Just in Time for Halloween: Zombie Aereo!

Preliminary injunction kills Aereo’s “live” retransmissions, but leaves it partly alive and still shuffling

It’s still alive!!!

Given up for dead by many, our old pal Aereo has managed to sidestep the Grim Reaper yet again. (Rule No. 2 in Zombieland: Always double tap.) But just barely, and its future prospects are not good.

We’ve already covered Aereo’s arc from Nothing to Big Deal to, well, whatever it is now that Judge Alison Nathan has enjoined it from doing some, but not all, of the things it was originally set up to do. To recap briefly for newcomers, Aereo marketed itself as a way to watch over-the-air television, live or recorded, through Internet-connected devices. It rolled its new service out in New York in 2012 and was immediately sued by broadcasters who insisted that Aereo’s system infringed on their copyrights. After losing three rounds in the Second Circuit, the broadcasters finally prevailed in the Supreme Court, which concluded that, to the extent Aereo offered effectively real-time retransmission of over-the-air programming, it was indeed infringing. The Supremes then sent the case back down to the trial court (Judge Nathan presiding) to decide what to do with Aereo.

And now we know.

Given a second bite at the Aereo apple, Judge Nathan has chomped down hard, issuing a nationwide preliminary injunction barring Aereo “from retransmitting programs to its subscribers while the programs are still being broadcast”. Not the injunction that broadcasters wanted (or that might have been expected given the Supreme Court’s ruling), but still a major disappointment to Aereo.

Nathan’s ruling is in line with the Supreme Court opinion, particularly because it demonstrates the same measured caution seen in Justice Breyer’s majority opinion. But because of that, it sets us up for further proceedings to explore what Aereo can and cannot still do. And that could eventually lead us back to the Supreme Court to determine Aereo’s ultimate existence.

So for now, Aereo is not the fully living, breathing entity it originally set out to be, but it’s still not dead. And as it stumbles around zombie-like, it could still constitute a threat to broadcasters’ interests.

In her decision, Judge Nathan reviews the three new legal arguments Aereo has developed in the wake of the Supreme Court decision. She does not appear impressed … favorably, at least.

As we have seen before, Aereo is now claiming that it should be considered a cable system under Section 111(f)(3) of the Copyright Act (often referred to as the “Cable Compulsory License”) and that it should therefore be allowed to continue operating as long as it satisfies all the obligations of a cable system. It made that argument to Judge Nathan. In the alternative, it also argued that, even if it isn’t a cable system, it should be protected by Section 512(a) of the Digital Millennium Copyright Act (DMCA) as a “mere conduit” of content. Aereo’s final fall-back position: if neither of the first two arguments is a winner, Aereo still shouldn’t be enjoined from operation because the broadcasters won’t be irreparably harmed.

As to Aereo’s “Look Ma, I’m a cable system!” argument, Judge Nathan saw that as an attempt to “turn lemons into lemonade”. (Hey, haven’t we heard that analogy before? Oh yeah, right here!) But she quickly squeezed the juice out of that. As she put it, “while all cable systems may perform publicly, not all entities that perform publicly are necessarily cable systems, and nothing in the Supreme Court’s opinion indicates otherwise.” She also observed that the Second Circuit has already answered the question of whether an Internet service can qualify as a cable system with a flat “NO” in its ivi, Inc. decision. Because the Supreme Court didn’t address the ivi, Inc. case, that case remains good law and binding precedent. (Note that Judge Nathan’s decision on this point is not at all helpful to Aereo’s efforts to get the Copyright Office to let treat it as a cable system for compulsory license purposes.)

Nathan took even less time to shoot down Aereo’s DMCA argument. But that’s because it wasn’t really an argument at all. As she noted, “Aereo’s opposition brief only declares that it qualifies as a service provider, but does not explain how it satisfied the statutory definition.” Aereo did suggest that it might come within the statute because Aereo doesn’t itself transmit programming but only acts at the direction of its users, but the Supremes had already rejected that notion.

As to Aereo’s renewed claim that the broadcasters wouldn’t suffer any irreparable harm if Aereo were permitted to continue to operate while the merits trial goes forward, Judge Nathan had a number of things to say. First, she noted that she is currently bound by the findings in her 2012 ruling, where she found that there may well be irreparable harm to the broadcasters. (Aereo will soon re-litigate this issue as the court moves to the full trial on the merits, but until then her earlier findings stand.)

Nathan also observed that Aereo hasn’t challenged other indicia of irreparable harm, such as loss of subscribers for broadcasters’ own services, loss of control over copyrighted content and damage to relationships with content providers, advertisers and licensees. So putting aside the two factual findings that Aereo asked her to relitigate, she concluded that “there is still substantial evidence of irreparable harm to Plaintiffs that Aereo does not challenge.”

And perhaps even worse news for Aereo on the irreparable harm/significant hardship front. In her 2012 decision Nathan held that Aereo would itself suffer significant hardship if it were enjoined from operating. But since then, the Supremes have indicated that Aereo’s service likely infringes on the broadcasters’ copyrights. And because it is “axiomatic that an infringer of copyright cannot complain about the loss of ability to offer its infringing product”, Aereo can no long claim that it would be harmed if enjoined.

So Aereo is now subject to an injunction considerably broader than Aereo might have expected. The broadcasters argued that the injunction should prevent it from any retransmissions, whether live or on delay. Aereo countered that with the suggestion that any injunction should prevent the retrans of only live programming or programming subject to no more than a 10-minute delay. Judge Nathan came up with her own approach: an injunction limiting Aereo subscribers from accessing a program they’ve recorded through the system until the over-the-air broadcast of that program has ended.

Interestingly, in considering the geographical scope of the injunction, Nathan noted that “the technological safeguards designed to ensure that subscribers cannot access broadcasts outside of their home DMA are easily overridden.” This is important not only in terms of the preliminary injunction motion, but also in the longer term. It’s hard to see Judge Nathan – or anyone else – allowing a service to operate in way that results in national accessibility of local broadcast programming.

So what’s next? 

Either Aereo or the broadcasters could appeal the injunction back to the Second Circuit.

Aereo might want to appeal the full decision or simply the time limitation of the injunction, which goes well beyond the 10-minute delay Aereo had sought.

The broadcasters might want to appeal the fact that the injunction still allows Aereo to provide any service at all. After all, a time-delayed Aereo is still a competitor in many ways. Viewers who don’t mind watching on a time delay – quite often the case for anything other than live sports – could still use Aereo as a cord-cutting/time-shifting alternative to cable or an alternative to the broadcasters own on-demand services. It could also compete with services like Hulu (in which broadcast networks have an ownership interest) and Netflix. 

Or either side could let this play out through the rest of trial. This obviously suits the broadcasters to some extent, since Aereo may not be as attractive to potential subscribers without the live viewing function. The networks may simply be content to wait and see what happens in the District Court, especially given some of Judge Nathan’s comments about Aereo’s viability. And, of course, they can continue to pursue the legality of Aereo’s time-delayed service then.

Which leaves us with the prospect of still more litigation dragging on, possibly for years to come, possibly even back to the Supreme Court, as the not-quite-dead Aereo struggles to survive some way, somehow, while broadcasters keep trying to administer the final double tap. Check back here for updates.

Now Available: Kevin and Harry's Excellent "Whither Aereo" Webinar

If you missed the webinar Kevin Goldberg and Harry Cole presented on the latest twists and turns in the Aereo case (and the prospects for more twists and turns to come), worry not: it, like pretty much everything else, is on the Internet. The folks at Team Lightbulb, who arranged and promoted the webinar, have posted a recording of the show here – all audio and video included. It’s free.

Upcoming Webinar: Whither Aereo? (or should that be "Wither Aereo?")

As we all know, the Supreme Court issued its decision in the Aereo case two months ago – but that wasn’t the end of the matter by any means. The Court’s decision left a number of questions unanswered. And, as has been the case since it burst onto the scene, Aereo is nothing if not creative, which means that, despite its loss in the Supremes, it has not exited the scene by a long shot.

While maybe you took the summer off, our Aereo watchers, Kevin Goldberg and Harry Cole, did not. They’ve been keeping track of the fall-out following the Supreme Court’s decision, and they’re ready to bring you all up to date in a free one-hour webinar on September 10 at 1:00 p.m. (ET).

You can sign up for the webinar here. It’s a Team Lightbulb production.

Aereo Loses First Round in Copyright Office, While Dish Wins its Next Round in the Ninth Circuit

More developments in the realm of Internet retransmission of OTA signals.

Aereo – the gift that keeps on giving, at least when it comes to blogworthy content. As we reported, after it got its clock cleaned at the Supreme Court, Aereo bounced back with Plan B, which amounted to declaring itself (a) a cable system and, thus, (b) eligible for the compulsory copyright license granted to cable systems. But you can’t just say “I’m a cable system” and expect anybody to believe you. So Aereo went ahead with some of the paperwork required of f’real cable operators; among other things, it filed a bunch (14, to be exact) of Statements of Accounts with the U.S. Copyright Office, along with some royalty and fee payments amounting to the princely sum of $5,310.74.

A nice gesture, but wouldn’t you know it, the Copyright Office (CO) was not inclined to play along with the gambit. In a brief letter dated July 16, 2014, the CO let Aereo know that, as far as the CO is concerned, Aereo is not a cable system entitled to the compulsory license. As it turns out, more than a decade ago the CO had concluded that “internet retransmission of broadcast television fall outside the scope” of the compulsory license. That’s bad news for Aereo, whose system is firmly – indeed, exclusively – based on Internet retransmission.

The CO also noted that, in the ivi, Inc. case in 2012, the U.S. Court of Appeals for the Second Circuit had agreed with the CO’s interpretation. That’s even worse news for Aereo because, at least for the last couple of years, the Second Circuit has been Aereo’s BFF in its nationwide litigation wars. Of course, Aereo’s view is that the Supreme Court’s decision effectively overruled ivi so ivi really isn’t good law anymore. But that’s a tough argument to make (credibly, at least) when the Supremes didn’t even mention ivi in their opinion. Normally, when the Supreme Court wants to overrule something, they’ll say so.

Though obviously down, Aereo still may not be entirely out. Despite its view that Aereo is definitely not a cable system, the CO recognized that Aereo is still hip deep in litigation concerning its status. Since Aereo has advanced the “Look-at-me-I’m-a-cable-system” claim in court (i.e., before Judge Nathan in the remand phase of the District Court proceeding in New York) and the court hasn’t yet resolved the question, the CO decided not to reject Aereo’s submissions out of hand. Instead, the CO is going to hold Aereo’s Statements of Accounts and its $5,310.74 check for the time being, just in case Aereo gets lucky. (For Aereo’s sake, we hope that the CO is holding that cash in an interest-bearing account, since Aereo’s other revenue streams seem to be drying up.) But the CO warned Aereo that it’s entirely possible that the CO may change its mind and take “definitive action” on Aereo’s filings, action that could include formal rejection of those filings.

Meanwhile, in another proceeding quasi-related to Aereo's travails, a panel of the U.S. Court of Appeals for the Ninth Circuit has declined to enjoin Dish Network from continuing to offer its “Dish Anywhere” and “Hopper Transfers” services. Fox has sued Dish in California, claiming that those two services infringe on Fox’s copyrights.

As we have seen in the various Aereo cases, standard operating procedure in such circumstances calls for the broadcast plaintiff to request an injunction to stop the alleged infringer in its tracks until the litigation is completed. Aereo successfully fended off such an injunction before both Judge Nathan and then, on appeal, the Second Circuit. But the Supreme Court reversed those lower decisions, strongly suggesting that an injunction should have issued.

But in the Dish case, in a decision issued after the Supreme Court had acted in Aereo, the Ninth Circuit did not enjoin Dish. Some observers seem mystified that, in the wake of the Supreme Court’s Aereo decision, the Ninth Circuit could seemingly flout the Supremes' opinion by refusing to enjoin an alleged infringer.

But there’s a perfectly simple explanation here.

Recall that, in order to obtain an injunction, a party must make a four-prong showing. One of those prongs calls for the moving party to demonstrate that it will suffer irreparable harm if the injunction is not granted. Another prong requires a showing that the moving party is likely to prevail on the merits of the case at trial.

In Aereo, while Judge Nathan had agreed that Aereo’s operation could cause the plaintiff broadcasters irreparable harm, she was not convinced that they would ultimately prevail on the merits. That was because of the Second Circuit’s 2008 Cablevision decision, which Aereo persuasively argued was controlling in the Aereo case. So the focus of the Second Circuit’s Aereo decisions and the Supreme Court’s opinion was the question of likelihood of success on the merits.

By contrast, in the Dish case, the trial court had concluded that Fox was not going to suffer irreparable harm; accordingly, the court declined to enjoin Dish. Fox’s appeal to the Ninth Circuit thus had nothing to do with the likelihood of success on the merits criterion. Rather, it was all about irreparable harm. The Ninth Circuit reviewed the record and, invoking an appropriately deferential standard of review, concluded that the trial court’s decision was OK: Fox had not established that it would suffer irreparable harm absent an injunction, so its request for an injunction was correctly denied.

To be sure, we expect that Aereo’s cookies are seriously frosted at the thought that Dish avoided an injunction within a matter of a week or two after Aereo got whacked in the Supremes. But the two cases have little to do with one another, at least as each of them currently stands in its respective litigation process. There may come a point at which the issues in both will overlap, in which event it may be reasonable for Aereo and the rest of us to expect conformity between the two. But with respect to the two cases in their present postures, it’s apples and oranges.

It's ALIVE!!!! Aereo Lurches Back to Life, Sort of

Trying to make lemonade out of the lemon handed to it by the Supreme Court, Aereo has come up with Plan B.

The best stories never really end when you think they’re going to, do they? There’s always a nifty twist that keeps the plot chugging along.

So we really didn’t expect that the Supreme Court’s decision was the last word in the Aereo case, did we?

And right we were.

After pulling the plug on its service within a couple of days after taking a seeming knock-out punch from the Supreme Court, Aereo has come up with a plan. According to a letter filed by Aereo with Judge Alison Nathan of the U.S. District Court for the Southern District of New York (where the Aereo saga first got our attention back in 2012), Aereo is now a cable company that is entitled – by Congress, thank you very much – to retransmit over-the-air broadcast programming. As long, that is, as Aereo files the necessary “statements of account” and “royalty fees”required of cable systems. And in its letter Aereo advises that it “is proceeding” to file just those items.

Following the adage about making lemonade when handed lemons, Aereo has taken the Supreme Court’s decision and tried to turn it to Aereo’s advantage. Since the Supremes said that Aereo is “highly similar” to a conventional cable company, well then (according to Aereo), Aereo is a cable system and, therefore, “is entitled to a license” under Section 111 of the Copyright Act.

And even if it’s not entitled to such a license, Aereo’s got another argument. The Supreme Court concluded that Aereo is like a cable system because Aereo provides “near simultaneous” retransmissions of over-the-air programming. So (Aereo reasons) if Aereo’s service were to be limited to delayed (i.e., not “near simultaneous”) retransmissions – providing, instead, essentially an elaborate recording-and-playback service – then Aereo would no longer be like a cable system and would no longer be subject to the terms of the Supreme Court’s decision. (Blogmeister’s Note: Props to the Swami, Kevin Goldberg, for seeing this argument coming.)

Aereo’s argument is far from perfect. For example, while the Supremes did clearly indicate that Aereo is “highly similar” to a cable system, it’s a stretch to conclude (as Aereo does) that the Supreme Court issued a “holding that Aereo is a cable system under the Copyright Act”. A couple of years ago an operation called ivi, Inc., which provided an Internet-delivered system for streaming over-the-air programming and claimed it was a cable system, didn’t make it out of the starting gate. While Aereo’s system is arguably different in certain respects from ivi’s, the fact that ivi didn’t get very far should send Aereo a cautionary message.

How Judge Nathan will react to Aereo’s pirouette remains to be seen.

But, for now, Aereo lives on. It’s into Plan B and its now-proposed service is far from the service that got this melodrama started in 2012. But it’s still with us, at least for a while.

The Supreme Court's Aereo Decision: What It Says, What It Means

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.

The Dissent

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.

What’s next?

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.

Aereo Update: Supreme Court Rules for Broadcasters!

The Supreme Court has decided the Aereo case! And the answer is (dramatic drum roll): The Supremes, in a 6-3 vote, have reversed the Second Circuit’s decision – which means that the broadcasters have won this round.

You can read the two opinions (those would be Justice Breyer's majority and Justice Scalia's dissent) here. We are hunkering down here in the CommLawBlog bunker to take a careful look at the opinions, which run to 35 pages in toto; we’ll be posting our analysis once we’ve had a chance to digest it. (In the meantime, feel free to read the inevitable accounts in the Main Stream Media, but don’t take them as gospel. Wait for us to chime in.)

For all of you who were, in anticipation of the decision, engaging in intra-office competitions (in the nature of “pools”, but purely recreational and not amounting in any way to “gambling”), here are some aspects of the decision that may be of interest:

The majority opinion was written by Justice Breyer.

The nine justices split 6-3, with a total of two separate opinions (including the majority). The line-up was, in the majority (i.e., for the broadcasters): Breyer, Roberts, Kennedy, Ginsburg, Sotomayor, Kagan; and dissenting (i.e., for Aereo), were Scalia, Thomas, Alito.

And finally, by our count the word “cloud” appears a total of four times in both opinions.

Aereo in the Supremes: What Are the Odds?

