On April 22, 2014, the United States Supreme Court will hear oral argument in American Broadcasting Companies, Inc. v. Aereo, Inc. The Court granted certiorari on the question of “[w]hether a company ‘publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.” Aereo’s service allows users to record and access over-the-air broadcast television programs from an Internet-enabled device. Aereo does  not pay broadcasters for the content that it streams to users. Petitioners, which include all major network broadcasters, claim that this infringes their rights under 17 U.S.C. § 106(4) to be compensated for the “public performance” of their copyrighted works. Aereo argues that, because of the exact mechanics of its service, there is no “public” performance and, instead, there are numerous private performances of unique, lawfully made copies for which the Petitioners have no right to compensation under the Copyright Act.

  1. The Cablevision Decision

Aereo’s position, adopted by the Second Circuit and subject to Petitioners’ appeal, is that its service does not infringe Petitioners’ public performance rights because it exactly follows the Second Circuit’s holding in Cartoon Network LLP, et al. v. CSC, Holdings, Inc., et al. (“Cablevision”), 536 F.3d 121 (2008),   cert.   denied,   557   U.S.   946   (2009). Cablevision is an operator of cable television systems that, in 2006, began to offer subscribers “Remote Storage Digital Video Recorder systems” (“RS-DVRs”) that have the functionality of traditional set-top DVRs (such as TiVo) but store the recorded programming remotely on Cablevision’s centrally located servers rather than on a physical DVR attached to the user’s television. Cablevision’s RS-DVR service thus allows customers who do not own DVRs to “record cable programming on central hard drives housed and maintained by Cablevision at a ‘remote’ location.” Id. at 124. Each time a user wants to record a program, Cablevision creates a unique copy for that user, and when the user requests to view the recorded programming, her unique copy streams to that user alone.

At issue in Cablevision and now Aereo is the Copyright Act’s definition of a “public performance” which appears in 17 U.S.C. § 101:

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.

In particular, the dispute focused on the second paragraph, which is known as the “transmit clause.” The Second Circuit found that the RS-DVR system “d[id] not involve the transmission of a performance ‘to the public’” because Cablevision’s system was designed such that any transmission emanating from Cablevision was sent to only one user. The Second Circuit held that “it is evident that the transmit clause directs us to examine who precisely is ‘capable of receiving’ a particular transmission of a performance.” Cablevision, 536 F.3d at 135. Because only one user could receive each individual transmission on Cablevision’s service, “members of the public” were not “capable of receiving the performance” and therefore there could be no public performance. Id. The U.S. Supreme Court denied the television networks’ subsequent petition for certiorari.

  1. The Aereo Service

Aereo’s service, which was established by former television industry mogul Barry Diller, is modeled closely on the technology found not to implicate public performance rights in Cablevision but, instead of allowing cable subscribers to record cable television programming, Aereo allows its users to record over-the-air television broadcasts. To accomplish this, Aereo maintains thousands of tiny antennae on a series of circuit boards at remote locations. An Aereo subscriber wishing to watch broadcast television from his or her Internet-enabled device either selects “Watch” to watch a program in near-real time (there is a several second delay to allow recording of a unique copy and buffering) or “Record” to save a copy of the program for later viewing. Aereo then assigns one of the antennae to that user. The antenna then tunes in to the over-the- air broadcast of the requested station. An individual copy of the broadcast received by the antenna is recorded by a DVR-like device that either stores a copy for later viewing or streams the recorded program to the subscriber while the recording is in progress. Similar to Cablevision, the programming streamed to each user originates from a recorded copy unique to that user.

