Aereo’s Antenna Arrays and Streaming of Broadcast Programming to Individual Subscribers Found Infringing

by Dorsey & Whitney LLP
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In a significant victory for the broadcast industry, the Supreme Court has held in a 6-3 decision that Aereo’s TV streaming service is a public performance within the meaning of the Copyright Act. Aereo operates massive antenna arrays tied to storage devices and rents individual dime-sized antennas with associated private storage, to allow subscribers either to watch live local broadcast TV programs or to select, store and playback the programs at a later time. Aereo pays no fees to broadcasters or copyright owners and has taken the position, supported by various federal courts, that its services do not infringe the broadcasters’ copyrights in their content, because Aereo is not publicly performing their works. Rather, analogizing itself to suppliers of equipment like VCRs or DVRs, Aereo has argued that all it does is facilitate private TV viewing for its individual subscribers.

Justice Breyer, writing for the majority, identified the two questions the Court must answer to reach a decision: First, does Aereo “perform” at all? Second, if Aereo performs, is the performance done publicly?

To answer the first question, the Court looks at the history surrounding the amendment of the Copyright Act in 1976. One of the purposes of amending the Act was to overrule two prior Supreme Court decisions involving community antenna television (CATV) systems. Decided under the prior 1909 version of the Copyright Act, the Court had held that CATV providers who picked up broadcast performances via antennas and routed them by cable to subscribers’ homes did not perform the television programs. In addition to re-defining the concept of performance, Congress’ amendments to the 1976 Copyright Act also included a structure for compulsory fees that cable systems are required to pay to retransmit broadcasts. (Aereo took the position that since it was not a cable system, it owed no retransmission fees to broadcasters, and therefore it has never paid such fees.)

Based on this history, the majority equates Aereo’s activities to those of the CATV companies whose conduct Congress intended to make illegal. It found that because of Aereo’s “overwhelming likeness to the cable companies targeted by the 1976 amendments,” what it is doing must be a performance under the current Copyright Act. Essentially, the majority decision rests primarily on a view that form should not be elevated over substance; if Aereo is perceived by consumers to be like a cable company, then that is how it should be treated under the Copyright Act, and cable companies are required to pay broadcasters in order to avoid infringement allegations.

Justice Scalia, writing for the dissent, argues that the conclusion that Aereo performs is based on a faulty syllogism: (1) Congress amended the Copyright Act to overrule the CATV decisions; (2) Aereo resembles a cable system; therefore (3) Aereo performs. Justice Scalia also identifies a key difference between Aereo and CATV, which is that CATV systems transmitted constantly, whereas Aereo’s system does not become active until a user indicates the user wants to watch a program. Thus, Aereo is like a “copy shop that provides its patrons with a library card.” The majority responds that this analogy “makes too much out of too little” because there is no difference between a turn of a knob on a CATV-enabled television set and a click on a website to turn on the stream of a broadcast. In effect, the unique technical aspects present in Aereo’s system do not make any difference in the analysis.

The second question the majority addresses is whether Aereo’s performance is public, and that question is answered affirmatively. Notwithstanding Aereo’s argument that all it does is facilitate the private viewing of streamed broadcasts, the majority holds that since the broad viewing public—which the majority contemplated can be made up of viewers not “situated together, spatially or temporally”—is capable of accessing these broadcasts through Aereo, its services are necessarily public, no matter how those broadcasts are disseminated. Specifically, “when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.”

The dissent never reaches this argument, in light of its view that Aereo did not perform. Indeed, it chastises the majority for reaching this issue as well, and characterizes the majority’s evaluation of the “performance” issue as making the “public” issue moot.

Ultimately, the dissent agrees that what Aereo is doing should probably not be allowed. But the dissent states that, if Aereo can get away with it because of a loophole in the law, then it is not the Court’s job to plug the loophole. Instead, it is the role of Congress to eliminate the loophole.

The key takeaway from the Court’s decision is that we now have a “cable-TV-lookalike” rule. Hence, anything that looks like a cable service from the point of view of the consumer risks running afoul of a copyright owner’s public performance right. But, as the dissent points out, it may be difficult to determine when the rule applies. Is it only when live television is offered? Or what about a service that builds in a mandatory time shifting to its service (e.g., shows that are not available until an hour after they have aired)?

Although the majority took pains to confine its decision to the Aereo facts, it is inevitable that new technologies will be tested against generalizations of the majority’s reasoning, and the consequences of the decision outside of the broadcasting context are more difficult to assess. Even the majority states “We cannot now answer more precisely how the…Copyright Act will apply to technologies not before us.” The majority also reminds us that if a party is concerned it may run afoul of the Copyright Act, the party can always seek action from Congress. Nevertheless, we can expect the Court’s decision to be used by creative analogy in future cases involving the ever-growing and changing uses of digital content. What is clear now, however, is that Aereo’s service, as presently configured, is very unlikely to survive, and that any similar group of entrepreneurs aiming to create a business built on supplying television broadcasts without compensating broadcasters should think again.

The case is American Broadcasting Cos., Inc. v. Aereo, Inc., No. 13-461. The Court's decision is available here.

 

 

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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