By Alexander P. Ott
(Editor’s note: The following summary addresses an important case that was highlighted by Major League Baseball at the Sports Lawyers Association’s annual meeting because of the threat it poses to the professional sports leagues’ television contracts.)
Addressing the legality of a streaming TV service that provides Internet-streaming of broadcast television programming, the U.S. Court of Appeals for the Second Circuit concluded that the activities in question were not materially different from those of the Cablevision system held to be non-infringing in the 2008 2d Circuit case of Cartoon Network LP v. CSC Holdings (“Cablevision”). WNET, Thirteen et al. v. Aereo, Inc., Case Nos. 12-2786, -2807 (2d Cir. Apr. 1, 2013) (Droney, Cir. J. and Gleeson, J., sitting by designation) (Chin, J., dissenting). The 2d Circuit held that Aereo’s Internet transmission of television programs it acquired from over-the-air broadcasts did not constitute a “public performance” because unique copies were created and transmitted for each customer.
Aereo enables its customers to watch broadcast television over the Internet for a monthly fee. Aereo maintains thousands of small television antennas that receive broadcast television channels. When a subscriber wishes to view or record a particular program, Aereo assigns a unique antenna and stores a unique copy of the program used solely for that particular subscriber (and no one else). The user can view their copy of the program nearly live or have it recorded for later viewing; users are also provided with DVR functionality such as pause and rewind.
Aereo was sued by two groups of copyright holders of broadcast television programming, including ABC, CBS, NBC, FOX, Univision, and PBS. The plaintiffs alleged infringement based on the exclusive rights of public performance and reproduction and also alleged contributory infringement. The plaintiff sought a preliminary injunction. The district court denied the injunction based on the likelihood of success factor, holding that Aereo’s system was not materially distinguishable from the Cablevision system that the 2d Circuit had held to be non-infringing. The plaintiffs appealed.
On appeal, the 2d Circuit affirmed. The court reviewed its Cablevision holding was not “materially distinguishable” from the facts presented here. The decision on Cablevision rested on two essential facts: unique copies of programs were created for each customer, and transmissions were generated for each customer from their own designated copy, which could be viewed by that customer alone and no others. The majority concluded that Aereo’s system had both of these essential features.
The court also rejected the plaintiffs’ attempts to distinguish Cablevision, disagreeing that Cablevision’s license for transmission of live programs played any role in its holding regarding Cablevision’s re-transmission of stored programs. The 2d Circuit also refused to aggregate each individual private transmission into a “public” transmission, holding that courts must look to the transmission, not the underlying work. The court held that Cablevision was not limited to VCR-like devices, noting its application of Cablevision to Internet music downloads in U.S. v. Am. Soc’y of Composers, Authors & Publishers. The court also found legal significance in Aereo’s use of separate antennas, finding them akin to rooftop antennas that are “rented” from Aereo. Finally, the Court disagreed that its decision “exalts form over substance,” stating that technical architecture matters and Aereo is not alone in designing systems to avoid copyright liability.
In dissent, Judge Chin characterized Aereo’s system of mini antennas as a sham, insisting they served no technological purpose. He further characterized the system as “a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act.”
WNET, Thirteen et al. v. Aereo, Inc.
Ott is an attorney at McDermott Will & Emery.