Supreme Court junkies doubtless know that there are, as of June 17, 2014, only 14 cases that have been argued, but not yet decided, by the Supreme Court this term. One of those is the Aereo case which we here in the CommLawBlog.com bunker have been following for the last couple of years.

The Court has announced that it will be handing down opinions on June 19, 23 and 30; there’s also the possibility that it will add more dates, although, obviously, time is fast running out. Since the Supremes traditionally resolve all pending cases before they split every year toward the end of June, we can be reasonably confident that the Aereo decision is on its way, real soon.

But, as Tom Petty cogently observed, the waiting is the hardest part. We are plagued by the near-palpable tension and anxiety produced by the knowledge that a decision is coming, but we just don’t know when.

No worries. We here at CommLawBlog are happy to provide a distraction in the form of seven separate Aereo-related points about which to speculate and prognosticate. We’ve presented them in an attractive one-page format, suitable for printing, distributing and posting prominently. Think of this as a Supreme Court version of your annual Final Four pool – an amicable way to increase camaraderie in the workplace.

We'd be very interested in seeing how our readers come out on these questions -- so please feel free to send us your results through the "comments" option, below. Or you can share them via Twitter (letting us know by using “@commlawblog” and/or “#aereowatch”).

And don’t forget to check back here at CommLawBlog once the decision gets released.

New Technologies Once Again Blurring the Lines of Copyright Law

[Blogmeister’s Note: The following article by Frank Montero appeared in Bloomberg BNA’s Telecommunications Law Resource Center. The folks at Bloomberg BNA have kindly given us permission to reprint it here.]

It seems like copyright law is always trying to catch up with new technology. That’s not a new phenomenon. Take the player piano and the 1908 Supreme Court case of White-Smith Music Publishing Co. v. Apollo Co., in which the high court ruled that manufacturers of music rolls for player pianos did not have to pay royalties to the composers.

The composers were understandably worried that the player piano – then a burgeoning new technology – would make sheet music (and, more importantly, the copyright royalties they earned from the sale of sheet music) obsolete. In response, Congress, in the Copyright Act of 1909, created the compulsory license, allowing anyone to copy a composer’s work without permission as long as they paid a predetermined license fee.

The same scenario is playing out today: New technological developments are outstripping decades-old copyright law, forcing changes in the law, challenging old models, and blurring long-established lines. The traditional “silo” mentality that addressed TV, radio, publishing, recording, cable – and now, the Internet – as separate and distinct areas cabined off from one another is eroding. Record companies are battling radio broadcasters. TV broadcasters are battling cable and satellite companies. Internet audio streamers are battling publishers. Publishers are battling record labels. Internet video streamers are battling Internet service providers.

A principal source of these issues: the Copyright Act’s definition of the “public performance” of copyrighted work.

The Copyright Act gives a copyright holder the exclusive right “to perform the copyrighted work publicly.” In response to a couple Supreme Court decisions applying that provision to the then burgeoning new technology of cable television (shades of the player piano situation) Congress amended the Act in 1976. To ensure that cable retransmission of over-the-air television broadcasts were treated as “public performances,” Congress expanded the definition of “[t]o perform . . . publicly.” As a result, that definition now includes the transmission “to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.”

That provision underpins the right of TV broadcasters to negotiate retransmission consent agreements to receive payments from cable systems and other multichannel providers that distribute the station’s programming to paying subscribers, a system that has worked reasonably well for more than 20 years.

But new technology won’t be denied. In the past two years a venture called Aereo Inc. has challenged that model by retransmitting to subscribers TV programming without paying copyright royalties. Aereo’s technology involves small individual broadcast antennas (one for each subscriber) which pick up free broadcast TV signals over the air.

Are Aereo’s Streams “Public Performances”?

According to Aereo (and the U.S. Court of Appeals for the Second Circuit, which sided with Aereo in a challenge by TV broadcasters), the company is not engaging in a public performance of copyrighted material because it sends each of its subscribers an individualized transmission of a performance from a unique copy of each copyrighted program. As a result (so the argument goes), it is not transmitting performances “to the public.” Rather, Aereo says that it is essentially renting its subscribers an “antenna farm” service that allows each subscriber to access a “private” performance much like they would if the antenna were on their roof and connected directly to their TV – only in this case, the antenna and the “roof” are off-site and owned by Aereo. (In an effort to bolster its claim – or maintain the illusion – that it is not a cable system, Aereo cuts off reception of its service beyond the perimeter within which a residential TV roof antenna could pick up over-the-air signals from TV stations.) 

TV broadcasters, of course, disagree. In their view, Aereo is engaged in a public performance of copyrighted material just like any multichannel video programming distributor (MVPD) and, therefore, Aereo should pay copyright royalties like any MVPD, whether the statutory amount associated with must-carry carriage or a privately negotiated amount, as with retransmission consent deals.

Last month, the TV broadcasters and Aereo went head to head at the Supreme Court in Am. Broad. Cos. v. Aereo. Among the questions to be decided: Is Aereo a cable company essentially engaged in retransmission of copyrighted programming? Or it is really just an equipment supplier providing subscribers with the equivalent of a new-fangled antenna on each subscriber’s “roof”? During oral argument, Chief Justice Roberts questioned the motives underlying the design of Aereo’s system: “There’s no reason for you to have 10,000 dime-sized antennas except to get around copyright laws. . .”

Meanwhile, radio broadcasters are waging their own battle over copyright royalties and Internet distribution. Although radio stations pay royalties to publishers and songwriters through ASCAP, BMI and SESAC licensing fees, they have long been exempt from having to pay performance royalties for over-the-air broadcasts of recorded music. The theory underlying the exemption: Record companies reap a benefit from having their recordings played over the airwaves.

The recording industry has been trying to reverse this in recent years by urging Congress to act on their behalf (shades of player pianos and cable TV), but the broadcasting lobby has been able to thwart those efforts. Still, radio stations are required to pay royalties to the recording industry for simulcasts they stream over the Internet. That’s the result of the 1998 Digital Millennium Copyright Act (DCMA). Back in the 1990s, when Internet access was shifting from dial-up to broadband, the volume of video and audio content streamed on the Internet increased. In the DCMA, Congress adopted a digital performance royalty for sound recordings.

The DCMA exempted over-the-air broadcast transmissions from that royalty, and it also exempted retransmissions of over-the-air broadcast transmission within a 150-mile limit. While broadcasters argued that streaming their own signals over the Internet should not be subject to the DCMA’s digital performance royalty, the Copyright Office disagreed.

But, again, technology won’t be denied. A new technology known as Geofencing now makes it possible to geographically limit the reach of an Internet webcast to a particular geographic area – say, 150 miles. So a Virginia broadcaster has sued, claiming that by limiting its Internet stream to within 150 miles using Geofencing, it should not have to pay DCMA performance royalties for those Internet simulcasts. This argument, of course, has faint echoes of Aereo’s deliberate efforts to artificially limit subscriber reception to an area equal to the reach of residential TV roof antennas (even though Aereo is accessible via Internet). In both cases, Internet distribution is being limited to reach audiences within an area comparable to a broadcast station’s over-the-air signals.

The goal in both cases is obvious: To use new technology to fit into traditional industry “silos” and thereby take advantage of laws based on that “silo” approach. And there is a further intersection. If the Supreme Court were to hold that Aereo’s use of small antennas to retransmit over-the-air signals over the Internet does not violate the copyright of TV broadcasters, then you could arguably use small antennas to receive and simulcast a radio station’s over-the-air signal over an Internet stream (in an Aereo-like model) to listeners without having to pay royalties to the recording industry. Bye, bye 150-mile limit.

In short, Aereo is trying to blur the line with TV broadcasting and radio broadcasters are trying to blur the line with pure Internet content providers like Pandora.

Is Pandora a Broadcaster?

Meanwhile, Pandora wants to be treated like a broadcaster. Last year the pure play music provider purchased an FM radio station in South Dakota in order to blur the line with broadcasters for copyright purposes. Pandora currently pays royalties to composers and publishers to use songs for its service through license fees it pays to organizations like ASCAP and BMI. But similar online services offered by broadcasters, such as Clear Channel’s iHeart Radio, pay lower ASCAP and BMI rates than Pandora. The difference between broadcasters and Pandora? Radio stations benefit from a January 2012 agreement between the Radio Music License Committee (which negotiates royalty rates for the radio industry) and ASCAP and BMI. So to bring itself under the terms of that agreement – and thereby relieve itself of considerable royalty obligations – Pandora bought a radio station and declared that it was now a radio broadcaster entitled to the benefits of the January 2012 agreement.

Finally, we come full circle to the licensing industries themselves. As mentioned earlier, radio stations currently pay copyright licensing fees to songwriters and publishing companies (primarily through payments to ASCAP, BMI and SESAC), but they are not required to pay recording companies (usually collected by SoundExchange) for over-the-air broadcasts of recorded performances.

Enter the Songwriter Equity Act recently introduced in the Senate, which aims to level the playing field between record labels and songwriters who claim they are not getting a fair piece of the pie. The legislation would broaden the pool of evidence that federal rate courts like the Copyright Royalty Board (CRB) could examine when setting songwriter compensation. The CRB would be able to set the fair market value of digital performance rates for composers. In so doing, it could also correct perceived inequities in the royalties received by songwriters and publishers on the one hand and artists and recording companies on the other.

The CRB would calculate fair market value when setting songwriter publishing rates on digital music services, in addition to four other considerations it already uses. For example, the CRB could consider the rates that are set between Sound Exchange (which collects royalties for recordings played over the Internet) and digital music service providers such as Pandora. Broadcasters are concerned because they fear that they will be stuck with the tab for correcting any inequities the CRB perceives between songwriters and artist rates.

The real issue at hand, however, is the fact that technologies are shifting faster than the law can adapt. In many ways, the copyright law, like many telecommunications laws and regulations, has historically been crafted around traditional industry “silo” models such as radio vs. TV vs. cable vs. telephony vs. Internet vs. publishing vs. recording. But thanks to the continuing evolution of technology, those once-clearly delineated lines are blurring and will continue to blur. This may require a complete overhaul of the system.

There are already initial efforts underway to update the Communications Act to remove the traditional industry silos of broadcasting, cable, wireless and telephony. Such changes will have to be carefully crafted and interpreted to avoid unintended consequences. In 2008, for example, the Second Circuit’s Cablevision decision – which held that Cablevision’s remote storage DVR did not infringe on broadcasters’ copyrights – led to an unintended consequence we now know as Aereo, much like the 1908 player piano decision changed for the next century the law of how music is copied and licensed.

In the Aereo oral argument before the Supreme Court, the justices were clearly concerned about the impact their decision could have on other developing technologies such as cloud storage. We are a long way from player pianos, but lessons can be learned and old models need revising.

Geofencing, Webcasting and Performance Rights Royalties: How Far Does The Exemption Go?

A radio broadcaster is arguing that geofencing exempts it from performance royalties for webcast songs; Could this lawyered loophole backfire on the industry?

For two years, TV broadcasters have railed against Aereo’s innovative interpretation of the Copyright Act based on what Aereo claims to be technological developments. According to Aereo, its interpretation would relieve Aereo of copyright obligations. Now, in an ironic turn of events, a radio broadcaster is asserting its own innovative interpretation of a separate provision of the Copyright Act, an interpretation that (a) is based on technological developments and (b) would relieve the interpretation’s proponent of copyright obligations.

If this new argument is ultimately endorsed by the courts, it could lead to major changes in webcasting copyright law – including some changes not likely to be welcomed by broadcasters. Those changes could include, at least theoretically, creation of the Performance Right that the broadcast industry has fought for years.

The broadcaster in question is VerStandig Broadcasting (VerStandig), licensee of some FM stations in Virginia. The technological development VerStandig is relying on: geofencing, which permits a webcaster to limit accessibility to its programming based on the physical location of the computers receiving the webcast. Geofencing works by checking the “receiving computer’s IP address, WiFi and GSM access point, GPS coordinates, or some combination against a real world map of those virtual addresses”.

The provision of the Copyright Law in question in Section 114, which provides a limited exemption from the requirement that a webcaster pay royalties for the performance of copyrighted sound recordings. While broadcasters are exempt from such performance royalties for their broadcast programming, they’re still on the hook for those royalties for recorded performances that they retransmit on the Internet. But thanks to Section 114(d)(1)(B)(i), even those retransmissions are exempt if they don’t go “more than a radius of 150 miles from the site of the radio broadcast transmitter”.

VerStandig’s claim: as long as it uses geofencing to make its streamed signal inaccessible to computers more than 150 miles from its station’s transmitter, it owes no performance royalty.

Much like Aereo’s claims (which involve an entirely different area of the Copyright Act), VerStandig’s have a certain facial appeal. But their ultimate validity requires deeper analysis, and their ultimate effect could be unpleasant for broadcasters.

On February 28, 2014, VerStandig notified SoundExchange, which administers the statutory license applicable to webcasting, of VerStandig’s intent to begin webcasting its Station WTGD via a simulcast of the station’s over-the-air signal. VerStandig further asserted that by using geofencing, it would fall within the 150-mile exemption found in Section 114. VerStandig asked SoundExchange to confirm that VerStandig’s approach would not be subject to a legal challenge.

SoundExchange responded two weeks later in a letter stating – not surprisingly – that  “SoundExchange does not share your view.” According to SoundExchange, the Section 114 exemption applies only to “retransmissions of broadcasts by cable systems to their subscribers or retransmissions by broadcasters over the air. It does not apply when broadcasters simulcast their own programming over the internet.” The letter strongly urged VerStandig to obtain licenses for the simulcast transmissions.

In response, VerStandig took the fight to federal court. It asked the U.S. District Court in Harrisonburg, Virginia to issue a Declaratory Judgment providing (among other things) that: a live stream of its FM broadcasts over the Internet to listeners physically located within 150 miles of the FM station’s transmitter is an exempt transmission under Section 114(d)(1)(B)(i) of the Copyright Act; such a stream is therefore not an infringement of any rights protected by the Copyright Act; no statutory license is required; and SoundExchange has no right to collect royalties for streaming to listeners located within 150 miles of the particular station’s transmitter.

The whole thing raises a number of questions touching on several subjects from the applicability of specific statutory provisions in this case to its potential effect on an entire industry. 

Why haven’t we heard much about this exemption before? Because it never mattered. First and foremost, most people probably thought the 150-mile exemption applied only to what we usually think of in terms of “retransmission”: retransmission of broadcast signals by a cable system or an over-the-air translator or booster. And even if anybody did think that the exemption might apply to webcasting, it was pretty much a moot point because there was no way to tell when an Internet listener was within 150 miles of the transmitter, let alone ensure that only people within that geographic area received the stream. 

But geofencing changed all that. As the VerStandig complaint notes: “[n]ow, because of geo-fencing, data made available over the Internet can be restricted to recipients based upon their physical locations”. And suddenly, the 150-mile exemption looms large.

Is the claim valid?  Hard to say – it’s never been litigated. But that’s because the only time it came up on the past, it was quickly dismissed because it was at that time technologically impossible to limit the range of listenership.

What’s the short-term effect if VerStandig is right? Even though geofencing isn’t cheap, it’s cheap enough that most webcasters would likely try to employ it. 

Note one uncertain aspect of the Section 114 exemption: it’s not clear whether that exemption applies to any listener within 150 miles of the station transmitter or whether it applies only if the station ensures that no listeners can attach the stream outside of 150 miles.

If a court says, yes, there is an exemption for retransmissions within 150 miles of the station transmitter and it’s applied on a per listener basis (i.e., the station doesn’t have to pay for any performances to listeners within that radius), royalties paid by broadcasters engaged in Internet simulcasting would go way down (and the number of stations engaged in simulcasting would probably go way up as the cost of performance royalties would be eliminated). 

If a court says, yes, there is an exemption for retransmissions within 150 miles of the station transmitter and it’s applied on an all or nothing basis (i.e., the station gets the exemption only if not one single listener outside the geofence attaches to the stream), we’ll see a less “world-wide” Internet, at least as far as webcasting is involved. Sure, stations love to reach community expats who have gone off to college or beyond or others interested in their local communities from afar, but they love saving money even more. I think many, possibly most, webcasting stations would prefer to reach more local listeners via multiple devices than more listeners in multiple far-flung locations.

The bigger question: What’s the long-term effect if VerStandig is right? It’s a variation on what we see as the eventual outcome of the Aereo litigation. Faced with an interpretation that, arguably, runs counter to Congress’s initial intent, Congress could be prompted to take steps to clarify that initial intent. But unlike in the Aereo case, such clarification would likely be a lot easier to accomplish. Rather than addressing the Performance Right in a forward-looking way that deals with new technologies – a potentially herculean task – Congress has a couple of “quick fixes” at its disposal. Most obviously, Congress could simply clarify that any court ruling for VerStandig got it wrong and that the 150-mile exemption in Section 114(d)(1)(B)(i) applies only to cable and over-the-air retransmissions and not to webcasting (as SoundExchange claims). 

Or maybe this is the final straw in the long-running battle over a long-proposed Performance Right for over-the-air broadcasting. That has been held at bay for a long time but it’s never been a slam dunk. But if VerStandig wins, the recording industry would have the added argument that it stands to lose a big chunk of revenues because radio broadcasters wouldn’t be paying any royalties for performance of sound recordings, over-the-air or online (as long as the 150-mile limit is maintained). That claim of increased harm might be enough to convince enough legislators to switch their view and enact a Performance Right applicable to broadcasters.

