Aereo: Okay, Fine, If You Say We Look Like A Duck, We'll Quack Like A Duck

from the let's-pay-up dept

In the wake of the Aereo ruling, I'd been meaning to do a post questioning whether or not the ruling had effectively overturned the ruling in the ivi case from a few years earlier. We had seen some people in our comments point out that, following the Aereo ruling, Aereo had an easy solution: just start paying retransmission fees. Except... that's exactly what ivi had tried to do, and the court had shut them down, using almost the opposite reasoning as the Supreme Court. Specifically, the Second Circuit appeals court (the same that had decided in Aereo's favor) ruled that internet services were not cable companies under the law, and couldn't just pay retrans fees:

Congress did not, however, intend for Section 111's compulsory license to extend to Internet transmissions. Indeed, the legislative history indicates that if Congress had intended to extend Section 111's compulsory license to Internet retransmissions, it would have done so expressly -- either through the language of Section 111 as it did for microwave retransmissions or by codifying a separate statutory provision as it did for satellite carriers. See 17 U.S.C. §§ 111, 119.

Extending Section 111's compulsory license to Internet retransmissions, moreover, would not fulfill or further Congress's statutory purpose. Internet retransmission services are not seeking to address issues of reception and remote access to over-the-air television signals. They provide not a local but a nationwide (arguably international) service.

Accordingly, we conclude that Congress did not intend for Section 111's compulsory license to extend to Internet retransmissions.

So, uh, which is it? Aereo has now decided that if the Supreme Court is going to call it a duck for looking like a duck, it's damn well going to quack like a duck too. It has told the lower court that it intends to pay retransmission fees under Section 111, more or less claiming directly that the Supreme Court overruled the ivi ruling. For what it's worth, Aereo's "wacky" (but seriously questionable) "competitor" FilmOn, already made a similar declaration of being a cable company, though as we've learned with FilmOn, you should take almost every claim it makes with a huge grain of salt.

Of course, this is a big problem with the Supreme Court's ruling. By coming up with this wacky "looks like a duck" test, it's encouraging companies like Aereo to use that test in a variety of ways, even though copyright law has never worked that way. Lots of things that "look like" each other face different rules: think of terrestrial radio and internet radio stations. Under the "looks like a duck" test, internet radio stations should be able to declare themselves the same as terrestrial radio stations and stop having to pay performance fees to musicians.

And, of course, the networks themselves don't like Aereo embracing the duck, even though the company is only doing so because of the network's own lawsuit.

On July 1, however, its counsel suggested that Aereo has rethought its entire legal strategy and will raise before this Court a brand new defense based on Section 111 of the Copyright Act. Aereo never before pled (much less litigated) Section 111 as an affirmative defense. Whatever Aereo may say about its rationale for raising it now, it is astonishing for Aereo to contend the Supreme Court’s decision automatically transformed Aereo into a “cable system” under Section 111 given its prior statements to this Court and the Supreme Court.

But it's not Aereo that made that decision. It's pretty clearly the Supreme Court and its stupid "looks like a duck" test. The entertainment industry might want to be careful what it wishes for. It applauded the dreadful looks like a duck test, and now it's freaking out when Aereo actually tries to apply it.

Filed Under: cable company, cable tv, copyright, retransmission fees, section 111, supreme court
Companies: aereo, filmon, ivi

Did Aereo Kill The Cablevision Ruling That Enabled So Much Innovation? Who The Hell Knows?

from the and-that's-why-it's-a-problem... dept

We've already discussed how the Aereo ruling is a disaster because of its lack of guidance, and a perfect example of that is that reading the decision you would have no idea whether or not it outlaws Cablevision's remote DVR service. None. It all depends on who you talk to. During the oral arguments, it appeared that the Justices recognized that they wanted to keep the important 2nd Circuit ruling that found Cablevision's remote DVR legal, with Justices even asking lawyers to take that ruling as precedent (even though it's not, since the Supreme Court refused to review that ruling). That's why it's been somewhat shocking to many that the final ruling from the Supreme Court doesn't even address Cablevision, other than an aside in a footnote.

And that means it's basically an open question as to whether or not Cablevision's remote DVR is still legal or not.

Cablevision, not surprisingly, insists that the ruling vindicates its position. You may recall that even though Aereo was relying on the Cablevision precedent, Cablevision sided with the broadcasters, stupidly believing that the Supreme Court would reject Aereo while preserving the Cablevision ruling. So, when the ruling came out, the company announced victory:

"We are gratified that the Court's decision adopted a sensible middle ground, holding that unlicensed retransmission services like Aereo violate the copyright law, while protecting consumer-friendly, cloud-based technologies, such as RS-DVR. The real winner today is the consumer who will continue to benefit from future innovation."

The problem is that's not true. The Court doesn't really say a damn thing about Cablevision, and leaves it out to hang based on the amorphous "looks like a" test. Law professor James Grimmelman is pretty sure that the Cablevision ruling is now dead, because the Aereo ruling totally overshadows it and creates this new standard that would clearly wipe out the Cablevision standard. Similarly, law professor Eric Goldman wonders what's left of that ruling:

... because the court said Aereo took the legally significant actions, it's possible this ruling overturned the 2008 Second Circuit ruling, exposing DVR service operators to new liability. The opinion further reinforces the riskiness of DVR-as-a-service when it says the simultaneous delivery of content to multiple viewers is an infringement, even if the system stores and delivers a personal copy for each viewer (the court later implies that even simultaneous delivery isn't required to violate the law).

Another commentator, Deborah Goldman, notes that the SCOTUS ruling "eviscerates" that ruling.

