Supreme Court Hears Argument in Aereo Case re Bringing Broadcast TV to the Internet

by Dorsey & Whitney LLP
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The public performance right is one of several stress points in the U.S. Copyright Act resulting from changes in technology, in particular from the technologies that make up the internet and all the devices that use it as a transmission medium.

When the public performance right was granted for music in 1897, there was really only one way such a performance could occur. Live performers could gather an audience from the public and sing and play in front of or within earshot of that audience. But over the years, advances in transmission and storage technologies made it possible to extend the reach of a public performance. Indeed, under the current Copyright Act, public performance can mean not only the initial performance of a work to the public, but also the transmission of a performance to the public.1 It is the transmission aspect of the public performance right that is at issue in the Aereo case discussed in further detail below.

Owners of works able to be performed have struggled with value slipping away from uses without payment and have sought to find copyright infringement in the acts of makers and users of the new technologies. One highpoint occurred when community antennas provided a shared facility to aid home TV broadcast viewing. In two separate Supreme Court decisions, both decided under the previous version of the Copyright Act, the Court held that the acts at issue were not a “performance” of the works and thus the public performance right was not violated.2 Congress responded to these decisions by adding to the current Copyright Act a compulsory licensing system for retransmission of broadcasts by CATV systems.3 Another touchpoint in the evolution came in 1984 with the Betamax case.4 There, the maker of a VCR device individuals used at home to capture broadcast content was accused of infringement. The Supreme Court decided that whatever a VCR user did in his/her home to make and playback personal copies of audiovisual content was a fair use. Stress grew around the proper meaning of “public” and “performance,” with consumer access to TV often being a guiding light.

Various new modes of digital content consumption have caused contention between content owners and content consumers. With cloud computing, services now allow consumers to store and retrieve content in a “private” storage area. The consumers claim the right to copy, share and enjoy whatever content they have purchased (and sometimes whatever they can find). The content owners see traditional streams of revenue from copies and performances they once controlled shrinking or even disappearing. Providers of technology to the consumers, both profit-seeking and those claiming to serve the needs, even rights, of consumers, continue to offer devices and facilities that help consumers find, download, store, copy, and playback (or “perform”) content. The Supreme Court’s Grokster decision showed that such facilitators can go too far, particularly when they sponsor or tolerate illegal copying and sharing, notwithstanding some copying and sharing being legal.5

The Aereo case6 opened an interesting front in the wars between content owners and consumers. Aereo operates massive antenna arrays tied to storage devices and rents individual dime-sized antennas with associated private storage, to allow subscribing consumers either to watch live local broadcast TV programs or to select, store, and playback the programs at a later time. While the subscriber controls antenna tuning and content storage, it seems clear that the individual antennas are not an efficient approach, but rather are used mainly to support that each subscriber rents and controls all facilities needed to select, store and playback desired broadcast content. Aereo pays no fees to the broadcasters for retransmission of their content.

Not surprisingly, several broadcast content providers see Aereo as profiting unfairly from their copyrighted works. After a ruling favoring Aereo in the Court of Appeals for the Second Circuit and split district court decisions involving two Aereo-like providers in other geographies,7 the broadcast content providers petitioned for review by the Supreme Court. Aereo supported the petition, making its grant easier for the Supreme Court. As presented by the broadcast content providers, the question is whether Aereo, in operating its antenna and storage arrays for subscribers performs publicly the copyrighted works.

In the oral hearing on April 22, 2014, representatives of the broadcast content providers and Aereo, as well as the Solicitor General, addressed the Supreme Court. The questions provided some possible signals as to the Court’s thinking.

A central theme of several Justices’ (e.g., Breyer, Sotomayor) comments and questions was how a decision finding Aereo’s business to involve public performance could affect Dropbox or other cloud storage providers where consumers store performance content. They probed for the unforeseen consequences of a decision against Aereo.

Justice Sotomayor also asked whether the case could be resolved by finding Aereo to be behaving like a cable company, who might enjoy a compulsory license. Counsel for the broadcasters suggested that Aereo would not fit the existing regime for cable carriers.

Justice Ginsberg pressed Aereo’s counsel to explain whether there was a technically sound reason to have the many individual antennas or whether these were just a way to avoid breach of the Copyright Act.8 Aereo’s counsel offered two somewhat credible reasons, but the motivation for the thousands of individual antennas remained suspicious. In follow-up Justice Ginsberg pointed out that all other broadcast TV transmitters pay royalties, leading Aereo’s counsel to liken Aereo’s role to that of a seller of a home-located receive-record-playback system or to a cloud storage provider, who would be shocked to be seen as performing content publicly, just because multiple customers initiate playback of the same content each had stored separately.

In the end, the basic theme of the broadcasters was that Aereo is making a profit on their content and paying no royalties by characterizing itself as a mere consumer equipment provider, despite antenna arrays that appear a mere “gimmick.” On the other hand, Aereo presented itself as a helpful consumer equipment/service provider, acting only under the command and control of consumers, who are freely entitled to do all that Aereo helps them to do.

The Supreme Court’s decision will likely be issued in June.  

1   17 U.S.C. § 101 (defining public performance).
2   Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968); Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394 (1974).
3   See 17 U.S.C. §§ 111, 119.
4   Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).
5   Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 US 913 (2005).
6   WNET v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013)
7   Fox Television Stations, Inc. v. FilmOn X LLC, No. 13-758 (D.D.C. Sept. 5, 2013); Fox Television Stations, Inc. v. BarryDriller Content Systems, 915 F. Supp. 2d 1138 (D. Cal. 2012).
8   This line of questioning may have, in part, been motivated by Judge Denny Chin’s dissent to the Second Circuit opinion, in which he stated: “Aereo’s ‘technology platform’ is…a sham. . . . [T]he system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.” WNET v. Aereo, 712 F.3d at 697.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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