Broadcasters Holding On Tight as Cord-Cutting Service Aereo Wins in Court

By: Deborah Goldman

You may have cut the cord with mommy, but the broadcasters are still holding on tight to wired technology. The latest cord-cutting television streaming service provider, Aereo, just defeated network broadcasters’ (including over-the-air networks ABC, CBS, NBC, PBS and Fox) preliminary injunction motion in the compiled Second Circuit case WNET v. Aereo.

Photo: Aereo

Aereo’s service, currently only available in the New York metro area, relies on data centers full of small antennae to provide television streams wirelessly. Upon logging into the service from either their internet browser or mobile application, each user is dynamically assigned to an antenna which they, and they alone, can control. Even if multiple users are viewing the same program simultaneously, they each receive different transmissions from different antennae. Users then can browse channels and choose what to view. Aereo also offers a recording service, in which a particular user’s antenna records a program to the user’s unique section of Aereo’s centrally-located storage device. Because each user has a unique storage section, there are multiple copies of the same program on the central storage device. Only the user who recorded a particular copy can view it. The Second Circuit found that this carefully designed service model avoids violating copyright laws by following its precedent in Cartoon Network v. CSC Holdings (holding that Cablevision’s Remote Service Digital Video Recording service (RS-DVR) did not constitute an infringement of Cartoon Network and other content providers’ public performance rights because only the account holder could access his or her copy of the recording, rendering any “performances” non-public).

In its April 1, 2013 decision in WNET v. Aereo, the United States Court of Appeals for the Second Circuit upheld a district court ruling denying a preliminary injunction against Aereo. Networks sued for copyright infringement on a number of different theories, including infringement of reproduction and public performance rights. In their injunction application, though, plaintiffs, including broadcasters such as Fox, PBS, CBS and ABC, only pursued the public performance issue.

The Second Circuit’s decision ultimately turned on whether Aereo’s service constitutes an infringement of the public performance right. The public performance right, one of the exclusive rights granted to copyright holders, prohibits the “performance” of copyrighted material beyond a typical circle of family and friends without a license. Because this decision was made at the preliminary injunction phase, and not at a full hearing on the merits, the question at issue was whether the plaintiffs were likely to prevail on the merits in light of the Court’s previous Cartoon Network decision. Because Aereo’s service is consistent with the model from the Cartoon Network case in that each user is dynamically assigned his or her own antenna and storage partition to use exclusively and that the particular signal or recorded copy is only transmitted to that specific user, the Second Circuit Court held that this was comparable technology, and thus could not be an infringement of the public performance right.

This issue was also addressed by a federal district court in California in the case of a similar service, Aereokiller. In that case, Fox Television Stations v. BarryDriller Content Systems, Judge Wu granted networks a preliminary injunction on the grounds that, contrary to the Second Circuit’s holding in Cartoon Network, this television streaming constitutes a public performance regardless of the individualized transmissions. The case is currently being appealed to the Court of Appeals for the Ninth Circuit. If the Ninth Circuit affirms the district court’s holding, the circuit split could push this case before the Supreme Court.

In the meantime, broadcasters are threatening to pull their programming off the airwaves and relegate it to cable networks only if services like Aereo remain operational. Because Aereo doesn’t pay retransmission fees to the networks like cable and satellite providers do, broadcasters consider these services to be stealing money out of their pockets. They claim that their traditional financial model, surviving solely on advertising revenue, cannot sustain their activities in this economy.

John Bergmayer of Public Knowledge, has expressed support to the networks in their endeavors to move to a subscription-based model like cable. Bergmayer notes that broadcasters currently have licenses for “prime spectrum,” which could be put to better use, since a majority of people watch broadcast programming via cable providers or online. While Bergmayer also acknowledges that these threats seem empty and merely aimed at achieving a political goal, not serving as an announcement of future business plans, this suggestion has merit.

The Federal Communications Commission (“FCC”) is responsible for licensing spectrum, the range of electromagnetic frequencies used to convey communications, something it notes is in high demand (in part due to its limited supply) for a number of purposes, including mobile wireless services, broadcast television and radio, and satellite services. Because a broadcast license does not vest a property right, but rather is a license to use a public resource (per section 301 of the Communications Act of 1934, 47 U.S.C. § 301), the FCC could revoke the licenses of broadcasters who fail to meet their obligations under the license (per section 312 of the Communications Act of 1934, 47 U.S.C. § 312). This would free up spectrum to be used elsewhere.

It appears as though this battle is going to work its way through the judicial and political system for some time, with final results too far away to speculate. It is likely that any resolution would require careful consideration of the technology involved. Whatever the result, lawmakers should not disregard the strong public interests at play.

Sources:

[1] The full text of the Second Circuit’s decision can be read at: http://nysbar.com/blogs/EASL/WNET%20v%20Aereo%20Opinion-2d%20Cir%2012-2786.pdf

[2] https://aereo.com/how-it-works

[3] http://www.nytimes.com/2013/04/02/business/media/aereo-wins-in-appeals-court-setting-stage-for-trial-on-streaming-broadcast-tv.html?_r=0

[4] For a list of the exclusive rights granted to copyright holders, see 17 U.S.C. § 106: http://www.law.cornell.edu/uscode/text/17/106

[5] Cartoon Network LP v. CSC Holdings, Inc.,  536 F.3d 121 (2d Cir. 2008). https://www.eff.org/files/filenode/studios_v_cablevision/cablevision-decision.pdf

[6] http://www.ipbrief.net/2013/01/18/splitting-decision-central-district-of-california-grants-preliminary-injunction-against-aereokillers-tv-streaming-service/

[7] Fox Television Stations, Inc. v. BarryDriller Content Systems PLC, 2012 WL 6784498 (C.D. Cali. Dec. 27 2012).

[8] http://www.mediapost.com/publications/article/197828/#axzz2QV3h6BQ8

[9] http://variety.com/2013/digital/news/chase-carey-threatens-to-yank-fox-from-broadcast-tv-over-aereo-1200334235/

[10] http://readwrite.com/2013/04/02/aereo-legal-victory-means-disruption-for-more-than-broadcasters

[11] http://www.nytimes.com/2013/04/10/business/media/aereo-has-tv-networks-circling-the-wagons.html?_r=3&

[12] http://www.publicknowledge.org/not-the-reaction

[13] http://www.fcc.gov/topic/licensing

[14] http://www.fcc.gov/blog/spectrum-supply-and-demand

[15] http://www.fcc.gov/guides/public-and-broadcasting-july-2008

[16] The entire Communications Act of 1934 (as amended by the Telecommunications Act of 1996) can be read at: http://transition.fcc.gov/Reports/1934new.pdf

[17] http://www.hollywoodreporter.com/thr-esq/tv-broadcasters-petition-aereo-rehearing-440428

[18] http://www.invention-protection.com/ip/publications/docs/Public_Performance_of_Copyrighted_Material.html

[19] For more on what wireless spectrum is: http://www.techopedia.com/definition/27409/wireless-spectrum

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