However, not everyone is convinced. Matt Schruers suggests that the Supreme Court effectively side-stepped the question by avoiding even looking at the DVR features of Aereo's system:

Importantly, yesterday's decision doesn't reach the question of Aereo's DVR-like features, and it seems clear that the Court's opinion does not aim to upset Cablevision.

But, of course, there's a difference between aiming to upset Cablevision and actually upsetting Cablevision, and there's nothing in the ruling that suggests a second shot at a remote DVR system won't turn out quite differently, given that plaintiffs can now use the "looks like a duck" test, rather than ever looking into the black box to see if the company hosting the DVR is really doing any infringement. And it gets especially worrisome with non-tech-savvy judges. While Schruers isn't sure if this ruling upsets the Cablevision standard, he is worried about the resulting uncertainty:

On the other hand, the Court's approach offers technology lawyers counseling clients little guidance. Who can predict whether a non-tech savvy federal judge will think that the next innovative service "looks like cable"? Yesterday's decision creates considerable uncertainty, suggesting that lawyers should counsel their clients based on what analogy will most appeal to a federal judge in the distant future. The Court — like others in the lead-up to the decision — promises its opinion won't threaten new technology, but as the dissent points out, it cannot deliver on that promise.

And this is not a small issue. As we've noted, a study by Harvard professor Josh Lerner found that the certainty created by the Cablevision ruling, resulted in somewhere around a billion dollars in new investment. Take that certainty away... and a lot of investment is about to go elsewhere.

Filed Under: copyright, innovation, looks like a duck, remote dvr, supreme court, uncertainty
Companies: aereo, cablevision

Up Is Down, Day Is Night, And Aereo's Shut Down Is 'Pro-Consumer' According To CBS CEO

from the and-by-pro-consumer-you-mean-pro-screwing-the-consumer dept

Les Moonves, CEO of CBS, was one of the more vocal network execs leading the charge against Aereo. He was the one insisting that CBS would move its content off of the public airwaves if Aereo won -- to which many people said that sounded like a good idea, so that others could use that valuable spectrum. Of course, when talking to his investors, Moonves also admitted that an Aereo win would have no real impact on the company, revealing the truth of the matter.

Either way, it's no surprise that he'd be delighted by the victory over Aereo. What gets ridiculous is when he claims that it's a "pro-consumer thing." How, exactly, is that the case? If you look at the comments from just about any Aereo user following Aereo's decision to "pause" the service this weekend in the wake of the ruling, it certainly doesn't look particularly "pro-consumer." Aereo user and GigaOm writer Jeff Roberts has what might be the best explanation of how horrible this is for consumers:

But while CBS and ABC investors may be throwing around high fives at the sop from the Supremes, the average consumer just took a bath. Not only did the court just stick it to them by protecting the TV industry’s bundle rip-offs, consumers also lose access to a marvelous technology.

Aereo, you see, was different. It gave urban dwellers like me a cheap way to see over-the-air shows (which the broadcasters send out for free in the first place, don’t forget) on their computers and phones.

The service, to be sure, was from perfect. The show streams could be choppy, and in the case of sports, the short time delay could be frustrating — I would sometimes learn about a goal on social media right before seeing it on Aereo. And it lacked the lazy, channel-clicking pleasure of TV.

But Aereo did point out what could be: a commonsense way to watch TV over the internet at a reasonable price. Now, we’re stuck instead with the TV industry’s over-priced bundles and, in the case of mobile, a confusing and convoluted “TV everywhere” system that seeks to replicate an out-of-date form of linear TV watching that no one wants in the first place.

You can claim that the networks' win in the Supreme Court was "good" for the broadcast industry (though I'd challenge that assertion too), but to claim in any way that it was "pro-consumer" is just clearly out and out ridiculousness by Moonves.

Filed Under: consumers, copyright, innovation, les moonves
Companies: aereo, cbs

Even Hollywood Publications Are Concerned That Aereo Decision Kills Innovation And Harms Consumers

from the time-for-Congress-to-fix-things dept

We've already noted how the Supreme Court's ruling in the Aereo case is a disaster for the technology industry, by using a bizarre "looks like a duck test" that provides no guidance for the tech industry and is going to create a litigation nightmare. Of course, the broadcasters and their supporters in the copyright maximalist world insist that this is all hyperbole and exaggeration -- but it appears that even many of their "friends" agree.

The LA Times is Hollywood's hometown paper, and it frequently supports the industry. However after the ruling, it's released an editorial worrying about the impact on innovation:

There's been plenty of speculation that Aereo could undermine broadcasters by cutting into or even eliminating the substantial fees they collect from cable operators. But then, as Scalia noted, broadcasters said the VCR would be the death of their industry too. By trying to close a legal loophole that technology enabled Aereo to exploit, the court blurred the boundaries around copyrights in a way that will chill investment and innovation. It would have been far better if the court had let Congress respond to a technological change it couldn't have foreseen 38 years ago.

Then jump over to the Hollywood Reporter, the leading trade magazine for Hollywood, and you get a similar analysis that notes the chill on innovation:

Innovators lose because the Aereo decision makes it harder for them to know where the lines are drawn. The court said Aereo – which allowed users to use RS-DVR technology to transmit programs, from a small antenna to a hard drive and thence via packet on the Internet to mobile devices and PCs – was "substantially similar" to a cable system that uses a single big antenna to transmit programs via cables buried in the streets to television sets. The fact that Aereo also resembled an RS-DVR was discarded. With that much elasticity, how does a technologist know whether her brilliant idea too closely resembles a phonograph or player piano roll and therefore runs afoul of some vastly pre-Internet analysis?

That report also notes the harm done to the public:

Consumers lose for the same reason that MVPDs win. High priced cable bills are here to stay, and unbundling remains a distant dream for consumer advocates.

