Update: Aereo Allowed to Continue Operation During Copyright Challenge

 Judge denies broadcasters’ request for injunction.

In the Aereo v. the Broadcasters smackdown, Round One has gone to Aereo. In a thorough 52-page opinion, Judge Alison Nathan, U.S. District Judge in the Southern District of New York, has rejected efforts by the broadcaster plaintiffs (i.e., the major broadcast networks) to get the court to enjoin Aereo’s operation. That means that Aereo can continue to serve its subscribers while the broadcasters’ various substantive claims against Aereo (consisting of claims of various flavors of copyright infringement) are litigated.

That’s bad news for the broadcasters. But what’s worse is how Judge Nathan got to that result. 

(If you’re fuzzy on just what the Aereo litigation is all about, take a look at our initial post about the case.)

Judge Nathan concluded that Aereo’s system is, for purposes of copyright law analysis, essentially the same as the Remote Storage DVR (RS-DVR) system that, according to the U.S. Court of Appeals for the Second Circuit, does not infringe copyrights. While her opinion grants a number of points to the broadcasters, her conclusion about the similarities between Aereo and the RS-DVR system deals the death blow to the broadcasters’ injunction request – and, looking down the line, very likely also to its overall claims of infringement.

We’ll delve into Judge Nathan’s decision a bit more below. But first, a brief primer on litigation procedure may give readers not versed in the Litigation Arts an understanding of what has happened thus far and what it means going forward.

When one party (i.e., the plaintiff) sues another party (i.e., the defendant), the result is an evidentiary trial (assuming, of course, that the parties don’t settle beforehand, or one of the two parties isn’t able to convince the judge that the issues are so clear that no trial is necessary). Preparing for and then actually trying the case takes months, maybe even years. Because of that, plaintiffs who are attacking defendants’ ongoing conduct often ask the court to put a halt to – or “enjoin” – that conduct pending conclusion of the trial.

When a plaintiff asks for an injunction, the court is called upon to consider a number of factors. Among those factors is the likelihood that the plaintiffs’ substantive charges will ultimately stick at trial. After all, if the plaintiffs’ case on the merits is weak, why should the defendants be ordered to stop what they’re doing? But on the other hand, if the plaintiffs can demonstrate that they’ve got a seriously kick-butt case, why should the defendants be permitted to continue to engage in their alleged misconduct?

So when an injunction is requested, long before the trial itself occurs, the court conducts a hearing (like a mini-trial) to determine whether or not to grant the requested injunction. Judge Nathan’s decision resolves that preliminary question in the Aereo case.

And while a decision on a stay request does not necessarily determine resolve the issues to be addressed in the main trial, in this instance the denial of the stay may indeed resolve the case itself.

The gist of Judge Nathan’s decision is that the broadcasters are unlikely to prevail on their infringement claims. And that’s because the Second Circuit (whose rulings are binding on the U.S. District Courts in New York, including Judge Nathan) has already ruled, in 2008, that use of technology akin to Aereo’s does not constitute copyright infringement. The 2008 ruling – in Cartoon Network LLC, LLLP v. CSC Holdings, Inc. – involved Cablevision’s RS-DVR system. The Second Circuit figured that that system was functionally equivalent to the type of private video cassette recorder that the Supreme Court had blessed way back in 1984, in the Betamax case

In the view of the Second Circuit, when a system for delivering video programming involves a “single subscriber using a unique copy produced by that subscriber”, that system is not providing transmissions “to the public”, but rather to that single subscriber. Since transmissions “to the public” are an essential element of “retransmission” for copyright infringement purposes, a “single subscriber” system does not infringe.

