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January 07, 2015 Articles

How Broadly Will the Fox v. Dish Court Interpret ABC v. Aereo?

Should the Court's holding be limited to the type of technology at issue or expanded to include Internet streaming of copyrighted programming?

By Alison Hutton and Alice Snedeker

In a much-debated decision handed down this summer, the U.S. Supreme Court determined that Aereo, Inc., "a technologically complex service that allows [its subscribers] to watch television programs over the Internet at about the same time as the programs are broadcast over the air," infringed the public performance rights held by the copyright owners of the transmitted television content. ABC, Inc. v. Aereo, Inc., 134 S. Ct. 2498, 2502–03 (2014). Going forward, however, the opinion left open more questions for service providers and copyright owners than it provided answers. Two such providers are Fox Broadcasting Co. and Dish Network L.L.C., which are currently pitted against each other in the Central District of California. Both parties have motions for summary judgment pending, and they rely in part on Aereo to support their respective positions. It raises the question: how broadly will the district court construe Aereo when ruling on their motions?

In exploring the potential implications of Aereo on Fox v. Dish, we begin with a brief look at the Supreme Court's opinion to give context to the discussion. Then, we delve into the Second Circuit precedent Aereo relied on to defend its service. Next, we take a detailed look at Aereo's service and how the Supreme Court reached its conclusion that Aereo violates copyright holders' public performance rights. Finally, we discuss the motions pending in Fox v. Dish in light of Aereo.

U.S. Supreme Court's Holding in ABC v. Aereo

In Aereo, the Supreme Court trod a careful path and carved out a limited holding relating only to the Aereo services before it. Specifically, the Court found—with little explanation—that Aereo's system was "highly similar" to the community antenna television (CATV) companies that were brought within the scope of the Copyright Act pursuant to the 1976 amendments. Consequently, Aereo "performed" under the Act (i.e., it was not just an equipment provider), and it transmitted copyrighted works to the "public," even though each subscriber selected the program and watched his or her own personal copy of a show. In this context, the Supreme Court held that an "entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work." Aereo, 134 S. Ct. at 2510.

In so finding, the Court focused not on the "technological manner in which [Aereo] provides the service," but on "the nature of the service that Aereo provides," which the Court found was substantially similar to the system provided by the CATV companies. Aereo, 134 S. Ct. at 2511 (emphasis added). The Court stated that it could not "now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before" it, and that the history of the cable broadcast transmissions "does not determine whether different kinds of providers in different contexts also 'perform.'" Aereo, 134 S. Ct. at 2510–11. Despite this attempt to limit its holding to the facts before it, the Supreme Court's decision reaches much farther than is apparent on its face.

The Court held that the transmit clause "makes clear that an entity that acts like a CATV system itself performs, even if when doing so, it simply enhances viewers' ability to receive broadcast television signals." Aereo, 134 S. Ct. at 2506. Thus, regardless of the technology, any service provider that "transmits" to the "public" copyrighted audiovisual works for which the end user does not have a license or does not own could run afoul of Aereo as long as the "nature of the service it provides" is like that of a cable system provider. The implications of the Aereo case could have even greater significance when considered in light of what the district court did on remand: holding that, unlike a cable provider, Aereo is not entitled to a compulsory license under 17 U.S.C. § 111, nor is it a mere conduit entitled to the safe harbor protection of 17 U.S.C. § 512(a). ABC, Inc. v. Aereo, Inc., No. 12-cv-1540, 2014 U.S. Dist. LEXIS 150555 (S.D.N.Y. Oct. 23, 2014).

Prior Second Circuit Jurisprudence: Cartoon Network v. Cablevision

The "technologically complex" service at issue in Aereo was one designed to skirt around the edges of earlier copyright jurisprudence from the Second Circuit, specifically, the 2008 decision Cartoon Network LP v. CSC Holdings, Inc. ("Cablevision"), 536 F.3d 121 (2d Cir. 2008). In Cablevision, the defendant provided a video storage system that allowed customers to record cable programming on hard drives housed and maintained by Cablevision at a remote location, called a "Remote Storage Digital Video Recorder" or "RS-DVR." The customer could then play back the recorded programming on his or her home television. The Second Circuit held that this system was not infringing the "public performance" right, under section 106 of the Copyright Act, of the transmitted works.

