ABC v. Aereo: SCOTUS Makes a Mockery of the Rule of Law

Posted By on Jul 15, 2014 | 0 comments

With apologies to our readers for the long delay in posting an analysis of the Supreme Court holding in ABC v. Aereo, now back at home, it is finally feasible to do so.

As we summarized in our abbreviated posting shortly after that ruling was issued, the majority holding was deeply disappointing, and frankly disturbing, for anybody who actually believes in the rule of law—for the majority willfully decided to ignore such, and instead, to dispense justice according to its own sense (or its own sense of what it believes the sense of Congress 40 years ago would have been, had it considered such a case).

As Mitch Stoltz of EFF observed:

Justice Breyer’s majority opinion, finding that Aereo performed television programs publicly, was driven by legislative history and first principles, with analysis of the statutory text an afterthought.  That approach turned a pure question of statutory interpretation into something more like common law adjudication.

Or as Justice Scalia put it in his dissent, the majority ruling was a “result-driven rule” amounting to a “test-free, ad hoc, case-by-case evaluation.”  The holding “distort[ed] the Copyright Act” but produced an outcome aligned with “the majority’s estimation of right and wrong” (the sense of which Justice Scalia later acknowledged that he, himself, shared).

In a discussion on twitter, I saw one commentator suggest that the majority holding

…is looking like a separation-of-powers decision to me. It’s all about deference to the legislative reaction to Fortnightly and Tele[prompter].

Except that the majority holding is precisely the opposite, of course.  In Fortnightly and Teleprompter, the Court used first principles and adjudicated the question of whether cable companies performed copyrighted works on a common law-like basis, as Mitch Stoltz describes it.  Congress responded to those decisions by providing statutory definitions for what did and did not constitute performance, and public performance.

Quite the opposite of deference to this act of Congress, the majority reached its conclusion by ignoring those definitions and instead applying first principles and adjudicating the question on a common law-like basis.  Elevating its own perception of what Congress would have intended over that which Congress actually wrote into law, in reaching its determination, is in no way an act of actual deference.  Rather, it is judicial activism at its pinnacle, with the Court attempting to plug a perceived loophole in the law.  But as Justice Scalia observed (and as we have oft noted in our prior discussions):

It is not the role of this Court to identify and plug loopholes. It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes.

And as Justice Scalia continued (and we have also oft noted):

Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude “looks-like-cable-TV” solution the Court invents today.

Furthermore, as we shall see below, the majority further disregarded the Court’s own basic judicial principles, for the expedience of reaching what it deemed a just result.

Even for those who believe that justice was ultimately served in this case, or who believe that Aereo could have properly been found to infringe by a legitimate analysis, this holding should be deeply disturbing.  We have known for decades now that Supreme Court holdings on hot button political issues can be expected to reflect nothing more than the ideological preferences of a majority of justices.  I, for one, had clung to the belief that, on other matters, the Court could be reasonably relied upon to impartially apply the rule of law.  The majority’s disregard for the actual statutory text in Aereo, and its provision of what it effectively characterizes, itself, as an anomalous decision peculiar specifically to Aereo, however, suggests that it is nothing but whimsical luck if any of the Court’s holdings actually adhere to any established principles of law.  This is the rule of judges, not the rule of law.

Who Performs?

Let’s take some time to actually go through the majority holding. The Court sought to answer two key questions:

First…does Aereo “perform” at all? And second, if so, does Aereo do so “publicly”?

The majority starts by asserting:

Considered alone, the language of the Act does not clearly indicate when an entity “perform[s]” (or “transmit[s]”) and when it merely supplies equipment that allows others to do so. But when read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo’s performs.

The majority then proceeds to recount how the Court had held in Fortnightly and Teleprompter that cable companies did not perform by retransmission, and how Congress, by the 1976 Copyright Act, had clearly amended the law to hold that cable companies do perform by retransmission (but, unmentioned by the majority, also to grant cable companies a royalty-free statutory license to so perform, when it came to doing the equivalent of what Aereo did: retransmit broadcast stations within their local market).

Of course, as Justice Scalia observes in his dissent, nothing about this is relevant to how the courts have answered the question of whether a party “performs” in past cases.  (Citations omitted in all excerpts.)

The Networks’ claim is governed by a simple but profoundly important rule: A defendant may be held directly liable only if it has engaged in volitional conduct that violates the Act.

This requirement is firmly grounded in the Act’s text, which defines “perform” in active, affirmative terms: One “perform[s]” a copyrighted “audiovisual work,” such as a movie or news broadcast, by “show[ing] its images in any sequence” or “mak[ing] the sounds accompanying it audible.” And since the Act makes it unlawful to copy or perform copyrighted works, not to copy or perform in general, the volitional-act requirement demands conduct directed to the plaintiff ’s copyrighted material. Every Court of Appeals to have considered an automated-service provider’s direct liability for copyright infringement has adopted that rule. Although we have not opined on the issue, our cases are fully consistent with a volitional-conduct requirement. For example, we gave several examples of direct infringement in Sony, each of which involved a volitional act directed to the plaintiff’s copyrighted material.

The volitional-conduct requirement is not at issue in most direct-infringement cases; the usual point of dispute is whether the defendant’s conduct is infringing (e.g., Does the defendant’s design copy the plaintiff ’s?), rather than whether the defendant has acted at all (e.g., Did this defendant create the infringing design?). But it comes right to the fore when a direct-infringement claim is lodged against a defendant who does nothing more than operate an automated, user-controlled system. Internet-service providers are a prime example. When one user sends data to another, the provider’s equipment facilitates the transfer automatically. Does that mean that the provider is directly liable when the transmission happens to result in the “reproduc[tion],” of a copyrighted work? It does not. The provider’s system is “totally indifferent to the material’s content,” whereas courts require “some aspect of volition”directed at the copyrighted material before direct liability may be imposed. The defendant may be held directly liable only if the defendant itself “trespassed on the exclusive domain of the copyright owner.” Most of the time that issue will come down to who selects the copyrighted content: the defendant or its customers.

A comparison between copy shops and video-on-demand services illustrates the point. A copy shop rents out photocopiers on a per-use basis. One customer might copy his 10-year-old’s drawings—a perfectly lawful thing to do—while another might duplicate a famous artist’s copyrighted photographs—a use clearly prohibited by §106(1). Either way, the customer chooses the content and activates the copying function; the photocopier does nothing except in response to the customer’s commands. Because the shop plays no role in selecting the content, it cannot be held directly liable when a customer makes an infringing copy.

Video-on-demand services, like photocopiers, respond automatically to user input, but they differ in one crucial respect: They choose the content. When a user signs in to Netflix, for example, “thousands of . . . movies [and] TV episodes” carefully curated by Netflix are “available to watch instantly.” That selection and arrangement by the service provider constitutes a volitional act directed to specific copyrighted works and thus serves as a basis for direct liability.

Applying the volitional conduct rule to Aereo, Justice Scalia continues:

So which is Aereo: the copy shop or the video-on-demand service? In truth, it is neither. Rather, it is akin to a copyshop that provides its patrons with a library card. Aereo offers access to an automated system consisting of routers,servers, transcoders, and dime-sized antennae. Like a photocopier or VCR, that system lies dormant until a subscriber activates it. When a subscriber selects a program, Aereo’s system picks up the relevant broadcast signal, translates its audio and video components into digital data, stores the data in a user-specific file, and transmits that file’s contents to the subscriber via the Internet—at which point the subscriber’s laptop, tablet, or other device displays the broadcast just as an ordinary television would. The result of that process fits the statutory definition of a performance to a tee: The subscriber’s device “show[s]” the broadcast’s “images” and “make[s] the sounds accompanying” the broadcast “audible.”The only question is whether those performances are the product of Aereo’s volitional conduct.

They are not. Unlike video-on-demand services, Aereo does not provide a prearranged assortment of movies and television shows. Rather, it assigns each subscriber an antenna that—like a library card—can be used to obtain whatever broadcasts are freely available. Some of those broadcasts are copyrighted; others are in the public domain. The key point is that subscribers call all the shots: Aereo’s automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it. Aereo’s operation of that system is a volitional act and a but-for cause of the resulting performances, but, as in the case of the copy shop, that degree of involvement is not enough for direct liability.  See Grokster, 545 U. S., at 960 (BREYER, J., concurring) (“[T]he producer of a technology which permits unlawful copying does not himself engage in unlawful copying”).

In sum, Aereo does not “perform” for the sole and simple reason that it does not make the choice of content. And because Aereo does not perform, it cannot be held directly liable for infringing the Networks’ public-performance right.

This is a statement solely relating to the question of direct liability, of course. For those not already familiar with the distinction between direct and secondary liability (Scalia’s dissent):

There are two types of liability for copyright infringement: direct and secondary. As its name suggests, the former applies when an actor personally engages in infringing conduct. Secondary liability, by contrast, is a means of holding defendants responsible for infringement by third parties, even when the defendants “have not themselves engaged in the infringing activity.” It applies when a defendant “intentionally induc[es] or encourag[es]” infringing acts by others or profits from such acts “while declining to exercise a right to stop or limit [them].”

Most suits against equipment manufacturers and service providers involve secondary-liability claims. For example, when movie studios sued to block the sale of Sony’s Betamax videocassette recorder (VCR), they argued that Sony was liable because its customers were making unauthorized copies. Record labels and movie studios relied on a similar theory when they sued Grokster and StreamCast, two providers of peer-to-peer file-sharing software.

This suit, or rather the portion of it before us here, is fundamentally different. The Networks claim that Aereo directly infringes their public-performance right.

Furthermore, as Scalia notes, the conclusion that Aereo does not “perform” under the volitional conduct rule, and so does not directly infringe, doesn’t render it non-infringing:

That conclusion does not necessarily mean that Aereo’s service complies with the Copyright Act. Quite the contrary. The Networks’ complaint alleges that Aereo is directly and secondarily liable for infringing their public performance rights and also their reproduction rights. Their request for a preliminary injunction—the only issue before this Court—is based exclusively on the direct-liability portion of the public-performance claim (and further limited to Aereo’s “watch” function, as opposed to its “record” function). Affirming the judgment below would merely return this case to the lower courts for consideration of the Networks’ remaining claims.

Our friends at Truth on the Market argue that Aereo actually did engage in volitional conduct by failing to enable NY users to tune some low-power stations in Manhattan.  Of course, even if true, this allegation wasn’t a part of the record such that the Court could rest a decision on it.  More importantly, at worst, such would be an easily-remedied, minor defect, not an inherent, defining characteristic of the service.

Our fellow commentator Devlin Hartline has repeatedly argued that merely designing a system such as Aereo’s (or such as Cablevision’s RS-DVR) constitutes sufficient volitional conduct to render the operator directly liable.  Such an interpretation goes well beyond precedent requiring what Justice Scalia describes as “a volitional act directed to the plaintiff’s copyrighted material.”  Furthermore, such an interpretation of volition would also encompass home equipment rented to consumers by service providers, as the only substantive difference between a traditional set-top-box DVR and an RS-DVR is not in its functional design, but merely in the location of the storage.  (What’s more, by this standard, it’s not clear what would distinguish even customer-purchased equipment, such as Tivos or the even the original VCRs.)

Hartline actually argues that the majority applied a volitional conduct test, despite the fact that the majority opinion makes no mention of volitional conduct, whatsoever, no mention of any caselaw relevant to such, and predicates its conclusion entirely on the functional similarity between Aereo and cable systems—a characteristic that has nothing to do with volition, whatsoever:

Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach. (“[C]able systems are commercial enterprises whose basic retransmission operations are based on the carriage of copyrighted program material”). Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, almost as they are being broadcast. In providing this service, Aereo uses its own equipment, housed in a centralized warehouse, outside of its users’ homes. By means of its technology (antennas, transcoders, and servers), Aereo’s system “receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.” It “carr[ies] . . . whatever programs [it] receive[s],” and it offers “all the programming” of each over-the-air station it carries.

[…] We recognize, and Aereo and the dissent emphasize, one particular difference between Aereo’s system and the cable systems at issue in Fortnightly and Teleprompter. The systems in those cases transmitted constantly; they sent continuous programming to each subscriber’s television set. In contrast, Aereo’s system remains inert until a subscriber indicates that she wants to watch a program.  Only at that moment, in automatic response to the subscriber’s request, does Aereo’s system activate an antenna and begin to transmit the requested program.

This is a critical difference, says the dissent. It means that Aereo’s subscribers, not Aereo, “selec[t] the copyrighted content” that is “perform[ed],” and for that reason they, not Aereo, “transmit” the performance. Aereo is thus like “a copy shop that provides its patrons with a library card.” A copy shop is not directly liable whenever a patron uses the shop’s machines to “reproduce” copyrighted materials found in that library. And by the same token, Aereo should not be directly liable whenever its patrons use its equipment to “transmit” copyrighted television programs to their screens.

In our view, however, the dissent’s copy shop argument, in whatever form, makes too much out of too little. Given Aereo’s overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here.

In fact, both the majority and the dissent overlook another critical difference between Aereo and cable systems.  The cable systems of Fortnightly and Teleprompter (as well as modern cable systems) served subscribers using shared antennas (or other reception equipment), whereas Aereo dedicated individual antennas (and transcoders, and disk space) to users.  This difference is essential to the argument that Aereo is actually offering equipment rental (as a service).  It is an argument that traditional cable systems could not make, and it renders Aereo completely consistent with other cloud service providers who are generally accepted, at least colloquially, as offering equipment rental as a service.

But getting back to the issue of volitional conduct, the above excerpt demonstrates the majority’s rejection of the use of a volitional conduct test in determining whether Aereo performs.  Instead, the majority holds that Aereo must be deemed to perform merely on account of its functional similarity to cable systems, and regardless of any considerations of volition.

This is precisely what caused Justice Scalia to characterize the majority’s holding as “Guilt By Resemblance” and to criticize that it:

…greatly disrupts settled jurisprudence which, before today, applied the straightforward, bright-line test of volitional conduct directed at the copyrighted work. If that test is not outcome determinative in this case, presumably it is not outcome determinative elsewhere as well. And it is not clear what the Court proposes to replace it. Perhaps the Court means to adopt (invent, really) a two-tier version of the Copyright Act, one part of which applies to “cable companies and their equivalents” while the other governs everyone else.

This is, of course, precisely what the majority has done: adopted a completely anomalous version of the transmit clause for Aereo (and, ostensibly, any other entities that it deems equivalent to cable companies) different from the version of the transmit clause that the majority suggests should apply to all others, despite that fact that the transmit clause was quite intentionally drafted to be application-neutral, and makes no specific mention of cable systems, or even television broadcast stations, whatsoever.

Public or Private?

Having held that Aereo performs, the majority is left with the question of whether those performances are public.

While the majority indulges us with a putative analysis of the public performance question, as Justice Scalia notes, the outcome is a foregone conclusion:

Part II of the opinion concludes that Aereo performs because it resembles a cable company, and Congress amended the Act in 1976 “to bring the activities of cable systems within [its] scope.” Part III of the opinion purports to address separately the question whether Aereo performs “publicly.” Trouble is, that question cannot remain open if Congress’s supposed intent to regulate whatever looks like a cable company must be given legal effect (as the Court says in Part II). The Act reaches only public performances, so Congress could not have regulated “the activities of cable systems” without deeming their retransmissions public performances. The upshot is this: If Aereo’s similarity to a cable company means that it performs, then by necessity that same characteristic means that it does so publicly, and Part III of the Court’s opinion discusses an issue that is no longer relevant—though discussing it certainly gives the opinion the “feel” of real textual analysis.

And this is precisely what we get: an analysis intended to support the pre-ordained conclusion that the performance is public, but which makes little rational sense, fails to withstand even superficial scrutiny, and is all but certain to create unintended consequences for many other technologies, despite the fact that the majority seems to believe them to be public “goods.”

We must start by recalling the transmit clause of the 1976 Copyright Act since this is the portion of the Copyright Act at issue:

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.

As Cablevision compellingly argued in its amicus brief, and per the statutory language, whether a performance (transmitted to non-public places) is public is determined by the audience “capable of receiving the performance.”  A public audience is one that consists of “a substantial number of persons outside of a normal circle of a family and its social acquaintances.”

A critical question—in fact, the critical question—has always been:

What performance does Aereo transmit?

The broadcasters have always argued that the performance transmitted is the prior performance that the broadcast station originally transmitted.  That is, that the retransmission of a performance is the same performance as the original broadcast—in essence, seeking to redefine the “performance” referenced from being a particular performance of a work, to being any performance of a particular work.  By this reasoning, all Aereo subscribers (a public audience) receive the same performance, and the performance is presumably public.

The Second Circuit rejected this approach (in both Cablevision and Aereo), correctly observing that such an interpretation would render major aspects of the statute meaningless (such as the distinction between public and private transmissions).

Cablevision again made a completely compelling case in its brief, not only that interpreting the retransmissions as separate performances produced consistent and meaningful results that cleanly preserved existing notions of the public/private distinction in other contexts (which the broadcasters’ proposed interpretation did not), but also citing legislative history demonstrating that Congress clearly intended for retransmissions to be separate performances from their original transmissions.

