Introduction
Language in US Copyright Act
Interpreting the transmit clause
The technology of Aereo
FilmOn X and a split in the courts
Recent developments and outlook


Introduction

While in the United Kingdom, the law in relation to the live streaming of free-to-view television channels has been resolved in favour of free-to-view broadcasters, following the reference to the European Court of Justice and the High Court decision in TVCatchUp, the same issue is still very much alive in the United States.

Much like TVCatchUp, Aereo and FilmOn X are technology platforms that allow subscribers to stream broadcast network programming over the Internet to their computers and mobile devices. The networks believe that this technology infringes their exclusive right to publicly perform a work in which copyright subsists under Section 106(4) of the US Copyright Act, and that Aereo and FilmOn X should be required to pay the statutory retransmission fee under Section 111 of the act. Aereo and FilmOn X argue that their technology merely captures broadcast programming to which consumers are already entitled free of charge, and gives them access to it on internet-capable devices. This is broadly the same argument that TVCatchUp unsuccessfully presented in the United Kingdom.

The issue in the United States turns on the definition of 'public performance' and the interpretation of the 'transmit clause' in the US Copyright Act. As things stand, there is a split among district and circuit courts in the United States as to whether this sort of streaming is lawful.

Language in US Copyright Act

Public performance right
The Copyright Act(1) confers on copyright holders the exclusive right to public performance by providing that the owner of a copyright under this title has the exclusive right" in the case of… motion pictures and other audiovisual works, to perform the copyrighted work publicly".

The act defines to 'perform' as:

"to recite, render, play, dance, or act [a work], either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible".(2)

The same provision also states:

"To perform or display a work 'publicly' means (1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times."

The second clause, which is analogous to the EU 'communication to the public' right,(3) is commonly referred to as the 'transmit clause'. To 'transmit' a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent, and a " 'device', 'machine', or 'process' is one now known or later developed.

Compulsory licence regime
US Congress limited a copyright holder's exclusive rights under Section 106 by adding a compulsory licence scheme in Section 111 for the secondary transmission of broadcast television by cable companies. In 1998 US Congress codified a separate statutory licence for satellite carries under Section 119. Under Section 111(c):

"secondary transmissions to the public by a cable system of a performance or display of a work embodied in a primary transmission made by a broadcast station licensed by the Federal Communications Commission… shall be subject to statutory licensing."

Accordingly, all cable and satellite companies in the United States currently pay a licence fee to retransmit broadcast television over their system.

Interpreting the transmit clause

In the 2008 Second Circuit case Cartoon Network, LP v CSC Holdings, Inc ('Cablevision'), broadcasters issued proceedings against a cable company over its remote storage digital video recorder (RS-DVR) system, which allowed subscribers to record programmes onto Cablevision's hard drives and play them back later. The broadcasters argued that their copyright was infringed in the following ways:

  • brief storage of the work in the RS-DVR's data buffers;
  • storage of a copy of the works on the RS-DVR hard drive; and
  • transmission of the data from the Cablevision remote server to subscribers' RS-DVRs in response to a "playback request".

The appeals court held that:

  • the embodiments of the programmes in the buffers were not "fixed" and therefore did not qualify as a "copy";
  • it was Cablevision's subscribers, rather than Cablevision, who were responsible for storing the copy of the works on the RS-DVR; and
  • the playback function involved no "public performance" of the works because the RS-DVR system, as designed, only made transmissions to one subscriber using a copy made by that subscriber.

Each RS-DVR transmission was made using a unique copy of a work made by an individual subscriber that could be decoded exclusively by that subscriber's cable box. Thus, only the subscriber was capable of receiving any given transmission and the transmission was not made to the public.

Accordingly, under Cablevision, the capture, recording and retransmission of a broadcast signal is not a public performance as long as an individually recorded signal is accessible only by one subscriber. The Second Circuit position appears to be in direct contrast the UK position in TVCatchUp (albeit that Cablevision dealt with capturing the signal for subsequent on-demand viewing), in which the court held that where the recipients had access to the same work at the same time, it was held to be irrelevant that each user accessed the content individually.

