Copyhype

The rise and fall of Aereo was meteoric, with the company going from founding to Supreme Court shutdown in little over two years. Last week, the Supreme Court held in American Broadcasting Companies v. Aereo that the company was liable for publicly performing when it transmitted copyrighted works without permission to paying subscribers. ¹Disclosure: The Copyright Alliance filed an amicus brief in support of broadcasters in the Supreme Court. As with all articles on this site, I am commenting here in my personal capacity.

Since details of the service and litigation have been recounted here and elsewhere in great detail, I will only very briefly summarize before looking at the Supreme Court decision in more detail. Aereo launched in early 2012 and offered subscribers the ability to watch broadcast television stations online, along with DVR-type capabilities, for a monthly fee. The stations were captured by Aereo using antennas to receive over-the-air signals. Aereo did not license any of the television programs it transmitted.

Broadcasters sued in March 2012, alleging that Aereo was publicly performing television programs they owned the copyright in, and sought a preliminary injunction. ²American Broadcasting Companies v. Aereo, Inc., 874 F. Supp. 2d 373 (SDNY 2012). Aereo argued that it was merely providing equipment to customers rather than performing itself. It also argued that “like the RS-DVR system in [the Second Circuit’s 2008 decision in] Cablevision, its system creates unique, user-requested copies that are transmitted only to the particular user that created them and, therefore, its performances are non-public.” The district court agreed with Aereo and denied the injunction, a decision the broadcasters appealed.

However, the broadcasters were unable to distinguish Aereo from Cablevision to the Second Circuit’s satisfaction, and the court affirmed the lower court’s decision. ³WNET, Thirteen v. Aereo, Inc., 712 F. 3d 676 (2nd Cir. 2013). The broadcasters again appealed, this time to the Supreme Court, which granted cert in January and held oral arguments at the end of April.

In a 6-3 opinion by Justice Breyer, the Supreme Court reversed the Second Circuit and held that Aereo does indeed perform to the public. (I’ll look at the dissent in a future post.)

The Aereo Decision

In a series of posts earlier this year following the Court’s grant of cert, I broke the analysis up into a series of questions, asking first “what is to the public”, then asking “what is a performance” and “who is the performer.” The Court approached it in a similar fashion, beginning its analysis by saying, “This case requires us to answer two questions: First, in operating in the manner described above, does Aereo ‘perform’ at all? And second, if so, does Aereo do so ‘publicly’?” (Although the Court at the outset does not separately ask what a performance is, it does address the issue, apparently agreeing, as I did, with the Second Circuit’s rule that a performance requires contemporaneous perceptibility.) ⁴This rule was adopted by the Second Circuit in United States v. American Soc. of Composers, Authors and Publishers, 627 F. 3d 64, 73 (2nd Cir. 2010). The Court here never explicitly adopts that interpretation, but its opinion suggests at various points that it concurs with the Second Circuit, as when it says, for example, that “an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work.”

When does an entity perform?

Turning to the first question, the Court says:

Considered alone, 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. But when read in light of its purpose, the Act is unmistakeable: An entity that engages in activities like Aereo’s performs.

The Court then examines its previous Fortnightly and Teleprompter decisions, which held CATV providers (community antenna television providers, the precursor to modern cable providers) did not “perform” under copyright law before explaining that Congress sought to overturn those decisions when it revised the Copyright Act in 1976. The Court notes that Congress specifically considered both the broadcaster and the viewer to be a performer under the Act. It also included the Transmit Clause, which, the Court says, “makes clear that 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.”

And, says the Court, Aereo is just such an entity. “Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach.”

Aereo sells a service that allows subscribers to watch television programs, many of  which are copyrighted, almost as they are being broadcast. In providing this service, Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes. By means of its technology (antennas, transcoders, and servers), Aereo’s system “receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.” It “carr[ies]… whatever programs [it] receive[s],” and it offers “all the programming” of each over-the-air it carries.

The Court rejects the argument that Aereo doesn’t perform because it emulates equipment that viewers can use at home, saying the same was true of the CATV systems that Congress brought within the scope of the Copyright Act in 1976. The Court does point out that the question of whether a provider performs in cases involving different kinds of services and technologies remains. “But the many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here.”

When is a performance to the public?

Next, the Court analyzes whether Aereo’s performances are “to the public.” The Court rejects Aereo’s position that the technology it deployed should be determinative—Aereo accomplishes the same thing cable companies, which clearly perform to the public, do, so why should it matter whether it does so “via a large multisubscriber antenna or one small dedicated antenna?”

It also completely rejects Cablevision’s holding that courts must look at the potential audience of a particular copy of a work to determine whether a performance is to the public.

We do not see how the fact that Aereo transmits via personal copies of programs could make a difference. The Act applies to transmissions “by means of any device or process.” And retransmitting a television program using user-specific copies is a “process” of transmitting a performance. A “cop[y]” of a work is simply a “material objec[t] . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicated.” So whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds.

