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Article: September 2014 Entertainment Litigation Update

Business Litigation Reports

ABC v. Aereo: Supreme Court Holds that Aereo’s System of Streaming Television Broadcasts via the Internet Infringes Copyrights in Programs Broadcast. On June 25, 2014, the Supreme Court issued its opinion in the closely-watched case of American Broadcasting Companies, Inc., et al. v. Aereo, Inc., 132 S. Ct. 2498 (2014). In a 6-3 opinion authored by Justice Breyer, the Court held that Aereo’s system of streaming television broadcasts via the Internet violated the exclusive public performance rights in those programs held by the Petitioners. Although this decision protects the intellectual property rights of content providers, it could have a chilling effect on means for delivering multimedia content.

Aereo provided a system through which its subscribers could watch over-the-air television shows via the Internet, including on mobile devices, at virtually the same time the shows were being broadcast. When an Aereo subscriber selected a program, an antenna operated by Aereo at a central location would tune to that show. Aereo would then record the program and stream it to the subscriber’s device with a delay of only a few seconds. Each of Aereo’s thousands of antennas was devoted to only one user at a time, and each recording was streamed only to that one user.

Petitioners—television producers, distributors and broadcasters—claimed that such streaming violated their exclusive public performance rights under the Copyright Act of 1976. The Court had to determine, first, if Aereo’s streaming constituted a performance and, second, if such a performance was “public.” The majority answered yes to both questions.

Aereo contended that it did not “perform” any of the copyrighted works because it did “no more than supply equipment that emulate[d] the operation of a home antenna and digital video recorder (DVR).” It argued that its equipment simply responded to subscriber directives and, therefore, it was the subscribers who “performed” the work when streaming television programs. The Court flatly rejected this argument based on the legislative history of the Copyright Act. The Act was amended in 1976 to address community antenna television (CATV) systems (the precursor to modern cable systems) that had previously been deemed outside its scope. Aereo, like cable providers, used its equipment to receive programs that had been released to the public and transmit them to users via private channels. Due to what it called an “overwhelming likeness” between Aereo and cable companies—despite “technological difference[s]”—the Court determined that Aereo’s streaming constituted a performance.

Aereo also claimed that it did not perform the works “publicly” (if they were performed at all) because each program was recorded for a specific subscriber and streamed only to that individual. The Court disagreed. Regardless of whether a particular recording was streamed to one user or multiple users, Aereo’s conduct was found to fit within the meaning of a public transmission under the Copyright Act. The Court again relied on Aereo’s similarity to cable TV providers, noting that technological innovations “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.” Further, the Court held that a “public” performance could be received by different members of the public at different times.

The Court attempted to tailor its decision narrowly to the particular technology at issue, expressly avoiding a discussion of cloud computing, remote-storage DVRs or “other novel issues not before the Court.” However, Justice Scalia noted in a dissent that this decision could “sow confusion for years to come” as to how the Copyright Act applies to new technologies that are challenging the traditional methods of transmitting content to consumers.