The other big trade publication, Daily Variety, was much more congratulatory towards Hollywood's "victory," but its editor-in-chief penned an analysis piece that warns the networks who hid behind this fight that if they don't want another Aereo to pop up, they need to start innovating themselves.

In other words, pretty much everyone -- even Hollywood's closest observers -- recognize that this ruling was a disaster towards true innovation, and are hoping against hope that these companies that have spent decades fighting innovation will magically start innovating themselves, now that they wiped out the upstart competitors. I wouldn't hold my breath. The purpose of this fight was to kill innovation, and that's not going to spur the networks to innovate. They think they wiped out this threat.

Filed Under: copyright, innovation, supreme court
Companies: aereo

Aereo Fallout Begins: Fox Uses Ruling To Attack Dish's Mobile Streaming Service

from the because-welcome-to-this-new-mess dept

We've been saying that the Aereo ruling is going to create a litigation headache for a number of companies... and here we go. You may recall that a bunch of TV broadcasters have sued Dish over its attempts to provide innovative features to consumers, such as its Dish AutoHopper and its Dish Anywhere streaming offering. So far, those lawsuits have gone nowhere and fast. But Fox sees renewed life in its effort to shut down innovation thanks to the Supreme Court's unfortunate "looks like a duck" test.

Within hours of Wednesday's ruling, Fox had run to the 9th Circuit appeals court with the news. The 9th Circuit had previously rejected Fox's attempt to shut down the Dish technology, but Aereo has renewed its hopes of killing some innovation:

Fox's lawyers believe the Aereo ruling strengthens their case against Dish. In a letter to the court Richard Stone, partner at Jenner & Block, wrote that the supreme court had ruled Aereo's service constitutes an "unauthorized public performance of Fox's copyrighted works."

"Dish, which engages in virtually identical conduct when it streams Fox’s programming to Dish subscribers over the internet – albeit also in violation of an express contractual prohibition – has repeatedly raised the same defenses as Aereo which have now been rejected by the supreme court," he wrote.

Stone highlighted that the court had specifically rejected Aereo's assertion that it is "merely and equipment provider" and that Aereo's subscribers were the ones transmitting content.

Get ready, because Aereo is going to get cited a lot by the legacy entertainment industry as they quickly seek to destroy innovation.

Filed Under: autohopper, copyright, dish anywhere, dvr, looks like a duck, remote viewing, streaming
Companies: aereo, dish, fox

The Aereo Ruling Is A Disaster For Tech, Because The 'Looks Like Cable' Test Provides No Guidance

from the a-mess,-a-mess,-a-big-fat-mess dept

Following the Aereo ruling in the Supreme Court this week, lots of folks are sifting through the decision and opining on what it all means. To give a brief summary, the general consensus is that the Supreme Court's "looks like cable" test is so devoid of actual legal standards and/or reasoning that perhaps the "best" result might be the fact that it gives no real guidance to anyone. The Court's decision rests almost entirely on the fact that Aereo "looked like" something else, totally ignoring the very important technical differences. The most ridiculous part of the ruling was where the majority totally admits that it's not going to even bother to look inside the black box to see if Aereo actually infringes, but rather will just say that it's infringement because of the similarity to cable:

Viewed in terms of Congress' regulatory objectives, why should any of these technological differences matter? They concern the behind-the-scenes way in which Aereo delivers television programming to its viewers' screens. They do not render Aereo's commercial objective any different from that of cable companies. Nor do they significantly alter the viewing experience of Aereo's subscribers.

That rationale should be scary to anyone who believes in the rule of law. The Supreme Court is flat out saying "we have no interest in opening up the black box to see if it's infringing, instead, we're going to look at the inputs and outputs and assume that it must be infringing, because those inputs and outputs sorta kinda match this other system that was infringing." But that deliberately blocks off what the actual dispute was about: whether or not what's happening in the black box infringes.

And because of that, lots of other internet services are... suddenly left swimming in the dark. Even if they (as Aereo did) follow the letter of the law to avoid infringing, if the Supreme Court (or another court) suddenly decide that they look like an infringing system because the court puts a black box around the specifics, they can be found infringing too.

Yikes!

Law professor Mark McKenna has a really good analysis of why this "looks like something that infringes" test is such a mess:

It would be one thing if the consequence of this approach were simply to block Aereo from offering its services. That would be a loss to consumers who don't want to pay $150 a month for cable subscriptions, but at least the damage might be contained. Unfortunately, the problem is bigger than that, for in glossing over technological details, the opinion potentially implicates a wide range of other services. What about Dropbox and other cloud computing services, for example, all of which use their own equipment to retransmit what they receive to their customers, often transmitting many user-specific copies of the same works? How do those avoid liability? Not to worry, says the court, those technologies might be different. Why? Because cable system.

The most obvious way to insulate many of the cloud computing technologies would be to hold, as the dissent suggested, that a party does not infringe when it “does nothing more than operate an automated, user-controlled system.” But that is apparently not the rule, because it would have insulated Aereo from liability, too. Thus, while the court assures us that user control over a system might, in some cases, make a difference, it gives us no guidance as to when that might be true, except to say that it isn't true here.

And... what that means is there will now be a ton of litigation, as old gatekeepers attack new innovations, testing out every angle of this bizarre "looks like an infringing system" test. Law professor James Grimmelmann, interviewed by Tim Lee at Vox, similarly notes what a mess this will become:

"The court is sending a very clear signal that you can't design a system to be the functional equivalent of cable," says James Grimmelmann, a legal scholar at the University of Maryland. "The court also emphasizes very strongly that cloud services are different. But when asked how, it says, 'They're just different, trust us.'"

