Divided High Court: Aereo’s Internet Transmissions Constitute Public Performances

Divided High Court: Aereo’s Internet Transmissions Constitute Public Performances

 WASHINGTON, D.C. — (Mealey’s) A U.S. Supreme Court majority today found that the Internet transmission of copyrighted broadcast television programs provided by Aereo Inc. constitute public performances per the “transmit clause” of the Copyright Act, reversing the Second Circuit U.S. Court of Appeals’ finding that Aereo’s services did not infringe the copyrights of a group of plaintiff television broadcast companies (American Broadcasting Companies, Inc., et al. v. Aereo, Inc., No. 13-461, U.S. Sup.; 2014 U.S. LEXIS 4496; See May 2014, Page 4) [lexis.com subscribers may access Supreme Court briefs and the opinion for this case]. 

In a dissenting opinion, three justices took issue with this “guilt-by-resemblance” theory related to traditional community antenna television (CATV) and cable providers.  Stating that instead of “distort[ing] the Copyright Act to forbid” Aereo’s activities, which it held “ought not to be allowed,” the dissenting justices said Congress should “take a fresh look at this new technology” in relation to copyright laws.

Infringement Lawsuits

Aereo transmits broadcast television programs over the Internet to subscribers for a monthly fee.  Aereo uses thousands of small antennas at its facility in Brooklyn, N.Y., to receive broadcast television channels and a remote hard drive to create individual copies of the programs that Aereo users wish to watch while they are being broadcast or record for viewing later.  Aereo assigns an individual antenna to each user, so no two users share the same antenna at the same time, even if they are watching or recording the same program.

In 2012, two groups of television programming companies filed separate copyright infringement complaints against Aereo in the U.S. District Court for the Southern District of New York.  The first group included American Broadcasting Cos., Disney Enterprises Inc., CBS Broadcasting Inc. and NBC Universal Media LLC.  The second included WNET, Fox Television Stations Inc., Univision Television Group Inc. and Public Broadcasting Service.

The TV companies asserted several theories, including infringement of the public performance right, infringement of the right of reproduction and contributory infringement.  They moved for a preliminary injunction barring Aereo from transmitting television programs to its subscribers while the programs were still being broadcast.  The two groups of plaintiffs agreed to proceed together, and the motion for a preliminary injunction was pursued in both actions simultaneously.

Discrete Transmission

In July 2012, Judge Alison J. Nathan denied the motion, finding that the TV companies were not likely to succeed on the merits.  Judge Nathan held that Aereo’s system was not materially distinguishable from the remote storage DVR at issue in Cartoon Network LLP v. CSC Holdings Inc., 536 F.3d 121 (2nd Cir. 2008) [an enhanced version of this opinion is available to lexis.com subscribers], which the Second Circuit found did not infringe copyright holders’ public performance right under the Copyright Act’s transmit clause.  "Because the Second Circuit considered the relevant performance to be the discrete transmission of each user's unique playback copy of the television program to that user, the potential audience 'capable of receiving' that performance was limited to that user, and each such performance was private, not public," Judge Nathan noted.

The TV companies appealed to the Second Circuit, which on April 1, 2013, affirmed the District Court’s ruling, again based on Cartoon Network.  The TV companies filed a petition for writ of certiorari with the U.S. Supreme Court, presenting the question of “[w]hether a company ‘publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.”

On Jan. 10, the Supreme Court granted the petition.  Amicus curiae briefs were subsequently filed in support of both sides.  In an amicus brief for the United States in favor of the petitioners, U.S. Deputy Solicitor General Edwin S. Kneedler sought leave for the U.S. government to participate in oral argument.  That motion was granted April 18.

