In Narrow Decision, Court Holds That Aereo Violates TV Broadcasters’ Exclusive Public Performance Rights
The U.S. Supreme Court has effectively shuttered online broadcaster Aereo, finding that its novel service of transmitting broadcast television to subscribers’ digital devices violates federal copyright law. In American Broadcasting Companies v. Aereo, Inc.,1 the Court overturned the United States Court of Appeals for the Second Circuit and held that Aereo performs television broadcasters’ works publicly within the meaning of the 1976 Copyright Act’s Transmit Clause. The decision appears to foreclose Aereo’s business model and to prohibit the company from serving as a low-priced alternative to cable TV.
The 1976 Copyright Act (17 U.S.C. § 106(4)) provides copyright owners with the exclusive right to perform a copyrighted work publicly. The Act’s Transmit Clause (17 U.S.C. § 101) states that, to perform or display a work “publicly,” means “to transmit or otherwise communicate a performance or display of the work . . . 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.”
Aereo, launched in 2012, is an online service that charges subscribers a monthly fee to watch and record broadcast television on their computers and other devices. The company rents to each subscriber his own miniature television antenna that captures a subscriber-selected television broadcast from the airwaves, makes an individual copy of the broadcast on a remote hard drive, and then streams that content to the subscriber’s digital devices. Through Aereo’s service, subscribers gain access to major network channels and local content delivered into the airwaves in their coverage areas; they do not get access to cable programming. Aereo operates without a license from copyright holders to record or transmit their programs.
Alleging copyright infringement, plaintiff television broadcasters, including ABC, CBS, NBC, and Fox, filed suit against Aereo in federal district court.2 Among other copyright violations, the broadcasters alleged that Aereo publicly performed their copyrighted works in violation of their exclusive performance rights under the 1976 Copyright Act. The plaintiffs moved for a preliminary injunction to bar Aereo from transmitting television programs to its subscribers while the programs were still being broadcast.
The United States District Court for the Southern District of New York denied the plaintiffs’ preliminary injunction motion. The United States Court of Appeals for the Second Circuit affirmed,3 and the Supreme Court granted review.
THE SUPREME COURT’S DECISION
In a 6-3 decision written by Justice Breyer, the Supreme Court reversed the Second Circuit and held that Aereo does perform the television broadcasters’ works publicly. In so doing, the Court observed that Aereo is equivalent to a cable TV company that retransmits broadcast signals, and that Congress intended to bring cable TV service within the scope of copyright with the 1976 amendments to the Copyright Act. Insofar as there are differences between a cable company and Aereo, the Court found, those differences concern “not the nature of the service that Aereo provides so much as the technological manner in which it provides the service.”4 The Court adjudged that those differences were not adequate to take Aereo’s activities outside the scope of the Act.
First, the Court found that Aereo “performs” the television broadcasters’ copyrighted works; it does not merely provide equipment that empowers subscribers to do so. Aereo sells a service that allows subscribers to watch copyrighted television programs, essentially as they are being broadcast. The Court noted that “in other cases involving different kinds of service or technology providers, a user’s involvement in the operation of the provider’s equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act.”5 But given the substantial similarities between Aereo and the cable companies Congress sought to address with the 1976 Act, the Court reasoned that Aereo is not “just an equipment supplier” and that Aereo “performs.”6
Second, the Court determined that those performances are made “to the public.” The Court noted that even though Aereo performs using individualized copies of the content and transmits those copies to individuals, Aereo still “communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated to each other,”7 and who do not have any ownership interest in the underlying works.8
The Court stressed that its holding is limited in nature, and should not discourage the emergence or use of different kinds of technologies. Aereo and others argued that applying the Transmit Clause to Aereo’s conduct would impose copyright liability on a wide swath of new technologies. The Court addressed that concern by providing that it “did not believe that [its] limited holding today will have that effect,” and by noting that the copyright implications of, for example, cloud computing and remote DVR services were not addressed by its decision.9
The decision appears to end Aereo, at least in its current form. Although the case is remanded to the lower court, the decision seems to provide the company with little room to operate pursuant to its current business model.
On the other side, the Court’s ruling is a clear victory for the television industry, whose business model was threatened by Aereo and services like it. Television broadcasters receive retransmission fees from cable and satellite companies for the right to retransmit broadcast programming. Aereo had sought to avoid those fees. If the Court had upheld Aereo’s business, other companies likely would have followed suit.
The decision likely will have a limited effect beyond Aereo and the television industry. Technological innovators had expressed concern that a sweeping holding might endanger a range of cutting-edge equipment and services. However, the Court made pains to limit its holding to Aereo and like companies, in order to avoid imperiling DVRs, cloud computing, and other novel technologies not before the Court.