So again we have a novel interpretation of a provision of the Copyright Act, based on claims of technical innovations and intended to exempt a substantial class of transmissions – or retransmissions – from copyright obligations. During oral argument in the Aereo case, Supreme Court Chief Justice John Roberts observed:

I’m just saying your technological model is based solely on circumventing legal prohibitions that you don’t want to comply with, which is fine. I mean that’s you know, lawyers do that.

But there it was a non-broadcaster seeking to be relieved of copyright payments to broadcasters. In the VerStandig case, a broadcaster is taking essentially the same approach to avoid copyright liability to recording artists, albeit with respect to a completely separate and distinct provision of the Copyright Act. Despite the differences between the two cases, the irony is inescapable.

There are a lot of hurdles to jump and questions to answer before this case reaches its final conclusion. But it’s not entirely out of the realm of possibility. Plainly, this case – like Aereo, albeit in a different context – has the ability to upend the broadcast industry. And, like Aereo, it’s all because someone lawyered a loophole.

Broadcasters would be well-advised to keep an eye on the progress of the VerStandig litigation as it wends its way through the courts.

Aereo in the Supremes: A Post Mortem Post

So the storm that had been brewing for some months – the long-impending Aereo argument in the Supreme Court – has now come and gone, and we are left to sift through what remains to try to figure out what’s next.

We are pleased to report that, as planned, our intrepid reporters on the Aereo beat, Kevin Goldberg and Harry Cole, attended the argument (nearly front-row seats, thank you very much) and were able to provide an overview of the festivities on CommLawBlog Live! less than three hours after the gavel came down in the courtroom. (That’s just a metaphor – Chief Justice Roberts did not appear to wield an actual gavel.) For those of you who missed it, you can catch a recording of the audio portion here, although you’ll miss the video of Kevin and Harry – which is, of course, the price you pay for not signing up for the live presentation.

Several highlights, in no apparent order:

  • The Supreme Court’s head was in the clouds . . . literally. Many of their questions centered on how cloud computing might be affected by any decision in this case.
  • At least four justices observed that Aereo looks just like a cable system, and at least a couple reflected an awareness that Aereo’s design was intended to allow it to avoid copyright obligations – but it’s not clear that that alone will convince them to find for the broadcasters.
  • The argument did not dwell as much as we had expected on the specific statutory language at issue here (i.e., the Transmit Clause of the Copyright Act).
  • Aereo’s counsel repeatedly characterized Aereo as being purely an equipment rental service. But he also acknowledged that, while some of its dime-sized antennas are “static”, i.e., devoted to a particular user, others are dynamic. In a dynamic system, an Aereo subscriber logging in to the service will be assigned whatever antenna is available, as opposed to any specific antenna.
  • The Court did not appear troubled at all by the procedural posture of the case. That is, what’s on appeal is the denial of a preliminary injunction, a decision based on a relatively thin factual record. Despite that, the Court appears to be psychologically ready to resolve this case without having to remand it for further evidentiary proceedings.

Bottom line: Kevin and Harry figure that the Court’s decision will be a narrow one designed to avoid, to the extent possible, any untoward effects on cloud computing. While the Justices kept their cards close to their robes – as is their custom – our guess is that the Court will come down on the broadcasters’ side, possibly with a unanimous decision.

In addition, Kevin was interviewed on the LexBlog Network about the argument. You can hear – and see! – him here: 

If you want to read the transcript of the Supreme Court argument, you can find it here. The recording should be available on the Supreme Court’s website in a couple of days.

And now we all just sit back and wait for late June, when we expect to see the Court’s decision. Check back here for updates.

Reminder: Live Webinar Review of Aereo Oral Argument - 4/22/14

There’s nothing like a Supreme Court argument to get the Main Stream Media’s attention. With tomorrow’s argument in the Aereo case nearly here, it seems that all the MSM (well, at least the Washington Post, the New York Times, the Boston Globe, CNET, PBS, among many others) are suddenly attuned to the story that we here at CommLawBlog have been all over for more than two years. (For a collection of our Aereo pieces, click here.)

As we reported last week, our Aereo beat bloggers Kevin Goldberg and Harry Cole are planning to emerge from the CommLawBlog bunker for a quick run over to the Supreme Court to take in the show. Then they’re going to hustle back for a live online discussion and analysis of the arguments at 3:00 p.m. that afternoon (Tuesday, April 22, 2014).

Why wait for the nightly news (or the next day’s newspaper) to find out what you’d probably like to know sooner? Space is still available if you want to hear Kevin and Harry lay it out.And it's FREE. Just click on the button below and sign yourself up.

 

Coming Soon: CommLawBlog Live!

A chance for you to hear directly from CommLawBlog contributors and friends.

CommLawBlog is pleased to announce the debut of a new feature: CommLawBlog Live!

From time to time, we will present our bloggers, and maybe even some outside guests, discussing communications law issues in a live online format. The kick-off show is set for Tuesday, April 22, at 3:00 p.m. – it will feature Kevin “The Swami” Goldberg and Harry “Blogmeister” Cole sharing their observations about the Aereo oral argument in the Supreme Court (which both will be attending earlier that day). Which Justices asked what questions? How did counsel respond? What does it all mean for broadcasters, MVPD’s, copyright holders, viewers, Aereo? And who knows what else?

Kevin and Harry, both veteran Supreme Court watchers, have been all over the Aereo saga for two years. If you like reading their posts on CommLawBlog.com, we expect you’ll like hearing them live and on-screen.

We’ll be using our usual webinar process, but don’t expect this to be like other webinars you may have attended. PowerPoints? Probably not. Off-the-cuff comments, casual banter, the occasional pointed critique? Count on it. Fun? We sure hope so. Keen insight? You’ll have to be the judge.

The April 22 CommLawBlog Live! test drive will be a complement to the more traditional webinar presented by Kevin and Harry as an Aereo primer in advance of the Supreme Court argument. If you missed that session, you can catch the recorded version by clicking on this link.

Registration for the first CommLawBlog Live! is now open – just click on the button below. Registration is first-come, first-served. Space is limited, so register sooner rather than later. 

Aereo Update: Alito Back On The Case

In case you ever wondered whether there’s such a thing as “unrecusal” – and, frankly, we hadn’t – here’s the answer: yes. The Supreme Court has announced that Justice Alito, who had recused himself from any participation in any aspect of the Aereo case (which, we remind you, is set for oral argument next week), is no longer recused. The Supremes aren’t required to explain their recusals and, it appears, the same is true of unrecusals. Whatever the reason, with Alito back on board the full nine-member court is now set to hear the case. That eliminates the possibility of a 4-4 tie among the justices (which would have left the Second Circuit’s decision in place, albeit without any approval by the Court)

Reminder: Aereo Webinar Set for April 16

As we announced several days ago, we’ll be presenting a FREE webinar next Wednesday, April 16 (at 3:00 p.m.), on the Aereo case. The Supreme Court will be hearing arguments in the case on April 22, so our webinar – hosted by Kevin Goldberg and Harry Cole – will provide attendees a comprehensive overview of the history of the Aereo litigation leading up to the Supremes. The webinar is designed to provide background and perspective to help make sense of both the arguments before the Court and the speculation likely to follow the arguments.

While space is limited, we still have some capacity, but it will be filled on a first-come, first-served basis. If you want to get yourself up to speed on All Things Aereo in advance of the Supreme Court argument, here’s your chance. Just click on the “Register Now” button below and sign yourself up.

Free Webinar on Aereo - April 16

Live on the Intertubes: Kevin (“The Swami”) Goldberg and Harry (“The Blogmeister”) Cole, recapping the Aereo story on (almost) the eve of the Supreme Court argument.

Hey, CommLawBlog readers (you know who you are)! Kevin Goldberg (a/k/a/ the Swami) and Harry Cole (a/k/a the Blogmeister) have put up scads of posts here covering the ongoing drama of Aereo vs. the Broadcasters (and its various spin-offs, including Aereo: Los Angeles, better known as Aereokiller vs. the Broadcasters). You’ve been reading their stuff for years – now you can listen to them, too!

Back in December, Kevin speculated that we could be seeing Aereo Armageddon sooner rather than later in the form of a Supreme Court showdown. And sure enough (we don’t call him the Swami for nothing), that showdown is on the Court’s schedule for April 22, when Aereo and its various nemeses are set to face off in an epic oral argument before the Supremes.

The outcome – likely to be decided by the end of June – could have a major impact on the Future of Broadcast Television (as well as other incidentals, like the Future of Cloud Computing). Suffice it to say, we can expect the argument and its aftermath to be big news.

To help make sense of it all before the argument – and to help make sense of the argument once it happens – Kevin and Harry will be presenting a FREE webinar on Wednesday, April 16 at 3:00 p.m. ET to review and explain the legal issues and judicial decisions that have brought Aereo to the Supreme Court. Their goal will be to provide attendees background to help them understand the arguments before – and the ultimate decision of – the Court. They’ll track the legal history from which Aereo emerged, sort out the various different lawsuits that have cropped up across the country, and look at possible outcomes.

You can register to attend the free 75-minute webinar by clicking on the link below. Space is limited and registration is available on a first-come, first-served basis only.


(Messrs. K and H assure the public their production will be second to none . . .)

Tenth Circuit to Aereo: That's Right, NOT in this Circuit!

Aereo’s losing streak continues.

Readers will recall that last month a U.S. District Judge in Utah granted broadcasters’ motion for an injunction preventing Aereo from operating in the six states that comprise the Tenth Circuit. Not surprisingly, Aereo appealed that decision to the U.S. Court of Appeals for the Tenth Circuit. Acting on an expedited basis, a three-judge panel from the Circuit has turned Aereo down.

As a result, Aereo is now required to shut down operations in Utah, Colorado, Kansas, New Mexico, Oklahoma and Wyoming at least until the Supreme Court decision on Aereo’s Second Circuit case comes down, likely in late June. And if the Supremes reverse the Second Circuit and hold instead for the broadcasters, Aereo may not be able to crank back up at all.

The Tenth Circuit’s decision denying Aereo relief from the injunction is unexceptional – two pages long, which is par for the course in such orders. But it does underscore a continuing theme running through the extended Aereo/FilmOn X litigation: in reaching its conclusion that Aereo is not likely to succeed on the merits, the three-judge Tenth Circuit panel split 2-1. In other words, there continues to be disagreement among federal judges relative to the merits of the opposing arguments here.

Which, of course, merely heightens the likely drama at the Supreme Court. Stay tuned.

Aereo Update: Supreme Developments

With more than six weeks to go before the April 22 oral argument, the Aereo case in the Supreme Court is in what litigators refer to as the “briefing phase” – the various parties are busy preparing and submitting their written arguments to the Court. The broadcaster-petitioners have already filed their brief; Aereo’s is due shortly.

But newsworthy things are still happening. Indeed, despite the snow storm that shut down Washington, D.C. yesterday, there were two noteworthy developments in the Aereo case.

First and perhaps most important, the U.S. Department of Justice – through its principal appellate mouthpiece, the Solicitor General – weighed in with an amicus brief in support of the broadcaster-petitioners. This is Big News because the DOJ’s opinion tends to be taken very seriously by the Court. And the DOJ’s brief reads like a broadcaster’s dream. (You can read a copy of the brief, posted by Deadline.com, here – props to Deadline.com for tracking this down and getting it up on line so quickly.)

Check out DOJ’s summary of its own argument:

The proper resolution of this dispute is straightforward. Unlike a purveyor of home antennas, or the lessor of hilltop space on which individual consumers may erect their own antennas . . ., [Aereo] does not simply provide access to equipment or other property that facilitates customers’ reception of broadcast signals. Rather, [Aereo] operates an integrated systemi.e., a “device or process”—whose functioning depends on its customers’ shared use of common facilities. The fact that as part of that system [Aereo] uses unique copies and many individual transmissions does not alter the conclusion that it is retransmitting broadcast content “to the public.” Like its competitors, [Aereo] therefore must obtain licenses to perform the copyrighted content on which its business relies.

Additionally, anticipating Aereo’s argument that a decision in favor of the broadcasters here would seriously hamper the development of innovative new technologies (including, e.g., cloud computing services), the DOJ assures the Court that that is not the case:

[The DOJ’s position] should not call into question the legitimacy of businesses that use the Internet to provide new ways for consumers to store, hear, and view their own lawfully acquired copies of copyrighted works.

The DOJ also takes pains to assure that Court that they need not toss the Second Circuit’s 2008 Cablevision decision. That decision, of course, is what apparently inspired Aereo’s business plan. As a practical matter, appellate courts (including the Supremes) generally prefer not to upset longstanding precedents if they can avoid doing so. Not to worry, says the DOJ – contrary to Aereo’s thinking, there are important distinctions between its system and the Remote Storage DVR system upheld in Cablevision, just like Judge Chin argued in his dissents to the Second Circuit Aereo decisions.

Again, the DOJ is just one more voice in the overall mix of voices trying to sway the Court in one direction or the other. But the DOJ’s voice tends to be loud and authoritative. If you still haven’t tossed your bet into the Aereo pool in your office, be sure to take a look at the DOJ’s brief before picking a side.

And the other development at the Supremes? It turns out that FilmOn X won’t have a seat at counsel’s table when April 22 rolls around. FilmOn X had asked the Court to let it “intervene” in the case – that is, to be deemed a party with essentially the same status as Aereo. That would have given FilmOn X at least a shot at some oral argument time. But in a standard one-sentence turn-down, the Court (not including Justice Alito, who has recused himself) denied FilmOn X’s motion.

That’s something of a disappointment, as the entertainment value of seeing Barry Diller’s Aereo and FilmOn X (née AereoKiller.com a/k/a BarryDriller.com) sitting on the same side of counsel table would have been off the charts. FilmOn X may still be able to get its two cents’ worth in by filing an amicus brief of its own – not quite the same as being a full-fledged intervenor, but still a chance to be heard to some degree.

Utah Judge to Aereo: Not in this Circuit!

As Supreme Court decision approaches, a U.S. District Judge in Utah has enjoined Aereo from rolling out its service in the Tenth Circuit.

Ten days ago we suggested that Aereo aficionados who can’t wait for the Big Show in the Supreme Court (oral argument April 22, decision likely before the end of June) might want to take a look at the U.S. District Court in Utah. That’s where the latest of the broadcasters’ copyright infringement suits brought against Aereo has been poking along.

And looky here. U.S. District Judge Dale Kimball has granted the broadcasters’ motion for a preliminary injunction! This marks the first time that Aereo has been on the wrong end of an injunction ruling; it should send a clear signal to one and all that Aereo may be in for some rough sledding ahead.

Judge Kimball’s decision reads like it was written by the broadcasters. Some sample bits and pieces: 

“The plain language of the 1976 Copyright Act support[s] Plaintiffs’ position.”

“Aereo’s retransmission of Plaintiffs’ copyrighted programs is indistinguishable from a cable company and falls squarely within the language of the Transmit Clause.”

There is “no basis in the language of the Transmit Clause or the relevant legislative history suggesting that technical details take precedence over functionality. In fact, such a focus runs contrary to the clear legislative history.”

And the bottom line?

“Based on the plain language of the 1976 Copyright Act and the clear intent of Congress, this court concludes that Aereo is engaging in copyright infringement of Plaintiffs’ programs.”

To reach his decision, Kimball reviewed not only the Copyright Act itself, but also the legislative history underlying that Act and the decisions of the other Aereo, and FilmOn X, courts. He didn’t think much of the Second Circuit’s Aereo decision or the Cablevision decision on which it was based.

In his view, the Second Circuit “proceeded to spin the language of [the Copyright Act], the legislative history, and prior case law into a complicated web”. Ouch. The Second Circuit “changed the wording” of the Act in a crucial respect. Double ouch. And contrary to the Second Circuit, Kimball found “no basis in the language of the Transmit Clause or the relevant legislative history suggesting that technical details take precedence over functionality. In fact, such a focus runs contrary to the clear legislative history.”

Further demonstrating how unimpressed he was with the Second Circuit, Kimball quoted extensively from Judge Denny Chin’s dissents in the Second Circuit and, presumably so we all couldn’t miss the point, expressly observed that “Judge Chin’s dissenting opinion [is] more persuasive than the majority opinion.”

And so Judge Kimball enjoined Aereo, but only in the Tenth Circuit. Of course, the Tenth sprawls across Utah, Colorado, Kansas, New Mexico, Oklahoma and Wyoming, so the injunction isn’t small potatoes by any means.

But the real impact of this turn of events is primarily psychological: Aereo’s strategy appeared to be working like a charm, what with resounding victories in the Second Circuit and a follow-on decision in the District Court in Boston. Sure, a couple of district courts went the other way, but those cases involved FilmOn X, not Aereo. Now, however, Aereo itself has ended up on the short end of a judicial decision.

This is likely to be the last court decision in the Aereo saga until the Supreme Court weighs in in a couple of months. The Aereo litigation in the First Circuit and the FilmOn X cases in the Ninth and D.C. Circuits have been stayed pending the Supremes’ decision. And even Judge Kimball, having enjoined Aereo, went ahead and stayed further proceedings in that case, too, also pending the Supreme Court’s decision.

Check back here for updates.

In the Supreme Court: Aereo Argument Date Set

It’s official. The big day is April 22, 2014. That’s when the Supreme Court will hear oral argument in the Aereo case. From the calendar released by the Court, it looks like the argument will be the second of two on the card – but that’s subject to change. If you’re planning on attending the argument, expect to get to the Court early in the morning, stand in line for a long time, and probably sit through a case you know nothing about

Or you could just make a point of checking in with us for our post-argument take on things.

