While Cloud Defenders Fret, Aereo Petitioners and Amici Defend the Cloud

To Project DisCo’s Matt Schruers, the Aereo appeal “puts the cloud at risk” because everything the petitioners say about Aereo pertains to all cloud services just the same. To his mind, the petitioners “insist that ‘any device or process’ that transmits works to the public makes a public performance, each of which must be licensed.” He thinks that whatever the petitioners say about Aereo “applies with equal force to cloud storage like Dropbox, SkyDrive, iCloud, and Google Drive,” and the “anti-Aereo rationale doesn’t distinguish between Aereo and the cloud.” For Schruers, any decision against Aereo, especially on the petitioners’ own terms, would be super-scary for the cloud—the DMCA, apparently, notwithstanding.

Schruers’ suggestion that the petitioners’ position would be injurious to the cloud stems from the argument that the Transmit Clause, which says that it’s a public performance to transmit a performance of a work “to the public” even if it can be received “at different times,” implies that multiple asynchronous transmissions should be aggregated together as constituting the same public performance. It’s easy to see how this view would be mischievous: If you and I both save our legally-acquired personal copies of the same work to the same cloud service for later playback, then why wouldn’t our subsequent individual transmissions be aggregated together as constituting the same public performance on the service provider’s part?

The fault with this line of reasoning is that the aggregation theory is only scary if the petitioners are actually arguing that multiple transmissions from the same service provider should always be aggregated together. The fact is that they are not. There’s only two mentions of the aggregation theory in the petitioners’ opening merits brief before the Supreme Court. The first is this:

That Aereo uses multiple transmissions to transmit the same performance to members of the public is immaterial as well, as Congress expressly contemplated the use of multiple transmissions when it provided that an alleged infringer is transmitting a performance to the public regardless of whether members of the public receive the performance “at the same time or at different times.” . . . Two members of the public who receive a performance “at different times” necessarily receive it by way of separate transmissions.

And then later in the brief, the petitioners attack the Second Circuit’s reading of the Transmit Clause:

One glaring problem with the Second Circuit’s construction is that it renders a significant part of the language from which it is purportedly derived entirely superfluous. Congress said explicitly that an alleged infringer is transmitting a performance to the public even when “members of the public capable of receiving the performance or display receive it . . . at different times.” . . . Of course, it is essentially impossible for two people to receive the same transmission of a performance “at different times.” Accordingly, even the Second Circuit was forced to acknowledge that its reading of the transmit clause renders that language superfluous.

The petitioners are not arguing, as Schruers suggests, that all transmissions of the same performance by the same cloud service provider should be aggregated together. They are instead saying that Aereo can’t escape liability through the simple expedient of using multiple asynchronous transmissions. In other words, it’s not necessarily true that each transmission is private because it is receivable “at different times.” Its asynchronous nature doesn’t automatically detract from its public nature, and it can be “to the public” even when each member of the public can receive an individualized transmission “at different times.”

More importantly, the petitioners point out that the doomsayers’ fears about the cloud are misplaced:

Contrary to Aereo’s alarmist suggestions, a decision from this Court reaching the same conclusion need not threaten the future of “cloud computing” technology, or any of the readily distinguishable services to which Aereo attempts to analogize itself. There is an obvious difference between a service that merely stores and provides an individual user access to copies of copyrighted content that the user already has legally obtained, and a service that offers the copyrighted content itself to the public at large.

Thus, even the petitioners, whom Schruers thinks are gunning for the cloud, acknowledge that there’s a simple way to differentiate legal from illegal cloud service providers—and this turns on who supplies the content. When the cloud service is used to store and stream content that the subscriber has legally obtained in the first place, the cloud service provider is not a direct infringer. And when the cloud service provider itself is supplying the very content at issue, it’s a direct infringer. The implication for Aereo is obvious: Aereo’s subscribers aren’t using its service to store and stream content they have already legally acquired; they instead are using Aereo’s service to acquire that content in the first place. Since Aereo itself supplies the very content at issue—and does so without license—it’s a direct infringer of the public performance right.

