LEGAL MEMO BY MICHAEL BERG

ABC v. Aereo: What Happened, What’s Next

Here's a roundup of the activity in March in the Supreme Court's ABC v. Aereo copyright infringement case with filings by both sides. There were also supporting arguments filed for both broadcasters and Aereo. And finally, there's a timetable for upcoming activity.

In March in the Supreme Court’s ABC v. Aereo Inc. case, the United States and 16 others filed friend of the court briefs supporting the broadcaster petitioners, and respondent Aereo Inc. filed its brief in answer to the earlier-filed broadcasters’ brief. This Legal Memo focuses mainly on those two events, and also notes other developments and next steps.

The full name of the case is American Broadcasting Companies Inc., et al. v. Aereo Inc. formerly known as Bamboom Labs Inc. (abbreviated here as ABC). Background is available in 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, FilmOn and The 411 On Aereo’s Many Legal Challenges.

In chronological order, here’s what happened in March: 

March 3: Seventeen friend of the court amicus briefs were filed, including one by the United States, in support of the broadcaster petitioners’ position that Aereo’s provision of broadcast signals and programs to paying subscribers, without broadcaster consent or compensation, violates U.S. copyright law. On the same date the SC denied FilmOn’s motion for leave to intervene and become a party in the case.

March 12: In addition to its amicus brief on behalf of the United States, the Solicitor General filed a motion for permission to participate in the oral argument before the SC on April 22. That motion is pending as of this writing.

March 26: Respondent Aereo filed a brief arguing why the SC should rule for Aereo.

BRAND CONNECTIONS

Also, on March 7 in the separate case Community Television of Utah v. Aereo Inc., the 10th Circuit Court of Appeals denied Aereo’s motion for a stay of the preliminary injunction against its operating in the Tenth Circuit states (Utah, Colorado, Kansas, New Mexico, Oklahoma and Wyoming) pending its appeal. The appeals court held that Aereo failed to show that it is likely to succeed on the merits of the Utah case, and refused to overturn the District Court’s injunction.

On April 2, amicus briefs by supporters of Aereo were due. (Their content will be covered in a future column.)

Briefs Supporting The Broadcasters Against Aereo

In addition to the amicus brief filed on behalf of the United States, pro-broadcaster briefs were also filed by The Media Institute; Professors Peter S. Menell and David Nimmer; The American Society of Composers, Authors and Publishers (ASCAP); American Intellectual Property Law Association; The National Association of Broadcasters (NAB); Viacom Inc.; Washington Legal Foundation; National Football League and Major League Baseball; Cablevision Systems Corp.; Copyright Alliance and Various professors; Ralph Oman, former Register of Copyrights of the United States; New York Intellectual Property Law Association; Screen Actors Guild-American Federation of Television and Radio Artists (SAG); International Center for Law & Economics; International Federation of the Phonographic Industry; and Time Warner Inc. and Warner Bros Entertainment Inc.

Here are capsule summaries of the Solicitor General’s brief, and a few of the other 16, to highlight the range of arguments made:

Solicitor General’s Brief Supporting ABC 

The U.S. Solicitor General represents the United States before the SC. Current SC Justice Elena Kagan was the SG before being named to the SC. The SG is not obligated to weigh in on every SC case, and generally takes sides when the SG believes that case results will significantly impact the interests of the United States. Due to the nature and prestige of the Office of SG and its selective approach to involvement in SC cases, the SG’s taking sides is usually significant.

The Solicitor General argued:

Aereo’s unauthorized Internet retransmissions infringe broadcasters’ exclusive public performance rights under the Copyright Act.

The Copyright Act guarantees copyright owners the exclusive right, “in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly” (emphasis added). The term “performance” includes both the allegedly infringing Aereo transmissions, and any underlying performances, such as the network broadcasts. Because Aereo’s system transmits the same underlying performance to numerous subscribers, it “performs” petitioners’ copyrighted works publicly and infringes petitioners’ public performance right.

Even if the SC construes the term “performance” narrowly to apply only to the transmission itself, the performance is still public because those transmissions are still available to any member of the public who is willing to pay Aereo’s monthly subscription fee.

 “… a decision rejecting respondent’s infringing business model and reversing the [2nd Circuit’s] judgment need not call into question the legitimacy of innovative technologies that allow consumers to use the Internet to store, hear, and view their own lawfully acquired copies of copyrighted works.”

The SG distinguished other technologies, such as cloud-based services, from Aereo. In the cloud and other non-Aereo technologies, the underlying content has already been lawfully acquired, and a consumer’s playback of her own lawfully-acquired copy of a copyrighted work to herself will ordinarily be a non-infringing private performance. Aereo, on the other hand, equips its subscribers to access copyrighted content in the first place (without any prior lawful acquisition by the consumer), providing the same service that cable companies have traditionally provided without paying the same license fees.

Examples of the diverse array of interests and legal and policy arguments supporting petitioners include:

ASCAP: Holding Aereo noninfringing would seriously undermine the music industry “just when the online marketplace has started to produce licensed business models that enable consumers to obtain access to music and audiovisual works, while permitting content creators and their business partners to generate the returns that allow them to produce new works.”

