• Duck, Duck, Goose? No, Says the Court - Aereo Remains Yet Another Duck
  • July 29, 2014
  • Law Firm: Dentons Canada LLP - Toronto Office
  • Many jurisdictions around the globe face complex questions resulting from the use of new technologies for internet redistribution of over-the-air linear broadcast signals in a manner that could threaten traditional television.

    On 25 June 2014, the United States Supreme Court released its opinion in American Broadcasting Companies v. Aereo, preserving the pre-Aereo status quo for linear television retransmissions, while at the same time striking a blow to Aereo's business and leaving significant uncertainty regarding how the law may apply in the future to other innovations and technologies. Similarly, in recent years TV Catchup (TVC) has caused a comparable debate in the UK and Europe.

    The Aereo and TVC cases illustrate a trend across both jurisdictions for the courts to look beyond technical differences between innovative and traditional broadcasters and distribution platforms, and instead focus on the service offered to viewers. Effectively such decisions may be summed up by the old cliché "if it looks like a duck, quacks like a duck, and walks like a duck, then it must be a duck" (i.e., if it looks like television and works like television, then it must be treated as television).

    The Aereo decision

    Aereo attempted carefully to navigate around US copyright law by designing a technological system for redistributing linear terrestrial broadcast signals to its subscribers in a manner calculated not to infringe the rights of the broadcasters. This technology was based on a plausible reading of earlier Supreme Court decisions interpreting the US Copyright Act, even though Aereo did not have authorisation from the broadcasters and did not pay any retransmission fees. Specifically, Aereo's system included thousands of miniature antennas housed at its facility, which would individually be activated when one of Aereo's subscribers selected programming to watch via the internet. Once an antenna was activated, the programming would be streamed individually to that specific subscriber, providing the subscriber with a near-live stream of free-to-air television broadcasts. If multiple subscribers wanted to watch the same programme, then each would receive a separate individualised stream, generated from a separate personal copy of the programme created on Aereo's system, from a uniquely dedicated antenna during the viewing period.

    In determining whether or not Aereo performed the copyrighted work publicly and therefore infringed the US Copyright Act, the Supreme Court acknowledged that the text of the applicable sections of the US Copyright Act does not clearly distinguish between when a person "performs" and when it merely supplies equipment that allows others to "perform" copyrighted works. As a result, the Supreme Court focused on legislative history, and prior amendments to the US Copyright Act that were designed to overturn earlier Supreme Court decisions, to conclude that "when read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo's performs". Furthermore, the Supreme Court concluded that the technical structure of Aereo's transmission of each signal of programming to separate individual subscribers makes no difference to its conclusion that Aereo is transmitting to the public, asking "Why would a subscriber who wishes to watch a television show care much whether images and sounds are delivered to his screen via a large multisubscriber antenna or one small dedicated antenna..." .

    This approach by the Supreme Court disregards a portion of a notable prior judgment of the Second Circuit Court of Appeals (i.e. not the Supreme Court) used when evaluating market-disrupting technology - Cartoon Network v. CSC Holdings, Inc. (Cablevision), 536 F.3d 121. Unlike Aereo, which provides its subscribers with near-live streams of free-to-air television broadcasts, Cablevision provided a remote digital video recorder system that allowed its subscribers to record linear cable programming on central hard drives which Cablevision maintained at locations outside each customer's home (in essence offering catch-up services to its subscribers). Broadcasters claimed that Cablevision's system reproduced and publicly performed their content without their consent. But, in the Cablevision case, the Court determined (1) that the copies were "made" by Cablevision's customers, not Cablevision itself, and (2) that the playback transmissions of those copies were made on a "one-to-one" level, rather than to the public, therefore amounting to a permissible private, rather than public, performance. Since the Supreme Court in the Aereo case does not cite the Second Circuit Cablevision decision, one may only speculate as to the distinction - perhaps, when looking at a system that otherwise looks like a traditional multi-channel distribution platform (like Aereo's system), "one-to-one" transmission is not relevant, but, in other cases such as network digital video recorders (like Cablevision's system), "one-to-one" transmission is relevant to the copyright analysis.

    Prior to the Aereo decision, many businesses and commentators suggested that if the decision went against Aereo it would have an adverse effect on other innovations, such as the use of cloud storage technologies as a means of delivering content to viewers. In the Aereo case, the Supreme Court expressly notes that it has not considered whether there is a copyright infringement when the user of a cloud service pays mainly for something other than the transmission of copyrighted works, such as remote storage of the content. Furthermore the Supreme Court states that it would not answer how the US Copyright Act applies to technologies which were not the subject of its decision in the Aereo case. Specifically, the Supreme Court in the Aereo case indicated that questions involving such other technologies (e.g., cloud computing and remote storage DVRs), as to which "Congress has not plainly marked [the] course", should await a case in which they are squarely presented. Further, the Supreme Court invites parties interested in clarifying the application of the US Copyright Act to such other technologies to "seek action from Congress".

