What do new cord-cutting technologies mean for copyright law?
In the newest iteration of DVR technology, Aereo—a newly launched tech company in New York City—has come under fire for selling a service that allows subscribers to watch television programs over the Internet. Aereo’s unique business model consists of leasing antennae to subscribers who can then retransmit television broadcasts (hours or even just seconds after their original air-time) to their internet-enabled devices, whether a laptop, tablet, or smartphone. As of 2012 the service offered the retransmission of programming from twenty-eight channels, including all major broadcast channels.
Alarmed by this latest innovation in the cord-cutting online TV trend, a slew of broadcasters, including such heavy-hitters as CBS, NBC, ABC, and Fox, sued the nascent company for copyright infringement. They construe Aereo’s business model as analogous to that of a cable company—as a redistribution channel for media to the public—the only problem is, unlike the cable company, Aereo does not pay a license to television producers or broadcasters to retransmit that media, and in their view, is in violation of their copyright claims. Aereo, however, argues that its service is more akin to existing DVR, VCR, and DVD technologies—other equipment-based technologies whose “record” and “play” functions, under the current law, do not constitute copyright infringement.
The core issue of this dispute boils down to whether or not Aereo’s streaming service constitutes a public performance.
The core issue of this dispute boils down to whether or not Aereo’s streaming service constitutes a “public performance” of the copyrighted works of the media companies as defined by the 1976 Copyright Act. The broadcasters sought and repeatedly failed to bring a preliminary injunction against Aereo on these and other grounds in the federal, appellate, and circuit courts. In June, the Supreme Court picked up the case and in a surprising reversal of the trends of the lower courts, rendered a 6-3 decision in favor of the broadcasters, temporarily shuttering Aereo and its cloud-based DVR service.
The issue brought before the Supreme Court concerned only the claim that Aereo violates the plaintiffs’ right to publicly performtheir copyrighted works. The public performance right derives from the 1976 Copyright Act, which prohibits copyrighted works from being “perform[ed] …publicly.”. In order to determine whether Aereo violated the exclusive right of public performance under copyright law, the Supreme Court had to decide (1) whether Aereo was in fact doing the performing (rather than the subscriber) and (2) whether the performance was to the public.
While the Copyright Act defines “publicly” and “perform,” the existing definitions lacked sufficient precision for this case. And so the Court looked to case law and the history of broadcasting technology for guidance, which sent the plaintiffs and the defendant in search of serviceable analogies to previous cases. The plaintiffs urged the Court to view Aereo as it would a designated cable company, while Aereo maintained that its service was more akin to VCR, DVD, and DVR technology.
Relying on this analogy, Aereo argued that it does not “perform” anymore than a DVR player “performs” because it simply provides the equipment. Instead, they argued that the subscriber performs the work when he or she directs Aereo to stream a particular program. By describing itself in this manner, as an equipment manufacturer and provider, Aereo placed itself in the same camp as technologies already adjudicated free to supply both “play” and “record” functionality for existing programs without copyright liability. Holding Aereo liable, it was argued, would choke developing technology and thwart dissemination of and access to content, contrary to the purpose of the Copyright Act. Aereo’s lawyers invoked the celebrated Sony Betamax case from 1984, as did the dissenting opinion (Justice Scalia, joined by Justices Thomas and Alito), who reminded the court majority,
We came within one vote of declaring the VCR contraband 30 years ago. . . . The dissent in that case was driven by the plaintiffs’ prediction that VCR technology would wreak all manner of havoc in the television and movie industries. The networks make similarly dire predictions about Aereo. . . . We are in no position to judge the validity of those self-interested claims or to foresee the path of future technological development. Hence, 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.
Though such arguments had proven persuasive to the lower courts, a majority of the Supreme Court disagreed with the analogy. Citing the language and history of the Transmit Clause of the Copyright Act, the Court instead construed Aereo as an entity that acted like a broadcasting system, even if they were simply amplifying (or retransmitting) existing signals already broadcast by others. In relevant part, the Transmit Clause defines a performance as “public” when its transmission is “by means of any device or process, whether the members of the public capable of receiving the performance … receive it in the same place or in separate places and at the same time or at different times.” Despite the ambiguity in this clause as applied to the technology at issue, the Court ruled against Aereo.
