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American Broadcasting Cos., Inc. v. Aereo, Inc.

District court denies motion of plaintiffs, producers, marketers, and distributors of broadcast television, to enjoin Aereo from continuing that potion of its services that allows subscribers to watch broadcast television content contemporaneously with broadcast, finding Aereo’s service did not constitute public performance of copyrighted content under Second Circuit’s Cablevision decision.

Plaintiffs American Broadcasting Companies, Inc. and other corporate producers, marketers, and distributors of broadcast television, brought two separate lawsuits against Aereo Inc., alleging that its service unlawfully captured broadcast television signals in the New York City area, including at least some corresponding to television programs in which plaintiffs hold the copyrights, and provided them over the internet to Aereo subscribers, directly and contributorily infringing on plaintiffs’ rights under the Copyright Act. Plaintiffs moved for preliminary injunction asserting that Aereo was directly liable for copyright infringement of plaintiffs’ public performance rights in their copyrighted works because of the aspects of Aereo's service that allow subscribers to view plaintiffs' copyrighted television programs contemporaneously with the over-the-air broadcast of these programs and seeking to bar Aereo from continuing to engage in those services. The district court denied plaintiffs' motion, holding that it was bound by the Second Circuit’s 2008 Cartoon Network LP, LLP v. CSC Holdings (Cablevision) to conclude that plaintiffs would be unlikely to succeed on the merits of its public performance copyright claims (but noting that without the Cablevision decision, plaintiffs would have likely prevailed on their motion for a preliminary injunction).

At the outset, the court engaged in a detailed description of Aereo’s services, from both the subscribers and Aereo’s perspectives. Subscribers to the Aereo service log into their Aereo accounts from their computers or internet-connected mobile devices and either watch television programs "live" (more or less contemporaneously, but with the ability to pause, rewind and review) using the "Watch" function or choose to record current or future programs for later viewing, using the "Record" function. In this way, at least from the perspective of the user, the Aereo service functions much like a digital video recorder (DVR) service, particularly a remotely located DVR, although Aereo users access their content over the internet rather than through a cable connection.

In opposition to plaintiffs’ motion for preliminary injunction, Aereo argued that plaintiffs were not likely to succeed on the merits in light of Cablevision, in which the Second Circuit construed the "transmit clause" in the Copyright Act to conclude that the 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 it merely transmitted to a single end user a unique playback copy of content recorded by that end user. The Cablevision court explained that because each RS-DVR playback transmission is made to an individual subscriber using a unique copy produced by that subscriber, these transmissions are not performances "to the public." The use of a unique copy may limit the potential audience of a transmission, making the transmission a private not a public performance. Aereo argued that its service, similar to a DVR service, effectively rents remote equipment to users, allowing them to create and save unique, user-requested copies of content on the company’s hard drives and allowing users to watch or save that content. Because its activities are materially identical to those of the cable company in Cablevision, the Second Circuit's analysis and holding in that case are directly applicable, precluding any public-performance liability. Aereo also argued that because each of its antennas function independently, even if the court were to find that the unique, user-created copies were not legally significant, it should still not issue an injunction because each user is receiving a distinct transmission generated by their own individually rented antenna.

Plaintiffs countered that Cablevision did not control and that the court should view Aereo's system as a technological device or process through which Aereo essentially passed along copyrighted content to the public. Specifically, plaintiffs argued that Cablevision was factually distinguishable because Aereo's subscribers watch programs as they are still being broadcast and are not using the copies Aereo creates for "time-shifting." As a result, these copies do not break the chain of over-the-air transmission. They don't act as copies from which distinct transmissions to end users are made, but merely facilitate the transmission of the original broadcast signal in the same way that a community antenna simply passes along a broadcast signal to the public.

The court disagreed, stating that it was constrained to reject the approach plaintiffs urged, finding that the copies Aereo's system creates were not materially distinguishable from those in Cablevision. Based on the factors the Cablevision court identified as significant in determining that the cable company’s copies "thwarted the plaintiffs' public performance claim," the court concluded that Aereo's system was materially identical to that in Cablevision, suggesting that the copies Aereo creates are as significant as those created in Cablevision. The court found that Aereo' s system creates a unique copy of each television program for each subscriber who requests to watch that specific program, which is saved to a unique directory on Aereo' s hard disks assigned specifically to that user. Each transmission that Aereo's system makes to an individual subscriber is from that unique copy and is made only to the subscriber who requested it. Other subscribers cannot access that copy and Aereo makes no transmissions from that copy except to the subscriber who requested it. The court also noted that, like the Cablevision system, Aereo’s system merely allowed subscribers to enjoy a service that could also be accomplished by the subscribers using equipment available to them in their home, in this case any standard DVR and a Slingbox, and to the extent that Cablevision was premised on an inability to distinguish the company’s system from otherwise seemingly lawful activities, Aereo's system deserves that same consideration.

Plaintiffs argued that Aereo's service was unlike the DVR system in the Cablevision case because the Aereo service allowed users to watch programs close in time to the original broadcast, without any "time-shifting," whereas Cablevision only addressed copies of programs viewed after the original broadcast. The court disagreed, however, noting that the Second Circuit's analysis in Cablevision focused on the significance of the cable company's copies and did not address time-shifting as a factor in its holding. As in Cablevision, Aereo does not allow users to access broadcast television directly, but rather allows a user to record content remotely and to view that recording either later or while the program was being recorded. The court determined that Cablevision's interpretation of "public performance" did not turn on when the user accessed recorded content, but on whether the content originated from a unique copy created by a user. "Public performance" does not depend on how long the user has to wait to access the recorded content or whether the original broadcast has ended before the user accesses the recorded content.

The court likewise rejected plaintiff’s argument that Aereo's service was akin to internet streaming, which courts have previously found results in public performance, because the recording and immediate retransmission of content was similar to "buffering" streaming content. The court distinguished the cases upon which plaintiffs relied, finding that those cases had not considered the impact of the creation of unique copies on whether internet streaming transmissions involve a public performance and therefore did not address the central question in the Aereo case. The court also distinguished "buffer copies," temporary repositories of data for no purpose other than to pass along an identifiable master copy to the user, from the copies Aereo’s service allows a user to create, finding that even the copies created in "Watch" mode are not "buffer" copies, since they are stored for the duration of the user's viewing experience.

Acknowledging that it need go no further in its analysis, once it concluded that plaintiffs were unable to demonstrate a likelihood of success on the merits of copyright claim, the court considered the additional factors bearing on the preliminary injunction, in anticipation of the fact that plaintiffs would seek interlocutory review of the court’s decision. While plaintiffs were able to demonstrate they would suffer irreparable harm in a number of ways, the court concluded that the balance of hardships did not tip decidedly in plaintiffs’ favor. Given its determination that the plaintiffs could not establish a likelihood of success, the court denied plaintiffs’ motion for preliminary injunction.