IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks -- April 11, 2013

Table of Contents

American Broadcasting Companies, Inc. v. Aereo, Inc., USCA Second Circuit, April 1, 2013
 Click here for a copy of the full decision.

  • Second Circuit affirms district court’s denial of plaintiffs’ request for preliminary injunction prohibiting defendant, Aereo, from transmitting plaintiffs’ copyrighted television programs to Aereo’s subscribers while those programs are still airing on broadcast television, finding that transmissions at issue are not “public performances” under the Copyright Act.

Plaintiffs American Broadcasting Companies, Inc., and other corporate producers, marketers, and distributors of broadcast television brought two separate lawsuits against Aereo, Inc., alleging that its service unlawfully captured broadcast television signals in the New York City area (including those corresponding to television programs in which plaintiffs hold the copyrights) and provided them over the Internet to Aereo subscribers, directly and contributorily infringing on plaintiffs’ rights under the Copyright Act. Plaintiffs moved for preliminary injunction, asserting that Aereo was directly liable for infringement of plaintiffs’ public performance rights in their copyrighted works because of the aspects of Aereo’s service that allow subscribers to view plaintiffs’ copyrighted television programs nearly contemporaneously with the over-the-air broadcast of these programs, and sought to bar Aereo from continuing to engage in those services. The district court denied plaintiffs’ motion, holding that it was bound by the Second Circuit’s 2008 Cartoon Network LP, LLP v. CSC Holdings (Cablevision) decision to conclude that Aereo’s transmissions did not constitute performances to the public under the Copyright Act and therefore plaintiffs would be unlikely to succeed on the merits of its public performance copyright claims. (Read our summary of the district court’s decision here). The Second Circuit affirmed, finding that under the analysis established by Cablevision, transmissions from Aereo’s service were not performances to the public under the Copyright Act and did not infringe on plaintiffs’ public performance rights.

As did the district court, at the outset the Second Circuit engaged in a detailed description of Aereo’s services, from both the subscribers’ and Aereo’s perspectives. According to the court, from the subscribers’ perspectives, Aereo provides the functionality of three devices – a TV antenna, a DVR, and a Slingbox (a device that enables subscribers to view programs on mobile devices) – allowing subscribers, through their Aereo accounts, to use their Internet-connected computers or other devices to either watch television programs live (contemporaneously, but with both a small delay and the ability to pause, rewind, and review the programs) using Aereo’s Watch function, or to choose to record current or future programs for later viewing, using the Record function. From Aereo’s perspective, the court noted that the service uses thousands of individual antennas to capture broadcast signals and a remote hard drive to create individual copies of the programs. When an Aereo user selects a program from the site’s list of programs, the service assigns an individual antenna to receive that user’s requested program. The antenna receives the signal, decodes it, and sends the data to a server, where a copy of the program is saved in a directory reserved for that individual user. Whether the user chooses the Watch or Record function, the service makes a copy of the requested program. The only difference in the functions, according to the court, is that when the user chooses Watch, the service begins to stream the program to the user’s device after six or seven seconds of the program are saved to the server; whereas if the user chooses Record, the service saves a complete copy of the program to the server for the user’s later access. As the court noted, when a user watches a program using the Watch feature, the user is not watching the feed directly from the assigned antenna, but rather from an individual copy of the program on the Aereo server. The court also specifically noted that no two users share the same antenna at the same time, even if they are watching or recording the same program, and that the Aereo service uses the signal received by each antenna to create an individual copy of the program in the user’s personal directory. Even when two users are watching or recording the same program, Aereo creates a separate copy for each, and each user, whether watching the show nearly live or previously recorded, sees that individual copy on the TV, computer, or mobile device screen. No other Aereo user can ever view that particular copy.