The remote DVR technology at issue in Cablevision involved splitting the stream of data sent to Cablevision into two streams, with one routed immediately to customers and the second sent to a device called the "Broadband Media Router." If a customer had made a request to record a particular program, the second stream of data was saved onto the portion of a Cablevision hard drive allocated to that customer. That way, a customer could access programs that he or she had previously recorded. From the customer's point of view, the service appeared much like a video on demand service already provided by many cable companies.

The Second Circuit overturned the lower court's finding that Cablevision had infringed the copyright holders' public performance rights by "transmitting a program to an RS-DVR customer in response to that customer's playback request." Cablevision, 536 F.3d at 126, 139. The Second Circuit agreed with Cablevision that the "potential audience" of the remote DVR's transmission was only one subscriber, and thus there was no infringing "public performance" of the underlying copyrighted works.

In so finding, the Second Circuit relied on the language of the transmit clause and the legislative history for the principle that "the transmit clause directs us to examine who precisely is 'capable of receiving' a particular transmission of a performance." Cablevision, 536 F.3d at 135 (emphasis added). Moreover, the district court determined that whether a transmission is "to the public" does not depend on the potential audience of a particular transmission, but rather on "the potential audience of the underlying work (i.e., 'the program') whose content is being transmitted." As the Second Circuit noted, the lower court's interpretation rendered the "to the public" language of the transmit clause surplusage because "the potential audience for every copyrighted audiovisual work is the general public." Cablevision, 536 F.3d at 135–36.

Thus, after Cablevision, service providers could avoid infringing a copyright holder's public performance right if the service provider transmitted the program separately to each individual subscriber.

U.S. Supreme Court's Aereo Analysis

Aereo's service was designed to capitalize on the loophole created by Cablevision. Its service provided its subscribers with the ability to watch broadcast content on any Internet-enabled device only a few seconds after the original broadcast was aired. Aereo operated its system using, among other things, a remotely located antenna that was dedicated to the subscriber for the duration of the program being recorded and a hard drive with space specifically allocated to that subscriber for saving the program before streaming it to the subscriber for viewing.

Specifically, the system worked as follows: An Aereo subscriber selected on Aereo's website the local programming he or she wished to view. One of Aereo's servers then selected a particular antenna (one of thousands of dime-sized antennas in its warehouse) to tune to the over-the-air broadcast carrying the show. The selected antenna was dedicated to receiving that particular program for that particular subscriber for the duration of the show. Once the antenna began to receive the broadcast, an Aereo transcoder would translate the broadcast content into a format that could be transmitted over the Internet. Finally, once several seconds of the programming had been saved to a subscriber-specific folder on Aereo's hard drive, Aereo's server would begin to stream the saved copy of the show to the subscriber over the Internet. As a result, the subscriber could watch the entirety of the broadcast program on his or her Internet-connected device a few seconds behind the over-the-air broadcast version of the show.

In response to a suit brought by television producers, marketers, distributors, and broadcasters seeking to preliminarily enjoin Aereo for violating their copyrights, the Southern District of New York, bound by Cablevision, agreed with Aereo that Aereo made only a "private" transmission of the copyrighted content. The Second Circuit affirmed and denied rehearing en banc. The Supreme Court granted certiorari to decide the issue of whether Aereo's service constituted an infringing "public performance" of the transmitted copyrighted works.

The Supreme Court's opinion in Aereo focused first on whether Aereo's service was a "performance" of the copyrighted work and then on whether that performance was "public." With respect to the first point, the Supreme Court explored the amendments to the Copyright Act, which were made in 1976 to bring cable systems within the scope of the Act. The Court concluded that Aereo's service resembled a CATV company and, as a result, its transmissions were "performances" under the Copyright Act. Aereo's activities, the Court concluded, "are substantially similar to those of the CATV companies that Congress amended the Act to reach" because "Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, almost as they are being broadcast" and "uses its own equipment, housed in a centralized warehouse, outside of its users' homes." Aereo, 134 S. Ct. at 2506.

