The US Supreme Court Faces Aereo and Web Streaming

Ever since its emergence in early 2012 the tech company Aereo has ruffled some feathers within the broadcasting sphere, and rightfully so. As discussed prior on this very blog, the website offers the ability to both stream and watch TV on-demand for a subscription fee, and functions much like a online DVR system as opposed to a licence based service provider such as Netflix. Although initially winning in the District Court of New York, the case has finally come to the US Supreme Court for final judgment, and presents a curious argument which will potentially affect the future of online streaming quite significantly.

The initial article on this blog discussed the Aereo case in the District Court of New York where the plaintiffs failed to demonstrate they would prevail on the merits of their infringement case, after which the case was subsequently appealed and went to the US Court of Appeals. It is worth discussing the issues again in light of this decision, facing final consideration in the US Supreme Court.

Under US copyright a copyright holder has an exclusive right to publicly perform their copyrighted works such as TV shows. Through this the Court was faced with determining whether Aereo's broadcasting of TV shows to its subscribers, whether live or on-demand, would amount to an infringement of this right as no licence was sought or paid for from the copyright holders of their respective contents broadcast over Aereo's systems.

"There has to be a better way!", thought Terry

The case largely hinges on the Transmit Clause within the US Copyright Act 1976, under which a public performance of a copyrighted work includes its transmission via cables, such as cable TV programming. The Clause's interpretation in the case of Cartoon Network v CSC Holdings, or more commonly known as the Cablevision case, is highly important in relation to Aereo and their potential infringement of the aforementioned public performance right. Under the Cablevision interpretation of the Transmit Clause, the Court of Appeals had to first consider the potential size of the audience of the transmission. A smaller amount of viewers, or a restricted ability to view the content, such as individual copies, would clearly weigh against the finding of a public performance of the copyrighted work. Secondly the court would have to avoid aggregating private transmissions of the works, making it irrelevant for the court to consider a large number of individual transmissions as opposed to a single, viewable by all transmission. This is important when assessing the first point, as a restricted and isolated transmission of a work would not be a public performance, clearly then not infringing that right. Thirdly the court would have to aggregate any transmissions made from a single copy of the work, i.e. if a single DVD is played in a player and distributed to several TVs. That transmission would clearly be a public performance of the work, at least more so than individual transmissions from individual copies. Finally, the court would have to take into account the factors which limit the potential size of the public who would view the transmission (emphasis the court's) in applying the Transmit Clause.

The Cablevision decision hinged on the very fact that all copies of the TV shows which were recorded through their DVR system were individual copies, and not merely a copy which was available to all. This limited both the actual and the potential amount of viewers for the copied transmission, clearly not making the performance a public one. Aereo's service functions much like Cablevision's DVR system, only creating a single copy viewable by that particular user upon their request to record it. As such Aereo's copies would, arguably at least, not be public performances, and not infringe the plaintiffs' rights in that content. Aereo's lack of licence is irrelevant as one is only required for public performances; something which Aereo's services are not doing. The Court of Appeals also reject the aggregation of Aereo's transmissions, as Cablevision's DVR functioned in a very similar way, and aggregating Aereo's transmissions would mean that Cablevision's transmissions would also have to be aggregated, clearly going against the precedent set by the case. The Court of Appeals rejected the plaintiffs' appeal, which is now being taken to the highest court in the US for final consideration.

The decision would have quite wide-ranging implications for both cable broadcasters and services much like Aereo. As the company pays no licencing fees to copyright holders, should they be allowed to operate and be deemed not to infringe copyright, similar services would undoubtedly spring up and cause significant losses to cable providers. On the other hand should the Supreme Court decide that Aereo infringes copyright, it could potentially restrict the future of the Cloud and cloud computing, further restricting the freedom of use over copyrighted content, at least on a commercial level. What ever the result will be, this writer for one is very interested in the decision and its potential impact on either side of the field.