According to the Second Circuit, plaintiffs’ appeal turned on whether Aereo’s service infringes plaintiffs’ exclusive public performance rights under the Copyright Act and, in particular, whether Aereo’s service constitutes a transmission of plaintiffs’ copyrighted programming under the Transmit Clause. Plaintiffs argued that Aereo’s transmissions of broadcast television programs at the same time they air on the broadcast stations fall within the plain language of the Transmit Clause and are analogous to the retransmissions of network programming made by cable systems, which are public performances under the 1976 Copyright Act. Because it rebroadcasts plaintiffs’ copyrighted shows without a license, Aereo infringes on plaintiffs’ exclusive right of public performance and violates the act. After reviewing the legislative history of the Transmit Clause, which the court acknowledged the drafters added to the Copyright Act in 1976 specifically to address the issue of the rebroadcast of network television programming by cable television systems, the court turned to its prior decision in Cablevision, in which the court “closely analyzed and construed the Transmit Clause in a similar factual context.”

In Cablevision, the Second Circuit, examining and interpreting the Transmit Clause, found that, in determining whether a transmission is to the public, the court must determine who is capable of receiving not the actual performance of the underlying work being transmitted but rather the transmission at issue, because the transmission is also a performance under the Transmit Clause. The Cablevision court concluded that the Transmit Clause directs the court to examine who is capable of receiving a particular transmission of a performance and that whether a transmission originates from an individual or a shared copy bears on that analysis, because the use of a unique copy may limit the potential audience of a transmission and therefore affects whether that transmission is made to the public. Applying that interpretation of the Transmit Clause to the facts of the case before it, the Cablevision court found that because defendant’s RS-DVR transmitted a unique copy of a recorded program to the individual subscriber who requested it, and because only that Cablevision customer, and no other subscriber, could receive a transmission generated from that particular copy, the universe of people capable of receiving an RS-DVR transmission is the single subscriber whose self-made copy is used to create that transmission. This transmission, concluded the Cablevision court, did not constitute a public performance within the meaning of the Transmit Clause and did not infringe on plaintiffs’ rights under the Copyright Act.

According to the Second Circuit, the Cablevision decision established four “guideposts” to determine plaintiffs’ appeal of the district court’s denial of the preliminary injunction. First and, according to the court, most important, the Transmit Clause directs courts to determine the potential audience of the individual transmission. If that transmission can be received by the public, the transmission constitutes a public performance, but if the potential audience of the transmission is only one subscriber, the transmission is not a public performance, with limited exceptions. Second, for the purposes of the Transmit Clause analysis, private transmissions are not aggregated, and whether the public is capable of receiving the same underlying work or original performance of the work by means of many transmissions is irrelevant. Third, an exception to this no-aggregation rule exists when private transmissions are generated from the same copy of the work. These private transmissions should be aggregated, and if these aggregated transmissions from a single copy enable the public to view that copy, the transmissions are public performances. And fourth, any factor that limits the potential audience of a transmission is relevant to the analysis.

According to the court, the Cablevision court’s decision that transmissions of programs using defendant’s RS-DVRs did not constitute public performances rested on two essential factors – that the system created unique copies of the programs that a subscriber requested to record and that only that subscriber could receive the transmission from that copy – and these two factors were also present in Aereo’s case. When an Aereo customer chooses to watch or record a program using either the Watch or Record functions, Aereo’s system creates a unique copy of that program and stores it in a directory on a hard drive assigned only to that user. When an Aereo user chooses to watch the program – whether live or long after the program has aired – the transmission sent by Aereo and received by that user is generated from that unique copy, and no other Aereo user can ever receive a transmission from that copy. Thus, the court concluded, “as in Cablevision, the potential audience of each Aereo transmission is the single user who requested that a program be recorded.”

