CASE SUMMARY

FACTS

Defendant Aereo, Inc. (“Aereo”) enables its subscribers to watch broadcast television programs over the Internet for a monthly fee. Aereo uses thousands of dime-sized antennas to access free over-the-air broadcasting and, at the request of the user, streams those videos to subscribers’ devices or saves them for later viewing. Several broadcasters (“the Broadcasters”) filed copyright-infringement actions against Aereo, alleging that Aereo violated the Broadcasters’ rights to control public performances of their copyrighted works under the 1976 Copyright Act.

The district court denied the Broadcasters’ motions for a preliminary injunction, holding that Aereo’s system was not materially distinguishable from the system in the Cablevision case, where the Second Circuit held that a cable provider’s remote digital video recording services (“remote DVR”) did not infringe the copyright holder’s public-performance right. The Broadcasters appealed the denial of the preliminary injunction motion.

ANALYSIS

The Second Circuit affirmed the district court’s decision, holding that Aereo’s actions were not public performances of the Broadcasters’ copyrighted works. The 1976 Copyright Act reserves to copyright owners several exclusive rights, including the right to perform their copyrighted work publicly.

According to the 1976 Copyright Act, 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 Circuit held that Aereo’s transmissions of unique copies of broadcast television programs created at its users’ requests were not “public performances” of the Broadcasters’ copyrighted works under Cablevision. In Cablevision, a cable provider allowed its subscribers to access and save a stream of programming to a “remote DVR” or hard drive. If two subscribers wanted to access the same video, Cablevision’s system would create two unique copies of the program. Cablevision would then stream the program to the subscriber’s television system when the subscriber wanted to view it. The Second Circuit held that the copying and streaming of programming to individual subscribers did not violate the copyright owner’s “public performance” right. In the present case, the court compared Aereo’s system to the Cablevision system and found that, like Cablevision, Aereo required its subscribers to request the recording and streamed the unique recorded copy only to that subscriber. “Just as in Cablevision, the potential audience of each Aereo transmission [was] the single user who requested that a program be recorded.”

The Broadcasters attempted to distinguish the Cablevision system from the Aereo system, arguing that Cablevision, as a cable provider, had a license to transmit programming when it aired the first time, whereas Aereo did not. The court disagreed, holding that neither Cablevision’s nor Aereo’s private performances required a license, because private performances do not violate a copyright owner’s “public performance” right.

The Broadcasters also argued that all of Aereo’s discrete transmissions should “be aggregated and viewed collectively as constituting a public performance” because they were “discrete transmissions of the same performance or work made by the same entity.” The court held, however, that the relevant inquiry under the 1976 Copyright Act was the “potential audience of a particular transmission, not the potential audience for the underlying work or the particular performance of that work being transmitted.”

The Broadcasters also argued that the Cablevision system was more akin to a traditional VCR, while the Aereo system acted more like a streaming broadcast over the Internet, contending that the Aereo system was “no different from the temporary . . . copies created by internet streaming, a process that [the Second Circuit] has assumed produces public performances.” The court disagreed, finding that unlike live streaming, an Aereo subscriber could pause the program, rewind it, or choose to watch it later. The court found that the level of user control separated the Aereo system from the incidental copies made during Internet streaming. In addition, the court held that, unlike Internet streaming, the “potential audience of each of Aereo’s transmissions was the single user to whom each antenna was assigned,” finding it “beyond dispute that the transmission of a broadcast TV program received by an individual’s rooftop antenna to the TV in his living room is private, because only that individual can receive the transmission from that antenna, ensuring that the potential audience of that transmission is only one person.” Aereo’s use of individual remote antennas, the court held, was similar to the use of a personal antenna. Thus, the court concluded, Aereo system’s entire chain of transmission “has a potential audience of only one Aereo customer.”

The court also denied the Broadcasters’ argument that Aereo designed its system of individual antennas around the Cablevision holding and that its multiple antenna system served no other purpose than to avoid copyright liability. The court held that, while this may be true, it did not change the analysis of whether Aereo violated the Broadcasters’ “public performance” rights. The court noted that Aereo is not alone in designing its technology around Cablevision, as many legitimate cloud-computing services, such as digital-music lockers, appear to have done the same. The court stated that while “[p]erhaps the application of the [Copyright Act] should focus less on the technical details of a particular system and more on its functionality,” technical architecture matters.

Finally, the court analyzed the legislative history of the 1976 Copyright Act and held that, despite the Broadcasters’ interpretation, Congress specifically exempted private transmissions from copyright liability. “[A]s much as Aereo’s service may resemble a cable system, it also generates transmissions that closely resemble private transmissions” from household antennas. The court concluded that it could not “disregard the express language Congress selected” when writing the 1976 Copyright Act.

Finally, the court held that the district court did not abuse its discretion by denying the Broadcasters’ motion for a preliminary injunction. Judge Chin dissented, arguing that the majority put “form over substance,” calling Aereo’s system a “sham,” and arguing that there was “no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna” other than to “take advantage of a perceived loophole.”

CONCLUSION

This case sets up a potential showdown between the Second Circuit’s decision and a similar case on appeal to the Ninth Circuit. In Fox Television Stations Inc. v. BarryDriller Content Systems PLC, 2012 WL 6784498 (C.D. Cal. Dec. 27, 2012), the U.S. District Court for the Central District of California held that BarryDriller, a competitor to Aereo using the same technology, infringed on broadcasters’ “public performance” rights.