Last week, the U.S. Supreme Court issued a major copyright decision and ruled that Aereo’s technology is illegal. Not familiar with the case? Here’s what you need to know:
What is Aereo?
According to Aereo’s website, the company provides cloud DVR services for a simple, straightforward way to watch live cable television online via tiny remote antennas. If you are based in one of 11 U.S. cities (including New York, Boston, and Miami just to name a few), for a fee, you can subscribe to Aereo’s service.
How Does It Work Exactly?
Once subscribed to Aereo’s service, users can access a dime-sized TV antenna attached to a remote DVR, both of which are housed in a local data center. When users access Aereo’s service to watch a particular channel or television program, they can instruct the antenna to record a program on that channel. After the program has aired for a few seconds, users can stream to their device the slightly delayed over-the-air broadcast.
What the Broadcasters Said …
Broadcasters, television producers, marketers, and distributors brought suit against Aereo because of their copyright ownership in many of the programs available via Aereo’s system. More specifically, they claimed that Aereo infringed against their right to perform these works publicly and sought a preliminary injunction to prevent Aereo from continuing to offer its services. Following the New York District Court’s denial of the broadcasters’ request, the Second Circuit found that Aereo did not infringe on the broadcasters’ right to perform publicly because the company streamed content to users via a private transmission. Therefore, the Second Circuit denied the broadcasters appeal to rehear the case. This outcome prompted the Supreme Court’s consideration of the case.
Why Your Aereo Subscription Doesn’t Quite Work Like It Used to …
In a 6-3 decision, the Supreme Court ruled that Aereo’s service is illegal because it infringes on broadcasters’ exclusive right to publicly perform their works. In reaching this conclusion, the Court considered two legal questions: (1) does Aereo “perform” and (2) “if Aereo does perform, is this performance “public?”
Given that Aereo’s users must proactively use the company’s equipment to engage the service to transmit programs, Aereo argued that the service does not “perform” and should not be held directly liable. The dissenting justices characterized this as a critical difference from other cable systems that transmit constantly. To address these types of cable systems, Congress previously amended the Copyright Act and the Transmit Clause to clarify that both the broadcaster and viewer of a television program “perform” as they both show the program’s images and transmit audible sounds. The majority of the court Court did not find Aereo’s argument persuasive and dismissed it. Ultimately, the Court found that Aereo does “perform” because there is essentially no difference between Aereo and cable systems.
Though the Court found that Aereo “performs,” the case then hinged on whether it performs publicly. Under the Transmit Clause, “an entity performs a work publicly when it transmits … a performance … of the work … to the public.” As previously mentioned, Aereo argued that the performance is not public because programs are transmitted privately to one subscriber. However, the Court determined that what constitutes ‘public’ depends on the relationship of the viewers to the underlying work. Relying on a valet parking and car dealership analogies, the Court reasoned that if an entity transmitted works to people in their capacity as owners or possessors, this did not amount to a public performance. However, if that entity transmitted works to users or subscribers that have no prior relationship in the work, then that transmission is deemed public. Therefore, Aereo’s streaming services to its subscribers who had no relationship to the programs constitutes a public performance. To support this determination, the Court further reasoned that the Transmit Clause provides that a performance is public regardless of members of the public are viewing the program at the same time or are viewing it in the same place.
What Will This Mean in the Future?
Well, in typical lawyer fashion, it depends …
The Supreme Court notes that its decision is limited and anticipates that it will not hinder the emergence and development or use of different types of technologies.
Aereo begs to differ as its CEO and founder Chet Kanojia expressed disappointment in the outcome and stated that “this sends a chilling message to the technology industry.”
The broadcasters on the other hand reveled in their victory with CBS CEO Les Moonves championing the Court’s decision and condemning Aereo’s technology as “theft.” For the time being, Moonves is pleased that people will be required to pay for their content.
This decision raises more questions than provides answers for copyright wonks. Rather than creating specific, bright-line rules, the decision leaves much to be desired in terms of establishing precedent. It is unclear whether this decision will apply only to platforms similar to cable systems or if it will be applied more broadly. Because this decision raises questions about when the “volition” test (in other words, who chooses and initiates the copying of a protected work) is triggered, platforms that facilitate the distribution of copyrighted works may be subject to increased litigation risk. Though the opinion provides some direction in terms of determining that a system is indistinguishable from a cable system when a user can watch a copy of a broadcast “contemporaneously” with a live television program, even this determination raises more questions, even this finding raises additional questions (e.g., When is it acceptable for an entity to distribute copies of a broadcast?).
In its summation, the Court noted that to the extent that interested parties are concerned with “the relationship between the development and use of …technologies and the Copyright Act, they are … free to seek action from Congress.” House Judiciary Chairman Bob Goodlatte interpreted this decision as further justification of his committee’s ongoing copyright review.
As more analysis and predictions occur around this case, users should continue to enjoy the benefits of technologies and services that exist and continue to innovate because of the appropriate balance in the U.S. Copyright system.