The Supreme Court may have pulled the plug on Aereo, a streaming video system that used cutting-edge technology to capture broadcast television signals, digitize them and send them to subscribers over the internet.
The 6-3 Supreme Court decision released Wednesday may relegate Aereo to the graveyard of other tech companies whose business models and services were based on practices that infringed on copyrights. Does anybody remember Napster and Grokster? (Supreme Court decisions pretty much wiped these two music sharing companies off the map).
The Aereo case is the latest test of the law catching up with technology. The litigation arose after a coalition of television networks sought a preliminary injunction to block Aereo from transmitting the broadcast signals over its digital system. The United States District Court for the Southern District of New York denied the request. In 2013, the Court of Appeals for the Second Circuit held that Aereo's system did not violate the Copyright Act's transmission rules because it sent the signals to private users. The Second Circuit mostly relied on a previous precedent set in Cartoon Networks LLP. v. CSC Holdings, Inc., which afforded protections to DVR technology.
Justice Stephen Breyer, writing for the majority, found that Aereo's capture of copyrighted television broadcasts and subsequent internet streaming was really no different than what cable television does, and that falls under the protections or restrictions of the Copyright Act.
Breyer's rendition of the facts and explanation of Aereo's technology and how it relates to the Copyright Act provides a clear picture for this highly-complicated and technical topic. The decision is also guarded, with the majority explicitly stating that the precedent should be narrowly applied to the Aereo technology and not future technologies, mainly the developing advances in cloud-based computer storage.
The case drew widespread media attention because of its potential to either rein in new technology as a means of transmitting content or relaxing protections afforded to copyrighted content.
As technology develops, the court has to wrestle with new questions and applications. These become particularly difficult questions because content dissemination can often become an issue regarding the free flow of information and First Amendment values. Though the Aereo case does not venture into the First Amendment area, it is by its very nature a "media law" case—actually a modern media law case.
New technology requires new application of the law. Over the decades, the Supreme Court has been called to clarify how intellectual property law should be applied to new forms of media whether it was with player pianos, photocopiers, video recorders or peer-to-peer music sharing websites.
Though VCRs are practically a thing of the past, they have largely been replaced by new technologies, including DVRs and cloud storage. In Sony v. Universal City Studios, the the Supreme Court famously declared that recording television shows on a VCR (actually Betamax video tape recorders) for private viewing later at home, was a legitimate fair use.
Aereo heavily relied on this decision in both its briefs and at oral arguments, repeatedly comparing its technology and operation to the "time shifting" video recording technology the court deemed a fair use under the Copyright Act.
Aereo's innovative technology employs tiny antennas which capture broadcast television airwaves which are then digitized and distributed to its subscribers who pay a fee to Aereo. The subscribers can then watch the broadcasts on their computers over the internet. This, the television networks argued, violated their copyrights because Aereo did not obtain permission, secure licenses or pay royalties.
The court's opinion does an excellent job explaining this process, the technology and the conflict while applying the law. The opinion also explains how Aereo's system violated the public performance and transmission definitions under the Copyright Act.
Under the Copyright Act, Justice Breyer writes it "is unmistakable" that Aereo engages in public performance under the Copyright Act. Further, Breyer noted that Aereo has an "overwhelming likeness" to cable companies.
By equating Aereo's retransmission to those of cable television operators, the court makes an important determination, which follows the Copyright Act. Two Supreme Court cable television/copyright decisions Fortnightly Corp. v United Artists Television and Teleprompter Corp. v. CBS prompted Congress to re-write the Copyright Act to include cable providers as entities that must acquire a license to retransmit broadcasts, which could be easily accomplished through compulsory licenses.
The comparison to cable television relates to the licensing scheme. Much of the content disseminated by cable companies is the result of highly-negotiated licensing agreements. Read in light of the 1976 amendments to the Copyright Act, roping cable television systems into the law's definitions for public performance and transmission, the court easily applied copyright protection to the works Aereo streamed.
Thus, a transmission of a broadcast is a transmission regardless of whether it is through a broadcast signal and antenna, a coaxial cable or new technological advancements which take the signal from the airwaves, digitizes it and sends it to a subscriber via the internet, as Aereo did.
At oral arguments in April, and through its briefs, Aereo argued that it simply provided a service and the hardware for subscribers—the equipment. A number of justices posed skeptical questions.
"The history makes clear that Aereo is not simply an equipment provider. Rather, Aereo, and not just its subscribers 'perform[s]' or ('transmit[s]'). Aereo's activities are substantially similar to those of the CATV companies that Congress amended to the Act to reach," the court wrote.
The concern that a ruling against Aereo would stifle future technologies or innovations was somewhat muted by the decision. The court explained the narrow application of the decision and how it will not affect future technologies or cases.
Immediately after the decision, Aereo issued a statement calling the court's decision "a massive setback for the American consumer" that "sends a chilling message to the technology industry." Aereo had said that an adverse decision would put it out of business.
The company's statement concluded: "We are disappointed in the outcome, but our work is not done. We will continue to fight for our consumers and fight to create innovative technologies that have a meaningful and positive impact on our world."
Every technological innovation that ends up in court requires a new decision, and the court also concluded that: "We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us," Breyer wrote.
The next decision may be up in the clouds.
Roy S. Gutterman is an associate professor and director of the Tully Center for Free Speech at the S.I. Newhouse School of Public Communications at Syracuse University.
Suggested Citation: Roy S. Gutterman, Aereo and 21st Century Copyright Law, JURIST - Forum, June 28, 2014, http://jurist.org/forum/2014/04/roy-gutterman-aereo-copyright.php
This article was prepared for publication by Brent Nesbitt, assistant editor for JURIST's academic commentary service. Please direct any questions or comments to him at firstname.lastname@example.org