Supreme Court Rules Aereo’s Streaming Broadcast Service Violates the Copyright Act

by Knobbe Martens
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American Broadcasting Companies, Inc. v. Aereo, Inc. – What You Need to Know

Today the Supreme Court ruled that streaming broadcast television signals to subscribers without paying for the programs violates the Transmit Clause of the Copyright Act.

The decision indicates that the Supreme Court is not willing to permit the use of new technology architecture to circumvent the language of the Copyright Act, but instead will assess the commercial realities involved in deciding the scope of the Transmit Clause.  

While the Court restricted its decision to the specific technological solution utilized by Aereo, the holding could stifle many internet television transmission services by requiring them to cease their transmissions or obtain licenses from broadcasters and content providers. Consumers should expect fewer choices in providers and an increase in subscription service cost from those that remain.

What Does the Transmit Clause of the Copyright Act Provide?

The Copyright Act of 1976 gives a copyright owner the “exclusive righ[t]” to “perform the copyrighted work publicly.” The Act’s Transmit Clause defines that exclusive right to include the right to “transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.”

Background on Aereo’s Service and Case

Aereo provides a service that allows its subscribers to watch television programs over the Internet at about the same time as the programs are broadcast over the air.  Aereo operates thousands of micro-antennas, each assigned to a fee-paying subscriber.  A subscriber selects a particular program to watch.  The user’s assigned antenna receives the program from a free aerial signal broadcast by a local television station.  Aereo then saves a copy of the program and streams the program over the Internet to the subscriber.  Aereo does not pay the local television stations or their networks for the programs. Petitioners, who are television producers, marketers, distributors, and broadcasters that own the copyrights in many of the programs Aereo streams, sued Aereo for copyright infringement and sought a preliminary injunction.  The district court denied the motion, and the Second Circuit affirmed.  The Supreme Court reversed, and held Aereo’s services infringed the copyright owner’s exclusive right to publicly perform the copyrighted works.

Analysis

The Supreme Court first concluded that Aereo “perform[s]” the copyrighted works and is not simply an equipment provider.  The Court found Aereo’s activities to be substantially similar to those of cable companies, and noted that Congress had specifically amended the Copyright Act to encompass cable companies.  Put simply, both Aereo and cable companies retransmit over-the-air broadcasts.  The Court recognized that Aereo’s system was not identical to that of the cable companies; Aereo’s subscribers select a particular program for streaming, while the cable companies have constant transmissions.  The Court concluded this difference between Aereo and the traditional cable companies was not sufficient to remove Aereo from the ambit of the Copyright Act, since Aereo’s services were in every other way strikingly similar to those offered by the cable companies that were targeted by the Copyright Act amendments.

The Supreme Court then held that Aereo performs petitioners’ works “publicly.” The purpose and text of the Transmit Clause determines that, 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 Court concluded that Aereo’s claims (that it transmits from user-specific copies and uses antennas individually-assigned to each subscriber) do not distinguish Aereo’s system from cable systems.  In addition, the Court concluded that the subscribers to whom Aereo transmits constitute “the public” under the Act because Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other. It is of no consequence that Aereo’s subscribers may receive the same programs at different times and locations. 

Given the limited nature of this holding, the Court stated that it did not believe its decision would discourage the emergence or use of different kinds of technologies such as cloud computers and remote storage DVRs.  The Court did not extend its interpretation of the term “the public” to those who own or possess those products.

The dissent argued that Aereo does not “perform” because Aereo’s subscribers select the program to watch and Aereo does not choose the content. The dissent likened Aereo’s services to those of a copy shop, and would not have found Aereo directly liable for infringing the copyrighted works.  The dissent would have focused instead on Aereo’s secondary liability for infringement of the performance right.  The dissent criticized the Court’s holding as being based on a few snippets of legislative history and lacking solid foundation.  The dissent argued that the technology differences between Aereo and the cable companies were not given sufficient consideration, and expressed concern that the majority’s holding is overly broad and will disrupt settled jurisprudence.

Justice Breyer delivered the majority opinion, joined by Justices Roberts, Kennedy, Ginsburg, Sotomayor, and Kagan. Justice Scalia filed a dissenting opinion joined by Justices Thomas and Alito.  The case was an appeal from the Second Circuit.

 

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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