(N.B., This is how legislative history is properly used in adjudicating cases.  Where there is an ambiguity in how statutory language is to be interpreted, the legislative history can be instructive in confirming a particular interpretation of the statutory text as correct, or in selecting among multiple, equally-plausible interpretations.  Doing such is very different from looking to the legislative history as the primary basis for making a determination, with consideration of the actual statutory text as a mere afterthought, or secondary consideration.)

Amazingly, the majority first states that it assumes arguendo that the retransmissions are distinct performances, but then proceeds to effectively argue that all performances (or at least, all performances by a single party) are always properly aggregated—even going so far as to include non-transmission performances:

Thus one can transmit a message to one’s friends, irrespective of whether one sends separate identical e-mails to each friend or a single e-mail to all at once. So can an elected official communicate an idea, slogan, or speech to her constituents, regardless of whether she communicates that idea, slogan, or speech during individual phone calls to each constituent or in a public square.

The fact that a singular noun (“a performance”) follows the words “to transmit” does not suggest the contrary. One can sing a song to his family, whether he sings the same song one-on-one or in front of all together. Similarly, one’s colleagues may watch a performance of a particular play—say, this season’s modern-dress version of “Measure for Measure”—whether they do so at separate or at the same showings. By the same principle, an entity may transmit a performance through one or several transmissions, where the performance is of the same work.

The Transmit Clause must permit this interpretation, for it provides that one may transmit a performance to the public “whether the members of the public capable of receiving the performance . . . receive it . . . at the same time or at different times.” Were the words “to transmit . . . a performance” limited to a single act of communication, members of the public could not receive the performance communicated “at different times.”

This is simply nonsense.

One can sing a song to his family, whether he sings the same song one-on-one or in front of all together—but the former is multiple performances, while the latter is a single performance.  And one’s colleagues may watch a performance of a play separately or together, but that doesn’t change the fact the former case involves multiple performances while the latter case involves a single performance.

Neither is determinative of whether any given performance is public or private.  Whether one sings a song to his family via a single performance to the entire group, or to each family member individually, the audience is always a family circle, and so the performances are always private.

Likewise, if any member of the public may attend the performance of a play, it is a public performance, even if only one person attends.

And most significantly, if a performance is a private performance, that there are a thousand other private performances (or even other public performances) doesn’t transform that private performance into a public performance.

The majority is certainly correct that the transmit clause, by its language, must allow for a transmission to be a public performance, even when it is only received by a single person—but that is very different from what the majority ridiculously concludes instead: that the transmit clause requires that all separate transmissions of separate performances be aggregated to evaluate whether they public.

Of course, the majority supplants any further analysis by declaring the process of making individual subscriber copies (and therefore, making the retransmissions separate performances, limited to a single subscriber) a mere “device or process” for the purposes of the transmit clause, so that it is simply to be ignored (without any attempt to evaluate what the implications of such an interpretation would be).

Attempting to Clean Up the Mess

Having made a complete mess of the statutory interpretation in order to achieve a result-driven conclusion especially for Aereo, the majority moves on to try to limit the collateral damage to others.

They begin this process with what what some might generously call a legal fiction.  I, however, would call it what it is: a half-truth, a bald-faced lie, and a complete disregard for proper judicial process.

The majority tells us:

Neither the record nor Aereo suggests that Aereo’s subscribers receive performances in their capacities as owners or possessors of the underlying works.

(The language here appears anomalous.  We shall assume that the majority intended to say “as owners or possessors of the underlying copies of the works.”)

The half-truth: the record doesn’t suggest that Aereo’s subscribers receive performances in their capacities as owners or possessors of the underlying copies only because the broadcasters limited the scope of the challenge before the Court to address the public performance issue, solely.  The broadcasters specifically chose to avoid challenging the legality of the copies made—according to Aereo, with the broadcasters acknowledging that they didn’t like their chances of prevailing on that issue, in light of the Sony precedent—and here the majority rewards them for such by effectively assuming that the copies are not lawful!

The bald-faced lie: Aereo absolutely suggested that Aereo’s subscribers received performances as owners or possessors of the the underlying copies used to generate those performances.  From Aereo’s brief, responding to the solicitor general’s suggestion that copies in the Aereo system were not lawfully acquired by subscribers:

Similarly, [the government] asserts that the RS-DVR service at issue in Cablevision was not infringing because there “the cable company already possessed [a] license[] to transmit copyrighted television programs to its subscribers.”  Under Sony, it reasons, consumers have a fair-use right to make a personal copy of televised content for timeshifted viewing, and “[t]here is no evident reason to reach a different result . . . merely because the relevant personal copy is created and stored remotely in digital form.”

