AEREO, Cable, What’s The Difference?

By Adam Stevenson (IPilogue Editor)
IP Osgoode

The world of copyright law is constantly evolving and adapting to changes and innovations.  No case better captures this ongoing evolution than the recent American decision of WNET, THIRTEEN, FOX TELEVISION STATIONS, INC. v. AEREO, INC.

 

 

 

 

The case involved a copyright dispute between a number of television networks and the provider of a new television viewing service AEREO.  AEREO was held not to have interfered with any rights of the television networks through their unique service, described as an amalgamation of services each of which the court did not find contravened any rights.

 

The service AEREO offers is quite unique. It first uses antenna boards to pick up broadcast signals in the New York area. A customer can then select to either “watch” or “record” a broadcast program. In either case, AEREO – upon request – will record a unique copy of the broadcast program, either to be buffered and immediately transmitted to the customer over the internet (or mobile device), or stored as a copy for later viewing. AEREO argued therefore that their service (for which they charge a monthly fee) could be described as a consumer owning a combination of a TV antenna, a DVR, and a slingbox.

 

In the determination of whether the AEREO service violated any of the rights of the networks, Justice Droney, writing for the majority, focused on the similarity between AEREO’s system and other services that have been litigated on. Being a decision from the same court and concerning a nearly identical service, the court particularly relied upon the case of Cablevision. Cablevision used a device called an RS-DVR to make individual copies of broadcasts for customers upon request.  In the same way as with AEREO’s system, these copies were only reproduced for the customers who actually ordered them. The Court of Appeal was clear that this service did not infringe any networks’ reproduction, public performance or transmission rights. Faced with that decision, the networks decided to give up its claim that AEREO’s making of copies was infringement, but they maintained that the service still infringed both their rights related to public performance and transmission.

 

The following are the four main points on which Justice Droney based the decision of Aereo upon:

 

  1. If an individual 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 usually not a public performance.
  2. Private transmissions (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.
  3. 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.
  4. Any factor that limits the potential audience of a transmission is relevant to the Transmit Clause analysis.

 

The AEREO set-up was found not to be a public performance, mainly because it failed to fall within the exception to an “aggregate transmission” in the same way that a cable transmission does.

 

From the foundational principle of stare decisis, the decision in AEREO can be viewed as only an extension of the same legal principles which were discussed in Cablevision. In my opinion, Justice Droney’s analysis was somewhat flawed when he engaged in a comparison of a cable transmission to AEREO’s system. With former case law against them, the networks had argued that AEREO’s system should nonetheless be considered a public broadcast because of its similarity to cable transmissions, which were specifically legislated against in 1976. In Justice Droney’s discussion of this argument, he did make an analysis of legislative intent behind the Transmit clause, but only briefly.  He also stated clearly that the AEREO system is similar in many ways to a cable transmission system, but failed to explain why the legislature would not have considered the AEREO system infringement, if they had been aware of it.  In my opinion (and likely in the opinion of the networks), it is clear that cable broadcasts were specifically addressed in the 1976 Copyright amendments due to the potentially massive financial impact they would have on the networks, and therefore, it is strange that a similar system wouldn’t be considered infringing.

 

Naturally, there is always the argument that the decision is correct because the AEREO service is simply an amalgamation of devices that a private consumer can secure for themselves.  The significant difference, from my perspective, is that it may not be considered infringement because it would be private consumers gaining benefits from the combined use of these devices; that is simply not the same situation as with the AEREO service, which is offered on an ongoing basis and for a fee.

 

The networks may have actually been better served in this decision if they had advanced a reproduction rights claim.  Although apparently settled by the Cablevision decision, continuing to press the issue would force the court to do a “Fair Use” analysis, since copying is arguably being done. In that analysis a series of market factors would have been considered and the court may have ruled in favour of the networks without needing to overrule Cablevision. Since those arguments were not presented and the court found that there was no public performance, there waso need to consider “Fair Use” factors as a part of the legal analysis.

 

Therefore we are left with a decision that it technically in keeping with the law, but seems inconsistent with the policy which underlies that law. Copyright law has always been a balance between protecting rights and increasing public access. That is the reason why the test for “Fair Use” in American Copyright law specifically considers market impact of a particular use. In my opinion, the courts are making a clear statement with decisions like these.  That statement is “If you can find a find a loophole in copyright law, you can exploit it”. While it may be acceptable to accept that mentality in a tax law context, it is not appropriate in a system like copyright which is based on a balance between the rights of individuals.

 

It is my sincere hope that the court wants to use this decision to prompt action from the legislature to specifically address this case as they did in 1976 in reaction to cable television. It is because of decisions like these that we get statements like the one from FOX COO Chase Carey talking about the possibility of turning FOX into a pay channel which is no longer broadcast. In my view, this is a different scenario, on a fundamental level, than a single person buying an antenna or a DVR.  AEREO is a transmission business – just like the cable television industry – and their operation will have a significant financial impact network television.

 

Adam Stevenson is an IPilogue Editor and a JD Candidate at Western University.

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