Sure, we now know that if it "looks like a cable system" then it's not legal. But now get ready for a whole host of "looks like x" lawsuits. Lots of different online services might "look like Grokster." After all, that's what Viacom claimed about YouTube. Would YouTube have survived the Viacom lawsuit with this test? Unclear. As Sarah Jeong notes in her write up about the ruling, the really scary part is that we'll "never know the technologies that could have existed, the services that could have been," because many won't even bother trying.

Filed Under: cloud computing, copyright, guidance, looks like cable, supreme court
Companies: aereo

Supreme Court Uses The Bizarre 'Looks Like A Cable Duck' Test To Outlaw Aereo

from the well-that's-unfortunate dept

As you may have heard, this morning, the Supreme Court effectively killed off Aereo with an unfortunate and terribly problematic 6 to 3 ruling that can be summarized simply as the "looks like a duck" test. If you're not familiar with the history, decades back, when cable companies were first around, they started rebroadcasting network TV to cable subscribes, and the Supreme Court (rightly) ruled that this was perfectly legal. The broadcasters ran screaming and crying to Congress, who changed the law to create a retransmission setup, saying that if cable companies wanted to retransmit broadcast TV they had to pay fees. Aereo got around that by setting up a very different system -- or so we thought. The majority decision, written by Stephen Breyer, really just keeps going back to the fact that Aereo looks just like what those cable companies used to do... and therefore, given that Congress changed the law to outlaw that, Congress must have meant that Aereo should be illegal as well. The majority seems to view things as a black box, ignoring everything in the box. It just says "well, to end users and to networks, this is identical to the old cable systems." As for the very careful steps that Aereo took to comply with the law? The majority just brushes that off as meaningless.

Given Aereo's overwhelming likeness to the cable companies targeted by the 1976 amendments, this sole technological difference between Aereo and traditional cable companies does not make a critical difference here. The subscribers of the Fortnightly and Teleprompter cable systems also selected what programs to display on their receiving sets. Indeed, as we explained in Fortnightly, such a subscriber “could choose any of the . . . programs he wished to view by simply turning the knob on his own television set.” ... The same is true of an Aereo subscriber. Of course, in Fortnightly the television signals, in a sense, lurked behind the screen, ready to emerge when the subscriber turned the knob. Here the signals pursue their ordinary course of travel through the universe until today's “turn of the knob”—a click on a website—activates machinery that intercepts and reroutes them to Aereo’s subscribers over the Internet. But this difference means nothing to the subscriber. It means nothing to the broadcaster. We do not see how this single difference, invisible to subscriber and broadcaster alike, could transform a system that is for all practical purposes a traditional cable system into “a copy shop that provides its patrons with a library card.”

Of course, that's NOT the "single" difference between the systems, and that's only part of why the majority ruling is so troubling. The second part of the ruling -- and the one that will have serious consequences for many other technologies -- is the determination that Aereo's service is not just a "performance" but a public performance. As we've discussed, this is the key part of the case, as it will determine just how badly it will impact cloud computing. The majority tries to indicate it shouldn't impact others by adding an important clause that might actually give Aereo (or others) a roadmap to get around this ruling. See if you can spot it:

Moreover, the 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.

Yeah, that "contemporaneously perceptible" tidbit could become pretty damn important. It seems like Aereo could just take away live TV viewing and basically become more DVR-like, requiring people to watch things on their own schedule starting with a brief delay, such that no one is really watching contemporaneously and potentially this no longer becomes a "public performance."

Still, that seems like a pretty ridiculous standard for what is and what is not public. The majority, unfortunately, brushes off concerns about how this might impact other cloud providers by going back to that "looks like a duck" test:

For one thing, the history of cable broadcast transmissions that led to the enactment of the Transmit Clause informs our conclusion that Aereo “perform[s],” but it does not determine whether different kinds of providers in different contexts also “perform.” For another, an entity only transmits a performance when it communicates contemporaneously perceptible images and sounds of a work....

Further, we have interpreted the term “the public” to apply to a group of individuals acting as ordinary members of the public who pay primarily to watch broadcast television programs, many of which are copyrighted. We have said that it does not extend to those who act as owners or possessors of the relevant product. And we have not considered whether the public performance right is infringed when the user of a service pays primarily for something other than the transmission of copyrighted works, such as the remote storage of content

Still, there are serious concerns about this. At the very least, it's going to lead to a lot of litigation as people try to determine if other sorts of cloud storage systems are engaged in "public performances." The dissent, written by Justice Scalia, highlights how problematic this ruling is on many levels. Rather than simplifying things down to a "looks like a cable duck" test, Scalia actually looks at copyright law, and the question of whether what Aereo does is direct infringement (in fact, he later says that even though it's clearly not direct infringement, Aereo might be liable for secondary infringement), and points out that there's no reasonable way to find Aereo guilty of direct infringement.

Aereo offers access to an automated system consisting of routers, servers, transcoders, and dime-sized antennae. Like a photocopier or VCR, that system lies dormant until a subscriber activates it. When a subscriber selects a program, Aereo’s system picks up the relevant broadcast signal, translates its audio and video components into digital data, stores the data in a user-specific file, and transmits that file’s contents to the subscriber via the Internet—at which point the subscriber’s laptop, tablet, or other device displays the broadcast just as an ordinary television would. The result of that process fits the statutory definition of a performance to a tee: The subscriber’s device “show[s]” the broadcast’s “images” and “make[s] the sounds accompanying” the broadcast “audible.” §101. The only question is whether those performances are the product of Aereo’s volitional conduct.

They are not. Unlike video-on-demand services, Aereo does not provide a prearranged assortment of movies and television shows. Rather, it assigns each subscriber an antenna that—like a library card—can be used to obtain whatever broadcasts are freely available. Some of those broadcasts are copyrighted; others are in the public domain. The key point is that subscribers call all the shots: Aereo’s automated system does not relay any program, copyrighted or not, until a subscriber selects the program and tells Aereo to relay it. Aereo’s operation of that system is a volitional act and a but-for cause of the resulting performances, but, as in the case of the copy shop, that degree of involvement is not enough for direct liability.

