In March 2012, a number of networks including Fox Television Stations, Inc., Univision Television Group and American Broadcasting Companies Inc., sued Aereo Inc. (Aereo), a company that provides access to live television broadcasts for display on computers and mobile devices, for copyright infringement in the US District Court for the Southern District of New York. The networks also filed a motion for preliminary injunction asserting that Aereo was directly liable for copyright infringement by publicly performing Plaintiffs’ copyrighted works. The court recently dismissed the networks’ motion on the ground that Aereo’s services fell within the scope of the Copyright Act.

As previously discussed by Arent Fox, Aereo is a subscription service that provides access to broadcast television over the Internet to users’ computers and mobile devices. Using a small antenna that captures live television signals, users can watch live television and record content on a digital video recorder for playback on various devices. The networks’ motion for preliminary injunction focused exclusively on the ability of Aereo’s users to view live television.

The court’s holding centered on whether the Second Circuit’s decision in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (Cablevision) was applicable to the facts of this case.In Cablevision, the Second Circuit held that a remote storage DVR system did not infringe the public performance right under the Copyright Act because each DVR playback involved a single copy of a work sent to a single subscriber, and was therefore not made to the public. The networks’ attempted to distinguish Cablevision based on apparent differences between the systems in each case, but the court favored Aereo’s description of its systems. Because Aereo’s system assigns an individual antenna for each subscriber and then creates, saves and transmits a unique copy of a television program solely to the subscriber that submitted a request for it, the district court found Aereo’s system “materially identical” to system in Cablevision. Accordingly, although Aereo’s system allows for the transmission of the same program to multiple subscribers, no violation of the public performance right could occur, and the network’s motion for preliminary injunction was denied. Unlike Cablevision, however, Aereo did not obtain retransmission licensing agreements with the networks. The court noted, however, that its holding was limited and that there could be violations of the public performance right in “cases in which copies are purely facilitory, such as true buffer copies or copies that serve no function whatsoever other than to pass along a clearly identifiable ‘master’ copy from which the transmission is made.” Moreover, the court rejected Aereo’s broad arguments that free access to and reception of broadcast television by any medium is necessarily in the public interest. The networks are expected to appeal the decision, and the remaining claims in the case have not been addressed.

The court’s decision on this motion highlights the legal and business issues created by the fast pace of technology and uncertainty in the law. Although Cablevision allows for the retransmission of programming under certain circumstances, courts should obtain a thorough understanding of the technology before analogizing Cablevision to justify actions under the Copyright Act. Failure to do so may result in loopholes that prevent content owners from controlling the transmission of their content and mitigating losses in advertising revenue. Moreover, as new technology develops, content owners will have to anticipate changes to compete in an ever-changing marketplace.