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Swimming Against the Stream: U.S. Supreme Court to Hear Appeal of American Broadcasting Companies, Inc. v. Aereo, Inc.

February 14, 2014

By Jill Jarvis-Tonus and Amrita V. Singh

On January 10, the United States Supreme Court announced it would hear an appeal from the Second Circuit decision of WNET v. Aereo, Inc., 712 F.3d 676 on a technical, yet fundamentally important copyright issue. Does Aereo, an internet start-up company, “publicly perform” copyright protected television programming when it retransmits it from free public over-the-air channels via an “antenna farm” stored in a central data centre? Small separate antennas from that centre are assigned to each paid subscriber, and an individual internet stream is made available to each subscriber. The Second Circuit in a 2-1 split held that assigning an antenna to each subscriber resulted in “private” performances, despite the transmissions being sent to thousands of individuals. Interestingly, in another case, the District Court of Columbia came to the opposite conclusion on similar facts.

Broadcasters, such as CBS and Fox, alleged that by charging a fee for subscribers to stream and record television programs available via free public broadcast signals, but delivered by individual antennas, Aereo was infringing their exclusive rights to publicly perform and retransmit their  programming. Aereo claimed its antenna set-up to individual subscribers fell within the “private” performance exemption under the United States Copyright Act, despite the fact that there were thousands of transmissions in the aggregate, and that each antenna is dynamically assigned, or not permanently dedicated, to a subscriber. It thus could avoid the retransmission consent fees ordinarily charged by broadcasters to cable and satellite providers.

Surprisingly, the Second Circuit majority agreed, holding that Aereo was not infringing the broadcasters’ copyright, as there was a one-to-one relationship between the transmission of the programming and the viewer. However, in a nod to substance over form, Judge Chin dissented, stating: “[t]he system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.” 

The District Court for Columbia, faced with similar facts involving broadcasters and a company called FilmOn X, found infringement of the broadcasters’ copyrights, agreeing with Judge Chin’s dissent. 

The Supreme Court has no doubt agreed to hear the case to resolve this point which will have a significant, practical impact on traditional broadcasting, cable and satellite services and emerging internet technologies.

What constitutes a private versus a public telecommunication is somewhat clearer under Canadian law, with the Court more likely to give precedence to substance over form. The Supreme Court of Canada in the recent case of Rogers Communication Inc. v. Society of Composers, Authors and Music Publishers of Canada, 2012 SCC 35 at para 29, held that “focusing on each individual transmission loses sight of the true character of the communication activity in question and makes copyright protection dependant on technicalities of the alleged infringer’s chosen method of operation… it is necessary to consider the broader context to determine whether a given point-to-point transmission engages the exclusive right to communicate to the public. This is the only way to ensure that form does not prevail over substance”. The Court continued, stating that “[w]hether a business chooses to convey copyright protected content in a traditional, “broadcasting” type fashion, or opts for newer approaches based on consumer choice and convenience, the end result is the same. The copyrighted work has been made available to an aggregation of individuals of the general public” (para. 40). Accordingly, Aereo’s services would likely be considered public performances in Canada.

Many await this U.S. Supreme Court decision with great interest. Undoubtedly it will have far-reaching impact on how network broadcasters, cable and satellite companies, and online streaming companies, structure their businesses and use  technology. Indeed, many fear a positive outcome for Aereo would seriously erode the traditional broadcasting world with broadcasters threatening to move their most popular over-the-air programming to cable services, and more internet based services likely to pop up and compete with the broadcast market. Parties with vested interests in the outcome have submitted amicus curiae briefs to the Court, including the National Football League, Time Warner and Viacom. Aereo has said that it has “every confidence that the Court will validate and preserve a consumer’s right to access local over-the-air television with an individual antenna.” Oral arguments in the Appeal will be heard starting on April 22, 2014, with a judgment hopefully rendered by July.

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