The Grokster decision shows that holding Aereo infringing will not discourage technological progress, because Aereo’s technology is not innovative, but merely implements “a contrived technology that is patently inefficient in order to perform exactly the same works and provide exactly the same consumer experience” as existing services that are licensed by … other content owners.”

NAB: Aereo’s system amounts to no more than a technological gimmick to subvert a carefully constructed legal framework. Through the compulsory licensing system and its retransmission consent scheme, Congress struck a careful balance between interests of broadcasters, copyright holders, MVPDs and the public.

Aereo disrupts this delicate balance, inflicting grievous and irreparable harm on broadcasters and national and local broadcast television by undermining the value of network and local advertising, impairing broadcasters’ ability to negotiate retransmission consent fees, interfering with the authorized online distribution of broadcast programming, and threatening to cause an exodus of network programming to subscription services.

NFL/MLB: The Second Circuit decision upsets settled law that commercial services must first obtain copyright licenses to retransmit broadcast signals, regardless of the technology that such services employ or the fact that broadcast programming is freely available over the air. An SC finding for Aereo would sanction distribution of an almost identical product to the one that the NFL/MLB licenses to others, and destroy the exclusivity that the NFL/MLB has provided various rights holders in marketplace-negotiated agreements.

Cablevision: Aereo’s system infringes petitioners’ public performance right, but such a finding should not extend to other technologies such as RS-DVR or cloud-based services. The relevant inquiry rests on the potential audience for a particular transmission. Consequently, Aereo’s transmissions are “to the public” because Aereo takes a particular pool of content and offers to transmit that content to anyone willing to pay.

Cablevision’s RS-DVR, on the other hand, is distinct from Cablevision’s delivery of cable programming, and therefore the relevant potential audience (for Cablevision’s RS-DVR) is those capable of receiving RS-DVR recordings, not those capable of receiving transmissions over Cablevision’s cable system generally.

The Screen Actors’ Guild: Aereo is unjustly enriching itself from the fruit of others’ labor. This “piggy-backing” violates the spirit and plain language of the Copyright Act. Such a service threatens to subvert residuals collected by guild members, and is comparable to CATV systems, which prompted Congress to amend the Copyright Act in 1976 to bring such systems within its regulatory purview.

Aereo’s Respondent Brief

Aereo’s Response Brief argues that Aereo should win the SC case because its provision of broadcast material does not violate copyright law. The brief makes three main arguments:

Aereo’s transmissions of broadcaster material to its subscribers are private, not public, performances, and therefore do not violate the Copyright Act’s Transmit Clause (which distinguishes between public and private performances). According to the Brief:

“Aereo’s equipment does not receive or record any broadcast programming except in response to user commands; when not in use by consumers, it is dormant. When an Aereo user plays her personal recording of a broadcast work and views its images and sounds over the Internet, the ‘performance’ she transmits and receives is that playback — not the broadcaster’s prior performance.” Because Aereo’s technology cannot be used to transmit content other than from a user’s personal recording of a broadcaster’s televised programming, Aereo’s performances of broadcast programs are not “public.”

Aereo does not exercise enough control of its transmissions of broadcast programming to be held directly liable for copyright infringement. “To impose direct liability under the Copyright Act,” the brief says, “the alleged infringer must engage in affirmative (‘volitional’) action that renders the copyrighted work capable of being perceived.” Because “nothing goes into or comes out of Aereo’s equipment except in response to a user’s commands,” it is Aereo’s users — not Aereo — who “perform” the copyrighted works. The fact that Aereo provides and maintains the equipment used by consumers does not constitute a performance in and of itself, and therefore Aereo does not infringe broadcasters’ performance rights.

Copyright policy considerations warrant a finding of no liability. According to the Aereo brief: Finding Aereo in violation of the public performance right would also implicate other technologies, such as cloud-based storage services.

Aereo cannot be distinguished from similar digital services based on whether or not the consumer’s own copy was “lawfully acquired,” as nobody in the current case has attempted to show that the personal recordings made by Aereo’s users are unlawful.

Nothing in the Copyright Act suggests that Congress intended petitioners to be able to extract “copyright royalties” from Aereo. “Because petitioners’ free, over-the-air broadcasts are supposed to be accessible to the entire public, they are not entitled to royalties when a consumer uses an antenna and DVR to access the content carried by their signals.”

Consequently, “no one — even cable and satellite companies — must pay copyright royalties,” (emphasis added) which are separate from the issue of retransmission fees), “to retransmit a broadcaster’s signal within the broadcaster’s market.”

Additionally, the SC “should not rewrite the Copyright Act in an effort to protect petitioners from lawful and logical advancements in technology or from the economic consequences of their transmitting works for free over the public airwaves.”

Parties filing briefs in support of Aereo include the American Cable Association (ACA); 36 intellectual property and copyright law professors; the Electronic Frontier Foundation, Public Knowledge, the Consumer Electronics Association, and Engine Advocacy (EFF); Dish Network et al.; small and independent broadcasters; the Computer & Communications Industry Association and Mozilla Corp. (CCIA); and the Consumer Union, among others.

