United States: ABC v. Aereo: What The Supreme Court Decided - And What It Did Not

On June 25, 2014, a 6-3 majority of the Supreme Court held that Aereo's service that allows customers to view over-the-air TV broadcasts via the internet violated the public performance right under the Copyright Act. Applying what the dissent characterized as "an improvised standard ('looks-like-cable-TV')," the majority held that Aereo infringed copyrights owned by television networks. The Court was extraordinarily careful in attempting to restrain the reach of its holding, leaving many issues as to different technologies unanswered. But however those questions are resolved, the Supreme Court's decision appears likely to doom the "view" functionality of Aereo's internet/mobile device transmission service. American Broadcasting Companies v. Aereo, Inc. (U.S., No. 13-461, June 25, 2014).

The bottom line: Notwithstanding Aereo's deployment of a complex transmission system carefully designed to avoid copyright infringement, the High Court found Aereo liable for direct infringement on the ground that it was Aereo, not merely its users, that had "performed" the copyrighted works, and that Aereo's performances were "public." That conclusion was substantially driven by the Court's sense that Aereo's viewing service was functionally equivalent to cable TV and therefore that a contrary result would be inconsistent with Congress's intent, when it amended the Copyright Act in 1976, to apply copyright restrictions to cable.

Although the outcome may be a huge defeat for defendant Aereo, its ultimate implications for other internet-based services will be much debated. On the one hand, the majority sought to downplay fears that its "limited holding" would discourage the emergence or use of new technologies such as cloud computing, expressly disclaiming any conclusion as to remote DVR or cloud storage services. On the other hand, the dissent argued that the Court's analysis would sow confusion and generate uncertainty regarding the application of the well-established "volitional act" standard and the distinction between direct and secondary liability for copyright infringement. Stay tuned for a more detailed Fenwick & West program that addresses these issues after the dust settles, in July 2014.

Factual Background

The plaintiffs included television networks that broadcast copyrighted programs over the public airwaves for all to see. Defendant Aereo set up an automated system that allowed its subscribers to receive, on internet-connected devices, such programming when they selected it.

After a subscriber chose a television program at Aereo's website, that user would automatically be assigned to one of the thousands of dime-sized antennas that Aereo maintained, and that antenna would be tuned to the selected over-the-air broadcast. The programming would be transcoded into data suitable for internet transmission and then briefly stored in a subscriber-specific folder on one of Aereo's hard drives. After several seconds of programming had been recorded, it would be streamed to the subscriber's computer or device. Importantly, although multiple subscribers might view the same program, each subscriber would have his or her own unique (temporary) copy, received via a transmission from the antenna uniquely assigned to him or her.

The networks sued, alleging inter alia that Aereo directly infringed the copyright holders' exclusive right under 17 U.S.C. § 106(4) to publicly perform their works. As the Court noted, "the [Copyright] Act's Transmit Clause defines that exclusive right as including 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.' [17 U.S.C.] § 101."

The Court's Analysis

Justice Breyer wrote the Court's opinion, joined by Roberts, Kennedy, Ginsburg, Sotomayor and Kagan. Scalia filed a dissent in which Thomas and Alito joined.

Breyer considered two issues. First, did Aereo "perform" the works? Second, did it perform them publicly?

Although the Court did engage in an analysis of the text of the statute, it basically resolved these issues via judicial-cum-legislative history. The Court had previously considered a similar issue in connection with community antenna television systems (CATV). In the earlier cases, the court had ruled in favor of the defendant antenna services, holding that the CATV operators had not engaged in "performances" of the copyrighted broadcast works. Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968); Teleprompter Corp. v. Columbia Broadcasting System, 415 U.S. 394 (1974). Those rulings were overturned by Congress when it amended the Copyright Act in 1976, clarifying what it meant to "perform" a work, and enacting the Transmission Clause.

These amendments made clear that anyone who causes an audiovisual work to be played (made visible and audible) has "performed" the work. Hence, if you, the consumer, put a DVD of a rock concert in your DVD player and press Play, you will have "performed" the songs under copyright law. But that doesn't necessarily mean you would be an infringer: if you "perform" them in this way at home, by yourself or among family and friends, it would not be a public performance.

In this case, the Court held first that Aereo performed the works. Although the Aereo technology was new, for performance and Transmission Clause purposes there was no material difference between Aereo's activity and what Congress had intended to bar when it overturned Fortnightly and Teleprompter. In light of the "overwhelming likeness to the cable companies targeted by the 1976 Amendments," the difference which the dissent focused on – that the CATV system sent programming continuously to each subscriber, whereas the Aereo system responds to subscriber requests – "does not make a critical difference here." This is particularly true, the Court stated, because the technical difference "means nothing to the subscriber" nor to broadcasters.

