United States: Quasi-Broadcasting And Copyright – End Of An Aereo?

Last Updated: July 15 2014
Article by Laura Phillips and Anthony D. Glosson

In a highly anticipated decision, the Supreme Court on June 25, 2014, issued an opinion that ruled that web-based TV streaming service Aereo violated copyright law by providing a service substantially similar to cable television without clearing copyrights to transmit the streamed program content. Aereo enabled its subscription viewers to watch or record over-the-air TV programming by renting antennas and digital storage spaces. Subscribers used online controls to operate their designated antenna within Aereo's facilities. The content they selected was transcoded to a digital signal and sent to their own dedicated space on Aereo's hard drives. From there, subscribers could stream the programming live or save it permanently onto Aereo's servers. Subscribers could access their live or recorded content from anywhere in the world via the Internet.

Aereo maintained that its television streaming service resembled other services that courts have determined to be non-infringing, and thus legal in a line of cases beginning with Sony Corp. of America v. Universal City Studios (Betamax). In that case, the Supreme Court reasoned that Sony had a right to sell Betamax video tape recorders because they had substantial non-infringing uses, including "time-shifting," or recording programming for one's personal viewing at a later time.

Similarly, in Cartoon Network v. CSC Holdings (Cablevision), the Second Circuit ruled that Cablevision's remote storage DVR systems were legal. The systems enabled consumers to record television shows to Cablevision's servers for their personal viewing at a later time. The court reasoned that "volitional conduct is an important element of direct liability." Cablevision, 536 F.3d 121, 131 (2d. Cir. 2008). It concluded that "by selling access to a system that automatically produces copies on command Cablevision more closely resembles a store proprietor who charges customers to use a photocopier on his premises, and it seems incorrect to say, without more, that such a proprietor "makes" any copies when his machines are actually operated by his customers." Cablevision, 536 F.3d at 132. Accordingly, the court held that Cablevision was not liable for infringing copies that the DVR system recorded on its servers.

Aereo apparently designed its technology in a manner aimed at avoiding volitional conduct. Specifically, Aereo allotted storage space to each subscriber on which to record whatever content they wanted. Moreover, Aereo allowed consumers to choose the channel to which they would tune their antenna, leaving consumers with the ability to record either copyrighted or uncopyrighted content. Aereo did little more than provide the equipment and underlying functionality to make each individual selection possible.

Aereo touted that its business model distinguished it from cable and satellite operators, who actively decide which programming will appear on their systems. Cable and satellite operators, as a result of their deliberate content selection, must compensate broadcasters for the right to carry their programming—and that compensation accounts for a substantial portion of broadcasting revenue. If cable and satellite operators switched to Aereo-like technology and stopped paying retransmission fees, broadcasters would lose a crucial income stream.

Broadcasters from around the country sued Aereo to stop its practices. The Second Circuit ruled in Aereo's favor, concluding that its services were legal because Aereo had not engaged in volitional conduct that infringed copyrights. Conversely, in a separate suit, the Tenth Circuit sided with the broadcasters by denying Aereo's request for a temporary stay of a lower court's order requiring it to shut down operations. The Tenth Circuit concluded that Aereo was not entitled to a temporary stay because it had not shown that it was likely to persuade the Supreme Court to rule in its favor.

The Supreme Court, on June 25, reversed the Second Circuit's decision, finding that Aereo's services infringed broadcasters' copyrights. The Court's analysis focused on interpreting the scope of a copyright owner's exclusive right under the Copyright Act "to perform the copyrighted work publicly." 17 U. S. C. §106(4). Justice Stephen Breyer, writing for the majority, conceptualized the issue in Aereo as a set of two questions: first, does Aereo "perform" the copyrighted works that its users stream via its service; and second, is the performance "public" within the meaning of the Act. Justice Breyer answered both of these questions in the affirmative.

