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:

• Copyright Act, 17 U.S.C. §101, et seq.
• Transmit Clause, 17 U.S.C. §101.
• Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984).
• Cartoon Network v. CSC Holdings Inc., 536 F.3d 121 (2008).
• American Broadcasting Companies, Inc., et al v. Aereo, Inc., 874 F.Supp.2d 373 (2012).
• WNET, Thirteen v. Aereo, Inc., 722 F.3d 500 (2013).