The technology of Aereo

In 2012 Aereo began streaming broadcast television over the Internet; but instead of seeking a compulsory licence, it has sought to take advantage of the exception created by the Second Circuit in Cablevision. Aereo's system employs thousands of individual antennae and digital video recording technology to transmit broadcast programming over the Internet to its fee-paying subscribers. When a subscriber elects to view a programme, an antenna is assigned exclusively to that user to capture the signal as the programme is broadcast over the air, convert it into digital format and then make it available to the subscriber as a live stream over the Internet or to be saved for viewing later. If the subscriber chooses to watch it live, a copy is stored in a user-specific directory, which allows the subscriber to pause and rewind the programme. If the subscriber elects to record the programme, three copies – each recorded at a different quality rate – are stored on Aereo's hard drive.

Shortly after Aereo's launch in New York, ABC brought a lawsuit against Aereo, alleging that the service infringed its exclusive right to perform its content publicly by retransmitting its works without paying the statutory licensing fee. ABC sought a preliminary injunction to shut Aereo down. Aereo argued that:

  • there was nothing to prevent it from capturing free network broadcast signals over the air; and
  • by creating individual, unique recordings of those broadcasts for personal use, it was, as in Cablevision, transmitting private rather than public performances.

In July 2012 the Southern District of New York denied the preliminary injunction against Aereo, finding that ABC was unlikely to succeed on the merits given the Cablevision precedent. ABC appealed. The Second Circuit affirmed the district court's analysis on the basis that the case was analogous to Cablevision in two key respects:

  • Like Cablevision's RS-DVR, Aereo's system created unique copies of every programme that an Aereo subscriber wished to watch or record; and
  • Like Cablevision's RS-DVR, Aereo's transmission of the live or recorded programme to a particular subscriber was generated from a unique copy (and no other subscriber could view the transmission created by that copy).

FilmOn X and a split in the courts

At the same time, on the West Coast, Alki David launched a site called BarryDriller, now rebranded as FilmOn X. FilmOn X employs the same retransmission architecture as Aereo. The broadcast networks issued proceedings against FilmOn X for copyright infringement and sought a preliminary injunction.

Not constrained by the decision in Cablevision, a district court in the Central District of California rejected Cablevision's analysis as resting on a misinterpretation of the 1976 Copyright Act and granted a preliminary injunction against FilmOn X. The court reasoned that:

"Cablevision erroneously focused on whether an individual copy of the copyrighted work was made for each individual user, and thus whether 'the transmission itself is public' as opposed to whether the copyrighted work was being transmitted to the public."

The California court's thinking on this appears to be aligned with the conclusion reached by the European Court of Justice in TVCatchUp.

The California court had the power to grant a nationwide injunction, but decided to limit its decision to regions within the jurisdiction of the Ninth Circuit, as its decision conflicted with precedent in the Second Circuit and the issue had not been settled in other circuits.

The limited injunction allowed FilmOn X to expand into other regions, including Washington DC. However, the broadcast networks initiated another set of proceedings against FilmOn X in a District of Columbia (DC) district court. The DC court agreed with the California court's reasoning, and on September 5 2013, granted a preliminary injunction against FilmOn X in all regions of the United States except the Second Circuit.

The DC court held that by making the broadcast networks' performance available to any member of the public who accessed the FilmOn X service, FilmOn X "transmit[ed]…a performance…of the work…to the public, by means of any device or process", and therefore performed the copyrighted work publicly as defined by the transmit clause. The table below summarises the litigation history described above:

