WNET v. Aereo, Inc. 712 F.3d 676 (2d Cir. 2013)

http://docs.justia.com/cases/federal/appellate-courts/ca2/12-2786/12-2786-2013-04-01.pdf

In WNET v. Aereo, Inc., the Second Circuit affirmed the district court’s denial of a preliminary injunction motion brought by plaintiffs, a group of network television broadcasters. Plaintiffs claimed that the Aereo service, which allows subscribers to watch broadcast network television programs over the internet for a monthly fee, infringed their exclusive right to publicly perform their works. The Second Circuit, relying on its decision clearing use of a remote DVR system in Cartoon Network LP, LLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) ("Cablevision"), determined that the transmissions through the Aereo system likewise did not constitute publicly performing the works and thus were not infringing under the Copyright Act. Judge Denny Chin dissented. On July 16, 2013, Judge Chin also dissented from the denial of a request for rehearing en banc, arguing there that Cablevision was wrongly decided and should not be extended to the Aereo service.

In Cablevision, content providers argued that Cablevision needed additional licenses to transmit copies of programming from its remote DVR system to its subscribers because the DVR system was transmitting copyrighted content to the public. The Second Circuit held, however, that "[b]ecause each RS-DVR playback transmission is made to a single subscriber using a single unique copy produced by that subscriber . . . such transmissions are not performances `to the public.’" Cablevision, 536 F.3d at 139.

The majority relied on a similar interpretation of the Copyright Act’s Transmit Clause, defining performing a work "publicly" when "a performance or display of the work" is "transmit[ted] or otherwise communicate[d] to … the public, by means of any device or process", to clear the Aereo system. Because the potential audience of each Aereo transmission, like the Cablevision transmissions, is only one subscriber, the transmissions are not public performances. When an Aereo customer elects to watch or record a program using either the "Watch" or "Record" features, Aereo's system creates a unique copy of that program on a portion of a hard drive assigned only to that Aereo user. And when an Aereo user chooses to watch the recorded program, whether (nearly) live or days after the program has aired, the transmission sent by Aereo and received by that user is generated from that unique copy. No other Aereo user can receive a transmission from that copy. Thus, just as in Cablevision, the transmissions are not infringing public performances because the potential audience of each Aereo transmission is the single user who requested that a program be recorded in the first place.

Judge Chin argued that Aereo's "technology platform" is a sham, "a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law." The Aereo system employs thousands of individual dime-sized antennas to capture the broadcast transmissions. Judge Chin found it significant that "there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna." After capturing the broadcast signal, Aereo makes a copy of the selected program for each viewer, whether the user chooses to "Watch" now or "Record" for later. Judge Chin dismissed Aereo’s argument that these are "private" performances because Aereo uses individual antennas and copies, arguing that Aereo’s transmissions "are very much public performances." Judge Chin noted Congress’ use of expansive language to protect against unforeseen methods of copying copyrighted works in the Copyright Act. See 17 U.S.C. § 101 (defining "[c]opies" as "material objects . . . in which a work is fixed by any method now known or later developed"). Judge Chin argued that it is inconceivable that Congress would use these broad terms to protect against future methods of both copying and transmitting, but also intend to create a loophole by which transmitters can avoid liability by first copying works and then transmitting the copies (rather than originals) to individual members of the public. Such a system, in Judge Chin’s view, is still just a "device or process" by which the transmission is made to the public. Notably, Judge Chin wrote the 2007 district court opinion that was reversed by the Second Circuit in Cablevision.

Judge Chin also argued that Cablevision primarily reasoned that the RS-DVR was no different than a set-top DVR, and that Cablevision should not have additional liability for transmitting the RS-DVR copies to its subscribers when it already paid licensing fees to retransmit the material live. Judge Chin noted that the Cablevision panel never considered how its rationale might apply to a device like Aereo's, which uses individual antennas and unique copies as a means to avoid paying licensing fees altogether. In the majority’s view, this argument fails because the question is whether Aereo's transmissions are public performances, not whether they are licensed. If the transmissions are not public performances, as the majority held, then Aereo needs no license.

Stay tuned as the case is not over. The decisions to date relate only to the plaintiffs’ request for preliminary injunctive relief. The case is now back in the district court for discovery and further proceedings.