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SCOTUS: Streaming TV Over Internet is Copyright Infringement


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: June 25, 2014 @ 12:08 pm
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Justice Stephen Breyer

Earlier today the United States Supreme Court issued its decision in American Broadcasting Companies, Inc. v. Aereo, Inc., a case that required the Court to determine whether Aereo infringed copyrights of the plaintiffs by selling its subscribers a service that allowed them to watch television programs over the Internet at about the same time as the programs broadcasted the programs over the air. In a 6 to 3 decision authored by Justice Stephen Breyer the Court found that Aereo’s actions did constitute copyright infringement. A dissent was written by Justice Scalia and joined by Justices Thomas and Alito.

Using an all too familiar “logical” construct, the Supreme Court determined that what Aereo did was not a public performance within the meaning of the Copyright Act, but was still infringement because it was a public performance. This construct, which often appears in patent cases, is logically absurd, but without anyone to review the Court’s decisions they seem completely comfortable rendering internally inconsistent and logically flawed decisions, particularly when dealing with intellectual property.

The Supreme Court likely struggles with intellectual property because the Court is simply not comfortable with technology. In the past I have made much of the fact that the Supreme Court does not use e-mail, I’ve also pointed to the fact that during the KSR oral arguments Justice Scalia called the entire area of patent law “gobbledegook.” But we don’t even need to go beyond the text of the written decision to understand the Court’s true naiveté. Indeed, at one point in his opinion Justice Breyer asked why the facts actually matter.

Breyer asked: “why should any of these technological differences matter?” Aside from the fact that intellectual property issues are by their very nature extraordinarily dependent upon technology, technological reality matters because under our system of law cases are supposed to be decided based on fact, not myth or superstition.

 

Aereo Technology

For a monthly fee, Aereo offers subscribers broadcast television programming over the Internet, virtually as the programming is being broadcast.  This is accomplished through the use of thousands of small antennas that are approximately the size of a dime. When a subscriber wants to watch a show that is currently being broadcast, he visits Aereo’s website and selects, from a list of the local programming, the show he/she wishes to see. Based on the subscriber selection Aereo dedicates to the use of that subscriber for the duration of the selected show, tuning the dedicated antenna to the over-the-air broadcast carrying the show. The antenna receives the broadcast and Aereo creates a subscriber-specific copy of the subscriber’s program of choice, placing it in a subscriber-specific folder on Aereo’s hard drive. After several seconds of programming have been saved in the folder Aereo then begins to transmit the program over the Internet to the subscriber.

Aereo argued that this was not copyright infringement because all it was doing was streaming the program to each subscriber from their own personal copy.

At trial the district court denied a preliminary injunction against Aereo. The United States Court of Appeals for the Second Circuit affirmed after determining that Aereo was not publicly performing the copyrighted work because it was not transmitting the program “to the public.”

 

Did Aereo “Perform”?

The first question answered by the Supreme Court was whether Aereo transmitted a performance within the meaning of the Copyright Act. The Supreme Court explained that the Copyright Act does not indicated whether an entity that merely supplies equipment that others uses “performs.” However, Justice Breyer wrote: “[W]hen read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo’s performs.”

To reach this conclusion the Court pointed out that in 1976 Congress enacted the “Transmit Clause” to the Copyright Act, which prohibits states that an entity performs publicly when it transmits a performance to the public. The Court’s interpreted this clause in this way: “The Clause thus makes clear that an entity that acts like a CATV system itself performs, even if when doing so, it simply enhances viewers’ ability to receive broadcast television signals.” After concluding that Aereo’s acts as much more than an equipment provider, Justice Breyer stated: “Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach.”

The dissent explained that in their view Aereo was not like a cable TV company, but rather like an establishment offering photocopiers to customers. This understanding related to the fact that Aereo’s system is not activated until a subscriber requests transmission of the requested program. Justice Breyer wrote that the dissent “makes too much out of too little.” He went further explaining:

[T]his difference means nothing to the subscriber. It means nothing to the broadcaster. We do not see how this single difference, invisible to subscriber and broadcaster alike, could transform a system that is for all practical purposes a traditional cable system into “a copy shop that provides its patrons with a library card.”