While predicting the final result in a case based on oral argument is an unreliable (at best) exercise, the exchanges between the Justices and counsel for the various parties invariably lend themselves to beaucoup speculation. And we here at CommLawBlog plan to be speculating with the rest of the crowd. The difference? We’ll have Swami Kevin Goldberg – no stranger to this kind of this – and his pal the Blogmeister (Harry Cole) doing the heavy lifting for us. Kevin and Harry are planning to attend the argument and to share their observations with our readers promptly thereafter. Stay tuned.

Aereo Update: Side Action in Utah

The Swami weighs in.

[Blogmeister’s Note: If you’ve got the Heartbreak of ALA (that would be Aereo Litigation Addiction) and you’re jonesin’ for some action while you’re waiting for the Big Showdown at the Supreme Court later the spring, you’re in luck. On February 11, the U.S. District Court in Utah is going to be holding a hearing on (a) the broadcasters’ motions for preliminary injunction (here and here) and (b) Aereo’s motion to move the case out of Utah and back to the more Aereo-friendly Southern District of New York. Aereo has also filed a separate motion asking the trial judge to put the Utah case on hold until the Supreme Court acts on the Second Circuit case. The Utah court took that last motion under advisement on February 7.

There are obviously a number of moving parts here, so we called in the Swami for his thoughts on how this might shake out. Here’s his take on the various items on the table – the Aereo transfer motion, the Aereo motion to stay proceedings and the broadcasters’ motions for a preliminary injunction.]

This is pretty hard to put odds on. 

Out of the three pending requests, the easiest to handicap is Aereo’s motion to move the case back the Southern District of New York, which I believe will be denied.  Aereo tried the same thing in its Massachusetts case, where Judge Nathaniel Gorton denied the motion. I think the same will happen here. Depending on what eventually shakes out in the Supreme Court, moving all Aereo-related cases to a single court might make sense someday, but certainly not just now. Look for this case to stay in Utah for the foreseeable future.

Aereo probably sees it the same way, which is the reason it filed its motion for the entire proceeding to be stayed pending the outcome of the Supreme Court case. If I have to pick one way or the other – and since I’m the Swami, I guess I do – I’m going to say that Aereo’s stay motion will be granted. That would temporarily moot out the broadcasters’ motions for preliminary injunction, allowing the judge to table them without having to resolve them. At this point, if I were a District Court Judge, I wouldn’t particularly want to weigh in on something this controversial if I didn’t have to. Why run the risk of eventually being overturned, which wouldn’t help me if I’m ever up for consideration for a seat on the Court of Appeals? (And yes, some judges worry about that kind of thing because a judge’s record on appeal – affirmances vs. reversals – can come into play if and when he or she is being considered for a move to a different court.)

Of course, grant of a stay would be effectively the same as denying the broadcasters’ injunction motions, at least for the time being, thus allowing Aereo to continue to operate in the Tenth Circuit. Still, I’m guessing that the Utah District Court takes the path of least resistance and stays everything pending the outcome of the Supreme Court review.

Aereo Update: And the Question is . . .

The Supremes opt to use the broadcasters’ formulation of the question to be resolved by the Court.

OK, all you Supreme Court tea leaf readers, you’ve got another leaf to read in the Aereo case. According to the Supreme Court’s website, the “question presented” that the Court has decided to use as the focus for briefing in that case is this:

A copyright holder possesses the exclusive right “to perform the copyrighted work publicly.” 17 U.S.C. §106(4). In the Copyright Act of 1976, Congress defined the phrase “[t]o perform ... ‘publicly’” to include, among other things, “to transmit or otherwise communicate a performance or display of the work ... to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.” Id. §101.

Congress enacted that provision with the express intent to bring within the scope of the public-performance right services that retransmit over-the-air television broadcasts to the public. Respondent Aereo offers just such a service. Aereo captures over-the-air television broadcasts and, without obtaining authorization from or compensating anyone, retransmits that programming to tens of thousands of members of the public over the Internet for a profit. According to the Second Circuit, because Aereo sends each of its subscribers an individualized transmission of a performance from a unique copy of each copyrighted program, it is not transmitting performances "to the public," but rather is engaged in tens of thousands of “private” performances to paying strangers.

The question presented is:

Whether a company "publicly performs" a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.

That’s possibly good news for broadcasters, because that’s the way that they perceived the question that the Court should be addressing. 

By contrast, when it advised the Court that it wouldn’t mind if the Court agreed to review the Second Circuit’s Aereo decisions, Aereo said that the appropriate question should be:

Whether Aereo “perform[s] publicly,” under Sections 101 and 106 of the Copyright Act, by supplying remote equipment that allows a consumer to tune an individual, remotely located antenna to a publicly accessible, over-the-air broadcast television signal, use a remote digital video recorder to make a personal recording from that signal, and then watch that recording.

It doesn’t take a particularly sensitive reader to identify the different slants in the two questions: the broadcasters’ approach lays things out from the broadcasters’ perspective, while Aereo’s is more Aereo-centric.

The fact that two opposing parties would propose conflicting versions of the “question presented” is not surprising. The rules of appellate litigation call for each party to specify the “question presented” for the court’s consideration, and litigators routinely take that opportunity to try to get the court to view the case from their respective clients’ viewpoint from the get-go. It’s a subtle thing, the actual utility of which is difficult, if not impossible, to assess. But in big-time appellate law – especially in a venue like the Supreme Court – you don’t pass on any opportunity to grab a possible advantage, no matter how slim the odds that it’ll really help. 

Hence the dueling “questions presented”.

The fact that  the Court has now announced that the parties are to use the broadcasters’ “question presented” as the starting point of their briefs on the merits seems like good news for the broadcasters. It suggests at least an initial willingness on the Court’s part to see things the way the broadcasters see them. Of course, lots can happen between now and the Court’s ultimate decision, and the “question presented” may prove to be of no consequence.

Again, this is just another tea leaf. Maybe it means something, maybe it doesn’t. But the parties’ lawyers presumably think it’s significant: they did, after all, bother to advance their respective versions, an effort they probably wouldn’t have made if they didn’t think it would make any difference. 

So if you’re sizing up the odds before placing your bets on the case, you should be aware that, to the extent that the “question presented” may provide a possible soupçon of a hint of the Court’s leaning, the broadcasters may have won the first round.

As always, check back with us for further updates.

Aereo: Supreme Court Bound!

Broadcasters' cert petition is granted; Alito recuses himself, Kagan doesn't

The Supreme Court has decided that now would be a good time to consider the arguments arising from the Second Circuit’s Aereo decisions to date – so the Supremes have granted the petition for certiorari filed by the broadcaster parties to the Second Circuit case. While this could ordinarily bode well for the broadcasters – after all, if the Supreme Court thought the Second Circuit got it right, they could just deny cert and let the Second Circuit’s action stand – you can probably expect Aereo to claim something of a victory here because, as we have previously reported, Aereo itself urged the Court to take the case.

As of this writing the briefing and argument schedules haven’t been posted on the Supreme Court’s website. Since the Court will be hearing arguments until the end of April, it seems reasonably likely that the Aereo case will be briefed and argued this term, which would mean that a decision from the Court by the end of June would be a near certainty. 

From the scant information that is currently available, it’s impossible to say how the Court is likely to rule. There are, however, two interesting tidbits that may or may not come into play down the line.

First, Justice Alito recused himself from consideration of the cert petition. As is customary, no reason for his recusal was given, nor did the Court’s order disclose whether he would be recused from the merits end of the case – although recusal there would seem more than likely. If he’s out, that would reduce the number of justices hearing the case to eight, giving rise to the possibility of a 4-4 split. In that case the decision of the lower court – i.e., the Second Circuit’s order upholding the denial of a preliminary injunction against Aereo – would remain in place.

Second, Justice Kagan did not recuse herself.

While there is no reason that she should have, her involvement in the Court’s deliberations could prove particularly important.  Why? Because Aereo’s case – indeed, some would say its whole system design – is based on the Second Circuit’s 2008 Cablevision case in which the Circuit concluded that Cablevision’s Remote Storage-DVR system did not infringe on copyrights held by various program producers whose works were recorded and transmitted through that system. Having lost at the Second Circuit, the copyright holders asked the Supreme Court to take a look at the case, just like the broadcast parties have done in the Aereo case.

In considering whether or not to take the Cablevision case, the Supremes asked the U.S. Department of Justice for its views on the subject. In May, 2009, the Solicitor General weighed in with a recommendation against Supreme Court review. BUT that recommendation was guarded and hedged.  In particular, the SG noted that “some aspects of the Second Circuit’s reasoning on the public-performance issue are problematic”. For example,

Some language in the [Second Circuit’s] opinion could be read to suggest that a performance is not made available “to the public” unless more than one person is capable of receiving a particular transmission. . . . Such a construction could threaten to undermine copyright protection in circumstances far beyond those presented here, including with respect to [video-on-demand] services or situations in which a party streams copyrighted material on an individualized basis over the Internet.

So, at least in the SG’s view, Cablevision was not necessarily the most persuasive case on a number of fronts, including its interpretation of the Copyright Act’s Transmit Clause. But interpretation of that clause was absolutely crucial to the Second Circuit’s Aereo decisions, and there the Circuit relied extensively on Cablevision. So if Cablevision is really “problematic”, that may not be a good sign for Aereo.

Did we mention that the Solicitor General who signed the Cablevision brief – the brief that characterized the Second Circuit’s Cablevision opinion as “problematic” – was (drum roll, please) Elena Kagan?

So we’re off to the Supremes. Check back here for updates.

Aereo Cert Day - January 13, 2014?

Supreme Court docket listing suggests decision on whether or not to take the Aereo case is imminent.

OK, it’s obviously way too early for your office’s Final Four pool or even the Super Bowl® pool, but no problem: the time is just right for organizing an Aereo Cert pool!

Will the Supreme Court agree to hear the broadcasters’ appeal of the Second Circuit’s denial of their efforts to put a temporary kibosh on Aereo’s operations in the Big Apple or not?  According to the Supremes’ docket listings, that question is currently scheduled to be considered by the Justices in their closed-door conference on January 10, 2014 – which means that it’s très très likely that we’ll find out the answer mid-morning on January 13 (the next day on which the Court will be sitting).  So get that pool started because time is short!

Regular readers will recall that, when last we left the Second Circuit phase of the Aereo saga, broadcasters had tried three separate times – first before the presiding U.S. District Judge, then before a three-judge panel of the Second Circuit, and finally before the Second Circuit en banc – to get Aereo shut down at least until their copyright infringement lawsuit against it can be completed.  The broadcasters got nowhere in any of those three fora.

You might think that, having whiffed three times, the broadcasters would be out – but they had one more chance: the Supreme Court.

So they submitted a petition for writ of certiorari ( “cert petition” to the cognoscenti) to the Supremes, asking it to review the case.  The problem is that the Court routinely denies the vast majority of such petitions (about 99%, according to the Court’s website), usually with nothing more than a terse unsympathetic-but-direct order (reading, in toto, “The petition is denied”). So the odds against the broadcasters are probably long.

But then Aereo told the Court that it, too, would like the Court to take the case now.  As the Swami observed, while that development does not by any means guarantee the Supremes will grant the cert petition, it certainly doesn’t hurt the chances.  Neither, presumably, do the eight (count ‘em, eight!) amicus briefs by the likes of the NAB, the NFL, MLB, the Copyright Alliance (along with “Various Professors”) and ASCAP.

One more thing you should know about the cert process before you opt in or out of the pool: even though there are nine Justices on the Supreme Court, it takes only four votes to get a cert petition granted.  And a wild card: we don’t know for sure that all nine Justices will participate, since one or more recusals are always possible.

So let the fun begin!  The most obvious point of contention will be on the yes-or-no question of whether cert is granted.  But the possibility of side action exists. If cert is denied, will any justice dissent (and if so, which one(s))? If cert is granted, will the case be heard on an accelerated basis so that it can resolved this term (i.e., by the end of June), or will it be set for argument next fall?  Whichever way the cert decision goes, how long will it take the prevailing party to formally pass that word along to the judges presiding over broadcaster-vs.-Aereo litigation in the various other jurisdictions – and will such notification have any effect on the progress of such litigation?

Check back here for updates.  We’ll report the news as soon as we get it – possibly by January 13.

[Blogmeister’s Note: This post should NOT be interpreted as encouraging gambling of any sort. Rather, it is an educational effort to introduce our readers to the arcane world of Supreme Court litigation through the suggested mechanism of a friendly competition-based approach intended to interest and enlighten.  Void where prohibited.  No purchase necessary.  Not a flying toy.]

Aereo Armageddon Ahead?

Warring parties agree on one thing: the Supreme Court should intervene ASAP – but will the Supremes agree to take the case now?

The Aereo War rages on, fought (like most wars) on several fronts, but always with an eye toward that epic battle destined to change the face of the conflict entirely. Yorktown. Waterloo. Gettysburg. Normandy.

Possibly soon to be added to that list: Washington, likely site of the Aereo Armageddon. More specifically, One First Street, N.E. – where the U.S. Supreme Court sits.

And it could happen sooner than many expected. That’s because the major broadcast networks, having lost their bids to shut Aereo down in New York and Boston, have sought Supreme Court review of the New York decision. And, in an interesting gambit, Aereo has taken the unusual step of agreeing with its adversaries. Aereo says that the Supreme Court should take the case. While that is no guarantee that the Court will agree that the issues are now ripe for resolution at the highest level, such unanimity among the parties certainly doesn’t hurt.

Before we get ahead of ourselves, a bit of history.

Aereo, of course, is the innovative service that captures over-the-air broadcast signals with dime-sized antennas and then makes those signals available to subscribers via the Internet device(s) of their choice. Aereo does this without the consent of, or any royalty payments to, the broadcasters whose signals are re-transmitted. Broadcasters feel Aereo’s service constitutes a “public performance” of content inconsistent with the broadcasters’ exclusive rights under the Copyright Act. (You can find lots of reporting on Aereo’s litigation here.)

Aereo began operating in March 2012 in New York. The major broadcast networks promptly filed a lawsuit in the U.S. District Court for the Southern District of New York alleging copyright infringement. They also asked the court to preliminarily enjoin Aereo from operating during the pendency of the trial. Judge Alison Nathan, the presiding judge, denied that request. Her ruling was upheld, 2-1, by a three-judge panel of the United States Court of Appeals for the Second Circuit; the full Second Circuit sitting en banc  declined to review the matter. So Judge Alison’s denial of the preliminary injunction remains in place and Aereo has continued operating in New York. Technically, the Second Circuit’s affirmance of her order is what is now knocking on the Supreme Court’s door.

But that’s just one front in the Aereo War.

Aereo has since commenced service in Boston, Atlanta, Salt Lake City, Miami and Houston.

It has been sued by broadcasters in Boston (in July 2013) and Utah (twice, in October 2013). Aereo has tried – so far unsuccessfully – to narrow the battlefield by asking the judges in Boston and Utah to transfer their respective cases back to the seemingly Aereo-friendly courtroom of Judge Nathan in New York. The Boston judge denied that request; the Utah court has not yet acted on the request pending before it.

The denial of the Boston transfer motion was not really a loss for Aereo, though. The Boston judge, following the path blazed by Judge Nathan in New York, denied the broadcaster-plaintiff’s request for a preliminary injunction, leaving Aereo up and running there. (A similar request filed in Utah has yet to be ruled on.) An appeal of the Boston ruling has recently been filed with the First Circuit.

So far, so good for Aereo. It’s 2-0 in the district courts and 1-0 on appeal in the Second Circuit.

But Aereo has a doppelganger of sorts. Shortly after Aereo appeared on the scene, a company called FilmOn X (née  “Aereokiller”) began offering a service similar to Aereo’s in Los Angeles. (Some might say that FilmOn X is a copycat of Aereo – dime-sized antennas and all – but FilmOn X claims that its technology is actually superior to Aereo’s.)

FilmOn X was sued by broadcasters in Los Angeles in 2012 and again in Washington, D.C., where it began operating in 2013. In the former case, Judge George Wu of the U.S. District Court for the Central District of California agreed with the broadcaster-plaintiffs and granted their motion for preliminary injunction, thereby ordering FilmOn X to stop operating in L.A. Judge Wu’s order is currently on appeal to the Ninth Circuit, which heard oral argument in late August, 2013, but has yet to issue a decision.

Meanwhile, in Washington, U.S. District Judge Rosemary M. Collyer also preliminarily enjoined FilmOn X from operating for the time being. But she went further than Judge Wu in L.A. and barred FilmOn X from operating anywhere in the country other than the states within the Second Circuit’s jurisdiction (i.e., New York, Connecticut and Vermont). She carved the Second Circuit out in deference to the Aereo decision. An appeal filed by FilmOn X with the D.C. Circuit is in its early stages.

So unlike Aereo, FilmOn X isn’t doing so well: 0-2 in the district courts.

Where does that leave us? Five distinct lawsuits in five different venues, producing (so far) four distinct District Court rulings: the defendant streaming service avoids preliminary injunctions in New York and Boston, but gets enjoined in L.A. and D.C., with the D.C. judge upping the ante by extending the injunction almost nationwide. On the appellate side, only one U.S. Court of Appeals – the Second – has yet weighed in, but a decision out of the Ninth Circuit could come out any time now, and appeals have been started in the First and D.C. Circuits as well.

Which brings us to Supreme Court. 

