Intellectual Property Law: Counseling, Licensing, Litigation & Procurement

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ABC v. Aereo

Banner & Witcoff offers the following content as a resource to help clients understand and prepare for the potential impact of this case:

Background

In American Broadcasting Companies v. Aereo, the U.S. Supreme Court considered whether a company “publicly performs” a copyrighted television program when it retransmits a broadcast of that program to paid subscribers over the Internet.

Under the federal Copyright Act, the owners of protected creations have an exclusive right “to perform the copyrighted work publicly.” Aereo, a two-year-old company based in New York, captures over-the-air television broadcasts and retransmits the broadcasts to Aereo subscribers.

Each Aereo subscriber, for $8 a month, receives a miniature antenna to capture the signal and interact with a cloud-based digital video recorder. While cable and satellite companies normally pay copyright owners “retransmission consent fees” in order to carry network programming, Aereo does not compensate nor obtain authorization from the broadcasting companies.

Last April, the Second Circuit ruled in favor of Aereo, declaring that such transmissions are not a “public performance,” and thus there is not a violation of the federal Copyright Act. Despite the victory below, Aereo filed cert at the Supreme Court in order to obtain a definitive answer on the issue. Without the Supreme Court stepping in, Aereo alleged, the TV broadcasting industry would otherwise “wage a war of attrition” by re-litigating the issue in every market to which Aereo expands its business.

The Second Circuit decision followed its 2008 decision in Cartoon Network v. Cablevision, where it held that Cablevision’s transmission of DVR-recorded programs were not public performances. In so holding, the Second Circuit concluded that one-to-one transmission of a specific program signal is not a public performance. Thus, as the industry brief notes, “so long as no two people can receive the same transmission of a performance, the public performance right is not violated — even if the performance is being transmitted concurrently to thousands of members of the public.”

In the present case, the Second Circuit compared Aereo’s business to a local consumer’s ability to watch and record a program for later viewing (i.e., DVR). In that light, because Aereo assigns each of its users an individual antenna at the time the show is streamed or recorded, the company’s “performance” is private, not public. “Control, exercised after the copy has been created, means that Aereo’s transmissions from the recorded copies cannot be regarded as simply one link in a chain of transmission, giving Aereo’s copies the same legal significance as the RS-DVR copies in Cablevision.”

Thus, the Second Circuit held, Aereo is lawfully providing a service to local residents, all of whom could have performed the service themselves, individually.

During oral argument on April 22, 2014, Aereo’s defense was grounded in its clever system design, which is seemingly tailored to avoid the provisions of the copyright laws — something that was not lost on the Supreme Court. Indeed, early on, Justice Ginsburg asked Aereo’s counsel if there was a “technically sound reason” for using multiple antennas or if “the only reason for that was to avoid the breach of the Copyright Act.” At several other points during the argument, Chief Justice Roberts pressed Aereo’s counsel on whether there is any technological basis for its system design.

On June 25, 2014, the Supreme Court held in a 6-3 ruling that Aereo’s business model of streaming live broadcast television content over the Internet to its users, without a license from those who own the copyright in that content, violates the copyright owners’ exclusive rights to publicly perform the copyright works.

In addressing the first question of whether Aereo “performed” the copyrighted work, the Court rejected Aereo’s claim that it is merely an “equipment provider.” In addressing the second question of whether Aereo performed the copyrighted works “publicly,” the majority rejected Aereo’s arguments that its transmission of a “personal copy” of a broadcast video recording to an individual user could not be considered a transmission “to the public” within the meaning of the statute.

Perhaps to the relief of those who saw this case as a potential setback for cloud computing technology, the Supreme Court seemed to recognize some of the ways in which a cloud storage platform might distinguish itself from Aereo and from the result reached in this case. For example, the Court noted that it has “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.”

Important Dates

 

  • June 25, 2014 – U.S. Supreme Court issues decision
  • April 22, 2014 – U.S. Supreme Court hears oral argument
  • Jan. 10, 2014 – U.S. Supreme Court grants ABC’s petition for a writ of certiorari
  • Oct. 11, 2013 – ABC files petition for a writ of certiorari
  • April 1, 2013 – U.S. Court of Appeals for the Second Circuit issues decision
  • Nov. 30, 2012 – U.S. Court of Appeals for the Second Circuit hears oral argument

Court Documents

Media

Banner & Witcoff attorneys are available to answer questions and discuss this case. Media inquiries should be directed to Amanda Robert (312) 463-5465 or arobert@bannerwitcoff.com.

Intellectual Property Law: Counseling, Licensing, Litigation & Procurement