Supreme Court Creates Copyright Uncertainty in Aereo Decision

In today’s 6-3 ABC v. Aereo decision, the Supreme Court made a mess of copyright law and sowed uncertainty for technology companies by trying to plug a loophole. As Justice Scalia put it in his dissent, the Court put in place “an improvised standard (‘looks-like-cable-TV’) that will sow confusion for years to come.”

The majority opinion invites years of litigation to clarify how far this supposedly limited decision extends. In reaching out to impose liability on Aereo, the majority goes beyond the statutory language and supposedly applies congressional intent. To do so, the majority ignores technology differences between cable systems and Aereo, stating these differences do not matter. However, such technology differences do matter to companies that are trying to create new technologies and to predict how copyright law will apply.

Full disclosure: I’m not a neutral bystander here. As a litigator, I fought in copyright vs. technology battles myself. As the general counsel of a technology startup, I tried to predict how copyright law would be applied to new technologies. Most recently, at Cogent Legal, we helped Aereo’s legal team in opposing a preliminary injunction (see this post for more about that).

In this post, I’ve annotated the Aereo opinion with my notes in a table of contents form. (I’ve put in bold/large heading some of the more significant or interesting sections of the opinion.) Click on the links below to go to the associated section of the opinion. I created the annotated PDF using some of the tools that we use at Cogent Legal to make e-briefs. I hope you find the annotated opinion useful. If you want to read more about e-briefs, check out previous e-brief posts on our blog at this link. Please email me if we might help you with e-briefs for your case.

• BREYER, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, GINSBURG, SOTOMAYOR, and KAGAN, JJ., joined.

  • Aereo infringes performance right by selling its subscribers a technologically complex service that allows them to watch television programs over the Internet at about the same time as the programs are broadcast over the air

  • Explanation of system: (1) select programming; (2) tune individual antenna; (3) make personal copy; (4) stream personal copy
  • First question: Does Aereo perform?
    • Considered alone, the language of the Act does not clearly indicate when an entity “perform[s]” (or “transmit[s]”) and when it merely supplies equipment that allows others to do so. But when read in light of its purpose, the Act is unmistakable

    • 1976 Copyright Act purpose was to overturn Fortnightly Supreme Court decision that community antenna systems did not perform copyrighted works

      • Fortnightly: CATV providers were more like viewers
      • Teleprompter: carrying broadcasts from 100s of miles away was more like a viewer function
      • In 1976 Congress amended the Copyright Act in large part to reject the Court’s holdings in Fortnightly and Teleprompter. Under revised Act, both a broadcaster and a viewer perform the copyrighted work.
        • Transmit clause enacted - entity performs publicly when it transmits to the public
        • Entity that acts like a CATV system performs
        • public performance includes rendition or showing, but also any further act by which that rendition or showing is transmitted or communicated to the public
        • 1976 Act - complex compulsory licensing for cable rebroadcast

      • Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach.

        • Aereo does not continuously transmit like cable systems in Fortnightly
        • Dissent: Aereo is like a copy shop that gives its patrons a library card
          • in whatever form, makes too much out of too little. Given Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference

          • “Sole technological difference” of allowing users to choose to tune, record and view programming does not matter in light of similarity to cable systems

          • 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.”
        • User involvement in operation may matter in other cases, but here, too similar to purposes for which Congress amended Act

  • Next question: whether Aereo performs works “publicly”

    • Assume that Aereo makes a new performance by streaming (assuming download is not a performance) (accepting for argument sake US v. Amer. Soc. of Composers from 2nd Circuit)

    • The fact that each transmission is to only one subscriber does not mean that Aereo does not transmit a performance “to the public” in light of Congress’ regulatory objectives

    • In terms of the Act’s purposes, these differences do not distinguish Aereo’s system from cable systems, which do perform “publicly.” Viewed in terms of Congress’ regulatory objectives, why should any of these technological differences matter?
    • Parade of horribles: cable companies could avoid licensing fees by substituting new technologies if Aereo were right
    • The Clause suggests that an entity may transmit a performance through multiple, discrete transmissions (like sending multiple copies of an email)

    • In light of the purpose and text of the Clause, when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.

    • We do not see how the fact that Aereo transmits via personal copies makes a difference
    • Moreover, the subscribers to whom Aereo transmits television programs constitute “the public.”
    • Subscribers are the public
      • “The public” need not be situated together, spatially or temporally

  • Limited holding today will not discourage or control the emergence or use of different kinds of technologies

    • History of cable TV does not determine whether different providers in different contexts also perform
    • Distinguishing mailing of DVDs as not involving equipment for contemporaneously perceptible images
    • Distinguish users of cloud services who have already lawfully acquired copyrighted works
    • Cloud services not transmitting to the public if not transmitting to substantial number of people outside of a family
    • Courts often apply general language in light of statutory basic purposes
    • Fair use can help prevent inequitable applications
    • Not deciding technologies not before the court
    • Commercial entities can see action from Congress
    • Similarities to cable systems put Aereo within scope of Copyright Act despite technological differences in how it provides services

• Scalia, Thomas and Alito dissent

  • Majority puts in place an improvised standard (“looks-like-cable-TV”)
  • Majority ignores the distinction between direct and secondary liability
    • Direct liability claim against Aereo requires a volitional act by Aereo

    • Copy shops are not liable when customers choose to copy copyrighted works

    • Video-on-demand like Netflix differs because it selects and curates content
    • Dissent: but-for conduct that allows illegal conduct is not enough
    • Dissent: guilt by resemblance to cable systems
  • Dissent criticizes snippets of legislative history used as intent of Congress
  • Dissent - technological differences between Aereo and cable TV matter - cable systems curate
  • Dissent: majority decision is unclear - creates a 2-tier system, one of which applies to “cable companies and their equivalents”
  • Dissent: no reason to consider “public” if Court has determined it looks like a cable system

  • “Nothing but th’ol’ totality-of-the-circumstances test (which is not a test at all but merely assertion of an intent to perform test-free, ad hoc, case-by-case evaluation)”.

  • Dissent: years or decades of uncertainty in applying this decision case by case

  • It is not the role of this Court to identify and plug loop holes. It is the role of good lawyers to identify and exploit loopholes
  • Court should not be plugging loopholes
  • In Sony, court came one vote away from outlawing VCRs

  • Court cannot judge competing, self-interested claims of economic impact of decisions, and cannot foresee path of future technological development.