Aereo Oral Argument Annotated: The Good, The Bad and The Ugly

Posted By on Apr 23, 2014 | 8 comments

After oral argument in ABC v. Aereo yesterday, there were multiple reports suggesting that the Court appeared to favor broadcasters, seemed to show little support for Aereo, and seemed more concerned about damaging other cloud providers than about damaging Aereo.

I didn’t have the benefit of observing oral argument in person, and we still have to wait a bit before audio of the argument will be made available, but after reading the transcript, my take on what questioning suggested of the Court’s disposition is quite different.  It’s hard to be certain how much of that might be due to the inability to hear tone and inflection, so some of the differential could potentially be due to that.  But press coverage of this case has clearly demonstrated that most reporters have a superficial understanding of the legal issues and arguments, and I suspect that this limits the ability of many reporters to correctly interpret the questioning by the Court.

Let’s go through the transcript, focusing primarily on Justices’ questions and comments, and try to understand what they seem to be saying.

(Note: I have marked corrections/questions, in square brackets, of several instances of what appear to be obvious errors in the transcript.)


Petitioners (The Broadcasters)
United States Government (Solicitor General’s Office)
Respondent (Aereo)
Petitioners (The Broadcasters) Rebuttal
Overall Analysis
Handicapping the Outcome

Petitioners (The Broadcasters)

First up was Paul Clement, representing the broadcasters, for what I presume was approximately 17 minutes, since broadcasters had given 10 minutes of their 30 minute allotment to the Solicitor General’s office, and Clement reserved 3 minutes for rebuttal.

Clement was interrupted almost immediately:

JUSTICE SOTOMAYOR: Why aren’t they cable companies?

JUSTICE SOTOMAYOR: I’m looking at the — everybody’s been arguing this case as if for sure they’re not. But I look at the definition of a cable company, and it seems to fit. A facility located in any State. They’ve got a — whatever they have — a warehouse or a building in Brooklyn, the — that receives signal transmissions or programs broadcast by television broadcast stations. They’re taking the signals off of the —

JUSTICE SOTOMAYOR: I’m sorry, they are.  Makes secondary transmissions by wires, cables, or other communication channels. It seems to me that a little antenna with a dime fits that definition. To subscribing members of the public who pay for such service. I mean, I read it and I say, why aren’t they a cable company?

JUSTICE SOTOMAYOR: But it just gets it mixed up. Do we have to go to all of those other questions if we find that they’re a cable company? We say they’re a capable company, they get the compulsory license.

This is referencing the argument FilmOn X made in its brief that if Aereo’s transmissions are deemed to be public performances by Aereo, then under the Copyright Act, Aereo should also qualify as a “cable system,” and therefore qualify for the Copyright Act’s compulsory statutory license for cable retransmission of broadcast stations.  (The statutory license is actually royalty-free for what Aereo is alleged to do—retransmit local stations within their local market—although there is a minimum royalty of approximately 1% of revenues required by regulations, for “the privilege of retransmitting distant broadcast signals even if none are carried,” that is required to be submitted with required filings.)

FilmOn X made a very simple, straightforward and strong argument on this point.  Justice Sotomayor seems to have found it compelling.

In response, Clement begins to argue that Aereo doesn’t want to be characterized as a cable system.

JUSTICE BREYER: Yes. But that’s why they don’t want it.

JUSTICE BREYER: That isn’t the question.

JUSTICE SOTOMAYOR: The question is are they?

JUSTICE BREYER: But I’d still like to know the answer to the question, in your opinion. And, of course, if you want a reason, I’ll give you my reason.

If we take public performance, maybe we run into what Professor Nimmer saw as a problem. Why isn’t what used to be called a phonograph record store that sells phonograph records to 10,000 customers a public performance? It seems to fall within that definition.  But if it is, there’s no — no first sale doctrine and it’s a big problem. So we could avoid that problem.

Now, that’s why I’m very interested in the answer, not just what they want.

It would seem that Justice Breyer is similarly inclined to the argument that Aereo would qualify as a cable system.

But what’s more significant here is Justice Breyer indicating skepticism of the broadcasters’ proposed interpretation of the transmit clause.  Cablevision made a compelling argument that their interpretation produced absurd results, such as classifying downloads as performances.  Aereo took it even further, observing in their brief that, arguably, even Amazon mailing DVDs might qualify as a performance, under the broadcasters’ proposed interpretation.

Justice Breyer’s comments suggest sympathy to this line of argument, even entertaining the possibility that it could extend to the extreme Aereo described.

This seems a basic acknowledgment by Justice Breyer that the broadcasters’ interpretation of the transmit clause would problematically conflate the public performance right with the reproduction right.

Clement responds by saying the question of whether Aereo is a cable company isn’t before the Court.

JUSTICE BREYER: Well, perhaps we should remand it, because my reason for wanting to decide it is what I said. And what you’ve read in their briefs is they, in [and] their supporting amici, have thrown up a series of serious problems not involving them, like the cloud, which the government tells us to ignore, and many others, which make me nervous about taking your preferred group [route]. So that’s why I was interested in this question.

Obviously, Justice Breyer isn’t satisfied to gloss over this issue.

Comments like this are among those that have been interpreted to say that the Court is more concerned about other cloud providers than about Aereo, but I think the proper way to read this is as Justice Breyer expressing skepticism that the broadcasters’ proposed interpretation can be correct, because when it is applied to other situations, it produces absurd results.

Clement attempts to explain that selling records isn’t a performance.

JUSTICE SOTOMAYOR: Is your definition — I mean, Justice Breyer has already asked you — said he’s troubled about the phonograph store, and — and the Dropbox and the iCloud. I’m also worried about how to define or — public performance or the performance of a work publicly, which I guess is the better way to do it, according to you. How do I define that so that someone who sells coaxial cable to a resident of a building is not swept up as a participant in this? Or someone who — the sort of passive storage advisors [devices?] that — this is really hard for me.

JUSTICE SOTOMAYOR: How do I — what do I do to avoid — what do we do, not me, but what does the Court do to avoid a definition or an acceptance of a definition that might make those people liable?

So Justice Sotomayor appears similarly skeptical of the broadcasters’ proposed interpretation and explicitly calls out that they are proposing to redefine the transmit clause’s reference to the transmission of a particular performance, to a reference of any performance of a particular work.

The reference to selling coaxial cable begins a transition to examining Aereo’s assertion that it is really just renting equipment.  Justice Sotomayor seems to be expressing skepticism that the broadcasters’ argument actually differentiates Aereo’s system from other cases that are either clearly, or much less controversially, equipment sales or rentals.

And the coaxial cable example demonstrates the earlier point about being careful about what is actually meant by these comments.  It’s hard to imagine anybody would hear that comment and come away saying “The Court seemed primarily concerned that they not inadvertently harm the coax cable industry” or “The Court seemed to be looking for a way to rule against Aereo without hurting the coax cable industry.”

Rather, the comment is properly read as expressing strong skepticism that the broadcasters’ argument and proposed interpretation produces a plausible and coherent result.

JUSTICE SOTOMAYOR: What if you get it through Dropbox?

JUSTICE KAGAN: Well, that’s something else before you get to Justice Sotomayor’s second half of the question, but something more along the lines of providing hardware. Suppose a company just gave the antenna and a hard drive, that’s what they sold to the user, and the user was able to use the antenna and the hard drive in her own house or apartment in order to get all these broadcast programs. What would the — would that be a performance?

JUSTICE KAGAN: But then it really does depend on, like, where the where the hardware is. In other words, if — if Aereo has the hardware in its warehouse as opposed to Aereo selling the hardware to the particular end user, that is going to make all the difference in the world as to whether we have a public performance or not a public performance.

JUSTICE KAGAN: So you think that in my hypo, there’s a performance, but it’s a private performance and then you move the hardware and it becomes a public performance. Is that it?

So Justice Kagan also seems skeptical that the broadcasters’ interpretation works to distinguish equipment suppliers.  Furthermore, she seems to be suggesting that, in the end, the only actual distinction between Aereo’s system and equipment used at home is the location of that equipment.

I read this as expressing skepticism that location of the equipment is a sufficient distinction to conclude that the performance is private in one instance but public in the other.

JUSTICE SOTOMAYOR: So Roku is — Roku is paying a license for no reason.

JUSTICE SOTOMAYOR: Roku is paying a license for no reason? They sold me a piece of equipment.

JUSTICE SOTOMAYOR: Go to the iDrop in the cloud.

It’s difficult in reviewing the questioning to be certain where a justice is expressing a lack of understanding as an intentional, devil’s advocate style questioning device, vs. where they are actually confused.  But here, Justice Sotomayor seems to actually be confused.  (So far as I know, Roku doesn’t pay any performance fees, and doesn’t do anything that would require such.)

Clement proceeds to try to argue the difference between Aereo and other cloud storage providers by drawing an analogy to car dealerships vs. valet parking.  The idea being, you can walk up to both and get a car, but at a car dealership, you can get a car when you didn’t have one to start with, whereas at a valet, you can only get a car if you brought a car there, previously.  (It did not seem to come off effectively.)

JUSTICE ALITO: What is the difference — I didn’t mean to interrupt your —

CHIEF JUSTICE ROBERTS: Why isn’t — and I don’t want to stretch it too but why isn’t it like a public garage in your own garage? I mean, you know, if you — you can park your car in your own garage or you can park it in a public garage. You can go to Radio Shack and buy an antenna and a DVR or you can rent those facilities somewhere else from Aereo. They’ve — they’ve got an antenna. They’ll let you use it when you need it and they can, you know, record the stuff as well and let you pick it up when you need it.

So back to the equipment question, with Chief Justice Roberts now suggesting a better analogy might be to compare an owned garage (like an antenna and DVR that a customer owns and keeps at home) vs. a public garage (like an antenna and DVR that a customer rents, and which is located in the cloud).

In response, Clement concedes that it’s plausible to view Aereo’s system as an equipment rental:

Mr. Chief Justice, that’s not an implausible way to look at this.

But then proceeds to argue that such is the view the Court took in the 1968 Fortnightly case involving cable operators—and that the view was subsequently overturned by Congress via the 1976 Copyright Act.

(This is a specious argument, for cable systems are shared systems, not a collection of individual systems separately rented to customers, and Clement is mischaracterizing how Congress “overturned” the Court’s holding.  One would expect the Court to see through this quite easily.)

JUSTICE ALITO: Well, the Second Circuit analogized this to its CableVision decision. So maybe you could explain to me what is the difference, in your view, between what Aereo does and a remote storage DVR system. Is the difference — does the difference have to do with the way in which the cable company that has the remote storage DVR system versus Aereo acquires the program in the first place? Does it have to do with the number of people who view this program that’s been recorded? What is the difference?

Hard to be confident here, but Justice Alito seems as if he may be sympathetic to the Second Circuit’s holding in Cablevision.  And asking Clement to explain the difference between Aereo and Cablevision suggests skepticism of the arguments advanced to distinguish them.

Clement responds:

I think the potential difference, and it’s both the CloudLocker storage and this example, I don’t think this Court has to decide it today. I think it can just be confident they are different. Here is the —

Not a good answer.  He might as well have said that he can’t explain the difference.

JUSTICE ALITO: Well, I don’t find that very satisfying because I really — I need to know how far the rationale that you want us to accept will go, and I need to understand, I think, what effect it will have on these other technologies.

Obviously, Justice Alito is thoroughly dissatisfied with that response.  And again, I think the proper interpretation of his response is not that he is necessarily more concerned about the fates of other technologies, but that he is concerned that the interpretation they adopt makes sense when consistently applied.

JUSTICE KENNEDY: I had the same question. Just assume that CableVision is our precedent. I know that it isn’t, but let’s just assume that it is. How would you distinguish the CableVision from your case and how is it applicable here? Assume that it’s binding precedent. Just that’s a hypothetical.

So it seems as if Justice Kennedy may be sympathetic to the Second Circuit’s holding in Cablevision, also.

