|December 17, 2013|
Previously published on December 16, 2013
In a development that surprised most observers, Aereo has filed a brief with the Supreme Court agreeing that the Court should hear the broadcast industry’s challenge to Aereo’s legality under the Copyright Act. Aereo’s action may make it more likely that the Court will take the case even though there is not yet a “split in the circuits,” which often is an informal prerequisite for Supreme Court review.
Background. In February 2012, Aereo launched a new subscription service that streamed over-the-Internet broadcast television programming to consumers who “rent” an “individualized antenna” from Aereo. Aereo does not obtain copyright clearances from the broadcasters or pay retransmission consent fees. The broadcasters quickly sought to shut down Aereo by suing it in the Southern District of New York (the first market served by Aereo was New York) for violating their exclusive right to publicly perform their copyrighted works. The court, relying heavily on the Second Circuit’s decision upholding the legality of Cablevision’s remote storage DVR, denied the broadcaster’s motion for a preliminary injunction. On appeal, the Second Circuit affirmed that decision.
Both Aereo and a second “copycat” service (previously known as BarryDriller or AereoKiller and currently marketed as “FilmOnX”) have commenced operations in a number of additional markets, spurring new lawsuits brought by the broadcasters. Aereo has prevailed in one of those suits (in Massachusetts), while the broadcasters succeeded in shutting down FilmOnX in the District of Columbia and in California (with the latter decision purporting to apply everywhere in the country except for the states covered by the Second Circuit). Appeals have been filed of these lower court decisions and the California appeal has been argued and is awaiting a decision by the Ninth Circuit.
With respect to the Second Circuit’s decision, the broadcasters opted to seek Supreme Court review by filing a petition for certiorari. Such petitions are rarely granted by the Court unless two or more circuit courts have issued conflicting decisions on the issue presented. In this instance, there was only one circuit court decision at the time the petition was filed by the broadcasters (although there are conflicting district court decisions arising out of suits against two different, but allegedly identical, services). Most observers expected that Aereo would oppose the petition on the grounds that it was premature. However, to the surprise of many, Aereo responded to the petition by agreeing with the broadcasters that the Court should take the case now.
Discussion. As expected, Aereo’s brief in response to the broadcasters’ petition argued that the Second Circuit’s decision was correct and should be affirmed by the Court. However, instead of asking the Court to deny the broadcasters’ petition, Aereo argued that the Second Circuit decision provides an “appropriate vehicle for resolving” the question of law presented. In support of this position, Aereo pointed out that the broadcasters “have shown every intention of pursuing litigation in every circuit in the nation,” imposing a financial burden and creating uncertainty that effectively threatens to undermine Aereo’s business. Aereo also argued that, as the lead case in a series of lawsuits filed by the broadcasters, the New York litigation has a well-developed factual record that is reflected in the district court’s detailed findings of fact. Those findings of fact, Aereo notes, were not challenged by the broadcasters in their Second Circuit appeal and thus should not be subject to dispute before the Supreme Court. Aereo contrasted the California decision against FilmOnX, in which the district court issued no findings of fact. Finally, Aereo pointed out how the Cablevision decision (on which the Second Circuit relied) has spurred a period of rapid technological innovation based on the expectation that “cloud” based services do not violate the Copyright Act. Aereo urged that, under the circumstances, it is particularly appropriate for the Court to decide the issues presented now rather than later. (Notably, in a “white paper” published on the same day that Aereo filed its brief, Cablevision pointed out how the development of “cloud” technology could be thrown into chaos if the Court accepted certain arguments made by the broadcasters that called into question the validity of the Cablevision RS-DVR decision as well as Aereo’s technology. Cablevision’s white paper argued that it is possible to distinguish the RS-DVR technology from the Aereo service in a way that upholds the former while ruling against the latter).
While Aereo acquiesced in the broadcasters’ request that the Supreme Court review the Second Circuit’s decision, it made clear that it does not agree with the broadcasters’ formulation of the issue that the Court should be deciding. The broadcasters characterized the issue as “[w]hether a company ‘publicly performs’ a copyrighted television program when it retransmits a broadcast of that program to thousands of paid subscribers over the Internet.” Aereo, however, contends that the issue presented should be reframed as “[w]hether Aereo ‘perform[s] publicly,’ under Sections 101 and 106 of the Copyright Act, by supplying remote equipment that allows a consumer to tune an individual, remotely located antenna to a publicly accessible, over-the-air broadcast television signal, use a remote digital video recorder to make a personal recording from that signal, and then watch that recording.”
Analysis. The conventional wisdom prior to Aereo filing its brief was that the Supreme Court was unlikely to grant the broadcasters’ petition, in part because there is no split in the circuits and in part because certain claims that the broadcasters might raise (such as whether Aereo creates infringing copies of the broadcasters’ programs) have not been addressed by any of the decisions below. The fact that Aereo is supporting Supreme Court review increases the likelihood that the Court will take the case, but some commentators continue to believe the Court will deny the petition and await additional lower court decisions. In any event, it is likely that Aereo, pending a decision on the petition for certiorari, will continue to roll out its service to additional markets and will argue in response to any new lawsuits brought against it that the courts should hold such complaints in abeyance until the Supreme Court decides whether it will review Second Circuit decision. If the Court denies the petition, the broadcasters will have to decide whether they want to look to Congress to deal with the status of Aereo as part the satellite compulsory license legislation that Congress must take up in 2014. On the other hand, if the Court decides to take the case, there is a strong possibility that the Court’s decision won’t come out until early in 2015.