06/25/14

Am. Broad. Co. v. Aereo: Aereo Business Model Amounts to an Infringing Public Performance


Category: Copyright
 
 
 
 By: Jesus Hernandez, Blog Editor/Contributor  
 
TitleAm. Broad. Co. v. Aereo, Inc., No. 13-461 (June 25, 2014).
IssueWe must decide whether respondent Aereo, Inc., infringes [the] exclusive right [to transmit or otherwise communicate a performance of a copyrighted work to the public] by selling its subscribers a technologically complex service that allows them to watch television programs over the Internet at about the same time as the programs are broadcast over the air. 
Am. Broad. Co. at *1 (text added).
Holding[H]aving considered the details of Aereo’s practices, we find them highly similar to those of the CATV systems in Fortnightly and Teleprompter. And those are activities that the 1976 amendments sought to bring within the scope of the Copyright Act. Insofar as there are differences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service. We conclude that those differences are not adequate to place Aereo’s activities outside the scope of the Act. For these reasons, we conclude that Aereo “perform[s]” petitioners’ copyrighted works “publicly,” as those terms are defined by the Transmit Clause.
Id. at *17-18.
 
 

 
Editor Comments
For further insight, check out the Audio Brief of oral arguments in Am. Broad. Co. v. Aereo, Inc. by clicking here.
  
 
Procedural HistoryPetitioners are television producers, marketers, distributors, and broadcasters who own the copyrights in many of the programs that Aereo’s system streams to its subscribers. They brought suit against Aereo for copyright infringement in Federal District Court. They sought a preliminary injunction, arguing that Aereo was infringing their right to “perform” their works “publicly,” as the Transmit Clause defines those terms. The District Court denied the preliminary injunction. […] Relying on prior Circuit precedent, a divided panel of the Second Circuit affirmed. […] The Second Circuit denied rehearing en banc, over the dissent of two judges.
Am. Broad. Co. at *3 (internal citations omitted).
 
