Prof. Rodney A. Smolla, Duke University School of Law
June 25, 2014
This IP Viewpoints article is filed as breaking news. Only minutes ago the Supreme Court announced its much-anticipated ruling in ABC, Inc., v. Aereo, Inc., a copyright case that, as I have previously posted in these Viewpoints pages, places in play the American television broadcast industry as we know it. (The Media Institute filed an amicus brief in support of the broadcasters in the case, on which I served as author and Counsel of Record.)
In a 6-to-3 decision, written Justice Stephen Breyer and joined by Chief Justice Roberts and Justices Kennedy, Ginsburg, Sotomayor, and Kagan, the Court this morning declared Aereo’s service to violate the copyright laws, effectively putting it out of business unless it is able to negotiate the payment of retransmission fees to broadcast content providers. Justice Scalia, joined by Justices Thomas and Alito, dissented.
As I have previously explained, Aereo uses antennas of about the size of a dime to retransmit to Aereo’s paid subscribers broadcast signals it picks off the air. Aereo does not pay broadcasters for this retransmission. In their copyright infringement suit, broadcasters argued that Aereo’s model was a free-riding exploitation of their copyrighted works, and that this retransmission constituted a “public performance” of those works. Aereo countered with the argument that because Aereo creates an individual dime-sized antenna for each of its subscribers, it is not engaged in any public performance, and its model does not infringe on any interest of the broadcasters protected by the Copyright Act.
This morning, the Supreme Court decided, emphatically and with no equivocation, with the broadcasters, and against Aereo. Justice Breyer’s opinion for the six-justice majority held that Aereo “performs” the copyrighted works of others, in violation of copyright laws, and does not merely “supply equipment” that allows others to do so. One of Congress’s primary purposes in amending the Copyright Act in 1976, the Court noted, was to overturn the Supreme Court’s holdings in early cases involving cable television, which had held that cable systems do not publicly perform the content of works they retransmit. Those two decisions, Fortnightly Corp. v. United Artists Television, Inc., and Teleprompter Corp. v. Columbia Broadcasting System, Inc., the Supreme Court in Aereo observed, were roundly rejected by Congress when it amended the copyright laws in 1976. The 1976 Act now clarifies that to “perform” an audiovisual work means “to show its images in any sequence or to make the sounds accompanying it audible.” As the Supreme Court in Aereo explained, this means that both the broadcaster and the viewer “perform,” because they both show a television program’s images and make audible the program’s sounds. In turn, Congress also enacted the “Transmit Clause,” which specifies that an entity performs when it “transmit[s] … a performance … to the public.” The Supreme Court in Aereo held this morning that this is exactly what Aereo does. The Supreme Court thus accepted the argument, advanced by the broadcasters and many supporting amici, including The Media Institute, that Aereo was indeed performing for the public, notwithstanding its clever attempt to avoid the Transmit Clause through its otherwise ridiculous dime-sized antennas.
As the Supreme Court today properly recognized, Aereo operates precisely as a CATV system operates. The Court explained that Congress intentionally created a complex licensing scheme that sets out the conditions, including the payment of compulsory fees, under which cable systems may retransmit broadcasts to the public, acting intentionally to bring cable systems within the coverage of the Copyright Act. Aereo’s attempt to end-run this set of legal and economic arrangements, the Court held, violated the law.
The Court in Aereo acknowledged one difference between Aereo’s system and typical cable systems: whereas cable systems transmit constantly, Aereo’s system remains inert until a subscriber indicates that the subscriber wants to watch a program. This difference, however, was not enough, the Court held, to justify treating Aereo differently than a cable company. As the Court in Aereo summarized its ruling:
In sum, having considered the details of Aereo’s practices, we find them highly similar to those of the CATV systems in Fortnightly and Teleprompter. And those are activities that the 1976 amendments sought to bring within the scope of the Copyright Act. Insofar as there are differences, those differences concern not the nature of the service that Aereo provides so much as the technological manner in which it provides the service. We conclude that those differences are not adequate to place Aereo’s activities outside the scope of the Act.
The majority opinion was careful, at the end, to caution that its ruling will not discourage the emergence of new media technologies. “We cannot now answer more precisely how the Transmit Clause or other provisions of the Copyright Act will apply to technologies not before us,” Justice Breyer’s majority opinion stated. The opinion elaborated that the ruling in Aereo did not purport to address issues that might arise from such formats as cloud computing, remote storage DVRs, or other technologies where Congress has not “plainly marked the course.” Congress had plainly marked the course for models such as Aereo’s, however, and the Supreme Court has now followed that course with fidelity.
As I have previously stated on behalf of The Media Institute, if a picture tells a thousand words, a thousand antennas tell the picture. This morning the United States Supreme Court made it clear that it got that picture.