WNET v. Aereo, Inc. Am. Broad. Cos. v. Aereo, Inc.

Citation: 722 F.3d 500Docket: 12-2786-cv 12-2807-cv

Court: Court of Appeals for the Second Circuit; July 16, 2013; Federal Appellate Court

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In the case of WNET v. Aereo, Inc., the United States Court of Appeals for the Second Circuit addressed the issue of whether Aereo, Inc.'s retransmission of over-the-air broadcasts infringes upon the copyright owners' exclusive rights. Aereo captures television programs and streams them to subscribers for a monthly fee, claiming that its method—using numerous individual antennas for each subscriber—constitutes 'private' performances rather than 'public' performances under 17 U.S.C. § 106(4). The court denied the petitions for rehearing en banc after a poll showed no majority in favor. Circuit Judge Denny Chin, joined by Judge Richard C. Wesley, dissented from the denial, emphasizing the core question of whether Aereo's actions infringe copyright by performing works publicly without authorization or payment.

The Court's decision in Cartoon Network LP v. CSC Holdings established that Aereo does not infringe copyright, a position upheld in WNET, Thirteen v. Aereo. A petition for rehearing en banc was denied, prompting a dissent. The dissent emphasizes the need for en banc review due to the cases' exceptional importance and their potential impact on the entertainment industry. The dissent argues that Aereo's retransmissions constitute public performances under the Copyright Act, and contends that the reliance on Cablevision is flawed, suggesting that Cablevision was incorrectly decided and misapplied in this context. The dissent outlines significant industry implications, citing potential reductions in retransmission fees and threats from broadcasters to shift to paid cable if Aereo's service continues. Aereo plans to expand its services to multiple cities, further intensifying the need for clarity in the legal framework surrounding such retransmissions.

Fox Broadcasting threatened to exit network television in response to the Aereo lawsuit, illustrating a broader concern among broadcasters about competition from streaming services. Aereo's expansion began in New York City and extended to metropolitan areas and other markets, including Boston, Atlanta, and Chicago, enabling service in various states. As competition from cable and the internet increased, television broadcasters have increasingly relied on retransmission fees and subscriber fees for revenue, rather than solely on advertising. A recent court decision allowed Aereo to retransmit broadcasts without fees, impacting the financial stability of major media companies, which saw their stock prices drop due to revenue concerns. The court previously ruled in WPIX, Inc. v. ivi, Inc. that unauthorized streaming of copyrighted content could harm the industry, diminishing the bargaining power of content creators and affecting the quality and quantity of programming produced. The potential for continued unauthorized retransmissions threatens to destabilize the entire television industry. The excerpt emphasizes the need for uniform decisions within the court system.

The majority's decision contradicts established precedent, as previous rulings recognize that activities similar to Aereo's constitute copyright infringement. In the ivi case, it was acknowledged that retransmitting copyrighted television programming via live streaming is a public performance violating the Copyright Act. Similarly, in ASCAP, streaming songs was also identified as a public performance. In Infinity Broadcast Corp. v. Kirkwood, it was established that providing access to receivers for public radio broadcasts amounted to a public performance. Aereo's arguments regarding individual antennas and unique copies are deemed irrelevant since they do not alter the public nature of its retransmissions. The dissent emphasizes that Aereo’s actions are illegal under the Copyright Act, which grants broadcasters the exclusive right to publicly perform their works. The statute defines public performance as occurring when works are performed in public or transmitted to the public. Aereo’s system, designed to receive and transmit copyrighted content to its subscribers—who are considered members of the public—fits within the statutory definition. Thus, Aereo's activities are classified as public performances under the Copyright Act.

Aereo is found to be committing copyright infringement as per the statutory definition. Legislative history supports the view that Aereo's actions constitute public performances. The Supreme Court rulings in Fortnightly Corp. v. United Artists Television, Inc. and Teleprompter Corp. v. Columbia Broadcasting System, Inc. indicated that community antenna television (CATV) systems retransmitting broadcasts without a license were not infringing. However, Congress rejected this interpretation in the 1976 Copyright Act, revising the definitions of "perform" and "publicly" to make such retransmissions illegal. 

The Act's language broadens the definition of "transmit" to encompass all forms of communication, ensuring that future technologies would also be included under copyright protections. Congress emphasized that any method of conveying a performance to the public requires a license. Consequently, Aereo's unlicensed retransmissions, regardless of their technical operation, amount to copyright infringement as intended by Congress.

The decision in Cablevision, which involved a licensed cable operator using a Remote Storage Digital Video Recorder (RS-DVR), is viewed as incorrect by some broadcasters. The case revolved around whether Cablevision required additional licenses for transmitting recorded content. The panel majority's reliance on Cablevision is criticized, suggesting that a reevaluation of its conclusions could be warranted.

The Court rejected the argument that RS-DVR playback transmissions qualify as public performances, stating that each transmission is directed to a single subscriber using a unique copy, thus not constituting a performance "to the public" as defined under copyright law. Since the 2008 Cablevision decision, this interpretation has faced substantial academic criticism and was challenged by the U.S. government in its amicus brief, suggesting that it could erroneously endorse a questionable service model. Moreover, the Central District of California recently declined to adopt Cablevision's reasoning in a case involving a system similar to Aereo, arguing that focusing on the uniqueness of individual copies is not mandated by the statute.

Critics argue that the Court should reevaluate Cablevision's interpretation of the "transmit" clause, which conflates "transmission" with "performance." The Cablevision ruling posited that identifying the audience for a transmission determines its status as a private performance; however, this misinterprets the legal distinction between transmission as a medium and performance as the content delivered. The statute indicates that "transmission" and "performance" are distinct terms, and unless otherwise indicated, they should be understood to have different meanings. The definition of "publicly" transmitting a work does not equate to the definitions of "perform" or "display," which remain undefined in the statute.

The definition of 'to transmit' distinguishes between 'performance or display' and the method of transmission, indicating that transmission cannot be equated with performance. The statute allows for performances to be received by the public in different locations and times, challenging the idea of a single transmission reaching all at once. Professor Jane C. Ginsburg emphasizes that equating transmission with performance disregards the statute's provision for reception at different times. The key factor is whether the public can access the copyrighted work, not the nature of the transmission itself.

The court's conflation of 'performance' and 'transmission' leads to complications regarding the terms 'in separate places' and 'at different times.' Initially, the court ruled that individualized transmissions should not be aggregated to determine public performance status but acknowledged an exception for multiple private transmissions from the same work copy. This exception allows for a public performance if the same copy is played by different individuals at different times. The court's rationale relies on a Third Circuit case and copyright treatises, though it admits these sources do not directly explain the impact of using a distinct copy on the transmission inquiry. The court's reasoning that a unique copy could limit audience potential may have been valid in earlier times but is outdated due to technological advancements. Importantly, the definition of 'public performance' does not reference 'copy' or 'copies,' nor does legislative history address this aspect.

Congress intended the definitions within the Copyright Act, specifically regarding "copies" and "transmissions," to clarify that the existence of unique copies is not a determining factor for liability. The Act defines "copies" as "material objects in which a work is fixed," and specifies that works being transmitted can be considered "fixed" if they are simultaneously recorded. This indicates that Congress envisioned scenarios where transmissions occur without the necessity of copies.

The distinction between "transmit" and "transmitting" is significant; the act of transmitting does not rely on individual transmissions being capable of reaching the public. The Copyright Act emphasizes the transmitter's actions rather than the specifics of each transmission. Therefore, it suffices that the transmitter is conveying the same performance or display to recipients who are members of the public.

Additionally, the Court's focus on the transmit clause in isolation was erroneous, as the transmit and performance clauses are meant to function together. The performance clause necessitates simultaneous public viewing, while the transmit clause allows for broader transmission without that limitation. The performance clause further clarifies that the public includes a substantial number of individuals beyond a transmitter's personal acquaintances.

Finally, the Court's interpretation of "copies" overlooked Congress's intention that transmitting "to the public, by means of any device or process," constitutes a public performance. This broad definition encompasses not only initial performances in public venues but also those communicated through various devices or processes, ensuring copyright control over performances in semi-public settings such as clubs and schools.

The term 'a family' encompasses individuals living alone, indicating that gatherings limited to an individual's social acquaintances are typically private. The term "any" is broadly interpreted, as affirmed by the Supreme Court in United States v. Gonzales, 520 U.S. 1 (1997). Congress's definitions of "device" and "process" are also expansive, meant to include technologies not envisioned in 1976. Legislative history clarifies that Congress intended to safeguard against unforeseen copying methods, defining "copies" as "material objects" fixed by any method known or later developed. It is illogical to conclude that copyright protection should depend on the transmission method of television signals. The legislative intent was to encompass all forms of communications, including those not yet developed, to prevent loopholes that could allow transmitters to evade liability by copying works before transmission. The focus on technical details of transmission by Cablevision misaligns with the statute's intent. Even if Cablevision's decision stands, it should be restricted to its specific facts, as the rationale may not apply to other systems like Aereo's, which avoids licensing fees through its unique copying method. The court's failure to reconsider Cablevision's interpretation of the Copyright Act represents a missed opportunity for clarity.

The holding in Cablevision does not allow content delivery networks to evade copyright liability by creating unique copies for each subscriber or enabling subscribers to make their own copies. The United States, in opposing certiorari in Cablevision, asserted that the appellate court's analysis should be limited to the specific circumstances of that case, and Cablevision should not apply to Aereo's unlicensed service. Cablevision itself argued against extending its ruling to Aereo. Although there are technological similarities between Cablevision's RS-DVR and Aereo's system, significant differences exist. Notably, Cablevision paid statutory licensing and retransmission consent fees for the content it retransmitted, while Aereo does not. Cablevision's RS-DVR allowed subscribers to store authorized content they could already view in real-time, making copies only as part of its licensed service. In contrast, Aereo's unlicensed system captures and retransmits broadcast television over the Internet without any authorization, using systems that are designed to enable retransmission without a license. Extending Cablevision's ruling to Aereo undermines the Copyright Act by allowing unlicensed retransmission of public television via individual antennas and unique copies, despite these components being unnecessary for the retransmission. Such legal interpretations based on outdated technology may prompt systems engineers to create convoluted solutions to comply with arbitrary legal standards. Congress intentionally avoided defining specific technologies in the Copyright Act to prevent obsolescence, yet the evolving hardware and technology render previous systems increasingly outdated.

Courts should prioritize a functional analysis over a technical one when assessing whether a device or process transmits a copyrighted performance to the public. In the case of Aereo, the conclusion is that it does transmit such performances. The dissent argues that the majority's ruling incorrectly prioritizes form over substance, asserting that Aereo’s subscription service, which retransmits broadcast television, should be considered a public performance despite Aereo's claim of using private transmissions through its system of antennas. The dissent characterizes Aereo's system as a deceptive mechanism designed to circumvent copyright laws, specifically criticizing the majority's acceptance of Aereo's arguments as inconsistent with the Copyright Act and congressional intent. The dissent emphasizes that all methods of transmission, regardless of their technicalities, fall under the scope of public performance as outlined in the law. It contends that the majority's interpretation disrupts established legal standards and industry expectations, urging that this decision should be overturned to clarify that loopholes allowing evasion of compliance with copyright laws should not be tolerated.