In a highly anticipated decision, the Supreme Court ruled on June 29, 2014 that Aereo Inc.’s online service that broadcasts television programming over the Internet infringed on the exclusive right of television broadcasters to provide those broadcasts to the public under the Copyright Act. The decision is a win for major broadcasters and content providers hoping to prevent online upstarts from impermissibly poaching their content. However, the Supreme Court’s ruling is limited and its application to future cases involving television content providers and storage is uncertain because the decision does not set forth a clear standard to identify the types of entities and services that violate the public performance provision of the Copyright Act.
For a monthly fee Aereo broadcasted television programming online to its subscribers, virtually simultaneously with the actual broadcast of the programming on television. Aereo’s programming included copyrighted works that Aereo did not own and did not have a license to broadcast.
Technically, Aereo’s service worked as follows: subscribers to Aereo visited Aereo’s website and selected the desired television program. Aereo’s servers selected an antenna, specifically dedicated to the subscriber, to pick up the broadcast and convert it to a digital form for transmission across the Internet. The digital version of the broadcast was then sent to Aereo’s server which saved the data into a folder specifically assigned to the subscriber, creating a personal copy of the broadcast for the subscriber. Once several seconds of programming had accumulated, Aereo’s servers began streaming the programming to the subscriber until the entire show had been sent to the subscriber. The digital copy that was sent to the subscriber was solely for that subscriber and that copy was not sent to other subscribers. If multiple subscribers wanted to watch the same show, Aereo created individual copies of the program for each subscriber in their own folder to use to stream the content.
The copyright owners for these television programs – television producers, marketers, distributors and broadcasters – brought suit against Aereo for infringing their right to publicly perform their works under the Transmit Clause of the Copyright Act and sought a preliminary injunction enjoining Aereo’s service. The District Court for the Southern District of New York denied the request for preliminary injunction finding that Aereo’s service did not transmit the broadcast to the public in violation of the Copyright Act, but rather sent private transmissions to individual subscribers. The Second Circuit affirmed and the case was certified to the Supreme Court.
Does Aereo’s Service Transmit a Performance to the Public?
The “exclusive right” to perform a work is defined in the Transmit Clause of the Copyright Act as the right to “transmit or otherwise communicate a performance . . . of the copyrighted work . . . to the public, by means of any device or process.” Based on these provisions of the Copyright Act, the Supreme Court (“Court”) identified two determinative issues: (1) whether Aereo’s service “performs”; and (2) if so, whether the performance was done publicly.
To determine whether Aereo “performed” the Court focused on the purpose of the Copyright Act as gleaned from the amendments to the Copyright Act in 1976. The Copyright Act was amended to specifically address early cable TV providers who carried local television broadcasts to subscribers in other cities. These early cable TV providers used antennas to receive television signals and coaxial cables to carry the signal to their subscriber’s television set. A subscriber was free to choose the desired program by turning the knob on their television set. Under the law existing prior to the 1976 amendments to the Copyright Act, broadcasters “performed” because they selected the programs to be viewed and sent the programming to the viewers. However viewers, which included the cable TV providers, did not “perform” because they simply carried the programs they received.
The Court explained that Copyright Act of 1976 was amended to erase this distinction between broadcasters and viewers and instead clarified that one “performs” by showing a work’s “images in any sequence or to make the sounds accompanying it audible.” The Copyright Act’s Transmit Clause further addressed this activity by defining the transmission of a “performance” as the communication “by any device or process whereby images or sounds are received beyond the place where they are sent.” The Court determined that these amendments make clear that an entity that acts like the early cable TV providers “performs” when it enhances a viewer’s ability to receive broadcast television signals.
With that in mind, the Court held that Aereo “performed” under the Copyright Act because Aereo’s service was substantially similar to the service provided by the early cable TV providers that the Copyright Act sought to address. The Court dismissed the differences in the underlying technology between Aereo and the early cable TV providers – subscribers to Aereo have to initiate the transmission of the specific broadcast online while early cable TV providers sent a continuous feed to the subscriber’s televisions – finding that this difference was invisible to the consumer, and that Aereo’s service’s similarity to early cable TV providers was controlling.
Work Performed Publicly
Aereo argued that it did not “perform” any work “publicly” because the performance it transmitted was a new performance, distinct from the original broadcast, that was created by its act of transmitting. Aereo further argued that each new performance was transmitted privately to a single subscriber, not publicly. The Court found that even accepting Aereo’s argument that its transmission was a new performance, Aereo’s service nonetheless fell within the Copyright Act because the new performance still communicated the same images and sounds contained in the original broadcast “by means of a device or process,” albeit contemporaneously.
Importantly, the Court determined that Aereo transmitted the work to the public. Although Aereo’s service stored individual copies for each subscriber, the court considered this a technology issue that had no effect on the ultimate viewing experience of Aereo’s subscribers nor Aereo’s commercial objectives. To the Court, the nature of the service Aereo provided was indistinguishable from the early cable TV providers who performed publicly. The Court found that although Aereo creates and transmits personal copies of the works to each subscriber, overall its service shows the same work (images and sounds) to multiple subscribers who request the broadcast. These subscribers constitute the public, since they are unrelated and unknown to each other.
Having found that Aereo’s service “performs” the copyrighted work and transmits that performance to the “public” similar to the service provided by the early Cable TV providers, the Court found that Aereo infringed Plaintiff’s exclusive rights under the Copyright Act and reversed and remanded the case.
In Aereo, the Court applied a standard that simply looked at the similarities between the nature of the services provided by Aereo and the early cable TV providers. This “cable TV like” standard is inexact and may create uncertainty in the application of the standard in cases going forward. The Court even acknowledged that the Aereo case could have limited application. Whether and to what extent Aereo can be applied beyond its limited holding may be answered soon, as Fox Broadcasting Co. is already wielding Aereo in support of their infringement claims in the Ninth Circuit against Dish Network over features of its digital video recorder (DVR) service that allows users to upload recorded broadcasts to mobile devices. (see Fox Broadcasting Co., et al v. Dish Network et al, Civ. Case No. 13-56818)
The Court further noted that the decision is not intended to discourage the development of new technologies. Novel issues concerning other technologies, such as cloud computing and DVR services, will have to be addressed as they come before the Court. Despite the Court’s attempt to tread carefully, the decision to ignore the intricacies of the technology and focus on the ultimate effect of the service provided is significant and could hinder the growth of unique technologies in this area.
Ultimately, Aereo allows television broadcasters and content providers to breathe a sigh of relief knowing that the Copyright Act protects them from online entities seeking to offer television services by circumventing copyright laws and impermissibly siphoning off broadcasts. Aereo has been forced to shut down its service since the Supreme Court ruling. Any online media company or content provider hoping to broadcast television content must work with the major broadcasters, obtain licenses and pay fees to do so. Otherwise, they risk suffering the same fate as Aereo.