Member Article

The Supreme Court today ruled that Aereo’s system for transmitting over-the-air television broadcasts through the Internet violates copyright law. In a 6-3 decision, with Justice Breyer writing for the majority, the Court ruled that Aereo both “performs” the television broadcasts at issue and does so “publicly.” With these key issues decided, the Court essentially sounded a death knell for Aereo and a similar but unrelated company, FilmOn X. The Court was careful to note that its opinion was not designed to quell other technologies, such as remote DVR services and cloud computing.

In an attempt to fit within the Second Circuit’s ruling in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2008), which authorized remote DVR services whereby customers could record and watch programs using remote storage on DVRs, Aereo designed a system that allows its customers to record and watch virtually live over-the-air television broadcasts through the Internet. By utilizing “farms” of miniature antennas, Aereo enables its customers, each using an individually-assigned antenna, to capture over-the-air television broadcasts, make an individual copy on Aereo’s DVRs, and watch that copy either “live,” with a seven-second delay, or later. Aereo argued that its gimmicky system is legal under copyright law since it does not transmit content to its customers at large. Rather, the Aereo system enables its customers to individually capture and make personal recordings of content for individual viewing, as they can indisputably do in their own homes with personal or remote DVRs. Aereo contended that this system renders each transmission of television content an authorized private, rather than illegal public, performance under the Copyright Act.

The networks disagreed, contending that Aereo’s system creates public performances under the Copyright Act, regardless of the gimmickry employed. The networks argued, and the Court agreed, that Aereo transmits the same content to the public through its system, and it makes little difference under the Copyright Act whether individual antennas and unique copies are employed. The Court, in the end, found Aereo to be similar enough to a cable television system, which the Copyright Act squarely addresses, to bring it within the bounds of the Copyright Act and render its performances public, and therefore unauthorized. However, the majority was very careful to limit the reach of its opinion to Aereo-type systems, assuaging (or at least attempting to) fears that a ruling against Aereo could have far-reaching and unintended effects on industries such as cloud computing and remote storage DVR services.

The dissent, authored by Justice Scalia, asserted that the majority was taking a results-driven approach that would create confusion for years to come. While the dissent by no means suggested that Aereo’s system is compliant with copyright law, it noted that Aereo should not be subject to direct infringement liability - the sole issue before the Court. Notably, the dissent concluded that Aereo does not “perform” the programs at all for purposes of direct infringement - its customers do. While the dissent seemed to suggest that Aereo could be liable as a secondary infringer and for creating unlawful reproductions - two issues not before the Court - it believed that the Court was making bad law by finding Aereo liable on direct infringement grounds. As to whether Aereo was merely manipulating a loophole in the copyright law, Justice Scalia quipped:

It is not the role of this Court to identify and plug loopholes. It is the role of good lawyers to identify and exploit them, and the role of Congress to eliminate them if it wishes. Congress can do that, I may add, in a much more targeted, better informed, and less disruptive fashion than the crude “looks-like-cable-TV” solution the Court invents today.

The Court’s decision, while beneficial to the networks, will likely have devastating effects on Aereo. Whether the company can modify its transmission model in a way to comply with the Court’s ruling is doubtful but remains to be seen. While the Court found Aereo to be like a cable system, it did not go so far as to find it entitled to the type of compulsory license the Copyright Act specifically allows for cable systems, essentially leaving Aereo with no lawful way to continue operations - at least under the current Copyright Act. Aereo may therefore be left with nowhere to go but away.

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