Overturning the Second Circuit, the U.S. Supreme Court ruled 6-3 that Internet-streaming service Aereo engaged in public performances by retransmitting the plaintiffs’ programming to Aereo subscribers. The Court concluded that Aereo’s near-contemporaneous transmission of copyrighted programs constituted public performances within the definition of the Transmit Clause of the Copyright Act.
Aereo’s service, which operated in a few major markets, including New York City, allowed its subscribers to watch television programs over the Internet in one of two basic ways. Subscribers logged in to their Aereo accounts from their computers or Internet-connected mobile devices and could either watch television programs “live” (more or less contemporaneously with the broadcast, but with the ability to pause, rewind, and review) using Aereo’s “Watch” function or record current or future programs for later viewing using the “Record” function. Only the “live” feature of the service was at issue in this case, and the precise issue on appeal was whether Aereo was publicly performing copyrighted works such that it could be directly liable to the plaintiffs.
The Aereo technology that enabled subscribers to watch their selected shows was at the heart of the case. When a subscriber selects a currently airing show from a menu on Aereo’s website, Aereo’s system tunes a small antenna to the broadcast carrying the show. That antenna, which is housed with thousands of others in a centralized warehouse, is dedicated to the use of that single subscriber only. A transcoder then translates the signals received by the antenna into data that can be transmitted over the Internet, and a server saves the data to a folder dedicated to that one subscriber on Aereo’s hard drive. The system begins streaming the show to the subscriber’s screen once several seconds of programming have been saved, and it continues streaming – a few seconds behind the broadcast – until the subscriber has received the entire show.
The plaintiffs – television producers, marketers, distributors, and broadcasters that own the copyrights in many of the programs that Aereo streams – brought suit, alleging direct and secondary copyright infringement. Plaintiffs argued that Aereo was directly infringing their exclusive right to publicly perform their copyrighted works and sought a preliminary injunction.
The district court denied the preliminary injunction motion, on the basis of the Second Circuit’s 2008 decision in Cartoon Network LP, LLP v. CSC Holdings (Cablevision), which prevented a finding that plaintiff would succeed on the merits. (Read our summary of the district court’s decision here.) In Cablevision, the Second Circuit construed the Transmit Clause in the Copyright Act and concluded that a cable company’s DVR service did not constitute a “public performance” of the copyrighted content separate from the cable company’s transmission of content to users, because the DVR service transmitted to a single end user a unique playback copy of content recorded by that end user. The district court concluded that Aereo’s system was materially identical to that in Cablevision, finding that Aereo was making only private transmissions of works, because each subscriber received a unique copy of each work. The Second Circuit affirmed over a vigorous dissent by Judge Chin. The Second Circuit denied hearing en banc, with Judge Chin (along with Judge Wesley) again dissenting. (Read our summaries of the Second Circuit’s decisions here and here.)
The Supreme Court, in an opinion authored by Justice Breyer, reversed the Second Circuit’s ruling and remanded the case for further proceedings. It found that Aereo was not simply a provider of equipment that allows users to view broadcast television shows but rather a service engaged in the transmission of copyrighted works – performances – to the public.
The Transmit Clause of the Copyright Act, which Congress added in 1976, defines the exclusive right of a copyright holder to perform the work publicly as including the right to “transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.”
Justice Breyer, writing for the majority, rejected Aereo’s arguments that the transmission was neither a performance nor a performance to the public. At the outset, the Court concluded that Aereo functioned in almost exactly the same way as the providers of community antenna television (the precursor to modern cable TV), using technology to enable additional viewers to view copyrighted shows virtually contemporaneously with their broadcast to the public. These transmissions were, according to the Court, exactly what the 1976 amendments to the Copyright Act – which also included a complex and compulsory licensing scheme for cable TV – were designed to address.
The Court also found that, even accepting Aereo’s argument that its service did not transmit the broadcasters’ transmission of the copyrighted work (the original or prior performance of the work) but rather a new performance created by its technology, the transmission was still a performance of the copyrighted work under the Act’s definition – to communicate contemporaneously visible images and contemporaneously audible sounds of the audiovisual work. The Court concluded: “When an Aereo subscriber selects a program to watch, Aereo streams the program over the Internet to that subscriber. Aereo thereby ‘communicate[s]’ to the subscriber, by means of a ‘device or process,’ the work’s images and sounds. . . . And those images and sounds are contemporaneously visible and audible on the subscriber’s computer (or other Internet-connected device). So under our assumed definition, Aereo transmits a performance whenever its subscribers watch a program.”
Turning to the “public” aspect of the analysis, the Court likewise rejected Aereo’s argument that because each transmission is of a subscriber-specific copy that streams only to that one subscriber, it is not a performance to the public. The Court held that, for the purposes of the Copyright Act, these technological differences did not distinguish Aereo’s system from cable systems, which do perform “publicly.” In light of the Copyright Act’s regulatory aims, Aereo’s service performed essentially the same function as cable TV providers, which are subject to a complex licensing scheme.
Justice Scalia, writing for the three justices in dissent (himself and Justices Thomas and Alito), argued that the broadcasters’ claims for direct copyright infringement must fail because Aereo does not “perform” the copyrighted works. According to the dissent, Aereo merely provides the equipment and access to the broadcasts (some of which are copyright protected and others of which are in the public domain), while the subscriber “calls the shots” and engages in the requisite volitional conduct, choosing which content is transmitted. This means that the subscriber, not Aereo, “performed” the works.
The dissent criticized the majority’s reasoning as “looks-like-cable-TV” and said the Court’s ruling did not provide any guidance regarding the legality of other technologies. Justice Scalia noted that while he shared the majority’s apparent view that Aereo was exploiting a loophole in the Copyright Act, it is up to Congress to plug any loopholes. Further, under the dissent’s approach, Aereo could still be secondarily liable for its subscribers’ public-performance infringements.