>>WNET v. Aereo: The Second Circuit Persists in Poor (Cable)Vision

WNET v. Aereo: The Second Circuit Persists in Poor (Cable)Vision

Prof. Jane C. Ginsburg, Columbia University School of Law
April 23, 2013

In 2008, the U.S. Court of Appeals for the Second Circuit decided Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), a case involving a “remote DVR” service that enabled Cablevision’s customers to designate programs to store in individualized storage areas on Cablevision’s servers, for subsequent transmission to the customer at a selected time.  The court ruled that transmission to a single subscriber from a single source copy was not a “public performance” under the 1976 Copyright Act because only one person was “capable of receiving” the performance communicated by the transmission from the individualized copy.  When I read Cablevision in 2008, I sensed that the decision offered a roadmap that would considerably undermine the public performance right, possibly evading its application to new business models for digital content delivery.

The Second Circuit confirmed that sense of doom on April 1 of this year, in WNET v. Aereo, Inc., a decision so inconsistent with statutory text and policy as to inspire surmise that the ruling was an April Fool’s prank.  In Aereo, the court determined that a service that captured over-the-air television signals, digitized them, and transmitted them to subscribers had not engaged in a “public performance” because Aereo had assigned each subscriber a personal antenna, which captured the signals, stored them individually on Aereo’s server, whence the signals were individually transmitted to the subscriber.  In explaining how Cablevision controlled the result in Aereo, the court laid out four simple and clear steps to building a business model for communicating copyrighted works without ever having to clear rights in or pay for the transmissions:

First and most important, the Transmit Clause [of the statutory definition of public performance] directs courts to consider the potential audience of the individual transmission.  If that transmission is “capable of being received by the public” the transmission is a public performance; if the potential audience of the transmission is only one subscriber, the transmission is not a public performance, except as discussed below.  Second and following from the first, private transmissions – that is those not capable of being received by the public – should not be aggregated.  It is therefore irrelevant to the Transmit Clause analysis whether the public is capable of receiving the same underlying work or original performance of the work by means of many transmissions.  Third, there is an exception to this no-aggregation rule when private transmissions are generated from the same copy of the work.  In such cases, these private transmissions should be aggregated, and if these aggregated transmissions from a single copy enable the public to view that copy, the transmissions are public performances.  Fourth and finally, “any factor that limits the potential audience of a transmission is relevant” to the Transmit Clause analysis.

Thus, as Judge Chin emphasized in dissent, and commentators have recognized, under the majority’s approach, a transmission to millions of members of the public becomes “non-public” if the communication is manipulated in order to limit any particular transmission to a single recipient.  Judge Chin wrote:

Aereo’s “technology platform” is, however, a sham.  The 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.  After capturing the broadcast signal, Aereo makes a copy of the selected program for each viewer, whether the user chooses to “Watch” now or “Record” for later.  Under Aereo’s theory, by using these individual antennas and copies, it may retransmit, for example, the Super Bowl “live” to 50,000 subscribers and yet, because each subscriber has an individual antenna and a “unique recorded cop[y]” of the broadcast, these are “private” performances.  Of course, the argument makes no sense.  These are very much public performances.  (Emphasis in original.)

The question I would like to address is: Does Aereo’s “contrivance” exploit a wrongly “perceived loophole,” or does the Copyright Act in fact contain a gap through which enterprising start-ups can drive 50,000 individual antennas, or, for that matter, millions of “individualized” communications?  If there is such a loophole, then Aereo and all others inspired by its example are perfectly entitled to follow the Second Circuit to its copyright-devastating conclusion until Congress fixes the statute.

Let us therefore examine the text of the definition of a public performance by transmission (the so-called “Transmission Clause”).

To perform or display a work “publicly” means –

. . .

(2) to transmit or otherwise communicate a performance or display of the work … to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.

One might first note the phrase “to the public by means of any device or process” – indicates that Congress was trying to think ahead, to anticipate new technologies.

Next, the phrase, “whether the members of the public” – this is important, because, as we shall see, when a transmission service, be it radio, cable, or Internet streaming, is offered to the public, every individual recipient is a “member of the public.”

