Applying Aereo: Dish’s Hopper with Sling

This is the second post in my “Applying Aereo” series. In the first post, I walked through the Supreme Court’s reasoning step-by-step. In this second installment, I’ll apply the holding of Aereo to Dish’s Hopper with Sling, and I’ll explain why I think Fox should lose on its new public performance claim against Dish. While some skeptics have complained that Aereo offers no guidance for courts to apply with other fact patterns, I think the Court’s holding can be applied here to show that the place-shifted performances enabled by Dish’s Hopper with Sling are private, not public. Rather than jeopardizing innovation, it seems to me that Aereo offers the type of relatively simple-to-apply bright-line rule that can foster it.

On July 7th, Fox and Dish returned to the Ninth Circuit for yet another round of oral argument in their ongoing copyright and contract battle. The parties had been there once before, with Fox losing its appeal of its denied preliminary injunction motion last year. In that first appeal, Fox challenged two features of Dish’s first-generation Hopper set-top DVR, namely, PrimeTime Anytime, which let subscribers record the prime-time lineup of the four major broadcasters, and AutoHop, which let subscribers watch those recordings back commercial-free. The Ninth Circuit agreed with the district court that Dish should not be enjoined since Fox was not likely to succeed on the merits of its reproduction right claims.

Early last year, Dish came out with its second-generation Hopper set-top DVR, Hopper with Sling, and a companion application, Dish Anywhere. The app lets subscribers stream live and recorded content from their personal Hopper with Sling DVRs to their mobile devices via the internet. Fox added a claim for this new place-shifting feature and sought to have it preliminarily enjoined. The district court denied the motion, bypassing the likelihood of success analysis in finding that Fox had failed to demonstrate irreparable harm—even if its success on the merits were presumed. The brunt of Fox’s second appeal thus concerned whether the district court applied the correct irreparable harm standard.

Even though the district court skipped over the merits of Fox’s new public performance claim, Fox and Dish nevertheless both argued it before the Ninth Circuit in the second appeal. Given that the district court didn’t consider these arguments in the first instance, it’s no surprise that the Ninth Circuit didn’t address them in its memorandum issued early last week. Fox has now lost this second appeal: The circuit panel agrees with Dish that the district court didn’t abuse its discretion in finding that Fox had failed to establish likely irreparable harm. Cross-motions for summary judgment on Fox’s new public performance claim are expected in the district court next month, so the battle over Dish’s Hopper with Sling is far from over.

The crux of Fox’s argument is that Dish itself performs since it causes the transmission to occur when content is streamed from a subscriber’s personal Hopper with Sling to a mobile device. Dish responds that it’s the subscriber who performs here, and it argues that even if Dish itself performs, the performance is private. Fox fires back that Dish “does all of the work”:

It sends the TV signals and copyrighted programs to the set top box (which it leases to the subscriber), converts them to a new format, creates a secure connection between the user’s set top box and their remote computer or device, and delivers the content to the consumer via the Internet so that it can be viewed on the Dish Anywhere website or mobile app.

After the Supreme Court issued its opinion in Aereo, both Fox and Dish filed letters with the Ninth Circuit Clerk of Court pursuant to FRAP 28(j) claiming that the Supreme Court’s interpretation of the public performance right supports their views. Fox’s letter to the Clerk contends:

[T]he Supreme Court rejected Aereo’s argument . . . that a performance is not “public” under the Copyright Act if each subscriber watches a unique, one-to-one stream of the program. Instead, the Court adopted Fox’s argument that the Copyright Act’s definition of public performance broadly encompasses any device or process that transmits Fox’s programming to the public, even if each person receives it at different times or different places.

While Dish’s letter to the Clerk responds:

[T]he Court’s decision relied upon the fact that Aereo “transmits to large numbers of paying subscribers who lack any prior relationship to the works.” . . . But the Court made absolutely clear that the Transmit Clause “does not extend” to a subscriber’s receipt of content she already owns or possesses. . . . “In addition, an entity does not transmit to the public if it does not transmit to a substantial number of people outside a family and its social circle.” . . . That is a direct reference to Sling.

These Aereo claims were reiterated by Fox and Dish during oral argument before the Ninth Circuit earlier this month (audio available here). In one interesting exchange, Circuit Judge Marsha Berzon scoffed at Fox’s lawyer’s suggestion that Dish’s Hopper with Sling was just like Aereo: “No, that’s completely different technology.” While judicial resolution of the merits of Fox’s new public performance claim will have to wait for another day, there’s no reason why we can’t look at how things stack up in light of Aereo.

In my last Aereo post, I went through the Supreme Court majority’s reasoning step-by-step, and it was a fairly lengthy post. However, the test from Aereo can be reformulated much more succinctly: (1) whether the defendant performs, and (2) whether the defendant performs publicly. As to the first element, the Court held that a defendant performs if its service is functionally equivalent to a cable system. As to second element, the Court laid down a bright-line rule:

[A]n entity that transmits a performance to individuals in their capacities as owners or possessors does not perform to “the public,” whereas an entity like Aereo that transmits to large numbers of paying subscribers who lack any prior relationship to the works does so perform.