In other cases involving different kinds of service or technology providers, a user’s involvement in the operation of the provider’s equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act. But the many similarities between Aereo and cable companies, considered in light of Congress’ basic purposes in amending the Copyright Act, convince us that this difference is not critical here. We conclude that Aereo is not just an equipment supplier and that Aereo “perform[s].”

 

Was it “Public”?

The next, and final, question that the Supreme Court had to address was whether Aereo’s performance of the copyrighted works amounted to a public performance within the meaning of the Transmit Clause.

The Supreme Court explained that to transmit a performance “means to communicate contemporaneously  visible images and contemporaneously audible sounds of the work.” Despite the minor time delay the Supreme Court found that Aereo’s system transmits a performance whenever a subscriber watches a program.

But is the transmittal of the performance a public performance? The Supreme Court recognized that the fact that only a single subscriber received the transmission meant that Aereo was not transmitting a performance to the public within the meaning of the Copyright Act. Thus, you might expect that the ruling would be that there was no copyright infringement. But to jump to such a rational conclusion would be to fail to understand the Supreme Court, particularly this Supreme Court, which seems to like very much to say that things are not truly X, but are still X as far as they are concerned. In the patent space last term the Supreme Court did this in Myriad, where the Court factually determined that the gene patent claims at issue were not found in nature, but were still patent ineligible because they represented something that only occurred in nature. Two years ago the Supreme Court did the same thing in Mayo v. Prometheus, when they determined that the method claims contained real world steps that made the substance of the claim different than a naturally occurring process, but still ruled the claims were patent ineligible because they only covered a naturally occurring process. Therefore, the fact that the Supreme Court would rule that what Aereo does is not a pubic performance, but constitutes copyright infringement because it is a copyright infringement is a sadly predictable and intellectually dishonest duplicity that is often found in Supreme Court decisions.

Essentially, the Supreme Court ruled that the fact that Aereo does not engage in a public performance does not change the fact that what they do is similar to what cable systems do, which is prohibited. Breyer wrote:

Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter? They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers’ screens. They do not render Aereo’s commercial objective any different from that of cable companies. Nor do they significantly alter the viewing experience of Aereo’s subscribers. Why would a subscriber who wishes to watch a television show care much whether images and sounds are delivered to his screen via a large multisubscriber antenna or one small dedicated antenna, whether they arrive instantaneously or after a few seconds’ delay, or whether they are transmitted directly or after a personal copy is made? And why, if Aereo is right, could not modern CATV systems simply continue the same commercial and consumer-oriented activities, free of copyright restrictions, provided they substitute such new technologies for old? Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies.

Yes, what difference does factual reality really make? Apparently none.

 

The Dissent

In his dissent Justice Scalia wrote that the decision of the majority was incorrect because Aereo did not “perform” anything. While I personally think that is a stretch, he was certainly correct as he characterized the majority opinion’s meaning. He wrote:

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.

Justice Scalia would go on to write that he viewed Aereo as “akin to a copy shop that provides its patrons with a library card.” Scalia further distinguished Aereo from a video-on-demand service by saying that is the wrong comparison because “Aereo does not provide a prearranged assortment of movies and television shows.”  He further explained: “The key point is that subscribers call all the shots: Aereo’s automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it.”

The distinction Justice Scalia makes is simply a distinction without a difference. The reality is that when a subscriber asks for a program Aereo transmits the program to the subscriber. To pretend that the subscriber is calls all the shots is both factually inaccurate given that Aereo handles all the technical details, and it also sets up a rationale that would completely swallow the copyright infringement prohibition. Under this logic, if you can call it that, an infringer who transmits a copyright work would simply need to argue that they only did it because the infringer asked for it. Somehow that doesn’t seem to get real world infringers off the hook when they play a copyrighted work and sell tickets to the events live, so why should it be an argument that it at all appealing when it happens over the Internet?

 

Conclusion

Frankly, I think the majority of the Supreme Court reached the right conclusion, but it is absurd for the Court to continue to defy logic with its rulings. Saying that there was no pubic performance but what Aereo did still violated copyright law because it was a public performance is ridiculous. What Aereo did was copyright infringement precisely because it was a public performance. If this were a patent case there would be absolutely no doubt that what happened was public because a member of the public obtained access. Thus, if the Court wanted to find what Aereo did to be an infringement all they had to do was acknowledge the factual reality that Aereo transmitted a copyright work to a member of the public. If they didn’t want to expand the definition of what it means to publicly perform then they could have said that Aereo engages in copyright infringement if at any time they transmit the same program to more than a single person, finding it legally insignificant that Aereo created duplicate copies then individually transmitted to subscribers. But instead the Supreme Court, calling upon their infinite and unreviewable wisdom, concluded that Aereo did not publicly perform but was still engaging in copyright infringement because they were publicly performing. Mind boggling how those who are allegedly the best and brightest Ivy League minds could write such nonsense.

