A federal appeals court this week upheld a preliminary injunction against an online service that streamed live broadcast television programming to subscribers.

ivi, Inc. launched its television-streaming service in September 2010, and by early 2011 it was retransmitting the signals of dozens of TV stations from New York, Seattle, Chicago and Los Angeles.  Broadcasters and other content owners — including ABC, CBS, NBC, Fox, Univision, PBS, and Major League Baseball — sued ivi for copyright infringement and asked a New York federal district court to order ivi to halt its operations while the suit was pending. ivi argued it was entitled to the compulsory copyright license available to cable systems under federal law.  The district court granted an injunction against ivi’s service in February 2011, and ivi appealed to the U.S. Court of Appeals for the Second Circuit.

In this week’s decision, the Second Circuit upheld the injunction, finding that ivi was not a cable system and thus was not entitled to a compulsory license. The Second Circuit concluded that the statute’s legislative history and the Copyright Office’s consistent interpretation both showed that Congress intended the compulsory license to apply only to localized retransmission services, not national or global services such as ivi’s.

The Second Circuit also found that broadcasters would suffer irreparable harm if ivi were allowed to continue operating during the litigation. “ivi’s actions harm plaintiffs’ retransmission and advertising revenues by substantially diminishing the value of their copyrighted programming,” the court held, noting that ivi’s service would reduce copyright holders’ control over the timing of broadcasts, fragment local audiences, and “drastically change the industry, to plaintiffs’ detriment,” resulting in a reduction in the “quantity and quality of efforts put into creating television programming.”

“Plaintiffs’ desire to create original television programming surely would be dampened if their creative works could be copied and streamed over the Internet in derogation of their exclusive property rights,” the court wrote.