On April 1, 2013, the Second Circuit affirmed the decision of the US District Court for the Southern District of New York denying a group of networks’ (the Networks) request for preliminary injunction barring Aereo, Inc.’s (Aereo) wireless broadcasting service as a violation of the public performance right under the Copyright Act. The parties will now resolve their dispute at trial while Aereo continues to operate.

As previously discussed by Arent Fox, Aereo provides an Internet-based subscription service in which local broadcast programs are transmitted to individually-assigned antennas. Subscribers can watch programs live and can also record programs to a remote DVR device for streaming on computers, cell phones and Internet TVs. Recorded programs are copied to a user’s personal directory and then eventually deleted.

In March 2012, the Networks sued Aereo for copyright infringement and brought a motion for preliminary injunction on the ground that Aereo’s services violated the public performance right granted under the Copyright Act. The District Court denied the motion, finding Aereo’s use of individualized copies of programs fell squarely within the scope of Cartoon Network LP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008) (Cablevision), which permitted single broadcast transmissions through a DVR system. The Networks appealed to the Second Circuit.

Reviewing the District Court’s decision for abuse of discretion, the Second Circuit considered whether Aereo’s service violates the Networks’ public performance rights under the Copyright Act by serving as a public transmission. Finding the Networks’ arguments distinguishing Cablevision unpersuasive, the court held that since Aereo produces user-unique transmissions, such transmissions were not public performances and fell within the considerations expressed by Congress in the legislative history of the Copyright Act. Accordingly, the Second Circuit found no abuse of discretion and affirmed the District Court’s denial of the Networks’ motion for preliminary injunction. Judge Chin entered a strong dissent arguing that both Cablevision and the legislative history of the Copyright Act should prohibit Aereo’s activities. He further noted the court’s split with the Ninth Circuit, which disagreed with Cablevision and found that infringement of the public performance right should focus on the transmission and not the ultimate recipient. In fact, in an analogous case, the US District Court for the Central District of California found a violation of the Copyright Act. Accordingly, Judge Chin argued that Aereo has clearly “over-engineered” its system to circumvent the Act and to “take advantage of a perceived loophole in the law.”

As the Networks continue their battle with Aereo, this case emphasizes the difficulties new technology presents. With the continued development of technology, courts will have to carefully apply the law to avoid creating inconsistent or overbroad precedent. Similarly, lawmakers will have to mindfully construct new legislation that can adapt with the fast pace of development. Content owners should also consider developing their own technologies to remain competitive in the marketplace and to adequately protect their copyrights.