Aereo and the Solicitor General’s Strange Conception of Rentals

Posted By on Mar 5, 2014 | 0 comments

Yesterday, we posted an analysis explaining how the Solicitor General’s argument, in its amicus brief for the Aereo case, contradicts itself.

We thought it worthwhile to post a follow-up explaining the technical points in a bit more detail, as well as explaining why we believe that the Solicitor General is obviously incorrect in their conception of what constitutes a legitimate equipment rental.

The Solicitor General’s brief cited two reasons why Aereo did not constitute a legitimate equipment rental.  First, that though the critical resources (in this case, antennas) are allocated individually, some shared systems are also involved:

…while each antenna functions independently in receiving broadcast signals, respondent’s centralized server and other shared equipment are integral to the process by which content is transmitted to the subscriber

And secondly, that even the individual assignment of critical resources (again, in this case antennas) last only so long as the subscriber is actually using the resource:

Even if respondent’s antennas were viewed in isolation from the other centralized equipment used in the transmitting process, any analogy to purveyors of home antennas would be inapt. It is true that, at any moment in time, each subscriber who is logged into the system is assigned a discrete antenna. That unique assignment occurs, however, only after the subscriber has logged in and has requested a transmission of a particular copyrighted work. … And when that subscriber is no longer connected to respondent’s system (or discontinues her subscription), respondent’s computerized server may reassign the same antenna to a different subscriber—that is, a different paying stranger. … The monthly fee that respondent’s subscribers pay thus purchases a right of access to a shared pool of antennas and the content they make available, not (as in respondent’s hilltop hypothetical …) to a discrete antenna dedicated solely to a single subscriber’s use.

The Solicitor General’s Self-Contradiction Explained in Detail

Let’s start with the latter.  First, we feel obliged to point out that the SG is factually incorrect in claiming that antenna assignment in Aereo’s system occurs only while the subscriber is logged.  In fact, antenna assignment may occur while the user is logged in (and watching near-live TV or a recording in progress) and it may also occur while the user is logged out (for example, in order to record a scheduled program).

We’ll give the SG the benefit of the doubt, however, and presume that they meant to point out that Aereo assigns an antenna to a subscriber only when the subscriber actually needs an antenna.

The alternative would be to assign each subscriber an antenna when they first sign up for service, and leave that antenna reserved for that subscriber’s exclusive use, until they terminate their subscription.

In technical parlance, the latter is what would be called static allocation, while the former is called dynamic allocation.

The point we made yesterday about the SG’s argument contradicting itself was that all of the cloud services which the SG effectively argued do constitute legitimate equipment rentals also use dynamic allocation.   For these services, the critical resource is disk storage, where they store subscriber’s individual files or copies of content.

Static allocation in this context would be permanently allocating a partition on the disk—a fixed portion of the disk—to each subscriber, for as long as they remain subscribed.  So if, for example, you purchase a 100 GB storage plan from Amazon, Amazon would have to allocate 100 GB of disk space to you immediately, regardless of how much you content you’ve actually uploaded to your Amazon cloud drive.

Dynamic allocation in this context is allocating disk space to each subscriber just-in-time, as the subscriber needs space to store content being added to the account.  And likewise, reclaiming that disk space once the content is deleted, so that it can be used for other subscribers.  Rather than pre-allocating a fixed amount of space, the space allocated to each user varies over time, being subject to a maximum limit (known in technical parlance as a disk quota) corresponding to the storage plan the subscriber has.  In this model, if you purchased a 100 GB plan from Amazon, 100 GB of storage is allocated only if you actually upload 100 GB of content.  If instead you upload just 30 GB of content, then Amazon allocates just 30 GB of disk space.

It should come as no surprise that the various cloud storage systems use dynamic allocation, not static allocation.  That includes Amazon, DropBox, Gmail—it’s safe to assume that virtually all cloud storage services use dynamic allocation.

As for the other issue—the use of a “centralized server and other shared equipment”—it really doesn’t require a technical explanation to understand that no cloud service dedicates an entire server and networking system to each subscriber.  In every instance, while the critical resource, disk space, is individually allocated, most other resources are shared among many users.

