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).

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.]

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.

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. . . .

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.

Some More Observations About Copyright, Content Distribution And Technological Innovation

More signs of the need for a fresh approach to copyright licensing for audiovisual content

In recent months I’ve suggested – here and here, for example – that changes in the video delivery landscape around us demand a good, hard look at the various laws which govern transmission and, especially, retransmission of audiovisual content usually seen on television.   It’s fair to say that, while I don’t advocate any particular approach, I support change that brings the various laws in this area into line with the viewing habits of an increasing amount of television watchers.   

But that would entail a herculean effort involving potential changes to the regulations of two major government agencies: the FCC and the Copyright Office. The FCC would be looking, or re-looking, at such things as the definition of an MVPD as well as rules governing must carry, retransmission consent, fin/syn and program exclusivity. The Copyright Office would have to examine its regs covering cable and satellite compulsory licenses. Changes there and elsewhere would have to be justified in light of actual evidence that the media delivery landscape is changing.  (I’m sold on this, but – if you can believe this – the Administrative Procedure Act requires more than my personal stamp of approval).

So that’s why I’m happy to see signs of serious inquiry on two fronts.

 One such sign is the FCC’s Further Notice of Inquiry in the Matter of Annual Assessment of the Status of Competition in the Market for the Delivery of Video Programming (FNOI), released on April 21.   On its face, this is a pretty mundane request by the FCC for information relating to competition in the video marketplace. In fact, it’s the Commission’s 14th annual review since Congress first directed the FCC to conduct such reviews back in the 1992 Cable Act.

But if you’re paying attention, you’ll realize that 2011 - 1992 ≠ 14. That’s because the FNOI relates to the 2007 proceeding. Why the holdup? Turns out the Commission has reviewed the “way in which it uses data” for reports like this, and it has concluded that the data previously submitted are “insufficient to produce an adequate report” – so the Commission is now asking for more data. 

But what’s interesting here is that, in making that request, the Commission notes the recently “increased availability of video programming over the Internet, made available by online video distributors (‘OVDs’)”. And, more importantly, the Commission specifically requests data on OVD-related data “in light of the growing importance of online video distribution to consumers” (apparently for the first time). So the Commission is trying to play a little catch-up in terms of assessing competition in the video market in light of the rise in OVDs.

In other words, the FCC sees OVDs as a significant separate element in the video distribution process, and wants to ascertain their effect on that marketplace. According to the Commission, “for most consumers [OVDs] are not a substitute for MVPD service today, but rather an additional method for viewing video programming”. Perhaps OVDs aren’t big enough to warrant regulatory change, but we seem headed in that direction – at least the FCC is now standing up and taking notice.

I see this recognition of the rising importance of OVDs as more significant than any substantive information likely to be elicited in response to the nearly 200 separate questions posed in the FNOI. Comments in response to the FNOI are due by June 8, 2011; reply comments are due by July 8.

Meanwhile, over at the Copyright Office, here’s a quick update on that Office’s investigation of the future of video delivery, i.e., the inquiry into the continued need for the cable and satellite compulsory licenses.   Comments were due on April 17. I’ve had a chance to review the comments received from 17 parties ranging from the NAB to outcast cable wannabe ivi, Inc. to the “Canadian Claimants Group”. Here’s what stands out:

Most commenters from all sectors – including cable provider AT&T, program provider NPR, a group of rural MVPDs, Dish Network, a group of “Devotional Claimants”, the NCTA, the Independent Film and Television Alliance, the TVMLC, Verizon, PBS, APTS and WGBH – opposed repeal of the compulsory licenses. A common concern: direct licensing or collective licensing alternatives would be too expensive and burdensome to provide a diversity of programming to the public.   

The NAB urged retention of the compulsory licenses enabling local carriage of stations. But it suggested terminating those allowing carriage of distant signals except for markets with unserved households or a shortage of signals, or in the case of nationally distributed superstations. 

ivi, Inc., opposed the phasing out of the compulsory licenses because that would “disincentivize” folks outside the TV industry from developing new distribution technologies, because  “there is no way to monetize that technology is to sell or license it [sic] to the gatekeepers of content that have every reason to keep their legacy distribution systems in place.” ivi, Inc. seeks extension of the compulsory licenses to online video distributors – no surprise there.

Dish Network recommended transitioning to a single compulsory license with “bright line rules for the carriage of digital broadcast TV signals applicable to cable and satellite, as well as online video distributors.” 

The Canadian Claimants Group cautioned that elimination of the compulsory licenses would likely result in the inability to retransmit an entire broadcast signal.

“Program Suppliers”, including the MPAA and other producers, went entirely in the other direction, claiming that compulsory licenses harm copyright owners. They advocated a combination of licensing approaches (e.g., direct, collective, or sublicensing). The Commissioner of Baseball agreed, urging that “any system replacing the statutory licenses replicate[ ] as closely as possible the marketplace-based system that has provided, and continues to provide, the public with a vast array of Baseball telecasts on terms and conditions that all affected parties have considered to be fair and reasonable.”

Some entities, including Rural MVPDs, called for reform of the retransmission consent process. Others, such as the NCTA, Dish Network, DirecTV, and Verizon noted that repeal of the compulsory licenses would require reform of the FCCs rules.

BMI and ASCAP, as one might guess, viewed collective licenses as striking a proper balance between free market and regulatory approaches.

Reply comments are due on May 17.  We'll keep you posted.

