SCIPR: Aereo

ABC, Inc., v. Aereo, Inc. (Aereo's Internet streaming of local TV broadcasts to individual subscribers is a public performance.)

Moderator: Bart Lazar, Partner, Seyfarth Shaw LLP

Panelists: David Frederick, Counsel to Aereo Inc.; Partner, Kellogg Huber Hansen PLLC: There’s a lot here for all sides. Plenty of broad language, but a lot of caveats that suggest that in the long run this is a one-trip only train ticket: for services that look like cable. Broad definitions of public performance get undercut by later parts of the opinion.  Surprised that J. Breyer was in the majority.

Paul Smith, Counsel to petitioner broadcasters; Partner, Jenner & Block LLP: Agreed about Breyer.  Statute is written very broadly to cover anyone who tries to build a business on retransmitting broadcast television.  Various caveats about the cloud.

Professor Peter Menell, University of California Berkeley School of Law, who co-authored an Amici Curiae brief in support of Petitioners ABC and others: also surprised about Breyer, famous for skepticism about ©. Saw it as statutory construction case—dueling about broader issue than ©--textualism v. purposivism.

Professor Rebecca Tushnet, Georgetown University Law Center: yep. Opinion somewhat at war w/itself b/c first part is textualist.

Q: language is unclear, according to majority. Agree?

RT: both views produced unacceptable results in some circumstances.  I think this is best explained as a copyright evasion theory, on the order of tax evasion v. tax avoidance.

Menell: statute is 40/50 years old (this language); would have been heroic to anticipate.  Congress also expected purposivism at that time. Judges trying their best—unusual leg. History intertwined w/two SCt decisions.

Smith: statute was written as broadly as it could have been incl. new technologies that might be invented.  Don’t get this kind of provision any more, but the function of retransmission ought to be licensed.  Don’t agree it’s ambiguous. Other tech used as scare tactic.

Frederick: 2d Cir.’s Cablevision case (great puzzle of this opinion is what’s going on w/Cablevision) had a great statutory analysis of the transmit clause and contradiction in position over whether what’s being transmitted is a performance or a copy of a performance. That inconsistency was fatal to transmit argument, we argued.  The statute itself doesn’t cohere in the same place/different places/different times clause—there’s a null set in the last part of the clause.  Which way does that cut? When there’s ambiguity in a property conferring statute, ordinarily the alleged infringer is given a pass and Congress can respond to powerful lobbying group to make changes.  Court flips: tie goes to party alleging infringement.

Q: Scalia cites Cablevision: doesn’t select what content subscribers view.  Volitional conduct required.  Is there volitional conduct here? Does majority repudiate Cablevision?

Smith: yes. (1) customer picking show to be watched means only secondary liability is appropriate—that’s gone. (2) transmit clause requires you to look at each transmission separately to see if it’s public—that’s clearly repudiated.  Looking at who pushes the last button: everything on the internet is on demand.  If there’s only indirect liability, there’s no public performance on the internet. Not different from POV of broadcasters or viewers.  You punch in the channel you want on Aereo or on your cable machine. Why should that make a difference for © policy?

Menell: Cablevision is now very shaky.  Volitional conduct isn’t in the statute.  Highlights creakiness of statute.  Netcom, pre-DMCA, had a thoughtful analysis but Congress didn’t codify that.

Smith: Scalia just made up the distinction between Aereo & Netflix. Both choose which shows to show.

Frederick: disagree. VOD chooses which programming to make available versus what Aereo did: antenna capability we all can get in our homes.  Networks choose what is put over the air.

RT: under this opinion, the statutory interpretation part clearly implicates the cloud.  I’m 100% sure that Dropbox has multiple copies of U2’s new album right now, from people who use both Dropbox and iTunes.  When someone uses Dropbox to stream their music to their phone, it’s just like what the SCt said was public performance.  If you say that Dropbox is different because it’s the user’s copy, so it was in Aereo.  If you say the standard is why people use the service, that’s really not in the Act, though you can certainly do it if you’re the Supreme Court.

Menell: can save Dropbox: it gets the content from the user, a sort of chain of custody analysis. That’s a way to draw the line Breyer sought to draw. Not sure how it works for broadcast TV though.  If I take my Netflix stream and DVR it, if it violates my Netflix agreement then the chain of custody doesn’t map to the current broadcast system. We can apparently “sling” these shows but that’s b/c we have our own copy. In the cloud it’s more complicated. 

Q: disruptive tech always creates headaches. Is this an issue that courts can apply?

Smith: remains to be seen. Distinctions might or might not be justified. Congress is dysfunctional now; courts will have to sort it out.

Q: dissent says there’s no standard for cable lookalike.

Smith: majority says performing this function = liability. Same function as cable co.

Frederick: So is Tivo.

Smith: not going to comment on that. Aereo: from the POV of the user, identical to cable.

Menell: true that Congress overruled Teleprompter and Fortnightly and required CATV to operate under a license, but they got a low-cost convenient license, splitting the baby. CATV was more sympathetic than Aereo but Congress was willing to slap them down (people who can’t get signal and join together to form a nonprofit are sympathetic). There should be room for a sensible competitive regime.

RT: since Congress won’t act, and Court knows it, it’s not in the same situation as Teleprompter and Fortnightly; has to choose between two alternatives and can’t impose compulsory license.

Frederick: paying individual copyright owners for signal was unadministrable.  1992: retransmission rights were designed to solve the problem of broadcasters and cable cos. competing for ad revenues. But Aereo isn’t competing for ad revenues. It’s sending the advertising through complete. Not picking off signal and omitting ads. Networks are being hypocritical and saying Aereo isn’t cable either.  The networks want to monetize the internet and replace free over the air television with a paid service.  (Currently in dispute.)

Smith: the idea that networks aren’t licensing on the internet isn’t true. Hulu etc. allows licensed viewing. Issue was whether you could avoid a license.

Frederick: networks recognize they were slow to the market. Want to sell over the internet.

Smith: they own the rights.

Frederick: evades Sony.  I can have an antenna in my home and not pay.

Smith: Congress overruled that for CATV.

Frederick: then Congress also made local broadcasts royalty-free.

Menell: internet TV has a bright future. Early skirmish. Other companies will try to figure out how to function consistent with this. Public solution via legislation not Rube Goldberg would be better.

RT: I don’t make predictions about the future of the internet.  Net neutrality is of real significance to the future of TV online more than Rube Goldberg devices.

Ochoa: if sufficiently like cable to be publicly performing, why not enough to get a license?

Smith: transmit clause: satellite companies also transmitted, but weren’t authorized to get cable licenses. Do what satellite cos. did: go to Congress.