In previous posts, I argued that, when interpreting what “the public” means, one should focus on the relationship between the performer and the audience. I proposed that “’Public’ relationships are those that tend to be described as commercial, arms-length, or impersonal, and are strongly unidirectional, while ‘private’ relationships tend to be described as familial, social, or collegial, and are much more reciprocal in nature.” The Court came to a similar conclusion, saying “the subscribers to whom Aereo transmits television programs constitute ‘the public.’ Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other.” But it then adds a further gloss on the term, holding that one should also examine the relationship between the audience and the underlying work.

Neither the record nor Aereo suggests that Aereo’s subscribers receive performances in their capacities as owners or possessors of the underlying works. This is relevant because when an entity performs to a set of people, whether they constitute “the public” often depends upon their relationship to the underlying work. When, for example, a valet parking attendant returns cars to their drivers, we would not say that the parking service provides cars “to the public.” We would say that it provides the cars to their owners. We would say that a car dealership, on the other hand, does provide cars to the public, for it sells cars to individuals who lack a pre-existing relationship to the cars. Similarly, 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.

The Court ends by addressing concerns raised about the effects of a holding reversing the Second Circuit on cloud computing services. It notes that its interpretation is influenced by Congress’s intent to cover “cable companies and their equivalents,” that its definition of the public “does not extend to those who act as owners or possessors of the relevant product,” and that fair use and the DMCA safe harbors for online service providers should mitigate any remaining concerns.

Analyzing the decision

I think the Court gets it right. It eliminates the overly-convoluted interpretations of the Copyright Act’s public performance provisions that resulted from Cablevision in favor of a straight-forward approach that is consistent with the Act’s language and intent. In hindsight, it will seem silly that a for-profit company could provide the functional equivalent to cable television, commercially exploiting copyrighted works to the public, and escape liability based on the number of antennas it used.

Already there a number of criticism of the decision, which I won’t address here. But I would add one of my own: I think the Court did not adequately explain the rule it was applying. Such an explanation, especially if it was articulated in more general terms, would provide lower courts with guidance to reach results consistent with the Court’s holding.

In a post published on SCOTUSblog, I argue that the majority’s inquiry resembles a proximate causation analysis. One way to think about the Court’s approach is that it uses analogy as shorthand. The Court says “An entity that engages in activities like Aereo’s performs.” Framed in terms of proximate causation, what it is doing is saying that we will not excuse as a legal cause an actor engaged in the factual cause of a harm when its conduct is functionally equivalent to the conduct of an actor clearly within the scope of the Copyright Act.

The Court explains in more detail some of the factors it considered when reaching its decision, which I note in my SCOTUSblog article:

Although Justice Breyer never raises the issue of proximate causation, he outlines a number of reasons why Aereo is directly liable in this case and which serve to lay the path for future proximate causation analyses. First, Breyer notes that in providing its service, “Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes.” The owner of the equipment is relevant since she maintains dominion and control over the process and is in a position to prevent infringement.

Breyer next points out that Aereo subscribers don’t “receive performances in their capacities as owners or possessors of the underlying works.”  Later, he explains that the decision “does not extend to those who act as owners or possessors of the relevant product.”  The provider of the copyrighted work at issue is relevant because he initiates the process that results in potential infringement and is in a better position to know whether the particular copy was authorized and whether she has a right to copy or perform the work.

Breyer also notes that the holding is limited because “we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.”  The range of uses of a particular service speaks to foreseeability and intent.

None of these facts by themselves are sufficient to show proximate causation. But taken together, they support the conclusion that Aereo is the legal cause of the harm and provide guidance to lower courts facing the question in future cases.

In Making Copies! Retiring the Volitional Conduct Test in Favor of Proximate Causation, I proposed that a proximate causation inquiry for cloud computing services that interact with copyrighted works should focus on the individual steps involved in the exploitation of a copyrighted work, including such considerations as the location of the equipment, the provision of the copyrighted work, the participation (or involvement) in the process, the range of uses of the service, and the dominion over any final copy. The Court’s analysis here looked at several of these factors.

But it also examined the service in light of the intent of the Copyright Act. Though it was able to resolve this case by looking at the very narrow intent of Congress to bring cable systems within the scope of the Act, future courts will need to look at other principles. I think it’s fair to say that the copyright law in general evinces three broad principles: (1) that a copyright owner’s exclusive rights to do or authorize any of the Section 106 acts are properly secured absent any limitation or exception, and (2) that copyright law is particularly concerned with acts that multiply copies or communicate works to the public, and (3) that any non-infringing conduct by an actor is not unduly curtailed. Analyzing proximate causation with those principles in mind, courts should be able to apply copyright law to cloud computing services in a consistent and logical manner.