Aereo Publicly Performs and Infringes Copyrighted Works

Aereo’s network receives broadcast television programming through thousands of dime-sized antennas. Aereo makes that programming available to subscribers by streaming the programming over the Internet.  Each subscriber is assigned a dedicated antenna that is not available to any other subscriber for the duration of the selected program.  A personal copy of the selected program is made for each subscriber.  Only the subscriber can access her personal copy.  When the broadcast companies sued Aereo for copyright infringement, the district court denied the broadcasters’ motion for a preliminary injunction.  The Second Circuit affirmed, ruling that Aereo does not publicly perform the transmitted works because the stream to the subscriber is a private transmission.  Read more about the Second Circuit’s decision in my post Unauthorized Streaming of Television Broadcasts Not Infringing.

Copyright owners have the exclusive right to publicly perform the works that they own.  The U.S. Supreme Court majority saw this case as reducing down to two questions:  “First, in operating in the manner described above, does Aereo ‘perform’ at all? And second, if so, does Aereo do so ‘publicly’?” (Opinion pdf page 8).  The Court ruled that Aereo’s activities are both a performance and a public performance.  Aereo infringes by violating the copyright owners’ exclusive right of public performance.

Congress Specifically Brought Cable Systems Within the Scope of the Copyright Act of 1976.

In previous decisions in 1968 and 1974, the U.S. Supreme Court ruled that community antenna television systems (CATV, cable’s predecessor) merely received and rechanneled broadcast television signals and that those functions were viewer functions.  Broadcasters, on the other hand, made creative decisions in choosing what to air.  “The Court drew a line:  Broadcasters perform. Viewers do not perform.”  (Opinion pdf page 9).

Congress rejected these 1968 and 1974 rulings when it enacted the Copyright Act of 1976.  Congress removed the Court’s line between broadcaster and viewer for performances of a work.

The amended statute clarifies that to ‘perform’ an audiovisual work means ‘to show its images in any sequence or to make the sounds accompanying it audible.’ Under this new language, both the broadcaster and the viewer of a television program ‘perform,’ because they both show the program’s images and make audible the program’s sounds.

Congress also enacted the Transmit Clause, which specifies that an entity performs publicly when it transmits a performance to the public.  The Clause thus makes clear that an entity that acts like a CATV system itself performs, even if when doing so, it simply enhances viewers’ ability to receive broadcast television signals.

Congress further created a new section of the Act to regulate cable companies’ public performances of copyrighted works.  Section 111 creates a complex, highly detailed compulsory licensing scheme that sets out the conditions, including the payment of compulsory fees, under which cable systems may retransmit broadcasts.

Congress made these three changes to achieve a similar end: to bring the activities of cable systems within the scope of the Copyright Act.

(Opinion pdf pages 11 – 12). 

Aereo Performs the Transmitted Works.

The Court ruled that Aereo’s activities are substantially similar to the activities of the CATV companies that Congress amended the Copyright Act to cover and that Aereo “performs” under the Copyright Act.  Aereo and the dissent argued that the subscribers’ ability to choose which programs to watch means that the subscriber transmits the performance, not Aereo.  The majority disagreed.

Given Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here.

(Opinion pdf page 14).

Aereo’s Transmissions are Public Performances.

The majority also ruled that Aereo’s transmissions are public performances of the copyrighted works.  Under the Transmit Clause, an entity performs a work publicly when it transmits a performance of the work to the public.  17 U.S.C. §101

Aereo argued that it does not transmit a public performance.  Each subscriber is assigned an individual antenna.  Aereo streams that subscriber’s personal copy to the subscriber, and no one else, over the Internet, making it a private performance.

The majority disagreed.

In terms of the Act’s purposes, these differences do not distinguish Aereo’s system from cable systems, which do perform ‘publicly.’ Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter? They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers’ screens. They do not render Aereo’s commercial objective any different from that of cable companies. Nor do they significantly alter the viewing experience of Aereo’s subscribers. Why would a subscriber who wishes to watch a television show care much whether images and sounds are delivered to his screen via a large multisubscriber antenna or one small dedicated antenna, whether they arrive instantaneously or after a few seconds’ delay, or whether they are transmitted directly or after a personal copy is made? And why, if Aereo is right, could not modern CATV systems simply continue the same commercial and consumer-oriented activities, free of copyright restrictions, provided they substitute such new technologies for old? Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies.

(Opinion pdf pages 16 – 17).

The majority ruled that a public performance can be made up of multiple, discrete transmissions and does not require a single transmission.

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 transmits a performance to all of them.

(Opinion pdf page 18).

The Court also ruled that Aereo’s subscribers comprise “the public.”  The Copyright Act does not define “the public.”  The Court inferred from its reading of the Copyright Act that “the public” means a large group of people outside of the normal circle of family and friends.  Aereo’s subscribers consist of a large number of people who are unrelated and unknown to each other.

This case is American Broadcasting Cos., Inc. v. Aereo, Inc., No. 13-461, U.S. Supreme Court.

