In a highly-anticipated decision, the Supreme Court last week released its decision in ABC v. Aereo, holding that the transmission of over-the-air broadcast signals by Aereo’s tiny antennas constitutes a “public performance” under the federal Copyright Act.[1] Justice Breyer delivered the opinion for a divided Court. Justice Scalia dissented and was joined by Justices Thomas and Alito.
The Court’s Opinion. Acknowledging that the plain language of the Copyright Act does not address when an entity “performs” or “transmits” information (instead of merely supplying equipment that allows others to do so), the Court determined that when “read in light of its purpose, the Act is unmistakable: An entity that engages in activities like Aereo’s performs.” The purpose of Congress’s 1976 amendments to the Copyright Act, according to the Court, was to “bring the activities of the cable systems within the scope of the Copyright Act.” Those amendments followed on the Court’s earlier decisions in two cases from the 1970s – Fortnightly Corp. v. United Artists Television, Inc. and Teleprompter Corp. v. CBS, Inc. – in which the Court held that cable television systems did not “perform” under the Copyright Act. In 1976, Congress amended the Copyright Act to reject those holdings. Citing the legislative history of the 1976 Act, the Court concluded that Aereo’s activities are “substantially similar to those of the CATV companies that Congress amended the Act to reach” and held that Aereo, not just its subscribers, “performs” or “transmits” under the Copyright Act.
Because the Court held that Aereo “performed” copyrighted works (i.e., the broadcaster’s content) under the Copyright Act, it also had to determine whether Aereo did so “publicly.” Aereo argued that (i) each of its transmissions of over the air content was a “new performance” created by the act of transmitting; and (ii) each transmission was conducted using an individual, personal copy for each viewer. Although the Court assumed the correctness of the former argument, it disagreed with the latter and declined to distinguish Aereo’s transmissions from a cable company, which performs works “publicly.” In conclusion, the Court distinguished Aereo from other technologies that permitted cable operators to deliver in new forms content that they had already obtained rights to deliver in the first place.
The Dissent. Scalia’s dissent argued that Aereo does not “perform” content at all, basing his argument on the fact that individual consumers (not Aereo) “choose the content.” Since Aereo thus did not “perform,” it cannot be held as directly infringing (as opposed to secondarily infringing) upon the performance rights of the copyright holders. Criticizing the majority for its reliance on legislative history, Scalia believed that the Court’s holding was an example of “guilt by resemblance,” because, in his view, (i) Congress amended the Copyright Act to cover cable companies; (ii) Aereo looks like a cable company; therefore, (iii) Aereo “performs” under the Copyright Act.
For Scalia, Aereo’s assignment of individual antennas to subscribers is akin to a copy shop that provides its users with a library card. The subsequent actions of these cardholders – i.e., “performing” copyrighted material – is not the “volitional conduct” of Aereo but the cardholders instead. Harkening back to the Sony/Betamax decision (which Scalia recalled allowed VCR technology to flourish by one vote), Scalia warned that it is “not the role of this Court to identify and plug loopholes.” Scalia asserted that the best way forward was to allow the lower courts to address the remaining arguments concerning the Aereo technology, and allow Congress – which can study the issues in a more comprehensive fashion and offer more tailored legislative remedies – to update the Copyright Act as it sees fit.
The Post-Aereo Future. The decision leaves open applications of these principles to the cloud (i.e., remote storage). The majority opinion explicitly stated that “we have not considered whether the public performance right is infringed when the user pays primarily for something other than the transmission of copyrighted material, such as the remote storage of content.” In order to avoid pre-judging issues not actually presented, the Court announced that it would “await a case in which [cloud computing and remote storage questions] are squarely presented.” Given the growing importance of cloud computing and remote storage in the media marketplace, it seems unlikely that the Court can stay out of this fray for long.
If you have any questions about this decision, please contact Sheppard Mullin’s Communications attorneys.
[1] ABC v. Aereo, No. 13-461 slip op. (U.S. June 25, 2014). A copy of the opinion is available at: http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf.