Aereo (Part One): Angry Like (a) Fox

So: Aereo, right? Kind of a big deal. You might want to read about it. Maybe we should write something about it. Let’s work backward, though:

On April 8, News Corporation announced that it would consider taking Fox—the broadcast television channel—off the air if the service known as Aereo is permitted to continue doing what it’s been doing for a year to date. “Aereo is stealing our signal,” said News Corp’s president Chase Carey. “We believe in our legal rights. We’re going to pursue those legal rights fully and completely, and we believe we’ll prevail. But we want to be clear. If we can’t have our rights properly protected through legal and political avenues, we will pursue business solutions. One such business solution would be to take the network and turn it into a subscription service.” Ah, but no less considerable a legal authority than the United States Court of Appeals for the Second Circuit has determined that, more likely than not, Aereo is not doing anything illegal.

Matthew David Brozik

Dapper like a fox.

Unless you’ve been living in a cave—or simply outside New York City—you’ve maybe heard of Aereo, a subscription service that, essentially, enables a subscriber to watch broadcast programming on an Internet device—a computer, tablet, “phablet,” or smart phone. A subscriber has the option of watching a program at the same time that it airs—with a minor delay, to allow for buffering—or to “record” the program and watch it later. (There are noteworthy limits to the recording feature, but those are not germane to the legal issue, as it happens.) Aereo charges a subscriber somewhere between eight and twelve dollars per month for the service (reports differ) and currently provides the service only in New York City and parts of Connecticut, although the company has plans to expand its availability, eventually, to no less than the entire planet.

In March of 2012, two lawsuits sought to stop Aereo, Inc. from doing what it was then going to start doing on March 14. The plaintiffs of the two suits (commenced separately but treated together) are an intimidating consortium, to be sure: all of the broadcast networks in New York City (ABC, CBS, NBC, Fox, THIRTEEN, WNET, WPIX, PBS, Telemundo, Univision… and Disney, among a few other entities). The complaints asserted, principally, that Aereo’s scheme was a blatant infringement of the plaintiffs’ exclusive public performance right provided by Section 106(4) of the Copyright Act. The plaintiffs argued that the mechanics of Aereo’s system is a sham.

What Aereo does—and I’m simplifying here, some—is this: At a facility in Brooklyn, there is an array of dime-sized antennae. When an Aereo subscriber requests that a program be streamed to him or her over the Internet, the facility dynamically assigns an available antenna to that subscriber’s account, and tunes the antenna to the local broadcast station showing the program requested. Other equipment at the facility converts the broadcast signal to a digital stream, which Aereo then sends to the subscriber’s account. What’s important—what was important to the courts, at least—is that at any given moment, any one Aereo antenna is working for at most one subscriber.

So when the plaintiffs moved for a preliminary injunction on their common cause of action based on Section 106(4), Judge Alison Nathan of the United States District Court for the Southern District of New York denied the motion, finding that what Aereo does is not in fact a public broadcast, being that the digitized signal is sent only to a person, and a person is not the public. (Again, I’m simplifying.) Judge Nathan decided that the plaintiffs were unlikely to prevail upon the merits of their claim, ultimately (and that, while the plaintiffs had demonstrated a likelihood of suffering irreparable harm absent an injunction, an injunction would also likely destroy Aereo’s business… which gave Aereo the advantage there). This was on July 11, 2012. The plaintiffs filed their notices of appeal the following day.

As if the plaintiff roster in the two cases weren’t impressive enough, the amici dramatis personae is a Who’s Who of important institutions: the NBA, NFL, NHL, and MLB; Paramount Pictures, Warner Bros., the Directors Guild of America, SAG-AFTRA, the Writers Guild of America, MGM, et al.; ASCAP, BMI, SESAC, et al.; Ralph Oman, former Register of Copyrights of the United States—all in support of the plaintiffs-appellants—and entities including the Computer & Communications Industry Association, the Internet Association, Intellectual Property and Copyright Law Professors, and the Electronic Frontier Foundation, among others, all for Aereo. Even if you knew nothing about the case, you’d know from looking at just the list of people with opinions about it that it’s something big.

The appellate decision, issued on April 1, 2013, is long and dense and needs to be read more than once to be fully understood, but the upshot of it is that the District Court denial of the plaintiffs’ motion for a preliminary injunction (decision here) was held to be proper. (Judge Denny Chin dissented, but he was outnumbered two to one.) Judges Droney and Gleeson made a point of acknowledging that Aereo’s set-up seems evidently designed specifically to be legal, insofar as the law was lain down by the 2008 decision of the Second Circuit in Cartoon Network v. CSC Holdings (a case referred to as “Cablevision”). In that case, the court had ruled that Cablevision’s Remote Storage Digital Video Recorder (RS-DVR) did not infringe copyright holders’ reproduction and public performance rights. And the same analysis and conclusion now apply to Aereo’s setup. Attempts by the plaintiffs to distinguish Cablevision were not well received, as it were.

“Though presented as efforts to distinguish Cablevision,” the decision reads, “many of Plaintiffs’ arguments really urge us to overrule Cablevision. One panel of the Court, however… cannot overrule a prior decision of another panel…. Plaintiffs have provided us with no adequate basis to distinguish Cablevision from the Aereo system. We therefore see no error in the district court’s conclusion that Plaintiffs are unlikely to prevail on the merits.”

To be continued in Part Two

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