Aereo: SCOTUS rules its service infringing

June 26th, 2014 by Barry Sookman Leave a reply »

The Supreme Court of the United States ruled in a 6 to 3 opinion yesterday that Aereo’s Internet retransmission service infringes copyright. Aereo had tried to architect its television restransmission system to avoid paying copyright royalties or license fees by “renting” dime sized antennae to subscribers. Judge Chin of the US Second Circuit Court of Appeals had called Aereo’s service  “a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.” In  American Broadcasting Cos. v. Aereo, Inc., the SCOTUS agreed telling Aereo essentially, it looked like a cable retransmitter, it acted like a cable retransmitter, Congress had specifically amended the Copyright Act to ensure that cable retransmitters publically performed when they delivered programming to subscribers, and that Aereo’s service was indistinguishable in any meaningful way from those services.

The opinion is a very important one for many reasons including the following.

There is a debate in the US as to whether a person that designs, programs and operates a system can escape copyright liability by arguing it lacks “volition” in the infringing act because the act is triggered by users. It had been argued that Aereo did not perform e.g., did not communicate, the sounds and images that viewers watched and listened to when they used the Aereo service. The claim was that Aereo merely provided the equipment that was used by subscribers to watch TV. This “volitional defense” argument, which the three dissenting Justices  were prepared to adopt, was rejected by the majority of the Court. They held that just as cable companies performed TV programming by retransmitting it, so did Aereo.

When an Aereo subscriber selects a program to watch, Aereo streams the program over the Internet to that subscriber. Aereo thereby “communicate[s]” to the subscriber, by means of a“ device or process,” the work’s images and sounds. §101. And those images and sounds are contemporaneously visible and audible on the subscriber’s computer (or other Internet-connected device). So under our assumed definition, Aereo transmits a performance whenever its subscribers watch a program.

The Court also ruled that the public performance right applies even if the content is streamed to individual users at different times and to different places. The right is broad enough to cover a myriad of on demand services now being provided over the Internet.

The fact that a singular noun (“a performance”) follows the words “to transmit” does not suggest the contrary. One can sing a song to his family, whether he sings the same song one-on-one or in front of all together. Similarly, one’s colleagues may watch a performance of a particular play—say, this season’s modern-dress version of “Measure for Measure”—whether they do so at separate or at the same showings. By the same principle, an entity may transmit a performance through one or several transmissions, where the performance is of the same work.

The Transmit Clause must permit this interpretation, for it provides that one may transmit a performance to the public “whether the members of the public capable of receiving the performance . . . receive it . . . at the same time or at different times.” §101. Were the words “to transmit . . . a performance” limited to a single act of communication, members of the public could not receive the performance communicated “at different times.” Therefore, in light of the purpose and text of the Clause, we conclude that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.

The U.S. Second Circuit Court of Appeals in the Cablevision case had ruled that a network PVR service that streams  TV programming  to members of the public by using separate copies of  the programs for each subscriber did not transmit such programming “to the public”.  This was an important holding because under the transmit clause a performance is only infringing if it is “to the public”. The SCOTUS rejected that holding interpreting the public performance right in a technologically neutral manner.

We do not see how the fact that Aereo transmits via personal copies of programs could make a difference. The Act applies to transmissions “by means of any device or process.” Ibid. And retransmitting a television program using user-specific copies is a “process” of transmitting a performance. A “cop[y]” of a work is simply a “material objec[t] . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicated.” Ibid. So whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds. Therefore, when Aereo streams the same television program to multiple subscribers, it “transmit[s] . . . a performance” to all of them.

The opinion in the Aereo case is not surprising. Aereo had, as Judge Chin described, tried to engineer around copyright laws to launch and run a system by paying for everything needed for the service including people and technology other than for the content, which in the end was what subscribers were paying for. Aereo’s system was indistinguishable in function from cable though  it used a different technology to do the retransmitting.  Although not cited in the opinion, an earlier Canadian Internet retranmitter, ICraveTV, was shut down by a District Court in Pennsylvania in the the case Twentieth Century Fox Film Corp. v. ICraveTV 53 U.S.P.Q.2d 1831 (W.D.Penn. 2000)

The opinion in the Aereo case is consistent with international precedents including the decision of the Supreme Court of Canada in Rogers Communications Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35 and the decision of the Court of Justice of the European Union in  ITV Broadcasting Ltd and other companies v TVCatchup Ltd, [2013] 3 C.M.L.R. 1 (Case C-607-11, CJEU).

My firm, McCarthy Tétraultwas involved in filing an Amicus Brief in the SCOTUS on behalf of Canadian and international and foreign associations and copyright scholars in support of the broadcasters and copyright owners in the case. I helped draft the amicus brief along with Dan Glover of McCarthy Tétrault and other amici. I also joined in the brief as one of the copyright scholars. The brief was filed by my partner Steven Mason, who is a member of the Bar of the U.S. Supreme Court.

For more on the case, see the article in yesterday’s Globe and Mail by James Bradshaw and the articles by Australian Copyright Council and Tom Sydnor. I was also interviewed about the case by BNN. You can watch it on BNN’s website.

 

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