LEGAL MEMO BY MICHAEL BERG

A Berg’s-Eye View Of Aereo Oral Arguments

Attorney Michael Berg, TVNewsCheck's Legal Memo columnist, was on hand for the April 22 arguments at the Supreme Court in ABC v. Aereo and he offers his observations on the questions and answers and also details the various friend of the court briefs and other filings made shortly before the hearing. While predicting outcomes from oral arguments is a very risky game, Berg says: "In this case I sensed that the SC majority is unlikely to buy Aereo’s copyright argument that it is just an equipment provider and there is no public performance and therefore no copyright obligations for sale of access to the broadcast signals."

The rollicking April 22 oral argument in the Supreme Court’s ABC v. Aereo before all nine justices capped a busy month in the court docket, and set the stage for a decision, probably in early July. I attended the argument and share observations in this column.

Also in April, leading up to the oral argument, Aereo supporters filed 10 amicus (friend of the court) briefs. ABC and the legion of other broadcaster petitioners filed their Reply Brief to Aereo’s opening brief. Those filings are summarized below.

Six days before the oral argument, Justice Samuel Alito ended his nonparticipation in the case, and participated in the argument, setting up the possibility of a 5-4 majority opinion.  

Background is available in my previous TVNewsCheck Legal Memos: Lots of Action Soon in SC’s ‘Aereo’ Case, ABC-Aereo Set For Supreme Court Showdown, The Two Court Rulings Rocking Aereo, FilmOnThe 411 On Aereo’s Many Legal Challenges and ABC v. Aereo: What Happened, What’s Next.

Observations On The April 22 Oral Argument:

There was a lot of turbulence under the SC’s two-story ceiling. It was not quiet or anywhere near ho-hum. After the first paragraph of the broadcasters’ scripted oral argument, Justice Sonia Sotomayor asked the first question: Why aren’t they [Aereo] a cable system? This set the pattern for the rest of the argument.

BRAND CONNECTIONS

Each side had 30 minutes of allotted argument time. On April 18 the SC granted a request to cede 10 minutes of the broadcast time to the deputy solicitor general who represented the United States’ support for the broadcasters against Aereo. None of the three arguers was spared hard questions.

Except for Justice Clarence Thomas, the other eight justices peppered both sides with frequent questions. The lawyers for the parties had to depart from their prepared scripts to answer a question by a justice, with other justices picking up the threads in further questions.

The eight justices who spoke during the argument clearly were perplexed by the case and looking for the right way out. They recognized that the ramifications of their ruling could resonate far beyond the facts of Aereo’s particular for-profit use of broadcast signals. There was an aura of wanting to do the right thing, but not yet seeing a clear solution, and needing to avoid pitfalls such as inadvertently undermining cloud-based businesses and other technical innovation.

Several Justices, including Chief Justice John Roberts at least twice and Justice Ruth Bader Ginsburg, doubted the legality of Aereo’s business model. For example, the chief justice asked the Aereo arguer whether its technology — thousands of out-of-the home, co-located  dime-size antennas activated by thousands of subscribers watching  the same programs — was  designed for any reason other than to avoid copyright. The Aereo arguer answered that Aereo counld not carry HBO, because HBO is not transmitted over the public airwaves.

The Justices asked both sides technical, business, copyright law and policy questions. Some examples:

Technical: Justice Alito: What’s the difference between an RS-DVR and Aereo? There were numerous questions from several other justices about other existing businesses and technologies and how they differ from Aereo’s, and what the legal conclusions should be from the comparisons and contrasts to Aereo (e.g., Roku, NimbleTV, Google, Dropbox, iCloud, iDrop, CloudLocker, RS-DVR, Simple.TV, Netflix, Hulu and Slingbox.)

Business: Justice Elena Kagan: What if Aereo sold the hardware to the consumer — then there’d be no copyright “performance”? The Aereo arguer said Aereo is an equipment provider, and nothing happens until the subscriber activates the system by ordering a program, and then Aereo is out of the picture. That’s important to the Aereo argument that only the Aereo subscriber, not Aereo, “performs” the broadcast works, and those are private, not public, performances. The broadcast lawyer disputed that as factually wrong. Justice Scalia to Aereo: Could you add HBO to the lineup if you win this case? The response was that Aereo could not add HBO because HBO is not transmitted over the public airwaves

Copyright: Justice Kennedy: I don’t understand why a viewer sometimes is a performer and sometimes not.

Policy: Justice Ginsburg voiced concern to the deputy solicitor that, as petitioners’ brief argued, Aereo’s view of public performance rights could  produce violations of  U.S. international copyright treaty obligations. The deputy solicitor general did not embrace that argument.

Bottom line: The oral argument highlighted the justices’ struggle to resolve this case — how to balance the sometimes competing interests of different rights and obligations under the Copyright Act; how to define Aereo’s business under copyright law; whether to remand the case to the 2nd Circuit for further proceedings before the SC acts; how to rule to uphold the federal  Copyright Act while not overly affecting diverse new ways to deliver and store content via the Internet.

Technology has usually outpaced the law throughout history. The justices, I thought, asked good questions, and seemed determined to uphold copyright protection without making a sweeping decision that would limit new technologies and consumer choice unreasonably. Alas, that is often the dilemma of copyright law cases. It could come down to whether Aereo is essentially a cable system and should be regulated like one.

Predicting outcomes from oral arguments is a very risky game. For example, a judge can ask tough questions of a party which might signal that the judge rejects the litigant’s position, but the questions could be asked to garner ammunition for the litigant by seeking answers at oral argument to counter judges preferring the other side.

In this case I sensed that the SC majority is unlikely to buy Aereo’s copyright argument that it is just an equipment provider and there is no public performance and therefore no copyright obligations for sale of access to the broadcast signals. If that is the ruling, I expect the court would also limit it and perhaps provide guidance as to what copyright law allows.

Amicus briefs supporting Aereo. On April 2, FilmOn and nine others filed amicus briefs in support of Aereo, in opposition to the 17 amicus briefs supporting petitioners. In addition to the amicus briefs described in ABC v. Aereo: What Happened, What’s Next, among the other briefs supporting Aereo in April were:

  • FilmOn, a competitor to Aereo whose petition to intervene in the case as a party was denied by the SC because the court thought that Aereo would represent FilmOn’s interests:  “Aereo and FilmOn are not stealing copyrighted content, but merely providing a convenient method to access content freely available on the public airwaves.” In return for receiving licenses to use public spectrum, broadcasters are obligated to provide consumers with free, over-the-air programming. Aereo/FilmOn furthers the public interest by making that programming more accessible. Holding Aereo/FilmOn as infringers would threaten individuals’ private performance and fair use rights. Alternatively, if the SC rules that Aereo/FilmOn engage in public performance, the SC should also find that Aereo/FilmOn are cable providers, and entitled to Copyright Act Section 111 compulsory copyright licenses (and Aereo would need broadcasters’ consent to use their signals, and pay royalties to them).”
  • Consumers Federation: Aereo promotes “consumer sovereignty” by simultaneously providing greater choice in where and how to watch free over the air (OTA) broadcast programs and making such flexibility more affordable. Finding for broadcasters would “permit incumbent providers to dictate terms on which significant technological innovations will be made available to consumers of free OTA broadcasts.”
  • IP (intellectual property) Law Professors: Aereo is the functional equivalent of Sony Betamax.  “Aereo does not infringe the public performance right for the same reason Sony did not: consumers who play back programs they previously recorded are engaged in private performances. Putting the storage device online rather than in a consumer’s home does not change its essential operation.”

These briefs back Aereo’s principal claim that its sale of broadcasters’ programs to hundreds of thousands of individual monthly paying Aereo subscribers is not a “public” performance subject to copyright law, because each transmission is a “private” performance of the broadcast programming by each Aereo subscriber.  

Broadcasters’ Reply Brief: Petitioners filed their Reply Brief, responding to Aereo’s opening brief. Main points:

  • Aereo brief: As long as each subscriber receives a user-specific transmission, Aereo can enable thousands of viewers to “Watch live TV” without publicly performing.

Broadcasters’ reply:

  • Congress intended the Transmit Clause to reach “‘any act by which the initial performance or display is transmitted, repeated, or made to recur,’ to the public.”
  • Aereo’s process of creating user-specific transmissions does not make their performance private. The Transmit Clause “reaches ‘any device or process’—whether ‘now known or later developed’—for transmitting performances to the public.”
  • Aereo’s service is akin to a video-on-demand service, which is encompassed by the Transmit Clause as making “available” a performance to the public (even though only one individual might end up receiving it).

 Aereo Brief: Aereo is not performing, but merely supplies equipment that enables end-users to watch broadcast television.

    Broadcasters’ reply:

    • When it enacted the Transmit Clause, Congress made clear that a retransmission service publicly performs.
    • Aereo is different from a supplier of copy machines and DVRs, in that Aereo supplies content and equipment.
    • The public availability of broadcasts does not allow third parties to facilitate unauthorized access to copyrighted content.

    Aereo Brief: Copyright and public policy weigh in Aereo’s favor.

      Broadcasters’ reply:

      • Aereo can be distinguished from legitimate cloud computing services. While cloud services only provide storage for content that the end-user independently possesses, Aereo makes the content itself available to anyone who subscribes.
      • Aereo is indistinguishable from the very cable systems that led to Congress’s enactment of the Transmit Clause.

      Principally, ABC Inc. and other petitioning broadcasters, and the U.S. Solicitor General on behalf of the United States, argue that Aereo’s technology is a subterfuge solely to avoid the copyright liability that Congress enacted for cable and other multichannel providers. Aereo is much more involved in “performing” the copyrighted broadcast material than Aereo admits, and Aereo “publicly performs” the same programs repeatedly to large audiences.  

      This column on TV law, policy and regulation by Michael Berg, an experienced Washington D.C. communications lawyer and principal in the Law Office of Michael D. Berg, appears periodically. He is also the co-author of FCC Lobbying: A Handbook of Insider Tips and Practical Advice. He represents commercial and noncommercial television and radio broadcasters, and others involved in communications, in FCC, Congressional and court matters. He can be reached at Law Office of Michael D. Berg, 1200 New Hampshire Ave., N.W., Suite 570, Washington, D.C. 20036-6802; [email protected]; or 202-776-2523. Read more of Berg’s Legal Memos here.

      Maxwell Hsu, a legal intern at Berg’s firm, contributed to this article. He expects his Juris Doctor degree in 2015 from the George Washington University Law School. His email is [email protected].

      Manny Fragata, a legal intern at Berg’s firm, also contributed to this article. He expects to have his Juris Doctor degree in 2014 from the Georgetown University Law Center. His email address is [email protected].

      Note: This column provides general guidance only and is not a substitute for individualized legal advice for particular situations.


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