Properly understood, the government’s reasoning compels dismissal of petitioners’ claim. The recordings made by Aereo’s users are equally lawful under fair-use principles – a fact petitioners effectively conceded by adverting to Sony in explaining why they did not seek an injunction on reproduction grounds. […] As this case comes to the Court, there is simply no basis for the government’s assertion that the recordings made by Aereo’s users are unlawful.

and from Aereo’s counsel, David Frederick, during oral argument:

[The broadcasters] abandoned their challenge in the preliminary injunction proceeding to the reproduction right issue because it runs right into the Sony decision. In Sony, this Court held that consumers have a fair use right to take local over-the-air broadcasts and make a copy of it. All Aereo is doing is providing antennas and DVRs that enable consumers to do exactly what this Court in Sony recognized they can do when they’re in home and they’re moving the equipment, the antennas and the DVRs.

and later:

…you would still have to explain why the hundreds of thousands of people that are subscribers to Aereo’s service don’t have exactly the same fair use right to get over-the-air broadcast content that all of those people who are not Aereo subscribers but they happen to have a home antenna and a DVR. Those people have every bit as right to get that access.

For a case where lawfulness of the underlying copy was never at issue, by the choice of the plaintiffs, how much clearer could Aereo possibly have been in asserting that Aereo subscribers had the same owner/possessor relationship to the underlying copies as any DVR user?

In an amicus brief, 36 Intellectual Property and Copyright Law Professors, led by James Grimmelmann and David Post, argued that Aereo was a reproduction rights case masquerading as a performance rights case, and that as a result, the case before the Court was not ripe for proper consideration:

The Aereo system is the functional equivalent of the Sony Betamax: consumers use it to record television programs for subsequent playback to themselves. In copyright terms, these are reproductions subject to the Copyright Act, many of which are likely protected as fair uses under Sony Corp. of America v. Universal City Studios. If any consumers do infringe, Aereo might be secondarily liable.

More than this, it is impossible to say on the current record. Petitioners have not pursued before this Court the argument that Aereo’s users infringe, the argument that anyone infringes the reproduction right, or the argument that Aereo is secondarily liable for its customers’ infringements. As a result, the facts that would bear on these questions are not in evidence.

Here, the majority makes their case.  They transform the public performance issue into a reproduction rights question by suggesting that the public vs. private performance question turns on whether Aereo subscribers have a relationship with the underlying copies as owners or possessors:

…when an entity performs to a set of people, whether they constitute “the public” often depends upon their relationship to the underlying work. When, for example, a valet parking attendant returns cars to their drivers, we would not say that the parking service provides cars “to the public.” We would say that it provides the cars to their owners. We would say that a car dealership, on the other hand, does provide cars to the public, for it sells cars to individuals who lack a pre-existing relationship to the cars. Similarly, an entity that transmits a performance to individuals in their capacities as owners or possessors does not perform to “the public,” whereas an entity like Aereo that transmits to large numbers of paying subscribers who lack any prior relationship to the works does so perform.

But rather than take the judicially-appropriate action, given this line of analysis, of remanding the case to develop a proper record to address the question of ownership/possession, the majority instead cites the (intentional) absence of such record to simply assume that there is no such relationship.  To grant the broadcasters the benefit of such a presumption, because the broadcasters, themselves, chose to exclude that issue from the present case, is outrageous, and an indefensible breach of proper judicial process.

(I daresay that an appropriate course of action for the district court considering this case on remand would be to proceed to properly develop the record on this issue, and if upon doing such the court concludes that subscribers actually do have an ownership or possessor relationship to the copies, then to follow the majority’s guidance and conclude the performances to actually be private.)

To the substance, I defy anybody to look at Aereo’s system, where a subscriber solely and exclusively controls the creation, deletion and playback of any copies, and explain how anyone could reasonably presume that such subscriber does not have at least a possessor relationship with the copy.

Furthermore, even if the copies were not lawfully owned by the subscribers, I defy anybody to look at the statutory text of the transmit clause, and explain where it, anywhere, even remotely suggests that lawful ownership (or even possession, for that matter) has any bearing on the public vs. private performance question.

