U.S. Supreme Court Rules That Aereo’s Streaming of Broadcast Television Programming Violates the Copyright Act

June 25, 2014

On June 25, 2014, the Supreme Court of the United States ruled in American Broadcasting Cos. v. Aereo, Inc., 13-461 (U.S. June 25, 2014), that the video streaming service offered by Aereo, Inc. infringed the exclusive right of copyright owners to publicly perform television broadcasts.  The Court’s opinion is a major victory for broadcasters and content providers that seek to prevent unauthorized re-broadcasting of their works, although the Court expressly stated that its holding is "limited" and that the Copyright Act is not intended to "discourage or to control the emergence or use of different kinds of technologies."  Slip op. at 16.

Aereo charges subscribers a monthly fee to receive broadcast television programming over the Internet, either in (almost) real time or after the initial over-the-air broadcast.  Once a subscriber selects the content she wishes to view, Aereo’s servers assign one of thousands of dime-sized antennas at Aereo’s central warehouse to receive and record the broadcast.  A specific antenna is dedicated to a single subscriber, and the antenna creates a unique copy of the broadcast that is stored on a subscriber-specific hard drive and then transmitted only to the particular subscriber who requested it.  Once several seconds of programming have been recorded, Aereo begins streaming the selected program to the subscriber.

The plaintiff broadcasting companies, producers, and distributors who own copyrights in the programs Aereo was transmitting sued Aereo in 2012 almost immediately after the service was launched.  The plaintiffs alleged direct–as opposed to secondary–infringement under the Copyright Act, and alleged that Aereo’s transmission constituted a public performance of copyrighted works.  Specifically, plaintiffs relied on a 1976 amendment to the Copyright Act that awards copyright owners the "exclusive righ[t]" to "perform the copyrighted work publicly" (17 U.S.C. § 106(4)), and defines that exclusive right to "transmit or otherwise communicate a performance . . . of the [copyrighted] work . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times."  Id. § 101.

The district court denied plaintiffs’ motion for a preliminary injunction, and a divided panel of the Second Circuit affirmed.  WNET, Thirteen v. Aereo, Inc., 712 F.3d 676 (2d Cir. 2013).  Following its precedents on the scope of the public performance right, the Second Circuit concluded that Aereo’s streaming service did not publicly perform copyrighted works because "the potential audience of each Aereo transmission is the single user who requested that a program be recorded."  WNET, 712 F.3d at 690.

The Supreme Court reversed the Second Circuit’s decision in an opinion by Justice Breyer, concluding:  (1) that Aereo’s streaming service performed the copyrighted works, and (2) that it did so publicly.

First, the Court concluded that Aereo performs the copyrighted works.  The 1976 Copyright Act amendments followed rulings by the Supreme Court that community antenna television ("CATV") providers (the precursors of modern cable providers) did not "perform" copyrighted works under their distribution model (see Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968); Teleprompter Corp. v. Columbia Broadcasting Sys., Inc., 415 U.S. 394 (1974)), and expressly broadened the definition of "perform[ing]" to include the CATV transmissions (slip op. at 7; see 17 U.S.C. § 101).  And the Court concluded that Aereo’s activities were "substantially similar to those of the CATV companies that Congress amended the Act to reach":  Aereo used its own equipment, located outside of users’ homes, to receive copyrighted television broadcasts and retransmit them to its subscribers.  Slip op. at 8–9.  Differences between Aereo and CATV were not "critical" "in light of Congress’s basic purposes in amending the Copyright Act."  Id. at 10.

Justice Scalia, in an opinion joined by Justices Thomas and Alito, dissented from what he characterized as the majority’s "’looks-like-cable-TV’" analysis of the performance issue.  According to the dissent, Aereo did not "perform" copyrighted works at all.  Slip op. at 1 (Scalia, J., dissenting).  Justice Scalia argued that the Copyright Act defined "perform" in "active, affirmative terms," which implied a "volitional-conduct requirement" for direct-infringement claims.  Id. at 3.  Aereo’s activities did not satisfy this requirement, he argued, because viewers, not Aereo, chose which content would be transmitted, and because the "subscribers call[ed] all the shots."  Id. at 6.

Second, the Court’s majority opinion also concluded that Aereo performed copyrighted works publicly.  The fact that Aereo made individual transmissions "to only one subscriber" did not functionally distinguish its service from the CATV services Congress had targeted with the 1976 Copyright Act amendments, and the amended Act suggested that "multiple, discrete transmissions" to individuals might nonetheless constitute public performance.  Slip op. at 12–13.  The Court noted that whether an audience constituted "’the public’ often depends on their relationship to the underlying work"–although "an entity that transmits a performance to individuals in their capacities as owners or possessors [of a copyrighted work] does not perform to ‘the public,’" "an entity like Aereo that transmits to large numbers of paying subscribers who lack any prior relationship to the works does so perform."  Id. at 15.

Importantly, the Court went out of its way in the opinion to avoid condemning emerging technologies, and to limit the scope of the ruling to the Aereo technology before it.  "Aereo and many of its supporting amici" had argued that condemning Aereo’s conduct would "impose copyright liability on other technologies, including new technologies, that Congress could not possibly have wanted to reach."  Slip op. at 15–16.  The Court "agree[d]" that Congress "did not intend to discourage or to control the emergence or use of different kinds of technologies."  Id. at 16.  But the Court also "agree[d] 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."  Id. at 17.  And the Court deferred to Congress to regulate "the use of such technologies and the Copyright Act." Ibid.

The Court’s decision in Aereo is a big win for the broadcasting companies, but on the opinion’s own terms, it is expressly a "limited holding" (Slip. op. at 16–17), and may be distinguishable with respect to different kinds of technology.

Gibson, Dunn & Crutcher LLP  

Gibson, Dunn & Crutcher’s lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Appellate and Constitutional Law, Intellectual Property or Media, Entertainment and Technology practice groups, or the authors of this alert:
 
Howard S. Hogan – Washington, D.C. (202-887-3640, hhogan@gibsondunn.com)
Blaine H. Evanson – Los Angeles (213-229-7228, bevanson@gibsondunn.com)
 
Please also feel free to contact the following practice group leaders:
 
Intellectual Property Group:
Josh Krevitt – New York (212-351-2490, jkrevitt@gibsondunn.com)
Wayne Barsky - Los Angeles (310-557-8183, wbarsky@gibsondunn.com)
Mark Reiter – Dallas (214-698-3360, mreiter@gibsondunn.com)
 
Media, Entertainment and Technology Group:
Ruth E. Fisher – Los Angeles (310-557-8057, rfisher@gibsondunn.com)
Scott A. Edelman – Los Angeles (310-557-8061, sedelman@gibsondunn.com)
Orin Snyder – New York (212-351-2400, osnyder@gibsondunn.com)
 
Appellate and Constitutional Law Group:
Theodore B. Olson – Washington, D.C. (202-955-8500, tolson@gibsondunn.com)
Theodore J. Boutrous, Jr. – Los Angeles (213-229-7000, tboutrous@gibsondunn.com)
Daniel M. Kolkey – San Francisco (415-393-8200, dkolkey@gibsondunn.com)
Thomas G. Hungar - Washington, D.C. (202-955-8500, thungar@gibsondunn.com)
Miguel A. Estrada – Washington, D.C. (202-955-8500, mestrada@gibsondunn.com)
 
© 2014 Gibson, Dunn & Crutcher LLP
 
Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.