Clement argues that the fact that Cablevision had a license (for live retransmission) is the difference.

JUSTICE BREYER: That’s exactly our problem. I’m hearing everybody having the same problem, and I will be absolutely prepared, at least for argument’s sake, to assume with you that if there were ever anything that should be held to fall within the public performance, this should be. All right? I will assume that. I’m not saying it.

But then the problem is in the words that do that, because we have to write words, are we somehow catching other things that really will change life and shouldn’t, such as the cloud? And you said, well, as the government says, don’t worry, because that isn’t a public performance. And then I read the definition and I don’t see how to get out of it.

So here’s an example where I could imagine somebody coming away thinking “The Court seems to be leaning toward the broadcasters, and is primarily concerned about how to rule for them without damaging the cloud.”

I think that’s an unreasonable inference.  I think the proper inference is that Justice Breyer is expressing extreme skepticism of the broadcasters’ proposed interpretation of the transmit clause.  He’s saying, in essence, that even if the Court agreed that the broadcasters were right, and that they should try to find Aereo infringing, nobody has offered a plausible interpretation of the transmit clause to achieve such without creating absurd and problematic consequences in many other realms.

MR. CLEMENT: Here is the way to get out of it, Justice Breyer. Ultimately the words you’re going to have to interpret are “to the public.”

JUSTICE BREYER: To the public? You see, separate, at the same time, or at different times? Separate or together? So a thousand people store in the cloud the same thing, as can easily happen, and pull it back at varying times of the day.

So quite explicit here—Justice Breyer is telling him that his proposed interpretation of public performance reads on all cloud storage performances.

Clement responds by referencing his valet parking analogy again, and suggesting that if the cloud storage company didn’t supply the content, then it’s not a public performance.

JUSTICE KAGAN: But what if, Mr. Clement, it’s not so simple as a company that just allows you yourself to put something up there? What if how about there are lots of companies where many, many thousands or millions of people put things up there, and then they share them, and the company in some ways aggregates and sorts all that content. Does that count?

So again, the question for us of whether a Justice’s question reflects actual confusion, or intentional confusion for questioning purposes.

At a minimum, we can infer from this that Justice Kagan is sensitive to the arguments made, most notably by CCIA and Mozilla in their brief, that there are many existing and likely future scenarios in which cloud storage providers could be characterized as, completely legally, providing users with content “in the first instance.”  And she is concerned about the fact that those aren’t distinguished.

Choosing a specific example that involves what sounds like file sharing and publication seems like it leads to more confusion than clarification, and so I would suspect is a product of actual confusion.

Clement responds by suggesting that each cloud example needs to be evaluated on its specific details, and that’s why he’s not asking the Court to decide the general cloud computing today.  He then reserves the remainder of his time for rebuttal.

United States Government (Solicitor General’s Office)

Next up was Malcolm Stewart, who argued for the Solicitor General (who was recused from this case), in support of the broadcasters, with 10 minutes allotted to him by the broadcasters.

Stewart begins by proactively conceding that Aereo can be viewed as an equipment supplier, and proceeding to reiterate a similar argument to the one Clement made that this is what the Court held in Fortnightly and Teleprompter, before Congress overturned such with the 1976 Copyright Act.  Stewart, however, acknowledges that Congress was actually clear only in saying that use of a single, shared antenna wasn’t merely an equipment rental.

He then continues:

MR. STEWART: The second thing that I would like to reinforce in Mr. Clement’s presentation is that there is no reason that a decision in this case should imperil cloud locker services generally, but, as Mr. Clement was pointing out, that the term “cloud computing” —

JUSTICE SOTOMAYOR: How about Simple.TV or NimbleTV, which is not quite a hybrid?

So Justice Sotomayor is referencing two of the examples provided by CCIA and Mozilla in their brief, in arguing that none of the tests proposed by the broadcasters and their amici (including the Government) work to coherently distinguish “good” from “bad” cloud providers.  Justice Sotomayor is apparently sensitive to this concern, also.

Stewart responds by saying he’s not familiar with the details of those two services, and proceeding to argue to the effect that it’s easy to distinguish the extremes, and by implication, conceding that it’s not easy to distinguish things that aren’t at the extremes.

JUSTICE KAGAN: Can I ask my same question to you that I asked to Mr. Clement? How about if there’s a company that allows sharing and that aggregates all the content that different individual users put up and that in some sense sort of sorts and classifies the content in different ways? How about that?

Ugh.  This one again.

Stewart’s response doesn’t really seem to be responsive, but is very interesting:

I think you would have to — you would have to know both the details of the service and you would have to be making a harder call there about how to draw the line, because I don’t pretend that there is a bright line between providing a service and providing access to equipment. If you look, for instance, at the extremes of a person putting a rooftop antenna at his own home, everybody agrees that the rooftop antenna manufacturer is not performing at all and the individual is engaged in a solely private performance.

The other extreme is the cable company, one big antenna, makes transmissions to a lot of people; Congress clearly intended to define that as a private performance. Somewhere in the — you could come up with lots of hypotheticals that look more or less like one of the other extremes, they are somewhere in the middle.  It’s an authentically hard call as to where to draw the line. So I don’t have a good answer for you.

So while the broadcasters have been arguing that Aereo is itself an extreme, that is easy to classify as an infringer, here, Stewart seems to concede that Aereo is actually somewhere in the middle and is more a judgment call.

That seems pretty significant!

JUSTICE BREYER: How do we get out of the example? I mean, how do we get out — what words do I write to get out of this, throwing into this clause a music store that distributes via Federal Express, a device, or the U.S. Postal Service or even someone over the counter, distributes to 10,000 people a copy of a record which they then will take and play it? They have, to the same degree, transmitted something that will electronically make a performance of the music. So are they when they sell the record violating the display clause?

Justice Breyer reiterating that the broadcasters’ (and the Government’s) proposed interpretation of the transmit clause produces absurd consequences.

MR. STEWART: No, they’re not —

JUSTICE BREYER: Because? Because?

MR. STEWART: Because the definition of “to transmit” goes on: “To transmit a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent.”