 
Legal Reasoning (J. Breyer for the Court)
Background
Legal StandardThe Copyright Act of 1976 gives a copyright owner the “exclusive righ[t]” to “perform the copyrighted work publicly.” 17 U. S. C. §106(4). The Act’s Transmit Clause defines that exclusive right as including the right to “transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.” §101.
Am. Broad. Co. at *1.
Aereo's business ModelAereo’s system is made up of servers, transcoders, and thousands of dime-sized antennas housed in a central warehouse. It works roughly as follows: First, when a subscriber wants to watch a show that is currently being broadcast, he visits Aereo’s website and selects, from a list of the local programming, the show he wishes to see. Second, one of Aereo’s servers selects an antenna, which it dedicates to the use of that subscriber (and that sub- scriber alone) for the duration of the selected show. A server then tunes the antenna to the over-the-air broad- cast carrying the show. The antenna begins to receive the broadcast, and an Aereo transcoder translates the sig- nals received into data that can be transmitted over the Internet. Third, rather than directly send the data to the subscriber, a server saves the data in a subscriber-specific folder on Aereo’s hard drive. In other words, Aereo’s system creates a subscriber-specific copy—that is, a “personal” copy—of the subscriber’s program of choice. Fourth, once several seconds of programming have been saved, Aereo’s server begins to stream the saved copy of the show to the subscriber over the Internet. (The subscriber may instead direct Aereo to stream the program at a later time, but that aspect of Aereo’s service is not before us.) The subscriber can watch the streamed program on the screen of his personal computer, tablet, smart phone, Internet-connected television, or other Internet-connected device.
Id. at *2.
[I]n operating in the manner described above, does Aereo “perform” at all?
Am. Broad. Co. at *4.
Bringing Cable Providers withing Copyright Act
Fortnightly, Teleprompter, and the
1976 Amendment to Copyright Act
[In Fortnightly Corp. v. United Artists Television, Inc., the Court found that a CATV provider did not infringe a copyright holders’ exclusive right to perform their works publicly because the CATV provider did not “perform” at all. In Teleprompter Corp. v. Columbia Broadcasting System, the SCOTUS found that a CATV provider was more like a viewer than a broadcaster.] In 1976 Congress amended the Copyright Act in large part to reject the Court’s holdings in Fortnightly and Teleprompter. […] Congress enacted new language that erased the Court’s line between broadcaster and viewer, in respect to “perform[ing]” a work. The amended statute clarifies that to “perform” an audiovisual work means “to show its images in any sequence or to make the sounds accompanying it audible.” [….] Under this new language, both the broadcaster and the viewer of a television program “perform,” because they both show the program’s images and make audible the program’s sounds.
Am. Broad. Co. at *7 (text added, some internal citations omitted).
Transmit ClauseCongress also enacted the Transmit Clause, which specifies that an entity performs publicly when it “transmit[s] . . . a performance . . . to the public.” […] Cable system activities, like those of the CATV systems in Fortnightly and Teleprompter, lie at the heart of the activities that Congress intended this language to cover. […] Congress further created a new section of the Act to regulate cable companies’ public performances of copyrighted works. See §111.[…] Congress made these three changes to achieve a similar end: to bring the activities of cable systems within the scope of the Copyright Act.
Id. at *7-8 (internal citations omitted).
Aereo Business Model Substantially Similar to CATV Companies Congress Intended to ReachThis history makes clear that Aereo is not simply an equipment provider. Rather, Aereo, and not just its subscribers, “perform[s]” (or “transmit[s]”). Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach. […] Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, almost as they are being broadcast. In providing this service, Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes. By means of its technology (antennas, transcoders, and servers), Aereo’s system “receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.” […] It “carr[ies] . . . whatever programs [it] receive[s],” and it offers “all the programming” of each over-the-air station it carries. […]
Id. at *8-9 (internal citations omitted).
Addressing DissentWe recognize, and Aereo and the dissent emphasize, one particular difference between Aereo’s system and the cable systems at issue in Fortnightly and Teleprompter. The systems in those cases transmitted constantly; they sent continuous programming to each subscriber’s television set. In contrast, Aereo’s system remains inert until a subscriber indicates that she wants to watch a program. Only at that moment, in automatic response to the sub-scriber’s request, does Aereo’s system activate an antenna and begin to transmit the requested program. […] We do not see how this single difference, invisible to subscriber and broadcaster alike, could transform a system that is for all practical purposes a traditional cable system into “a copy shop that provides its patrons with a library card.”
Id. at 9-10.
[D]oes Aereo [perform] “publicly”?
Am. Broad. Co. at *4.
Aereo’s Transmissions Within Scope of Transmit Clause[A]n Aereo subscriber receives broadcast television signals with an antenna dedicated to him alone. Aereo’s system makes from those signals a personal copy of the selected program. It streams the content of the copy to the same subscriber and to no one else. One and only one subscriber has the ability to see and hear each Aereo transmission. The fact that each transmission is to only one subscriber, in Aereo’s view, means that it does not transmit a performance “to the public.” […] [However,] [t]he text of the Clause effectuates Congress’ intent. Aereo’s argument to the contrary relies on the premise that “to transmit . . . a performance” means to make a single transmission. But the Clause suggests that an entity may transmit a performance through multiple, discrete transmissions. That is because one can “transmit” or “communicate” something through a set of actions. Thus one can transmit a message to one’s friends, irrespective of whether one sends separate identical e-mails to each friend or a single e-mail to all at once. So can an elected official communicate an idea, slogan, or speech to her constituents, regardless of whether she communicates that idea, slogan, or speech during individual phone calls to each constituent or in a public square.
Am. Broad. Co. at *12-13.
On Personal CopiesWe do not see how the fact that Aereo transmits via personal copies of programs could make a difference. The Act applies to transmissions “by means of any device or process.” Ibid. And retransmitting a television program using user-specific copies is a “process” of transmitting a performance. A “cop[y]” of a work is simply a “material objec[t] . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communi- cated.” Ibid. So whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds. Therefore, when Aereo streams the same television program to multiple subscribers, it “transmit[s] . . . a performance” to all of them.
Id. at *14.
On Different Times and LocationsFinally, we note that Aereo’s subscribers may receive the same programs at different times and locations. This fact does not help Aereo, however, for the Transmit Clause expressly provides that an entity may perform publicly “whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.” Ibid. In other words, “the public” need not be situated together, spatially or temporally.
Id. at *15.
Policy Concerns: Future Technologies
SCOTUS does not believe that holding will have the effect or discouraging or to controlling the emergence or use of different kinds of technologies.
For one thing, the history of cable broadcast transmissions that led to the enactment of the Transmit Clause informs our conclusion that Aereo “perform[s],” but it does not determine whether different kinds of providers in different contexts also “perform.” For another, an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work. […]
Am. Broad. Co. at *16 (internal citations omitted).
Further, we have interpreted the term “the public” to apply to a group of individuals acting as ordinary members of the public who pay primarily to watch broadcast television programs, many of which are copyrighted. We have said that it does not extend to those who act as owners or possessors of the relevant product. And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content. […]
Id.
Cannot Anticipate the Future in the PresentWe cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us. We agree with the Solicitor General that “[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course,’ should await a case in which they are squarely presented.”
Id. at *17.
Conclusion
We therefore reverse the contrary judgment of the Court of Appeals, and we remand the case for further proceedings consistent with this opinion.
Am. Broad. Co. at *18.
 
