The Curious Cases of Aereo, BarryDriller and FilmOn X…

Posted By Larry Spiwak On October 3, 2013 @ 3:12 PM In Cable,Copyright,Intellectual Property,MVPDs | Comments Disabled

With proliferating advances in new technology, enforcing copyright in the digital age is becoming increasingly difficult.  Take for example the string of cases over the last twelve months which have ruled on the legality of new third-party subscription services (described in more detail below) designed to allow customers to view over-the-air broadcast television via the internet and mobile devices.  At issue was a simple legal question: do these services facilitate a “public performance” of protected works under Section 101 of the Copyright Act (a.k.a. the “Transmit Clause”), which provides, inter alia, that a work is performed publicly whenever such work is “transmit[ed] or otherwise communicate[ed] … to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.”  The Second Circuit ruled that the answer is no, finding that these services essentially act as a high-tech DVR; however, two district courts (one in California and one in the District of Columbia) held that the answer is yes, and granted preliminary injunctions against further use of the technology. 

Putting aside for the moment the thorny issue of how these cases impact the raging fight over whether to reform the dysfunctional retransmission consent regime, the purpose of this blog is to ask which court reached the right decision as a matter of copyright law?  (Indeed, just to remind folks, the retransmission consent regime deals with the broadcast signal, not the copyrighted programming sent over the signal.)  While the ultimate resolution of this issue will probably rest with the nine Justices of the Supreme Court, it appears (at least to me) that there are a growing number of courts which are not going to be inclined to condone these new services.

Let’s start with a review of the technology at issue.  According to one court’s description [1], the technology behind these subscription services involves the construction of an array of “mini-antennas”, each no larger than the size of a dime and spaced inches apart.  The antennas are networked to a tuner router and server which, in turn, link to a video encoder.  The encoder converts the signals from the antennas into a video format viewable by computers and mobile devices.  The video encoder is connected to a “distribution endpoint,” which is a “server or group of servers” that delivers the video and audio to users.  Significantly, no single antenna is used by more than one user at a time.  When a particular user selects a channel to watch through a website or a mobile application, the user’s request is sent to a web server which, in turn, sends a command to the tuner router and server.  The tuner router and server identify an available antenna and encoder slot, and then the tuner directs the assigned antenna to tune to the requested channel.  Once the antenna begins receiving the signal, data for the requested channel flows from the antenna to the antenna router and then to the video encoder, where it is stored on a computer hard drive in a “unique directory” that is created for the specific user.  The data then goes through the distribution endpoint, over the Internet to a website or a mobile application, for the user’s consumption.  Video data remains on the server in the user’s unique directory while the user is actually watching television. When the user finishes viewing the channel by pressing stop or pause, closing the user application, or switching channels, a “stop” request is passed from the user to the antenna router, which immediately stops retrieving data from the antenna and frees the antenna for use by another user.  The data in the user’s unique directory is then deleted.

The first major attempt to address the legality of this technology came in the Second Circuit’s ruling in WNET v. Aereo [2], 712 F.3d 676 (2nd Cir.), rehearing en banc denied, 722 F.3d 500 (2013), where several programmers sought a preliminary injunction to block further use of the technology.  In order to determine whether the technology violated the “Transmit Clause”, the court ruled that it was necessary to focus the inquiry on “who precisely is capable of receiving a particular transmission of a performance.”  After review, the Second Circuit held that because no other user can ever receive a transmission from another person’s “unique directory”, there was no “transmission” to the public.  Stated another way, the court found that potential audience for each transmission was only the single user (i.e., a “private” performance) to whom each antenna was assigned.  As such, the court found that the technology did not violate the “Transmit Clause” and denied the injunction.

While I am generally not one to highlight dissenting opinions (primarily because it is the argument that lost), the dissent in Aereo is worth mentioning due to the similarity between it and the decisions of other courts.  Describing the technology platform as a “sham”, the dissent observed that the

system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.  After capturing the broadcast signal, [the defendant] makes a copy of the selected program for each viewer, whether the user chooses to “Watch” now or “Record” for later.  Under [the defendant’s] theory, by using these individual antennas and copies, it mayretransmit, for example, the Super Bowl “live” to 50,000 subscribers and yet, because each subscriber has an individual antenna and a “unique recorded cop[y]” of the broadcast, these are “private” performances.  Of course, the argument makes no sense.  These are very much public performances. (Emphasis in original.)

This same argument is found in the majority opinion of two later district court cases that found that the technology did violate the Transmit Clause.  I describe each briefly below.

In the first case, Fox Television Stations v. BarryDriller Content Systems, 915 F. Supp. 1138 (C.D. Cal. 2012), a district court rejected the Second Circuit’s focus on the transmission of the work and instead held that, at least under Ninth Circuit precedent, it is more appropriate to focus on the performance of the copyrighted work.  As the court wryly observed, “[v]ery few people gather around their oscilloscopes to admire the sinusoidal waves of a television broadcast transmission.  People are interested in watching the performance of the work.  And it is the public performance of the copyrighted work with which the Copyright Act, by its express language, is concerned.” (Emphasis in original.)  The court then went on to focus on the fact that there is a significant legal distinction between what individuals can lawfully do for themselves and what a commercial provider doing the same thing for a number of people can lawfully do.  Indeed, the court noted that “this case involves a commercial service transmitting copyrighted content to thousands, and potentially millions of people.”  As a result, the district court found that the technology violated the Transmit Clause and, as such, granted the preliminary injunction (at least as so far as the jurisdiction of the Ninth Circuit).