This is the same point I made in my last post about Aereo, where I explained why I think the cloud will be safe even if Aereo is shut down. This is, of course, in large part due to the DMCA—the immunity-granting statute that many cloud doom-and-gloomers conspicuously fail to mention. But, more fundamentally, I argued that there is a difference between a service provider which is a passive conduit, supplying only dumb pipes used by others to infringe, and a service provider which is an active participant, taking affirmative steps to bring about the particular copying at issue. It’s quite simple to find that Aereo is an active participant—and thus a direct infringer of the public performance right—without finding that other cloud service providers are in the same boat. The way to arrive at this conclusion is by application of the only bright-line rule that exists for separating passive conduits from active participants, namely, whether the service provider itself supplies the very content at issue.

A quick recap of my argument is this: One way to publicly perform a work is by transmission of a performance of the work to the public. Whether the transmission is to the public depends on the identites of the sender and the receiver, since only then can we determine whether that relationship is public or private. When a performance of a work is transmitted from a service to a subscriber, sometimes the identity of the sender is the service provider and sometimes it’s the subscriber. When the service provider is a passive conduit, the identity of the sender is the subscriber and it’s a private performance. And when the service provider is an active participant, the identity of the sender is the service provider and it’s a public performance.

So how do we distinguish passive conduits from active participants? Simple. When a service provider allows a subscriber to access content which the subscriber has legally acquired in the first place, that service provider is a passive conduit. On the other hand, when a service provider itself supplies the very content at issue to the subscriber, that service provider is an active participant. Note how the pieces fit together: In order to establish whether a service provider is a passive conduit or an active participant, we look at that service provider’s volitional conduct in causing the transmission to occur. When the service provider itself supplies the very content at issue, its volitional conduct is sufficient to find that it is the identity of the sender. Assuming the receiver is a member of the public, the transmission is a public performance.

By suggesting that liability for cloud service providers turns on who supplies the content, the petitioners have a far more nuanced reading of the Transmit Clause than Schruers gives them credit for.  And, properly understood, the petitioners’ views are far less scary for the cloud than Schruers admits. Moreover, the amicus briefs submitted by the United States (“the government”), the Center for Democracy and Technology (“the CDT”), and the BSA | The Software Alliance (“the BSA”), which Schruers cites as reasons why we should all be worried about the cloud’s fate, all point out the same simple approach for distinguishing passive conduits from active participants.

In the government’s amicus brief, the distinction is made between services providers which supply the content and those which do not:

Reversal of the judgment below need not threaten the legality of cloud computing. One function of cloud-computing services is to offer consumers more numerous and convenient means of playing back copies that the consumers already lawfully acquired. A consumer’s playback of her own lawfully-acquired copy of a copyrighted work to herself will ordinarily be a non-infringing private performance, and it may be protected by fair-use principles as well.

Respondent’s service, by contrast, enables subscribers to gain access to copyrighted content in the first instance—the same service that cable companies have traditionally provided. Unlike cable companies, however, respondent does not pay licensing fees to the copyright holders. A decisions holding that respondent publicly performs the broadcast programs it transmits to paying subscribers will not threaten the use of different technologies that assist consumers in hearing or viewing their own lawfully-acquired copies of copyrighted works.

To his credit, Schruers does confirm that the government presents this simple dichotomy: “The USG’s rationale is that as long as a consumer has lawfully acquired media in the first place, no cloud service need worry that someone will demand a license.” But then Schruers quickly tries to dismiss this argument by alluding to some other, albeit unnamed, amici whom he claims disagree. Furthermore, he takes issue with the government’s choice of words in saying that Aereo’s loss “need not threaten the legality of cloud computing.” He notes that the government “conspicuously does not argue that it will not threaten the cloud.” This argument is unpersuasive to begin with, and it’s undercut by the fact that just three sentences later the government explicitly says that a decision against Aereo “will not threaten the use of different technologies that assist consumers in hearing or viewing their own lawfully-acquired copies of copyrighted works.”

