The Supremes have spoken, and now it’s the Swami’s turn.
[Blogmeister’s Note: As we have already reported, the Supreme Court has reversed the Second Circuit in the Aereo case, giving the TV broadcasting industry a major victory. Yes, that’s the result that the Swami, Kevin Goldberg, had predicted. So we asked him to review the two opinions out of the Supremes – Justice Breyer’s majority opinion and Justice Scalia’s dissent – and let us know what he found. Here’s his report – but note that we are dispensing with our routine summary of what Aereo is and how the case got to the Supremes. If you’re just getting to the Aereo party now and don’t know the background, check out our extensive Aereo-related coverage at this link. And if you want to see Kevin talking about Aereo, check out his appearance on LXBN TV.]
As I observed following the April 22 oral argument in Aereo, for the most part the Justices on the Supreme Court can’t really be described as “tech savvy”. Nothing in either the majority or the “dissenting” opinion changes that. (Why the quotes around “dissenting”? We’ll look at that below.)
But the Justices’ seeming unfamiliarity and general discomfort with New Technology may be a good thing. The Court appears to have taken care to limit its Aereo decision to areas with which it is familiar. And it also tried hard to make sure that its decision will not disrupt what it believes it knows about new media such as cloud computing.
Let’s take a look at Breyer’s majority opinion (which was joined in by Chief Justice Roberts and Associate Justices Kennedy, Ginsburg, Sotomayor and Kagan), and then the dissent by Scalia (writing for himself and Justices Thomas and Alito). Then I’ll field some questions that I’ve been frequently asked.
The Majority Opinion
Breyer’s opinion is methodical. It focuses (as it should) on the narrow question of whether Aereo infringes the right to “publicly perform” copyrighted programs when it sells its subscribers “a technologically complex service that allows them to watch television programs over the Internet at about the same time as the programs are broadcast over the air”. Under the Copyright Act, of course, the public performance right is held exclusively by the copyright holder – and everybody agreed that Aereo was not the copyright holder of any of the over-the-air programming it provided to subscribers.
He broke the issue into two questions: does Aereo “perform” the programs at all and, if it does, does it do so “publicly”?
With respect to the first question, it’s clear that Aereo’s system results in the “performance” – i.e., the display – of copyrighted works. But who is doing the “performing”, Aereo or its subscriber? Aereo’s view is that it is merely an equipment supplier and that the subscriber, by individually deciding to avail herself of the equipment provided by Aereo, is the one who does all the “performing”.
Needless to say, the language of the Copyright Act does not resolve the question. But in Breyer’s view, a close look at the Act’s legislative history does.
The 1976 Copyright Act was Congress’s response to two Supreme Court decisions – Fortnightly and Teleprompter, from 1968 and 1974, respectively. In those cases the Court had held that cable television systems were not engaged in the “public performance” of broadcast programming: as it said in Fortnightly, “Broadcasters perform. Viewers do not perform. . . . [And a cable provider] falls on the viewer’s side of the line.” Essentially, those holdings in favor of cable operators were what Aereo was hoping it would get.
But Congress hadn’t liked the Court’s conclusion, so in 1976 it amended the Copyright Act to erase the distinction between broadcaster and viewer. In Congress’s view, both are “performing” a broadcast – the primary distinction between the two being that the viewer isn’t likely to be engaged in that second requirement for copyright infringement because the viewer’s “performance” isn’t likely to be public. Congress also added: the Transmit Clause which, from its language, was clearly directed at cable television systems; and the Cable Compulsory License, which requires payment of royalties by cable television systems for retransmission of broadcast programming.
As Breyer saw it, “[t]his history makes clear that Aereo is simply not an equipment provider”. It performs, just like the cable companies in Fortnightly and Teleprompter did.
Having concluded that Aereo “performs” the copyrighted works, Breyer turned to whether it does so “publicly”. Aereo’s view on that point was that, because subscribers can access only the programs they request, any individual transmission to a subscriber is by definition a private transmission. Not so, according to Breyer. As the Justice (and his five colleagues) saw it, Aereo’s transmissions involve a “set of actions”. He likened it to a person sending an email message to a number of friends: he or she can send the message through a single email to all or through multiple identical emails to each separately. (Another example offered by Breyer: Supreme Court Justices see the same Shakespeare play at different or the same showings.) So, too, can Aereo transmit a performance through one or several transmissions, when that performance is of the same program. The result is in either event a “public” performance.
Perhaps the most interesting aspect of Breyer’s opinion is the last section, where he emphasized that the decision is by design limited in scope. In particular, it is not intended to unduly disrupt other industries. He distinguished Aereo’s system from cloud computing services. He even suggested that the Cablevision Remote Storage DVR system – whose approval by the Second Circuit inspired Aereo’s design – is also distinct from Aereo’s.
Scalia’s dissent addressed only whether Aereo “performs” anything at all. Because he concluded that Aereo does not perform, he did not need to determine whether any performance is “public”. According to Scalia, Aereo is nothing more than an “automated service provider”.
Scalia was especially critical of the majority for adopting a new (and, he thought, statutorily unsupported) standard, i.e., the notion that, because Aereo “looks like cable TV”, it is subject to copyright obligations equivalent to those imposed on cable. Scalia also noted that, because the broadcasters had accused Aereo of “direct infringement” (as opposed to “contributory infringement”), the Court needed only determine that Aereo had not engaged in any “volitional conduct”, since that is required in “direct infringement” cases. Since Scalia saw no such conduct by Aereo in its system (because the subscriber makes all the decisions without any involvement by Aereo), the broadcasters’ claim of “direct” infringement must fail.
