Aereo: Will SCOTUS Clear the Way for Unlicensed Retransmission?

The U.S. Supreme Court granted certiorari for American Broadcasting Companies, Inc., et al v. Aereo, Inc. on January 10, 2014. This case has the potential to change the landscape of broadcasting, transmission and retransmission/recording and has garnered a great deal of attention. First, we provide some short, pertinent background on the Betamax and Cablevisions cases that preceded it, and then onto the Aereo case.

Betamax Case

The current state of the law in this area was set in place in 1984 when the U.S. Supreme Court issued its ruling in Sony Corp. of America v. Universal City Studios, Inc. This case is commonly referred to as the “Betamax Case.”

The “Betamax case” dealt with at home recording of programming through the use of VCRs and Betamax, novel technological advances for the time. The plaintiffs wanted the manufacturers of these systems to be held directly liable for the infringing uses of their customers. However, the court held this was not copyright infringement. The devices in question had legitimate and non-infringing uses as well as potentially infringing uses. Ultimately, the court ruled that this was a fair use because individuals were using the devices for personal use in their homes and to facilitate time shifting for later private home viewing.

Cablevision Case

The next major ruling in the line of cases in this area came in 2008 in Cartoon Network v. CSC Holdings, commonly referred to as the “Cablevision case.”

The Cablevision case involved potential copyright infringement through the use of RS-DVRs (remote storage DVRs). In this instance, Cablevision had existing contracts with content providers to receive broadcasts and retransmit them to home viewers, a service it was regularly providing. However, it began providing an additional service of recording content for customers that did not have their own DVR device in their homes. It did not obtain the proper licensing arrangement for redirecting transmissions to remote storage. They began rerouting the content to a remote storage facility where a copy of the content could be saved for any customer that had requested it and viewed by that customer at a different time.

Recording in the RS-DVR required buffering. Each second of a program would be buffered one at a time. It would be held for no more than 1.2 seconds and then overwritten by the next second of the program. The 2nd Circuit held that this act of buffering did not qualify as creating a reproduction of the works because it did not meet the duration requirement of copying. The court believed that 1.2 seconds was only a transitory period and not sufficient to be considered an act of copying.

The court also considered whether transmission of the content from the RS-DVR qualified as a public performance, thus violating the statute. Because each work in storage was only transmitted to the individual that requested it, the court ruled that it was not a public performance.

Similar to the Sony holding, the court held that Cablevision could not be directly liable for any acts of copying through the use of the RS-DVR. The company itself had little control over the circumstances and copies that were actually “made” by the customers. It simply provided the mechanism. This decision focused on the court’s findings that the RS-DVR system created unique copies of each recording for each individual customer that requested it; and each customer was only allowed to view those unique recordings that it had requested.

Aereo Case

This brings us to the present situation in which Aereo is being sued for providing recording services, although under somewhat different circumstances. Aereo is an online, membership-based service which provides access to on-air broadcasting via a very small  antenna located in a data center near the member. The antenna is connected to a storage device in the same data center which the member controls from an internet-connected device.

Twentieth Century Fox, Univision, and others requested the US Supreme Court to review Aero’s win in the Second Circuit Court of Appeals in New York. These petitioners feel that Cablevision is not applicable, primarily due to the ability to watch live broadcasts as well as recorded programming and are doing so without the proper license. Because Aereo customers can watch the programs in almost real-time, they are not using the copies created by Aereo for time-shifting purposes. They claim this is a public performance. They believe this is a clear distinction from the Cablevision case, in which the court didn’t discuss time-shifting and breaking the chain of transmission because a licensing arrangement for live transmissions existed.

In deciding the public performance issue of this case, the 2nd Circuit relied on the definition of the Transmit Clause. 17 U.S.C. §101. If a transmission is capable of being received by the public, it is deemed to be a public performance. However, if the potential audience is only a single customer, the transmission is not public. Transmissions to individuals should not be aggregated in order to make them qualify as a public performance, especially because each of the transmissions in question is being generated from individual copies created by Aereo customers.

The dissent to the 2nd Circuit ruling points to the availability of licensing agreements to solve disputes such as this. It stated that transmitting and retransmitting programming to the public without proper authorization is a clear violation of the law. In the dissent’s opinion, Aereo is performing an act which other parties are engaged in legally through the use of licensing agreements and it should not be tolerated.