Schruers notes that the CDT “argued that an ‘overly broad view of the public performance right would chill the promise and progress of cloud computing.’” This is no doubt true. Should the Supreme Court’s interpretation of the Transmit Clause be overly broad, the cloud would be endangered. But what the CDT doesn’t do is wave its hands in the air and say that we should all be panic-stricken for the cloud. The CDT instead offers an interpretation of the Transmit Clause which recognizes the simple dichotomy between passive conduits and active participants.

As the CDT amicus brief puts it:

[W]hen a user accesses her own digital files (whether music, video, text, or software) over the Internet, the resulting transmission should not be treated as a public performance within the meaning of the Copyright Act. Thus, when a consumer uses a cloud-based service like an online backup or storage locker for his lawful copies of copyrighted works, the later transmission of those copies back to himself, in a manner not accessible to others, does not constitute an exercise of the public performance right.

The Court should take care not to analyze the present case in a manner that would undercut, ignore, or reject this crucial principle regarding one-to-one transmissions of personal copies. In particular, it should avoid any suggestion that the transmission to users of their own, lawfully acquired personal copies constitutes public performance.

It should be mentioned that Schruers is certainly cognizant of this argument, for the second paragraph is a verbatim transcription of what Schruers himself argued in an amicus brief before the Court of Appeals for the District of Columbia Circuit in the Aereo-copycat FilmOn X appeal. Note too how the CDT’s argument tracks that of the petitioners and the government—what matters is whether the content was legally acquired by the subscriber in the first place. But the CDT brief is even more nuanced than that, and its argument tracks my own in claiming that whether the service provider is the identity of the sender depends on the volitional conduct test, which uses a proximate causation analysis to determine who directly causes the transmission to occur.

As the CDT explains:

When a computer system is used to reproduce or perform a work in a way that may infringe, direct liability is reserved for parties whose volitional conduct is sufficiently proximate to the infringement. Where the key volitional conduct lies with the computer system’s users, the legal responsibility of the computer system is analyzed under principles of secondary liability. ***

The Cablevision case applied the volitional conduct test to the act of copying. On the facts of that case, the court held that the user engages in the volitional conduct that causes a specific program to be recorded. Users therefore were deemed to be the ones who “do” the copying. . . . The Second Circuit expressly declined to reach the question of whose volitional conduct triggers the subsequent playback, because it held the resulting performances to be private in any event. . . . That made the volitional conduct question moot. But as a general matter, volitional conduct is an important additional element of public performance analysis. [footnote 9] ***

[footnote 9] Following Cablevision, the court below did not consider the issue of volitional conduct: who here is performing the broadcasts, the users or Aereo? Petitioners simply assume that Aereo is the volitional actor. But if the users are the volitional actors, the Petitioners have effectively conceded in the context of their discussion of the “hapless customer” that no public performance would occur. ***

In short, the volitional conduct requirement draws the line between (a) volitional actors whose overt acts incur direct responsibility for infringement and (b) providers of tools or instrumentalities, who may be secondarily liable for the acts of others, in appropriate circumstances.

With the exception of the footnote, this argument is also a verbatim copy of Schruers’ own argument in the FilmOn X appeal. The CDT, via Schruers, hits the nail on the head when it points out that whether Aereo—or any other cloud service provider, for that matter—is a direct infringer depends on the remoteness of its volitional conduct in bringing about the transmission.

Schruers’ claim about the BSA amicus brief is even more off-kilter. Schruers states:

The Business Software Alliance similarly argued that “[t]ransmissions between a provider of cloud storage services and individual users are thus outside the scope of the Transmit Clause [of the Copyright Act]” and that a “contrary interpretation of the Transmit Clause would be fatal for cloud computing.”

Those quotes are pulled out of context. The BSA actually says this:

Pursuant to the Transmit Clause’s plain terms, a private transmission that is initiated by the user who stored the content and is accessible only to that user cannot violate the Transmit Clause. Transmissions between a provider of cloud storage services and individual users are thus outside the scope of the Transmit Clause.

