On June 25, 2014, the Supreme Court rendered its opinion in the Aereocase concerning the Copyright Act's exclusive right to "perform [a] copyrighted work publicly." The Court rejected Aereo's arguments (1) that it did not "perform" when it streamed broadcast television to individual users, and (2) that it was not a "public" performance if Aereo provisioned a unique antenna and technical pathway to each user. Instead, the Court found that Congress intended to regulate the resulting activity, not the technical means to achieving that activity, and that Aereo had violated the public-performance right.

Aereo's Technology:

Aereo allows users to rent an antenna at a remote location and stream live television to computers and portable devices for a monthly fee. Subscribers may also record and play back broadcasts using simple digital video recorder ("DVR") features. The unique aspect of this technology is that each subscriber rents his or her own antenna, and the signal is taken from free over-the-air broadcasting, is individually digitized and is streamed to that user. For Aereo, each antenna is roughly the size of about a dime and is located on banks of hundreds or thousands.

Issues Before the Court:

The Copyright Act of 1976 gives a copyright owner the exclusive right to "perform the copyrighted work publicly." That right is defined as 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." 17 U.S.C. § 101.

In light of this, the Court addressed two questions dealing with Aereo's service:

  1. Does Aereo's streaming system "perform" a work, and
  2. If so, does Aereo do so "publicly"?

The Court's Decision:

In a 6-3 decision, the Court found that Aereo does "perform" the work, and does so "publicly."

The Court first found that Aereo "performed" the broadcasts. Rejecting Aereo's argument that Aereo was an equipment provider that merely "emulate[s] the operation of a home antenna" and DVR, the Court found that Aereo was indistinguishable from the cable television providers who similarly served content to subscribers. Prior to 1976, these providers were found not to "perform" because a user controlled what it received from the transmission. However, in 1976, Congress amended the Copyright Act to reject this distinction, and defined "perform" to mean merely "to show its images in any sequence or to make the sounds accompanying it audible," and to include retransmission.

The Court next found that Aereo performed "publicly." Despite that each user was provided exclusive stream from their own antenna in Aereo's antenna banks, the Court found that this technical distinction was not a legal distinction. Congress, the Court noted, was not concerned with the behind-the-scenes way in which broadcasts were performed publicly, but rather the result born from the commercial objective. Congress intended to cover this and the Transmit Clause therefore covered performance through "multiple, discrete transmissions," the Court found. Because the underlying copyrighted work is the same, the mass transmission of individual streams to unrelated people of that work is still a public performance, the Court found.

The Court finally suggested its decision might be limited. The Court specifically noted that it did not address "cloud computing, [remote storage] DVRs, and other novel issues."

Implications:

At least initially, the likely outcome of the Aereo opinion will be the shutdown or drastic retooling of defendant Aereo's service, and those services substantially like it. This is unlikely to affect most internet streaming services.

However, the largest implication for streaming services is that they in general cannot rely on individualized streams as a way to avoid liability under the Transmit Clause. Although the Aereomajority expressly stated it was not commenting on cloud storage, it provided no rationale for this difference. This raises important questions, chiefly: Will cloud services that stream other content that a user has stored in the cloud, but does not own the rights to, violate the Transmit Clause?

Indeed, Justice Scalia's dissent states, "The Court vows that its ruling will not affect cloud-storage providers ..., but it cannot deliver on that promise" and that "one of the first questions the lower courts will face is whether Aereo's 'record' function, which allows subscribers to save a program while it is airing and watch it later" infringes the public-performance right.

Ultimately, most services that do not substantially duplicate Aereo's business model will likely not be subject to follow-on suits. However, until lower courts further interpret Aereo, the decision raises uncertainty for cloud storage and streaming services.