Startup sued for putting local TV on the iPhone
poststar.com
poststar.com
http://www.theage.com.au/business/optus-wins-landmark-web-br...
Building a business on a "loophole" seems to be a highly risky affair. That said, I'm not really familiar with the US law making process so I don't know how long it would take to change it to make what they are doing illegal.
Of course it is quite a silly lawsuit in the first place since anybody can get it of the net in the form of a torrent for free.