1976 Copyright Act

Justice Stephen Breyer wrote the majority opinion, joined by Justices John Robert, Anthony Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan.  The majority noted that Congress enacted the Copyright Act in 1976 largely to overturn the high court’s rulings in Fortnightly Corp. v. United Artists Television Inc., 392 U.S. 390 (1968) [enhanced version] and Teleprompter Corp. v. Columbia Broadcasting System Inc., 415 U.S. 394 (1974) [enhanced version].  The act “clarifie[d] that to ‘perform’ an audiovisual work means ‘to show its images in any sequence or to make the sounds accompanying it audible,’” the majority said, which meant that “both the broadcaster and the viewer ‘perform,’ because they both show a television program’s images and make audible the program’s sounds.”  Thus, the act established that the transmitting of a program constitutes performance to the public, the majority said.

The majority further noted, per the act’s transmit clause, that “an entity that acts like a CATV system itself performs even when it simply enhances viewers’ ability to receive broadcast television signals.” 

Substantially Similar Activities 

Aereo contended that its services do not constitute public performances of any copyrighted works because each of its customers has a dedicated antenna that transmits only to that customer and not to the public at large.  The majority disagreed with this conclusion, finding Aereo’s activities to be “substantially similar to those of the CATV companies that Congress amended the [Copyright] Act to reach.”  Despite its claims to the contrary, the majority held that Aereo is not merely an equipment provider because it “sells a service that allows subscribers to watch television programs, many of which are copyrighted, virtually as they are being broadcast.” 

Although the majority found that there were some differences between Aereo and the companies in Fortnightly and Teleprompter, it held that the “overwhelming likeness to the cable companies” these technological differences do “not make a critical difference here.” 

Public Performance

The majority rejected Aereo’s argument that its customer-specific transmissions and antennas distinguished its services from those of CATV providers.  Under the objective of the transmit act, the majority held that “these behind-the-scenes technological differences do not distinguish Aereo’s system from cable systems which do perform publicly.”  The majority held that the congressional intention of copyright protection under the act should also “protect a copyright holder from the unlicensed activities of Aereo.” 

Also, the majority held that Aereo’s customers constitute “the public,” as defined in the Copyright Act, because “Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other.”  The fact that Aereo users have the ability to receive their selected “programs at different times and locations is of no consequence,” the majority said.

Addressing concerns that had been raised over the course of the case, the majority said that “[g]iven the limited nature of this holding,” it believed that this decision will not “discourage the emergence or use of different kinds of technologies.” 

Dissent

Justice Antonin Scalia offered a dissenting opinion, joined by Justices Clarence Thomas and Samuel Alito, stating that the majority’s opinion “disregard[s] widely accepted rules for service-provider liability” and constitutes “an improvised standard . . . that will sow confusion for years to come.”

Although “Aereo’s operation of [its] system is a volitional act,” the dissent stated that Aereo’s actions do not constitute performances under the transmit clause “for the sole and simple reason that it does not make the choice of content.”  Because Aereo’s users choose the content that is transmitted and viewed, the dissent held that Aereo “cannot be held directly liable for infringing the Networks’ public-performance rights.”  

The dissent clarified that this does not mean that Aereo’s service is in accord with the Copyright Act, noting that the original complaint alleged direct and secondary copyright infringement liability.  However, the panel noted that the preliminary injunction request that ultimately brought the matter before this court pertained only to the direct infringement matter related to performance rights, not the copyright holders’ reproduction rights.  These matters will still remain ripe for decision upon remand to the lower courts, the dissent stated. 

Counsel

Aereo is represented by David C. Frederick, Aaron M. Panner, Brendan J. Crimmins and Caitlin S. Hall of Kellogg, Huber, Hansen, Todd, Evans & Figel in Washington; Brenda M. Cotter and Daniel Brown of Aereo in Boston; R. David Hosp and Mark S. Puzella of Fish & Richardson in Boston; and Seth D. Greenstein of Constantine Cannon in Washington.

The plaintiffs are represented by Paul D. Clement and Erin E. Murphy of Bancroft in Washington; Bruce P. Keller and Jeffrey P. Cunard of Debevoise & Plimpton in New York; Paul M. Smith and Matthew E. Price of Jenner & Block in Washington; and Richard L. Stone and Amy M. Gallegos of Jenner & Block in Los Angeles.

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