Understanding Aereo, Part 2 (Back to Aereo)

Posted By on Jan 22, 2014 | 0 comments

In part 1 of this series, we examined the litigation history of the Cablevision RS-DVR case and the key issues decided in that case.  The system used by Aereo was clearly designed specifically to comport with the holding in Cablevision, with much of the system being modeled directly after Cablevision’s RS-DVR.  But the Aereo system differs from Cablevision’s RS-DVR in some potentially important respects.

In part 2, we proceed to review the litigation history and issues presented in Aereo, itself.  As we did for Cablevision in part 1, we start with a review of the Aereo system.

Legal Issues
District Court Holding
Second Circuit Holding
En Banc Review Denied
Supreme Court Petition

Aereo allows users to access free, over-the-air television broadcasts, using equipment at Aereo facilities to receive and retransmit the broadcasts over the internet.  Via Aereo’s website, users select a program from a program guide, and then choose either to “Watch” or “Record.”  Either choice causes the selected program to be recorded.  Choosing “Watch” also automatically starts to stream the recording, in near-real-time, with several seconds delay from the live broadcast, and with normal DVR controls (rewind, pause, etc.) available.  If the user subsequently chooses to record a watched program while viewing, then the entire recording, from the time the user initially chose to watch, is preserved.  Otherwise, the system automatically deletes the recording once the end of the program is reached.

The Aereo system uses many miniaturized, individual antennas, mounted on printed circuit boards.  (See photo above.)  When a user submits a request to watch or record a program, one of the antennas is allocated to the user for the duration of the viewing/recording session.  (Aereo reportedly does use longer-term static allocation of antennas to specific users, in some instances, but predominantly allocates them dynamically, as needed.)  An individual tuner/demodulator associated with the individual antenna is directed to tune and demodulate the appropriate broadcast signal carrying the program.  The demodulated program is transcoded, for more efficient storage and transmission over the Internet, using an allocated transcoder, and is stored to disk storage that is allocated to the individual user, much as in Cablevision’s RS-DVR.  Finally, the program is streamed from the user’s individual copy on disk, to the user’s viewing device (such as a PC, phone, tablet, AppleTV or Roku box), whether in their home, or outside of their home, anywhere within the DMA (Designated Market Area) of the broadcast stations.

In this fashion, Aereo maintains both individualized copies, and an individualized transmission chain from initial reception at an individual antenna, through to the user’s viewing device.

(The limitation of reception to within the specific DMA would not appear to address any copyright concerns.  Most likely, Aereo chose to impose this limitation in order to avoid any distraction from the core copyright issues, in the initial rounds of litigation.)

Legal Issues

There was one factual issue in dispute at the outset of the Aereo case: whether Aereo’s miniaturized antennas actually functioned independently.

Separate from that, the programmers argued that the facts of the Aereo system were distinguishable from Cablevision, and that Aereo’s system should be viewed as a technological gimmick, in aggregate constituting a device or process by which Aereo offers retransmissions to the public, like any other cable system.  For live viewing, in particular, the programmers asserted that the recording of programs did not break the chain of transmission, and that the recording copies should be viewed as merely facilitating retransmission of a single master copy, rather than as substantive copies from which distinct transmissions are made.

The term device or process refers to the transmit clause of the 1976 Copyright Act:

To perform or display a work ‘‘publicly’’ means—

  1. to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or
  2. to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or 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. [emphasis added]

Aereo argued that its system was materially identical to that of Cablevision, and that it simply rented to users remote equipment comparable to equipment they could install at their homes (an antenna, DVR, and Slingbox-equivalent).  Aereo further argued that even if the recording copies were deemed insignificant to the overall transmission, its system, nonetheless, effected only private transmissions, because each user received a distinct transmission generated from their own individually-rented antenna.

District Court Holding

Not by accident, Aereo located itself and launched its service initially within the Second Circuit, ensuring that the initial litigation would take place in a court bound by the Cablevision precedent.