“History makes clear that Aereo is not simply an equipment provider,” concluded the Court, “Aereo’s activities are substantially similar to those of [previous cable and retransmission systems] that Congress amended the act to reach” under the Transmit Clause. As such, Aereo was held subject to liability as violating the public performance right absent a license.
This holding is not without controversy. On the law, there are two strong arguments that Aereo should have won, the first of which being that it does not publicly perform. When Aereo sends a program to a subscriber, its retransmission of the program is private because it is a one-to-one transmission (a private copy is sent from Aereo to a private home, much like when I send a document to a friend over email). It is not public because it is not a one-to-many transmission, which is what the Transmit Clause outlines.
Aereo is not like a broadcast program sent from a broadcaster or cable company to all homes subscribed, or like an email newsletter sent from one person to many recipients. Aereo’s innovation is that it makes a private copy at the request of a subscriber, stores it separately for each subscriber on unique equipment for each subscriber, and then sends it. As such, it seems to have engineered its system around the definition of “public” in the Copyright Act (one-to-many) to avoid infringing copyright’s exclusive “public performance” right.
If this is a public performance, there is not much left of private ones. And this is worrisome.
The majority opinion both disagrees with this definition of “public” and suggests Aereo appears to be exploiting a statutory loophole. It interprets the Transmit Clause as including the transmission of a separate work to many different people at different times (e.g., as when a single person sends separate emails each with an attached video to many different people at different times). If this is a public performance, there is not much left of private ones. And this is worrisome. The court claims to be avoiding the issue of cloud storage (are we publicly performing when we invite people to access the contents of our digital lockers?), but it is not clear from the decision how it is doing so.
Second, the Court ignores a long-standing and reasonable rule that assigns infringement liability between direct and indirect infringers. The Court was asked to decide only the extent to which Aereo was directly liable for violating the exclusive right to public performance, but Aereo’s system depends on the volition of subscribers. As such, Aereo should only be liable for secondary infringement, and then, only if its subscribers are directly liable. Like a photocopy machine depends on users making copies (some of which might be infringing while others may not be), Aereo’s system activates upon the decision of a consumer to select and play a particular program.
Aereo cannot be directly liable for something it did not directly do. The majority sought to conflate these very different kinds of liability by analogy to other previous broadcasting and cable systems and cases. But unlike cable companies and other retransmitters, Aereo’s system is not constantly on. Rather, it is activated—like a VCR, DVD player, or DVR—only upon the request of a consumer. As the dissent notes
It is not the roles of this Court to identify and plug the 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 . . . in a much more targeted, better informed and less disruptive fashion than the crude ‘looks-like-cable-TV’ solution the Court invents today.
In trying to make Aereo pay for content it streams at the consumer’s request, the Court blurred important boundaries between intermediaries and primary users. Those boundaries have maintained a balance between technological innovation, content creation and distribution for at least the past fifty years. Now Aereo and other digital streaming companies—like YouTube and Amazon— are left in an uncomfortable and costly limbo. The Copyright Office has already declared that Aereo is not a cable company under the Copyright Act, and now Aereo is waiting for a ruling on this claim from a district court.
To the tune of fairness, the Supreme Court ruled in favor of copyright owners. But as is often the case at the intersection of law and technology, by looking backward rather than forward, this legal decision has gotten in the way of simpler solutions; an interim ruling for Aereo would have kept content flowing and technology progressing, leaving Congress to act if broadcasters and content creators suffered unduly. But as it stands now, the circulation of content is stymied, consumers have less choice, and no one is getting paid—thus creating precisely the kind of stalemate which the copyright system should aim to avoid. But now, until further notice, Aereo’s services are off the table, and both the business and its subscribers are left in the lurch.