The Second Circuit rejected plaintiffs’ argument that Cablevision is distinguishable because while Cablevision’s RS-DVR copies “broke the continuous chain of retransmission to the public” by serving as the source of the transmission of a program after the original broadcast had ended, Aereo’s “buffer” copies do not, because they are merely the device by which Aereo enables its subscribers to watch nearly live TV. The court disagreed for two reasons. First, Aereo’s copies have the same legal significance as the copies in Cablevision because the user exercises the same control over their playback – pausing and rewinding – and therefore creating a transmission that is no longer contemporaneous with the live broadcast. In addition, because the user can exercise this control after the copies are created, these copies cannot be regarded as simply one link in a chain of transmission. Second, the court found that plaintiffs’ argument failed to account for Aereo’s user-specific antenna, which collects the signal to create only the copy requested by a specific user, not multiple copies if multiple users request the same show. “Thus even if we were to disregard Aereo’s copies, it would still be true that the potential audience of each of Aereo’s transmissions was the single user to whom each antenna was assigned.” The court analogized the Aereo antenna to an individual’s rooftop antenna, which is undoubtedly private, because only that individual can receive the transmission from that antenna, and concluded: “Plaintiffs have presented no reason why the result should be any different when that rooftop antenna is rented from Aereo and its signals transmitted over the Internet: it remains the case that only one person can receive that antenna’s transmissions.”

Turning to the other factors bearing on the preliminary injunction analysis, the appellate court found no abuse of discretion in the district court’s determination that the balance of hardships does not tip decidedly in plaintiffs’ favor, because while plaintiffs were likely to suffer irreparable harm in the absence of an injunction, Aereo would suffer significant hardship – likely the end of its business – if the court issued an injunction. The Second Circuit rejected plaintiffs’ argument that the court should disregard the hardship to Aereo because its actions were illegal, finding that the argument hinged on the conclusion that Aereo’s business infringes plaintiffs’ copyrights. Because the Second Circuit had concluded otherwise, at least on the limited question before it, the court concluded that the harms Aereo would suffer from an injunction are legally cognizable and significant.

Judge Chin wrote a lengthy dissent, in which he described Aereo’s technology as a “sham,” and stated: “I conclude that Aereo’s transmission of live public broadcasts over the Internet to paying subscribers are unlicensed transmissions ‘to the public.’ Hence, these unlicensed transmissions should be enjoined.”


Quirk v. Sony Pictures Entertainment, Inc., USDC N.D. California, April 2, 2013
 Click here for a copy of the full decision.

  • District court grants motions for summary judgment dismissing copyright and implied contract claims alleging that defendants copied plaintiff’s novel Ultimate Rush in creating motion picture Premium Rush, finding that film bears no substantial similarity to any copyrightable expression in novel and that plaintiff’s publication of his novel prevented plaintiff from satisfying bilateral expected payment element of implied contract claim.

Plaintiff Joe Quirk brought suit for copyright infringement and breach of implied contract against a number of defendants involved in the making of the motion picture Premium Rush, about a New York City bicycle messenger pursued by a rogue cop for the contents of a package he is carrying, asserting the film was an unauthorized adaptation of his 1998 novel Ultimate Rush, about a San Francisco rollerblading package delivery service messenger who becomes involved in dangerous situations with criminals as a result of packages he carries, and screenplays derived from the book (commissioned by Warner Bros., not a defendant in the case). The district court granted defendants’ motion, finding that, based on the record, a reasonable jury could not conclude that the movie and the book contain substantially similar protectable expression, and that Quirk’s Desny (implied contract) claim likewise failed because his decision to disclose the ideas in his novel to the entire world, without any conditions other than those arising under copyright law, precludes him from claiming that there was a bilateral expectation of payment for defendants’ alleged use of his ideas.

Plaintiff published his novel, Ultimate Rush, in 1998. Prior to its publication, Quirk retained an agent who distributed prerelease copies and synopses of the novel to various persons and entities throughout the movie industry, seeking a film development deal. Warner Bros. (not a party to the litigation) bought an option for the rights to adapt the novel in to a movie and commissioned two separate writers to prepare screenplays of the novel; however, it never pursued developing either of the two scripts, for which it holds the copyrights, and let its option lapse. Plaintiff brought suit for copyright infringement and breach of implied contract against a number of defendants, entities involved in the making of the motion picture Premium Rush, asserting the film was an adaptation of his novel and the Warner Bros. screenplays. Defendants moved for summary judgment on plaintiff’s copyright claims, arguing that Quirk failed to adduce sufficient evidence that defendants’ motion picture is substantially similar to the copyright-protected material contained in Quirk’s novel.