Court Parties Date Outcome
Second Circuit Court of Appeals(4) Cartoon Network, LP v CSC Holdings, Inc (Cablevision) August 4 2008 Held that Cablevision's retransmission of broadcast television through its RS-DVR system did not violate the plaintiff's public performance right under the Copyright Act.
US District Court for the Southern District of New York (within the Second Circuit) American Broadcasting Companies, Inc v Aereo, Inc (Aereo 1) July 11 2012 Held that, under Cablevision, Aereo's retransmitions were non-public performances that did not violate the Copyright Act. Denied preliminary injunctive relief. Decision appealed to the Second Circuit Court of Appeals.
US District Court for the Central District of California (within the Ninth Circuit)(5) Fox Television Systems, Inc v BarryDriller Content Systems, PLC (FilmOn X) December 27 2012 Held that FilmOn X violated the plaintiff's copyright and granted a preliminary injunction against FilmOn X, but limited the injunction to the regions within the Ninth Circuit. Decision appealed to the Ninth Circuit Court of Appeals.
Second Circuit Court of Appeals WNET, Thirteen v Aereo, Inc (Aereo 2) April 1 2013 Affirmed and adopted the district court's analysis in Aereo 1 (preliminary injunction denied).
Ninth Circuit Court of Appeals Fox Television Stations, Inc v FilmOn X LLC August 27 2013 Oral arguments of appeal were heard. Decision is forthcoming.
US District Court for the District of Columbia Fox Television Stations, Inc v Film On X LLC September 5 2013 Held that the Copyright Act forbids FilmOn X from retransmitting copyrighted programmes over the Internet and granted preliminary injunction nationwide, except in the Second Circuit.
US District Court for the District of Massachusetts (within the First Circuit)(6) Hearst Stations, Inc d/b/a WCVB-TV v Aereo, Inc October 8 2013 Held that the analysis in Aereo 1 was a more plausible interpretation of 'public performance' under the Copyright Act and denied the plaintiff's motion for preliminary injunction.

Recent developments and outlook

While the broadcast networks succeeded in their proceedings against FilmOn X, on October 10 2013 a US district court in Massachusetts refused to grant a preliminary injunction against Aereo in Boston. The court's decision is significant because it was the first lawsuit against Aereo outside the Second Circuit and the court elected to follow the Second Circuit's reasoning in Cablevision. Buoyed by its success in the First and Second Circuits, Aereo is expanding rapidly to other cities – including Chicago, Los Angeles, Houston and Denver and has announced an Android app that will allow subscribers in those cities to view broadcast television on their mobile devices. In addition, some cable and satellite companies have responded by threatening to use the decision in Aereo to re-engineer their own delivery systems to retransmit broadcast signals without paying a licensing fee.

Immediately following the decision in Massachusetts, Disney, CBS, NBCUniversal, WNET, Fox and Univision filed a petition for writ of certiorari asking the Supreme Court to review the Second Circuit decision. The likelihood of the Supreme Court granting the petition is uncertain, as there is currently no split among circuit courts. However, the FilmOn X decision in the Central District of California was appealed to the Ninth Circuit, where a decision is expected in the next few months. If the Ninth Circuit upholds the injunction against FilmOn X, the issue is likely to head to the Supreme Court.

For further information on this topic please contact Michael J Hartman at Reed Smith LLP's Century City office by telephone (+1 310 734 5200), fax (+1 310 734 5299), or email (mhartman@reedsmith.com).Alternatively, contact Nick Swimer at Reed Smith's London office by telephone (+44 203 116 3000), fax (+44 203 116 3999) or email (nswimer@reedsmith.com). The Reed Smith website can be accessed at www.reedsmith.com.

Endnotes

(1) 17 USC § 106

(2) 17 USC § 101

(3) The analogous EU 'communication to the public' right is found in Article 3(1) of EU Directive 2001/29/EC, which provides that "member states shall provide authors with the exclusive right to authorise or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access them from a place and at a time individually chosen by them".

(4) The Second Circuit consists of the Second Circuit Court of Appeals and the district courts in Connecticut, New York and Vermont.

(5) The Ninth Circuit consists of the Ninth Circuit Court of Appeals and district courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington.

(6) The First Circuit consists of the First Circuit Court of Appeals and the district courts in Maine, Massachusetts, New Hampshire, and Rhode Island.