This key passage establishes a relatively simple test for distinguishing public and private performances. The Court says that even if the service is performing, that performance is private so long as the subscriber has a “prior relationship” to the content. This is a version of the “who supplies the content” test that I have been advocating as the proper way to distinguish infringers from noninfringers in this context (see here, here, here, and here). When a service supplies content to a subscriber in the first instance, the performance is public. And when the subscriber has a “prior relationship” to the content, the performance is private. Aereo teaches that it’s not enough that the defendant transmits to members of the public; the relationship of the members of the public to the content being transmitted has to be taken into account as well.

Applying Aereo to Dish’s Hopper with Sling, I think the first element, i.e., whether Dish performs, is debatable. I’m sympathetic to Fox’s argument that Dish performs when content is streamed from a subscriber’s personal Hopper with Sling to a mobile device, but I’m also sympathetic to Dish’s argument that here it’s the subscriber who performs. I think the correct answer is that it’s both Dish and the subscriber who perform in this scenario, but, for whatever reason, the courts like to say it’s one party or the other. Given the Ninth Circuit’s resolution of the reproduction right claims in the first appeal, I think it will eventually side with Dish on this element. While I’m not convinced this is the right result, I don’t think it really matters in this case: If the performance is private, it’s noninfringing no matter who causes it.

Turning to the second element, i.e., whether Dish performs publicly, Fox is correct that “the Supreme Court rejected Aereo’s argument . . . that a performance is not ‘public’ under the Copyright Act if each subscriber watches a unique, one-to-one stream of the program.” But Dish is also correct that “the Court made absolutely clear that the Transmit Clause ‘does not extend’ to a subscriber’s receipt of content she already owns or possesses,” and the problem for Fox is that this is what counts here. If each transmission from a subscriber’s personal Hopper with Sling to a mobile device involves content to which the subscriber has a “prior relationship,” then under Aereo, each performance is private. Thus, we can apply Aereo’s bright-line rule to deduce whether the performance is public or private—even if we don’t know the identity of the performer.

Assuming Dish performs, how do we determine whether it “transmits a performance to individuals in their capacities as owners or possessors” or whether it “transmits to large numbers of paying subscribers who lack any prior relationship to the works”? The Supreme Court didn’t exactly spell out the contours of what constitutes this “prior relationship,” but it did tell us that Aereo’s subscribers didn’t have it. The Court also provided an analogy which clues us in on the distinction it’s making:

When, for example, a valet parking attendant returns cars to their drivers, we would not say that the parking service provides cars “to the public.” We would say that it provides the cars to their owners. We would say that a car dealership, on the other hand, does provide cars to the public, for it sells cars to individuals who lack a pre-existing relationship to the cars.

In the Court’s opinion, Aereo is like a “car dealership” since it “does provide cars to the public” who have no “pre-existing relationship to the cars.” To me, this indicates that the Court is concerned about the specific car being provided by the dealership. If I happen to already own one certain make and model car, the car dealership is still providing me with a car to which I have no “pre-existing relationship” when I later buy from it a second car of the same make and model. Applying that analogy, it’s not just any “prior relationship” to the content that the Court is concerned with. The question is whether the subscriber has a “prior relationship” to the particular content being transmitted by the particular defendant service.

A quick example illustrates this distinction: Say I purchase a DVD of “Frozen.” I then have a “relationship” to the content on the DVD, but this doesn’t mean I have a “prior relationship” to the content that’s transmitted when I later stream the movie from my cable company’s on-demand service. The on-demand performance offered by my cable company is public whether I own the DVD or not. While I may have a “prior relationship” to the movie since I already own the DVD, I don’t have a “prior relationship” to the particular ones-and-zeroes being transmitted from my cable company. My cable company is analogous to a “car dealership” since it’s selling me content to which I have no “pre-existing relationship.” Contrast this with a Dropbox-like cloud storage service. If I upload the content from my DVD to the cloud, I then do have a “prior relationship” to the content when I stream it back later. The cloud storage service in this scenario acts like a “valet parking attendant,” not a “car dealership.”

Turning back to Dish’s Hopper with Sling, Dish’s core satellite service is functionally equivalent to a cable system. When Dish transmits to its subscribers via satellite, it “transmits to large numbers of paying subscribers who lack any prior relationship to the works” being transmitted. These satellite transmissions are thus public performances, and they are the means by which Dish supplies content to its subscribers in the first instance. With this part of Dish’s service, Dish is like a “car dealership.” But a subsequent transmission from a subscriber’s personal Hopper with Sling to a mobile device is a separate performance, and it occurs only after the subscriber has obtained a “prior relationship” to the particular content being transmitted. With this part of Dish’s service, Dish is like a “valet parking attendant,” and the performance is therefore private. Even if Dish is presumed to be causing this later performance, it’s nonetheless noninfringing since Dish “transmits a performance to individuals in their capacities as owners or possessors,” i.e., it transmits content to which the subscriber has a “prior relationship.”

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

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