Applying Aereo: The Supreme Court’s Reasoning

Since there’s been a lot of concern about how Aereo applies to other services, I thought I’d offer a pair of posts looking at the majority’s reasoning in Aereo and then applying it to a concrete issue that is currently being litigated. In this first post, I’ll walk through the Aereo majority’s thinking step-by-step, adding my own commentary as I go. In the next post, I’ll look at the parties’ arguments in the Fox v. Dish appeal concerning Dish’s Sling service, and I’ll explain why I think Dish should prevail on that narrow public performance issue in light of the majority’s reasoning in Aereo.

Despite some claims that the Aereo majority’s reasoning was atextual, the majority in fact analyzed the relevant statutory text, turning to the statute’s purpose and legislative history to help fill in the gaps. The primary statutes at issue in Aereo were the public performance right under Section 106(4) and the Transmit Clause under Section 101. The former grants the public performance right to authors, while the latter defines one way the public performance right may be infringed: “To perform a work ‘publicly’ means . . . to transmit or otherwise communicate a performance . . . of the work . . . to the public, by means of any device or process.”

The Aereo majority noted that there were two relevant inquiries under the 1976 Copyright Act:

This case requires us to answer two questions: First, in operating in the manner described above, does Aereo “perform” at all? And second, if so, does Aereo do so “publicly”?

As to the word “perform,” the majority remarked that the Act’s text “does not clearly differentiate when an entity ‘perform[s]’ (or ‘transmit[s]’) and when it merely supplies equipment that allows others to do so.” Nevertheless, the majority held that “when read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo’s performs.” By the Act’s “purpose,” the majority was referring to the history of the public performance right and the Transmit Clause with the 1976 Copyright Act.

In the late ‘60s, the Court held that CATV systems, which used antennas to receive broadcasts that were then retransmitted to their viewers, were not publicly performing since they were not acting like broadcasters. The Court thought CATV systems were acting more like viewers, whom it considered not to perform at all. In the early ’70s, the Court reinforced this view when it held that the distance between CATV systems and their viewers was irrelevant. The Aereo majority noted that the 1976 Act was created to legislatively abrogate the Court’s narrow holdings in these two opinions, and it found that the modern Act included three innovations that were relevant to analyzing Aereo’s service.

The majority relied on the text of the 1976 Act and its legislative history to state that there are actually two performances with the current broadcaster-viewer model: It’s one performance when the broadcaster sends the transmission to its viewer, and it’s another performance when the viewer renders that transmission viewable (such as with a television or computer screen). Also relying on the statutory text and history, the majority remarked on the intended breadth of the public performance right, which includes “not only the initial rendition or showing, but also any further act by which that rendition or showing is transmitted or communicated to the public.”

Given the text, purpose, and legislative history of the Transmit Clause, the majority reasoned that the Clause “makes clear that an entity that acts like a CATV system itself performs, even if when doing so, it simply enhances viewers’ ability to receive broadcast television signals.” Some have ridiculed this test as standing for mere guilt-by-association, but I think that misses the point. It’s not that the Transmit Clause was enacted to capture only cable systems. It was instead worded broadly to include any service that functions the same as a cable system. It’s not guilt-by-association; it’s liability for engaging in conduct the Clause directly and designedly proscribes.

The majority then turned to the text and legislative history of Section 111, which regulates retransmissions of broadcasts by cable systems. In the majority’s view, the purpose of these three innovations was to bring “the activities of cable systems within the scope of the Copyright Act.” But, again, it wasn’t just cable systems that the Transmit Clause was crafted to regulate. The language Congress chose was far broader, covering “any device or process” that transmits “to the public.” This includes cable systems, but it also includes any service that is functionally equivalent to a cable system—such as Aereo’s.

The majority reasoned that Aereo was more than an equipment provider, and that it, “and not just its subscribers, ‘perform[s]’ (or ‘transmit[s]’).” Again citing the legislative history, the majority deduced that “Aereo’s activities are substantially similar to those of the CATV companies that Congress amended the Act to reach.” The majority listed the reasons why Aereo was just like the cable systems the 1976 Act brought within its ambit:

Aereo sells a service that allows subscribers to watch television programs, many of which are copyrighted, almost as they are being broadcast. In providing this service, Aereo uses its own equipment, housed in a centralized warehouse, outside of its users homes. By means of its technology (antennas, transcoders, and servers), Aereo’s system “receive[s] programs that have been released to the public and carr[ies] them by private channels to additional viewers.” . . . It “carr[ies] … whatever programs [it] receive[s],” and it offers “all the programming” of each over-the-air station it carries.

