Aereo Wins Again: Appeals Court Says Its System Is Not Infringing

from the a-good-win dept

As you may recall, Aereo has been in an ongoing legal dispute with the TV networks, who seem to be arguing that anything that disrupts their coveted business model simply must be illegal. While they've won against others, Aereo actually won the first round at the district court level, blocking an attempted injunction. The networks quickly appealed. On appeal, it seemed clear that the judges realized just how insane the situation is. If you don't recall, Aereo sets up a separate individual antenna for each customer, and then streams TV broadcasts to that customer over the internet. This setup makes no technological sense whatsoever. It's inefficient and stupid. But because of the wacky way copyright is interpreted, it's believed to be necessary to avoid being guilty of infringement for doing the same damn thing much more efficiently.

Today, on appeal, the appeals court affirmed the district court ruling, once again blowing a big hole in the networks' arguments. The full ruling (linked above and embedded below) is well worth a read, as it's nice to see the court really try to do its best to truly understand the technology at play, rather than resorting to simplistic and inaccurate analogies, as copyright maximalists often desire. The key to the networks' argument here is that those individual antennas that Aereo sets up are a myth. They claim that it's really one giant antenna. The court disagrees. This issue plays into the big question of whether or not Aereo's service is functionally the same as the (legal) Cablevision remote DVR system, or if it goes too far and is a tool for infringement. The distinguishing factor in that Cablevision case was that Cablevision made a unique copy for every user who requested it (again, stupid and inefficient from a technological standpoint, but this is the life we lead under bad copyright laws). Bizarrely, even Cablevision argued against Aereo here, trying to distinguish its own case (perhaps to handicap a potential competitor).

The court, thankfully, doesn't buy Cablevision's own wacky interpretation, but rather relies on what the court in is case actually said, mainly, that having a unique copy means that it's not doing a "public performance" of the work.

As discussed above, Cablevision’s holding that Cablevision’s transmissions of programs recorded with its RS-DVR system were not public performances rested on two essential facts. First, the RS-DVR system created unique copies of every program a Cablevision customer wished to record. Second, the RS-DVR’s transmission of the recorded program to a particular customer was generated from that unique copy; no other customer could view a transmission created by that copy. Given these two features, the potential audience of every RS-DVR transmission was only a single Cablevision subscriber, namely the subscriber who created the copy. And because the potential audience of the transmission was only one Cablevision subscriber, the transmission was not made “to the public.”

The same two features are present in Aereo’s system. When an Aereo customer elects to watch or record a program using either the “Watch” or “Record” features, Aereo’s system creates a unique copy of that program on a portion of a hard drive assigned only to that Aereo user. And when an Aereo user chooses to watch the recorded program, whether (nearly) live or days after the program has aired, the transmission sent by Aereo and received by that user is generated from that unique copy. No other Aereo user can ever receive a transmission from that copy. Thus, just as in Cablevision, the potential audience of each Aereo transmission is the single user who requested that a program be recorded.

The court rejects the networks' argument that Cablevision was different because Cablevision had a license for its initial transmission, noting that the case has nothing to do with transmission, but is solely based on the question of whether or not this is a public performance under the Copyright Act. As it notes, if there is no public performance, the license question is moot, as Aereo only needs such a license for the public performance.

The court also responds nicely to the bizarre argument of the networks that because Aereo specifically designed its system to be legal within the confines of the Cablevision ruling, that proves it's infringing. As we noted at the time, this argument doesn't help the networks at all. After all, the courts found Cablevision legal, so it makes sense that Aereo would design with that in mind for the purpose of staying on the right side of the law. The networks' basic argument is, directly, that if you try hard to stay within the law, you must be breaking the law. That's crazy, and the court, rightly, rejects it:

Plaintiffs also make much of the undisputed fact that Aereo’s system was designed around the Cablevision holding, because it creates essentially identical copies of the same program for every user who wishes to watch it in order to avoid copyright liability, instead of using a perhaps more efficient design employing shared copies. However, that Aereo was able to design a system based on Cablevision’s holding to provide its users with nearly live television over the internet is an argument that Cablevision was wrongly decided; it does not provide a basis for distinguishing Cablevision. Moreover, Aereo is not the first to design systems to avoid copyright liability. The same is likely true of Cablevision, which created separate user associated copies of each recorded program for its RS-DVR system instead of using more efficient shared copies because transmissions generated from the latter would likely be found to infringe copyright holders’ public performance right under the rationale of Redd Horne.... Nor is Aereo alone in designing its system around Cablevision, as many cloud computing services, such as internet music lockers, discussed further below, appear to have done the same...

In other words, no, designing your system in accordance with the law doesn't mean you're trying to violate the law. As the court later notes, it appears that the networks really want to overrule Cablevision, which is made clear by their claims that Aereo designing within the confines of Cablevision must be infringing. The court notes that even if that's what the networks want, barring a Supreme Court decision in the alternative, they can't change their earlier ruling.

Though presented as efforts to distinguish Cablevision, many of Plaintiffs’ arguments really urge us to overrule Cablevision. One panel of this Court, however, “cannot overrule a prior decision of another panel.” ... We are “bound by the decisions of prior panels until such time as they are overruled either by an en banc panel of our Court or by the Supreme Court.” ... There is an exception when an intervening Supreme Court decision “casts doubt on our controlling precedent,” ... but we are unaware of any such decisions that implicate Cablevision.

There is a dissent from Judge Denny Chin, who argues that because Aereo had to go through the technologically inefficient process it does, that shows why it's infringing.

Aereo's "technology platform" is, however, a sham. The system employs thousands of individual dime-sized antennas, but there is no technologically sound reason to use a multitude of tiny individual antennas rather than one central antenna; indeed, the system is a Rube Goldberg-like contrivance, over-engineered in an attempt to avoid the reach of the Copyright Act and to take advantage of a perceived loophole in the law.

That argument is really troubling, and it's good that the majority overruled it. If that were true, any inefficient or convoluted process required by the law to remain consistent with copyright law would be seen as evidence of infringement. And that's just wacky. You'd effectively create veto power for any new innovation that way.

Anyway, the case is far from over, but so far Aereo is 2 for 2 and the networks have come up empty. Let's hope that trend continues.

Filed Under: 2nd circuit, copyright, individual copies, public performance
Companies: abc, aereo, cablevision, fox, nbc