Emerging Technology and Existing Law: Can Geofencing Provide Radio Webcasters a Workaround of Digital Performance Royalties?

28 11 2014

New technology continues to generate business models that test the limits of intellectual property laws enacted before such technologies were ever contemplated.  The latest example is the use of “geofencing” in an attempt to avoid certain obligations to pay certain digital performance royalties.

In February 2014, VerStandig Broadcasting, the owner of several radio stations in Virginia, sent a letter to SoundExchange, the entity responsible for administering statutory licenses and collecting digital performance royalties for sound recordings.  The letter stated that VerStandig intended to use geofencing (explained below) to stream radio broadcasts to a limited area within 150 miles of each station’s transmitter using geofencing technology.  This method, VerStandig Broadcasting said, would fall into an exemption under Section 114(d)(1)(B)(i) of the Copyright Act (17 U.S.C. §114(d)(1)(B)(i)), that would excuse it from paying digital performance royalties to recording artists.

A month later SoundExchange responded that the referenced exemption did not apply to simulcasts over the internet and urged VerStandig to seek a statutory license for such online streaming, regardless of whether such signal was “geofenced” to a limited 150-mile area.  Six weeks later, VerStandig filed a declaratory judgment action against SoundExchange, seeking a judicial interpretation of whether its radio stations could avoid paying digital performance royalties by using geofencing to restrict online streaming (WTGD 105.1 FM v. SoundExchange, Inc., No. 14-00015 (W.D. Va. filed Apr. 30, 2014)).

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