Stream Dammed: The Supreme Court switches off internet-enabled rebroadcasts of over-the-air television

June 30, 2014

The Supreme Court switches off internet-enabled rebroadcasts of over-the-air television

In American Broadcasting Cos., Inc. v. Aereo Inc., a 6-3 majority of the Supreme Court held that Aereo Inc., an online television streaming service, violates copyright law by retransmitting copyrighted programs without authorization.[1] In the June 25, 2014 decision, the Court held that Aereo “performed” the copyrighted works of the major networks “publicly” within the meaning of the Transmit Clause of the Copyright Act of 1976.[2]

            Additionally, Justice Breyer, writing for the majority, reasoned that Aereo’s position as a passive intermediary was similar to the community antenna television (CATV) systems Congress expressly addressed in the 1976 revisions to the Copyright Act. Any technological differences between Aereo and the CATV systems were insufficient or irrelevant to whether Aereo violated the Transmit Clause.

I.                   The Facts and Proceedings Below

Aereo’s streaming service operates by allowing subscribers, for a monthly fee, to watch television programming over the Internet at virtually the same time the programming is broadcasted. The system consists of servers, transcoders, and thousands of tiny antennae. A subscriber can view a currently airing show by selecting the show from a list on Aereo’s website. One of Aereo’s servers then tunes an antenna to the broadcast carrying the selected show and the antenna remains dedicated to that subscriber for the duration of the show. As the antenna receives the broadcast signal, an Aereo transcoder translates the signal into data that can be transmitted over the Internet. A server saves that data in a user-specific folder and begins to stream the saved copy once several seconds of programming have been saved. The subscriber can then watch the program on any Internet-connected device just a few seconds behind the aired broadcast. Because most over-the-air content is copyrighted, Aereo’s system streams mainly consist of copyrighted works.

Television producers, marketers, distributors and broadcasters sued Aereo in New York Federal District Court alleging copyright infringement based on Aereo’s retransmission of the networks’ protected works. The District Court denied the major networks’ motion for a preliminary injunction. A divided panel of the Second Circuit affirmed. The court relied on Circuit precedent[3] to find that Aereo did not perform “publicly” within the meaning of the Transmit Clause. Instead, Aereo’s streamed programs constituted a private transmission available only to the particular subscriber who requested that program. The Second Circuit denied rehearing en banc, with two judges dissenting. 

II.                The Status of the Law Before Aereo

             The Copyright Act provides copyright owners the “exclusive righ[t]” to “perform the copyrighted work publicly.”[4] In 1976, Congress amended the Copyright Act to include the Transmit Clause, which further defines that right to include the right to

transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.[5]

Before the June 25, 2014 decision, district courts split on whether the same or similar technology violated copyright laws. District courts in California and Washington, D.C. found that a similar technology constituted a “public performance.”[6] Conversely, a trial court in Massachusetts denied a request for a preliminary injunction against Aereo’s system. [7]

III.             The Court’s Reasoning and Future Guidance

            The Supreme Court granted certiorari and reversed, finding that Aereo performed petitioners’ copyrighted works publicly in violation of copyright law. First, the Court determined that Aereo’s activities constituted transmitting a “performance” under the Transmit Clause. Aereo argued that its subscribers, not Aereo itself, performed by using Aereo’s equipment to stream television programs because Aereo simply supplies the equipment. Justice Scalia, in dissent, joined by Justices Thomas and Alito, found this argument persuasive and highlighted the fact that Aereo’s subscribers selected the copyrighted content.[8]

The majority disagreed. Drawing on the legislative history surrounding the amendment of the Copyright Act in 1976, the majority concluded that Congress intended to classify systems such as Aereo’s as ones that “perform.” The Court maintained that Congress amended the Copyright Act to bring the activities of cable systems, which simply amplified broadcast signals to improve their strength, within its scope. Because Aereo’s activities, the Court reasoned, were substantially similar to those of the cable providers Congress intended the amended provisions to reach, Aereo was not just an equipment supplier but instead an entity that “performs” the

copyrighted works.[9] The fact that subscribers selected the programming did not “make a critical difference” given Aereo’s “overwhelming likeness” to the cable systems.[10]

Furthermore, the Supreme Court held Aereo performed the copyrighted works “publicly.” Aereo argued that because each transmission only went to one subscriber, its system was not transmitting “to the public.” The Court rejected this argument, again drawing on the Act’s purposes to find that Aereo’s system is indistinguishable from the cable systems which broadcast content “publicly.” The Court also pointed to the text of the Transmit Clause to argue that an entity can transmit the same performance through one or several transmissions. Furthermore, the court reasoned that Aereo’s subscribers, a large number of individuals lacking any prior relationship to the works and not qualifying as a family and its social circle, constituted “the public.”[11] Moreover, the Court noted that “‘the public’ need not be situated together, spatially or temporally.”[12]

            The Supreme Court addressed concerns that its decision would cripple the use of new technologies that Congress did not intend to reach with the 1976 amendments by stating “we do not believe that our limited holding today will have that effect.”[13] The Court also noted that its decision does not reach remote storage of content already lawfully acquired. In dissent, Justice Scalia criticized the majority for creating a “cable-TV-lookalike rule” that is so imprecise that the Court may not be able to keep its promise that cloud-storage providers will not be affected by the ruling.[14]

            In sum, by concluding that Aereo’s system was a public transmission of copyrighted work, the Court’s decision effectively dries up Aereo’s streaming system, unless Congress acts to the contrary. Moreover, by punting on the questions of remote storage and cloud computing, the Court left the door open for assertions of copyright infringement against technology firms in those spaces.

Authored by Brian McCall and Barbara Marchevsky

The views expressed are solely those of the authors and not necessarily those of Merchant & Gould.

 


 

[1] American Broadcasting Cos., Inc., et al. v. Aereo, Inc., fka Bamboom Labs, Inc., No. 13-461, 573 U.S. ­­­­­­­­­­­­­­­­­­­­___, slip op. at 1 (June 25, 2014).
[2] Id. at 17-18.
[3] Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2008).
[4] 17 U.S.C. § 106(4).
[5] 17 U.S.C. § 101.
[6] Fox TV Stations, Inc. v. FilmOn X LLC, 996 F. Supp. 2d 30 (D.D.C. 2013); Fox TV Stations v. BarryDriller Content Sys., 915 F. Supp. 2d 1138 (C.D. Cal. 2012).
[7] Hearst Stations Inc. v. Aereo, Inc., 977 F. Supp. 2d 32 (D. Mass. 2013).
[8] Aereo, slip op. dissent at 4-5 (Scalia, J., dissenting).
[9] Aereo, slip op. at 8-10.
[10] Id. at 10.
[11] Id. at 14-15.
[12] Id. at 15.
[13] Id. at 16.
[14] Aereo, slip op. dissent at 11 (Scalia, J., dissenting).

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