Who stands to be harmed by this opinion? This ruling has the ability to change the way that fees are assessed for consumers of programming. If Aereo’s actions are approved by the court, more companies are likely to pop up that collect broadcasting from the airwaves and provide it directly to consumers without paying licensing fees to the content creators. Due to lost revenue, content creators could raise the prices charged to paying customers. Or they may stop broadcasting over public airwaves. Whether it is due to a lessened ability to access broadcasts or additional fees paid for content, the individual consumers are the ones most injured by the implications of this case.

Legal and Technical Background

To fully understand the court’s reasoning, it is essential to understand the various terms they are construing. Below are some definitions from the Copyright Act that are necessary for this discussion.

Copyright Definitions

“a work is ‘fixed’ when it is ‘sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration’”

  • “’to perform’ a work is ‘to recite, render, play, dance or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or make the sounds accompanying it audible’”
  •  “’to perform or display a work publicly’ is ‘(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause or to the public, by means of any device or process, 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’”
  • “a ‘device or process’ is ‘one now known or later developed’”

17 U.S.C. §101.

How Aereo Works

The main difference in this case is that there is no pre-existing contract between the parties. Aereo provides its service by capturing live broadcast signals (unlawfully, according to the plaintiffs) and transmitting them to customers through internet capable devices including computers, laptops, smartphones and other mobile devices. Customers are also able to request in advance that certain programming is recorded.

How does the process work? When customers make a request for specific programming, the request goes to the Antenna Server which then allocates a specific antenna and transcoder for each customer. Static customers have a particular antenna assigned to them at all times. Dynamic users, which comprise most of Aereo’s customer base, do not have their own antennas, but they are randomly assigned an antenna each time that they send a request. Each Aereo antenna is only assigned to a single user at one time.

The Antenna Server then tells the Streaming Server to store a copy of the requested program for the individual user. After being encoded by the transcoder, the program is saved onto a hard disk file in the user’s directory. Programs that are being viewed live are only retained for the normal buffering period and not saved longer unless the recording option is engaged. Recorded programs are automatically saved.

Each antenna is composed of a small pair of metal loops. Up to 80 antennas are stored on a single circuit board, with 16 circuit boards contained within a single metal housing. In the district court, plaintiffs argued and provided evidence from an expert that these antennas are not capable of operating separately because they are housed so closely together that it is impossible for incoming signals to distinguish between them.  Aereo contested the finding of the expert’s experiments with another expert and argued that the antennas all function separately.

Aereo subscribers can choose to watch live programming with only a short delay or request the recording of programs for later viewing. Aereo contends that this is similar to the remote storage option that was upheld in the Cablevision case. According to Aereo, “its system creates unique, user-requested copies that are transmitted only to the particular user that created them and, therefore, its performances are nonpublic” and “each of its antennas function independently.” American Broadcasting Companies, Inc., et al v. Aereo, Inc., 874 F.Supp.2d 373, 379 (2012).

For more information:

 

 

Ninth Circuit: An Independent Copyright Interest by Actors?

Garcia v. Google: The Recognition of an Independent Copyright in Actors’ Performances and Its Impact on the Film Industry

In an interesting opinion issued by the Judge Kozinski of the 9th Circuit on Feb. 26th, the court issued a preliminary injunction forcing YouTube to remove a video posting and opened the door for actors to assert an independent copyright interest in their performances.

The video in question was titled “Innocence of Muslims.” The 13 minute film was posted on YouTube and later aired on Egyptian television. It was not well-received by the Muslim community and an Egyptian cleric even issued a fatwa, demanding the killing of everyone involved in the film.

Cindy Lee Garcia, an actress, made a 5 second appearance in the film. When she agreed to perform, Garcia was under the belief that the film would have an entirely different subject matter. She was told the working title was “Desert Warrior.” She was hired by Mark Basseley Youssef, the writer and producer, and paid around $500 for 3.5 days of filming.

In the released version of the film, Garcia’s voice was dubbed over and it appears as if she is saying “Is your Mohammed a child molester?” Based on this appearance, she began receiving a number of death threats. She was forced to implement various security measures, including moving to a new home and relocating her business.

Garcia filed 8 takedown notices under the Digital Millennium Copyright Act, all of which were refused by Google, the owner of YouTube. (DMCA takedown notices must be issued by the copyright holder of a work.) Garcia then filed for a temporary restraining order, which the district court treated as a motion for a preliminary injunction. The injunction was rejected by the district court which believed that she had unnecessarily delayed in bringing the action (she filed her complaint 5 months after the film was originally posted but immediately after beginning to receive death threats) and failed to demonstrate that the requested relief would prevent the alleged harm. It also stated that she had granted Youssef an implied license to use her performance and would therefore, be unlikely to succeed on the merits.

