Professor Matthew Sag, Loyola University of Chicago School of Law. November 18, 2014
This post is based on a summary I wrote for the ABA IP Litigation Roundtable
The Supreme Court’s recent majority decision in American Broadcasting Companies v. Aereo, Inc. 134 S.Ct. 2498 (2014) holds that a service allowing consumers to watch broadcast television programs over the Internet virtually simultaneously with the original over the air broadcast directly infringes the copyright owners the exclusive rights to “perform the copyrighted work publicly.” The majority overrules the Second Circuit ruling in the same case, and throws into doubt one of the central holdings in the Second Circuit’s Cablevision decision.
Aereo’s service is just one of a long sequence of technologies raising conflicts between the interests of content owners and technology companies. In the late 1960’s and early 1970’s community antenna television (CATV) systems challenged the incumbent television broadcasters by retransmitting television signals to CATV subscribers. The CATV provider in Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968) placed antennas on hills above the cities and used coaxial cables to carry the signals received by the antennas to the home television sets of its subscribers. The CATV provider in Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394 (1974) carried broadcast television programming into subscribers’ homes from hundreds of miles away. In both these cases the Supreme Court held that the CATV systems were more like a viewer than a broadcaster and thus were not themselves engaged in a public performance.
There is no doubt that the revised definitions of what it means to perform and to perform a work publicly in the Copyright Act of 1976 were motivated in part by a desire to reverse the outcome of the CATV cases. However, the language Congress adopted to that end is anything but clear, and the actual scope of the public performance right has been a controversial question for some time.
Aereo offered consumers the ability to watch live television over the internet and to pause, rewind and fast-forward programming. Aereo provided this service by receiving free to air television signals on a vast array of micro-antennae. Each antenna was dedicated to an individual subscriber, but only when the subscriber tuned in. The receivers were thus under the subscribers’ individual control. The television signals so received were reduced to individual copies of individual programs, but only if a subscriber indicated an intention to watch the program. These copies were then transmitted to Aereo’s subscribers at their command, either in real time with a very slight lag, or asynchronously like other remote DVR services.
The Second Circuit
On appeal from the denial of a preliminary injunction, the Second Circuit held that Aereo’s system did not implicate the copyright owners’ public performance rights under the Copyright Act because each transmission was from a single fixed copy to a single end-user. Consistent with its ruling in the Cablevision remote DVR case, the Second Circuit held, although Aereo’s system may transmit any given program to a large number of end-users, Aereo did not perform publicly within the meaning of the Copyright Act because it did not transmit “to the public.” Rather, each time Aereo streamed a program to a subscriber, it sent a private transmission that was available only to that subscriber. Judge Chin dissented, arguing that “Aereo’s “technology platform” is, however, a sham. The system … is 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.”
The Supreme Court
— Who is the performer?
Aereo’s service was evidently designed to take maximum advantage of the precedents holding that the provider of an automated service does not engage in the volitional conduct required for direct copyright liability. There is no obvious engineering reason to give each subscriber their own micro-antenna, however, this design choice emphasizes that it is the user, not Aereo, that choses to receive the broadcast signal, transcode (or reformat) that signal, make a copy of the selected program and ultimately transmit the program by pressing the “watch” button on their internet connected device. Relying on the volitional conduct cases, Aereo argued that it was not directly liable under the public performance right because it merely provided the equipment that its subscribers used and controlled.
Writing for a six Justice majority, Justice Breyer acknowledged that
“the language of the Act does not clearly indicate when an entity ‘perform[s]’ (or ‘transmit[s]’) and when it merely supplies equipment that allows others to do so.”
The majority opinion does not engage with the distinction between direct and contributory copyright liability, nor does it directly address the cases on the ‘volitional conduct doctrine’ (see more below). The majority simply holds that cable systems perform and Aereo is like a cable system, thus Aereo performs. More specifically, the majority holds that in view of the legislative history and the manifest intention of Congress to make cable retransmission services liable for copyright infringement, “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.”
This broad construction of performance does not demand a rejection of the volitional-conduct doctrine in general. Indeed, the holding may be limited to services that “act like a CATV system”. Even in Cablevision the court recognized that “our conclusion … that the customer, not Cablevision, ‘does’ the copying does not dictate a parallel conclusion that the customer, and not Cablevision, ‘performs’ the copyrighted work.”
Justice Scalia, in dissent, argued that the expanded definition of performance under the 1976 Act was still consistent with the volitional-conduct requirement. Unlike the CATV services in Fortnightly and Teleprompter, the Aereo system did not send a constant transmission stream to its subscribers. Instead, the system remained inert until a subscriber sent the ‘watch’ command. Only then, and quite automatically, would the Aereo system activate an antenna and begin to transmit the requested program. Thus, even though both sender and receiver of a conventional broadcast could be said to ‘perform’ because both engage in an affirmative volitional act, only the user of an automated system performs when she alone initiates and receives a transmission.