The case came before Judge Alison Nathan in the Southern District of New York.  In July of 2012, Nathan found for Aereo, denying the programmers’ request for a preliminary injunction.

Nathan found that the programmers failed to credibly rebut Aereo’s significant evidence that their antennas functioned independently, and held that Aereo’s antennas do function independently.  (The programmers have not contested this issue any further.)

Nathan further found that the programmers’ efforts to distinguish the recording copies of Aereo’s system from that of Cablevision rang hollow, and that Aereo’s copies were not materially different from those in Cablevision.  She additionally dismissed as irrelevant several other attempts by the programmers’ to distinguish the Aereo system from that of Cablevision.

Nathan’s holding did not resolve the issue of whether the individual antennas, alone, were sufficient to render the transmissions private.  However, it did suggest that the use of individual antennas reinforced the notion that there was no master copy in Aereo’s system.

Second Circuit Holding

The programmers’ appealed to the Second Circuit Court of Appeals, where the case was heard by a three judge panel that, as it happened, included Judge Denny Chin (the district court judge who heard the Cablevision case, and who had been elevated to the Circuit Court in the intervening time).

The panel upheld the lower court’s denial of a preliminary injunction, with Chin dissenting.

Regarding the programmers’ assertion that Aereo’s system differed materially from Cablevision’s by virtue of the fact that Cablevision possessed a license to retransmit the content live, the Court observed that:

…the question is whether Aereo’s transmissions are public performances of the Plaintiffs’ copyrighted works. If so, Aereo needs a license to make such public performances; if they are not public performances, it needs no such license. Thus whether Aereo has a license is not relevant to whether its transmissions are public and therefore must be licensed.

In response to the programmers’ assertion that the legislative history of the 1976 Copyright Act showed that Aereo’s transmissions should be deemed public performances, the Court observed:

Congress recognized when it drafted the 1976 Act that its broad definition of “performance” could create unintended results. The House Report states that under this definition, “any individual is performing whenever he or she plays a phonorecord embodying the performance or communicates the performance by turning on a receiving set.” [citation] But because Congress did not wish to require everyone to obtain a license from copyright holders before they could “perform” the copyrighted works played by their television, Congress was careful to note that a performance “would not be actionable as an infringement unless it were done ‘publicly,’ [citation] “Private” performances are exempted from copyright liability. [citation] This limitation also applies to performances created by a “transmission,” since, as the Cablevision court noted, if Congress intended all transmissions to be public performances, the Transmit Clause would not have contained the phrase “to the public.”

In the technological environment of 1976, distinguishing between public and private transmissions was simpler than today. New devices such as RS-DVRs and Slingboxes complicate our analysis, as the transmissions generated by these devices can be analogized to the paradigmatic example of a “private” transmission: that from a personal roof-top antenna to a television set in a living room. As much as Aereo’s service may resemble a cable system, it also generates transmissions that closely resemble the private transmissions from these devices. Thus unanticipated technological developments have created tension between Congress’s view that retransmissions of network programs by cable television systems should be deemed public performances and its intent that some transmissions be classified as private. Although Aereo may in some respects resemble a cable television system, we cannot disregard the contrary concerns expressed by Congress in drafting the 1976 Copyright Act. And we certainly cannot disregard the express language Congress selected in doing so. That language and its legislative history, as interpreted by this Court in Cablevision, compels the conclusion that Aereo’s transmissions are not public performances.

En Banc Review Denied

The programmers’ appealed to the Second Circuit for a rehearing en banc (by all judges in the court).  The Court denied the request, with Judge Denny Chin dissenting (joined by one other judge, out of eleven others who participated).

Supreme Court Petition

The programmers petitioned the Supreme Court for certiorari.  Aereo also argued for certiorari to be granted, in order to provide final resolution.  On January 10th, 2014, the Supreme Court granted certiorari.  Oral arguments are planned for April 2014.

Alternative Views

In part 3 of this series, we examine significant alternative views, conflicting with the Aereo holdings.  Or go to our Understand Aereo page, for access to all of our Aereo-related articles.