Analysis of the Supreme Court's Decision in Aereo

This article was produced by Olswang LLP, which joined with CMS on 1 May 2017.

Analysis of the decision

The Supreme Court's decision in Aereo is a vindication for broadcasters and content-creators, who have for years campaigned for judicial protection against unauthorised exploitation of their content. The decision rules Aereo's service unlawful, whose business model was redistributing third party television content without licence or consent, and making considerable profit in doing so. The decision has similarities, both in terms of the facts of the case and its ultimate outcome, to the case brought in the English courts by various broadcasters against a UK-based streaming service, TVCatchup. However, the strong dissenting opinion illustrates how complex an issue this is for services which fall on the borderline of copyright protection despite their parasitic nature.

What's the case about?

Aereo sold a service enabling subscribers to watch TV channels, which it streamed over the internet, a few seconds behind the real-time broadcasting of the channels over the air. Each time a user wished to view a particular channel, he had a dedicated aerial that streamed directly to him alone. This is unicasting (one-to-one) as opposed to multicasting (one-to-many). The claimants (or "petitioners" before the Supreme Court) included various TV producers and broadcasters which owned copyright in the broadcasts and programs.

The allegation was that Aereo infringed the copyright-owner's exclusive right to "perform the copyright work publicly" which included the right to "transmit or otherwise communicate a performance of the work to the public". There are two parts here:

1. Do Aereo "perform" the work?

Yes. Aereo argued that they merely supplied equipment which was capable of receiving and retransmitting television broadcasts: it was tantamount to the same thing as a consumer's traditional set up, except the consumer's own aerial was connected via the internet. US law had been specifically amended some years ago to ensure that cable TV networks which retransmitted broadcast content were captured by the copyright legislation. Unlike a cable television network - where the transmission was "always on" and you simply need to turn on the television knob to receive it - in Aereo's case nothing happens until the user requests the stream. Any "performance" (argued Aereo) was therefore by the user alone, not Aereo as well. The Court rejected this, arguing that a click on a website is simply "today's 'turn of the knob"; and that the difference is not sufficient to exonerate Aereo from being a "performer".

2. Is the transmission/communication to the "public"?

Yes. The Court held that you can transmit or communicate to the public not only by one-to many transmissions, but also by multiple one-to-one unicast transmissions. The fact that each transmission was private does not mean that the sum of communications were not made to the "public".

Analysis

European broadcasters and content-producers, especially those who supply content to US broadcasters for consumption, should view this case with interest (and relief). The Supreme Court's reversal of the earlier finding is protective of their position and will be helpful in preventing unauthorised retransmissions of their content over the internet. However, the strong dissenting argument of Justice Scalia suggests the argument is not quite that clear-cut. Whilst even there he "shares the Court's evident feeling that [Aereo's service]… ought not to be allowed". However, he is reluctant to "distort the Copyright Act to forbid it".

Aereo's view, supported by the dissenting judges, is that its subscription service is akin to a "providing library cards for copy-shop" - i.e. granting paying users access to technology which they have to turn on and use themselves with no further input from Aereo, and which can be used for both legitimate and illegitimate purposes (some of the content was not copyrighted). One of the pivotal elements of the judgment is the Court finding equivalence between Aereo's service and a cable television service. In doing so, it held that the absence of cable's "always-on" nature doesn't negate that equivalence. The dissenting Judges objected strongly to this argument - their view being that since Aereo does not make the choice of content, it is not performing and cannot be directly liable.

A similar factual scenario arose in the TVCatchup proceedings (albeit there the meaning of "cable" is important for other reasons). Olswang acts for three English broadcasters, ITV, Channel 4 and Channel 5, in ongoing proceedings now before the Court of Appeal. TVCatchup receives free-to-air broadcasts, and streams them over the internet on a one-to-one, unicast basis to individual members of the public. TVCatchup is free to subscribe to and makes money from advertising.

The High Court held TVCatchup were found to be carrying out the act of "communication", even though (just as an Aereo) it was the user who had to trigger the stream by requesting it. The judgment relied on the European Court's finding that the change in the medium of transmission (i.e. via the internet, as opposed to broadcast) amounted to a new act of communication and therefore required copyright owners' consent. In another parallel with Aereo, the Court found that TVCatchup's communications were to the "public" even though each stream was on a one-to-one basis.

What minor issues are still before the Court of Appeal in TVCatchup, the broad (unappealed) finding of liability by the High Court reflects the weight of the Court's judgment in the broadcasting community's favour. Both the US and European Courts have now ruled against these piggyback streaming services, which seek to exploit television content without payment or permission.

To learn more about the implications of the Aereo decision, read our Aereo and the future of cloud TV report.