Finally, we have the just-decided case of Fox Television Stations v. FilmOn X [1], __ F. Supp. __ (D.D.C. Sept. 5. 2013).  Like BarryDriller, the district court found that making available copyrighted works via a subscription web-based service constituted a “public performance” under the Transmit Clause.  Indeed, the court outright rejected the defendant’s argument that the performance was “private” due to the one-to-one relationship between a dedicated mini-antenna and the viewer, finding that this was a “charitable description” of the business arrangement.  As the court observed,

while each user may have an assigned antenna and hard-drive directory temporarily, the mini-antennas are networked together so that a single tuner server and router, video encoder, and distribution endpoint can communicate with them all.  The television signal is captured by [the defendant] and passes through [the defendant’s] single electronic transmission process of aggregating servers and electronic equipment. This system, through which any member of the public who clicks on the link for the video feed, is hardly akin to an individual user stringing up a television antenna on the roof.  Moreover, every broadcast of a television program (whether cable, satellite, over-the-air, over the internet, or otherwise) could be described as “generated from the same copy”—the original source.

The court also held that the aggregation of several new kinds of technology does not avoid the Copyright Act because Congress, in its view, intended the terms “device or process” in the Transmit Clause to include “all kinds of equipment for reproducing or amplifying sounds or visual images, any sort of transmitting apparatus, any type of electronic retrieval system, and any other techniques and systems not yet in use or even invented.” (Emphasis in original and citations omitted.)  So, while the court deliberately refused to reach the legal question of whether the defendant should be formally categorized as a “cable company”, the court held that it “suffices to say that nothing about the 1976 [Copyright] Act or its legislative history suggests that Congress intended a commercial entity that rebroadcasts copyrighted material for consumption by the public … to avoid liability for infringement of the copyright holders’ exclusive right to public performance.”  As such, the district court granted a nationwide injunction against further use of the technology (with the exception of the Second Circuit, where Aereo still holds).

So where does this leave us?

Courts have a long history of permitting innovative consumer electronic equipment (ranging from the original case of the Sony BetaMax case in the 1980s to the more recent case of DISH’s “Hopper” service) to withstand scrutiny under Copyright law.  However, the Aereo-type service, at least to two district courts, is clearly a bridge too far.  To them, the Aereo-type technology was patently developed to produce a product designed to look and quack like a souped-up betamax but act like a (de facto) cable provider.  While you can’t help but grant kudos to some clever lawyering, it appears the plan was perhaps a little too clever. 

Again, I predict that this issue will ultimately be decided by the Supreme Court.  Should the Second Circuit’s logic prevail, I suspect the precedent would seriously erode the effectiveness of copyright protection in the digital age.  Given the flaws pointed out by the dissent in Aereo that were echoed in the two district court cases described herein, however, somehow I don’t think it ultimately will.

Update:

Five days after this blog was posted, the United States District Court for the District of Massachusetts denied a request for a preliminary injunction against Aereo on the grounds that its technology did not facilitate a public performance under the Transmit Clause.  See Hearst Stations v. Aereo, Civil Action No. 13-11649-NMG (D. Mass. Oct. 8, 2013).  As to be expected, the plaintiffs argued that the District Courts in BarryDriller and FilmOn X interpreted the Transmit Clause correctly, while Aereo argued that the Second Circuit got it right.  In a rather terse opinion, the District Court simply held that “while the Transmit Clause is not a model of clarity”, Aereo’s argument that it is only transmitting a private rather than a public performance “is a better reading of the statute….” 

To be continued at the D.C., Ninth and First Circuits, and eventually the Supreme Court….

 


Article printed from @lawandeconomics: https://www.phoenix-center.org/blog

URL to article: https://www.phoenix-center.org/blog/archives/1495

URLs in this post:

[1] According to one court’s description: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2013cv0758-33

[2] WNET v. Aereo: http://www.copyrightcodex.com/wnet-v-aereo-inc-712-f-3d-676-2nd-cir-2013-streaming-tv-broadcasts-online/2013/06/06

[3] : https://www.phoenix-center.org/blog/archives/1495?share=twitter

[4] : https://www.phoenix-center.org/blog/archives/1495?share=facebook

[5] : https://www.phoenix-center.org/blog/archives/1495?share=reddit

[6] More: #

[7] : https://www.phoenix-center.org/blog/archives/1495?share=linkedin

[8] : https://www.phoenix-center.org/blog/archives/1495?share=tumblr

[9] : https://www.phoenix-center.org/blog/archives/1495?share=pinterest

[10] : https://www.phoenix-center.org/blog/archives/1495?share=pocket

Copyright © 2020 @lawandeconomics. All rights reserved.