This is why we noted so emphatically that the Solicitor General’s cited reasons for disqualifying Aereo as an equipment rental apply equally to the other cloud technologies that the Solicitor General argues do constitute legitimate equipment rentals.

What Qualifies as a Rental?

The above should make clear that no actual distinction has been drawn between Aereo and other cloud technologies.  If any qualify as an equipment rental, then all should qualify as an equipment rental.  Conversely, if any are disqualified from being an equipment rental, then all should be disqualified from such.

So which is it?

We didn’t discuss it in the prior post, because recognizing the internal inconsistency and self-contradiction of the Solicitor General’s argument was, by far, the most important observation to make.  But to our view, the points cited by the Solicitor General, to argue that Aereo cannot qualify as an equipment rental, are entirely without merit.

Again, let’s first consider dynamic allocation vs. static allocation.

We’ve been unable to identify any other context where this distinction is considered to be significant.  On the other hand, we can easily identify many where it is treated as irrelevant.

In other contexts, the dynamic vs. static allocation distinction corresponds to duration of the usage period.  Dynamic allocation is temporary or short duration, static allocation is a semi-permanent or long duration.  And yet, consistently, duration of usage period is considered to be irrelevant.

Whether you lease a car for 3 years from the local car dealer, rent one for 2 days from Hertz, or rent one for 30 minutes from Zipcar—we have no issue considering each of them to be a rental.  Likewise, whether you lease your apartment annually, rent a villa by the beach for a week, or rent a trashy motel room for an hour—all are clearly rentals.  And with the cliché photocopiers, whether you lease one for the office for a period of years, or pay to copy just a few pages at the local copyshop—we treat each as a rental.

Furthermore, in other computing contexts where static vs. dynamic allocation is directly applicable, we also treat the distinction as irrelevant.  Most websites are hosted by one of any number of web hosting service providers.  That is, the owner of the site doesn’t actually buy a web server.  Rather, they rent from a large web hosting service provider.  Most web hosts offer a variety of plans, ranging from shared hosting (used by most small web sites, where many customers/sites share a single server, and a single operating system), to virtual private servers (again, many customers/sites sharing a single server, but each customer having its own operating system), to dedicated servers (where a customer is given a dedicated server, that is not shared with any other customer).

In shared hosting, all resources are dynamically allocated.  In virtual private servers, some resources may be statically allocated, but most are still dynamically allocated.  In dedicated servers, most resources are statically allocated, but some resources, such as disk storage, may be external and still dynamically allocated.  In all cases, networking capacity is dynamically allocated, as needed.

Nobody suggests that shared hosting or virtual private server hosting plans are any less a rental model than a dedicated server.

What’s more, web hosting is a simple example of a business cloud service technology.  Like retail cloud service technologies, it offers subscribers individualized storage, based on dynamic allocation of storage, and a “centralized server and other shared equipment.”

But still, nobody suggests that web hosting doesn’t qualify as a rental.  And furthermore, if I place copyrighted content on my website, nobody suggests that my web hosting firm, rather than myself, is the party who placed it there.

And when it comes to the question of centralized control systems and shared secondary resources, looking at the example of per-page copying at a copyshop—something clearly treated as an equipment rental, as a matter of settled law—is instructive.  Would anybody seriously argue that if a photocopier were built using two scanners and two printers connected to a single computer, that the use of a common control system and network would change the essential nature of the system such that it no longer qualified as an equipment rental?  Or that copies that two different users made, simultaneously, using that system, were no longer copies that those two users, themselves, made?

Given all of this, it’s really hard to understand how the system features that the Solicitor General cites serve to, in any way, disqualify Aereo (or any other cloud technologies) from being treated as a legitimate equipment rental, or have any other special significance in the context of copyright.  Accordingly, we think the proper conclusion is obvious: that all of the various cloud technologies under discussion qualify for treatment as legitimate equipment rental models.

If you found this interesting, you might also be interested by our article Analyzing the Menell/Nimmer Brief on Aereo.  Or for complete coverage of Aereo, see our Understanding Aereo page.