  1. Procedural History

In March 2012, Petitioners brought suit in the Southern District of New York to enjoin Aereo from continuing its service. The District Court denied the injunction and found that Aereo’s service was squarely within the Cablevision reading of the transmit clause exempting one-to-one streams from public performance liability. The Second Circuit upheld the District Court’s finding and held that “just as in Cablevision, the potential audience of each Aereo transmission is the single user who requested that a program be recorded.” WNET, et al. v. Aereo, Inc., 712 F.3d 676, 690 (2nd Cir. 2013). Petitioners have also brought suits against Aereo in several other jurisdictions, with mixed results. See Hearst Stations Inc. v. Aereo, Inc., Civ. A. No. 13- 11649, slip op. (D. Mass. Oct. 8, 2013) (finding the Second Circuit’s reasoning persuasive); Community Television of Utah, LLC v. Aereo, Inc., 13-CV- 00910 (DAK) (C.D. Utah Feb. 19, 2014) (rejecting the Second Circuit’s Cablevision reasoning). Petitioners filed for a writ of certiorari, which was granted on January 10, 2014. Petitioners submitted their brief to the Court on February 24, 2014, and amici curiae briefs supporting the broadcasters were submitted on March 3, 2014, by numerous entities including the United States government; American Society of Composers, Authors and Publishers (ASCAP); American Intellectual Property Law Association; National Association of Broadcasters; and several others. Briefs supporting neither party were submitted on March 3, 2014, by BSA/The Software Alliance and others. Respondent’s brief should be filed on March 26, 2014, and amici curiae briefs in support of Aereo are due by April 2, 2014. Oral argument is scheduled for April 22, 2014.

  1. The Networks’ Argument

Petitioners claim that Aereo’s system of thousands of individualized antennae is a Rube Goldberg workaround designed to circumvent the Copyright Act’s intended protections for copyright holders. Their brief opens with a history of the 1976 Copyright Act, which Petitioners argue included an updated definition of “public performance” precisely to address “retransmissions” of the sort they claim are engaged in by Aereo. Petitioners point to two early cases—Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968) and Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394 (1974)—in which the Supreme Court found no public performance where a service used an antenna to capture over-the-air broadcasts and retransmit those broadcasts to more remote locations that otherwise would not have been able to receive the original broadcast. Petitioners claim that some of the 1976 Copyright Act amendments were enacted in response to Fortnightly and Teleprompter and thus were intended to extend public performance liability to services like Aereo. According to Petitioners, Congress “enacted [in the 1976 Copyright Act] a series of definitions designed not only to ensure that the public-performance right includes retransmitting broadcast television signals to the public, but also to reach all those who would build a business model out of transmitting performances.” Pet. Br. at 5.

Petitioners cite this legislative history to challenge the Second Circuit’s interpretation of the transmit clause, claiming that the Cablevision reading of the transmit clause is incorrect. Petitioners assert that “[t[here is no dispute that Aereo captures over-the- air television broadcasts for retransmission to its paying subscribers. There is no dispute that the broadcasts Aereo captures for retransmission are performances of copyrighted works. There is no dispute that Aereo offers retransmissions of these performances to the public.” Pet. Br. at 23.

In response to the argument that each transmission is disaggregated and therefore not made to the public, Petitioners claim that Congress intended that multiple transmissions of the same performance are nonetheless a public performance because “Congress expressly contemplated the use of multiple transmissions when it provided that an alleged infringer is transmitting a performance to the public regardless of whether members of the public receive the performance “at the same time or at different times.” Pet. Br. at 24.

Finally, Petitioners argue that allowing Aereo’s mechanistic approach to disaggregating retransmissions into thousands of  one-to-one streams would imperil the Copyright Act’s intended protection for creative works. The broadcasters underscore that Aereo, unlike Cablevision, which is a licensed cable content provider with subscribers who pay for access to the programming licensed by Cablevision, does not pay for the content that it is “retransmitting” and yet receives payments from its subscribers.

  1. Respondent’s Argument

Although Aereo’s Supreme Court brief was not available at the time this article was written, its December 12, 2013 brief, submitted in support of the petition for a writ of certiorari, outlines what will likely be Aereo’s main arguments. Aereo petitioned the Court to certify the question of “[w]hether Aereo ‘performs publicly,’ under Sections 101 and 106 of the Copyright Act, by supplying the remote equipment that allows a consumer to tune an individual, remotely-located antenna to a publicly accessible, over-the-air broadcast television signal, use a remote digital video recorder to make a personal recording from that signal, and then watch that recording.” Resp. Br. on Petition for Writ of Certiorari at (i).

