U.S. Supreme Court Finds Direct Copyright Liability for Subscriber-Directed Retransmissons of Over-the-Air Broadcasts

by Eversheds Sutherland (US) LLP
Contact

The U.S. Supreme Court held last week that a service provider directly infringes a copyright owner’s exclusive performance right when it transmits to subscribers individualized streams of copyrighted works almost simultaneously to their broadcast over the air. Justice Stephen Breyer, writing for a six-justice majority, opined that one of Congress’s chief purposes in amending the Copyright Act in 1976 (the 1976 Amendments) was to bring the activities of cable television service providers under the Act. A service that accomplishes the same objectives as cable TV, the majority held, should therefore be subject to the same legal prohibitions, regardless of the technological underpinnings of the service. The Supreme Court’s opinion in American Broadcasting Cos., et al. v. Aereo, Inc. is here. The holding serves as a stark reminder, to developers of emerging technologies in particular, that apparent compliance with the letter of the law is not an absolute shield to liability.         

Section 106 of the Copyright Act provides copyright owners with the exclusive right to “perform the copyrighted work publicly.” 17 U.S.C. § 106(4). The Act’s Transmit Clause, added as part of the 1976 Amendments, defines the public performance right as the right to “transmit or otherwise communicate a performance … of the [copyrighted] work … to the public, by means of any device or process.” 17 U.S.C. § 101.

Aereo, Inc. (Aereo) provides a service that allows subscribers to view television programs on internet-connected devices at about the same time the programs are broadcast over the air. Aereo’s system consists of servers, transcoders and thousands of dime-sized antennas. When a subscriber wants to watch a show, the subscriber selects the show from a list of local programming on Aereo’s website. Then one of Aereo’s servers selects an antenna and dedicates it to the subscriber, and only that subscriber, for the duration of the selected television program. The server tunes the antenna to the selected over-the-air broadcast, and a transcoder translates the signal received by the antenna into data that can be transmitted online. The server then saves the data in a folder that, like the antenna, is dedicated solely to the subscriber. After a buffer of several seconds, the server streams the saved personal copy of the show to the subscriber’s internet-connected device.

The television producers, marketers, distributors, and broadcasters (the Networks) that own copyrights in the content Aereo streams sued Aereo in the U.S. District Court for the Southern District of New York for copyright infringement. The Networks sought a preliminary injunction for their claim of direct infringement, which the District Court denied. A split panel of the U.S. Court of Appeals for the Second Circuit affirmed, holding that Aereo does not perform publicly because it does not transmit content “to the public.” The panel found that Aereo’s individualized streams were private transmissions, not public performances.

The Supreme Court reversed and remanded. Aereo directly infringed the Networks’ performance rights, the Court found, because (1) it performed the Networks’ copyrighted works, and (2) it performed them publicly.

Prior to the 1976 Amendments, Supreme Court precedent had held that “Broadcasters perform. Viewers do not perform.” Slip Op. at 5 (quoting Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390, 398 (1968)); see also Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394, 408 (1974) (“The reception and rechanneling of [broadcast television signals] for simultaneous viewing is essentially a viewer function, irrespective of the distance between the broadcasting station and the ultimate viewer.”). The Court had held that cable access television providers fall on the viewer side of the line because they “receive programs that have been released to the public and carry them by private channels to additional viewers.” Slip Op. at 5 (quoting Fortnightly, 392 U.S., at 398).

The 1976 Amendments not only inserted the Transmit Clause in the Act. They also established a compulsory licensing scheme that required cable television providers to pay copyright owners for the retransmission of their content. Justice Breyer found in these amendments and in an accompanying House report (which stated that Fortnightly and Teleprompter had been “completely overturned”) a clear purpose to bring the conduct of cable companies under the Act. The text of the Act, Breyer wrote, does not clearly indicate when an entity “performs” or “transmits.” “But when read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo performs.” Slip Op. at 4.

Justice Breyer acknowledged that Aereo differs from the cable companies in existence at the time of the 1976 Amendments because it transmits only those programs that subscribers select, and only upon their selection. But the Court dismissed the difference as inconsequential. Technological machinations aside, Aereo “for all practical purposes [is still] a traditional cable system,” the Court wrote. Slip Op. at 10.

The majority found therefore that Aereo, not the viewer, performs. Having found that Aereo performs, it next considered whether it performs publicly. The Court found that Aereo’s transmissions to individual subscribers did not distinguish it from cable companies which are considered to perform publicly. “Behind-the-scenes” technological differences do not matter, the Court held. Slip Op. at 12. Television looks the same whether received by a “large multisubscriber antenna or one small dedicated antenna.” Id. What matters are commercial objectives, the Court held, and found that Aereo’s and the cable companies are the same.

The Court next addressed concerns, expressed by amici and others, that a decision against Aereo would hamper the development of innovative technologies, especially “cloud computing.” The Court assured that its decision applied neither to services that stream content to subscribers that the subscribers themselves own, nor to services that transmit content to less than a “substantial number of people outside of a family and its social circle.” Slip Op. at 17. Justice Breyer commented that entities concerned with the applicability of the Copyright Act to new technologies are always free to seek action from Congress, if desired. Slip Op. at 17.

While Justice Antonin Scalia, in dissent, agreed with the majority that Aereo’s service “ought not to be allowed,” Dissent at 12, he could not find a basis for doing so because all that was before the Court was the Networks’ claims of direct copyright infringement of their performance rights, not the Networks’ claims of contributory infringement (nor their claims regarding reproduction rights). Justice Scalia found that because Aereo’s conduct is not volitional, it “does not ‘perform’ at all.” Dissent at 1.

Justice Scalia, citing earlier Breyer opinions for support throughout his dissent, characterized the majority opinion as “guilt by resemblance”: “(1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts; (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs.” Dissent at 7. Justice Scalia found defects in the majority’s analysis at each turn. First, he criticized the majority for deriving Congressional intent from snippets of legislative history penned by a fraction of one chamber of the legislature. Second, he distinguished Aereo from the cable companies on the basis that it only transmits content that subscribers select, and only at the direction of its subscribers. This distinction is critical, Justice Scalia wrote, because it demonstrates the absence of volitional conduct by Aereo. Finally, Justice Scalia wrote, even if the purpose of the 1976 Amendments were to override the Court’s cable TV precedents, “what [the Amendments] were meant to do and how they did it are two different questions – and it is the latter that governs the case before us here.” Dissent at 9.

If a challenged activity complies with the letter of the law, Justice Scalia concluded, but not its perceived intent, the onus falls on Congress to act, if it so chooses. It is not the Court’s job, Justice Scalia wrote, to “identify and plug loopholes,” Dissent at 12, or “apply laws that have not yet been written.” Dissent at 13 (quoting Sony Corp. of America v. Universal City Studios, Inc., 464 U. S. 417, 456 (1984). This conclusion highlights the fundamental rift between the dissent and the majority. The dissent would permit technologies unforeseen by Congress until Congress expressly forbids them. The majority finds such technologies prohibited until Congress is persuaded to allow them.

 

 

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.

© Eversheds Sutherland (US) LLP | Attorney Advertising

Written by:

Eversheds Sutherland (US) LLP
Contact
more
less

Eversheds Sutherland (US) LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.