Ordinarily, the Court is reluctant to agree to review a case unless it reflects a “circuit split”, that is, a situation in which inconsistent decisions have been reached at the Court of Appeals stage. In such a circumstance, the Supremes can step in a resolve the inconsistency and restore uniformity to the law. Here, even though only one Court of Appeals – the Second – has technically taken a position, the divergent decisions reached thus far in the various venues do seem to reflect a pretty clear split. That’s one of the primary reasons that the broadcasters in the Second Circuit case have petitioned the Supreme Court to review the Second Circuit’s ruling in favor of Aereo.

In their petition (full legal name: “petition for writ of certiorari”), the broadcasters home in on the dangers presented by the Second Circuit’s decision. They argue that the Court’s intervention is “urgently needed” both because: (a) Aereo’s business model is built on the unauthorized for-profit exploitation of others’ copyrighted works, a practice for which the Supremes have historically shown little tolerance; and (b) the “viability of over-the-air broadcast television” is threatened. 

The detailed substantive arguments largely track those advanced by the broadcasters in the lower courts, arguments that were accepted by Judge Denny Chin (a Second Circuit judge who strongly disagreed with his colleagues) and the District Courts in the L.A. and D.C. FilmOn X cases. To summarize briefly: The Copyright Act gives the copyright holder the exclusive right to make “public performances” of their copyrighted works. The Act’s definition of “public performance”, and Congress’s intent underlying that language, are clear: “performance” refers to the copyrighted broadcast program. 

That definition was enacted by Congress in direct response to the Supreme Court’s decision in the Fortnightly case in which the Court said that cable television systems were not engaged in separate performances when retransmitting broadcast programming. The key is not, as the Second Circuit believes, how many people can receive a particular transmission of a broadcast; rather, the crucial question is how many can receive the broadcast itself. In essence, the Second Circuit has confused “transmission” with “performance”. 

These are not clear-cut semantic distinctions. Clarifying the confusion will be the Supreme Court’s main task.

The broadcasters also argue that the Second Circuit’s misreading of the Copyright Act will cause the broadcast industry significant harm. It is a “direct assault” on a “well-established and statutorily protected” business model. As the broadcasters note, Aereo – emboldened by the Second Circuit decision – has already expanded to several other cities, with plans to enter 20 more in 2013 alone. And presumably in response, major cable and satellite companies appear to have altered their business practices with regard to retransmission consent. That poses a clear financial threat to broadcasters. And beyond retransmission consent, there is also a danger to the broadcasters’ ratings which underpin advertising rates: the Nielsen ratings system will not reflect Aereo viewers.

So will the Court grant the broadcasters’ petition? 

When I first sat down to write this post, I didn’t think so. The Supremes are notoriously reluctant to decide an issue – especially a difficult one – until they have to. (Recent example: The current court reviewed the FCC’s indecency rules not once, but twice, in a matter of three years but they still declined to decide whether those rules violate of the First Amendment.) 

Plus, there are a lot of potential “outs” regarding this case: the Ninth Circuit and the D.C. Circuit could side with their Second Circuit confrères and reverse the L.A. and D.C. district court rulings, effectively undermining any notion of a circuit split.  Perhaps more importantly, all these cases – even the Second Circuit case – are still in their infancy. They involve only motions for preliminary injunction at this point. That means that no trial has yet occurred in any of the cases, so no court has yet compiled a full evidentiary record on which the Supreme Court may confidently rely.

So I was figuring the broadcasters’ petition would be denied.

But then Aereo, in response to the broadcasters’ petition, urged the Justices to take the case. 

Ordinarily, parties in Aereo’s position, having won in the lower court, are not inclined to risk taking points off the board like that. When you think about it, though, Aereo’s move makes perfect sense because Aereo has at least a couple of reasons for wanting to accelerate this case to closure now.

First, the broadcasters are obviously willing to litigate their arguments anywhere and everywhere possible, which gives rise to the prospect of extended litigation in courts across the country. That imposes a direct financial burden on Aereo, and also creates uncertainty that “undermines Aereo’s efforts to expand its footprint and further develop its business.”

Second, the factual record now in front of the Supremes is the factual record that led the Second Circuit to come down on Aereo’s side. The record in the L.A. and D.C. cases didn’t work so well for Aereo’s counterpart there, FilmOn X. Why wait around and risk having other facts crop up that might not be helpful to Aereo?

Third, technology changes fast. While the Supreme Court might traditionally be inclined to sit back and wait to see how things shake out over the long haul, that approach doesn’t work as well in an age of rapid technological development. Parties in high tech industries often cannot as a practical matter wait three years to determine whether every new technology is legal or not. 

And while Aereo’s decision to support Supreme Court review now rather than later may be motivated more by Aereo’s own strategic self interest than by altruism, it caused me to do a 180 – I think it’s very likely the Court could take this case, possibly as early as mid-January (which might get us a decision on the merits by July, if everything falls into place just right).

Cablevision apparently thinks so too.  I’m deducing that from a “white paper” it released entitled “Aereo and the Public Performance Right”.

Cablevision essentially channels Marshall McLuhan in Annie Hall, slamming people who think, wrongly, that they fully grasp another’s theories. Here, Aereo’s legal theory derives largely, if not entirely, from the Second Circuit’s 2008 decision in Cablevision (which involved the copyright implications of Cablevision’s Remote DVR service), so Cablevision may rightly claim some parental rights to the theory underlying that decision. Cablevision’s White Paper reads something like a paraphrase of McLuhan (reading Woody Allen’s script): “We’ve read what you were arguing! You know nothing of our work! How you were able to transmit anything is totally amazing!”

The White Paper tries to put distance between the Cablevision case and Aereo’s. That’s not surprising.  Cablevision stands to lose a lot no matter which side ultimately wins before the Supreme Court. If Aereo wins, Cablevision, the cable company, will have a new competitor. If the broadcasters win, Cablevision’s ability to innovate could greatly be curtailed; its current Remote DVR service, blessed at this point only by the Second Circuit, could be shut down.

Cablevision argues the broadcasters’ interpretation of the Copyright Act is wrong. The broadcasters try to differentiate between a “performance” and a “transmission” but those are actually the same thing, in Cablevision’s view, so the broadcasters are wrong and should lose. 

But, Cablevision says, Aereo is wrong, too. Aereo’s service is completely unlike Cablevision’s Remote DVR service (and most cloud services available today) because Aereo’s hard drive copies are not even lawful in the first place: “Subscribers have no fair use right to make copies merely so they can receive programming over an unlicensed television delivery service”. This is something many have wondered as well: yes, Aereo is simply taking over-the-air signals with an antenna like anyone else could and yes, Aereo is simply helping its subscribers play that content back via an Internet device, but is it legal to combine the two?

We can expect to see the arguments set out in the White Paper show up in an amicus brief from Cablevision when the Aereo case ultimately gets to the Supreme Court. In which case we will have three key players, each weighing in with its view of the law, with just one thing in common: each of the three players – Aereo, broadcasters, Cablevision – is convinced that the other two are wrong, so it’s time for the Supreme Court to decide who is right. 

I agree.

Upcoming Webinar: Goldberg on Aereo

Aereo on the agenda: Where it’s been, where it’s going, where it’s taking the rest of us

If you’re interested in the ongoing Aereo saga – and the impact that it’s likely to have on communications law, copyright law and the video delivery business in general – check this out. FHH guru Kevin Goldberg (regular CommLawBlog readers may know him as “the Swami”) will be sharing his Aereo expertise in a webinar on January 16, 2014. Titled “Will Aereo Case Force a Rewrite of Communications and Copyright Laws?”, the gig is billed as a webinar for folks who advise communications and broadcasting companies, professionals involved in media ownership and regulation and intellectual property practitioners. It may even qualify for continuing legal education in some jurisdictions. Such a deal! The 90-minute affair, which is scheduled to start at 1:00 p.m., is sponsored by Bloomberg BNA.  Consult the registration page for information about admission fees (there are a couple of options), CLE details, other webinar panelists and the like.

AereoKiller Cuffed Nationwide

U.S. District Judge in D.C. enjoins Aereo-like service everywhere but the Second Circuit.

Score a big one for the broadcasters! A federal district judge in the District of Columbia has enjoined FilmOn X (that would be the folks formerly known as “Aereokiller” who operated at “BarryDriller.com”) from operating its dime-sized wannabe-MVPD service, much like a judge did in Los Angeles late last year.

But get this – the D.C. judge went way further than the L.A. judge by extending the injunction NATIONWIDE (except for New York, Vermont and Connecticut).

To say that this complicates matters in the overall Aereo/Aereokiller universe would be an understatement.

First things first. The latest decision was issued by Judge Rosemary M. Collyer, of the U.S. District Court for the District of Columbia. FilmOn X had cranked up its service in the D.C. area last spring, which prompted D.C. broadcasters to ask the D.C. federal court to shut it down – essentially the same scenario that had already played out in New York (with Aereo’s similar service) and L.A. (where FilmOn X, but not Aereo, was the defendant). As our readers already know, the Second Circuit judges in NYC declined to enjoin Aereo’s operation, but a U.S District Judge in the Ninth Circuit in L.A. did enjoin FilmOn X. (We’re still awaiting a decision from the three-judge panel of the Ninth Circuit reviewing that latter decision.)

Both the NYC and L.A. decisions were based on the same facts and underlying precedent presented to Judge Collyer, so she had two flatly inconsistent model approaches (in her words, “a binary choice”) that she could use as guidance. She opted to go West Coast, but with a couple of twists.

First, instead of simply citing Judge Wu’s decision in the initial FilmOn X case and chiming in “me too”, Judge Collyer undertook her own detailed analysis of the Copyright Act and its legislative history. Her conclusion: the FilmOn X operation clearly infringes the plaintiffs’ copyrights. In so doing, she tipped her hat to Judge Chin’s dissents in the Second Circuit litigation and Judge Wu’s analysis in the L.A. case. But she went further than either of those by (among other things) directly challenging the claim that the Aereo/FilmOn X mini-antenna approach creates a cute little “one-to-one relationship” between a single mini-antenna and a single viewer/subscriber. Characterizing that as a “charitable description”, Judge Collyer offered a far more critical assessment:

[W]hile each user may have an assigned antenna and hard-drive directory temporarily, the mini-antennas are networked together so that a single tuner server and router, video encoder, and distribution endpoint can communicate with them all. The television signal is captured by FilmOn X and passes through FilmOn X’s single electronic transmission process of aggregating servers and electronic equipment. This system, through which any member of the public who clicks on the link for the video feed, is hardly akin to an individual user stringing up a television antenna on the roof.

Her take on the technology skewered the Aereo/FilmOn X theory of the case.

Not stopping there, she also found considerable support in the Copyright Act for the notion that Congress intended to extend copyright protection to transmissions through “all kinds of equipment”, including the innovative mini-antennas deployed by FilmOn X.

Having determined that the broadcaster plaintiffs are likely to win on the merits of the case and would suffer irreparable harm if FilmOn X is permitted to continue its operation pending the trial of the case, Judge Collyer had no problem concluding that an injunction should be issued.

But then came the next twist.

The injunction would be effective not just in D.C., but rather NATIONWIDE, with the limited exception of states within the Second Circuit’s jurisdiction – i.e., New York, Vermont and Connecticut. That limited carve-out was a matter of “comity” in recognition of the fact that the Second Circuit has thus far declined to enjoin Aereo from operation there. But since there is no precedent in any other circuit contrary to Collyer’s decision, she figured that the Copyright Act “commands a nationwide injunction”, so she could and should enjoin FilmOn X everywhere but the Second Circuit.

So how does this affect the overall battlefield?

First, Collyer’s decision will almost certainly be appealed to the D.C. Circuit, but even if it is, we probably won’t see a Circuit decision for a year at least. So her injunction will likely remain in effect for the foreseeable future. That means that FilmOn X’s operations will be in check for the time being everywhere but in the Second Circuit.

Second, Collyer’s decision should buoy the spirits of broadcasters everywhere outside the Second Circuit, all of whom are facing the continuing roll-out of Aereo’s service. While Aereo is not itself subject to Judge Collyer’s injunction (since Aereo is not a party to that proceeding), the fact that an Aereo-like system has been enjoined from operation nationwide may prompt other judges in other circuits to similarly enjoin Aereo. There’s already a parallel copyright infringement suit pending in U.S. District Court in Boston (that would be in the First Circuit); the broadcast plaintiff there has already requested an injunction. (A hearing on the broadcaster’s motion is currently scheduled for September 18.) And Aereo is now up and running in Atlanta and Utah as well, so we won’t be surprised to see new lawsuits filed there (for readers keeping score, those would be in the Eleventh and Tenth Circuits, respectively.)

Third, the likelihood of a “circuit split” – and consequent Supreme Court review – has increased. Yes, we’re still waiting to hear what the Ninth Circuit will do in its review of Judge Wu’s FilmOn X decision and no, we won’t know for a while where the D.C. Circuit stands, but having yet another federal judge weigh in against FilmOn X clearly adds heft to the anti-Second Circuit position. That’s especially true to the extent that the nationwide scope of Collyer’s injunction may induce other courts to adopt her approach with respect to Aereo.

So while the seemingly inexorable roll-out of Aereo’s service may have dispirited broadcasters, the cavalry may just have arrived, thanks to Judge Collyer. The next few months should prove interesting. Check back here for updates.

Aereokiller in the Ninth Circuit

May it please the court? Maybe, maybe not. YOU be the judge.

Even those practiced in the art of appellate advocacy have trouble correctly guessing, on the basis of oral arguments, how a court will ultimately rule. (Doubt that? Just ask the Swami.)

The post-argument guessing game is particularly hard for the Great Unwashed because appellate arguments tend to be somewhat intimate affairs, not widely publicized beforehand, seldom recorded for extensive public consumption. Any press accounts of arguments tend to shed only limited light on precisely what was said, making it hard for the reader to draw any conclusions.

But things are different in the U.S. Court of Appeals for the Ninth Circuit which, as it turns out, posts audio recordings of its arguments on its website within 24 hours of each argument. Who knew?

So if you’ve got about 45 minutes and want to try to figure out what’s going to happen next in the Aereokiller case, click on this link. (Note: Aereokiller has since re-named itself FilmOn X, even though it’ll always be Aereokiller to us.) Clicking on that link will allow you to download and open the recording of the August 27 oral argument before a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit (sitting in Pasadena).  See if you can figure which way the court’s going to go.

The argument, of course, concerns whether the injunction issued against FilmOn X’s operation in the Los Angeles area should be lifted. Our readers will recall that U.S. District Judge George Wu granted the request of a number of broadcasters and program producers last December and put the kibosh on FilmOn X, whose program distribution service (based on individualized mini-antennas) is supposedly nearly identical to that of Aereo. FilmOn X has appealed that decision to the Ninth Circuit.

The outcome of the case will be of more than passing interest to the TV industry.   The Ninth Circuit’s sister circuit in New York – the Second Circuit – has at least preliminarily held, in the Aereo litigation, that the Aereo/FilmOn X system of program distribution does not constitute copyright infringement even though the over-the-air stations whose programs are being distributed don’t consent to that distribution. Judge Wu’s decision on the West Coast went in the opposite direction. As we have observed, if the Ninth Circuit affirms Wu’s decision, we’ll have a “circuit split” that could lead the Supreme Court to wade in.

So that’s the set-up. Give a listen to the arguments before the Ninth Circuit and see how you think the court’s going to rule. It’s particularly tough in this case because, unlike other courts, this particular panel isn’t especially chatty. Often, judges seem to dominate the conversation in appellate arguments; that doesn’t really happen in this case. 

For our money, though, the most interesting exchanges occur at around 8:30-10:00 and then again around the 25:00 mark. There, one of the judges – we suspect it’s Judge Diarmuid O’Scannlain, but we’re not 100% sure – suggests that the bottom line issue may be one for Congress, not the courts, to resolve.  In other words, if FilmOn X is merely availing itself of a loophole in the Copyright Act, shouldn’t it be up to Congress to close that loophole? (If the court goes in that direction, of course, it could be Bad News for broadcasters.)  In the later colloquy, Robert Garrett, counsel for a number of the broadcaster/appellees in the case, does his best to persuade Judge O’Scannlain and his colleagues that they, and not Congress, can and should deal with the problem.

How well did Mr. Garrett do? Take a listen and let us know what you think. We’ll let you know as soon as we learn of the court’s decision (which may take a couple of months to get cranked out).

Ninth Circuit Tosses Fox into the Hopper . . . For Now

At first blush, the Ninth Circuit decision allowing Dish to continue to offer its “Hopper” service may not look great for broadcasters, but don’t hop to any conclusions just yet.

The TV industry has suffered some setbacks on the copyright front in the Aereo litigation in the Second Circuit and, as we have reported, the industry is keeping its fingers crossed, hoping for support from the Ninth Circuit on the Left Coast (in the pending Aereokiller appeal).

Bad news. In an unrelated case the Ninth Circuit has issued a decision that doesn’t help broadcasters although, much like the Aereo decisions so far, the damage here is by no means catastrophic.

The decision involves the “Hopper” from Dish. 

You may be familiar with the Hopper from its truly annoying commercials. It’s the Dish satellite service’s home DVR system, which includes a feature called “PrimeTime Anytime” (PTA). PTA allows a subscriber to record any and all primetime programming on any of the four major broadcast networks every night of the week. The PTA service defaults to recording all the programming, which (again by default) it saves on the user’s DVR for eight days (although the subscriber can modify these defaults).

As with most (if not all) other DVR systems, the user can start watching PTA-recorded programming right away, but if they can wait until the next morning, they can take advantage of the Hopper’s main selling point: the ability to “AutoHop” over commercials, skipping them entirely, automatically. No need to fast forward through commercials – Dish has taken care of that for you.