If I make an illicit recording of a song, does that render it a public performance when I play that recording in my home, so that only I can hear it?  Don’t I still have to actually perform it to the public for it to be a public performance?

The simple truth is, even ignoring the inanity of the majority’s conclusion, this test fails to distinguish other technologies which the majority appears to believe to be likely lawful, and explicitly suggests that its holding in this case won’t prejudice.  For example, the Court seems to look favorably on Cablevision’s RS-DVR, but all of the majority’s reasoning as to why Aereo infringes apply equally to Cablevision’s (and virtually any cable) RS-DVR.  The majority’s suggestion that its determination in this case is anomalous notwithstanding, given the majority’s rationale for justifying its holding, it is difficult to see how any lower court could reconcile finding an RS-DVR to be non-infringing.

More generally, as Justice Scalia observed:

The Court vows that its ruling will not affect cloud-storage providers and cable television systems, but it cannot deliver on that promise given the imprecision of its result-driven rule.

A Just Result?

Most observers, including most of the general public and most of mainstream media, have taken or will take little note of the details of the Court’s determination.  Rather, they will note only the bottom line outcome.

If we ignore the details, we’re left with the question of whether justice has been served.

As I have noted repeatedly in prior articles on Aereo, it seems quite likely that if Congress of 1976 had foreseen the likes of Aereo, they would have decided to treat them like cable companies.  But while, by the 1976 Copyright Act, Congress brought cable systems within the purview of copyright law, it’s also the case that they fundamentally held that delivering the signals of broadcast stations to viewers within the local markets of those broadcast stations warranted no additional compensation to rightsholders, and as a result, they granted cable systems a royalty-free statutory license for such local retransmission.

As we noted in prior articles, by the plain language of the Copyright Act, if Aereo’s transmissions constitute public performances by Aereo, then Aereo qualifies as a cable system eligible for that statutory license.  Multiple justices (among the majority) seemed to acknowledge this reality, during questioning at oral argument.

Historically, the Copyright Office of the Library of Congress, which is responsible for administering that statutory license, has imposed an extra-statutory requirement of its own, rejecting entities that aren’t regulated by the FCC as cable systems, even when they meet all elements of the statutory definition of “cable system” in the Copyright Act.  At least one lower court has deferred to the Copyright Office’s determination in that regard.

Just before the Aereo ruling was announced, we opined that if the ruling went against Aereo, they would declare themselves a cable system, and move to take advantage of the statutory license.  Last week, Aereo submitted a filing in its lower court case suggesting it intended to do just that.

Frankly, the noises coming out of Aereo since the ruling suggest to me that management wants to proceed aggressively, but Aereo investors are probably balking at further investment on a still-uncertain legal path.  So we might not see Aereo proceed, after all—though we will certainly see somebody (such as FilmOn X) pursue this tack once again.

It is unfortunate—actually, I think it irresponsible—that the majority clearly considered this issue, but failed to even mention it in dicta in their holding.  By failing to mention it, they leave Aereo (and others) with a high level of uncertainty over an issue that should be very simple and straightforward.

Consider the possibility that the courts allow the Copyright Office’s interpretation to stand.  We would have Aereo deemed subject to copyright liability, solely because the Court deemed it equivalent to a cable system, and despite the fact that the relevant portions of the Copyright Act make no special provision for cable systems.  On the other hand, we would have Aereo deemed ineligible for the statutory license that Congress very intentionally granted specifically to cable systems, and despite the fact that Aereo quite clearly meets the Copyright Act’s definition of “cable system” used in creating the statutory license.

Even ignoring the details, it’s hard to conceive how the result in this case could be considered just, if the courts allow the statutory license Congress intentionally granted to cable systems to be denied to Aereo, after it was deemed guilty of infringement, by resemblance to cable systems.

Further Commentary from the Rightsholders Über Alles Contingent

Consistent with the commentary we mentioned previously, recasting the majority’s anomalous holding to argue that it actually endorses one’s personal theory of the case has proven a common theme among supporters of the broadcasters.  Terry Hart of the Copyright Alliance tells us that the court reached a “similar conclusion” to his view that “one should focus on the relationship between the performer and the audience” in determining whether a performance is public.  Devlin Hartline repeats the same claim.  This notwithstanding the fact that the majority holding nowhere says any such similar thing.  Rather, as we saw above, the majority actually suggests that courts should focus on the relationship between the audience and the copy of the content being performed.

