Aereo vs. the Broadcasters

Another day, another way to move video to the Internet . . . and another set of lawsuits.

Welcome to the latest bout in the Alternate Video Delivery System Smackdown Series. In this corner, the upstart challenger, Aereo (formerly known as Bamboom Labs, Inc.); in that corner, pretty much every major broadcast network.

Aereo is the latest innovator seeking to bring video content from one source (in Aereo’s case, over-the-air broadcasting) to subscribers in some alternate fashion – a fashion that ideally makes it attractive enough to cause consumers to fork over $12/month to Aereo. Aereo plans to deliver a full (or at least nearly full) array of over-the-air broadcast programming to you through the Internet. That, of course, means that you would be able to access that programming through whatever Internet-accessible device you might choose – tablet, smartphone, desktop, big screen TV in your living room, etc. The programming could be streamed as it is being broadcast, or it could be accessed on a delayed basis, just like shows you might otherwise save on a DVR.

And that’s Aereo’s angle: as Aereo sees things, its service “enables consumers to access broadcast television via a remote antenna and DVR”. Actually, make that “cloud DVR”, a term Aereo slips into its on-line response to the two lawsuits brought against it by the major TV networks.

What exactly is a “cloud DVR”? It’s a quasi-imaginary device – actually, a combination of devices – that affords the user the ability to access streamed or recorded content from broadcast stations through the Internet. A crucial element of the technology is a teeny-weeny antenna – about the size of a dime (see illustration, above, taken from the Aereo website) – that Aereo uses to receive OTA broadcasts. When you subscribe to Aereo, you are assigned one such antenna – it’s yours and (supposedly) nobody else’s. It’s hooked to “massive amounts of storage and super-fast Internet connections”. You are then given an “elegant interface” with which to “control your antenna”. You can pick a channel to watch or you can tell it to record for later viewing.

So it’s just like sitting in your living room, fiddling with your cable remote, right?

Not really, at least according to a cadre of broadcasters who have claimed, in two separate suits, that Aereo’s system infringes on their copyrights by illegally reproducing and publicly performing copyrighted programs.  (Read the complaints here and here.) The broadcasters also argue that Aereo’s operation would violate New York unfair competition law. Their theory is that Aereo is commercially exploiting the programming and the broadcast infrastructure without authorization in a way that “undermines [the broadcasters’] substantial creative and financial investment in their audiovisual works” as well as the broadcasters’ "efforts and labor". (If we may paraphrase that latter claim, it seems to us to be something like: “Look, there’s a system in place that allows broadcasters to be paid by cable and satellite systems in exchange for carriage of their signals. It’s existed for many, many years. You, Aereo, are unilaterally threatening that system”.)

As the broadcasters see things, Aereo is engaging -- or, more accurately, will engage in , since Aereo's system isn't slated to launch until March 14 -- in the “retransmission” of OTA broadcast signals. Under the copyright laws, of course, the “retransmitter” ordinarily needs to get permission from the copyright owner of the “retransmitted” material before any “retransmission” can lawfully occur. Aereo doesn’t have such permission, so it’s infringing – hence the lawsuits.

Hold on there, says Aereo. Aereo doesn’t “retransmit” the signal in a way that violates the law. Rather, they’re simply a company that rents antennas to subscribers. Those antennas pick up a broadcast signal within the local area; the fact that the antenna doesn’t happen to be in the subscriber’s home isn’t legally significant. I think everyone would agree that, at least up to this point in the analysis, what Aereo has done is completely legal.

But Aereo’s service doesn’t just deliver the OTA signals from an antenna to a TV set. It makes them available on the Internet. Does that constitute a direct retransmission of content that was lawfully received at each individual antenna? Or does it just make it easier for consumers to do what they are otherwise entitled to do anyway?

That, of course, is the $20 million dollar question for Aereo ($20 million being the approximate level of financing it’s rounded up). 

The problem is that there are two lines of precedent potentially at work here – and they lead to different results.

