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.