The 9th Circuit reversed the district court’s ruling and considered whether Garcia had an independent copyright interest in her performance, whether the performance was a work made for hire and whether an implied license existed.

In determining if an independent copyright interest existed, the court analyzed several factors. Was this a work of joint authorship? If so, any of the joint authors would have the right to use and exploit the work without the approval of the other joint authors and Garcia’s complaint would fail. She argued, and the court agreed, that she did not intend for her performance to be a work of joint authorship. Intent is a requirement, so the court stated this was clearly not a work of joint authorship.

Next, it contemplated whether or not there could be a protectable copyright interest in just her performance. The fixation requirement had been met, so she needed only to show that her performance contained a minimal degree of creativity in order to be protectable. Google argued that the dialog was written by the director who also managed all aspects of production and chose to dub over her voice, so the performance belonged to the director and not the actor.  But, the court described acting as an “embodiment [that] includes body language, facial expressions and reactions to other actors and elements of the scene” and found that Garcia had met the threshold for creativity and protectability. (They judges are careful to point out that they “need not and do not decide whether every actor has a copyright in his performance within a movie,” but felt that Garcia was likely to prevail under the circumstances.)

If the performance was deemed to be a work made for hire, all rights in Garcia’s performance would vest in the director. Works made for hire are completed by an employee acting with the scope of his/her employment or an independent contractor that has transferred its interests in writing. Several factors were analyzed, but the court felt the evidence weighed in favor of Garcia and a finding that this performance was not a work made for hire. She was hired for only this specific part with no proof of a potentially ongoing relationship. She did not receive health or employment benefits. There was no written agreement. Youssef was not in the “regular business of making films.” And Garcia only worked for 3.5 days.

Finally, the court discussed whether or not an implied license existed between the parties which would give all copyright rights to the director, and not the actor. The court pointed out that in most actor/director relationships a non-exclusive implied license exists when a work is created at the director’s request and handed over with the actor knowing that the director intends to copy and distribute it. Under the circumstances of this case, the court recognizes that an implied license is present because Garcia auditioned, got paid for her performance and could reasonably foresee that the film would be released. However, it focused on how Youssef exceeded this license by leading her to believe that she was involved in one project and drastically changing it to another. It explains that this is a very rare circumstance, but Youssef’s actions were fraudulent and sufficient to void any agreement that was present between the parties.

Google is clearly unhappy with the outcome in this case and threatens continued action. The typical takedown message that appears on YouTube videos that have been subject to DMCA claims has been altered. It reads: “This video is no longer available due to a copyright claim by an actress over her 5-second appearance in the video. A U.S. court has ordered Google to remove the video. We strongly disagree with this copyright ruling and will fight it. Sorry about that.”

Critics are disapproving of this decision and feel that it will most likely be problematic. Is this a limited holding or one that will be broadly construed by actors to negatively affect the process of film distribution? Will certain sectors of the industry be potentially more affected than others, e.g. adult films or other areas where actor’s remorse is common? What implications will this have on the freedom of speech?

For more information:

Case: 2:12-cv-08315-MWF-VBK

 

Part III: new gTLDs and Trademark Issues

Parts I and II have laid the framework for ICANN and how the newly available domain names will operate. But, how will all of this affect trademark owners and how will disputes be handled?

The next wave in the domain name business will be providing specific domain names to trademark owners interested in purchasing them.

Trademark owners that have spent a great deal of time and money building value in their mark are likely to also want to control the use of that mark as a domain name. For example, instead of shopping at AMAZON.COM, consumers can simply go to .AMAZON. If a random company owns .AMAZON, it is likely to create confusion for consumers expecting to find AMAZON.COM products and services on the site. The goodwill associated with the AMAZON.COM mark will suffer. Thus, an outlet for potential cybersquatting has materialized.

This system poses new opportunities as well as new challenges for trademark owners. According to the ICANN Factsheet for gTLDs, the organization has given great consideration to protecting trademark holders and has outlined a 4 part process: (1) “an objection-based process will enable rightsholders to demonstrate that a proposed gTLD would infringe their legal rights,” (2) applicants for new gTLDs will be required to describe in their applications the rights protection mechanism they propose for second-level registrations, which must be made public,” (3) all new gTLDs must ensure that second-level registrations are subject to ICANN’s Uniform Domain Name Dispute Resolution Policy (UDRP),” and (4) “ICANN has been working closely with the trademark community to find additional solutions to potential issues for trademark holders in implementing new gTLDs.” (http://www.icann.org/en/about/learning/factsheets)

ICANN has set up a Trademark Clearinghouse (TMCH) to assist trademark owners as the domain name system (DNS) expands. The body handles all applications, conflicts and objections through a system composed of various timelines.