 
 
 
JUSTICE SCALIA, with whom JUSTICE THOMAS and JUSTICE ALITO join, dissenting. Am. Broad. Co., Scalia Op, at *1.
General Grounds for DissentThe Networks sued Aereo for several forms of copyright infringement, but we are here concerned with a single claim: that Aereo violates the Networks’ “exclusive righ[t]” to “perform” their programs “publicly.” 17 U. S. C. §106(4). That claim fails at the very outset because Aereo does not “perform” at all. The Court manages to reach the opposite conclusion only by disregarding widely accepted rules for service-provider liability and adopting in their place an improvised standard (“looks-like-cable-TV”) that will sow confusion for years to come.
Am. Broad. Co., Scalia Op, at *1.
Disntinguishing Direct and Secondary liability
Most suits against equipment manufacturers and ser- vice providers involve secondary-liability claims. For ex- ample, when movie studios sued to block the sale of Sony’s Betamax videocassette recorder (VCR), they argued that Sony was liable because its customers were making unauthorized copies. […] This suit, or rather the portion of it before us here, is fundamentally different. The Networks claim that Aereo directly infringes their public-performance right. Accordingly, the Networks must prove that Aereo “perform[s]” copyrighted works, §106(4), when its subscribers log in, select a channel, and push the “watch” button. That process undoubtedly results in a performance; the question is who does the performing. […]
Id. at *2.
The volitional-conduct requirement is not at issue in most direct-infringement cases; the usual point of dispute is whether the defendant’s conduct is infringing (e.g., Does the defendant’s design copy the plaintiff’s?), rather than whether the defendant has acted at all (e.g., Did this defendant create the infringing design?). But it comes right to the fore when a direct-infringement claim is lodged against a defendant who does nothing more than operate an automated, user-controlled system.
Id. at *3-4.
Copyshops and On-DemandA comparison between copy shops and video-on-demand services illustrates the point. A copy shop rents out photo- copiers on a per-use basis. […] [T]he customer chooses the content and activates the copying function; the photocopier does nothing except in response to the customer’s commands. […] Video-on-demand services, like photocopiers, respond automatically to user input, but they differ in one crucial respect: They choose the content. […] So which is Aereo: the copy shop or the video-on-demand service? In truth, it is neither. Rather, it is akin to a copy shop that provides its patrons with a library card. […] [S]ubscribers call all the shots: Aereo’s automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it. Aereo’s operation of that sys- tem is a volitional act and a but-for cause of the resulting performances, but, as in the case of the copy shop, that degree of involvement is not enough for direct liability.
Id. at *5.
Aereo Does Not PerformAereo does not “perform” for the sole and simple reason that it does not make the choice of content. And because Aereo does not perform, it cannot be held directly liable for infringing the Networks’ public-performance right.3 That conclusion does not necessarily mean that Aereo’s service complies with the Copyright Act. Quite the contrary. The Networks’ complaint alleges that Aereo is directly and secondarily liable for infringing their public- performance rights (§106(4)) and also their reproduction rights (§106(1)). Their request for a preliminary injunction—the only issue before this Court—is based exclusively on the direct-liability portion of the public-performance claim (and further limited to Aereo’s “watch” function, as opposed to its “record” function). See App. to Pet. for Cert. 60a–61a. Affirming the judgment below would merely return this case to the lower courts for consideration of the Networks’ remaining claims.
Id. at *6-7.
Guilt By ResemblanceThe Court’s conclusion that Aereo performs boils down to the following syllogism: (1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts;4 (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs. Ante, at 4–10. That reasoning suffers from a trio of defects. First, it is built on the shakiest of foundations. Perceiving the text to be ambiguous, ante, at 4, the Court reaches out to decide the case based on a few isolated snippets of legislative history, […] Second, the Court’s reasoning fails on its own terms because there are material differences between the cable systems at issue in Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U. S. 394 (1974), and Fortnightly Corp. v. United Artists Television, Inc., 392 U. S. 390 (1968), on the one hand and Aereo on the other. The former (which were then known as community-antenna television systems) captured the full range of broadcast signals and forwarded them to all subscribers at all times, whereas Aereo transmits only specific programs selected by the user, at specific times selected by the user. […] Third, and most importantly, even accepting that the 1976 amendments had as their purpose the overruling of our cable-TV cases, what they were meant to do and how they did it are two different questions—and it is the latter that governs the case before us here. The injury claimed is not violation of a law that says operations similar to cable TV are subject to copyright liability, but violation of §106(4) of the Copyright Act.
Id. at *7-9.
Secondary Liability not Before the CourtI share the Court’s evident feeling that what Aereo is doing (or enabling to be done) to the Networks’ copyrighted programming ought not to be allowed. But perhaps we need not distort the Copyright Act to forbid it. As dis- cussed at the outset, Aereo’s secondary liability for per- formance infringement is yet to be determined, as is its primary and secondary liability for reproduction infringe- ment. If that does not suffice, then (assuming one shares the majority’s estimation of right and wrong) what we have before us must be considered a “loophole” in the law. It is not the role of this Court to identify and plug loop- holes. It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude “looks-like-cable-TV” solution the Court invents today.
Id. at *12.

 
 
 
© 2000-2019, Journal of the Patent & Trademark Office Society
Disclaimer & Privacy Policy