The majority dismissed this argument noting that the “sole technological difference between Aereo and traditional cable companies” was invisible and meaningless to Aereo’s subscribers and to Aereo itself.
But this difference means nothing to the subscriber. It means nothing to the broadcaster. We do not see how this single difference, invisible to subscriber and broadcaster alike, could transform a system that is for all practical purposes a traditional cable system into ‘a copy shop that provides its patrons with a library card.’
— Public Versus Non-Public Transmissions
Aereo argued, and the Second Circuit agreed, that it did not perform the plaintiff copyright owners works “publicly,” within the meaning of the so-called ‘Transmit Clause’. In addition to the general definition of performance, the 1976 Act contains a two-part definition of what it means to “perform or display a work ‘publicly’”. Subsection (1) guides courts as to where the draw the line between public and non-public places. Subsection (2) of that definition, which is generally simply referred to as the Transmit Clause, provides that an entity performs a work publicly when it “transmit[s]… a performance … of the work … to the public.”
Justice Breyer was willing to assume arguendo (although with some skepticism) that the relevant performance referred to in the Transmit Clause is not the copyright owners’ initial broadcast, but the new performance created by Aereo’s act of transmitting.
That performance comes into existence when Aereo streams the sounds and images of a broadcast program to a subscriber’s screen. … Thus, for present purposes, to transmit a performance of (at least) an audiovisual work means to communicate contemporaneously visible images and contemporaneously audible sounds of the work.
Nonetheless, Justice Breyer argued that Aereo’s attempt to sidestep liability for public performance by interposing discrete copies did not distinguish its service from that of a cable system in terms of Congress’s regulatory objectives. Justice Breyer noted that the behind-the-scenes technical details of how Aereo delivered television programming to its viewers did not change Aereo’s commercial objectives or its subscribers’ user experience. Traditionally copyright law has relied upon secondary liability to address attempts to evade liability that nonetheless are clearly at odds with Congress’s regulatory objectives. However, the Aereo majority indicated that the defendant’s intervening user-specific copies could simply be regarded as an elaborate “device or process” by which the company made its transmissions. The majority has thus converted the broad by any “device or process” language in the Act into an anti-avoidance provision.
While accepting that the relevant performance under the transmit clause was the new performance created by the act of transmission, Justice Breyer nevertheless concluded that “when Aereo streams the same television program to multiple subscribers, it ‘transmit[s] … a performance’ to all of them.” The Transmit Clause indicates that that one may transmit a performance to the public capable of receiving it at the same time or at different times. For Breyer, this necessarily implies that “an entity may transmit a performance through one or several transmissions, where the performance is of the same work.” Previous case law had seemed to require that for such asynchronous transmissions to be aggregated, they had to be made from the same copy of a work. In contract, Justice Breyer concluded 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.
However, Justice Breyer added an important qualification to the foregoing: whether a group of people constitutes ‘the public’ depends upon their relationship to the underlying work.
an entity that transmits a performance to individuals in their capacities as owners or possessors does not perform to “the public,” whereas an entity like Aereo that transmits to large numbers of paying subscribers who lack any prior relationship to the works does so perform.
Uncertainty in the Wake of Aereo
In re Cellco Partnership, the district court held that downloading a ringtone to a cell phone is a reproduction but not a public performance. The clearest implication of the Aereo decision is that the Supreme Court has maintained this distinction between downloading and streaming (the former being a copy, the latter being a performance). The majority insisted that “an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work.” That issue aside, Aereo leaves open a wide range of follow-up questions.
1. Most obviously, copyright owners may now wish to relitigate the legality of remote DVR services. The Second Circuit’s Cablevision decision relies on the volitional-conduct doctrine in relation to copies made at the direction of DVR subscribers and the non-aggregation of transmissions made from separate copies of the work in relation to the question of public performance. Each of these pillars may be challenged in the wake of Aereo. However, I expect that even if the reasoning changes, lower courts will not find remote DVR services liable for direct infringement. There is enough language in Aereo to limit its holding two services that are primarily focused on simultaneous retransmission.
Remote DVRs that let you pause and rewind live tv
2. The decision also leaves open the question of services that are primarily intended to act as remote DVR’s but which could also be used for near simultaneous viewing of live television. Moreover, cable companies will take heart from the Court’s suggestion that whether a group of people constitutes the public depends upon their relationship to the underlying work. Cable services are authorized to retransmit broadcast television under the terms of a statutory license. The public at large is authorized to receive unencrypted broadcast television signals — at least within the ordinary transmission range of such signals — so it is unclear whether cable TV customers really have a different relationship to the underlying work than Aereo’s subscribers did.
Does the cloud look like a cable system?