Scalia further calls out Breyer for using a questionable "resemblance" test based on nothing in the actual law. He points out that it's not illegal to be "similar to cable TV," but rather you have to look at the actual law and see if Aereo violates it. He further notes that the majority ruling relies heavily on taking a few snippets of the Congressional record out of context, and then leaping to the conclusion that Aereo is too similar to those old cable systems, rather than really exploring the differences within the blackbox:

The former (which were then known as community-antenna television systems) captured the full range of broadcast signals and forwarded them to all subscribers at all times, whereas Aereo transmits only specific programs selected by the user, at specific times selected by the user. The Court acknowledges this distinction but blithely concludes that it “does not make a critical difference.” ... Even if that were true, the Court fails to account for other salient differences between the two technologies. Though cable systems started out essentially as dumb pipes that routed signals from point A to point B, ... by the 1970’s, that kind of service “ ‘no longer exist[ed],’ ” ... At the time of our Teleprompter decision, cable companies “perform[ed] the same functions as ‘broadcasters’ by deliberately selecting and importing distant signals, originating programs, [and] selling commercials,”... thus making them curators of content—more akin to video-on-demand services than copy shops. So far as the record reveals, Aereo does none of those things.

Because of all of this, Scalia points out that the majority decision is not only self-contradictory, but part of it actually makes a huge part of the rest of it entirely superfluous... and then creates tremendous uncertainty.

The rationale for the Court’s ad hoc rule for cablesystem lookalikes is so broad that it renders nearly a third of the Court’s opinion superfluous. Part II of the opinion concludes that Aereo performs because it resembles a cable company, and Congress amended the Act in 1976 “to bring the activities of cable systems within [its] scope.” .... Part III of the opinion purports to address separately the question whether Aereo performs “publicly.” .... Trouble is, that question cannot remain open if Congress’s supposed intent to regulate whatever looks like a cable company must be given legal effect (as the Court says in Part II). The Act reaches only public performances, see §106(4), so Congress could not have regulated “the activities of cable systems” without deeming their retransmissions public performances. The upshot is this: If Aereo’s similarity to a cable company means that it performs, then by necessity that same characteristic means that it does so publicly, and Part III of the Court’s opinion discusses an issue that is no longer relevant—though discussing it certainly gives the opinion the “feel” of real textual analysis.

Making matters worse, the Court provides no criteria for determining when its cable-TV-lookalike rule applies. Must a defendant offer access to live television to qualify? If similarity to cable-television service is the measure, then the answer must be yes. But consider the implications of that answer: Aereo would be free to do exactly what it is doing right now so long as it built mandatory time shifting into its “watch” function. Aereo would not be providing live television if it made subscribers wait to tune in until after a show’s live broadcast ended. A subscriber could watch the 7 p.m. airing of a 1-hour program any time after 8 p.m. Assuming the Court does not intend to adopt such a do-nothing rule (though it very well may), there must be some other means of identifying who is and is not subject to its guilt-by-resemblance regime.

Take this a step further, and as Scalia notes, suddenly you implicate a lot of other services:

Two other criteria come to mind. One would cover any automated service that captures and stores live television broadcasts at a user’s direction. That can’t be right, since it is exactly what remote storage digital video recorders (RS–DVRs) do, ... and the Court insists that its “limited holding” does not decide the fate of those devices.... The other potential benchmark is the one offered by the Government: The cable-TV-lookalike rule embraces any entity that “operates an integrated system, substantially dependent on physical equipment that is used in common by [its] subscribers.” ... The Court sensibly avoids that approach because it would sweep in Internet service providers and a host of other entities that quite obviously do not perform.

That leaves as the criterion of cable-TV-resemblance nothing but th’ol’ totality-of-the-circumstances test (which is not a test at all but merely assertion of an intent to perform test-free, ad hoc, case-by-case evaluation). It will take years, perhaps decades, to determine which automated systems now in existence are governed by the traditional volitional-conduct test and which get the Aereo treatment. (And automated systems now in contemplation will have to take their chances.) The Court vows that its ruling will not affect cloud-storage providers and cable television systems..., but it cannot deliver on that promise given the imprecision of its result-driven rule. Indeed, the difficulties inherent in the Court’s makeshift approach will become apparent in this very case. Today’s decision addresses the legality of Aereo’s “watch” function, which provides nearly contemporaneous access to live broadcasts. On remand, one of the first questions the lower courts will face is whether Aereo’s “record” function, which allows subscribers to save a program while it is airing and watch it later, infringes the Networks’ public-performance right.

Scalia further notes that it's quite troubling to see the Supreme Court effectively picking winners and losers in the technology space, noting as a warning how close the Court came to outlawing the VCR based on bogus claims of "we'll die!" by Hollywood.

We came within one vote of declaring the VCR contraband 30 years ago in Sony.... The dissent in that case was driven in part by the plaintiffs’ prediction that VCR technology would wreak all manner of havoc in the television and movie industries. ... (arguing that VCRs “directly threatened” the bottom line of “[e]very broadcaster”).

The Networks make similarly dire predictions about Aereo. We are told that nothing less than “the very existence of broadcast television as we know it” is at stake. .... Aereo and its amici dispute those forecasts and make a few of their own, suggesting that a decision in the Networks’ favor will stifle technological innovation and imperil billions of dollars of investments in cloud-storage services. We are in no position to judge the validity of those self-interested claims or to foresee the path of future technological development.... Hence, the proper course is not to bend and twist the Act’s terms in an effort to produce a just outcome, but to apply the law as it stands and leave to Congress the task of deciding whether the Copyright Act needs an upgrade.