Thus, relying on the statutory text, purpose, and legislative history, the Court held that Aereo was the functional equivalent of a cable system because of all of the things Aereo did to cause the transmissions to occur. The majority here applied the volitional conduct test, which I have previously argued is the proper analysis for this issue. The test looks at the conduct engaged in by the defendant that caused the particular performance to occur. As Copyhype’s Terry Hart has explained, the law does not “excuse as a legal cause an actor engaged in the factual cause of a harm when its conduct is functionally equivalent to the conduct of an actor clearly within the scope of the Copyright Act.”

Implicit in the majority’s reasoning was the conclusion that Aereo crossed the line from being a passive conduit to being an active participant because it functioned just like a cable system. It provided a service utilizing its centrally-housed equipment to receive broadcasts that were then retransmitted to members of the public. This is the same thing cable systems do, and it’s the same thing the Transmit Clause defines to be an infringement of the public performance right. The majority found that the differences between Aereo and a cable system were not critical. For example, the fact that Aereo didn’t constantly transmit like a cable system didn’t mean that Aereo was not performing when it did in fact transmit.

Having concluded that Aereo performed, the majority then turned to the question of whether these performances were public or private. The majority assumed that the transmissions from Aereo to its users were different performances than the earlier transmissions from the broadcasters to Aereo. Citing the statutory text and the Second Circuit’s holding in a different case, the Aereo majority explained that a performance requires contemporaneous perceptibility:

[T]o transmit a performance of (at least) an audiovisual work means to communicate contemporaneously visible images and contemporaneously audible sounds of the work. . . . Aereo thereby “communicate[s]” to the subscriber, by means of a “device or process,” the work’s images and sounds. . . . And those images and sounds are contemporaneously visible and audible on the subscriber’s computer (or other Internet-connected device). So under our assumed definition, Aereo transmits a performance whenever its subscribers watch a program.

As to why Aereo’s transmissions were “to the public,” the majority disagreed with Aereo that its use of personal copies for individual users meant that the performances were private, and it concluded that the technological details “behind-the-scenes” didn’t change the fact that Aereo’s service was functionally equivalent to a cable system. Moreover, the majority found that the text of the Transmit Clause “suggests that an entity may transmit a performance through multiple, discrete transmissions.” The majority thus held “that when an entity communicates the same contemporaneously perceptible images and sounds to multiple people, it transmits a performance to them regardless of the number of discrete communications it makes.”

The majority then looked at the relationship between Aereo and its users:

[T]he subscribers to whom Aereo transmits television programs constitute “the public.” Aereo communicates the same contemporaneously perceptible images and sounds to a large number of people who are unrelated and unknown to each other. This matters because, although the Act does not define “the public,” it specifies that an entity performs publicly when it performs at “any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” . . . The Act thereby suggests that “the public” consists of a large group of people outside of a family and friends.

Having reiterated that Aereo performed, the majority considered whether these performances were public or private. The majority reasoned that since Aereo’s relationship with its users was public, these performances were likewise public. Furthermore, the majority found it important that Aereo’s users were not “owners or possessors of the underlying works,” meaning, the users had no preexisting ownership or possessory interests in the content being transmitted. This was relevant, “because when an entity performs to a set of people, whether they constitute ‘the public’ often depends upon their relationship to the underlying work.”

Thus, the relationship between Aereo and its users, as well as the relationship between its users and the content being transmitted, meant that the performances were public. The majority held that when a service functioned just like a cable system, receiving and then retransmitting content to members of the public who had no prior ownership or possessory interests in that content, the performances were “to the public” under the Transmit Clause. It mattered not whether the members of the public were “situated together, spatially or temporally,” or whether they “may receive the same programs at different times and locations.”

Agreeing with Aereo, the majority stated “that Congress, while intending the Transmit Clause to apply broadly to cable companies and their equivalents, did not intend to discourage or to control the emergence or use of different kinds of technologies.” And the majority indicated that its holding should not have this negative effect since its analysis focused on functional equivalence to cable systems and did “not extend to those who act as owners or possessors of the relevant product.” Furthermore, the majority emphasized that “an entity does not transmit to the public if it does not transmit to a substantial number of people outside of a family and its social circle.”

In my next post, I’ll look at how the majority’s reasoning in Aereo applies to Dish’s Sling service, an issue currently being considered by the Ninth Circuit in the Fox v. Dish appeal.

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