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The case turned largely on interpretations of a single word, "only," as it appears in the Copyright Act. In 2002, Parliament changed the Act, carving out a separate category for Internet broadcasting by defining "new media retransmitters" as those whose broadcasts are lawful "only" because of a special exemption from the CRTC.

At a court hearing last Thursday, VMedia denied that it was acting as a new media retransmitter because it is already licensed to lawfully broadcast the channels through Internet protocol television (IPTV). Rocco DiPucchio, a lawyer for VMedia, suggested Bell's claims would create "a technological straitjacket" for TV innovators.

"We're on very dangerous ground here," Mr. DiPucchio said.

Steven Mason, a lawyer for Bell from McCarthy Tetrault LLP, countered that the CRTC expressly made new media activities separate and distinct. "The CRTC's saying they have to negotiate with copyright holders, and obtain their consent," Mr. Mason said.

Justice Myers agreed that VMedia's argument "runs squarely into the CRTC's determination" that Internet retransmitters are separate, should "be subject to broadcasters' copyrights," and have to "negotiate for licenses individually."

A spokesperson for Bell said the company "supports innovation," but the court's ruling confirms "that Internet distributors don't get to use copyrighted content for free. They need to obtain necessary content rights as does Netflix, Amazon, or any other competitor in the category."

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A CRTC spokesperson declined to comment.

Mr. DiPucchio also argued VMedia's broadcasting licenses don't expressly prohibit the Roku-delivered service. "It's just not there," he said.

But Justice Myers dismissed that argument, too. "VMedia seems to be arguing that a person with a driver's license can walk on the sidewalk under her driver's license," he wrote.

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