United States Supreme Court Rules Online TV Streaming Service Violates Copyright Law

by LeClairRyan

On June 25, 2014 the Supreme Court of the United States in ABC v. Aereo, Inc., No. 13-461 (S.Ct. June 25, 2014), in an opinion delivered by Justice Breyer, ruled that an online television streaming service that allows subscribers to watch television programs over the Internet at about the same time programs are broadcast over the air violates the Copyright Act of 1976.

Aereo provides subscribers broadcast television programming over the Internet in essentially real time for a monthly fee. The broadcast process begins when a viewer chooses online which show to watch. Aereo’s servers then select one of thousands of mini antenna to be dedicated to the subscriber for that show. The antenna receives the broadcast, which Aereo saves in a subscriber-specific folder on its hard drive. Then, Aereo streams the personal copy to the subscriber over the Internet only a few seconds behind the over-the-air broadcast. Aereo does not own the copyright in these works or a license from the copyright owners to perform those works publicly.

The Suit
Television networks brought suit against Aereo for copyright infringement in Federal District Court. The Networks sought a preliminary injunction, arguing that Aereo was infringing their right to “perform” their works “publicly.” The District Court denied the preliminary injunction, and the Second Circuit affirmed. The Supreme Court granted certiorari.

The Copyright Act of 1976 gives a copyright owner the “exclusive righ[t]” to “perform the copyrighted work publicly.” 17 U.S.C. § 106(4). The Court identified two questions necessary to deciding this case: (1) Does Aereo “perform” at all? (2) If so, does Aereo do so “publicly”?

Aereo argued that it does not perform, rather it merely supplies equipment that emulates the operation of a home antenna, and it is only the subscribers who perform. In response, the Court began by reviewing the Copyright Act. The Court explained that one of Congress’ primary purposes in amending the Copyright Act in 1976 was to reject the Court’s holdings in two prior cases that community antenna television (“CATV”) systems fell outside of the Act’s scope. CATV systems involve a provider that places antennas that allow subscribers to choose programs they wish to view. The Court noted three changes resulting from the Act’s amendment: (1) Congress changed the language so that both the broadcaster and the viewer of a television program could be considered to “perform” because they both show the program’s images and make audible the program’s sounds, (2) Congress enacted the Transmit Clause which states that an entity performs publicly when it “transmits a performance to the public” 17 U.S.C. § 101, and (3) Congress created a new section of the Act to regulate cable companies’ public performances of copyrighted works. The Court concluded, “Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach.”

Aereo claimed that it is different than CATV systems because Aereo’s system remains inert until subscribers indicate that they want to watch a program, whereas a CATV system transmits constantly. The Court rejected this argument, deemed Aereo was “for all practical purposes a traditional cable system,” and explained that “this sole technological difference between Aereo and traditional cable companies does not make a critical difference here.” The Court concluded that an entity that engages in activities like Aereo’s performs.

Aereo denied that it performed the Networks’ work “publicly,” reasoning that the performance it transmits is the performance created by its act of transmitting, and because each of these performances is capable of being received by only one subscriber, Aereo transmits privately, not publicly. The Court assumed that Aereo’s first argument was correct and focused only on Aereo’s contention that it does not transmit a performance “to the public.” The Court noted that in terms of the Act’s purpose, the fact that each subscriber receives data streamed from his own personal copy does not distinguish Aereo’s system from cable systems, which do perform “publicly.” The Court concluded 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.” Moreover, Aereo, through such communication to a large number of people who are unrelated and unknown to each other, transmits to the public, which does not need to be situated together spatially or temporally.

Aereo and its supporting amici argued that if the Court applied the Transmit Clause to Aereo’s conduct, it will impose copyright liability on other new technologies such as cloud computing and DVRs. The Court then readdressed Congress’ intent, elaborating that Congress meant for the Transmit Clause to apply broadly to cable companies but did not intend for it to discourage or control the emergence of different kinds of technologies.

This case reinforces that the Copyright Act of 1976 was specifically created to stop cable systems and cable system lookalikes from rebroadcasting over-the-air content without authorization, yet specifically states that its holding is limited in that it does not address how the Act applies to new technologies.

Justice Scalia, joined by Justices Thomas and Alito, dissented. The dissent concluded that Aereo does not violate the Networks’ “exclusive righ[t]” to “perform” their programs “publicly” because Aereo does not “perform” at all. The dissent claimed that when Aereo subscribers log in, select a channel, and push the “watch” button, the subscribers are the performers, not Aereo. The dissent reasoned that because Aereo does not make the choice of content, it does not engage in volitional conduct that violates the Act, and therefore cannot be held directly liable for infringing the Networks’ public-performance right.

The dissent also criticized the Court’s reasoning, and blamed the Court for gleaning congressional intent from a few snippets of legislative history. The dissent also believed the fact that Aereo transmits only specific programs whereas CATV systems transmits the full range of broadcast signals to all subscribers at all times is a material difference.

Technology changes constantly; whether this decision will provide guidance to lower courts or will sow confusion as stated in the dissent remains to be seen. For now, if a technology is a “cable lookalike” it cannot broadcast without authorization.

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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