The truth is that by transmitting copyrighted works to a member of the public without permission of the copyright owner Aereo was infringing the copyrights of the petitioners — end of story. There was no need to ask why facts matter, or engage in breathtakingly dishonest reasoning.

The trend in intellectual property cases coming from the Supreme Court is truly disturbing. Instead, rather than limiting their ruling to the case before them and applying the law, the Supreme Court continues to act as a quasi-legislative body, which simply is not supposed to be their role under our system of government.

 

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Posted in: Copyright, Gene Quinn, Government, Internet, Internet Television, IP News, IPWatchdog.com Articles, Technology & Innovation, US Supreme Court

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

14 comments
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  1. One has to wonder, so this is what the abyss looks like?

    Sorry – too early for gallows humor?

  2. I’m not sure we are at the point of gallows humor, but if the Monty Python players were interested in making fun of the U.S. Supreme Court all the logical flaws they would need would come from SCOTUS intellectual property opinions.

  3. Aereo provided an antenna and a line from that antenna to the consumer. The question that should have been debated is does the physical location of that antenna matter. I understand that the networks make millions off of subscriber agreements with cable companies, but the delivery of that signal is very different from Aereo. Fact if I have a home and an antenna I can get these signals free of charge. Fact Aereo found a way to make an antenna array I could rent that antenna. Perhaps they should sell a physical antenna and we can have this argument the right way? The delivery of said signal is irrelevant it should be my choice of where I want the antenna located. It seems like such a logical point but no where do I see this discussed.
    If the Supreme Court is stating I must have an antenna on my property to get the signal at no charge I would understand the logic of their ruling. If they would have ruled on behalf of Aereo using the logic an antenna is an antenna I am certain congress would have scrambled to write a new law stating just that to protect their back pockets. Sadly we once again have no logic to law and are left to speculation on “what could have been.” Sorry Aereo for this sad state of law.

  4. ” … will sow confusion for years to come.”

    Alice!? Is that you!?

  5. Retry: no mod flag notice

    lexuswht,

    Notwithstanding the attempts by the Court to narrow the judgment, the logic – as you point out with “ Fact if I have a home and an antenna I can get these signals free of charge” is diabolically devastating.

    There is no logical difference between an individual owning an antenna in her home and an individual owning an antenna outside of her home. Since rental of the chattel of an antenna imbues all the rights of private ownership of that chattel, what the logic of this case provides (regardless of the attempt to restrain that logic) is that individuals are now liable for “performing” those signals currently freely available on the airwaves.

    In a very real sense, the public domain has been transformed with this decision. Sure the physical space is still public domain, but the content traveling through that domain is NOT – not to Aero, and critically, not to the individual.Since Aero can be found guilty of performance, then so too, an individual can be found guilty of performance. An individual with their (rented or owned) antenna (in or outside of the home) can be said to be doing the exact same thing – in, dare I use the word, gist – as to what Aero was doing. Eliminate the middleman and the actual action of intercepting from the (free) space the (now not-free) content, and “performing” that content – in the exact same way – is still being done. Since the law cannot be applied indiscriminately, those rabbit-ear owning individuals out there (including you my grandfather, sorry) are now scofflaws with liability for copyright infringement. (let’s not forget the statutory and criminal aspects involved)

    There simply exist no legal basis for distinguishing the situations. Quite in fact, Those renting furnished homes are precisely covered by the immediate ruling, as the facts are directly analogous.

  6. “Therefore, the fact that the Supreme Court would rule that what Aereo does is not a pubic performance…” (sic)

    I completely misunderstood the nature of Aereo’s business model!

  7. “The truth is that by transmitting copyrighted works to a member of the public without permission of the copyright owner Aereo was infringing the copyrights of the petitioners — end of story. There was no need to ask why facts matter, or engage in breathtakingly dishonest reasoning.”