As evidenced from this framing of the question and its prior arguments to the Second Circuit and Southern District of New York, Aereo will likely argue that according to the plain language of the transmit clause, the mechanics of its service prevent Aereo from publicly performing the works that it streams to users; rather, these works are streamed to users in a manner in which only one individual— and not the public—is “capable of receiving the performance.”

It is perhaps telling that the Court certified the question of “[w]hether a company ‘publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.” Aereo will have to convince the Court that although it may retransmit a program to thousands of subscribers, these individual transmissions should not be aggregated for purposes of analysis under the transmit clause. Aereo maintains that its conduct is not analogous to the re-broadcasters in Fortnightly and Teleprompter, who retransmitted programming to many people at once and hence could be seen to be publicly performing the rebroadcast works.

Rather, as the Second Circuit held, Aereo likely will argue that “Aereo’s system could accurately be analogized   to   an   upstream   combination   of   a standard TV antenna, a DVR, and a Slingbox.” WNET, et al. v. Aereo, Inc., 712 F.3d at 691. In its brief on petition for certiorari, Aereo reminded the Court that, for all Petitioners’ protestations about Aereo’s unlicensed “retransmissions,” “[t]he essential bargain that petitioners made to obtain, for free, public spectrum worth billions of dollars was that, once they have broadcast their programming, consumers have a right to receive and to view that programming using an antenna and to copy that programming for their personal use.” Resp. Br. on Petition for Writ of Certiorari at 1. Aereo argued that it is entirely legal for a user to capture free over-the-air broadcasts on a TV antenna, record this content with a DVR and use a device such as a Slingbox to route the program to the user’s Internet- enabled device and that all it has done is to centralize this process: each stream is still requested, created, and sent to only one user.

  1. Aereo Outside the Second Circuit

As noted above, Petitioners have had mixed success outside the Second Circuit. A district court in Boston, relying heavily on the Second Circuit’s decision in Aereo, denied an injunction that would have prevented Aereo from operating in Boston. Hearst Stations Inc. v. Aereo, Inc., Civ. A. No. 13- 11649, slip op. (D. Mass. Oct. 8, 2013). More recently, however, a district court in Utah granted an injunction to prevent Aereo from operating its service in Utah. Community Television of Utah, LLC v. Aereo, Inc., 13-CV-00910 (DAK) (C.D. Utah Feb. 19, 2014).

There has also been litigation in other circuits involving an Aereo-like service currently called “FilmOn X” and previously known as “Aereokiller” and “Barry Driller.” The Central District of California and the D.C. District Court refused to follow the Second Circuit’s approach in Cablevision and found those services to be engaged in public performances of copyrighted content. See Fox Television Stations, Inc. v. BarryDriller Content Sys. PLC, 915 F. Supp. 2d 1138 (C.D. Cal. 2012), appeal docketed sub nom., Fox Television Stations, Inc. v. Aereokiller, LLC, Nos. 13-55156, 13-55157 (9th Cir. Jan. 25, 2013); Fox Television Stations, Inc. v. FilmOn X LLC, No. CV 13-758, 2013 WL 4763414 (D.D.C. Sept. 5, 2013), appeal docketed, No. 13-7146 (D.C. Cir. Sept. 17, 2013).

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The Aereo case has been and will be closely watched by many in the media industry. Depending on the Court’s reading of the transmit clause, there are potential implications not only for services like Aereo but also for cloud locker services, other services  engaged  in  content  downloads—deemed not to be public performances by the Second Circuit in United States v. American Society of Composers, Authors & Publishers, 627 F .3d 64 (2d Cir. 2010), cert. denied, 132 S. Ct. 366 (2011), and by the Southern District of New York in In re Application of   Cellco   Partnership,   663   F.   Supp.   2d   363 (S.D.N.Y. 2009)—or on-demand streaming, and even for the RS-DVR service at issue in Cablevision. On the flip side, CBS has recently threatened to discontinue over-the-air broadcasts, and other broadcasters might follow suit, if the Aereo service is found to be legitimate.

Katy Merk