    The TVC decision

    Similar to Aereo, the UK service TVC provided its subscribers (in the UK) with the ability to view near-live streams of free-to-air television content over the internet and mobile networks. As in the USA, the practice was not unchallenged by broadcasters, and between 2010 and 2013 TVC found itself at the centre of a legal battle against three of the UK's largest public service broadcasters (PSB), who claimed that TVC was committing copyright infringement for, among other things, a communication of their broadcasts to the public.

    The Court of Justice of the European Union (ECJ) was asked by the High Court of England and Wales (the High Court) to decide whether the concept of a "communication to the public" covered a terrestrial television broadcaster's works when they were transmitted by another organisation, even though they were within the reception area of the original broadcast and could have lawfully been received on television.

    The ECJ found resoundingly in the claimants' favour citing that, where there are copyright works included in a terrestrial TV broadcast, and those works are retransmitted:

    • by an organisation other than the original broadcaster and without the original broadcaster's consent; and
    • via different technical means (i.e., via the internet rather than as a terrestrial broadcast),

    then the retransmission amounts to an unauthorised "communication to the public" of those works. This remains the case even where the subscribers to the service could lawfully receive the broadcast on their televisions and whether or not the service competes with the original broadcaster or is making a profit (unlike Aereo, TVC is an ad-funded free service for its subscribers).

    As in the Aereo case, the ECJ rejected the defendant's argument that because the transmissions work through a series of "one-to-one" connections this should not be regarded as a communication to the public. The ECJ noted that such "one-to-one" connections did not prevent users accessing the same content at the same time.

    The TVC case returned to the UK and the High Court ruled that TVC should stop streaming all of the claimants' channels on its service on mobile networks and all of the non-PSB channels (such as ITV3 and 5USA) on the internet. Despite this, TVC continues to stream the main PSB channels on the internet, due to a historic provision in UK law (section 73 of the Copyright, Designs and Patents Act 1988) that was originally enacted to allow cable operators to transmit the PSB channels without obtaining broadcasters' consent. However, for how long TVC will continue to operate remains to be seen as the company entered into administration in June 2014.

    How do the European and US approaches match up and what does this mean going forward?

    Interestingly, in the Aereo and TVC cases the courts were faced with similar questions as to whether a technical "one-to-one" transmission should be regarded as a communication to the public (in the TVC case) or performance to the public (in the Aereo case) and both the US Supreme Court and the ECJ determined that such transmission could be.

    While the courts in both the Aereo and TVC cases had strong arguments for applying a different ruling in light of the one-to-one transmission, in the end the courts determined that the similarity of both forms of technology to traditional linear television distribution was an overriding factor.

    The ruling of the Aereo and TVC cases strengthens the broadcasters’ position towards unauthorised service providers who provide near-live streams of free-to-air television content in their respective jurisdictions. It may also have far-reaching implications for the way similar services are perceived by the courts in other jurisdictions. For example, in Europe a service known as Bhaalu that offers collaborative video recorder technology (i.e. catch-up / on-demand like services) to its subscribers is currently being challenged by Belgian broadcasters. If following the current trend the European courts determine that these services infringe copyright laws, then Bhaalu-like services will also come under extreme pressure. Other challenges to similar services are occurring in Europe as the ECJ continues to analyse them as services based on the concept of a "communication to the public” (crucial from the perspective of the TVC case), e.g. in BestWater International GmbH v. Michael Mebes, Stefan Potsch (Case C-348/13) and C More Entertainment (C-279/13).

    Currently, there are clearly similarities across Europe and the USA with regard to how services that provide near-live streams of free-to-air television are considered by the courts. However, there remains a question mark over catch-up and on-demand services on both sides of the pond. In the US, the law established by the Cablevision case in the Second Circuit of the Court of Appeals has yet to be challenged or considered by the Supreme Court and Congress has not taken any action in response, while in Europe the Bhaalu case is still working its way through the courts. Meanwhile, the resulting uncertainty may dissuade creation and implementation of innovative technologies and services as emerging companies and their investors, who are already challenged with high start-up costs, may find the costs associated with such a potential (or even likely) lawsuit to be an insurmountable hurdle.

    For now at least, broadcasters in Europe and the USA can briefly sigh in relief, as retransmission consent negotiations in the USA will continue forward as they have done in the past, and traditional linear broadcaster rights will be preserved in the USA and Europe - at least until the next innovation, which perhaps does not so closely resemble traditional linear distribution, comes along. Until then, the safest course of action for distributors of content is to secure the applicable licences from the owners of such programming prior to transmitting it to the public - in the wake of the Aereo and TVC cases, if you look like a duck, walk like a duck, and quack like a duck, you should be prepared to pay the farmer or be ready to challenge the role of Old McDonald in court.