A contrary interpretation of the Transmit Clause would be fatal for cloud computing. Cloud networks would be unable to function if every user-directed transmission implicated the Transmit Clause.

The BSA does not merely state that any transmission from a cloud service provider to its subscriber is beyond the Transmit Clause’s reach. It specifically is limiting its argument to “a private transmission that is initiated by the user who stored the content and is accessible only to that user.” This tracks the argument made by the petitioners, the government, and the CDT—and it tracks Schruers’ own argument made elsewhere. The BSA agrees that too broad a reading of the Transmit Clause would be disastrous for the cloud, but it sees this as an opportunity to urge the Supreme Court to adopt a narrower reading.

Adopting the volitional conduct approach, the BSA continues:

Direct liability for copyright infringement requires a volitional act. In the context of cloud-based data storage service—where the storage and transmission of data result from volitional acts performed solely by the user, and the provider of the storage service merely executes the user’s commands—the absence of any volitional act by the provider precludes imposition of direct liability for infringement and bars liability for any infringing acts by its users. [footnote 3]

[footnote 3] A different situation would be presented if a cloud services provider does not simply store data for users and transmit that data as requested by a user, but rather stores a work on its own initiative and offers access to the public generally or to its “subscribers” (or stores the work at the request of a user but transmits the work at the request of persons other than that user).

The BSA too thinks that whether the service provider is a passive conduit or an active participant turns conclusively on who supplies the content. When the subscriber supplies content to himself, the performance is private. But when the service provider itself “stores a work on its own initiative and offers access to the public generally,” the performance is public.

Schruers is no doubt correct to be concerned about the Supreme Court adopting too broad a reading of the Transmit Clause. But where he misses the boat is in his suggestion that a blow to Aereo necessarily means lights out for the cloud. The petitioners’ argument is not so broad as to imperil the cloud—and, in fact, they defend it. Moreover, as the amicus briefs submitted by the government, the CDT, and the BSA all point out, a simple dichotomy exists between passive conduits and active participants which turns on who supplies the content. Schruers here presents the Aereo appeal as an all-or-nothing battle for the cloud, but the truth is that a loss for Aereo needn’t mean any such thing. While other doom merchants have picked up on his argument, one can’t help but think that their strategy is to distract attention away from Aereo itself.

Follow me on Twitter: @devlinhartline

© 2014 Devlin Hartline. Licensed under the Law Theories Public License 1.0.

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5 thoughts on “While Cloud Defenders Fret, Aereo Petitioners and Amici Defend the Cloud

  1. Devlin, I’m not a regularly reader so I only just happened across your post. You say “…even the petitioners, whom Schruers thinks are gunning for the cloud…”

    However, the first paragraph of my post states, “It isn’t that broadcasters necessarily bear malice toward cloud computing; it is just that when broadcasters complain about how Aereo works, their complaints describe cloud-enabled access to content.”

    I can’t think how I could have stated any more clearly that I don’t think broadcasters are “gunning for” the cloud. What about that sentence was ambiguous?

    1. Thanks for stopping by, and I appreciate the comment. I think your criticism is a fair one, and you clearly weren’t saying that the petitioners are intentionally trying to take the cloud down. Do you think my criticism of you, namely, that your post is aimed at getting everyone really worried at the thought of Aereo losing, is fair? I’m curious why in your Aereo posts you never bother to discuss how we separate good cloud computing services from bad ones. And where exactly in the petitioners’ merits brief do you think they’re arguing that multiple private transmissions should be aggregated? That’s the premise of your argument, yet you never explain where the petitioners say this. Thanks!

      1. Yes, I think anyone interested in cloud computing should be worried about an Aereo loss because it is hard to conceptualize a coherent opinion in favor of the broadcasters that does not call into question whether cloud storage providers need a public performance license for every performable file in the cloud.

        Assuming there’s any value in labeling cloud services as ‘good’ and ‘bad’; the metric for that is presumably the Copyright Act, and no such evaluation is possible without knowing the scope of the Act’s public performance right. Many, of course, thought that was settled by Cablevision.