Next, “capable of receiving the performance or display receive it” – what’s the “it?”  For the Second Circuit, the “it” is the transmission of the performance, not the performance of the work.

Finally, “at different places and different times.”  This is the key language that should make clear that Congress was covering both simultaneous, and “asynchronous” transmissions.  But, as we shall see, the Second Circuit’s reading effectively deletes “different times” from the statute, thus defeating Congress’s clear intent to bring pay-per-view and other individualized forms of transmission within the scope of the Copyright Act.

So where is the loophole?  The Second Circuit found one first by failing to concentrate on “members of the public.”  The court believed that a transmission from an individual’s own-made copy (remember the individualized source copy stored on Cablevision’s and Aereo’s servers) back to that individual could not be “public.”  Hence the example given in Cablevision of a “hapless customer who records a program in his den and later transmits the recording to a television in his bedroom would be liable for publicly performing the work simply because some other party had once transmitted the same underlying performance to the public.”  Surely that individual should not require a license from the copyright owner of the recorded work.  A correct conclusion, but not because the source copy for the in-home transmission was made by Hapless Homeowner from a television broadcast.  Rather, there is no copyright violation because Mr. Hapless did not transmit the recording “to the public.”  Within the domestic sphere, neither the originator of the transmission nor its recipient are “members of the public.”  By contrast, in the context of Cablevision, and certainly in Aereo, the transmissions were “to the public,” to “members of the public,” invited to and capable of receiving the performance wherever they have receiving devices (whether at home or out and about).

Error number two: The Second Circuit conflated “performance” with “transmission” – remember the “it” – and on the individualized model, there is only one member of the public who is capable of receiving that transmission.  This reading does not work in terms of the statute.  Moreover, the reading is wrong whether the source of the individualized transmission is a common source or is an individual source.  The individual/common source distinction is a red herring because a reading of the statute that requires members of the public to receive the same particular transmission would exclude all asynchronous transmissions no matter how shared the source.  If one member of the public receives an on-demand transmission of a performance of a given work at 12 o’clock, and another receives from the same transmission service an on-demand transmission of a performance of the same work at 1 o’clock, only one person can receive each on-demand transmission.  Reading the statute to equate “transmission” with “performance” reads “different times” out of the statute.  Once one recognizes that it is not possible for the two people to receive the same transmission “at different times,” then it becomes clear that the “public” character of the transmission cannot turn on capacity to receive a transmission.  Rather, what makes a transmission, whether simultaneous or individualized on-demand, and whatever the number of source copies, “public” is its communication to “members of the public.”

Consider a variation on Aereo, one that might be a “public” performance under that decision’s “common source copy.”  Suppose Mr. Hapless creates a webpage whose access is limited to close family and social acquaintance.  Mr. Hapless being only modestly outgoing, his circle of social acquaintance that can access his webpage does not exceed 25 persons, a statutorily insubstantial number, we shall assume.  On his webpage, Mr. Hapless posts a digital file of a song that he recorded from a webcast.  Hapless’s friends can click on and listen to the song whenever they wish; no two listen at the same time.  Under Aereo, Hapless might be publicly performing the recording by transmission because his friends, albeit listening on-demand asynchronously, are receiving the transmission from a common source copy situated on Hapless’s webpage.  But it should be clear that Hapless is not publicly performing, not because none of his friends receives the same transmission, but because, within the restrained social circle, the friends are not “members of the public” and Hapless therefore is not transmitting “to the public.”

By contrast, if Hapless’s “friends” numbered in the hundreds or thousands, their acquaintance essentially virtual, his transmission would be “to the public,” not because of the single source copy, but because of the substantial number of persons to whom he makes the communication available, whether they listen “at the same time or at different times.”

That’s why Cablevision is wrong, that’s why Aereo is wrong, and the prospects for business models are terrifying, or terrific, depending on whether you own a copyright, or just make money off of someone else’s.

By |2018-04-05T19:44:54+00:00April 23rd, 2013|Intellectual Property Issues|Comments Off on WNET v. Aereo: The Second Circuit Persists in Poor (Cable)Vision