Unfortunately, the majority decided to go in the other direction. And it has just created a huge mess for cloud computing that may result in tremendous stifling of important innovation online.

Filed Under: antonin scalia, cable services, cloud computing, direct infringement, looks like a duck, retransmission, stephen breyer, supreme court
Companies: aereo

Broadcasters' Lawyer Lays Out Every Bogus Trope Possible Against Aereo

from the how-to-be-totally-uninformed dept

Neal Katyal, a former Acting Solicitor General of the US, and (more importantly) a lawyer hired by the broadcasters to help with their case against Aereo, has written one of the most ridiculous opinion pieces yet about Aereo, published over at the Hollywood Reporter. It basically reiterates every bogus copyright maximalist trope there is in this particular fight, and apparently demonstrates that he was paying attention to very different Supreme Court oral arguments than the rest of us.

First, he pulls the trick we discussed recently in which he pretends that complying with the law is somehow circumventing the law. Then he does that thing where he completely hand-waves away the claim that a ruling against Aereo won't impact cloud computing, by just insisting that they're different, without bothering to deal with (as many of the Justices pointed out in the oral arguments) that there's a real problem with declaring Aereo a public performance, as there's no clear way to distinguish it from cloud computing.

But the real problem with Katyal's reasoning is the "but if they were serious they could just get licenses" argument:

Licensed services like Netflix, Amazon and iTunes play by the rules, and that means their services are not at issue here. In fact, these services provide concrete evidence that refutes Aereo's vague threats about "innovation" writ large. These services developed because of licensing – not despite it. And they continue to thrive today, to the benefit of the public and copyright holders alike, because they deliver something valuable to consumers – not just a way to circumvent the law.

Aereo, on the other hand, is an illegitimate, unlicensed streaming service. It grabs broadcasters' signals from the airwaves without paying for them, stores user-specific copies of that programming in its servers, and then delivers that programming over the Internet live or on-demand for a fee. Aereo would prefer that everyone just focus on that second function (storage) but disregard the other two (theft and transmission).

Except that nearly everything above is misleading to inaccurate (sometimes in the extreme). Aereo plays by the rules too -- the rules that allow people to time shift and place shift over the air broadcasting, which is provided for free to the public, supported by advertising (and an enormous grant of free spectrum to the broadcasters from the public, supposedly for the public good). The fact that Netflix, Amazon and iTunes license other content has no bearing on the actual legal issue of whether or not providing the same piece of content to multiple parties (even if they are individual copies) is a "public performance." That some businesses do a different thing another way is not the issue. The issue is how a ruling that this represents a public performance will massively increase liability on any company that stores and transmits the same content to multiple people.

And, Aereo also seems to deliver something valuable to consumers. I've spoken to many Aereo customers and they all absolutely love the service.

As for Katyal's ridiculous claims of "theft" or "grabbing" -- that's just rhetoric used to mislead. These are over the air signals, and it's perfectly legal to "grab" those signals as the Supreme Court made clear in the Betamax case that Katyal must surely know about. Similarly, it's perfectly legal to transmit such content over the internet, via something like a Slingbox, so long as it's done privately by an individual for his or her own account. And that's what Aereo has set up for consumers -- a service to do what is clearly established as legal.

At the hearing, the Justices asked about these critical differences between Aereo and legitimate cloud services. They repeatedly mentioned the line between merely passive storage, on the one hand, and active content-distribution services, on the other. Aereo falls in that second category, which is why this case does not implicate cloud storage services. And it does not have a license, which is why this case does not implicate iTunes, Amazon or other legitimate streaming services on the content-delivery side of the line.

Katyal appears to be under the misconception that the "worries" about how this could impact cloud computing are people worrying about how it impacts iTunes or Amazon Prime's streaming service. They're not. They're worried about how it impacts things like iCloud or Amazon's S3 services, in which people store content on far away servers. Based on the arguments of the broadcasters, Apple and Amazon may be implicated as providing a "public performance" of content that people choose to store and stream from those services -- unrelated to the "licenses" that they have for their other services. It's kind of amazing that Katyal can be so confused about this.

Delivering on-demand streaming of copyrighted programming for a fee is the quintessential public performance.

I store plenty of (authorized) music MP3s on Amazon S3. And I stream from there. I pay Amazon for that service. But Amazon has not licensed those works. Yes, Amazon has licenses for its digital music, but these are not songs purchased from Amazon (some aren't even available on Amazon). But Katyal appears to be claiming that my storing of content and streaming it is a public performance. And that's exactly the problem we're talking about.

Katyal keeps insisting that Aereo is selling the content. He's wrong. They're selling the service of enabling people to access content that is available free, over the air. It's a classic case of ignoring the value of the service, and insisting 100% of Aereo's value is the content.

Much is at stake in the Supreme Court's decision in this case. Broadcasters invest billions of dollars to create, acquire, and distribute the most-watched video programming in the country, and perhaps even the world.

... And then they give it away for free via over the air broadcasts. And nothing that Aereo does impacts that market at all. The broadcasters' real problem, which Katyal doesn't mention because it would expose the sheer ridiculousness of his argument, is that the broadcasters have become fat and happy based on cable and satellite retransmission deals. That's what they're really fighting over, though they don't want to admit it. Notice that nowhere does Katyal admit that all of the content in question is broadcast free over the air? I wonder why...

I recognize that Katyal is a high powered lawyer who used to be the Solicitor General, but the broadcasters really ought to spend their money on someone slightly more convincing.