JUSTICE BREYER: Of course they are. The sounds are received beyond the place. It requires the person to take the record, put it on a machine, and then play it.

MR. STEWART: Well, there is a separate exclusive right.

JUSTICE BREYER: Of course there is. And that separate exclusive right has such things as first sale doctrine is attached. But if they also flow here, if they — if this covers them, which is why NMPA wrote the paragraph that was quoted, if this covers it, there is no first sale doctrine, and that has a lot of consequences. I think so. Anyway, if you don’t know and you haven’t got something right there and you haven’t thought about it, you’re not going to think about it in two minutes, nor will I.

Justice Breyer pounding the table with the assertion that the broadcasters’ proposed interpretation does, indeed, produce the absurd consequence of conflating the public performance right with the reproduction right, and effectively undermining the long-standing first sale doctrine (whereby once you purchase a copy of a work, you are entitled to re-sell that copy without further royalty), and that this is not easily remedied.

I’m not sure what NMPA-written paragraph he refers to, but NMPA (National Music Publishers Association) and many other music-related organizations filed an amicus brief in which they broke with the broadcasters and other amici and argued that cloud storage locker services transmissions are public performances and do require a performance license.

Stewart responds arguing that sending materials through the mail aren’t “transmitted” in the sense used in the Copyright Act.

JUSTICE GINSBURG: Mr. Stewart, before you finish, Mr. Clement in his brief made the point that we would if we took the position that Petitioner urges, there would be an incompatibility with our international obligations; that is, Aereo’s view of the public performance right is incompatible with our obligations under the Berne Convention and under — what is it, WYCO? [WIPO?] On pages 44 to 45 of his brief, he says that “Aereo’s view of what the public performance right is runs straight up against our international obligations,” and he cites a case from the European Court of Justice and I think another case.

Justice Ginsburg is referencing an argument that has been put forward that if Aereo’s performances are private, then the US will not be in compliance with its intellectual property treaty obligations.  (This argument was quite thoroughly rebutted in an amici brief from 24 professors and scholars of international copyright law.)

What’s interesting about this is that Justice Ginsburg’s daughter, Jane Ginsburg, has been prominent in criticizing the Second Circuit holdings in both Cablevision and Aereo, and has specifically advanced this argument.

It apparently resonated at least with her mother.

Stewart, on the other hand, responded by noting that the Government hasn’t made that argument and saying that even if the Court “misconstrue[d] the statute,” the US would not “automatically be thrown into breach.”

JUSTICE KENNEDY: How do you want us to deal with CableVision — the CableVision case in the Second Circuit? Again assume it’s a binding precedent. Just assume that.

More reason to think that Justice Kennedy is sympathetic to the Second Circuit holding in Cablevision.

Stewart states his agreement with Clement’s answer, and reiterates that response.  His argument is then complete.

Respondent (Aereo)

Next up is David Frederick, on behalf of Aereo.  He begins by asserting that the text of the transmit clause is clear for Aereo, that all opposing interpretations are a threat to cloud computing, and that:

this case is really a reproduction right case masquerading as a public performance case.

He then proceeds to argue that Aereo isn’t a cable system (based on drawing distinctions that aren’t relevant to the definition in the Copyright Act).

JUSTICE SOTOMAYOR: I always thought, and I’ll try to be careful about it, but not often enough, probably breach it like every other member of the public, that if I take a phonograph of a record and duplicate it a million times the way you’re doing it, and I then go out and sell each of those copies to the public, then I am violating the Act. So why is it that you are not?

JUSTICE SOTOMAYOR: It’s not logical to me —

JUSTICE SOTOMAYOR: — that you can make these millions of copies and give — sell — essentially sell them to the public, because you’re telling the public when they want to buy it, they can call it up and hear it. So why aren’t you trans —

This question is pretty straightforward: you make millions of copies, how can it be you don’t infringe?

By being phrased in terms of copies, the question plays directly into Frederick’s opening assertion that the case is really about reproduction rights.  (Intentional on Justice Sotomayor’s part?)

Frederick responds by pointing out that her hypothetical pertains to the reproduction right, and that the broadcasters’ abandoned their challenge relating to the reproduction right in this proceeding (for a preliminary injunction), reiterating the assertion from their brief that the broadcasters did so because of the Sony precedent.

He then proceeds to argue that Aereo is just enabling users to exercise their fair use rights under Sony, just like a conventional antenna and DVR.


JUSTICE GINSBURG: — was Judge Chin right when he said there was no technically sound reason to use these multiple antennas? That the only reason for that was to avoid the breach of the Copyright Act. Was there a technical reason, instead of having a one-way antenna, to have all of these what, dime-size antennas?

Frederick proceeds to deliver the first of several long-winded arguments that there’s actually some technical or business reason for the design, beyond the legal issue.

(The argument is fallacious.  There’s no question that, while they might not use one, they would use many fewer antennas, and probably more significantly, transcoders, if they didn’t believe such were necessary to be copyright compliant.)

CHIEF JUSTICE ROBERTS: But is there any reason you need 10,000 of them? Can’t you put just — if your model is correct, can’t you just put your antenna up and then do it? I mean, there’s no technological reason for you to have 10,000 dime-sized antenna, other than to get around the copyright laws.

Frederick responds, in essence, that the question is irrelevant.

JUSTICE SCALIA: That may well be, but it doesn’t contradict the Chief Justice’s question. I mean, you’re just saying that by doing it this way you don’t violate the copyright laws. But his question is, is there any reason you did it other than not to violate the copyright laws?

Frederick responds that they designed it that way to replicate the in-home approach at much lower cost.

CHIEF JUSTICE ROBERTS: Yeah, but it’s not — it’s not. You give them space that’s available when they call in. They don’t have — this is my little dime thing, and this is my copy that’s going to be here.  They’re there, and when they want something, you provide the service of giving them that. They don’t have a dedicated antenna in Brooklyn.

Frederick responds that, as the record shows, there are some statically assigned antennas, but then proceeds to argue that the static vs. dynamic distinction doesn’t change the fact that it’s an equipment rental.

