Movie Systems v. Heller

Citation: Movie Sys., Inc. v. Heller, 710 F.2d 492 (8th Cir. 1983)(full-text).

Factual Background
Defendant, Edward Heller, installed special equipment, which included a down-converter and a microwave antenna with which to receive television entertainment programming produced by HBO (Home Box Office, Inc.). The high frequency signal cannot be received without such equipment and is generally installed and maintained by the distribution company for a fee. At the time on installation, HBO was being transmitted by Twin Cities Home Theatre Inc.

Plaintiff Movie Systems Inc. (MSI) subsequently purchased the right to distribute HBO programming in the Minneapolis/ St. Paul metropolitan area from Twin Cities and was granted an exclusive license from HBO to distribute its programming by multipoint distribution service (MDS).

MSI detected Heller’s interception of its signal and informed him of his obligation to pay the subscription fee and when he refused, MSI filed suit to enjoin such interception without payment.

Trial Court Proceedings
At trial, the district court granted MSI’s request for a preliminary injunction and granted MSI’s motion for summary judgment, which permanently enjoined Heller from intercepting MSI’s transmissions of television programming without MSI’s consent. The trial court also rejected Heller’s affirmative defenses and counterclaims. Heller appealed.

Appellate Court Proceedings
On appeal, the Eighth Circuit affirmed the district court's holding. The appellate court initially examined the motion for summary judgment where it agreed with the district court’s reasoning. The court found that Heller violated the 47 U.S.C. §605 which provides in pertinent part:


 * no person not being entitled thereto shall receive or assist in receiving any interstate or foreign communication (or any information therein contained) for his own benefit or for the benefit of another not entitled thereto.

The statute however provides a caveat whereby its prohibitions


 * shall not apply to the receiving, divulging, publishing or utilizing the contents of any radio communication which is broadcast or transmitted by amateurs or others for the use of the general public.

The Court rejected Heller’s argument that §605 did not apply because MSI’s broadcast has mass appeal and therefore it was for use by the general public. The court found that the case law contradicted Heller’s argument. The court stated that the crucial factor in determining whether some programming was for use by the “general public is not whether the content of the program has mass appeal or mass availability but rather, whether it was intended for the use of the general public.”

The court cited the Sixth Circuit case of ''KMLA Broadcast. Corp. v. Twentieth Century Cigarette Vending Corp.,'' where it pointed out that although subscription television “may be available for use by the general public it is intended for the exclusive use of paying subscribers. Availability and use are separate concepts” and therefore subscription television is not broadcasting.

Heller attempted to rebut this by contending that the definition of broadcasting included in 47 U.S.C. §153(o) controls for purposes of §605. The court rejected that argument, based on National Subscription Television v. S&H TV, where the court held that section 153(o) does not control the provisio in §605.

The court stated that although HBO programming “may be of interest to the general public, access to that programming cannot be gained with traditional television sets.” The program is put out at such a high frequency that the signal cannot be received without the microwave antenna and down converter and therefore it was not broadcasting, and §605 prohibits unauthorized interception of the MDS signal.

The court then went on to reject Heller’s claim that MSI is required to scramble it signal in order to protect its transmission under §605, because Heller cited no support for this claim.

The court also rejected Heller’s reliance on Orth-O-Vision Inc. v. Home Box Office, because the only two circuit courts that have addressed this question have expressly rejected the reasoning in Orth-O-Vision, which emphasized mass appeal of the program content in determining whether the MDS system was broadcasting.

Lastly, the court rejected Heller’s first amendment claim of right to access to the airways because it had not been raised in the district court.

The court then proceeded to discuss Heller’s affirmative defenses. Heller contended that MSI is barred from bringing the action because Twin Cities, MSI’s predecessor, had failed to sue to enjoin his reception of the programming and contends that MSI is bound the Twin Cities decision not to file suit. The contention was based on the equitable doctrines of estoppel, waiver, acquiescence and laches. However, the appellate court sided once again with the district court because MSI was not seeking past payment for services and Heller refused to submit to the subscription fee after being notified that his conduct was unlawful.

The Court then proceeded to address Heller’s counterclaims. The court first rejected Heller’s counterclaim that the MSI’s use of a van equipped with electronic equipment to determine if Heller was intercepting HBO programming violated his Fourth and Fourteenth Amendment rights. The court held that constitutional provisions do not apply to actions of private citizens and that Heller did not allege any facts nor does the record show any finding of state action.

The second counterclaim was that MSI requirement that receiving equipment owned and operated by a subscriber be "installed, maintained and operated pursuant to the carrier’s instruction and control" constitutes illegal tying under antitrust law. The district court found no merit in this claim because MSI did not require that Heller purchase an antenna and down-converter and the control requirement has been mandated by the FCC.

The appellate court affirmed.