Filed Under: circumvention, cloud computing, copyright, neal katyal, public performance
Companies: aereo

Why Do So Many People Describe Aereo 'Complying' With Copyright Law As The Company 'Circumventing' Copyright Law?

from the the-law-is-the-problem dept

We mentioned this briefly in our writeup of the oral arguments at the Supreme Court in the Aereo case, but I wanted to focus in on one particularly annoying issue that has come up repeatedly throughout this company's history: the idea that its compliance with the law is actually the company circumventing the law. A perfect example of this is an incredibly ill-informed opinion piece for New York Magazine's Kevin Roose that declares, based on a near total misunderstanding of the case, that the Supreme Court should shut down Aereo because its 10,000 antennas are a cheap "copyright-avoidance gimmick."

But that's simply incorrect. It's actually 100% the opposite. We'll fully admit, as that article does, that the setup of Aereo is simply insane from a technology standpoint. There is no good reason at all to design the technology this way. But the reason they're doing this is not to avoid copyright but to comply with it. If you think that this is insane (and you're right) the answer is not to whine about what Aereo is doing, but to note that it's copyright law that leads to this bizarre result. Don't blame Aereo for following exactly what the law says, and then say it's a "gimmick." Blame the law for forcing Aereo down this path.

Of course, it's one thing for an uninformed magazine columnist to make this argument... but quite another for Supreme Court justices to do so themselves. And tragically, in the oral arguments, a few of them appeared to be coming close to making that kind of argument (though not so ridiculously as the column above). The worst offender was Chief Justice Roberts, who asked:

All I'm trying to get at, and I'm not saying it's outcome determinative or necessarily bad, I'm just saying your technological model is based solely on circumventing legal prohibitions that you don't want to comply with, which is fine. I mean, that's -- you know, lawyers do that.

Note the twisting here. Complying with the law is now "circumventing legal prohibitions." Justices Ginsburg and Scalia both also asked about whether or not the technology decisions had any technological purpose, or if they were solely about the law (though, at least both questioned if the choices were about "complying" with the law). But the implication that is being raised (and has been explicitly raised by others) is that in setting up this "a Rube Goldberg–like contrivance" (as 2nd Circuit judge Denny Chin called Aereo in his dissent to the company's victory in that court) it means that they're somehow violating the law by meticulously complying with it.

And that's a very dangerous assumption, even by implication.

If that argument is allowed to fly, then it's not a stretch to see how copyright holders might twist lots of versions of complying with the law, into infringing on the law simply by arguing that the form of compliance is somehow "too clever." That would lead to all sorts of dangerous implications -- in which those who are being careful to comply with the law may suddenly be deemed infringing because of their careful compliance. Under such a standard, the more carefully you aim to comply with the law, the greater chance you can be accused of "contorting" yourself in a manner that allows copyright holders to argue that your compliance is somehow "less than sincere" as appears to be the main suggestion here.

It's troubling that at least a few of the Supreme Court Justices appear to even be considering such a possibility.

Yes, Aereo's setup is technologically bizarre. But that's because it's doing everything to comply with copyright law. If you have a problem with it, it's not because the company is breaking the law, it's because the law itself is broken. It would be a cruel twist of fate for Aereo to lose its case because Supreme Court Justices believed that it had broken the law, because the inevitable results of the broken law itself create a situation where complying with the law looks so bizarre that it appears to be infringement!

Filed Under: antonin scalia, compliance, copyright, gimmicks, john roberts, kevin roose, ruth bader ginsburg
Companies: aereo

Supreme Court Discussion In Aereo: At Least The Justices Recognize The Harm They Might Do

from the but-will-they-still-do-it? dept

The oral arguments in the Aereo case happened this morning before the Supreme Court and you can read the transcript here (it's still a travesty that there is no live broadcasting (or any video recording at all) of the proceedings, but that's a different argument for a different day). As with any such case, this discussion needs to be prefaced with the fact that reading the tea leaves from what Justices say during oral arguments is a unlikely to yield much that is useful. You'll often see large segments of the arguments discuss issues that later don't appear at all in the final ruling. In some cases, Justices are just testing out certain theories or pushing the lawyers to see how they respond. Oral arguments do matter, but not nearly as much as the underlying briefs. We still have a few months (probably) to find out how the Court will rule, but we can at least comment on some of today's discussion.

The important thing to get from the discussion was that the Justices, for the most part, seem to actually recognize that with copyright law the way it is today, finding -- as the broadcasters would like -- that Aereo is engaged in a public performance -- may have long term consequences for all sorts of other industries. It starts off early on, with Justice Sotomayor jumping in with a very different question, concerning whether or not Aereo is a cable company, which would include a different set of issues (in fact, this was exactly the strategy that Aereo competitor/predecessor ivi sought to take -- and ran into trouble). She points out that there may be value in avoiding the whole public performance question all together, since it could get messy:

If we take public performance, maybe we run into what Professor Nimmer saw as a problem. Why isn't what used to be called a phonograph record store that sells phonograph records to 10,000 customers a public performance? It seems to fall within that definition. But if it is, there's no -- no first sale doctrine and it's a big problem. So we could avoid that problem.

Meanwhile, Justice Breyer is clearly concerned about the possible impact on the cloud, again in discussing the possibility that the Court could avoid the issue by calling Aereo a cable company:

And what you've read in their briefs is they, in their supporting amici, have thrown up a series of serious problems not involving them, like the cloud, which the government tells us to ignore, and many others, which make me nervous about taking your preferred group.

Which bounces back to Sotomayor, who notes that the public performance definition the broadcasters want "sweeps up" an awful lot of other businesses where it doesn't make sense:

I mean, Justice Breyer has already asked you -- said he's troubled about the phonograph store, and -- and the Dropbox and the iCloud. I'm also worried about how to define or -- public performance or the performance of a work publicly, which I guess is the better way to do it, according to you. How do I define that so that someone who sells coaxial cable to a resident of a building is not swept up as a participant in this? Or someone who -- the sort of passive storage advisors that -- this is really hard for me.