On the other hand, Hart’s criticism of Scalia’s characterization of volition as central to copyright infringement rings truer (as purely textual analysis, that is—the state of long-established caselaw is a different story).  Some trouble for Hart, however, is that he, himself, has endorsed a similar principle of proximate causation.  And more importantly, contrary to his declaration that “the majority in Aereo had the better interpretation of ‘perform,'” in fact, the majority provided no rule for the interpretation of “perform,” whatsoever.  Instead, they gave us only an anomalous determination, specific to Aereo, that Aereo must be deemed to perform (without any need for interpretation of that term) on the basis of their view of the legislative history, and Aereo’s functional similarity to cable systems.  All other cases are left as a future exercise:

We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us. We agree with the Solicitor General that “[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court, as to which ‘Congress has not plainly marked [the] course,’ should await a case in which they are squarely presented.”

It’s hard to see how one could reasonably conclude that the majority “had the better interpretation” of “perform,” when the majority actually provided no interpretation of “perform” at all!  (And it certainly is nowhere close to obvious that, by issuing this admittedly anomalous determination respecting Aereo, the majority was rejecting the significant body of lower court precedent respecting volitional conduct that Justice Scalia relies upon in his dissent.)

Truth on the Market declared that the majority “implicitly acknowledged” their argument that DMCA’s safe harbor provisions provide adequate protection for other cloud storage providers.  The only trouble being, of course, that the majority did no such thing, not even implicitly.  Rather, the majority merely cited DMCA’s safe harbor provisions as an example to support their suggestion that concerned parties could seek redress from Congress:

…to the extent commercial actors or other interested entities may be concerned with the relationship between the development and use of such technologies and the Copyright Act, they are of course free to seek action from Congress. Cf. Digital Millennium Copyright Act, 17 U. S. C. §512.

Truth on the Market additionally dismissed Justice Scalia’s criticism of the majority’s use of the legislative history by characterizing it as:

…a practice he opposes as a means of divining a statute’s meaning;

I cannot speak to what Justice Scalia does or does not oppose as interpretive methodology, generally, but his criticism in this case was not stated as a philosophical objection to the use of legislative history, generally, but rather, as an objection to the extremely selective use of legislative history in this case, and the use of a pretext of ambiguity to effectively elevate the legislative history above the statutory text, itself:

Perceiving the text to be ambiguous, the Court reaches out to decide the case based on a few isolated snippets of legislative history. The Court treats those snippets as authoritative evidence of congressional intent even though they come from a single report issued by a committee whose members make up a small fraction of one of the two Houses of Congress. Little else need be said here about the severe shortcomings of that interpretative methodology.

I would add that the majority specifically ignores other aspects of the legislative history that are far more relevant to both the issues in question and any actual ambiguity in the statutory text.

Final Thoughts

For final thoughts, I leave you with Justice Scalia’s final thoughts, from his dissent:

I share the Court’s evident feeling that what Aereo is doing (or enabling to be done) to the Networks’ copyrighted programming ought not to be allowed. But perhaps we need not distort the Copyright Act to forbid it. As discussed at the outset, Aereo’s secondary liability for performance infringement is yet to be determined, as is its primary and secondary liability for reproduction infringement. If that does not suffice, then (assuming one shares the majority’s estimation of right and wrong) what we have before us must be considered a “loophole” in the law. It is not the role of this Court to identify and plug loopholes. It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude “looks-like-cable-TV” solution the Court invents today.

We came within one vote of declaring the VCR contraband 30 years ago in Sony. The dissent in that case was driven in part by the plaintiffs’ prediction that VCR technology would wreak all manner of havoc in the television and movie industries.

The Networks make similarly dire predictions about Aereo. We are told that nothing less than “the very existence of broadcast television as we know it” is at stake. Aereo and its amici dispute those forecasts and make a few of their own, suggesting that a decision in the Networks’ favor will stifle technological innovation and imperil billions of dollars of investments in cloud-storage services. We are in no position to judge the validity of those self-interested claims or to foresee the path of future technological development. Hence, the proper course is not to bend and twist the Act’s terms in an effort to produce a just outcome, but to apply the law as it stands and leave to Congress the task of deciding whether the Copyright Act needs an upgrade. I conclude, as the Court concluded in Sony: “It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of Appeals must be [affirmed].”