3. More broadly, if separate asynchronous transmissions originating from distinct copies of a work are to be aggregated for the purpose of copyright’s public performance right, what does this mean for cloud computing services? The Second Circuit’s interpretation of “to the public” made it quite clear that video-on-demand services would implicate the public performance right, but that online cloud storage providers such as Dropbox and Amazon Cloud Drive would not.
The majority’s ‘looks like a cable system’ approach makes the public performance right almost incomprehensible. Is the aggregation transmissions from distinct copies limited to services directly analogous to cable retransmission? Is it limited to services engineered to avoid public performance liability? The majority’s comment that the legislative history compelled the determination that Aereo performs but that “it does not determine whether different kinds of providers in different contexts also perform” suggest either of these might be possible.
What is it about cable systems that is important?
4. If future public performance cases turn on the resemblance of an accused service to cable television, which characteristics of a cable service will courts deem to be most relevant? Justice Breyer’s decision indicates that courts will be more focused on commercial motivation and user experience than specific technical details.
Technological neutrality: effects vs. function
5. Aereo raises fundamental questions about copyright and technology neutrality. If technological neutrality is a question of the effect of a given technology, then Aereo was, in effect, a retransmission system and thus it was, in effect, engaged in public performance. But if technologically neutrality is a question of function, then Aereo was in fact an elaborate copying service and not the originator of public performances. Like Judge Chin’s dissent at the Second Circuit Court of Appeals, Justice Breyer’s majority opinion takes an effect-based perspective. Will the Court use an effects-based approach to expand other exclusive rights under the Copyright Act?
What happened to Aereo?
On October 23, 2014, the Federal Southern District Court of New York granted an injunction against Aereo “barring Aereo from retransmitting programs to its subscribers while the programs are still being broadcast”. The plaintiffs sought an injunction against Aereo’s fully time-shifted transmissions, the district court did not rule this out, but merely said it would “not reach the issue at this preliminary stage of the litigation.”
 17 U.S.C. § 106(4).
 WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2013).
 Cartoon Network LP, LLLP v. CSC Holdings, Inc. 536 F.3d 121 (2008).
 See Fox Broadcasting Co. v. Dish Network LLC, 747 F.3d 1060, 1066-1068 (C.A.9 2014); Cartoon Network, supra, at 130-131 (C.A.2 2008); CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 549-550 (C.A.4 2004). Religious Technology Center v. Netcom On-Line Communication Services, 907 F.Supp. 1361 (N.D.Cal.1995). See also Parker v. Google, Inc., 242 Fed.Appx. 833, 836-837 (2007) (per curiam) (3d Cir. Unpublished)
 American Broadcasting Companies v. Aereo, Inc. 134 S.Ct. 2498, 2504 (2014).
 The drafters of the Copyright Act of 1976 clearly intended to include both the sender and the receiver of a traditional broadcast within the definition of ‘to perform’ and thus overturn contrary Supreme Court authority. See Twentieth Century Music Corp. v. Aiken, 422 U.S. 151 (1975) (“those who listen to the broadcast through the use of radio receivers do not perform the composition”). See also Fortnightly Corp. v. United Artists, 392 U. S. 390 (1968) and Teleprompter Corp. v. CBS, 415 U. S. 394 (1974).
 American Broadcasting Companies v. Aereo, Inc. 134 S.Ct. 2498, 2506 (2014).
 Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F. 3d 121, 134 (2d Cir. 2008).
 American Broadcasting Companies v. Aereo, Inc. 134 S.Ct. 2498, 2512-13 (2014).
 Id. at 2507.
 17 U.S.C. §101.
 American Broadcasting Companies v. Aereo, Inc. 134 S.Ct. 2498, 2508 (2014). If the Court had held otherwise it would have not only overturned Cablevision, but also United States v. American Soc. of Composers, Authors and Publishers, 627 F.3d 64, 73 (2d Cir. 2010) (holding that a download of a work is not a performance because the data transmitted are not “contemporaneously perceptible”).
 “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?” Id. at 2509-10.
 See e.g. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).
 The Copyright Act aims for neutrality in that the public performance right is defined to include the right “to transmit or otherwise communicate a performance… to the public, by means of any device or process.” § 101. But it is far from clear that the “by means of any device or process” language means that non-public transmissions should be rendered into public transmissions simply because they have the same effect as technology we recognize as implicating the public performance right.
 Id. at 2509.
 Columbia Pictures Industries, Inc. v. Redd Horne, Inc., 749 F.2d 154 (3d Cir. 1984) Defendant operated a video rental store with a number small private booths. Patrons would select a film, enter the booth, and close the door. An employee would then load a copy of the requested movie into a bank of VCRs at the front of the store and push play, thereby transmitting the content of the tape to the television in the viewing booth. By showing a single copy repeatedly to different members of the public the defendant engaged in a public performance.
 Id. at 2510.
 663 F. Supp. 2d 363, 371–74 (S.D.N.Y. 2009).
 American Broadcasting Companies, Inc. v. Aereo, Inc., (SDNY 2014).