U.S. Supreme Court Hears Arguments in Copyright Dispute Over Internet-Based DVR Service

U.S. Supreme Court Hears Arguments in Copyright Dispute Over Internet-Based DVR Service

 WASHINGTON, D.C. — (Mealey’s) The U.S. Supreme Court on April 22 heard oral arguments in a copyright infringement case pitting a group of broadcast television companies and the U.S. government against Aereo Inc., a company that provides Internet-based digital video recorder (DVR) services in a dispute over the differences between public and private performances of copyrighted works in the context of current digital technology (American Broadcasting Companies, Inc., et al. v. Aereo, Inc., No. 13-461, U.S. Sup.; See 4/21/14, Page 51) [lexis.com subscribers may access Supreme Court briefs for this case].

Attorney Paul D. Clement, representing the petitioners, and Deputy Solicitor General Malcolm L. Stewart, representing the U.S. government, were peppered with questions from the Supreme Court justices seeking differentiation between Aereo’s technology and the remote storage DVR (RS DVR) found to be noninfringing by the Second Circuit U.S. Court of Appeals in Cartoon Network LLP v. CSC Holdings Inc., 536 F.3d 121 (2nd Cir. 2008) (Cablevision) [an enhanced version of this opinion is available to lexis.com subscribers]. 

Arguing for Aereo, David C. Frederick contended that the television companies’ positions and “interpretations of the text . . . absolutely threaten cloud computing.”  He called the case “a reproduction right case masquerading as a public performance case.”

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 Cablevision, 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 Cablevision.  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. 

‘To The Public’

Asking the first question, Justice Sonia Sotomayor sought clarification as to why Aereo did not simply qualify as a cable company, which would moot most of the questions at issue.  Other justices joined in with questions about how Aereo’s technology differed from such services as Roku, Dropbox and iDrop.  Additionally, the justices sought differentiation between a user’s individual purchase of technology similar to Aereo’s that can record television shows and the service that Aereo provides for many users but tailors to individual users. 

Clement stated that “Aereo’s business model” of “enabl[ing] thousands of paying strangers to watch live TV online” constitutes public performance under the Copyright Act.  Clement and Stewart stressed that the difference between Aereo and the Cablevision RS DVR centers on interpretation of the phrase “to the public.”  Aereo provides its services to the public and, thus, should pay corresponding royalties subject to compulsory licenses, they said, as opposed to individual recordings that a user might make on his or her own for a private performance.

Additionally, Stewart contended that the differentiation lies in the definition of “to transmit,” which means to communicate “a performance or display . . . by any device or process whereby images or sounds are received beyond the place from which they are sent.” 

Equipment Provider

Frederick stressed that Aereo is “not a cable service” because it does not conform with the “very particularized regulatory structure that deals with taking . . . content and pushing it down to consumers.”  By contrast, he said, “Aereo is an equipment provider.”  Frederick said that the fair use right established for use of video cassette recorders in Sony Corp. of America v. Universal City Studios Inc. (464 U.S. 417 [1984]) applies to Aereo’s technology. 

Justice Ruth Bader Ginsberg asked if there was a “technically sound reason” that Aereo  used many small antennas instead of just one large antenna, or whether this was merely “to avoid the breach of the Copyright Act,” citing Justice Denny Chin’s dissent in the Second Circuit’s ruling.  Frederick said that there are technical and practical reasons for the use of many antennas but that the number of antennas did “not matter for copyright laws” because the question turns on the matter of private performance.  Frederick stressed that the matter of whether something is a public or private performance depends on “who is acting to make the sequence of sounds and images perceivable.” 

Frederick also stressed that satellite and cable providers do not pay copyright royalties for local over-the-air broadcasts, which is the programming that is at issue with Aereo’s technology. 

The decision in this case also implicates cloud storage technology, Frederick said, because cloud computing companies have “invested tens of billions of dollars on the notion that [a] user-specific, user-initiated copy, when perceived by that person, is a private performance and not a public performance.” 

Counsel

Aereo is represented by 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 first group of plaintiffs is represented by Clement and Erin E. Murphy of Bancroft in Washington and Bruce P. Keller and Jeffrey P. Cunard of Debevoise & Plimpton in New York.

The second group of plaintiffs is represented by 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.

Deputy Solicitors General Kneedler and Stewart, of the U.S. Department of Justice in Washington, represent the government. 

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