By way of example, he pointed to “copy shops”, where the proprietor makes copying equipment available for customers to use on a self-service basis. The copy shop isn’t liable for direct infringement when customers illegally reproduce famous works (though it could be liable for contributory infringement in certain situations). In Scalia’s view, Aereo is akin to a copy shop that gives users a library card to find freely available content, the key point being that “the subscribers call all the shots”. As Scalia saw it, Aereo’s system does not relay any program until a subscriber selects the program and tells Aereo to relay it, so the subscriber is calling all the shots.
That said, Scalia indicated that he was no fan of the Aereo system. Even if the Court agreed with Scalia that no direct infringement had been shown, as the litigation proceeds the broadcasters would still presumably argue that Aereo was contributorily infringing in the public performance of the programs (and possibly both directly and contributorily infringing through the reproduction of the programs).
But, again, those weren’t the questions before the Court in this case. In this case the Court was looking only at whether Aereo’s “live” streaming of broadcast programming” constitutes direct copyright infringement. By focusing on the “similar to cable television” analysis, the majority opinion raised left many questions unresolved. For example, is the Court’s decision limited only to systems that offer access to live television to qualify? If similarity to cable-television service is the measure, then the answer must be yes. But does that leave the door open for Aereo to run a record-only service? And what about the application to non-cable television type services. Justice Scalia worried that “it will take years, perhaps decades, to determine which automated systems now in existence are governed by the traditional volitional-conduct test and which get the Aereo treatment.”
It should also be noted that even though Scalia’s opinion was labeled a dissent – and, therefore, presumably a vote in support of Aereo – it appears that, in the long run, Aereo shouldn’t be counting on Scalia for much help. He seemed to signal that he suspects that Aereo may be guilty of infringement of some kind – just not the kind that was (in his view) the proper focus of this particular appeal.
Frequently Asked Questions
Having reported on the Aereo litigation for more than two years, I have developed a feel for readers’ interest in the real world implications of the Court’s resolution of this case. So here are answers to the most likely questions on your mind.
The Court remanded the case back to the Second Circuit, which in all likelihood will simply remand the case back to the trial court (that would be the United States District Court for the Southern District of New York). There Judge Alison Nathan will have to decide whether to enjoin Aereo from operation pending the conclusion of the proceeding.
It’s a pretty good bet that Judge Nathan will enjoin Aereo. Even though the question resolved by the Supremes (i.e., is Aereo infringing the broadcasters’ copyrights?) is just one of four factors to be considered in deciding whether an injunction should be imposed, Judge Nathan sympathized with the broadcasters on the other three when she first addressed the issue.
But even if Judge Nathan opts not to enjoin Aereo, we are still looking at a pretty inevitable conclusion. The broadcasters are likely to file a Motion for Summary Judgment, arguing that this Supreme Court decision mandates a finding in their favor.
At that point Aereo would seem to have only a couple of possible “outs”.
It could try to avoid summary decision by demonstrating that there are some questions of fact that would require a full trial to resolve. The problem with that is that Justice Breyer seemed to indicate that the few factual questions that haven’t been resolved (e.g, do the individual Aereo antennas really capture the programming and save that programming as Aereo claims?) don’t really matter.
A more likely scenario, particularly in light of Justice Scalia’s opinion: Aereo voluntarily withdraws the portion of its service which allows subscribers to view programming “real time” and instead provides only a record-and-watch-later service. (Justice Scalia predicted this will be one of the first questions the lower court will have to face on remand.)
Does this ruling affect the future of cloud computing and other new technologies?
Not very much. Again, this was a pretty limited holding that is clearly intended to apply only to Aereo. Justice Breyer expressly disavowed any wider impact in several ways. So I think that the future of “cloud locker” services (e.g., Dropbox, iTunes and Amazon) is not threatened.
Does this ruling affect RS-DVR Services offered by Cablevision and others?
Not really. If anything, it underscores and expands their validity. Until now, the RS-DVR service had been approved by only one federal court of appeals – the Second Circuit – in the Cablevision case that spawned Aereo. By apparently distinguishing RS-DVR service from Aereo’s, Breyer has effectively affirmed the legality of RS-DVR. And when the Supreme Court affirms the legality of something, that affirmation has nationwide effect. So if any cable operators outside the Second Circuit had had any doubts about offering an RS-DVR service, they can breathe easier now.
How influential was the oral argument to the Final Result?
This is a total guess – I’m just the Swami, I’m not a mind-reader – but I’d say it was moderately important. Sure, there wasn’t much discussion during oral argument regarding the text, history and meaning of the relevant provisions of the Copyright Act, and that was a central element of Breyer’s opinion. But don’t forget that the first question out of the box at the argument was from Justice Sotomayor, asking why Aereo wasn’t a cable company. And the majority’s conclusion that Aereo is, in fact, like a cable system was the basis for its ultimate decision. My strong sense is that the six Justices in the majority were clearly swayed by what they heard on that issue during oral argument (and just as clearly not dissuaded by Aereo’s counter-arguments).
What could Congress do to help Aereo?
Engage in a wholesale rewrite of the Copyright Act, which many have already suggested is necessary. Less ambitiously, Congress could perhaps home in on the very narrow issue of the “Transmit” clause to clarify that “public performance” occurs when one transmits the “transmission”, not the work. But given Congress’s dysfunctional nature right now, the prospect for any significant movement – broad-brush or narrowly-targeted – is doubtful.