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Broadcasters win in Supreme Court’s ABC v Aereo opinion

Michael Loney, New York

In a ruling that Justice Antonin Scalia predicted in a dissent “will sow confusion for years to come”, the Supreme Court has reversed the Second Circuit in the ABC v Aereo copyright case in a 6-3 ruling

In an opinion written by Justice Stephen Breyer – in which he was joined by Chief Justice John Roberts and Justices Anthony Kennedy, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan – the Supreme Court said Aereo infringes broadcasters’ copyright by selling subscribers a service to allow them to watch television programmes over the internet “at about the same time as the programmes are broadcast over the air”.

Aereo offers subscribers broadcast television programming over the internet for a monthly fee. It uses thousands of dime-sized antennas to create a subscriber-specific copy of a programme selected by a subscriber that starts to stream after several seconds of programming have been saved.

A mix of television producers, marketers, distributers and broadcasters sought a preliminary injunction arguing Aereo was infringing their right to “perform” their copyrighted works “publicly”. The District Court denied the injunction. The Second Circuit affirmed, saying that Aereo does not perform publicly within the meaning of the Transmit Clause because it does not transmit to the public.

Within the Copyright Act's scope

The Supreme Court reversed the Second Circuit, holding that Aereo performs the petitioners’ works publicly within the meaning of the Transmit Clause.

"But when read in light of its purpose, the [Copyright] Act is unmistakable: An entity that engages in activities like Aereo’s performs" - Justice Stephen Breyer

The Court cited an amendment of the Copyright Act in 1976 that it said was intended to overturn two Supreme Court’s holdings that the activities of community antenna television (CATV) providers fell outside of the Act’s scope. The Court had determined in Fortnightly v United Artists Television that a CATV provider was more like a viewer than a broadcaster because it only enhanced a viewer’s ability to receive the broadcasters’ signal and therefore did not perform publicly. In Teleprompter v Columbia Broadcasting System it determined that the reception and rechanneling of a television signal is essentially a viewer function regardless of the distance between the broadcasting station and the viewer.

The Copyright Act was amended in 1976 to say performing an audiovisual work means “to show its images in any sequence or to make the sounds accompanying it audible”, indicating that both the broadcaster and the viewer “perform”. Congress also enacted the Transmit Clause specifying that an entity performs when it transmits a performance to the public. This made it clear that an entity that acts like a CATV system performs even when it simply enhances viewers’ ability to receive broadcast signals.

The Supreme Court said the Copyright Act makes it clear that Aereo is not merely an equipment provider.

“Considered alone, the language of the Act does not clearly indicate when an entity “perform[s]” (or “transmit[s])” and when it merely supplies equipment that allows others to do so. But when read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo’s performs,” wrote Justice Breyer.

The Court found that Aereo also performs the petitioners’ works “publicly”. The petitioners argued that Aereo performed a prior performance of their works, whereas Aereo argued it transmits a new performance created by its act of transmitting. “Under the Court’s assumed definition, Aereo transmits a performance whenever its subscribers watch a programme,” wrote Justice Breyer.

Aereo claimed that it does not transmit a performance to the public because it transmits from user-specific copies using individually-assigned antennas. The Court said, however, these differences were not enough to place Aereo’s activities outside the scope of the Copyright Act.

The Court did recognise one big difference between Aereo’s system and the cable systems at issue in Fortnightly and Teleprompter, however. Rather than transmitting constantly, Aereo’s system remains inert until a subscriber indicates he wants to watch a programme.

“Given Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here,” wrote Justice Breyer.

The Supreme Court was at pains to limit the scope of its opinion. There had been concerns the Court’s ruling in this case could have consequences on technologies such as cloud computing.

“Aereo and many of its supporting amici argue that to apply the Transmit Clause to Aereo’s conduct will impose copyright liability on other technologies, including new technologies, that Congress could not possibly have wanted to reach. We agree that Congress, while intending the Transmit Clause to apply broadly to cable companies and their equivalents, did not intend to discourage or to control the emergence or use of different kinds of technologies. But we do not believe that our limited holding today will have that effect.”

It said the term “the public” does not extend to those who act as owners or possessors of the relevant product. It added that it had not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content.

“We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us. We agree with the Solicitor General that “[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course,’ should await a case in which they are squarely presented.”

“Built on the shakiest of grounds”

In a strongly-worded dissent, Justices Scalia, Thomas and Alito disagreed with the majority. Justice Scalia disagreed with the claims that Aereo violates the broadcasters’ exclusive right to perform their programmes publicly.

"Rather, it is akin to a copy shop that provides patrons with a library card.” - Justice Antonin Scalia

“That claim fails at the very outset because Aereo does not “perform” at all. The Court manages to reach the opposite conclusion only by disregarding widely accepted rules for service-provider liability and adopting in their place an improvised standard (“looks-like-cable-TV”) that will sow confusion for years to come,” he wrote.

Justice Scalia said use of Aereo service undoubtedly results in performance but the “the question is who does the performing”. He illustrated his point by giving a comparison between copy shops, which rents out photocopiers on a per-use basis and in which the customers choose the content (which could be of copyrighted material), and video-on-demand services, in which the providers choose the content.

“So which is Aereo: the copy shop of the video-on-demand service?,” he asked. “In truth, it is neither. Rather, it is akin to a copy shop that provides patrons with a library card.” He said Aereo’s antennas are like a library card through which subscriber can obtain whatever broadcasts are freely available. “Some of those broadcast are copyrighted; others are in the public domain. The key point is the subscribers call all the shots,” he wrote.

In the Supreme Court’s majority opinion, Justice Breyer had written: “In our view, however, the dissent’s copy shop argument, in whatever form, makes too much out of too little.

The dissent said Aereo does not perform because it does not make the choice of content and so cannot be held directly liable for infringing the broadcasters’ right. “That conclusion does not necessarily mean that Aereo’s service complies with the Copyright Act. Quite the contrary,” wrote Justice Scalia. The request for preliminary injunction was based exclusively on the direct-liability portion of the networks’ complaints, rather than the secondary liability claims.

The dissent also said that the Court’s conclusion that Aereo performs “is built on the shakiest of grounds”. Firstly, it said that the Court used a few isolated snippets from a single report to conclude that Congress amended the Copyright Act to overrule the Supreme Court’s CATV decisions. Secondly, it said there are “material differences” between the cable systems in those cases and Aereo, and that the Court was wrong to “blithely conclude” that it does not make a critical difference.

“Third, and most importantly, even accepting that the 1976 amendments had as their purpose the overruling of our cable-TV cases, what they were meant to do and how they did it are two different questions—and it is the latter that governs the case before us here,” wrote Justice Scalia.

He said the injury claimed is not violation of a law that says operations similar to cable TV are subject to copyright liability but, rather, violation of Section 106(4) of the Copyright Act.

“And whatever soothing reasoning the Court uses to reach its result (“this looks like cable TV”), the consequence of its holding is that someone who implements this technology “perform[s]” under that provision. That greatly disrupts settled jurisprudence which, before today, applied the straightforward, bright-line test of volitional conduct directed at the copyrighted work. If that test is not outcome determinative in this case, presumably it is not outcome determinative elsewhere as well. Perhaps the Court means to adopt (invent, really) a two-tier version of the Copyright Act, one part of which applies to ‘cable companies and their equivalents’ while the other governs everyone else.”

It continued that the rationale for the Court’s ad hoc rule for cable-system lookalikes is so broad that it renders nearly a third of the Court’s opinion superfluous. It added that, “to make matters worse”, it provides no criteria for determining when a cable-TV-lookalike rule applies.

The case has been remanded for further proceedings.



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