The prospect of automatic ad-skipping technology is obviously not something that commercial broadcasters – whose existence depends on the ads being skipped – cotton to.

Enter Fox Broadcasting Company. 

The network that first introduced the world to 21 Jump Street filed suit in the U.S. District Court for the Central District of California, trying to ground the Hopper. Since that’s the same court that has preliminarily enjoined Aereokiller (now known as FilmOn.com), you might think that the chances would be good for Fox to Arrest the Development of the Hopper technology. 

Not so fast.

The same court, maybe, but two different judges. And while Judge Wu (the Aereokiller judge) was inclined to side with the broadcasters, Judge Dolly Gee wasn’t. She refused to enjoin Dish from marketing the Hopper. Fox was unable to convince Judge Gee that Fox was likely to be able to prove either that the Hopper infringes (directly or secondarily) Fox programming or that the Hopper constitutes a breach of Dish’s carriage agreement with Fox.

In its recent decision, the Ninth Circuit has affirmed Judge Gee.

Now that the appeals court that will rule on the Aereokiller appeal has shown no love for broadcasters, broadcasters should be scared that their victory in that case will be short-lived, right?

Again, not so fast.

Sure, there is some commonality between the Aereokiller and Hopper cases – primarily in the general sense that both call on the courts to apply 1976-vintage copyright laws to technologies that not even Scully and Mulder could have foreseen. But the specific issues in each case are distinct.  

Perhaps most importantly, though, both the Aereokiller and Hopper cases – and, sure enough, the Aereo case as well – are all still at the preliminary injunction phase. As we have previously explained (in the context of Aereo), that phase is a pre-trial process in which one party (in all these cases, the broadcasters) try to halt the other side’s operation until the trial court can hear all the evidence and arguments and resolve the litigation on its merits. The actual trial on the merits of the broadcasters’ claims of infringement has not yet happened in any of the three cases. It’s at least theoretically possible that, having picked up some cues during the arguments relative to the preliminary injunction, the broadcast plaintiffs will be able to improve their arguments in the merits phase of the proceeding.

And let’s not forget that, in reviewing a trial judge’s decision on a preliminary injunction, a court of appeals is stuck with the facts as they have been developed thus far in the trial court. Further, the appellate court can’t overrule the lower court unless the lower court committed an “abuse of discretion”, an awesomely deferential standard.

Don’t take our word about the importance of those caveats. Just read the Ninth Circuit opinion affirming Judge Gee. It’s hard not to get the impression that: (a) the Circuit really didn’t want to rule in favor of Dish here; and (b) there’s hope for the broadcasters in the Aereokiller case if the three judges on the Aereokiller panel show even a scintilla of the dedication to the abuse of discretion standard as their brethren in the Hopper case.

So what did Ninth Circuit say in its decision?

Recall that Fox claimed that the Hopper infringes its copyrights and breaches several provisions in its retransmission consent agreements with Dish. Judge Gee, the trial judge, concluded that Fox had not demonstrated that it was likely ultimately to prevail on those claims, with one possible exception.  The exception involves the process by which Dish processes broadcast programming for the AutoHop system.

You may have noted in our description of the AutoHop feature that it’s not available until the day after the program has aired. Why the wait? Because AutoHop requires the intervention of Dish technicians (located, for some reason, in Cheyenne, Wyoming) who have the wonderful job of reviewing all the primetime programming and manually inserting electronic tags exactly when the commercials begin and end so the Hopper can AutoHop over them.   Fox pointed out that that tagging process requires that Dish make a copy of Fox programming for Dish’s own use, which would ordinarily be a cut-and-dried copyright violation. (Dish protested that the copy it makes is for “quality assurance” purposes.)  Judge Gee figured that Fox will likely prevail on that claim . . . BUT, in order to get a preliminary injunction, Fox would also have to demonstrate that the infringement would cause it “irreparable harm”. Gee wasn’t satisfied that Fox would suffer such harm here.

On appeal, the Ninth Circuit held that Gee had not abused her discretion in holding that Fox hadn’t shown either that it was likely to win on the copyright infringement and breach of contract claims or that it was likely to suffer irreparable harm from continued creation of “quality assurance” copies. In so doing, though, the Circuit panel repeatedly emphasized the narrowness of its focus (thanks to the deferential “abuse of discretion” standard of review) and the consequent narrowness of the overall decision.

Addressing the question of whether Dish’s PTA service is directly infringing Fox’s copyrights, the Circuit agreed with Gee that Dish’s mass copying of Fox’s programs was akin to the copying in the Second Circuit’s 2008 Cablevision case (yes, the same Cablevision successfully relied upon by Aereo). In both cases, the key question is “who is making the copy”? And in both cases, the courts concluded that the answer is the viewer, not the technological system. Since we know (from the Supreme Court’s Betamax decision from the early 1980s) that individual audience members are entitled to record programming for their own personal use, the PTA did not constitute infringement.

Whether that determination will survive after a full evidentiary trial remains to be seen. It’s important to keep that in mind because even Gee acknowledged that Dish’s PTA service went well beyond the system approved by the Second Circuit in Cablevision in terms of Dish’s “exercise of control” over the recording process. She found that “Dish decides how long the copies are available for viewing, Dish maintains the authority to modify the start and end times of the primetime block, and a user cannot stop a copy from being made once the recording has started.” 

Curiously, that wasn’t enough to convince Gee that Dish doesn’t exercise control of the recording process. The Ninth Circuit, in full deferential mode, accepted her conclusion with the less than ringing endorsement that “the District Court did not err” (as opposed to, say, “we wholeheartedly agree with the District Court”).

The Circuit’s affirmance of Gee’s ruling on the secondary infringement issue was also hardly solid as a Roc. Fox’s theory on that point is that, even if Dish isn’t infringing Fox’s programming, Dish users are, and Dish is contributing to that infringement.  But Gee found that the end users – i.e., the viewers – were engaging in mere “time-shifting”, which is a “fair use” of the programming (thanks to the Supremes’ Betamax decision), so no infringement appears to be occurring. If anyone is aggrieved by the AutoHop process, according to the courts, it should be the advertisers whose commercials are being hopped.

In terms of Shaky Ground, though, Dish’s initial success on Fox’s breach of contract claims appears to be the shakiest of all. Fox had argued that its deals with Dish prevented Dish from recording, copying or duplicating Fox programming or distributing it on an interactive, time-delayed, video-on-demand basis or the like. 

In Gee’s view, if anybody was engaging in such conduct, it was Dish’s customers, not Dish itself. And the Ninth Circuit didn’t find enough in the lower court’s record to reverse her on that point. The Circuit did observe that Fox’s contractual claims – specifically as to whether Dish was distributing the programming – were at least “plausible”; however, so too was Judge Gee’s take on those claims, so that darned “abuse of discretion standard” standard carried the day again. Significantly, though, the Circuit emphasized that it was expressing “no view on whether, after a fully developed record and arguments the district court’s construction of ‘distribute’ will prove to be the correct one.”

Again, it’ll be important to see how the full trial-on-the-merits shakes out before declaring any final victors here.

Fox also argued that Dish’s operation violated a contractual bar against fast forward functionality in a VOD service. In the District Court, Judge Gee held that, if PTA were a VOD service, it would indeed be a contract breach. But Gee somehow concluded that, while having some VOD elements, PTA is more akin to a DVR service. And on that point, the Ninth Circuit was as close to Undeclared as it could be: “The district court’s finding that [PTA] was more akin to a DVR than to video on demand was not clearly erroneous”. 

Finally, the Ninth Circuit agreed with Gee that Dish’s “quality assurance” copies were likely to constitute copyright infringement, but it also agreed such infringement would not irreparably harm Fox (since, if it ultimately prevails, Fox could be adequately compensated via monetary damages). 

Bottom line: PrimeTime Anytime and the Hopper will remain in operation and the case goes back to Judge Gee for further proceedings.  Fox could seek en banc review from all the judges on the Ninth Circuit but we saw how well that went for the broadcasters in the Aereo case. Given the Firefly-level energy radiating from the Ninth Circuit’s opinion, I suppose there may be hope that the full 27-judge Court would step up and reverse the District Court. But let’s get real – it’s far more likely that Fox’s best chance lies in building a full record before the District Court, especially on the breach of contract claims. With a better factual record, the network should have a much better idea as to whether it will be Grounded for Life or whether, like Parker Lewis, it Can’t Lose.

Aereo Update: Second Circuit Nixes En Banc Review

Procedural rejection does not resolve merits of broadcasters’ case.

Put another one in the “W” column for Aereo. The Second Circuit has denied the petition for en banc review filed by the broadcast plaintiffs last April. 

It may be some comfort to the broadcasters that the Court’s decision technically did not address the merits of the case. That’s because of the nature of en banc procedures. As we previously summarized that process, when a petition for en banc review is filed, the petition is circulated to all the active judges on the Circuit. If any of them asks for a vote to be taken on whether or not to grant en banc review, then all the active judges are polled. Note that they’re not polled on the bottom line substantive issue(s) involved; rather, they’re just polled on the limited question of whether the Court should agree to let the parties slug it out before the full Court.

In this case, one active judge (we’re guessing that was probably Judge Chin) did ask for a vote, and the bottom line was 10-2 in favor of not reviewing the earlier panel decision. So there will be no en banc review.

It should come as no surprise to folks who have been following the Aereo case that the two judges who dissented – that is, the two who wanted the Court to take on the case en banc – included Judge Denny Chin. (The other dissenter was Judge Richard Wesley.) Judge Chin, of course, is the judge who dissented from the panel decision in the Aereo case in April. And before that, Judge Chin presided over the trial of the Cablevision case. He held for the broadcasters/program producers in that case, but was reversed by the Second Circuit in 2008, in a decision that his two colleagues on the Aereo panel relied on extensively.

Judge Chin’s 30-page dissent provides the broadcast plaintiffs yet another road map to the Supreme Court. He again takes pains to lay out, in detail, all the reasons why Aereo’s arguments don’t, or shouldn’t, hold water. The fact that he has thus far been unable to persuade any of his colleagues (other than Judge Wesley) of the soundness of his views does not appear to have weakened his commitment to those views.

So where do we go from here?

The broadcasters have a choice. Bear in mind that the Second Circuit’s April decision concerned the trial court’s denial of preliminary injunctive relief. That means only that Aereo was permitted to continue to operate while the trial itself went ahead. The trial is indeed going ahead – it’s still in the discovery phase (which is currently set to wrap up at the end of October) – although Aereo has sought summary decision. In other words, at this point the parties are still probably months away from any disposition on the merits of the broadcasters’ claims in the trial court. 

That being the case, the broadcasters might opt to take no further action in response to the denial of their initial en banc effort, and instead press forward in the trial court, seeking perhaps to assemble a stronger factual showing than before.

Alternatively, the broadcasters might decide to seek Supreme Court review of the Second Circuit’s April decision. While they cannot now claim any “circuit split” on the underlying copyright issues, they could certainly point to the decision of the Federal judge in Los Angeles in the Aereokiller case as an indication that the Ninth Circuit may disagree with the Second Circuit. (By the way, Aereokiller’s appeal of that lower court ruling has now been fully briefed in the Ninth Circuit; oral argument is currently scheduled for late August.) And Judge Chin’s dissents – both to the April panel decision and to the denial of en banc review – also identify issues and arguments that might get the Supremes’ attention.

Petitions seeking Supreme Court review (we call them cert petitions, or petitions for certioriari – feel free to use the technical term to impress your friends) are due within 90 days of the entry of judgment in the Second Circuit, so the broadcast plaintiffs have some time to decide how they want to line up this particular shot. With the Ninth Circuit set to hear the Aereokiller appeal before September, the possibility still looms that a head-on conflict between the Second and Ninth Circuits will indeed materialize. Check back here for updates.

We should also note in passing that at least one broadcaster has sued Aereo in U.S. District Court in Boston – First Circuit territory. But that case is in its earliest stages, and it seems unlikely that we’ll be seeing any decisions out of the Boston court that might influence the immediate decisions of the Second Circuit parties. But you never know.

[Blogmeister's Update: Since the above was posted, we have confirmed that oral argument in the Aereokiller case in the Ninth Circuit has been set for Tuesday, August 27.  The Court has allotted a whopping 20 minutes per side -- a near-eternity when it comes to arguments in the court of appeals.]

Bungled Bundle Bill? McCain Introduces the "Television Consumer Freedom Act"

Proposed law looks to address multiple aspects of TV in the MVPD era, including bundling, broadcast abandonment and blackouts.

True to his reputation as a maverick, Arizona Senator John McCain has authored a bill seemingly designed to please nobody, while arguably disserving just about everybody. Dubbed the “Television Consumer Freedom Act of 2013”, it consists of clumsily crafted legislative language that mashes together in one bill three disparate and contentious aspects of the current video delivery system. In only one of those three areas does McCain’s proposal come to remotely practical terms with the problem it seeks to address.

McCain’s bill aims to: (1) promote “a la carte” program availability for MVPD subscribers; (2) discourage broadcasters from removing their programming from over-the-air availability (in response to the success that Aereo has recently enjoyed); and (3) eliminate broadcast blackouts of sports coverage in certain situations.

Promoting “A la Carte” MVPD offerings

McCain has long been an advocate of an a la carte approach to program availability. Under that approach, cable and satellite TV subscribers would be able to sign up for only those channels they want to watch – no more required “bundles” or “tiers”, i.e., packages of channels including some really desirable choices and a bunch of others that probably won’t be watched much, if at all. 

The practice of “bundling”, of course, is not unique to the MVPD operator/MVPD subscriber relationship.

Upstream of that relationship, program producers like to make their programming available to MVPD operators in bundles because bundling allows producers to use their popular programs as an incentive for MVPD operators to carry the producers’ less popular programs. It’s a lot easier to convince the MVPD operator to carry one or more niche channels with limited curb appeal if such carriage is required as a condition to securing an established and guaranteed crowd-pleaser or two.  MVPD operators then pass the consequences along to their subscribers by offering subscription packages that require the subscriber to take non-A-list material in order to get the A-list stuff.

Basically, it’s a win-win set-up – except (as far as McCain is concerned) for the viewer/consumer, who is forced to pay for channels he or she probably won’t watch.

McCain’s bill would provide program producers (including broadcasters) and MVPD operators certain “incentives” to offer MVPD subscribers a la carte options. “Incentives”, here, is really just a polite term for “threats”.

Under the bill, MVPD operators would be free not to provide an a la carte option. But those who don’t offer an a la carte option would lose the benefit of the statutory copyright license that for years has made their lives much easier and, probably, cheaper. 

Broadcasters who happen to be under common control with non-broadcast program producers (think any of the major TV networks, for the most obvious examples) be similarly “incentivized”: such broadcasters would lose the right to retransmission consent and the protection of network non-duplication and syndicated exclusivity rules if all of the programming under common control is not made available to MVPD operators on an a la carte basis.

And what about program producers who don’t happen to control any broadcast licensees? Lacking any legislative benefit to withdraw (such as retrans consent for broadcasters or statutory copyright licenses for MVPDs), McCain would simply say that program producers cannot offer packages of various programs to MVPDs unless those producers also offer those same programs a la carte.

One additional twist: The bill would require that, if a program producer and an MVPD can’t come to terms on the availability of programming on an a la carte basis, the two parties would have to notify the FCC of the last terms each side offered the other. The bill is silent about what, if anything, the FCC could or should do with that information.

McCain’s proposal isn’t likely to thrill either MVPDs, or broadcasters, or program producers. Each derives some benefit from the current bundling system: MVPDs get their desired programming, along with the ability to bundle that programming with a bunch of less desirable programming and charge subscribers more; and program producers (including broadcasters under common control with producers) are able to use their popular material to assure carriage of their less popular material. A mandatory a la carte option would arguably undermine this mutually beneficial arrangement.

That is immaterial to McCain, though, because he attaches overriding importance to the availability of an a la carte option to MVPD subscribers. Let’s give the people what they want, and only what they want!

Many MVPD subscribers might agree with him, at least at first blush. But think about the real consequences. Since the current system allows popular programming to subsidize, in a sense, the production of less popular programming, the cost to access the less popular shows would likely increase in an a la carte universe, where the potential for such subsidization would be dramatically diminished. As with ordering a la carte at a restaurant, sure, you can get exactly what you want, but in the end you’ll probably end up paying more and getting less. Can we be sure that that’s what viewers really want?

And let’s not forget the niche programming that might not garner enough viewers to warrant continued production. While many of us may share the Boss’s despair at the seeming lack of viewable programming fare, the fact is that even the narrowest of niche programming presumably has some viewers. And niche programming contributes to the much-vaunted diversity of information we hear so much about. By discouraging various bundling practices, McCain’s bill could threaten that diversity by forcing lesser-viewed programming out of production. 

Deterring broadcasters from defecting from OTA operation

Since Aereo started to get traction with its system allowing mobile Internet access to over the air broadcasting – and particularly since that system survived an initial challenge in the Second Circuit – some broadcasters have been making noises about removing their programming from their OTA operations in favor of some subscription-only venue (e.g., cable, satellite, or maybe even their own version of an Aereo set-up). McCain obviously thinks that that’s not a good idea, and he means to do something about it in the second section of his bill.

Here’s where he hauls out the big guns: TV stations that engage in such mischief will lose their licenses! Yikes! While that threat is guaranteed to get your attention, upon closer scrutiny that threat largely disappears, thanks to some truly bad wording.

