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The cable industry’s leading lobbying organization has filed suit in federal court in Washington, D.C., accusing the U.S. Copyright Office of unlawfully inflating the royalty fees cable providers must pay to retransmit broadcast television signals.

In a complaint lodged in the U.S. District Court for the District of Columbia, the Internet & Television Association — formerly known as the National Cable & Telecommunications Association — argues that a 2024 agency rule misinterprets Section 111 of the Copyright Act. The group contends that the rule requires cable operators to report revenue they never actually receive, resulting in higher royalty payments.

Section 111 establishes a statutory license allowing cable systems to retransmit over-the-air broadcast programming in exchange for fees paid to the Copyright Office, which then distributes the funds to copyright holders. The dispute centers on how “gross receipts” are calculated for purposes of determining those fees.

According to the trade group, the rule forces operators to treat the full standalone price of cable television service as revenue, even when customers purchase that service as part of a discounted bundle that includes broadband internet or telephone service. The association maintains that this approach creates what it describes as “phantom” revenue because the discounted bundle price reflects a lower amount actually collected from subscribers.

The complaint cites standard accounting principles that require discounts on bundled services to be allocated proportionally among each component. For example, if television, internet and phone services are each priced at $40 individually but sold together for $99, the discount should be divided across all three services, resulting in $33 attributed to cable television rather than $40. The association argues that the Copyright Office’s rule disregards this method, effectively overstating cable-related income.

The lawsuit also challenges the agency’s treatment of equipment fees. The trade group says the rule includes charges for hardware such as cable boxes in the calculation of gross receipts, even though some customers can access broadcast content through smart TVs or streaming devices without dedicated equipment. It contends that equipment fees are not payments “for” broadcast programming and should not be included unless the hardware is indispensable to the service.

Named as defendants are the Copyright Office, the Library of Congress, which oversees the office, Copyright Office Director Shira Perlmutter, and Acting Librarian of Congress Robert Newlen. Representatives for the agency and the library declined public comment.

The Internet & Television Association is asking the court to declare the rule unlawful under the Administrative Procedure Act and to require the agency to revise its methodology so that royalties are based on actual cable revenue within bundled offerings and exclude equipment fees that are not directly tied to broadcast retransmission.

The case adds to ongoing tension between cable operators and federal regulators over how retransmission royalties should be calculated in a marketplace increasingly shaped by bundled services and evolving technology.