How And Why Aereo Got To The Supreme Court

ote: This blog is cross-posted from Law360.com with permission from Portfolio Media, Inc.

This spring, the U.S. Supreme Court will hear arguments in a case that could have significant impacts on several segments of the television industry. While it may seem unusual that a dispute centered on dime-sized antennas would capture the attention of the high court, the case captioned American Broadcasting Companies Inc. v. Aereo Inc., on certiorari from the Court of Appeals for the Second Circuit, sits in the context of a half-dozen pending litigations across the country; it also tests both the boundaries of a Second Circuit decision that the court refused to hear five years ago, and the language that Congress drafted over 35 years ago.

This article aims to help those who have not been following along understand how Aereo got to the Supreme Court and what the key issues are that the court will be deciding in the coming months.

Ultimately, the decision will boil down to the interpretation of the meaning of Section 106(4) of the 1976 Copyright Act. That section gives copyright owners the exclusive right to perform their works publicly. Thus, the court will be tasked to determine whether Aereo, by providing a service that permits subscribers to view over-the-air broadcast television on Internet and mobile devices, impinges upon the public performance right.

Background: What Aereo Is and Does

Before diving into the law, it is important to understand generally how Aereo’s technology is constructed. To put it simply, the Aereo architecture consists of a series of dime-sized antennas that operate somewhat like traditional “rabbit ear” antennas in that they capture broadcast signals over the air for public viewing. But rather than residing on top of a television set in the home, the signals arriving on the antennas are processed for transmission over the Internet to subscribers.

If an Aereo subscriber wishes to watch a channel, she sends a signal to Aereo’s facility, and one of the antennas is reserved for her — and only her. While the antenna is in a state of being “rented” to the subscriber, nobody else can use it or see what is being transmitted from that specific antenna.

For the user to watch the programming, there is no particular technological reason for each person to have an individual antenna. As with cable or satellite television, which retransmits over-the-air television under license, Aereo could retransmit broadcast television without the construct of the multiple antennas.

Yet if that is how Aereo operated its system, it would fall squarely within the public performance right as incorporated into the 1976 Copyright Act: Following two decisions from the Supreme Court (known as Teleprompter and Fortnightly), which held that retransmission of broadcast over cable did not implicate copyright rights, the language of the statute had been expressly designed to ensure that retransmission of broadcast television over systems like cable would, in fact, implicate the public performance right. In accordance with this language, courts had similarly found that services like Ivi and FilmOn, which transmitted broadcast television over the Internet, violated the public performance right.

Second Circuit’s Ruling: Technological Structure Has Legal Significance

This background begs the question: Why should Aereo be any different? Nonetheless, according to the Second Circuit in Aereo, the structure of the system makes a legal difference in determining whether Aereo performs the networks’ programming publicly. Under the holding, where a single antenna is assigned to a single user, then the transmission ceases to be “public.” And this means that the transmission is not a “public performance” in the context of Section 106(4).

Thus, ultimately, the Supreme Court’s focus will necessarily center on the “public” aspect of “to perform publicly.” The relevant part of the definition of the term “publicly” in the context of a performance includes transmitting or otherwise communicating a performance of the work to 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 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.”

Aereo offers a device or process for making transmissions, and those who receive it are certainly members of the public. However, Aereo’s defense was grounded in a 2008 Second Circuit decision captioned Cartoon Network LP v. CSC Holdings Inc., commonly known as Cablevision. In Cablevision, the cable company offered a “remote-storage DVR” service where subscribers could choose to make copies of programming from a separate dedicated stream of linear programming for later playback from their own dedicated hard drive space located at Cablevision’s facilities. Certain copyright owners argued that the retransmissions collectively constituted public performances, and the district court agreed; but the Second Circuit reversed, finding that the individualized transmissions made from the subscriber’s dedicated hard drive were not “public” performances. In 2009, the Supreme Court denied certiorari.

When Aereo launched, it claimed reliance on Cablevision, noting that its system followed Cablevision’s structure “to a T.” On the networks’ motion for a preliminary injunction in mid-2012, Judge Alison Nathan of the Southern District of New York found the architecture legally indistinguishable from that in Cablevision, and she denied the injunction on that ground. In a 2-1 decision (with the dissent penned by the judge who had served as the district judge in Cablevision), the Second Circuit affirmed on various grounds, including stare decisis. Two months later, the networks’ request for en banc review was denied.

Certiorari Quickly Granted: Why Aereo, Why Now and What’s Next?

The nature of the question alone does not explain how the case passed the difficult hurdle of receiving a grant of certiorari — or why both the petitioners and the respondent asked that the Supreme Court take the case. This is where a competitor — known during the proceedings as BarryDriller, then Aereokiller, then FilmOn X — comes in.

While Aereo first launched in New York, within the Second Circuit, Aereokiller entered market areas in which Cablevision was not law. Despite claiming to be technologically similar to Aereo, and despite finding itself sued by the networks, Aereokiller did not have the luck that Aereo did: In December 2012, Judge George Wu in the Central District of California issued an injunction that extended to the Ninth Circuit, and in September 2013, Judge Rosemary Collyer of the District of D.C. enjoined Aereokiller everywhere but the Second Circuit. The networks had also sued Aereokiller in the District of Utah. Meanwhile, Judge Nathaniel Gorton in the District of Massachusetts held in October 2013 that Aereo should not be preliminarily enjoined.

In the wake of these conflicting decisions and the threat of more to come, Aereo agreed with the networks that it was time for the Supreme Court to weigh in and give the final word on whether these one-to-one technologies implicate the public performance right, or are simply a collection of “private” performances.

The amicus briefs filed on both sides in the various proceedings (including appeals of the district court decisions, which appeals have been stayed pending the outcome of the Supreme Court case) identify the ways in which the Aereo case is about more than just small antennas on rooftops. Those supporting the petitioners argue that affirming for Aereo could have a ripple effect that not only takes away royalties for copyright owners and distributors via Aereo and systems like it, but via other, more established systems as well.

On the side of the respondent, amici caution that finding the collected individualized transmissions via Aereo’s system to implicate the public performance right, could mean that cloud-based technologies might similarly require licenses to send copyrighted material via the Internet.

All of these arguments will be fleshed out fully in the coming weeks as briefing is submitted in late February and through March. Arguments are expected in around April. While the outcome is uncertain, we know that the copyright, television and technology industries will be watching the decision closely. Nor is there any guarantee that a ruling for either side will end the dispute: Just like what happened with cable after the Supreme Court’s rulings in Teleprompter and Fortnightly, the next phase for Aereo could be legislation in Congress. Stay tuned.

—By Eleanor M. Lackman, Cowan DeBaets Abrahams & Sheppard LLP

Eleanor Lackman is a partner in the New York office of Cowan DeBaets Abrahams & Sheppard. Cowan DeBaets Abrahams & Sheppard has drafted amicus briefs submitted in support of the networks in certain of the Aereo and Aereokiller proceedings. While at a prior firm, Lackman also represented certain of the litigants in the Cablevision case.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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