According to the bill, the mischief that would lead to license loss occurs when a “television broadcast station does not retransmit the signal over-the-air that is identical to the signal retransmitted” to an MVPD. 

Can we be frank here? That language makes no sense at all. A TV station doesn’t “retransmit” its signal – it transmits it. And in practical terms, it’s unlikely in the extreme that a broadcast station would attempt to broadcast one batch of programming while simultaneously feeding a different batch to the local MVPDs. More likely, the broadcasters’ threat alluded to above would play out by having the networks opt not to provide their affiliates with primo, prime-time programming. So, for example, the Fox prime-time schedule might end up exclusively on the MVPD-only FX channel, while the Fox Network feeds its affiliates re-runs of old Fox shows. In that case, the station affiliates would still be feeding their OTA programming to the MVPDs, so McCain’s proposed threat wouldn’t reach them.

Maybe we’re missing something, but this proposal would achieve nothing in terms of addressing the issues swirling around Aereo. (If McCain really wanted to revolutionize copyright law to ensure that the next Aereo controversy doesn’t occur, he would take a crack at redefining “MVPD” in a way that reflects the increasing level of online viewership that is tied to the decreasing level of scheduled OTA television viewing.)

Prohibiting blackouts of certain sports programming

The final section of the bill is probably the only one likely to please both the broadcast and cable industries. It provides that sports programming cannot be blacked out (like when an NFL team doesn’t sell out its home game within a certain period before kickoff) when the game is played in a publicly-financed stadium.   Hard to argue with that, unless you’re a professional sports league or team that has negotiated out extensive agreements based on the existence of the blackout.

But really, in the overall scheme of things whether or not blackouts are permitted in some limited instances isn’t likely to compel support for McCain’s bill.

Hopefully, the bill wasn’t intended as something to be enacted, but rather as a starting point for further change. But even there, you have to wonder: why? After all, McCain’s bill is more or less a recycling of identically titled legislation originally introduced by Senator Ron Paul in 2007. 

Over the years, John McCain’s maverick nature has garnered him his fair share of supporters and detractors. That’s not just because he’s been willing to go out on a limb for what he believes in, popular support be damned, but also because he’s been a very skilled and effective legislator that produced results on a regular basis. Sadly, this time, it looks like he’s just gone off on a tangent.

Aereo Update: Next Stop, En Banc?

Broadcasters ask full Second Circuit to review panel’s decision allowing Aereo to continue to operate pending trial of infringement claim

We told you the Aereo saga wasn’t over. 

Having lost the most recent (but certainly not the last) round in their litigation war with Aereo, the broadcast plaintiffs have filed a “petition for rehearing en banc” with the U.S. Court of Appeals for the Second Circuit. In that petition, the broadcasters are asking the full 13-member court to review the 2-1 decision of a three-judge panel that affirmed a lower court ruling allowing Aereo to continue to operate while the trial of the case moves ahead.

[Before we get into the nitty-gritty of the petition, let’s take a brief introductory side trip into the world of appellate procedure. Each of the 13 federal courts of appeals consists of between six (in the First Circuit, covering New England) and 29 (in the Ninth Circuit, which sprawls across nine western states and a couple of territories) judges. When an appeal is filed, it is normally heard by a panel consisting of three judges from the particular circuit court where the appeal is filed. 

After the panel issues its decision, if the losing party believes that that decision was wrong, the loser has three options. It can ask: (1) the three judges to re-think their disposition of the case; (2) all the judges in the circuit, sitting “en banc”, to review the panel’s decision; or (3) the Supreme Court to look the case over. Supreme Court review is usually the longest of long shots. Similarly, since the panel has just deliberated over the issue and come up with the result at hand, it’s usually a pretty good bet that the panel won’t be eager to reverse itself. But en banc review brings a bunch of different judges into the mix, so it presents at least some source of hope to the party unhappy about the panel decision.

But the rules are set up to make en banc review hard to get.

You’ve first got to argue with a straight face that en banc review is necessary either to maintain “uniformity of the court’s decisions” or to address a “question of exceptional importance”. If you can get past that hurdle, you’re still not home. The court isn’t obligated to give you the time of day unless at least one judge calls for a vote as to whether or not the case should be heard en banc. If such a call is made, then all the judges vote and, if a majority supports en banc review, the en banc process kicks in. That process entails another round of briefs and oral argument presented to all the judges on the particular circuit in question. Usually, but not invariably, the panel’s judgment gets vacated once the full court decides to review it en banc.]

According to the broadcasters’ petition, the decision allowing Aereo to keep operating “will wreak commercial havoc by allowing new and existing distributors to design around [the requirement to get a license] and profit from the delivery of copyrighted programming while paying nothing for it.” If that’s not dire enough for you, they also claim that the decision could cause “the entire retransmission licensing regime” to be “swallow[ed]”.   The swallowing (according to the petitioners) will occur thanks to Aereo-like set-ups supposedly being contemplated by Time Warner Cable and Dish Network, and the recent statements made by one of their own – Newscorp COO Chase Carey’s threat to convert the Fox Network to a subscription-based cable channel.

The broadcasters’ petition presents a two-fold attack. 

First, it argues that the panel’s 2-1 ruling misinterprets the Copyright Act. This argument depends to a great degree on linguistic subtleties, like whether the terms “transmission” and “performance” were intended by Congress to mean the same thing. According to the petition, the Act clearly contemplated that “‘transmissions’ and ‘performances’ are not the same thing” – “the ‘performance’ is the thing that is communicated and the transmission is the means of communicating it.” This, of course, is a distinction made by dissenting Judge Denny Chin in the earlier Aereo decision. (Oh yeah, it’s also a distinction made by the United States District Court for the Central District of California in the AereoKiller case.) It is likely to be the predominant legal issue when the case is ultimately resolved (with the predominant – and only – factual issue being whether Aereo can actually do what it claims with just one antenna per subscriber).

But the challenged interpretation of the Copyright Act itself derived from the Second Circuit’s 2008 Cablevision decision on which Aereo relies to justify its operations as legal. So in a separate section the broadcasters’ petition takes dead aim on the rationale of the Cablevision decision as well.

As the broadcasters see it, Cablevision was based on a “false premise” and the earlier decision in Aereo compounds the error in several ways.

The three-judge Cablevision panel’s decision was based in large measure on the notion of a hypothetical “hapless customer” who wanted to use the Cablevision remote DVR service to record a program in his den but play it back in his bedroom. The Cablevision panel concluded that that consumer wasn’t engaging in a public performance.  Within the context posited by the panel, the broadcasters agree with its conclusion: “a subscriber who records a program in his den and watches it in his bedroom is not transmitting the program to the public; he is transmitting it to himself”.   

But, say the broadcasters, that’s not the case with Aereo’s system, which doesn’t simply involve one person retransmitting to himself. Rather, third parties are involved; it’s important to focus on who transmits and who receives a given performance.

The Petition also homes in on Cablevision’s notion that aggregation of individual transmissions could create a public performance only if they came from a single master copy. But, the broadcasters observe, the all-important Transmit Clause in Section 117 of the Copyright Act says nothing about master copies. The broadcasters argue that “a far better reading of the Transmit Clause would aggregate all transmissions of the same performance of a work by the same transmitter to members of the public, treating them collectively as a public performance regardless of whether the source is one or many copies.” Under this interpretation, Aereo, ivi, cable systems, and satellite services would all require a license. 

Having thoroughly beaten up on the Cablevision rationale, though, the broadcasters stop short of arguing that that decision should be discarded.  In a deft pirouette, they urge that “[w]hile the reasoning of Cablevision . . . needs to be rejected, that does not mean there cannot be private performances.” In other words, the petitioners are willing to concede that the result in Cablevision was correct – that is, the “hapless customer” should be permitted to record a program in his den and watch it in his bedroom without incurring the wrath of the Copyright Police. But the path by which the Cablevision court reached that result was flawed. We’re guessing that this delicately crafted argument is intended to attract the broadest possible support across all the Second Circuit’s judges, including those who would prefer not to overrule the Cablevision case.

So, what now? We sit back and wait to see whether the Second Circuit agrees to en banc review. If it doesn’t, the case stays in its current posture: Aereo can continue to operate while the trial of the broadcasters’ claims proceeds before the district court. If the Second Circuit takes the en banc appeal, in all likelihood Aereo’s operation will be stopped pending the outcome of that process. 

But regardless of how any of this turns out, we still think it’s likely that the underlying copyright issue here will eventually be resolved either by the Supreme Court or by Congress. The issue is already in play in both the Second Circuit, with the Aereo case, and the Ninth Circuit, with the AereoKiller case. And, since Aereo is promising to roll its service in more markets in the near future, it’s entirely possible that other cases will be brought in other circuits as well. Obviously, the issue has national implications demanding a uniform, national, resolution. Check back here for updates.

Aereo in the Second Circuit: Wha' Happened?

Fox seems to think that the Second Circuit’s decision was a Big Deal. We’re not so sure.

So Aereo recently kept its winning streak alive with a favorable ruling from the U.S. Court of Appeals for the Second Circuit . . . and the next thing you know, the Fox Network is making noises about kissing good-bye to its over-the-air operations and moving to some alternative delivery system, possibly as a subscription service.

If you were to buy into Fox’s over-the-top reaction, you might get the impression that the Second Circuit’s decision marks a major, and possibly irreversible, turning point in the struggle between broadcasters and the proponents of various Internet-based programming systems. But that’s why you read CommLawBlog, right?

 As Mike LaFontaine might say, “Wha’ happened?”

Correct answer: Very little, at least as far as we can tell from the Second Circuit decision.

There are a number of factors to consider here. First, the Second Circuit’s decision – while densely analytical, thoughtfully reasoned, and ultimately favorable to Aereo – was not unanimous. The dissenting opinion, as it turns out, was also analytical (although somewhat less densely so than the majority’s) and thoughtfully reasoned. And anyway, the majority opinion was at most an interlocutory (i.e., intermediate) holding in one isolated piece of litigation in one federal circuit. That case has a long way to go before we can put it in the finito file. And there’s already at least one other case, involving Aereokiller, working its way through the federal courts in California (that would be in the Ninth Circuit), where at least one court hasn’t been kind to Aereo-like arguments.

So while the latest Second Circuit decision may not be the happiest of news to broadcasters, it’s far from the end of the line. Which makes Fox’s reaction to it a bit puzzling.

If you’re new to Aereo and other MVPD wannabes, take a minute and check out our previous posts about Aereo, ivi TV, FilmOn.com and Aereokiller

When last we left Aereo – a company which offers subscribers the opportunity to access over-the-air programming via the Internet – it had convinced a federal District Judge in New York not to enjoin it from continuing operation while copyright infringement lawsuits against it proceed. An injunction would likely have been a death sentence to the fledgling service, so the denial of the injunction was viewed as a set-back for the broadcasters who were looking to send Aereo to the showers in the early innings. The broadcasters appealed the decision to the Second Circuit, where they lost in the recent 2-1 decision.

The majority opinion in the Circuit, authored by Judge Christopher Droney (a relative newby on the Circuit, having joined the court in December, 2011), examined the tangled web of copyright laws, judicial decisions and technological developments at work here. Since the most recent overhaul of the Copyright Act happened back in the mid-1970s while technology has obviously advanced well beyond mid-1970s standards, trying to apply the former to the latter is not an easy task. 

In crafting his opinion, Droney was able to rely extensively on the Second Circuit’s 2008 decision in the Cablevision case. (Note the date: Cablevision was decided several years before Droney made it to the court; Droney did not participate in Cablevision.)   In Cablevision, the court had concluded that a cable system’s remote storage DVR service did not constitute copyright infringement. While the RS-DVR system is not perfectly analogous to Aereo’s technology, the earlier Cablevision decision provided Droney with at least some helpful guideposts for framing his analysis.

But hold on there. Judge Denny Chin, the dissenter, was no stranger to the Cablevision case. In fact, he had written the 2007 District Court decision that the Second Circuit had reversed in Cablevision. (Chin was elevated from the District Court to the Court of Appeals in 2010.) So it’s safe to say that he is familiar with the law in this particular area, including particularly the niceties of the Cablevision decision. It’s also safe to say that Judge Chin does not agree with Judge Droney’s analysis.

And the third judge on the panel? He happened to be another District Court judge, sitting “by designation”. While that doesn’t mean he’s dumb by any means, it does mean that he did not have the in-depth personal familiarity with the Cablevision case that Chin had.

As a result, it’s hard to view the most recent 2-1 panel decision as absolutely conclusive of anything. At most it reflects the complexity of the subject matter and the difficulty of resolving the issues presented by Aereo and its kin. Yes, the decision affords Aereo some breathing room in which to continue to try to get traction in the marketplace. But that’s about all.

Bear in mind, too, that the Second Circuit’s recent decision related only to the question of a preliminary injunction, i.e., an attempt to halt Aereo’s operation until the trial court can hear all the evidence and arguments and resolve the question of Aereo’s legality on its merits. The actual trial on the merits of the broadcasters’ claims of infringement has not yet happened. It’s at least theoretically possible that, having picked up some cues during the arguments relative to the preliminary injunction, the broadcast plaintiffs will be able to improve their arguments in the merits phase of the proceeding.

For example, at trial it may turn out that Aereo’s supposed system – i.e., one antenna per each subscriber – doesn’t work exactly as described. Within the analytical framework of Judge Droney’s analysis, that could be bad news for Aereo.

And let’s also not forget that, once the trial is over, the losing party will be entitled to appeal – to the Second Circuit and, ultimately, possibly even to the Supreme Court. That process is likely to take several years and will obviously afford plenty of opportunities for all parties to make all conceivable arguments. Need we point out that, once a case gets to the Supreme Court, anything can happen?

Meanwhile, the Aereokiller litigation is likely to be chugging along in California. Aereokiller, of course, is a video delivery system very similar to Aereo’s. But as we have previously reported, in the California case (where broadcasters have sued Aereokiller), the trial judge has granted a preliminary injunction. If the tide in the California litigation continues to run in that pro-broadcaster direction, we could easily find ourselves with the classic “circuit split” – i.e., a situation in which two federal circuit courts of appeals (in this case, the Second Circuit in New York and the Ninth Circuit in California) stake out inconsistent positions relative to a particular set of legal questions. A circuit split often leads the Supreme Court to step in to resolve the circuits’ differences.

And the Ninth Circuit may not be the only one eventually involved here.  Aereo has announced plans to roll out its service in 22 other markets across the country.  Broadcasters in each of those markets might also opt to get in on the litigation fun by filing their own infringement actions.  The more the merrier!  And the more different federal circuits that get involved, the greater will be the likelihood of a circuit split.

One other wild card prospect: Congressional intervention. The source of much of the controversy here is the Copyright Act, which Congress could amend, if it wants to.

The bottom line here, then, is that the Second Circuit’s recent decision is clearly not the bottom line here. While it does constitute, for broadcasters, the undesirable loss of an arguably important skirmish, it is not the loss of the battle, much less of the war.

Which brings us back to Fox and its dramatic reaction to the Second Circuit’s decision. What are we to make of that? Was it an over-reaction? An attempt to rally the broadcasting troops (think Mel Gibson in Braveheart, or maybe John Belushi in Animal House)? A calculated effort to disguise, as a frustrated response to the Second Circuit’s decision, some already-in-the-works  strategy to exit over-the-air broadcasting? We have no idea. But we are confident that the folks at Fox are no dummies, and they appear to have some very definite notions of where they’re going here. For sure, the suggestion that Fox might bail out of the OTA universe sparked a firestorm of interest in Aereo, copyright, and the Second Circuit. We’ll try to keep on top of developments. Check back here for updates.

Will ivi Wither on the Vine?

Supreme Court rejection may be the end of the road for the upstart, Internet-based MVPD wannabe.

It looks like the Supreme Court may have dumped a final, fatal treatment of Roundup on ivi, Inc.  In a standard nine-word order (“The petition for a writ of certiorari is denied.”), the Supremes unceremoniously rejected ivi’s last-gasp effort to get out from under the preliminary injunction imposed by the federal District Court in NYC two years ago.  As a result, ivi is still barred from operating in the Second Circuit, and its future prospects are decidedly dim.

We’ve reported on several occasions on ivi.  It’s one of a handful of companies seeking to revolutionize television viewing by making broadcast signals available to viewers via the Internet.  ivi’s approach involves a liberal interpretation of the Copyright Act that would allow it to stream television programming directly to your computer, tablet or smartphone.  

ivi claims that its Internet-based streaming operation is the equivalent of a cable system as defined in Section 111 of the Copyright Act.  Under that theory, it has argued that it’s entitled to retransmit broadcast programming without the prior consent of the broadcasters as long as it pays applicable copyright royalties.  The broadcast industry has disagreed, naturally; in 2010, even before ivi started operation, broadcasters peppered ivi with cease and desist letters.  Undaunted, ivi went on the offensive, filing a lawsuit in the U.S. District Court for the Western District of Washington seeking a declaratory judgment that ivi is a cable system under the Copyright Act.  The broadcasters promptly countered with their own suit (alleging copyright infringement) in New York.

ivi’s Washington case was tossed by the judge there in January, 2011.  The following month, the broadcasters convinced the judge in the New York case to preliminarily enjoin ivi from operating pending the outcome of the case.  ivi appealed that ruling to the Second Circuit, to no avail.  In its trip to the Supreme Court it was trying to get the Supremes to lift the injunction.