While the Court acknowledged that, unlike traditional cable service companies' service, Aereo's service did not "transmit" anything absent a user's direction and "may even emulate equipment a viewer could use at home" (such as a set-top box), the majority called this a distinction without a difference "[g]iven Aereo's overwhelming likeness to the cable companies targeted by the 1976 amendments." Thus, "this sole technological difference between Aereo and traditional cable companies does not make a critical difference here." In finding that Aereo's system was substantially similar to that of the CATV companies, the Court stated that "[i]n other cases involving different kinds of service or technology providers, a user's involvement in the operation of the provider's equipment and selection of the content transmitted may well bear on whether the provider performs within the meaning of the Act," but the Court offered no guidance on when a user's involvement might be enough to support a finding that the user, rather than the service/equipment provider, "performs" the work. Aereo, 134 S. Ct. at 2507.

With respect to the second part—whether Aereo performed the copyrighted work "publicly" under the transmit clause—Aereo essentially parroted to the Court the arguments made in the Cablevision case: each transmission at issue was "capable of being received by one and only one subscriber" and thus was a private performance. Aereo, 134 S. Ct. at 2508. Assuming that Aereo's definition of "performance" was correct—that Aereo transmitted a performance each time it streamed the sounds and images of a program to the subscriber's screen—the Court found that the performance was "public" because the same work (the underlying program being performed) could be transmitted to numerous, unconnected users. The fact that Aereo transmitted personal copies of programs did not make a difference to the Court because

when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes. . . . So whether Aereo transmits from the same or separate copies, it performs the same work; it shows the same images and makes audible the same sounds.

Aereo, 134 S. Ct. at 2509. This is exactly what the Second Circuit in Cablevision had said was acceptable: that discrete "transmissions" of a work to one subscriber were not a "public" performance. Thus, even though the Court did not expressly overturn Cablevision, it is apparent that the "potential audience" inquiry the Second Circuit relied upon in that case is no longer valid under Aereo.

Perhaps even more significantly, the Court found unimportant the technical aspects of Aereo's system in reaching its conclusion. The majority did not need to pull back the curtain on the "way in which Aereo delivers television programming to its viewers' screens" because the differences in technology between Aereo's services and those of a cable television provider did not "render Aereo's commercial objective any different from that of cable companies," nor did it "alter the viewing experience of Aereo's subscribers." Aereo, 134 S. Ct. at 2508. As far as the Court was concerned, the technical difference between Aereo and CATV providers meant nothing to the subscriber or the broadcaster because it was invisible to them both.

Aware that these principles could have broad consequences, especially on new technologies and on ones yet to be developed, the Supreme Court tried to cabin its holding. It agreed with the Solicitor General that "[q]uestions involving cloud computing, [remote storage] DVRs, and other novel issues not before the Court . . . should await a case in which they are squarely presented." Aereo, 134 S. Ct. at 2511 (alterations in original). The Court also removed from the scope of its holding entities that do not "transmit" a performance, such as a distributor of DVDs or a cloud service that permits only the remote storage of works rather than their transmission.

Pending Summary Judgment Motion Based on Aereo: Fox v. Dish

While the Supreme Court stated that its holding was limited to Aereo's particular service, the wording of its opinion appears to suggest that nearly any service that "transmits" copyrighted material in any manner to an end user who does not have the rights to that material could infringe the public performance right of that copyright holder, as long as the service looks and feels like cable television.

The question of how broadly the lower courts will interpret Aereo'sreach will be taken up soon in cross motions for summary judgment pending in the Central District of California in Fox Broadcasting Co. v. Dish Network L.L.C., No. 2:12-cv-04529 (C.D. Cal.). At issue in that case are several aspects of Dish's service, including its live streaming on "Dish Anywhere." Through that service, Dish subscribers can log on to the Dish Anywhere website or mobile application and watch live broadcast programming, including Fox's, over the Internet. As in Aereo, the subscriber clicks the button on Dish's website and directs Dish to stream the live TV to the subscriber's in-home unit.