    I agree. Dodgy reasoning just makes everything look like a conspiracy.

    “The trend in intellectual property cases coming from the Supreme Court is truly disturbing. Instead, rather than limiting their ruling to the case before them and applying the law, the Supreme Court continues to act as a quasi-legislative body, which simply is not supposed to be their role under our system of government.”

    This is correct, unfortunately.

  8. wow,

    The problem you have is that the “permission” angle is suspect – Aero was doing (at the request of the individual) exactly what the individual prior to this case had always done: pick the signal out of the airwaves.

    In essence, what this Court has done is create a new right that needs permission. And as noted above, the attempts to constrain this fail on their own weight. The previous understanding was that NO permission for picking the signal out of the airwaves was needed because the airwaves belonged to all, and the price of using the airwaves was to a de facto open permission. Any dust kicking on recovery of costs is also just that: the original deal was that for being allowed control and use of everyone’s airwaves, those pushing the signals could not charge the common man whose airwaves had been taken and given to the content pushers. That is the entire basis for commercials on television. That was the approved mechanism – and only approved mechanism prior to the cable concept coming into the picture.

    The Court here really flubbed – and flubbed badly yet another IP matter.

  9. i don’t see much technological difference between my dvr and aereo, except that my “request signals”, via my remote control, travel a few feet to the recording device and the playback signals travel about the same distance, versus a greater distance when using aereo.

  10. Gene-

    There is an enormous difference between your DVR and Aereo. With Aereo a middleman is stealing over the air content and then selling it to you. With your DVR your satellite or cable provider is paying for the content and delivering it to you. So the difference is whether the content creator gets paid, which is of course enormous.

    There is simply no way to be a content creator without getting paid.

    -Gene Quinn

  11. Gene @ 9.

    That’s exactly the point – there is no technical difference (and even less of one if we are to learn the lesson of Alice and carry over the application of “Gist” as was apparently done by Breyer et al as noted by the dissent.

    Likewise (unfortunately) Breyer misstates the effect of this decision on technologies “in the cloud,” thinking that this is some off-in-the-future concern.

    “In the cloud” is nothing more than a buzzphrase, a marketing device. Aero’s business model is “in the cloud” now. This decision very much affects every provider that operates “in the cloud.” The Justice errs badly to think that he can parse the effect when he makes such a fundamental mistake.

  12. Gene Quinn @ 10,

    You have made two (not so small) errors:

    1) no one is stealing anything. It is the same exact signal – with the same exact payment – that the same exact end user is controlling.

    2) The deal with the providers for using those public airwaves was expressly not to charge directly for the use of those public airwaves. You make a crucial mistake by overlooking the method of payment as nothing at all to do with the signal once that signal is performed by the only one true performer. The content creators have already been paid at that point in time (through the commercial advertising mechanism).

    So while it remains true that content providers/content makers need to be paid, you overlook a few critical pieces to this puzzle.

  13. Amendment to my point 1):

    The exact payment is the payment to the content provider. There is the introduction of a new separate payment – that of the end user to Aero. However, that payment is – and should be – considered extraneous to both the technical and the legal aspects of this case. It is a red herring – and one I believe has distracted the Justices to the detriment of the case.

    Compare:

    No Aero – Content Provider (paid already by commercial sponsors) performs and uses the public airwaves, having already agreed NOT to charge those receiving that signal through the public airwaves. End user uses that signal without paying Content Provider.

    With Aero – Content Provider (paid already by commercial sponsors) performs and uses the public airwaves, having already agreed NOT to charge those receiving that signal through the public airwaves. End user uses that signal without paying Content Provider. End user pays Aero to act as its agent to optimize End user’s ability to use that which has already been put into the public airwaves.

    From this viewpoint, how again is this decision justified?

  14. A follow up story: http://www.corpcounsel.com/home/id=1202661557102/Aereo-Rallies-Customers-Make-Your-Voices-Heard?back=NY&kw=Aereo%20Rallies%20Customers%3A%20%27Make%20Your%20Voices%20Heard%27&et=editorial&bu=Law%20Technology%20News&cn=20140703&src=EMC-Email&pt=Daily%20Alert

    Bottom line: if the Court’s want to legislate, fight fire with fire and involve the actual legislators.