The future of television was on trial during what was one of the most publicized copyright cases since Napster. In a 6-to-3 decision, the Supreme Court of the United States recently held that the streaming TV subscription service, Aereo, was liable for copyright infringement.
Aereo was a subscription-based system that allowed users to rent personal antennas stored at Aereo's headquarters. For a base fee of $8 per month, subscribers streamed television programs from major broadcasters moments after the initial broadcast. Several broadcasters sued Aereo for copyright infringement – specifically claiming that Aereo infringed the exclusive right to publicly perform their copyrighted programming.
The Court's decision turned on two main questions: whether Aereo "performs" and if so, does it perform "publicly". Aereo argued that it was simply an equipment provider that enabled its subscribers to perform the works. The Court disagreed. Its holding relied on an analysis of Congressional intent in the 1976 Copyright Act. The 1976 Act thoroughly revamped copyright law to accommodate what were the new technologies of that era, notably including cable television. The new Act defined "performance" of a work as to "show its images in any sequence or to make the sounds accompanying it audible". It was clear under this and other provisions of the law that cable transmissions of works are "performances" even when the transmissions merely enhance viewers' ability to receive broadcast signals. Although Aereo vigorously denied the analogy between its technology and those of cable systems, the Court was unconvinced, finding that Aereo is "for all intents and purposes a traditional cable system."
Aereo argued further that its transmissions were not "to the public" because its system generated user-specific copies through personal antennas, making each transmission available to only one subscriber. In fact, it was this very premise on which Aereo's business model relied to operate its services without paying copyright owners for their content. The Court, however, found this argument to be irrelevant. It cited the Transmit Clause of the Copyright Act, which provides that a performance is transmitted to the "public" no matter whether people receive it in the same place or in separate places and at the same time or at different times. Thus, even though each user's recording was unique and not available to more than one user, Aereo's transmissions were still "to the public."
A few days after the decision, Aereo shut down its service and will be refunding subscribers for their last month. It may be too soon to count Aereo out, however. In a scrappy move of legal jiu jitsu, Aereo is attempting to turn the Court's ruling to its advantage.
The 1976 Copyright Act created a compulsory license for cable systems to retransmit broadcast signals. By paying a statutory license fee to the copyright owner, the cable company can retransmit the signal without having to obtain permission from or negotiate with the copyright owner. Much to the consternation of broadcasters, Aereo has taken the position that since the Supreme Court has found its service to be functionally identical to cable, it should be able to continue to operate under a compulsory license. Another antenna farm streaming service called FilmOn had taken this approach from the start and sought to obtain a compulsory license from the Copyright Office. That effort was opposed by CBS, which was able to obtain a favorable court ruling. That may now be revisited in light of the Supreme Court's decision.
While Aero's business model plays itself out, the wider ramifications of the decision remain to be seen. As with many copyright cases involving new technologies, critics lamented that the ruling would have a chilling effect on innovation. In fact, the decision is now being cited by broadcast networks in legal battles with other streaming services. Within hours of the decision, 21st Century Fox attorneys submitted the Aereo ruling as ammunition in its ongoing battle against the Dish Anywhere service.
Originally published August 26, 2014
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