A Sunrise Period of at least 30 days, and up to 60 days, has been opened in which trademark owners are encouraged to submit applications to TMCH for a desired gTLD of their particular mark. Deloitte is currently the only company working with the TMCH, and will be tasked with authenticating all applications, compiling a database of the applications and providing that information to registries and registrars. Once they have been added to the database, owners will be informed when a gTLD matching their trademark becomes available.

The Trademark Claims Period follows the Sunrise Period. Applications are accepted in a number of languages and all parties with matching or conflicting marks are notified when a conflict arises. This period runs for up to 90 days. In order to be eligible, marks must fit into one of the following categories:

  • “Nationally or regionally registered word marks form all jurisdictions
  • Word marks that have been validated through a court of law or other judicial proceeding
  • Word marks protected by a statute or treaty in effect at the time the mark is submitted to the Clearinghouse for inclusion
  • Other marks that constitute intellectual property may be recorded in the Clearinghouse by arrangement with a registry” (http://newgtlds.icann.org/en/about/trademark-clearinghouse/faqs)

Following the Trademark Claims Period is a Land Rush Period in which registration is open to anyone.

When an application period ends, the applications are published on the ICANN website for objection. There is a 60 day window for public commentary and a 7 month window for objections. If no objections exist, the registration will be completed following this period.

The Uniform Domain-Name Dispute Resolution Policy, UDRP, was adopted in 1999 as a way to provide an “alternative to costly litigation for resolving disputes concerning cybersquatting in gTLDs.” All registrars are required to abide by this policy as it is included in their contracts. To date, over 30,000 complaints have been filed.

Trademark-based domain name disputes will be resolved by agreement, court action or arbitration. Following a decision, the registrar can be advised to cancel or suspend a domain name or transfer the domain name to the successful complainant.

Decisions through the UDRP have been very inconsistent making it difficult for lawyers to advise clients on their likelihood of success. Complaints must adequately prove that the opposing party is a cybersquatter or used the domain name in bad faith.

The big question with all of these changes is how will the consumers respond? Will they readily adopt these new advances? Will the companies that have invested receive an adequate return on investment? Registrars have outlined marketing campaigns that they intend to implement in order to encourage consumers to use these new gTLDs. But it will be some time before we can rule on whether or not the system is a success.

For more information:

Part II: New gTLDs

Part I provided an introduction to ICANN, its many acronyms and how the system came to be. This section focuses on what this means for consumers.

ICANN’s Generic Names Supporting Organization (GNSO) conducted trials in the early 2000s and introduced a policy development process in 2005 based on the introduction of new gTLDs. The new gTLD release was approved in June 2011 and has now reached the implementation stage. Sixty one new gTLDs have been released in the first 5 weeks of 2014 with many more expected in the coming months. (http://newgtlds.icann.org/en/program-status/delegated-strings)

The goals of the program include “enhancing competition and consumer choice, and enabling the benefits of innovation via the introduction of new gTLDs.” (http://newgtlds.icann.org/en/about/program). The organization considered intellectual property concerns, consumer protection, DNS stability, and several other factors when deciding to implement this program. They started accepting applications in January 2012 and 1,930 were received. (http://newgtlds.icann.org/en/program-status/statistics)

Applying to be a registrar for one of these gTLDs requires an application fee of $185,000 and ICANN warns that companies should anticipate additional operating costs.

What will the new gTLDs look like and how does this affect the average consumer and/or company? Donuts and GoDaddy are registrars that are heavily involved in the new gTLDs and have filed a large number of applications. They will be controlling domains such as .COMPUTER, .MEDIA, .MENU and .UNO.

This system is meant to ease the burden on consumers searching out businesses. If a consumer is interested in researching places to visit during a trip, he can simply go to .MUSEUM or .TRAVEL instead of performing a more generic search. Individuals looking for food options can go directly to .MENU. Those in need of housing can use .APARTMENTS or .RENTALS.

The system is intended to benefit businesses as well. Previously, businesses may have had a hard time procuring a domain and web address that adequately described their business. Now they will have the ability to be part of a domain that specifically serves a particular industry. For example, snow boarding business called Big Air may not have been able to obtain the BIGAIR.COM domain because it was already in use by another company, like a fan retailer or water ski seller. Big Air may be forced to choose a domain name that could confuse its customers or make it more difficult for them to locate the proper company. Now, Big Air would have the option of locating itself on a domain that is more specific, like .SNOW.