In considering whether the performance was "public," the Court accepted arguendo Aereo's position that the performances at issue consisted of the multiple performances that occurred when the copyrighted programs were retransmitted to multiple subscribers through the Aereo system, after being separately received on multiple unique antennas and stored separately for each viewing subscriber. By Aereo's logic, since each subscriber's transmission was a distinct performance, then none should be deemed public because each such performance went to only one subscriber, not to the public.

The Court rejected this argument on two grounds. First, again, similarity to CATV providers: This consideration did "not render Aereo's commercial objective any different from that of cable companies. Nor do they significantly alter the viewing experience of Aereo's subscribers," who did not care whether their program came from one big antenna or myriad small dedicated antennas. Moreover, the text of the Transmission Clause supports the conclusion that Aereo's performances are public because that clause expressly anticipates that a public performance can be received by members of the public "at different times." The multiplicity of viewers of the different streams of the same underlying performance of the work therefore made the performance a public one.

The Dissent

Justice Scalia's dissent argued that the majority ignored what the minority consider "a simple but profoundly important rule: A defendant may be held directly liable only if it has engaged in volitional conduct that violates the Act." (Emphasis added.) Under the volition rule, service providers have commonly been held not directly liable for copyright infringement for hosting an automated, user-controlled system that end-users may use to infringe or may use for non-infringing purposes, though secondary liability might still attach. See, e.g., CoStar Group v. LoopNet, 373 F.3d 544 (4th Cir. 2004).

In other words, under the "volition" line of cases, the subscriber or consumer who used a technology to engage in a volitional act of selecting and triggering a performance or some prima facie act of copyright infringement might be directly liable. But direct liability would not apply to the company that provided the automated technology; to hold the technology provider liable, a plaintiff would have to prove secondary liability.

Curiously, although the majority responded to part of the dissent's argument, it did not directly or expressly address the volition issue, neglecting even to utter the term "volition." The majority opinion found Aereo directly liable without discussing whether Aereo (as opposed to its users) had engaged in any volitional act in regard to any particular performance. The Court did not explain whether the Copyright Act would or would not require a volitional act for a service that did not so closely resemble cable TV.

The majority's failure to engage with this rule, Scalia argued, throws into doubt and confusion the line between direct and secondary liability. It leaves uncertainly about the scope of the ruling because the Copyright Act doesn't say that "operations similar to cable TV are subject to copyright liability," and it is not clear just how much similarity to cable TV may cause the Aereo holding or its similar-to-cable standard to apply.

One way to understand the majority's approach might be that they did not want to disturb the volitional standard as a general matter, but felt that Congress's intent to preclude activities like Aereo's should prevail irrespective of the volition issue in this case. This turns Aereo into a sui generis decision, which is almost what the majority says it is, but one in conflict with the generally applied volition principles.

What Does the Aereo Decision Not Do?

The majority, in attempting to calm concerns that its decision will discourage new technologies, states:

"[T]he history of cable broadcast transmissions...informs our conclusion that Aereo 'perform[s],' but does not determine whether different kinds of providers in different contexts also 'perform.'"

The Court adds further comments emphasizing its limited approach.

  • An entity "only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work" (emphasis added), as opposed, for example, to distribution of DVDs which the recipients might perform.
  • The Court notes that its ruling on the scope of "the public" does not include those who act as owners or lawful possessors of a product. And, moreover, the decision does not consider "whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as remote storage of content."
  • The Court states: "We agree with the Solicitor General that '[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court, as to which "Congress has not plainly marked [the] course," should await a case in which they are squarely presented.'"
  • And the dissent notes that even for Aereo itself, it may be unclear whether the Supreme Court's "looks-like-cable" analysis should apply to Aereo's time shifting service – which functions more like a remote DVR than like a contemporaneous retransmission by cable TV.

In light of these comments, any analysis of the broader impact of Aereo requires the caveat that these disclaimers by the Supreme Court will neither preclude the application of Aereo in other contexts, nor predict how the decision may be applied by other courts in the future. That is a subject that deserves more than an instantaneous reaction – and one which we will take up at the live CLE program Fenwick & West will provide on this topic during July 2014. Stay tuned.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
20 Jan 2019, Conference, California, United States

Since 2009, recognized as a vital cornerstone for all constituents of the healthcare and biotechnology community, PMWC provides an exceptional forum for the exchange of information about the latest advances in technology (e.g. DNA sequencing technology), in clinical implementation (e.g. cancer and beyond), research, and in all aspects related to the regulatory and reimbursement sectors.

20 Jan 2019, Conference, California, United States

Fenwick partner ​Kevin Kabler will be speaking at the IO Intellectual Property session (January 21 at 2pm).

21 Jan 2019, Speaking Engagement, California, United States

Now entering its fifth year, the Pocket Gamer Connects events series has grown to become the biggest and most influential mobile games conference in the west as well as th​e biggest games event overall in the UK and Helsinki.

Similar Articles
Relevancy Powered by MondaqAI
Harvey Siskind LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Harvey Siskind LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions