ABC-Aereo Set For Supreme Court Showdown

Each year the U.S. Supreme Court (SC) grants less than 1% of requests for review of lower federal court rulings. On Jan. 10, the dispute between TV broadcasters and Aereo Inc. became part of that 1%.

On that date the SC granted broadcasters’ petition for review of the April 2013 Second Circuit New York federal appeals court copyright law ruling in favor of Aereo. In this column the new SC case is called ABC.

The crux of the dispute is the legality of the businesses operated by Aereo (and its competitors such as FilmOn). Without consent from or compensation to the TV broadcasters, Aereo and its competitors use multiple tiny co-located antennas, one for each subscriber, to capture over-the-air TV broadcast signals and retransmit them to paying customers via the Internet to consumer devices. Background is available in my two earlier TVNewsCheck columns, The 411 on Aereo’s Many Legal Challenges and The Two Court Rulings Rocking Aereo, FilmOn.

Today’s column focuses on what’s ahead at the High Court: its quick timing, the filing of amicus (“friend of the court”) briefs, the parties and their arguments, and a little “tea leaf reading” of current SC justices’ prior positions in cases that might influence their perspective in ABC.

ABC is one of several similar federal broadcaster/Aereo, and broadcaster/FilmOn, cases in different judicial circuits. Some are in early stages. In California and D.C., federal courts have ruled for broadcasters and against FilmOn on essentially the same facts and legal issues as in ABC, by granting broadcaster-requested injunctions against FilmOn from operating anywhere in the U.S. outside of the Second Circuit (the states of New York, Connecticut and Vermont). This split in federal judicial circuits is often a reason for grant of SC review.

Pending the SC ABC outcome, the other lower federal court cases are already, or likely will be, stayed — suspended until the SC rules in ABC.

The SC ABC schedule (Broadcasters are the petitioners, Aereo Inc. is the respondent.)

• Feb. 24 (45 days after Jan. 10): Petitioning broadcasters’ deadline to file a brief explaining why they should win on the merits of the case. (If any filing in this list is made earlier than the SC deadline, the deadline for the next step runs from the actual filing date of the early filing).

• Seven days after petitioners’ brief is filed: Deadline for amicus briefs in support of the broadcasters, and deadline for amicus briefs that don’t support either side.

• Thirty days after petitioners’ brief is filed: Aereo must file its respondent brief, explaining why it should win on the merits of the case.

• Seven days after filing of respondent’s brief: Any amicus briefs in support of Aereo are due

• Thirty days after respondent brief filing, petitioners may file a reply brief, responding to the points made by Aereo, but it must be filed at least seven days before oral argument.

• Oral argument before the SC: To be set by the court, probably for late April.

• By or soon after July 4: The justices issue their decision(s). The most senior justice in the majority writes the majority opinion or assigns it to another justice.

Justice Samuel Alito has recused himself — opted out of participation in this case. Usually this is due to ownership of stock in a party to the case or other factor that could affect impartiality. In ABC, there could be a 4-4 split, with four justices siding with Aereo and four with the broadcasters and no “majority opinion.” If that happened, the Second Circuit appeals court ruling for Aereo would remain in effect, although it would have somewhat less value as precedent than if there were a majority opinion.

Parties to the Case and Their Main Arguments

• The parties. The petitioners include American Broadcasting Companies, Disney Enterprises, CBS Broadcasting, CBS Studios, NBCUniversal Media, NBC Studios, Universal Network Television, Telemundo Network Group, WNJU-TV Broadcasting, ABC, Thirteen Productions, Fox Television Stations, Twentieth Century Fox Film Corporation, WPIX, Univision Television Group; The Univision Network Limited Partnership, and Public Broadcasting Service. The respondent is “Aereo Inc. (formerly known as Bamboom Labs).”

• The legal issues. The specific legal question to be resolved is whether, under the “Transmit Clause” of the Copyright Act,  Aereo “publicly performs” copyrighted broadcast television programs when it retransmits the programs for Internet viewing to potentially thousands of  individual identical antennas, one for each Aereo subscriber. If these are “public” performances, copyright protection applies. If “private,” copyright protection does not apply, under the transmit clause, but may apply under other copyright provisions.

The Second Circuit appeals court, the same one that ruled for Aereo last year, held in the 2008 Cablevision case that the “relevant consideration” under the “transmit Clause is whether the public is capable of receiving a particular transmission. Therefore, the court said, when each member of the public is capable of receiving a particular transmission, the transmission is private and not protected under the Copyright Act.

However, the Second Circuit limited its Cablevision holding to the issue of public performance, and said:

“This holding, we must emphasize, does not generally permit content delivery networks to avoid all copyright liability by making copies of each item of content and associating one unique copy with each subscriber to the network, or by giving their subscribers the capacity to make their own individual copies. We do not address whether such a network operator would be able to escape any other form of copyright liability, such as liability for unauthorized reproductions or liability for contributory infringement.”

This quote may be of particular interest to the SC now.

Aereo’s arguments: Aereo contends that because its retransmissions and copies are “created” at the direction of its subscribers, and each transmission can only be accessed by the user who requested it and cannot be accessed or received by anyone else, its retransmission to its subscribers does not violate the broadcasters’ public performance right.

Broadcasters’ arguments: Broadcasters and their supporters argue that the Second Circuit erroneously interprets the Transmit Clause and confuses “performance” and “transmission.” They claim that the relevant consideration should be whether the public is capable of receiving a particular performance, not a particular transmission. Therefore, Aereo’s thousands of simultaneous transmissions should be treated the same as a single transmission to 10,000 households, in violation of the broadcasters’ public performance right.

Broadcasters say that Aereo and similar services threaten the continued viability of the broadcast industry. Cable systems and other MVPDs (multichannel video program distributors) must get retransmission consent for retransmission of their signals. Broadcasters rely on retransmission fees as a source of income. Aereo can offer lower prices to its subscribers than cable because Aereo does not have to pay any program fees, or comply with compulsory license requirements or FCC cable regulations.

This practice, the petitioners’ argument goes, not only harms current MVPDs, but has encouraged some of them to question why they should continue to pay retransmission fees if Aereo doesn’t have to. To protect their copyrighted material, some broadcasters have said publicly they are considering moving their free public broadcasts to paid cable, depriving the public of a recognized interest in access to over-the-air broadcast TV. The SC can consider consequences such as this.

Supreme Court Potential Leanings 

Predicting how judges will vote and courts will decide is a very risky business. Each case is different. Lawyers, however, often speculate about how a given judge or court might view a new case based on what they did in previous cases. Here are a few examples: 

The Cablevision Case

In June 2009, the SC denied review of the Cablevision ruling against copyright holders. In ABC, Aereo is likely to rely heavily on that 2008 Second Circuit appeals court decision. The composition of the SC has changed somewhat since 2009. Also, the SC denied review of the ruling for broadcasters in a case involving ivi, a former Aereo competitor.

In January 2009 in Cablevison, the SC sought advice from the U.S. Solicitor General, who represents the federal government before the SC. Current SC Justice Elena Kagan was then the U.S. Solicitor General. She  filed an amicus brief advising denial of review because the Cablevision holding did not conflict with any other Circuit or SC precedent, and Cablevision dealt only with the transmit clause and left open whether there could be other kinds of copyright violations. Specifically, the Cablevision appeals court said:

 “Some language in the court of appeals’ opinion could be read to suggest that a performance is not made available “to the public” unless more than one person is capable of receiving a particular transmission…. Such a construction could threaten to undermine copyright protection in circumstances far beyond those presented here, including with respect to VOD services or situations in which a party streams copyrighted material on an individualized basis over the Internet.”

Kirtsaeng v. John Wiley & Sons, March 2013.

Justice Stephen Breyer, who wrote the majority opinion in this case, said that the SC should interpret the Copyright Act in light of the intent of Congress to avoid “surprising consequences.” (In the 2014 ABC case, whichever party loses is likely to experience those).

Metro-Goldwyn-Mayer Studios Inc. v. Grokster, June 2005.

In his concurring opinion, Justice Breyer said “copyright laws are not intended to discourage or control the emergence of new technologies, including (perhaps especially) those that help disseminate information and ideas more broadly or more efficiently.” This is likely to be a concern of most of the current Justices, though probably not a deciding factor.

In her concurrence (with current Justice Anthony Kennedy joining), Justice Ruth Bader Ginsburg said wrote that the Court should try to “strike a balance between a copyright holder’s legitimate demand for effective — not merely symbolic — protection … and the rights of others to engage in substantially unrelated areas of commerce.” 

Author’s Observations

On the Second Circuit Cablevision case as a model for the SC ABC case: The lower Second Circuit Court in Cablevision granted summary (i.e., early) judgment in favor of the copyright owners (the retransmissions were public, not private), and issued a permanent injunction against the rollout of Cablevision’s RS-DVR system. The injunction prohibited Cablevision from “copying plaintiffs’ copyrighted works and engaging in public performance of plaintiffs’ copyrighted works, unless it obtains licenses to do so.” The appeals court reversed that and reached the opposite result.

Hyper-technical focus by the Second Circuit Court of Appeals on the transmit clause in Cablevision seems akin to “can’t see the forest for the trees.” Aereo configured its technology to avoid copyright based on the Cablevision appeals court result.  That was a ruling in one judicial circuit.

The framers of the Constitution (in Article I, Sect. 8) authorized Congress “to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

The founders knew not of broadcasters or Aereo. But they knew that created works would proliferate and be widely available if the creators were assured of some exclusive rights and protection from uncompensated use of their works by others without consent. This need not stop technological progress now, and often promotes it. Free unauthorized use of someone else’s product by a for-profit business based on the sale of that product seems incompatible with technological innovation and the wide dissemination of “useful arts,” particularly free, over-the-air distribution. (Full disclosure: I was an NAB lawyer much earlier in my career, before entering private practice.)

Stay tuned as the ABC case moves forward.

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].

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