On the one hand, you have the Betamax/Cablevision model. Old-timers will recall the 1984 Betamax case, in which the Supreme Court concluded that use of a VCR by individual consumers for the purpose of “time-shifting” the viewing of programming did not constitute copyright infringement. (All you kids, “VCR” stands for “videocassette recorder” – ask your parents.)

That theory was expanded somewhat in 2008, when the U.S. Court of Appeals for the Second Circuit concluded that Cablevision’s “remote storage” DVR system similarly did not infringe on copyrights. Under that system, Cablevision subscribers no longer had a separate VCR or DVR recording unit in their homes; instead, Cablevision took care of the recording – at the subscriber’s request – within its own system. The subscriber could then access the recorded programming by using its remote control device, just as if the subscriber was using a set-top recording unit. The Second Circuit held that this did not constitute infringing retransmission. The court focused in particular on the fact that each playback transmission went to a “single subscriber using a unique copy produced by that subscriber” – and, therefore, such transmissions were not made “to the public”, an essential element of “retransmission”.

On the other hand, you have the ivi TV and FilmOn.com cases. Those involved companies claiming that they were entitled to retransmit OTA broadcast signals to subscribers over the Internet. As our readers should recall, that claim ran into a brick wall – actually, a couple of brick walls. At least two courts weren’t willing to buy into the notion that an on-line operation should be entitled to compulsory carriage rights under the copyright laws.

Aereo is probably planning to rely on the reasoning in the Cablevision case: Aereo is, after all, providing its service to one subscriber at a time through one antenna at a time. As a result, so the argument goes, any transmission of programming that occurs is not “to the public”, but rather to the individual subscriber. No copyright infringement there, right?

But what of the fact that each retransmission occurs over the Internet, providing access to the programming not just in the comfort of the subscriber’s living room, but anywhere? The Cablevision case did not involve that Internet component; the ivi TV and FilmOn.com cases did. Does that make a difference? Should it?

Which brings us back to the $20 million question. I really have no clue how this is likely to end up, and I will be as interested as anyone to see how the courts will react. Interestingly, the broadcasters have sued Aereo in the U.S. District Court for the Southern District of New York, the court which dealt Filmon.com and ivi TV major setbacks. Bad news for Aereo? Maybe, maybe not: decisions from that court get appealed to the Second Circuit, source of the Cablevision decision. 

Should we read something, then, into the fact that Aereo is launching in the New York market first?  Perhaps, because if Aereo can convince either the District Court or, failing that, the Second Circuit court that it is like Cablevision, it should win. But what about the planned launches elsewhere? I can see further lawsuits, one in each city until a “circuit split” is created on this issue. From there, it could be on to the Supreme Court, source of the Betamax case. There may be some method to Aereo’s madness. This could get interesting.  

But, even if the Supreme Court doesn’t resolve the issue, I know one thing and I’m going to sound like a broken record saying it (Problem understanding that metaphor? Ask your parents, again): there needs to be a significant overhaul of all Copyright Laws, or at least some form of compulsory license to allow on-line transmission of broadcast programming so that the many innovators who actually want to save broadcast television programming can do just that.

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Comments (2) Read through and enter the discussion with the form at the end
Joe - March 6, 2012 7:50 PM

But isn't there an analytically distinct issue of whether this is retransmission without consent (independent of the copyright claims). Would love to hear your thoughts on that.

Kevin Goldberg - March 7, 2012 5:46 PM

Not really. Retransmission consent wasn't raised as a separate issue in the broadcasters' lawsuits (I think they're underlying all of the claims however, including the unfair competition claim). Nor would it be, as the retransmission consent rules don't really offer their own basis for a lawsuit.

In fact, they're really a formalized version of the licensing agreement that Aereo could have sought anyway. AT&T U-Verse got those agreements and, hence, isn't in this position. Aereo specifically chose not to, preferring instead to try and build a better mousetrap and that's why we're here.

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