JUSTICE KENNEDY: Suppose — suppose Aereo offered a service so that the viewer at home could press three different buttons, but it takes only 45 seconds, and he could get the broadcast without advertising? And Aereo would have some way to screen out the advertising so you could watch the entire baseball game or football game without the ad — without the ads.

This question of the potential for altering the content to remove (or change) the advertising goes to two things.  Menell and Nimmer argued in their amici brief that if Aereo were legal, there would be nothing to prevent them from doing such.  It is not something Aereo does.

But also, the Court is surely aware that the broadcasters have also been litigating a case against Dish over the “AutoHop” feature of their Hopper DVR, that automatically skips commercials.  And so, whatever concerns the Justices might have about Aereo with respect to that possibility, it’s hard to imagine they don’t recognize that if such is a problem, it is not a problem unique to Aereo.  The same potential for a problem would exist with any in-home equipment solution, also.

Frederick should have made this point, but responds only that it would probably violate the reproduction right, not performance rights.  (In fact, I think this might actually depend on the details of how it were implemented.)

JUSTICE KENNEDY: Would Aereo be a performer then?

MR. FREDERICK: Aereo would not be a performer. The question would be — and this does go into the technical details. And here, the position between the parties is quite stark. They say the facts don’t matter. We have a well-developed factual record. There, Justice Kennedy, the fact that would matter in your hypothetical would be whether or not the initiation of the advertiser-free had been somehow done by the consumer or whether it had been done by the cloud provider.

JUSTICE KENNEDY: No, the consumer makes the choice. You can have it with the ads or without the ads. Push button one or button two.

MR. FREDERICK: Right. I understand —

JUSTICE KENNEDY: I don’t understand why he is the performer in one case and not in the other case.

Justice Kennedy would seem to be testing the limits of Aereo’s theory of who is the performer, and perhaps exploring for potential consequences of a ruling in Aereo’s favor.

His last question doesn’t quite make sense, as Frederick has argued that in both cases, the user is the performer.  This might suggest that Kennedy is thinking that Aereo would be the performer, if it altered the broadcast content, and so why isn’t it also the performer when it doesn’t alter the content?

Frederick responds by reiterating his view that it’s not a performance issue, saying it’s actually a difficult reproduction right issue, but it’s not something Aereo does, and he hasn’t prepared to defend the issue.

JUSTICE SCALIA: Mr. Frederick, your — your client is — is just using this for local signals —


JUSTICE SCALIA: — right now. But if we approve that, is there any reason it couldn’t be used for distant signals as well?

MR. FREDERICK: Possibly.

JUSTICE SCALIA: Possibly what? There is possibly a reason, or it could possibly be used?

MR. FREDERICK: It can’t be used for distance, but it implicates —

JUSTICE SCALIA: What would the difference be? I mean, you could take HBO, right? You could you could carry that without — without performing.

MR. FREDERICK: No, because HBO is not done over the airwaves. It’s done through a private service.

Interesting that Justice Scalia doesn’t seem to realize that HBO isn’t broadcast over-the-air, and isn’t meaningfully regionalized, but his concern is understood.  This is another effort to understand not what Aereo currently does, but what the potential consequences are of a decision in favor of Aereo.  (HBO is presumably on Justice Scalia’s mind, in particular, because it was mentioned (as a specious example) in the Menell-Nimmer brief’s parade of horribles.)

While Aereo presently limits users to viewing content from stations within their local market, one of the concerns that has been raised is that the technology could be used to enable access to distant stations.  And if that can be done, then a company like Aereo could package together, say, football games from all markets, undermining current rights structures.

(This is the one hypothesized problem that I have repeatedly noted is a legitimate concern.  That doesn’t mean it makes Aereo illegal, but it is a legitimate potential consequence, unique to Aereo, and of legitimate concern.)

Frederick continues to argue that this is not a performance issue, but instead, it is a reproduction right question: is it fair use to record a program from a distant market?

In other words, the Court would be capable of, separately, preventing that, if it concluded it were not a fair use to record content from a distant market.  (This is actually an interesting argument, though I can’t help but wonder how well it extends to issues not being considered here.  For example, if the courts eventually conclude that transmissions directly from an individual antenna would also be private performances, conceivably, one could build a different system that provided access to distant signals with no DVR functionality, so no copy, and no fair use question.)

Frederick also goes on to talk about copyright royalties, how the Copyright Act grants a compulsory license to cable and satellite companies with no royalties for retransmission of local stations (and low royalties for retransmission of distant signals), and how retransmission fees that cable and satellite operators pay are from a completely different regulatory system, having nothing to do with copyright.

JUSTICE GINSBURG: Mr. Frederick, would you clarify? If every other transmitter does pay a royalty — maybe it’s under compulsory license — and you are the only player so far that doesn’t pay any royalties at any stage —

MR. FREDERICK: Well, Justice Ginsburg, the person who sells an antenna to me at the local Radio Shack doesn’t pay copyright royalties either. And a — and a company that provides a rental service for me to put an antenna in my home and install it, they don’t pay copyright royalties either.

And the question that it really boils down in this case is how significant should it be how long the cord is between the antenna and the DVR being —

JUSTICE BREYER: The answer is very significant. And the reason it’s very significant is because what the local antenna person doesn’t do but you apparently could do, even if you don’t, is with the same kind of device pick up every television signal in the world and send it, almost, and send it into a person’s computer. And that sounds so much like what a CATV system does or what a satellite system does that it looks as if somehow you are escaping a constraint that’s imposed upon them. That’s what disturbs everyone.

And then what disturbs me on the other side is I don’t understand what the decision for you or against you when I write it is going to do to all kinds of other technologies. I’ve read the briefs fairly carefully, and I’m still uncertain that I understand it well enough. That isn’t your problem, but it might turn out to be.

This is the first I believe we have seen from Justice Breyer of a very clear indication that he’s not merely of playing devil’s advocate, but actually has a major reservation regarding a ruling for Aereo, seemingly due primarily to potential unintended consequences.