In the past, .COM domains were once thought of as the one and only option (or one of the only, but now they will just be “one store in the whole shopping mall.”

In Part III we will provide a discussion of  the effect of gTLDs on trademark owners.

For more information:

Part 1: gTLDs, ICANN, and Donuts, What Does It All Mean?

The internet has changed our lives in a number of ways. And in order to keep up with the demands of today’s technologically savvy society, it must continue to grow and change as well. In recent months, the internet universe has been expanding from the .COM and .ORG universe to a number of new domains that were not previously available.

Antonelli Law is providing a series of three posts to explain the development and release of the new generic Top Level Domains. Part I is an introduction to ICANN and domain names.  Part II will further discuss the release of new gTLDs. Part III will provide information on how trademark owners will be affected and how disputes will be resolved.

The first release of new generic top level domains occurred in October 2013 and there are no signs of slowing down. This effort is ostensibly aimed at making things easier for consumers and poses new considerations for companies and trademark owners interested in further developing and protecting their brand.

Whether the release of new gTLDs will in fact achieve these stated aims remains unclear. Remember the .XXX domain released in 2012, where legitimate companies were urged to purchase their identities in the .XXX domain to avoid market confusion? In our opinion, there is no public clamor for these new gTLDS and appears to be just another shot at pumping an internet commerce bubble. Perhaps soon, the market will tell.

Part I: Introduction to ICANN and Domain Names

It is an undisputed fact that the internet has greatly altered the way that companies do business. All aspects of a company’s online presence are closely related to marketing, consumer exposure and trademark rights. But our .COM world is changing to one which is expected to be even more tailored toward the consumer experience.

With these changes, comes a new list of acronyms and buzz words.

  • DNS: Domain Name System
  • ICANN: Internet Corporation for Assigned Names and Numbers
  • TMCH: Trademark Clearinghouse
  • gTLD: Generic Top Level Domain
  • ccTLD: Country Code Top Level Domain
  • Sunrise Period: exclusive trademark holder registration period
  • UDRP: Uniform Domain Name Dispute Resolution Policy
  • ACPA: Anti Cybersquatting Consumer Protection Act
  • Donuts: company that filed the largest number of gTLD applications

While companies were previously in a position to ignore them, they are quickly becoming part of the vernacular. But what do they all mean and how do they work together?

ICANN is an organization that was created in 1998 to handle all of the background operations that enable the internet to function. Participants in the organization come from all over the world and offer input on how the internet should be run.

Computers operate by each having unique identifiers (commonly known as the IP address) so that they can properly communicate with each other. ICANN compiles databases of these identifiers, typically unreadable series of numbers, and implements systems which make the Internet usable. Instead of typing in a series of numbers to reach a specific website, consumers use the name that has been associated with those numbers.

This organization initially focused on handling cybersquatting complaints. Cybersquatting occurs when a party acts in bad faith by occupying a domain name that it feels will be desirable to another party. In many instances, cybersquatters acquired a number of domain names in order to solicit money from parties that had trademark rights in the name and would likely want to use it for their business. The Anti Cybersquatting Consumer Protection Act was put in place to prohibit registration of domain names that contain the marks of others. Today, cybersquatting is almost completely nonexistent.

ICANN controls all of these web addresses and makes available to users wishing to start websites. It creates domains, called registries, and then gives them to a registrar. The registrar has the ability to assign each domain to a specific purchaser. ICANN oversees the many registrars and makes sure that the domains are not duplicated. The US is home to the largest number of registrars, but the can also be found in 60 other countries throughout the world.

ICANN also created a system of ccTLDs (country code top level domains). While it is something that we are relatively unaware of in the US, the rest of the world relies heavily upon these domains. Each country can be assigned its own TLD and it then controls the distribution of sites within that domain. Examples: .CO for Colombia, .DE for Germany, .JP for Japan. There are currently 250 active ccTLDs. Countries are allowed to put their own regulations in place for handling these domains.

The remainder of the internet was originally occupied by a small number of gTLDs, including .COM, .NET and .ORG. ICANN is in the process of greatly expanding the number of gTLDs with the first new ones hitting the market in late 2013. New gTLDs were made available and a number of registrants filed applications in order to obtain them for sale. ICANN claims that “establish[ing] market competition for generic domain name (gTLD) registrations [will] result in a lowering of domain name costs by 80% and saving consumers and businesses over $1 billion annually in domain registration fees.” (http://archive.icann.org/tr/english.html)

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