Fox contends that "Dish is infringing Fox's exclusive right to publicly perform its copyrighted works by streaming them over the Internet." Fox maintains that, under Aereo, Dish's Dish Anywhere and PrimeTime Anytime services infringe its public performance right because "[s]treaming copyrighted programming over the Internet is a public performance, and is therefore copyright infringement if done without the copyright owner's permission." In other words, Fox argues for a broad interpretation of Aereo, despite its supposedly limited holding, focusing on the nature of Dish's service as an Internet streaming technology. According to Fox, this interpretation of Aereo would ensure that "a service provider who makes copyrighted programming available to paying subscribers cannot avoid liability by claiming that its subscribers are culpable because of technological gimmicks that require the customer to press buttons to access the copyrighted material." See Plaintiffs' Memorandum of Points and Authorities in Support of Motion for Summary Judgment, Fox v. Dish, No. 2:12-cv-04529 (C.D. Ca. Aug. 22, 2014), ECF No. 390.

Dish, perhaps predictably, contends that the services at issue are included in a device in the customer's home and thus are not the same as or similar to the Aereo system. Specifically, Dish focuses on the Sling Adapter and the Hopper with Sling set-top devices. The Sling technology on these devices allows subscribers to use an Internet-connected device to remotely access either live or recorded content from their home set-top boxes. Dish maintains that the Sling functionality does not allow a subscriber to transmit content "to the public" because it is "a discrete communication of audiovisual content from a subscriber's home to that subscriber's remote viewing device." See Defendants' Opposition to Plaintiffs' Motion for Partial Summary Judgment at 9, Fox v. Dish, No. 2:12-cv-04529 (C.D. Cal. Sept. 19, 2014), ECF No. 433.

It is unlikely to come as a surprise that Dish focuses on the equipment it uses to offer its subscribers access to live TV over the Internet and how that equipment and the services it offers work, rather than on the simple "streaming" nature of the service. But as the Supreme Court queried in Aereo, "why should any of these technological differences matter?" Aereo, 134 S. Ct. at 2504.This is the point that Fox tries to make, contending that Aereo applies even to systems that "route[] live television signals through in-home set-top boxes." See Reply in Support of Plaintiffs' Motion for Partial Summary Judgment, Fox v. Dish, No. 2:12-cv-04529 (C.D. Cal. Oct. 3, 2014), ECF No. 489. The Court emphasized the nature of Aereo's service, as opposed to the technology used to make the service work. It could be that the nature of Dish's live TV service makes it like the services provided by cable companies, which fall squarely within the "test" articulated in Aereo.

Where the Central District of California lands on the issue of whether Dish's services infringe as a matter of law under Aereo should provide one of the first measures of how broadly district courts will interpret Aereo. Will the holding of Aereo be limited to the particular type of Internet TV service before the Supreme Court in that case? Or will the district court interpret Aereo more broadly to find that the public performance right is violated by all streaming of copyrighted programming, particularly live TV, over the Internet, as Fox would suggest? There is strong language throughout the opinion about the limited nature of the holding that a district court could rely upon to narrowly construe Aereo.Other language in Aereo would equally support this outcome. The district court need only ask whether the nature of the service is substantially similar to cable companies' regardless of the technology used to provide that service. It is also notable that the Fox v. Dish court, ruling on a motion for summary judgment, will face a very different record than the Aereo courts did in ruling on a preliminary injunction. Given that Fox v. Dish is currently scheduled to go to trial in February 2015, we can anticipate a ruling from the Central District on the pending summary judgment motions raising this issue soon.

Keywords: litigation, intellectual property, summary judgment, Copyright Act, transmit clause, public performance, Internet streaming, broadcast programming, ABC v. Aereo, Fox v. Dish

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