Justice Kagan, also, quickly gets to the heart of the matter -- the point that we've been raising since the beginning with Aereo -- that this is all about the length of the cable. If someone were to do this at home -- with the same exact electronic setup, it's clearly legal. But the broadcasters want to make Aereo illegal, because the length of the cable between the "DVR" component and the "TV" component is much longer.

Suppose a company just gave the antenna and a hard drive, that's what they sold to the user, and the user was able to use the antenna and the hard drive in her own house or apartment in order to get all these broadcast programs. What would the -- would that be a performance?

When the broadcaster's lawyer pushes back, Kagan points out that it does seem odd that where the hardware sits determines if there's a public performance or not.

But then it really does depend on, like, where the -- where the hardware is. In other words, if -- if Aereo has the hardware in its warehouse as opposed to Aereo selling the hardware to the particular end user, that is going to make all the difference in the world as to whether we have a public performance or not a public performance.

Chief Justice Roberts highlighted the same issue:

Why isn't -- and I don't want to stretch it too -- but why isn't it like a public garage in your own garage? I mean, you know, if you -- you can park your car in your own garage or you can park it in a public garage. You can go to Radio Shack and buy an antenna and a DVR or you can rent those facilities somewhere else from Aereo. They've -- they've got an antenna. They'll let you use it when you need it and they can, you know, record the stuff as well and let you pick it up when you need it

There's then a discussion trying to see if there's a way to distinguish Aereo from the Cablevision decision (in the 2nd Circuit appeals court) saying that Cablevision's remote DVR was legal. The lawyer for the broadcaster says that he thinks the Cablevision decision was decided incorrectly, but the difference is that Cablevision already has a license. This is misleading, because the license in Cablevision was unrelated to the issue of the DVR feature. Furthermore, over-the-air broadcasts (which is what Aereo offers) have an implied license already associated with them (you don't have to pay to watch over-the-air TV for that very reason). So the distinction here is meaningless. Justice Breyer says that, even if that's true, there's still a real risk to cloud computing.

But then the problem is in the words that do that, because we have to write words, are we somehow catching other things that really will change life and shouldn't, such as the cloud? And you said, well, as the government says, don't worry, because that isn't a public performance. And then I read the definition and I don't see how to get out of it.

When asked similar questions, the Deputy Solicitor General, Malcolm Stewart, (again, bizarrely, the US is intervening on behalf of Hollywood for no clear reason), appears to admit that there's no clear line, and that things should be decided on something of a case by case basis:

I think you would have to -- you would have to know both the details of the service and you would have to be making a harder call there about how to draw the line, because I don't pretend that there is a bright line between providing a service and providing access to equipment. If you look, for instance, at the extremes of a person putting a rooftop antenna at his own home, everybody agrees that the rooftop antenna manufacturer is not performing at all and the individual is engaged in a solely private performance.

The other extreme is the cable company, one big antenna, makes transmissions to a lot of people; Congress clearly intended to define that as a private performance. Somewhere in the -- you could come up with lots of hypotheticals that look more or less like one of the other extremes, they are somewhere in the middle. It's an authentically hard call as to where to draw the line. So I don't have a good answer for you.

But that seems rather important, given that this case is asking for that line to be drawn. And the Justices were clearly struggling with that point. Justice Breyer responded:

How do we get out of the example? I mean, how do we get out -- what words do I write to get out of this, throwing into this clause a music store that distributes via Federal Express, a device, or the U.S. Postal Service or even someone over the counter, distributes to 10,000 people a copy of a record which they then will take and play it? They have, to the same degree, transmitted something that will electronically make a performance of the music. So are they when they sell the record violating the display clause?

This isn't to say that the Justices are in agreement with Aereo. They expressed plenty of skepticism about the whole setup, arguing repeatedly that the whole thing seems to have been set up solely to fit within the law, using a technological setup that makes no sense. Aereo, in response, sought to argue that there were technical reasons for its setup, but frankly, that's bogus. The technological setup is insane, but the insanity is not because Aereo is trying to "get around" the law, but the exact opposite. Because it's trying to stay within the law. If the setup of copyright law itself wasn't so insane, there would be much better ways to do what Aereo is doing. But thanks to a bunch of interlocking "rights" buried within copyright law, and caselaw that is basically duct-taped onto the statute every time a new technology comes around, actually innovative requires the Rube Goldbergian-approach that Aereo took just to stay within the law. It's ridiculous that that is seen as a suggestion of illegality...

When the broadcasters lawyer comes back to rebut Aereo's lawyer, he argues that if Aereo loses, it can just get a license or go out of business. But Justice Breyer notes that it's really not that simple:

Once you take them out of the compulsory licensing system, they're going to have to find copyright owners, who owns James Agee's pictures? Who owns something that was written by -- like a French silent film in 1915? I mean, the problem is that they might want to have perfectly good things that people want to watch and they can't find out how to get permission. That is a problem that worries me and it worries me again once you kick them out of the other systems

In the end, I think the Justices were rightly worried about how any ruling might impact the cloud. While there was some skepticism about Aereo's setup, Aereo's lawyer did a good job highlighting why those were wrong. Still -- and again, reading Supreme Court tea leaves is nearly impossible -- if I were going to guess, I'd guess that the Supreme Court will seek some sort of "narrow" ruling that tries to say that Aereo should get a license (possibly just throwing the issue back to the lower courts on the details), while doing everything it can to avoid a ruling that throws the entirety of cloud computing under the bus.

Filed Under: copyright, length of cable, public performance, retransmission, supreme court
Companies: aereo