Frederick responds that he addressed how to handle the distant signal issue (i.e., the fair use approach), and on the facts of this case, that issue would not entitle the broadcasters to an injunction.

He then moves on to argue what is wrong with the broadcasters’ proposed interpretation of the transmit clause, and how it creates problems for cloud providers, generally.

CHIEF JUSTICE ROBERTS: Just to make sure I’ve got — there’s no reason it’s a user-specific copy, is it? They’re making 10,000 copies. It’d be much easier for you if you’d just have to make one copy and everybody could get a copy.

Frederick responds by saying this is how Aereo replicates the home experience, so that if a user starts recording 2 minutes into a program, they missed the first two minutes.

CHIEF JUSTICE ROBERTS: Surely, you can make a program where you have just one copy and starting it at different times. You don’t need every viewer to have his own copy.

Frederick responds that having the individual copies is what distinguishes Aereo from VOD, and only the one user who made a copy can view that copy.

CHIEF JUSTICE ROBERTS: That’s just saying your copy is different from my copy.

CHIEF JUSTICE ROBERTS: But that’s the reason we call them copies, because they’re the same.

CHIEF JUSTICE ROBERTS: All I’m trying to get at, and I’m not saying it’s outcome determinative or necessarily bad, I’m just saying your technological model is based solely on circumventing legal prohibitions that you don’t want to comply with, which is fine. I mean, that’s — you know, lawyers do that.  But I’m just wondering why —

CHIEF JUSTICE ROBERTS: — whether you can give me any technological reason, apart from compliance with a particular legal issue, for your technological mind.

Frederick gives another long-winded (and mostly fallacious) explanation for why there are technical/business reasons for the approach.  I don’t understand why they don’t just concede this point.  The only issue that’s even arguably relevant from a legal perspective is that the DVR copy has a purpose beyond just the legal.

He then pivots to argue that the broadcasters’ argument that Aereo is a content provider implies that home DVR vendors and equipment vendors generally are content providers, also.

JUSTICE GINSBURG: They give the subscriber a menu, and it says you can get any of these things.  It’s not as though the — the subscriber initiates it. You have these choices and they’re providing you these choices and those choices are content.

MR. FREDERICK: It’s no different, Justice Ginsburg, than if I’m at home and I have an antenna or rabbit ears on my TV and I know what channels I can get.

JUSTICE KAGAN: But, Mr. Frederick, it’s also — it’s also no different from — from a user’s perspective, it’s exactly the same as if I’m watching cable. Right? You just have a different content selection, but it looks the same to you. Somebody else is providing you with a menu, and then you pick off that menu.

MR. FREDERICK: Right. But the menu, Justice Kagan and Justice Ginsburg, is simply what is technologically available. There are broadcast signals that are available in a local area, and they are limited because that’s what the broadcasters make available. And simply providing a user guide that says you can tune to this channel or you can tune to that channel, if you want to pick up one program or another, can’t be the difference between a content provider and merely — merely facilitating the use of your equipment.

This is the sort of thing that makes you wish you were there to smack him and say, “Tell them that, in this sense, the experience is also no different from a Tivo connected to an antenna.  The experience is common on cable systems but it’s not unique to cable systems.”

JUSTICE BREYER: Would you — would you explain in a sentence or two, which will sound as if I’m bickering with you, but I want them to have a chance to reply, the thing that frightened me somewhat in your brief was, I think, of the cloud storing everybody’s music. Vast amounts of music. And now they then send it down, perhaps to a million people at a time, who all want to hear the same song.

Now, what you said was, if I understood it, but explain it if it is, that there is a provision of the copyright law that says when that happens, it’s subject to a compulsory license. And if it’s subject to a compulsory license, then, of course, people can get it and it’s paid for by somebody. But if we side with them, there’d be a different provision that would come into play, namely, the performance, and it wouldn’t be subject to the compulsory license. There’s no point telling me I’m right if I’m wrong. What I want to know is am I — have I got your argument correctly? And if not, what is it?

MR. FREDERICK: I think that your argument, Justice Breyer —

JUSTICE BREYER: It’s not my argument. It’s a parody. An indirect version of your argument.

MR. FREDERICK: Let me — okay. Let me try to correct this. There is no compulsory license with respect to music or video. There are different compulsory licenses with respect to satellite and cable that capture all signals and push them down to everyone.

JUSTICE BREYER: All right. So that would be the same and it isn’t going to be a problem.

MR. FREDERICK: No. Where it’s going to be a problem with the cloud is if you say — if I’m watching a particular program and you’re watching a particular program and Justice Sotomayor is watching the same program, we are engaging — and the company that has allowed us to make a copy of that is engaging in public performance. Where you have to deal with infringement is the concept of — of volition and the idea of who is doing the act. If I’m simply making equipment available, then —

JUSTICE BREYER: But it should work out in a parallel way. That is, when I look at the program, I am making a copy of the program and, therefore, I’m violating the nonexclusive right the exclusive right to copy. Now, if that’s fair use and therefore, I can do it, it should also be fair use if exactly the same thing happens but it comes from a cloud.

Ugh.  Earlier it seemed Justice Breyer understood the issues for general cloud storage.  This kind of confusion makes one wonder.  I guess we should hope that the justices all have good clerks who can help them to understand how cloud systems actually work—at least from the standpoint of a user perspective—so that they don’t base a decision on misunderstanding how these various cloud systems actually work.

This last point that Justice Breyer ends up at, however, is quite interesting.  Although the broadcasters’ abandoned their challenge based on the reproduction right in this proceeding, they (and others) have nonetheless intimated that the copies in Aereo’s system are unlawful.  Here we see Justice Breyer explicitly suggesting that if making the copy at home is lawful, then making the copy in the cloud should be lawful, also.  This would seem to suggest agreement with Aereo’s perspective.

Frederick tries to explain a distinction regarding music distribution, which seems to be ignored.

JUSTICE SOTOMAYOR: But now you’re saying that AT&T system, Netflix, Hulu, all of those systems get their content and they don’t push it down to you. They do exactly what you do. They let you choose what you want to see.