Justice Breyer wrote the majority opinion and was joined by Chief Justice Roberts and Justices Kennedy, Ginsburg, Sotomayor and Kagan.  Justice Scalia dissented and was joined by Justices Thomas and Alito.

Dissent

The dissent discussed the distinction between direct and secondary liability in copyright cases – something not even mentioned in the majority opinion.  Direct liability occurs when the actor personally engages in the infringing activity.  Secondary liability occurs when a defendant is held liable for the infringing activity of a third party.  Copyright infringement is a strict liability tort for direct infringers, meaning that the actor is not required to intend to infringe the copyright to be held liable for copyright infringement.  Secondary liability requires the defendant to intentionally induce or encourage others to infringe while declining to do anything to stop or limit the infringement.  Secondary infringement requires volitional conduct by the defendant.

The dissent described Aereo as “an automated, user-controlled system,” analogous to an Internet service provider.

Aereo offers access to an automated system consisting of routers, servers, transcoders, and dime-sized antennae. Like a photocopier or VCR, that system lies dormant until a subscriber activates it. When a subscriber selects a program, Aereo’s system picks up the relevant broadcast signal, translates its audio and video components into digital data, stores the data in a user-specific file, and transmits that file’s contents to the subscriber via the Internet—at which point the subscriber’s laptop, tablet, or other device displays the broadcast just as an ordinary television would. The result of that process fits the statutory definition of a performance to a tee: The subscriber’s device shows the broadcast’s images and makes the sounds accompanying the broadcast audible. §101. The only question is whether those performances are the product of Aereo’s volitional conduct.

(Opinion pdf pages 27-28).

According to the dissent, the performances do not result from Aereo’s volitional conduct.  Aereo does not perform, because it does not make content choices.  Since Aereo does not make content choices, it cannot be liable for direct infringement. 

The key point is that subscribers call all the shots: Aereo’s automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it. Aereo’s operation of that system is a volitional act and a but-for cause of the resulting performances, but, as in the case of the copy shop, that degree of involvement is not enough for direct liability.

(Opinion pdf page 28).

The dissent seemed to think that the majority’s decision was premature.  The dissent pointed out that the only issue before the Court was Aereo’s direct liability for public performance.  The broadcast companies also brought other claims for direct and secondary liability.  Affirming the decisions of the district court and Second Circuit would remand the case to the lower courts for consideration of the other direct and secondary infringement issues.  Since this case came to the Supreme Court following a ruling on a preliminary injunction, the Court need not overturn the lower courts’ rulings just because they may not like what Aereo did.  There would still be plenty of opportunity for Aereo to be on the hook when the lower courts considered the broadcasters’ other claims.

The dissent argued that the majority’s reasoning was faulty.

The Court’s conclusion that Aereo performs boils down to the following syllogism: (1) Congress amended the Act to overrule our decisions holding that cable systems do not perform when they retransmit over-the-air broadcasts; (2) Aereo looks a lot like a cable system; therefore (3) Aereo performs.  That reasoning suffers from a trio of defects.

(Opinion pdf page 29).

The first defect is that the majority’s reliance on a few snippets of legislative history demonstrated “severe shortcomings” in interpretative methodology.

The second defect is that there are material differences between CATV systems and Aereo’s system.  According to the dissent, by the time it made its decisions in the CATV cases,

Cable companies performed the same functions as broadcasters by deliberately selecting and importing distant signals, originating programs, and selling commercials, thus making them curators of content—more akin to video-on demand services than copy shops. So far as the record reveals, Aereo does none of those things.

(Opinion pdf page 30).

The third defect is that Congress did not amend the Copyright Act to say that someone who uses a technology that looks like cable TV “performs.”  The majority’s opinion makes the law going forward unclear by possibly setting different standards for cable companies and their equivalents and everyone else.  Under the majority’s reading of the Copyright Act, a performance by a cable company will always be a public performance, making one-third of the majority’s opinion superfluous.

Finally, the dissent disagreed with the majority’s distorted application of the Copyright Act.

I share the Court’s evident feeling that what Aereo is doing (or enabling to be done) to the Networks’ copyrighted programming ought not to be allowed. But perhaps we need not distort the Copyright Act to forbid it. As discussed at the outset, Aereo’s secondary liability for performance infringement is yet to be determined, as is its primary and secondary liability for reproduction infringement. If that does not suffice, then (assuming one shares the majority’s estimation of right and wrong) what we have before us must be considered a ‘loophole’ in the law. It is not the role of this Court to identify and plug loopholes. It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude ‘looks-like-cable-TV’ solution the Court invents today.

The proper course is not to bend and twist the Act’s terms in an effort to produce a just outcome, but to apply the law as it stands and leave to Congress the task of deciding whether the Copyright Act needs an upgrade. I conclude, as the Court concluded in Sony: ‘It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of Appeals must be affirmed.’

(Opinion pdf pages 34 – 35).

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