Some of the arguments made in favor of Aereo include:

ACA: “The exclusive right to perform a work publicly does not encompass a right to limit who can be in the audience, or to veto technologies used to gain reception of the licensed performance.” Aereo is merely “one more technology that serves the public’s right to tune in to signals broadcast over the public’s airwaves and to do, remotely, what has long been permissible using the functional equivalent of home-based equipment.”

EFF: Construing the Transmit Clause so expansively as to hold Aereo infringing would “strip away all the commercial freedom that led to the home stereo, the videocassette recorder, all manner of personal audio and video technologies, and many Internet-based services.”

Small Independent Broadcasters: User-friendly viewing technologies like Aereo enable small, independent broadcasters to better reach audiences, especially those with limited access to more conventional viewing equipment (e.g., cable or satellite television). Similar to Sony’s Betamax (which the SC held legal in 1984), technologies like Aereo help broadcasters expand their audiences by expanding private home viewing capabilities for the public at large.

Dish Network: Allowing suit against dual-use technologies (products that a consumer can either use lawfully or to infringe) many years after their creation chills innovation, as inventors will be more hesitant to invest the time and money into developing such products only for them to be deemed illegal many years later.

CCIA: Holding Aereo infringing would also threaten the expansion of cloud computing that is “fundamentally reshaping information technology.” Aereo’s technology cannot be distinguished from cloud computing services based on questions of “first instance” (how was the copyrighted material obtained in the first instance) or “direct liability” (who exercises the requisite volition in making the illegal copies) offered by broadcasters and their supporters. This “imperil[s] socially beneficial innovations and current businesses that build on the efficiencies promised by cloud computing.”

Law Professors: Holding Aereo noninfringing does not conflict with the provisions of the Berne Convention or World Intellectual Property Organization Copyright Treaty. However, even if there were a conflict between international law and the U.S. Copyright Act, the Copyright Act would prevail, as Congress has made clear that the U.S. Copyright Act takes precedence over and should not be modified by any international obligation.

Next Steps

April 15: Petitioners may file a reply brief to Aereo’s respondent’s brief.

Before April 22: The SC grants or denies the SG’s motion to participate in oral argument.

April 22: Oral argument before the SC by both sides, with justices asking questions, which may indicate how they are leaning.

By, or soon after, July 4: The justices issue their decision(s).

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.


Comments (8)

Leave a Reply

Gregg Palermo says:

April 4, 2014 at 10:19 am

Everyone should go read the Betamax decision. Private use of a signal applies, because the Aereo subscriber owns an individual antenna, not at all like cable TV.

    John Murray says:

    April 4, 2014 at 10:49 am

    Minor difference Rusty: Sony didn’t charge Betamax owners a monthly subscription fee. Aereo put the lie to its whole case by agreeing to act as a Bloomberg TV distributor. Yes, that would indeed make Aereo a… “distributor”

    Angie McClimon says:

    April 4, 2014 at 3:26 pm

    The Aereo subscriber DOES NOT own the antenna. It is leased. Everything in their receiver chain is leased, just like cable. Also there is no proof that one user gets assigned one antenna. And “Bemused” is correct. The moment they added Bloomberg TV to their available channels, they became an MVPD, which is what cable is.

    Wagner Pereira says:

    April 4, 2014 at 4:26 pm

    Not by the definition of the law defining a MVPD. See article link below.

Andrea Rader says:

April 4, 2014 at 3:22 pm

And Sony didn’t provide an antenna array at a central headend, either.

    Wagner Pereira says:

    April 4, 2014 at 4:49 pm

    As I have said for months, Antennas are a red herring. if you read the framing of the case that SCOTUS is deciding on, SCOTUS is not looking at antenna and if they work or not. Again, this is only a red herring for those who have not taken the time to educate themselves as to what SCOTUS is actually ruling on. Anyone who continues to bring up the Antenna is only showing their ignorance in this case.

Wagner Pereira says:

April 4, 2014 at 4:23 pm

You would be wise to to read the Aereo response as well as the 1976 Copyright Law. Specifically, The 1976 Copyright Act actually states that cable operators should NOT pay copyright fees on content distributed within their local market. Furthermore, in the 1992 Cable Act, retransmission consent applies to cable systems and is absolutely distinct from copyright law. Props to BTIG Richard Greenfield for reading the entire Aereo response and pointing out this is perhaps a game changer. http://www.btigresearch.com/2014/03/31/broadcasters-should-be-very-concerned-could-be-time-to-prepare-for-a-legal-aereo/#ixzz2xx1XQKbq

Read more: http://www.btigresearch.com/2014/03/31/broadcasters-should-be-very-concerned-could-be-time-to-prepare-for-a-legal-aereo/#ixzz2xx0lAu83http://www.btigresearch.com/2014/03/31/broadcasters-should-be-very-concerned-could-be-time-to-prepare-for-a-legal-aereo/


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