Frederick gives a rather ham-fisted explanation talking about right to exclude and public vs. private property, which not surprisingly, seems not to be understood.

JUSTICE GINSBURG: But you are feeding subscribers, legions of subscribers. So I don’t understand that. You say they have to — are you selective, in that some people who want to use your service are going to be turned down? You’re not. You will take anybody who can pay, right?

Frederick confirms, but then notes that if they went around installing rented antennas and DVRs at homes, it would be exactly the same as what they’re doing, and it wouldn’t be a copyright violation.  He then moves on to criticize the broadcasters’ proposed distinction vs. Cablevision, based on “supposed lawfulness of the first instance in which the content is received.”

JUSTICE KAGAN: Mr. Frederick, why isn’t it sufficient to create a line such as the one Mr. Clement said, which said, you know, do you on the one hand supply or provide the content, that puts you in one box; on the other hand, if you are not supplying or providing the content, if the user is supplying and providing the content, and you are just providing the space, a kind of platform for them to do that and for them potentially to share the content, that puts you in another box?

Is Justice Kagan playing devil’s advocate here?  She seemed to support the Cablevision holding as Solicitor General.  Drawing the line in this fashion would render Cablevision infringing.

Frederick responds by first saying that there’s nothing in the transmit clause to support drawing that distinction, that “to get there, you have to make up words to put them in the Transmit Clause.”  He then moves on to question why subscribers to Aereo don’t have the same fair use right to get broadcast content that home antenna and DVR users do.

JUSTICE GINSBURG: Why do people pay for the Aereo service if they can do the same thing all by themselves?

Frederick responds that its much cheaper to rent from Aereo than to buy the equipment, and that it’s a rental cannot transform the equipment provider into a performer, and then is complete.

Petitioners (The Broadcasters) Rebuttal

Clement opens by correcting Frederick’s assertion that local cable retransmission is royalty-free, on the basis that a minimum royalty (of ~1% of revenues) is required with filings, even if no distant signals are carried.  (As mentioned before, this is correct, but the regulations are explicit in attributing this minimum fee to the privilege of retransmitting distant signals, not local signals.)

He then argues that Aereo is not merely a hapless or passive bystander when a user presses a button to record a program, but that its system has to take all kinds of actions.  (True, but no different from an in-home DVR.)

JUSTICE SOTOMAYOR: Mr. Waxman [Clement?], tell me the consequences of our decision today.

JUSTICE SOTOMAYOR: Do you put them out of business, or do they have to go and negotiate a license with every copyright holder? The — you are, in fact, telling me they are not a cable company, they are not a satellite company, so they can’t go into those systems of payment. What happens then?

Justice Sotomayor seems potentially concerned about the prospect of putting Aereo out of business.

Clement all but says they deserve to go out of business.

JUSTICE BREYER: Once you take them out of the compulsory licensing system, they’re going to have to find copyright owners, who owns James Agee’s pictures? Who owns something that was written by — like a French silent film in 1915? I mean, the problem is that they might want to have perfectly good things that people want to watch and they can’t find out how to get permission. That is a problem that worries me and it worries me again once you kick them out of the other systems.

Justice Breyer is definitely concerned about the prospect of putting Aereo out of business.

Clement suggests the Court need not worry about that.  If it’s important Congress can create a compulsory license for them, or they can try other ways to get around such.

JUSTICE SOTOMAYOR: But the Second Circuit —

JUSTICE SCALIA: Do you have some other rebuttal points?

Clement makes a last point, and the case is submitted.

Overall Analysis

Having gone through all of their questions and comments, I can’t agree with press reports that suggest the Justices were primarily skeptical of Aereo, and seemed to lean toward the broadcasters.  Nor can I agree with the suggestion that Justices seemed unconcerned about the fate of Aereo, and solely concerned about other cloud providers.  I think that’s reading the wrong inferences from how the questions are posed, and ignoring some comments altogether.

I think informed, objective observers would conclude that there was considerable skepticism directed to both sides.  To my view, the Court actually expressed more skepticism of the broadcasters’ legal argument, than of Aereo.  (I’m not claiming that, in itself, is dispositive.  But that’s how it reads to me.)

I do think it’s likely that many, perhaps all, of the Justices are sympathetic to the broadcasters view, in the sense that they can viscerally understand how Aereo’s service seems a lot like cable.  But I give the Justices much more credit than to think that this will be determinative for them.

I would expect that what are, in effect, policy arguments that resonate with them, will primarily influence them if they conclude that they have a choice between multiple viable interpretations of the law as it is written, and one or more align well with their sense of what Congress’s intended policy was, or would be.

But my view of the arguments in this case is that there aren’t going to end up being multiple viable interpretations of the law, as written, that allow them to make such a choice based on policy.  Rather, I think that they will conclude that they would effectively need to rewrite the law, in order to achieve a policy goal. To do such would effectively elevate Congress’s perceived policy intentions above what Congress actually wrote in the law, and at least in a non-ideological case, I don’t think they’re going to be inclined to do that.

And when I hear what I see as strong objections being expressed, repeatedly, that the broadcasters’ proposed interpretation of the transmit clause is not viable, it reinforces my sense that this is how they are likely to approach the case.  Furthermore, I think it’s noteworthy that through significantly sustained challenges to the broadcasters’ position, we really didn’t see any of the other Justices rushing in to the broadcasters’ defense.  This suggests to me that even the Justices who didn’t speak much to those issues may harbor similar concerns.

(We didn’t see any Justices rushing to the defense of Aereo, during its questioning, either; however, I don’t think we saw the same kind of sustained questioning of Aereo on any single issue as happened with the broadcasters.)

I would also note that there are two qualitative differences between the potential “unintended” consequences that were explored respecting the positions of both sides.  First, the potential consequences explored on the Aereo side all relate to hypotheticals that aren’t actually being done by Aereo today, but that some hypothesize that somebody might do, if Aereo is found to be legal (and only one is actually unique to Aereo).  On the other hand, the potential consequences explored relating to the broadcasters’ interpretation of the transmit clause would immediately impact a potentially enormous array of activities that are widely done today.