        In response to your question about where petitioners make the aggregation argument: you may be right that my post assumes too much familiarity with the parties’ arguments. Since our brief won’t be filed until later this week, I will point to BSA’s brief ISONP which is concise:

        “Petitioners contend that, because the text of the second part of the Transmit Clause refers to “receiving the
        performance,” the language can encapsulate multiple private transmissions of a single performance. See,
        e.g., Pet. Br. 31-34. Petitioners therefore argue that the Transmit Clause applies equally whether there is one or multiple transmissions. Ibid.”

        1. Yes, I think anyone interested in cloud computing should be worried about an Aereo loss because it is hard to conceptualize a coherent opinion in favor of the broadcasters that does not call into question whether cloud storage providers need a public performance license for every performable file in the cloud.

          But in your amicus brief in the FilmOn X appeal, you said:

          This unanimous jurisprudence establishes that when an Internet user accesses her own digital files (whether music, video, text, or software) over the Internet, the resulting transmission is not treated as a public performance within the meaning of the Copyright Act. Thus, when a consumer uses a cloud-based service like an online backup or storage locker for his lawful copies of copyrighted works and transmits those copies back to himself, in a manner not accessible to others, the public performance right is not being exercised.

          The Court should take care not to analyze the present case in a manner that would undercut, ignore, or reject this crucial principle regarding one-to-one transmissions of personal copies. In particular, it should avoid any suggestion that the transmission to users of their own, lawfully acquired personal copies constitutes public performance.

          That means that if the FilmOn X service in fact operates in a way that creates lawful personal copies, it would necessarily follow that the subsequent transmissions of those individual copies to those same individual customers represent private performances, not public ones.

          It seems to me that you’ve given us a way to conceptualize a coherent opinion in favor of the broadcasters that wouldn’t involve harming the cloud since we can find that Aereo’s copies are not lawfully created in the first place. Other cloud computing services that use lawfully created copies would not be affected. Isn’t this a simple test for distinguishing infringing from noninfringing cloud services? We can argue about whether the copies with Aereo are lawfully created, but I think this is certainly a workable test.

          In response to your question about where petitioners make the aggregation argument: you may be right that my post assumes too much familiarity with the parties’ arguments. Since our brief won’t be filed until later this week, I will point to BSA’s brief ISONP which is concise:

          “Petitioners contend that, because the text of the second part of the Transmit Clause refers to “receiving the performance,” the language can encapsulate multiple private transmissions of a single performance. See, e.g., Pet. Br. 31-34. Petitioners therefore argue that the Transmit Clause applies equally whether there is one or multiple transmissions. Ibid.”

          I don’t read those pages as standing for that proposition. The petitioners are saying that the performances aren’t necessarily private just because they’re individualized. They’re not saying that multiple private transmissions become public once you aggregate them, which you always do. They’re saying that just because there are multiple transmissions, that doesn’t necessarily mean they’re private.

          And to drive the point home, that the petitioners say the following:

          Contrary to Aereo’s alarmist suggestions, a decision from this Court reaching the same conclusion need not threaten the future of “cloud computing” technology, or any of the readily distinguishable services to which Aereo attempts to analogize itself. There is an obvious difference between a service that merely stores and provides an individual user access to copies of copyrighted content that the user already has legally obtained, and a service that offers the copyrighted content itself to the public at large.

          So they’re acknowledging the same criteria that you acknowledged in your FilmOn X brief, namely, whether the copies at issue are lawfully acquired is determinative. When they are lawfully acquired, there’s no public performance. And when they are not, the service provider can’t escape liability by simply using individualized transmissions.

          Does that make sense? I think things don’t look nearly as scary as you make them out to be once you get past the caricature of the petitioners’ aggregation theory and acknowledge that they propose a test that echoes your own. Moreover, I think it’s strange that you leave the DMCA out of it. Even if the Court adopts a really broad reading of the Transmit Clause, the DMCA will still protect these cloud computing services. I doubt you disagree.

          I look forward to your brief!

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