In support of their motions for summary judgment on Quirk’s copyright claims, defendants argued that Quirk failed to adduce sufficient evidence of substantial similarity of copyright-protected material between his novel and defendants’ motion picture. Quirk opposed the motion, arguing that a comparison between his novel and defendants’ film demonstrated that the film is an adaptation of the novel. The district court concluded that Quirk failed to apply the appropriate legal standard for determining when a film is a copy of an underlying novel for the purposes of copyright law. The fundamental flaw in Quirk’s analysis, stated the court, is that he objectively assumes he has a viable claim in copyright as long as he can prove the movie is an “adaption” of the novel. Even assuming Premium Rush was “adapted” from Quirk’s novel, “it simply does not automatically follow that the protectable elements of the two works are substantially similar and thus there is liability under copyright law.”

Considering only the protectable elements of and characterizations fairly supported by Premium Rush and Quirk’s novel, the court concluded that the two works were not substantially similar. As an initial matter, the court noted that because Quirk lacks standing to pursue a copyright claim based on alleged infringement of any expression found in either of the Warner Bros. scripts that is not also present in the novel, the scripts were irrelevant to the substantial similarity analysis. Noting that Quirk relied on subjective and often highly unfair characterizations of material in the book and the movie, the court found that the two works differed in many large and small details, as well as in their overall mood, style, and structure. Accordingly, the court held that Quirk had not pointed to sufficient commonalities of expression from which a reasonable fact-finder could conclude the movie and the book contained substantially similar protectable expression.

The court also granted defendants’ motion for summary judgment with respect to Quirk’s Desny claim. In Desny v. Wilder, the California Supreme Court recognized an implied contractual right to compensation when a writer submits material to a producer with the understanding that the writer will be paid if the producer uses the concept. The Ninth Circuit has affirmed that Desny claims remain viable, not preempted by the Copyright Act, and rest on “an expectation on both sides that use of an idea requires compensation.” Characterizing Quirk’s publication of Ultimate Rush in the late 1990s as an unconditional disclosure to the public at large of all the ideas contained in the novel, the court held that Quirk lacked evidence that defendants utilized any of the ideas contained in Ultimate Rush under circumstances giving rise to a “bilateral expectation” of payment.


Spinner v. American Broadcasting Companies, Inc., Court of Appeals, California, 2nd Appellate District, Division 8, March 8, 2013
 Click here for a copy of the full decision.

  • California Court of Appeal affirms summary judgment in favor of defendant ABC on plaintiff’s Desny claim, finding that ABC established lack of access to plaintiff’s script and that ABC independently created television show Lost.

Plaintiff Anthony Spinner brought suit against ABC asserting a Desny claim for breach of an implied contract, alleging that ABC used his idea, contained in a script he submitted to them in 1977, to develop and produce the hit television show Lost. The lower court granted ABC’s motion for summary judgment, and the Court of Appeals affirmed, finding that plaintiff had failed to produce sufficient evidence that ABC had access to his materials and finding that ABC had established independent creation of the show.

In 1977, ABC retained Spinner to write a two-hour pilot tentatively titled L.O.S.T., a show based on people stranded in impossible circumstances, how they would survive, and the strange adventures they would have. He submitted the script, but ABC eventually passed on the project. Spinner resubmitted his idea in 1991, and ABC passed on that treatment. In 1994, he resubmitted the same idea, again with the same result. In early 2003, while on vacation in Hawaii, Lloyd Braun, the then-chairman of ABC Entertainment Television Group, came up with the concept for Lost – a television show that was to be a marriage of the 2000 movie Cast Away, the reality show Survivor, and the older TV show Gilligan’s Island. In July 2003, he pitched this idea to other executives at a brainstorming session during an ABC retreat – a meeting that was transcribed – and hired Jeffrey Lieber to draft an outline for the proposed pilot. Braun did not like Lieber’s draft and subsequently hired J.J. Abrams and Damon Lindelof. On January 12, 2004, Lindelof, Abrams, two ABC executives, and three others who worked on Abrams’ show Alias met and exchanged ideas for the show. Lindelof drafted six pages of notes memorializing the ideas discussed at the meeting and circulated them by email to the attendees after the meeting. Because ABC wanted the show to premiere during the 2004-2005 season, Lindelof and Abrams needed to draft an outline quickly to send to ABC. The team worked on the outline January 13-January 16, 2004, and on the 16th Lindelof sent a final version of the outline to ABC. Braun called Lindelof the next day and told him that ABC was going to produce the pilot. In January and February 2004, Lindelof and the team developed the pilot script, which was first submitted on February 24, 2004. The script was revised numerous times, and ABC accepted the final version on April 19, 2004. By early May 2004, the writers had created a bible of the show that described its general format, various elements, character biographies, and approximately 30 ideas for the future of the show. In September 2004, ABC premiered the pilot for Lost.

