Mar 28, 2014

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Why Aereo Will Win, and Win Easily (at the Supreme Court)

Why Aereo Will Win, and Win Easily (at the Supreme Court)

Those who have read my prior commentaries on ABC v. Aereo know that while I have felt strongly that Aereo should prevail on the merits, in litigation with broadcasters, I have been quite circumspect regarding the issue of whether they actually would prevail.  To my view, there have simply been too many occasions where the court has issued rulings that turned on either a factual error, or a contrivance, and we had already seen such at the lower court level related to this case, where in particular, Judge Denny Chin had gone far afield in both Aereo, and the Cablevision case that underlies it.

I was also waiting to see if a compelling argument in favor of the plaintiffs would emerge, that might change my view of the merits.

With the filing of Aereo’s response brief in ABC v. Aereo, I believe we now have enough to be confident in the outcome.  We have now seen plaintiffs and their amici weigh in with their best arguments, and we have seen Cablevision and Aereo weigh in with defenses of the Second Circuit holdings in Cablevision and Aereo, respectively.

It is not a close call.  The contrast between the quality of arguments on the two sides is stark.  It is like night and day.  This is not a case of nuanced and compelling (or even plausible) arguments on both sides, where, depending on a judgment call, the issue could go either way.

The disparity is so great, and the arguments in favor of Aereo so strong, that it’s now hard to believe that either a factual misunderstanding, or politics, could avert the Supreme Court from reaching the correct outcome.

Let’s take a brief look at how the arguments compare.  Recall that this case turns on the question of whether the transmissions/performances in Aereo’s system are public performances or private performances.

The arguments of plaintiffs and their supporters amount to one basic thing: a hand-waving argument that Aereo’s service is equivalent to cable service, and should be deemed merely a technological evolution of cable that falls under the copyright act with the same legal status as cable systems, as just another “device or process” to effect public retransmission of broadcast signals.  To do this, they tell us, we need not, and in fact should not, delve into the details of how Aereo actually works, because the intent of Congress with its “any device or process” language was to be technologically neutral.

But as Aereo has pointed out previously, this view presumes that all technological advances are advances in public reception and retransmission, rather than advances in private reception and retransmission.  It also presumes that simply because Congress intended to write the law in a technologically neutral fashion, that they automatically should be deemed to have succeeded in doing such perfectly, and that the resulting law can be applied to a new technological paradigm that didn’t emerge until some four decades after the basic statutory concept and language was constructed.

In my prior commentaries, I have often allowed that it was likely true that, if Congress had foreseen a system like Aereo’s, they would have written the Copyright Act to bring it within the purview of copyright law much like cable services.  And I still think that is likely correct.  However, Aereo makes an interesting and relevant point that, in crafting the 1976 Copyright Act that brought cable services within the purview of copyright law, Congress specifically and very intentionally granted cable systems a statutory license, with no royalty whatsoever, to do what Aereo does: effect local retransmission of broadcast stations, within their home market.

The broadcasters’ argument in this case simply doesn’t hold water.  In order to sustain their position through a detailed analysis, they and their supporters end up resorting to truly bizarre notions, and often end up contradicting themselves in their attempt to reconcile their view that Aereo’s actions should be found infringing against the notion that a whole slew of other actions (sometimes even long-settled as non-infringing) aren’t likewise infringing.

For example, by Judge Denny Chin’s theory of Cablevision, but for a factual error in his analysis, the home DVR you get from your cable, satellite or telco operator would actually infringe copyright.  And when you record a program on that DVR, legally, it would actually be your cable operator who was making that recording.  Likewise, by the Solicitor General’s theory of the case, but for a factual contrivance, the local copy shop would infringe copyright, merely by making self-serve copiers available to the public.

From a conceptual standpoint, the broadcasters and their supporters are forced to concoct bizarre notions, without any statutory basis, that separate and independent acts should be aggregated in order to determine their public vs. private status, or that the question of who is actually transmitting a performance turns on whether the copy used to generate that performance was legally acquired (but not even on who actually acquired it!).

Cablevision and Aereo, on the other hand, provide cogent arguments defending the Second Circuit holdings of non-infringement in their respective cases.  In the process, they convincingly discredit each of the criticisms of those holdings put forward by the broadcasters and their supporters.

Together, Aereo’s and Cablevision’s arguments in defense of the Second Circuit holdings make a completely compelling case that:

  1. Consistent with the language of the statute, on its face, whether a transmission/performance is public or private turns on who is capable of receiving it—not on who actually receives, or on the relationship between the sender and receiver (or any other notion that’s been introduced without any statutory basis).
  2. The transmissions emanating from Aereo’s systems are private, because the performances they embody are performances of individual recordings, and only the user who made the recording is capable of receiving it.
  3. The recordings are not merely gratuitous, but rather functionally essential, even during “live” viewing, because they enable the individual users to pause, rewind, and otherwise control the performance.
  4. It is the end users, themselves, and not Aereo, who transmit/perform.
  5. Though not actually at issue in this case, that it is the users, not Aereo, who make the recordings, and those recordings are legally acquired and non-infringing, under long-standing principles of fair use.

It’s beyond the scope we can reasonably address here to explain how Aereo and Cablevision dismantle each of the criticisms of the Second Circuit holdings that have been put forward, but interested readers can find them in our reviews of the Cablevision amicus brief, and the Aereo response brief.

Given the stark contrast in quality between the arguments, it’s hard to imagine that Aereo will not prevail easily at the Supreme Court, later this year.  The most likely outcome is a unanimous 8-0 ruling (with Justice Alito recused) affirming the Second Circuit holding.

But while Aereo’s prospects at the Supreme Court look very strong, indeed, a win in the battle of litigation will not necessarily translate to a win in the war of creating a successful business.

As we have noted previously, even with a win at the Supreme Court, there remains a high likelihood that broadcasters will turn their efforts to amending the law, and there’s a good chance that Congress will be inclined to bring Aereo within the purview of the Copyright Act.  After all, while today Aereo enables solely local retransmission of broadcast stations, within their home market, opponents were absolutely correct in observing that if Aereo is legal, there is nothing to prevent them (or somebody else) from enabling users to access distant broadcast stations, and undermine content distribution models that rely on regionalization (such as the division between regional sports rights and national/package rights).

Furthermore, as we have also noted previously, Aereo’s technological model creates some considerable practical challenges in delivering reliable service, and it’s not clear whether they can actually be profitable at their current price point.

So even with a win in court, it remains to be seen whether Aereo can win as a business.

For post-oral argument updates, see Awaiting Aereo and Aereo Oral Argument Annotated: The Good, The Bad, and The Ugly.  For complete coverage of Aereo, see our Understanding Aereo page.

 

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