Copyright, Content Distribution And Technological Innovation: The Need To Re-Think The Compulsory Licensing System

Signs point to tensions between the laws of the past and the technology of the present and future

Not to go all chicken little on you, but the world may be coming to an end – the world of copyright and compulsory licensing as we have known it for the past several decades, that is. I’ve been following the evolution of content delivery across all platforms (including the legal systems which underlie content delivery), and have in recent months noted a recurring theme: the legal rules governing delivery of content – and audiovisual programming, especially – are falling farther and farther behind the state of the technological art. Traffic rules developed during the horse-and-buggy days don’t really help anybody in an age of superhighways and high-performance cars. So maybe it’s time for legislators and regulators to roll up their sleeves and get to work developing a copyright licensing system for the 21st Century.

Examples? How about online streaming providers ivi, Inc. and Filmon.com, who have been trying to cram the square peg notion of an “on-line cable system” into the round hole system of traditional compulsory licensing. They’re clearly outliers making long shot attempts to revolutionize television viewing. From a legal standpoint they’re still on the outside looking in, as both have been told by federal courts that they are not acting within the boundaries of the Copyright Act. Yet, as we reported on these cases, we prophesied that ivi.Inc and Filmon.com may simply be ahead of their time.

Our predictions weren’t far off the mark.

As we have since reported, at Congress’s direction the Copyright Office has instituted a proceeding that could dramatically alter the copyright compulsory licenses applicable to cable television and satellite television.  In particular, the Copyright Office is looking at the possible elimination of such licenses (which are currently found in Sections 111, 119 and 122 of the Copyright Act). 

Our call for legal reform – or at least a very thorough review of this area of law – is further buttressed by two separate, but related, developments involving one of the more popular content delivery systems going today: the Apple iPad. 

In one instance, News Corporation (let’s call them Fox for short) has told Time Warner Cable (TWC) to stop streaming the various Fox channels to the iPads of TWC subscribers. (Scripps Network Services Interactive (Scripps) has reportedly joined Fox in this effort.) TWC is apparently the first cable company to create an “app” that allows its subscribers to view programming via an iPad (Cablevision has since released a similar app with similar pushback). Seems pretty simple right? You’re a TWC subscriber, you pay TWC to provide you access to programming in your home, you would like to use your iPad to watch TV in and around your home, TWC can make that happen – where’s the problem? After all, you’re already paying to get those channels, and TWC is also paying for the right to get you those channels – so why should it matter whether you’re watching on a full TV screen or an iPad?   (This would be especially true if TWC’s app happens to include some form of geographic restriction to prevent video viewing “out of market”. Note that I don’t know whether the app does feature such a restriction.)  

But that’s not how Fox and Scripps see it – and I suspect that they’re not alone.

And there’s another instance involving an iPad App – this time the Zite news reader, which describes itself as “a personalized iPad magazine that gets smarter as you use it”. The Washington Post, AP, Gannett, Getty Images, Time, Dow Jones and many other media organizations have sent Zite a cease-and-desist letter telling it to stop providing their content.  This is admittedly different from the Fox/TWC situation, as you’re now talking about aggregation of news content regardless of subscription, which is a big problem for news entities. But, again, if there is some way to ensure that subscribers have greater access to the content they’ve paid for, you’d think that the actual manner of delivery is a minor concern, right? 

And that’s the common thread here: new, highly popular content delivery systems that don’t fit comfortably into any existing licensing scheme. And that lack of fit is not because the folks who designed the existing licensing schemes considered but rejected inclusion of the new delivery systems. Au contraire, the folks who drafted the existing copyright laws had no idea that such delivery systems would ever exist.

Now let’s be clear: I am not against – in fact I’m very much in favor of – protection of the rights of copyright owners. But I think that these cases demonstrate that the current compulsory licensing system is failing to keep up with the times. The result is resistance, induced by out-dated laws, to innovation of new products, services and technology. The results of such innovation  can deliver content from a copyright owner to the consumer and – in theory at least –  the concept of compulsory licenses is designed to facilitate the legal delivery of that content to the consuming public.  But the existing legal scheme was not designed to, and thus cannot easily accommodate, this fastest growing area of content delivery. As a result, whenever a good product is created, the content owners move quickly to restrict its easy implementation. It’s not just the iPad, but other popular products as well: think, for example, of Apple TV, GoogleTV and Roku, all of which have been hamstrung in terms of available content. 

One might, wonder, of course whether content owners fully appreciate the long-term effects of their heavy-handedness.   But I won’t go there. I recognize that they have to do everything they can to protect their most valuable asset. 

Instead, I think the finger should be pointed elsewhere – at the legislators and regulators who need to take notice of these developments and figure out a way to bring all parties together to discuss this . . . especially before the tension between antiquated laws and unstoppable technological innovation throws everything so far out of whack that it can’t be righted.  (Though I and my colleagues represent many different media entities on all sides of the equation, we are particularly concerned for broadcast television stations, since they don’t create much of their content, relying instead on networks or syndicated programming producers; I strongly believe that broadcasters would be the most likely to be cut out of any individual side deals.) 

I don’t know what the future holds for television delivery. But I am increasingly sure that TV delivery will – and should – look vastly different tomorrow than it did yesterday or than it does today. It’s in everybody’s interest – the content creators’, the content distributors’ and the content consumers’ – that the copyright laws that underlie and provide structure to the delivery process be designed to accommodate and facilitate technological innovation.