Spinner filed suit in July 2009 for breach of an implied-in-fact contract. He alleged the contract was created when ABC solicited the 1977 script, he submitted the script with the reasonable expectation of payment if ABC used it, ABC accepted it knowing that he expected payment, and ABC used it. He further alleged that ABC had access to and used his 1977 script to develop and produce Lost, and that he is due an ongoing royalty for ABC’s use of the ideas in the 1977 script. ABC moved for summary judgment, arguing that it did not use Spinner’s ideas from his 1977 script in developing and producing Lost. The appellate court agreed, holding that ABC negated Spinner’s claims by providing sufficient evidence to establish both that it did not have access to Spinner’s 1977 script and that the script for Lost was created independently.

In California, in order to prevail on a cause of action for breach of implied-in-fact contract, Spinner must show that (1) he clearly conditioned the submission of his idea on an obligation to pay for any use of his idea; (2) ABC, knowing this condition before Spinner disclosed the idea, voluntarily accepted the submission; and (3) ABC found the idea valuable and actually used it – that is, based its work substantially on Spinner’s idea rather than on its own ideas or ideas from other sources. Because Spinner had no direct evidence of use, he needed to show use by inference – by demonstrating that ABC had access to his idea and that Lost is substantially similar to his idea. Evidence of access and substantial similarities that raise an inference of use may be dispelled by ABC’s showing that it had independently created Lost, however.

The court first found that Spinner failed to show that ABC had access to his idea. Under California law, defendants must have had an opportunity to view or copy the plaintiff’s work, and where there is no direct evidence of access, plaintiff must show a sufficiently strong nexus between the intermediary to whom he submitted his work and the creators of Lost. The relationship linking the intermediary and the creators requires more than the mere fact that they share a common employer. Spinner’s evidence is insufficient, according to the court, because he relied on a bare possibility of theoretical access premised on mere speculation. Though ABC has a retention policy to keep all scripts not returned to the authors, ABC never found the 1977 script in its files. Further, while the executives at ABC to whom Spinner presented and submitted his idea and script shared a common employer with the creators of Lost, they were not employed at the same time. Last, the creators of Lost stated that they have never spoken with or received any materials from any of the executives at ABC to whom Spinner presented and submitted his idea and script.

The court then also found that ABC demonstrated it had independently created Lost and that Spinner failed to contradict any of that evidence. Direct testimony and sworn statements of witnesses who were involved in the independent creation of the product, as well as contemporaneous correspondence and other papers documenting the creation process, are sufficient under California law to demonstrate independent creation. Here, the key creators of Lost all gave sworn statements as to the creation of the show, and ABC produced emails and transcripts of meetings regarding the development of Lost as well as evidence of the process of the creation of Lost – from the original idea to the pilot outline to drafts of pilot scripts to the final pilot script and show bible. 

For more information, please contact Jonathan ZavinW. Allan Edmiston, David Grossman, Jonathan Neil StraussTal Dickstein or Meg Charendoff.

Westlaw decisions are reprinted with permission of Thomson/West. If you wish to check the currency of these cases, you may do so using KeyCite on Westlaw by visiting http://www.westlaw.com/.


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Loeb & Loeb LLP on:

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