It’s pretty clear that the folks who devised the Aereo system used the blue print provided by the Second Circuit as a guide to the design of their system. As presented to Judge Nathan through a number of technical witnesses, the Aereo system looked just like its earlier infringement-free counterparts – technologically distinct, of course, but functionally the same as the RS-DVR and the Betamax, as far as copyright law is concerned. In fact, the judge seemed to conclude that Aereo’s system is even more legal than its precursors. That’s because, as she saw it, Aereo invariably provides only a single data stream to a single user throughout its process, while the RS-DVR system started with multiple data streams from which it then created individual user streams. If the latter didn’t constitute an infringing use, the former certainly didn’t.

Judge Nathan was not unsympathetic to the broadcasters. She agreed that the operation of Aereo could cause the broadcasters irreparable harm, and she seemed to view the relative harms that would be suffered by the broadcasters, on the one hand, and Aereo, on the other, as reasonably equivalent. And, surprisingly, she even said that an injunction “would not disserve the public interest” – which, when you unwind the double negative, seems to say that the public interest would be served by an injunction.

It's worth noting too that Judge Nathan clearly did not intend to open the door to any number of other technical innovations in the future. Broadcasters, who might fear her ruling as a massive expansion of the concept of "public performance", will presumably read her opinion with suspicion in this regard.  But in assessing the public interest considerations, she specifically rejected the exceedingly broad claim advanced by Aereo and Electronic Frontier Foundation (an amicus on Aereo's side), i.e., that free access to and reception of broadcast television by any medium is necessarily in the public interest. 

That claim echoes a theme espoused by new media innovators everywhere. They assert that copyright owners have some obligation to share their works with the public because that’s just the way the electronically interconnected world operates now.  (The corollary: anyone who tries to stifle innovation is a dinosaur (or worse).)  For the record, we're on board with Judge Nathan when she observes that, taken to its logical extension, that notion would lead to the conclusion that the public interest favors no copyright restrictions at all, since "unrestrained piracy" of content would also increase public access to that content.

But none of those points arguably favorable to broadcasters could override the fact that Judge Nathan did not believe that the broadcasters are likely to prevail on the merits.

That doesn't necessarily mean that the broadcasters can’t prevail on the merits. The trial process is a long one, often with lots of unexpected twists and turns. One possible scenario: to support their injunction request, the broadcasters relied on a report from an expert witness who did not personally testify at the hearing (the broadcasters offered his written report instead). In his view, the Aereo system is not the functional equivalent of the RS-DVR approach. But Aereo offered live testimony from its experts to counter that view, and the Judge found Aereo’s witnesses to be “highly credible and persuasive”. It’s at least possible that, if the broadcasters were to put their experts on the witness stand at trial, they might be able to undermine the persuasive showing advanced by Aereo during the injunction hearing. That’s particularly so in view of the fact that the Judge has now explained why she believes that Aereo’s system (at least as she understands it) doesn’t infringe. If the broadcasters’ experts could convince her that her understanding is incorrect in any respect, they might be able to turn things around.

Another possible line of attack to explore: the front end of the Aereo system, in which Aereo first acquires and records the over-the-air programming for later transmission to Aereo’s subscribers. Judge Nathan’s opinion focuses on the back end of the Aereo system, i..e., the process by which the subscriber accesses and retrieves the programming. Since it doesn’t appear to have been fully explored in the injunction hearing, the front end of the Aereo system -- and the transition from the front end to the back end -- may be susceptible to effective challenge at trial.

In her opinion Judge Nathan went to some lengths to emphasize that her conclusions as to the broadcaster’s likelihood of success were intended to be narrow. Nevertheless, her decision doubtless reassures Aereo that its approach is solid: keep yourself well within the wake of the RS-DVR and Betamax precedent and you should be able to avoid copyright problems.

According to the opinion, the broadcasters have signaled that they’re probably going to appeal this interlocutory decision. That appeal would go to the Second Circuit – so if Judge Nathan is reading the Circuit’s Cartoon Network opinion incorrectly, the Circuit can set everybody straight sooner rather than later. But in the meantime, it looks like Aereo will remain up and running for the foreseeable future.

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