US Supreme Court rules in Aereo TV Copyright Case

US broadcasters have won an important battle in their efforts to prevent an unlicensed service from providing online real-time streaming of their broadcasts.

The Facts

On 25 June 2014, the US Supreme Court delivered a pivotal judgment in American Broadcasting Companies v Aereo, tackling the question as to whether or not Aereo, a technology company based in New York, was in breach of the US Copyright Act 1976. The Copyright Act gives a copyright owner the exclusive right to “perform the copyrighted work publicly”. Although this is a US decision limited in its impact to the USA, it will nevertheless be of great interest to providers of online streaming and VOD services in the UK and elsewhere.

The core of the case involved Aereo using innovative technology to receive linear terrestrial broadcast signals via tiny antennas which are stored in a remote location, and then assigning those antennas to Aereo’s subscribers for them to stream almost-live free-to-air television programmes directly to their computers, tablets and other mobile devices. Aereo did not obtain authorisation from the broadcasters and did not pay any retransmission fees. The service worked as follows:

  • When a subscriber wishes to watch a show that is currently being broadcast, they visit Aereo’s website and duly select it.
  • Aereo’s server selects an antenna, which it dedicates to the use of that subscriber (and that subscriber alone) for the duration of the selected programme.
  • The server then tunes the antenna to the over-the-air broadcast carrying the show. The antenna begins to receive the broadcast, and a transcoder translates the signals received into packets of data that can be transmitted over the Internet.
  • Rather than directly send the data to the subscriber, the server saves the data in a subscriber-specific folder on a hard drive, i.e. a “personal” copy of the subscriber’s programme of choice.
  • Once several seconds of programming have been saved, Aereo’s server begins to stream the saved copy of the show to the subscriber over the internet.
  • When two subscribers wish to watch the same programme, Aereo’s system activates two separate antennas and saves two separate copies of the programme in two separate folders. It then streams the show to the subscribers through two separate transmissions, each from the subscriber’s personal copy.

The broadcasters sought an injunction on the grounds that the Aereo service violated their “public performance” rights under the US Copyright Act. As each individual subscriber was assigned an individual antenna, Aereo argued that this constituted a one-to-one transmission of the television programmes, and argued therefore that it did not violate the broadcasters’ public performance rights. The lower US courts agreed with Aereo’s arguments, and found that its transmissions to subscribers were private, not public. However, the Supreme Court reversed these decisions and ruled that the service constituted a public performance and therefore infringed the broadcasters’ copyright.

The Issues

The Supreme Court had to answer two questions:

  1. In operating in the manner described above, did Aereo “perform”?
  2. If so, did Aereo perform “publicly”?

The Decision

Was there a “performance”?

The Court sought to establish whether Aereo transmits a performance when a subscriber watches a show using Aereo’s service, or whether it is only the subscriber who transmits. It observed that the language of the Copyright Act did not clearly indicate when an entity performs or transmits and when it merely supplies equipment that allows others to do so.

In Aereo’s view, it did not perform; it simply supplied equipment that emulated the operation of a home antenna and digital video recorder and therefore it could only be the subscribers who “performed” when they used Aereo’s equipment to stream television programmes to themselves. The key point was that the subscribers were in control: Aereo’s automated system did not transmit any programme until a subscriber selected the programme and directed Aereo to transmit it.

The Court however took the view that when read in the light of Congress’ intent in enacting the Act, “the Act is unmistakable: An entity that engages in activities like Aereo’s performs”. After all, Congress had amended the Copyright Act in 1976 to ensure that cable retransmissions were covered by the Act, and the technical process of getting content to someone could be interpreted as a performance. The Court held that Aereo’s activities were substantially similar to those of the cable companies that Congress had intended the Act to reach.

Was the performance “public”?

Under the Transmit Clause of the Copyright Act, an entity performs a work publicly when it “transmit[s] … a performance … of the work … to the public”. If there was a performance by Aereo, was this “public” within the meaning of the clause? In Aereo’s view, the fact that each transmission was limited to one subscriber meant that it did not transmit a performance “to the public”. However, the Court asserted that this did not distinguish Aereo’s service from cable services, which do perform “publicly”. The Court held that the behind-the-scenes technological differences did not distinguish Aereo’s commercial purpose from that of cable companies, nor did they alter the subscriber’s viewing experience, and that “Congress would as much have intended to protect a copyright holder from the unlicensed activities of Aereo as from those of cable companies”.

Will the ruling affect other technologies?

The Court acknowledged concerns that its ruling might impose copyright liability on other technologies that Congress would not have wanted to reach but said that it could not answer more precisely how the Transmit Clause or other provisions of the Copyright Act would apply to technologies that had not been presented to it.  However it did observe that Congress would not have intended to indiscriminately discourage or control other technologies.

Comment

The decision is one of the more extreme examples of a purposive approach to statutory interpretation. The Court seemed very keen to rule on that basis without regard to the technical niceties of the Aereo system, matters upon which Aereo placed great store. As Justice Scalia who led the minority opinion observed: “the proper course is not to bend and twist the Act’s terms in an effort to produce a just outcome, but to apply the law as it stands and leave to Congress the task of deciding whether the Copyright Act needs an upgrade”.

Similar to the decision in Aereo in the US, here in the UK last year we saw the TVCatchup case, where broadcasters challenged TVCatchup’s retransmission of ITV, Channel 4 and Channel 5 programmes to a UK audience over the internet, on the basis that TVCatchup was breaching their copyright by “communicating to the public” their content. The High Court referred the case to the ECJ, which found that the retransmission did amount to an unauthorised “communication to the public”.

But what of other systems of storage, retrieval and distribution?  Most notably emerging cloud based remote storage digital video recorders?

On the one hand, perhaps cloud storage providers would not be affected by these rulings because there is a fundamental difference between a company, such as Dropbox, that stores and provides an individual with access to copies of copyrighted content that the individual has legally acquired; and a company that provides the copyrighted content itself to a public audience.  Explicit succour was provided by the US Court in stating that “the public” does not include those who act as owners or possessors of the product.

On the other hand, although the rulings do not explicitly undermine cloud storage and distribution models, they leave open the question of whether, for example, a licence will be required to stream copyrighted content from a cloud storage facility on the basis that it “looks like” the very thing which the US Court considered the Act to outlaw.

In an interesting postscript to the Aereo decision, the company is now applying for a statutory licence to permit retransmission of the broadcasts, on terms similar to those which the US cable companies enjoy.  The system of statutory licensing was introduced in the Copyright Act as a quid pro quo to its curtailment of unauthorised retransmission by the cable companies.  Well, if you can’t beat ‘em, then join ‘em…

This article was written by Paul Herbert, Partner, Commercial and Media, with assistance from Paralegal Sona Voreux.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 020 7404 0606 and ask for your usual Goodman Derrick contact.