Now that the U.S. Supreme Court has denied ivi’s bid for “certiorari” (the high-falutin, legalese term for an appeal to the High Court), it’s looking more like ivi may be exiting the marketplace.  Granted, the Courts to this point have ruled only on the issue of the preliminary injunction, so the case is technically not done – thus far ivi has been told only that it can’t operate pending the outcome of the full lawsuit on the merits.  But things aren’t looking good and that’s usually the death knell for many start-up companies. 

Let’s be clear that I am not reveling in any of ivi’s misfortune.  I distinctly appreciate and support innovation and have argued that Congress and the Copyright Office should consider changing the relevant laws to create a place at the video distribution table for ivi and its brethren. But let’s face facts.  ivi hasn’t operated in about two years, and it’s hard to see how ivi could have raised revenue to keep the fight going; one also has to wonder whether it’s been able to attract funders to its cause in the face of repeated judicial defeats.

Lacking the nutrients necessary for any business to survive, and facing the toxicity of multiple losses on the judicial front, ivi may simply wither away like so many innovators before it.

But even if ivi does wither, other contestants remain in the video-delivery-by-Internet race.  Ivi’s legal theory was, for instance, distinct from the theory underlying approach taken by Aereo and its quasi-twin, AereoKiller. As our readers know, though, that latter approach has received mixed reactions in court, with Aereo preliminarily succeeding while AereoKiller not so much.

Judge Puts the Cuffs on AereoKiller

Disagreeing with the Second Circuit, a district judge in the Ninth Circuit has enjoined Aereokiller from transmitting its opponents’ over-the-air programming.

Remember Aereo, the Barry Diller-backed startup seeking to revolutionize the way we watch television? (Hint: It’s the video delivery service that uses rooms full of dime-sized antennas, each assigned to a different subscriber, enabling said subscriber to watch broadcast television via any mobile, Internet-based device.) As we reported last summer, Aereo won a key legal battle in New York in July, when a federal judge OK’d the continued provision of Aereo’s service at least temporarily. (Technically, the judge refused to issue a preliminary injunction requiring Aereo to shutter its service while it’s being sued by a number of broadcasters claiming that the Aereo service infringes their copyrights.) 

You may also recall Alki David, the owner of several services providing online distribution of over-the-air television (and other) programming. The most relevant for our purposes are FilmOn.com and Aereokiller

David’s Aereokiller service seems to have drawn inspiration (not to mention its name) from Aereo’s service. While not absolutely identical to Aereo, Aereokiller rests on the same general technology and the same basic legal principles as Aereo. (In its court filings, Aereokiller argues that it is not only technologically analogous to Aereo but, in fact, “better and more legally defensible”). And further highlighting the influence of Diller’s Aereo service on David’s Aereokiller service, the latter was originally launched via a website found at www.barrydriller.com (though it has now migrated to David’s FilmOn.com site and is available via an Aereokiller app); it appears to be operated by the David-owned “Barry Driller Content Systems, PLC”. At least I think I’ve got that corporate structure right (there’s clearly a lot going on here). 

In any event, it’s easy to suppose that David may have Aereo and Barry Diller in his sights, at least competitively. But a recent decision by a federal judge in Los Angeles could deep-six both Aereokiller and Aereo: Judge George Wu from the United States District Court for the Central District of California has issued a preliminary injunction against at least some aspects of Aereokiller’s operation.

We could be on a direct path to the Supreme Court.  (Quick, someone get the Swami! Oh, wait, that’s me!).

Like Aereo, Aereokiller was sued by virtually every major broadcast network soon after it began streaming signals of the network affiliate stations in Los Angeles. Using the same approach they had tried, unsuccessfully, in the NYC litigation against Aereo, the networks sought a preliminary injunction, asking Judge Wu to stop Aereokiller from retransmitting the networks’ over-the-air broadcasts until the litigation had been concluded. 

As we learned in the Aereo preliminary injunction post, the networks could win their motion for preliminary injunction only if they could show:

  • A likelihood of succeeding on the merits of the case itself;
  • That they would suffer irreparable harm in the absence of preliminary relief;
  • That the balance of equities tips in their favor;
  • That an injunction is in the public interest.

In both the Aereo and Aereokiller cases, the broadcasters were able to satisfy three of those four criteria. But you need all four, and in the Aereo case in New York, the judge was not convinced that the broadcasters were likely to prevail on their central infringement claim – because the Second Circuit’s Cablevision decision posed an insurmountable obstacle to that claim. So Aereo was allowed to continue to operate.

Aereokiller was not so lucky. Judge Wu in Los Angeles concluded that the broadcasters are likely to prevail. 

First, and foremost, he reminded everyone of basic geography: California is in the Ninth Circuit, not the Second Circuit. Therefore, he is not bound by either the Aereo decision or the Second Circuit’s Cablevision decision. 

More importantly, Judge Wu surmised that the Ninth Circuit – whose decisions are binding on Wu – would have come out differently in the Cablevision case. His disagreement with the Second Circuit is based on an alternate interpretation of the Copyright Act. In his densely reasoned opinion, Judge Wu parsed the meaning of terms such as “transmission”, “copy”, “work”, “performance” and “performance of a performance”. He concluded that, in Cablevision, the Second Circuit placed too much importance on whether the end user (i.e., the Aereo subscriber/viewer) was ultimately receiving a public performance of a transmission; the key issue should have been whether the end user is receiving a public performance of a copyrighted work “irrespective of which copy of the work the transmission is made from”. 

As the Judge explained:

Very few people gather around their oscilloscopes to admire the sinusoidal waves of a television broadcast transmission. People are interested in watching the performance of the work. And it is the public performance of the copyrighted work with which the Copyright Act, by its express language, is concerned. Thus, Cablevision’s focus on the uniqueness of the individual copy from which a transmission is made is not commanded by the statute.

Judge Wu also cited a law review article by the esteemed (by some) Judge Richard Posner (from the U.S. Court of Appeals for the Seventh Circuit), who proposed this analysis of the considerations relevant to the assessment of copyright infringement claims:

A rational resolution of the issue requires discerning the purpose of giving the owner of a copyrighted work the exclusive right to perform it. The purpose is to prevent the form of free riding that consists of waiting for someone to spend money creating a valuable expressive work and then preventing him from recouping his investment by copying the work and selling copies at a price below the price the creator of the work would have to charge to break even.

As Wu sees it, in Judge Posner’s terminology, Alki David and (presumably) Barry Diller are in effect free riders. 

All of which puts the Aereo decision (from a District Judge in the Second Circuit) and the Aereokiller decision (from a District Judge in the Ninth Circuit) on course for a collision in the Supreme Court.

If both the Second Circuit and the Ninth Circuit affirm their respective lower courts’ views as to what constitutes a public performance, the result will be a classic “circuit split” that could be resolved only by the Supreme Court (unless Congress were to intercede with legislation addressing the problem). In my mind, it’s dead-on certain that the Supreme Court would agree to resolve the split in Circuit law, should such a split develop. The Supremes would have to resolve that split because avoiding it would result in a nationwide service being treated differently according to region, with similar parties treated in vastly distinct manners under the law.

In that case the Supremes would likely consider not only how the statutory language itself must be read, but also what Congress intended and how much weight that perceived intention should be accorded. That, in turn could, lead to Congressional revision of the definition of “public performance”, should Congress disagree with the Court’s decision. In which case, there is still the possibility that David, Diller and innovators everywhere win in the end (and for that, from a strictly legal-nerd perspective, I love them . . . because this will be fascinating to watch). 

But that’s all a bit speculative – we probably won’t get to that point for a year or two, if ever.

In the meantime, the situation will have to remain geographically muddled. In the Second Circuit, Aereo may still operate its service (although the legal momentum Aereo had been enjoying may be diminished some thanks to Judge Wu’s contrary analysis). But in the Ninth Circuit, Aereokiller – although offering a service extremely similar to Aereo’s – may not

retransmit[ ], stream[ ], or otherwise public perform[ ] or display[ ] within the geographic boundaries of the [Ninth Circuit], directly or indirectly, over the Internet (through websites such as filmonx.com or filmon.com), via web applications (available through platforms such as the Windows App Store, Apple’s App Store, the Amazon Appstore, Facebook or Google Play), via portable devices (through applications on devices such as iPhones, iPads, Android devices, smart phones, or tablets), or by any means of any device or process, the Copyrighted Programming.

For purposes of the injunction, “Copyrighted Programming” refers to all broadcast TV programming in which any of the plaintiff broadcasters holds an exclusive right under the Copyright Act. The plaintiffs include NBCUniversal, Telemundo, ABC/Disney, CBS, Open 4 Business Productions and Big Ticket Television, Inc.

The Second Circuit encompasses New York, Connecticut and Vermont. The Ninth Circuit covers Alaska, Arizona, California, Guam, Hawaii, Idaho, Montana, Nevada, the Northern Mariana Islands, Oregon and Washington – and Guam and the Northern Mariana Islands, too! 

That leaves a huge chunk of America’s heartland in which Aereo and/or Aereokiller may or may not be deemed legal. For now, the Swami will remain silent on where he sees this going. . . .

ivi TV Loses Round Two

Second Circuit affirms injunction preventing would-be online “cable system” from carrying over-the-air content.

ivi TV, the company that burst onto the video delivery scene two years ago with a business plan based on an innovative reading of Section 111 of the Copyright Act, has suffered a major setback at the hands of the U.S. Court of Appeals for the Second Circuit. The court has upheld a lower court’s order enjoining ivi TV from infringing the copyrights of the broadcast networks that sued ivi TV back in 2010. 

The lower court’s injunction effectively put ivi TV’s operation on life support. The Second Circuit’s decision may have pulled the plug entirely.

ivi TV’s idea was relatively simple, if outside the box. ivi TV wanted to stream broadcast stations online in real time. It wasn’t a cable company in the traditional sense: no headend, no wires, no set top box. But according to ivi TV, it was entitled to retransmit over-the-air broadcast signals, without the broadcasters’ permission, because ivi TV’s operation was essentially a “cable system” as that term is used in Section 111. Section 111 gives “cable systems” the statutory right to such retransmission, provided they pay governmentally-established royalties (which ivi TV said it was willing to pay).

The district court disagreed with ivi TV’s reading of Section 111 back in 2011. And now the Second Circuit has piled on, concurring with the district court that Congress “did not intend for § 111 licenses to extend to Internet retransmissions”. That conclusion largely guts ivi TV’s claims.

This result is not unexpected. ivi TV was trying to stretch some statutory language beyond its seemingly natural meaning. There’s no harm in trying such a gambit, especially when technological change is occurring so fast that legislation can’t keep up. If existing laws don’t specifically address the latest technologies, it makes sense for the proponents of those technologies to do what they can to try to squeeze their ideas into the existing regulatory pigeonholes.

Such efforts, however, are not guaranteed to succeed. That’s especially true when, as here, the innovative approach would threaten the interests of others (in this case, broadcasters and other copyright-holding video content providers).

According to one published report, an ivi TV spokesperson has said that this is “not the final chapter” to the ivi TV story. It’s not clear what ivi TV might have in mind, but one might imagine that it might be thinking about re-casting its legal theory along the lines of Aereo.

Readers will recall the Aereo system, which allows subscribers online access to over-the-air programming through dime-sized antennas, each of which is allocated to a single subscriber. Rather than stretch the definition of “cable system”, as ivi TV unsuccessfully tried to do, Aereo pitched its system as nothing more than a modern-day equivalent of a VCR. Back in the 1980s, the Supreme Court had held (in the famous Betamax case), that private use of a VCR does not involve copyright infringement. And in 2008 the Second Circuit itself had extended that notion to include a “remote storage” DVR system provided by Cablevision to its customers. 

So far Aereo’s approach has survived the same type of broadside legal assault mounted by the networks against ivi TV. That probably frosts ivi TV’s cookies, particularly because Aereo has succeeded in the same jurisdiction – the federal district court in the Southern District of New York – where ivi TV has struck out. And objective observers might raise an eyebrow at the notion that broadcast programming might legally be made available online to subscribers by Aereo but not by ivi TV. After all, if the end result is the same – i.e., Joe and Loretta Six-Pack can view broadcast programming on their desktops or mobile devices – why should the law differentiate between the ivi TVs and the Aereos of the world?

ivi TV may try to make such an argument to the Second Circuit, or possibly even the Supreme Court. And maybe one of the two, or some other court (such as the Ninth Circuit, which may be the site of the next dust-up between BarryDriller.com and the broadcast networks), might eventually agree, although we wouldn’t recommend holding your breath until that day comes.

Whether the law will eventually adopt a coherent approach to the online delivery of video programming – an approach that might accommodate the ivi TVs and the Aereos of the world, as well as others yet to be identified – is uncertain at this point. But that doesn’t mean that the players already on the field can’t adjust their playbook to the law as it currently stands. As we recently reported, FilmOn.com – an online quasi-cable service relying on a very ivi TV-like approach to the law – has reportedly agreed to a permanent injunction prohibiting it from retransmitting certain broadcast content. But at the same time, the FilmOn.com folks have launched BarryDriller.com, an Aereo look-alike. While ivi TV might continue to fight for its interpretation of Section 111 in the courts, it would seem that switching to the Aereo model might be a better strategy, at least in the short run.

The real question, though, is where the long run will take all of this. As my colleague Kevin Goldberg has cogently (and persuasively – to me, at least) argued, what we really need here is a fundamental change, a change that brings the various copyright and cable-regulation laws into line with the viewing habits of 21st Century television watchers. Kevin has noted that there have been inklings that such changes may be in the early stages at both the FCC and the Copyright Office. In view of the speed (think glacial, but with a flat tire) with which the government has thus far reacted to such things, it’s probably unrealistic to expect near-term change. But we can at least hope that the process has started.

FilmOn.com Is Dead (or so it appears). Long Live BarryDriller.com!

Out of the ashes of one MVPD wannabe rises another.

To paraphrase T.S. Eliot, this is the way the MVPD wannabe ends, not with a bang but a whimper. . . and a $1.6 million settlement payment.

You remember FilmOn.com. They’re the folks who were going to revolutionize the video biz by legally delivering broadcast signals via the Internet . . . until they got immediately sued for copyright infringement by the major broadcast networks. 

“Oh, you mean Aereo, right?”, you reply. 

That would be the Barry Diller-financed entity that captures broadcast signals via a series of individual antennas, stores them on individually assigned remote DVRs and allows subscribers to watch programming in (almost) real time or via delay over the Internet. But, no, they’re not who we’re talking about here. Aereo still exists and has even won the first round in its legal battle against the broadcasters, surviving a motion for preliminary injunction.

“Oh, right . . . you’re talking about ivi TV?”, you protest, referring to the wannabe “first online cable system”. No, not them either (but you’re close).

Though ivi TV may be on its last legs, it still technically exists. ivi TV initially sought (in federal court in the State of Washington) a declaratory judgment that its service does not violate the Copyright Act. It lost. Meanwhile, ivi TV was sued by the major broadcast networks, who won. They sought – and received – a preliminary injunction against ivi TV from the U.S. District Court for the Southern District of New York. Not one to be stopped by a little injunction, ivi TV has appealed that decision to the U.S. Court of Appeals for the Second Circuit. (Oral argument was held in late May. A decision could come down any time now.)

FilmOn.com is very similar to ivi TV. Started in 2010, it’s an online system claiming to fall within the Copyright Act’s definition of “cable system”. Like ivi TV, FilmOn.com was almost immediately sued by the major broadcast networks and, like ivi TV, it was quickly on the back foot. Within a couple of months of its launch in late 2010, Filmon.com was hit with a Temporary Restraining Order prohibiting it from infringing “by any means, directly or indirectly” any copyrighted material. That slowed the service down, but did not stop it immediately. 

And now – almost two years later – FilmOn.com has reportedly agreed to a permanent injunction that will apparently require it to stop streaming the signals of the four major networks – at least until FilmOn boards BarryDriller.com (more on that in a moment). Oh, yeah, according to trade press reports, FilmOn.com will also be ponying up about $1.6 million to settle the case.

But that’s not the end of the story. After all, when you’re funded by billionaire Alki David, you’re not going to go away simply because a federal court tells you to. (Possibly instructive anecdote: David is the gentleman who reportedly offered $1 million to the first person who would streak in front of President Obama with “Battlecam.com” – another David enterprise – written across the streaker’s chest.) So, like a phoenix rising from the ashes, “BarryDriller.com” has emerged. BarryDriller.com is David’s new project (which is reportedly being funded by a related company called “AereoKiller, LLC”). BarryDriller.com is said to be “Aereo-like”. Though there are differences (BarryDriller.com will charge subscribers about half of what Aereo charges and claims that it will pay broadcasters for their content), BarryDriller.com is certainly like Aereo in one sense: it’s been in business for just a few days and has already been sued by Fox.  

If nothing else, the BarryDriller.com suit is interesting for one reason: its locale. The suit was filed in the U.S. District Court for the Central District of California (because BarryDriller.com was retransmitting KTTV, the Fox affiliate out of Los Angeles). Different city = different court = different governing precedent. While Judge Allison Nathan of the U.S. District Court for the Southern District of New York was bound by the Second Circuit’s Cablevision DVR decision in ruling for Aereo last month, the Cablevision decision doesn’t have the same weight in the wild, wild west. I’ve said from the start that the endpoint for the Aereo case would be the United States Supreme Court if at least one federal court outside the Second Circuit were to reject the rationale of the Cablevision decision. Such a ruling would set up a “circuit split” that might induce the Supremes to wade into the thicket and sort things out. If nothing else, BarryDriller.com may have accelerated that process by giving the networks the opportunity to sue David and company in California, where the Ninth Circuit is the top federal dog.

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.

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.