Lots Of Action Soon In SC’s ‘Aereo’ Case

As Aereo Inc. readies the March 3 Austin, Texas, rollout of its paid subscription broadcast signal retransmission business, without broadcasters’ consent or compensation, February has been a busy month in the pending ABC v. Aereo Supreme Court (SC) case (ABC). This column summarizes briefly the February activity and updates the next steps in and around ABC, which will decide, for the whole country, whether Aereo’s business is legal or illegal.

Background on the Aereo and related FilmOn court cases is available in my three earlier columns: ABC-Aereo Set For Supreme Court Showdown, The Two Court Rulings Rocking Aereo, FilmOn and The 411 On Aereo’s Many Legal Challenges.

FEBRUARY DEVELOPMENTS

In order of occurrence:

Feb. 3: Aereo competitor FilmOn, which like Aereo has spawned federal court rulings about its legality, filed a motion for leave to intervene (i.e., participate) in ABC. FilmOn, which offers an Aereo-like service, told the high court that its Aereo ruling will have a significant impact on its business and that its interests won’t be adequately represented in the Supreme Court by Aereo, its primary competitor.

Feb. 10: Aereo opposes FilmOn’s motion to intervene. Why? Because, said Aereo, FilmOn neither identifies any deficiencies in Aereo’s legal arguments nor articulates any additional contribution it would make if permitted to intervene, and Aereo will fully represent FilmOn’s interests. (As noted in my September 2013 “411” column, the federal district court in New York found FilmOn and its CEO to be in contempt of court last September).

Feb. 18: FilmOn filed its reply to Aereo’s opposition to its motion to intervene.

Feb. 24: ABC, WNET New York, Disney, PBS and other petitioner broadcasters filed their brief advocating why they should win on the merits of the case. Main arguments are:

• Aereo’s unauthorized retransmissions are prohibited by the plain text of the Transmit Clause of the U.S. Copyright Act. It provides that a “performance” [in this case, making broadcast programming available to Aereo subscribers] is “public” “whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.” Aereo therefore violates broadcasters’ Copyright Act public performance rights by providing the same performances to “tens of thousands” of individual consumers.

• Congress adopted the Transmit Clause to apply broadcasters’ public performance right to cable television systems and future technologies that retransmit broadcasts to subscribers. The SC should not adopt a reading of the Transmit Clause that allows Aereo to effectively retransmit to the public using technology designed for the express purpose of avoiding the Transmit Clause.

• The Second Circuit’s federal appeals court’s 2008 Cablevison interpretation of the Transmit Clause should be overturned. The Second Circuit’s reading violates standard principles of statutory interpretation (in that it renders a portion of the statutory language superfluous) and conflicts with the language of the statute, which focuses on the audience capable of receiving a particular performance or display, not who is capable of receiving a particular transmission. The Second Circuit focused excessively on the technical details of Aereo’s system, despite the law’s language that the precise “device or process” by which the public receives the performance does not matter.

• Aereo’s model violates the spirit of the Copyright Clause of the Constitution, which seeks to encourage innovation by allowing inventors to secure a fair return for their creative labor. By allowing Aereo to freely appropriate content that broadcasters spend billions of dollars to create and acquire, Aereo threatens to chill the very innovation that copyright protection is intended to foster. Aereo also endangers the basic right of every copyright holder to determine if, when and how to make its copyrighted work available to the public.

Feb. 25: In the case Community Television of Utah v. Aereo Inc., a federal district court in Utah (the 10^th federal judicial circuit, also including Colorado, Kansas, New Mexico, Oklahoma and Wyoming) granted KSTU and other broadcasters a preliminary injunction stopping Aereo from operating in the 10th Circuit. The same court postponed the rest of the case pending SC resolution of the ABC v. Aereo case. Last Tuesday, however, the Utah court granted a temporary stay of the injunction for 14 days — until March 11 — while Aereo seeks an emergency stay of the injunction from the 10th Circuit Court of Appeals.

Feb. 27: SC receives record, part of it sealed, from the 2nd Circuit. 

Feb. 27:  The Media Institute files an amicus brief supporting broadcasters, arguing that Aereo’s model relies on “technological contrivances that serve no purpose other than to provide a pretext of legal cover, allowing Aereo to traffic in copyrighted content without paying for it,” and that Aereo’s practices amount to “manipulative exploitation.”

Today, Feb. 28: The SC (minus Justice Samuel Alito, who recused himself from (declined to participate in) ABC, meets to discuss the FilmOn motion to intervene.

NEXT STEPS IN THE SC ABC SCHEDULE:

• March 3: Deadline for amicus (“friend of the court”) briefs in support of the broadcasters, and deadline for amicus briefs that don’t support either side.

• March 26: 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: Amicus briefs in support of Aereo are due.

• Thirty days after respondent brief filing, but not later than April 15: petitioners may file a reply brief, responding to Aereo’s points. Aereo.

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

• 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.

CURRENT LEGALITY OF AEREO, AND FILMON, OPERATION

Unless Aereo can persuade, by March 11, the 10^th Circuit Court of Appeals to block the lower court’s injunction against Aereo, Aereo will be legally prohibited from operating in the six 10^th Circuit states named above. Aereo is currently available in Boston, Detroit, New York, Baltimore, Cincinnati, Dallas, Houston, San Antonio, Atlanta and Miami.

FilmOn is prohibited from operating anywhere in the United States outside the Second Circuit, which includes Connecticut, New York and Vermont.

SUPREME COURT OPTIONS FOR DECIDING THIS CASE

When it rules, the Supreme Court could:

•  Rule for petitioner broadcasters because Aereo’s business violates the Copyright Act’s public performance right, and the Second Circuit erred in its interpretation of the Transmit Clause.

• Find Aereo’s subscription service unlawful, but not based on the public performance right (perhaps leaving intact the Second Circuit decision in the 2008 Cablevision decision).

• Rule for Aereo because it does not infringe on the public performance right (affirming the Second Circuit’s pro-Aereo decision).

• Rule exclusively on the New York district court’s denial of broadcasters’ request for a preliminary injunction and decline to rule on the merits of Aereo’s legality until after the lower court cases conclude. The SC could uphold the lower court’s decision not to grant an injunction without weighing in more fully on Aereo’s legality, or it could overturn the lower court’s decision and order it to enjoin Aereo from operating before continuing with the case.

• Conclude that the court’s acceptance of the ABC case was “improvidently granted.” This option is unlikely and would leave the Second Circuit ruling on the Transmit Clause intact.

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.