Secondly, the potential consequences that would arise out of adopting the broadcasters’ proposed interpretation would be consequences created by intentionally contorting the meaning of the statute as written, to fix a perceived error by Congress, to achieve a policy goal.  This would effectively render any problematic consequences the responsibility of the Court.  On the other hand, adopting a “clean” interpretation leaves any problematic consequences as the responsibility of Congress (for writing the law badly in the first place, or for failing to fix it).  I think the Justices will be more inclined to leave any problems as Congress’s responsibility.

So this makes me think that, regardless of whether the Justices like the outcome, in this case, the law, and the facts, and the proper role of the courts vs. Congress, and not wanting to take ownership of a lot of problems, is going to weigh heavily towards finding the performances to be private.

I will say it’s somewhat concerning for me that the Justices didn’t come into oral argument with a stronger understanding of the factual details, and the arguments, than they seemed to have.  It significantly elevates my concern for the risk that an erroneous decision is reached on account of a misunderstanding of the facts.

But let’s go through and try to handicap this.

Handicapping the Outcome

I’d rather be Aereo than the broadcasters in this case.  Based on the questioning, and the limited scope of this particular proceeding, I do think it’s plausible that the Court could punt, and remand this without a final ruling.  But I probably wouldn’t bet on that as the most likely outcome.

I think the most likely outcome is finding the performances to be private.  It provides the only clean solution (even if they dislike the end result respecting Aereo).

Punting is probably the next most likely.

I think if they find the performances to be public, it is almost certain that they will also either rule, or give strong guidance that they believe, that Aereo qualifies for the compulsory statutory license as a cable system. I think based on the level of concern expressed regarding consequences for other technologies, they’d also almost certainly construct some pretext by which to try to make Aereo (and perhaps the near-live feature of Aereo, in particular) a special case, and try to broadly insulate other cloud technologies.  (But frankly, it would be a very difficult task for the court to construct this result.)

This last possibility would leave the major issue for Aereo whether it is an MVPD under the Communications Act.  (i.e., whether retransmission consent rules apply to it.)  It certainly does not qualify as a cable system for the purposes of the Communications Act.  If the retransmission consent rules don’t apply, the broadcasters’ would effectively have lost despite winning.  (But the rest of the world could be left dealing with the unintended consequences.)

The major issue for everybody else would be how good a job the Court did in carving out an exception to address Aereo.

At this point, I would think least likely of all to be a ruling that holds the performances to be public, and doesn’t attempt to insulate other technologies.  (Though this is the only other approach that would be even remotely “clean.”)

As for the individual Justices, the easiest call would seem to be Justice Ginsburg.  She was silent during questioning of the broadcasters, somewhat active during the questioning of Aereo, and asked the Solicitor General a question on the treaty compliance issue that her daughter has pounded the table regarding.  Furthermore, prior to oral argument, many apparently believed she was a predictable vote for the broadcasters.  I think it’s a reasonable bet they will turn out correct.

The same crowd apparently believed that Justice Kennedy was a predictable vote for Aereo.  I think Kennedy is harder to predict than Ginsburg, based solely on oral argument.  But ultimately, it appears he is sympathetic to Cablevision, and the issue he picked on during questioning of Aereo was a fear of something an entity like Aereo could do someday, but isn’t unique to Aereo.  Coupled with the a priori prediction, I’d guess Kennedy votes for Aereo.

Justice Breyer is not going to be able to find a clean way to write words to rule for the broadcasters.  A vote for Aereo.

Justice Sotomayor really hammered the broadcasters.  Much easier on Aereo.  I think probably a vote for Aereo.

Justice Kagan harped on the broadcasters.  She also seemed to support the Cablevision ruling when she was Solicitor General.  Though she questioned Aereo as to why the broadcasters’ test of who supplies the content wouldn’t work, that test would render Cablevision infringing.  I think probably a vote for Aereo.

Justice Alito was quiet, except for seeming to express sympathy for the Cablevision ruling, and expressing frustration at the broadcasters’ saying there were a lot of cases between the extremes that they didn’t need to rule on today.  I’d guess leans toward Aereo.

Chief Justice Roberts has been characterized as having “slammed” Aereo, but going based just on the transcript, without hearing tone, there’s really one thing he asks Aereo again and again, and that’s whether there’s any reason beyond copyright compliance for their design.  I could understand his annoyance at not getting a straight answer, but at the end of the day, the answer should be irrelevant to the outcome, as he himself allowed was potentially the case.  (It would not solve any of the problems created for other cloud technologies to ignore details and deem Aereo merely a “device or process.”)

Chief Justice Roberts also suggests that the dynamic allocation of antennas is different from in-home, but doesn’t seem to harp on it.  At the same time, he re-iterated the suggestion that Aereo was just a rental version of home equipment, sort of piling on after Sotomayor and Kagan had pushed on the equipment view of Aereo for a while.  I initially guessed he would actually end up leaning toward Aereo.  But after reflecting, I think his persistent questioning on that one point may suggest that he’s tempted to call Aereo just a “device or process,” and so will lean to the broadcasters.

Justice Scalia was silent except during Aereo questioning, where he mostly chimed in to echo Roberts’ question as to whether there was a technological reason for Aereo’s design.  He’s personally close to Ginsburg, and since they rarely agree on the ideological cases, perhaps inclined to agree on a case like this?  I’d guess he’ll lean toward the broadcasters.

Justice Thomas was silent as usual during the entire oral argument.  No clue how he would lean.

So I’d guess 5 votes leaning toward Aereo, 3 leaning toward the broadcasters, and one that’s anybody’s guess.

And I’d sooner guess that, after evaluating everything, Chief Justice Roberts and Justice Scalia might conclude that they need to hold their noses and vote in favor of Aereo’s position, than that those leaning toward Aereo might conclude that they can adopt the broadcasters’ position.

For further discussion see Would it Matter if Aereo were a “Sham?” and Awaiting Aereo. For complete coverage of Aereo, see our Understanding Aereo page.