First, the Court determined that Aereo "performed" the copyrighted works because the service Aereo offered was similar to the services that Congress sought to regulate with the Copyright Act of 1976. Specifically, the majority noted that Congress passed the Act in part to reverse two Supreme Court decisions, Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394 (1974), and Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390 (1968). The Court in those cases held that cable providers did not violate copyright law by selecting and transmitting a variety of broadcasters' signals simultaneously to customers, who could then choose which signal entering their cable box they would like their TV to display. In Aereo, the Court acknowledged the technological differences between Aereo's user-directed tuning and storage technology on the one hand, and cable or satellite operator-curated systems on the other, but largely dismissed that distinction as irrelevant. Because Aereo served virtually the same function for consumers as cable does, the majority deemed Aereo's degree of control over the recording process to be of little importance.

Second, the Court determined that Aereo's performance of the work was a public one because, although viewers of the same work deriving from different source copies normally cannot be aggregated to constitute the "public," the distinction in this case was inconsequential. The Court stated that Aereo could have devised a more technologically efficient system in which all viewers watched copies deriving from the same antenna, but it did not do that solely because of the copyright implications. Because the technical difference is imperceptible and irrelevant to both viewers and broadcasters, the Court reasoned, it does not bear on the copyright liability determination. Consequently, the Court concluded that the fact that Aereo's service permitted access to copies of the same work for many unrelated individuals sufficed to demonstrate that Aereo performed the copyrighted works in public.

The majority emphasized the limited nature of the Court's ruling, likely in attempt to allay concerns that a ruling against Aereo would destabilize the cloud computing and video streaming developments that Cablevision had fostered by reducing service providers' apparent risk of liability for the content their consumers upload.

According to the majority, the same analysis may not apply to other technologies outside of the broadcast retransmission context. Because Congress had enacted the 1976 Copyright Act specifically to bring broadcast retransmission technology into the Act's purview, the Court concluded that broadcast retransmission technology occupied a special place in copyright law that justified applying a different standard than might otherwise inhere in cases implicating other consumer-operated forms of cloud technology. Although not binding on future decisions, the Court attempted to distinguish the cloud storage at issue in Cablevision from Aereo's model, stating that "[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court . . . should await a case in which they are squarely presented." Slip op. at 17, (quoting Brief for United States as Amicus Curiae 34) (both alterations in original).

Justice Antonin Scalia wrote the dissent, and was joined by Justices Samuel Alito and Clarence Thomas. The dissent contended that the majority's approach introduced a "cable-lookalike" exception to the Cablevision and Betamax principle that merely providing equipment capable of infringing copyrights does not usually constitute infringement. Drawing from the Second Circuit's opinion in Cablevision, the dissent compared Aereo's service to that of a photocopy shop, arguing that neither service provider should be liable solely because its customers sometimes use its facilities to infringe copyrights. According to copyright professors Peter Menell and David Nimmer, however, that analogy "rings hollow, especially in view of Congress's clear intention to channel retransmission services into the detailed statutory regime."

The decision largely embodies the result that the U.S. Justice Department had urged the Court to reach: a narrow decision favoring the broadcasters, but without broader implications in the technology space. The Brief for United States as Amicus Curia had argued that Aereo was "blatantly violating" copyright law, but emphasized that its conclusion "should not call into question the legitimacy of businesses that use the Internet to provide new ways for consumers to store, hear, and view their own lawfully acquired copies of copyrighted works."

For broadcasters and other copyright holders, the ruling represents a significant victory in ensuring that technological advancement does not undermine robust copyright protections. For service providers, the Court left many questions open regarding the applicability of its analysis to technologies outside the broadcast retransmission context.

The ruling may even have implications for the ongoing IP transition proceedings at the FCC, as beneficiaries of interconnection obligations seek to ensure that those obligations remain in place following the IP transition. It has not taken commentators long to suggest the Supreme Court's congressional intent-based reasoning in Aereo may counsel a similarly technology-neutral application of interconnection obligations throughout the IP transition.

For its part, Aereo temporarily shut down its operations within days of the Supreme Court's ruling. How widespread the market impact will be beyond Aereo and whether investors will become more hesitant to back start-ups providing services that resemble a cable model is unsettled, unless those firms build copyright clearance into their business models. It is plain, however, that the opinion represents an important landmark in copyright law illustrating, as Professors Menell and Nimmer suggest, that "[t]he Copyright Act of 1976 is indeed creaky."

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
Laura Phillips
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
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